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IN THE SUPREME COURT OF IOWA No. 81/ 04-1763 Filed September 29, 2006 CITY OF DES MOINES, Appellee, vs. EMPLOYMENT APPEAL BOARD and LABOR COMMISSIONER BYRON K. ORTON, Appellants. ________________________________________________________________________

On review from the Iowa Court of Appeals.

Appeal from the Iowa District Court for Polk County, Glenn E. Pille, Judge.

The employment appeal board and labor commissioner seek further review of an adverse ruling on the City's petition for judicial review. COURT DECISION OF COURT OF APPEALS VACATED; DISTRICT JUDGMENT REVERSED AND CASE REMANDED WITH

DIRECTIONS.

Rick Autry, Des Moines, and Gail Sheridan-Lucht, Des Moines, for appellants.

Mark Godwin, Deputy City Attorney, Des Moines, for appellee.

2 WIGGINS, Justice. The Iowa labor commissioner filed a complaint against the City of Des Moines (City) for two serious violations of the general industry Iowa occupational safety and health (IOSH) standards for permit-required confined spaces in connection with two deaths and five injuries occurring to the employees of a contractor while working on a sewer-relining project for the City. The employment appeal board found the City

committed the two serious violations and assessed a total penalty of $9000. The City sought judicial review of the appeal board's decision. The district court reversed the decision of the appeal board. The appeal board and the labor commissioner appealed the district court's decision. We transferred the case to our court of appeals. The court of appeals affirmed the district court's decision. The appeal board and labor

commissioner then sought further review, which we granted. On further review, we find (1) the commissioner did not violate Iowa Code section 17A.3 (2001) when he used federal interpretations of the United States occupational safety and health administration (OSHA) standards as a guide in interpreting those standards; (2) the City's due process rights were not violated when the commissioner and the appeal board relied on the federal interpretations of the OSHA standards; (3) the appeal board was correct in its interpretation of the general industry permit-required confined spaces standards (29 C.F.R. section 1910.146); (4) substantial evidence supports the appeal board's conclusion that the general industry permit-required confined spaces standards were applicable to this sewer project; (5) the appeal board properly determined that the City was a "host employer" under 29 C.F.R. section

3 1910.146(c)(8)(i), (iii); and (6) substantial evidence supports the appeal board's decision that the City committed two serious violations. In view of these conclusions, we vacate the decision of the court of appeals, reverse the district court's decision, and remand the case to the district court for an entry of judgment upholding the employment appeal board's decision. I. Background Facts and Proceedings. Upon receiving a notice from the Iowa department of natural resources (DNR) of the presence of raw sewage in Dean's Lake, the City contracted with Insituform Technologies USA, Inc. to reline a portion of its sewer. Before receiving this notice, the City did not have any plans to work on the sewer. In July 2002, fumes from unidentified sewer gases overcame Insituform workers inside the City-owned sewer line. Two

workers collapsed inside the sewer and drowned in pooling water. Five other workers were seriously injured in the incident. The City's plan for the sewer project called for a sanitary sewer renovation using a cured-in-place pipe liner, sewer cleaning,

reconnecting sewer services, by-pass pumping, and other related items. The plan required Insituform to insert a liner within an existing sewer pipe, expand the liner within the pipe, and cure it in place with heat. Insituform was also required to install fillets to reduce the sharp angles in the sewer and increase the liner's strength. Prior to the start of this project, the City developed procedures relating to sewer entry consistent with the IOSH general industry standards for permit-required confined spaces. Insituform had a similar confined spaces entry plan for its employees.

4 A pre-construction meeting was held between City officials and Insituform representatives before work began in the sewer. At that

meeting, the City did not discuss its permit-required confined spaces procedures with Insituform. From the start date of the actual work in the sewer to the date of the fatal accident, the City had an inspector at the work site virtually every day. After the accident, the Iowa division of labor services occupational safety and health bureau investigated the circumstances surrounding the accident. After completing its investigation, the bureau cited the City for two serious violations. The first violation was based on 29 C.F.R.

section 1910.146(c)(8)(i), as incorporated in Iowa's administrative rules, for the City's failure to inform Insituform that the sewer contained permit spaces and that permit space entry is allowed only through compliance with a permit space program. See Iowa Admin. Code r. 875--10.20(88). The City was also cited for a violation of the provisions in 29 C.F.R. section 1910.146(c)(8)(iii), as incorporated in Iowa's administrative rules, for its alleged failure to apprise Insituform of what precautions and procedures the City implemented to protect employees in or near permit spaces where Insituform personnel would be working. See id. The

citation proposed a penalty of $4500 for each violation, or $9000 in total. The City contested the citation. The commissioner filed a An administrative law

complaint with the employment appeal board.

judge presided over the hearing on the complaint. In addition to offering testimony and exhibits at the hearing, the parties stipulated that the City did not perform the actions required in 29 C.F.R. section

1910.146(c)(8)(i), (iii).

5 The administrative law judge entered a decision and proposed order affirming the violations concluding (1) the commissioner's reliance on federal interpretations of its OSHA standards in deciding what violations may have occurred did not amount to rulemaking in violation of Iowa Code section 17A.3; (2) the safety and health regulations for general industry promulgated under 29 C.F.R. part 1910 apply to the work in the sewer, rather than the safety and health regulations for construction employment promulgated under 29 C.F.R. part 1926; and (3) the City was a "host employer" under 29 C.F.R. section

1910.146(c)(8).

The judge disagreed with the determination that the

violations were serious violations, amended the violations to other than serious violations, and reduced the penalty to a total of $2500. The City appealed the decision to the employment appeal board. The appeal board issued a decision and final order agreeing with the administrative law judge's decision as to the violations, but found the violations to be serious violations and reinstated the $9000 penalty. The City petitioned the district court for judicial review. The

district court reversed the appeal board's decision and voided the penalty. The court concluded the commissioner's reliance on the federal OSHA documents constituted an abuse of discretion and unlawful rulemaking, the work performed by Insituform was not governed by the general industry safety and health regulations promulgated under 29 C.F.R. part 1910, and the City was not a "host employer" under 29 C.F.R. section 1910.146(c)(8). The appeal board and the commissioner appealed. We transferred the case to our court of appeals. Our court of appeals affirmed the

district court's ruling concluding the commissioner's reliance on the

6 federal OSHA documents constituted an abuse of discretion and unlawful rulemaking in violation of Iowa Code section 17A.3, as such reliance was undisclosed and authoritative. Our court of appeals also found substantial evidence did not support the appeal board's decision approving the citation under the general industry standards. The court of appeals did not reach any other issues raised on appeal by the parties. The appeal board and commissioner filed an application for further review, which we granted. II. Issues. To resolve this appeal we must decide whether: (1) the appeal

board erred when it held the commissioner did not violate Iowa Code section 17A.3 when he used federal interpretations of the OSHA standards as a guide in interpreting those standards; (2) the City's due process rights were violated when the appeal board relied on the federal interpretations of the OSHA standards; (3) the appeal board erred in interpreting the general industry permit-required confined spaces standards (29 C.F.R. section 1910.146); (4) substantial evidence

supports the appeal board's conclusion that the general industry permitrequired confined spaces standards applied to the work in the sewer; (5) the board properly determined that the City was a "host employer" under 29 C.F.R. section 1910.146(c)(8)(i), (iii); and (6) substantial evidence supports the appeal board's decision to find the City committed two serious violations. III. Scope of Review. When reviewing the decision of the district court on judicial review, "we must apply the standards set forth in [the Iowa Administrative Procedure Act] and determine whether our application of those standards

7 produces the same results as reached by the district court." ABC

Disposal Sys., Inc. v. Dep't of Natural Res., 681 N.W.2d 596, 601 (Iowa 2004); see also Iowa Code

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