<DOC>
[108th Congress House Hearings]
[From the U.S. Government Printing Office via GPO Access]
[DOCID: f:90137.wais]
H.R. 2731, THE OCCUPATIONAL SAFETY AND HEALTH SMALL EMPLOYER ACCESS TO
JUSTICE ACT OF 2003
=======================================================================
HEARING
before the
SUBCOMMITTEE ON WORKFORCE PROTECTIONS
of the
COMMITTEE ON EDUCATION
AND THE WORKFORCE
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED EIGHTH CONGRESS
FIRST SESSION
__________
September 17, 2003
__________
Serial No. 108-32
__________
Printed for the use of the Committee on Education and the Workforce
Available via the World Wide Web: http://www.access.gpo.gov/congress/
house
or
Committee address: http://edworkforce.house.gov
______
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COMMITTEE ON EDUCATION AND THE WORKFORCE
JOHN A. BOEHNER, Ohio, Chairman
Thomas E. Petri, Wisconsin, Vice George Miller, California
Chairman Dale E. Kildee, Michigan
Cass Ballenger, North Carolina Major R. Owens, New York
Peter Hoekstra, Michigan Donald M. Payne, New Jersey
Howard P. ``Buck'' McKeon, Robert E. Andrews, New Jersey
California Lynn C. Woolsey, California
Michael N. Castle, Delaware Ruben Hinojosa, Texas
Sam Johnson, Texas Carolyn McCarthy, New York
James C. Greenwood, Pennsylvania John F. Tierney, Massachusetts
Charlie Norwood, Georgia Ron Kind, Wisconsin
Fred Upton, Michigan Dennis J. Kucinich, Ohio
Vernon J. Ehlers, Michigan David Wu, Oregon
Jim DeMint, South Carolina Rush D. Holt, New Jersey
Johnny Isakson, Georgia Susan A. Davis, California
Judy Biggert, Illinois Betty McCollum, Minnesota
Todd Russell Platts, Pennsylvania Danny K. Davis, Illinois
Patrick J. Tiberi, Ohio Ed Case, Hawaii
Ric Keller, Florida Raul M. Grijalva, Arizona
Tom Osborne, Nebraska Denise L. Majette, Georgia
Joe Wilson, South Carolina Chris Van Hollen, Maryland
Tom Cole, Oklahoma Tim Ryan, Ohio
Jon C. Porter, Nevada Timothy H. Bishop, New York
John Kline, Minnesota
John R. Carter, Texas
Marilyn N. Musgrave, Colorado
Marsha Blackburn, Tennessee
Phil Gingrey, Georgia
Max Burns, Georgia
Paula Nowakowski, Staff Director
John Lawrence, Minority Staff Director
------
SUBCOMMITTEE ON WORKFORCE PROTECTIONS
CHARLIE NORWOOD, Georgia, Chairman
Judy Biggert, Illinois, Vice Major R. Owens, New York
Chairman Dennis J. Kucinich, Ohio
Cass Ballenger, North Carolina Lynn C. Woolsey, California
Peter Hoekstra, Michigan Denise L. Majette, Georgia
Johnny Isakson, Georgia Donald M. Payne, New Jersey
Ric Keller, Florida Timothy H. Bishop, New York
John Kline, Minnesota George Miller, California, ex
Marsha Blackburn, Tennessee officio
John A. Boehner, Ohio, ex officio
------
C O N T E N T S
----------
Page
Hearing held on September 17, 2003............................... 1
Statement of Members:
Norwood, Hon. Charlie, Chairman, Subcommittee on Workforce
Protections, Committee on Education and the Workforce...... 1
Prepared statement of.................................... 3
Owens, Hon. Major R., Ranking Member, Subcommittee on
Workforce Protections, Committee on Education and the
Workforce.................................................. 4
Statement of Witnesses:
Drummond, Anita, Senior Director, Legislative and Regulatory
Affairs, Associated Builders and Contractors, Arlington,
Virginia................................................... 18
Prepared statement of.................................... 20
Knott, James, Riverdale Mills, Northbridge, Massachusetts, on
behalf of the National Association of Manufacturers........ 10
Prepared statement of.................................... 12
Nelson, Scott, Public Citizen Litigation Group, Washington,
DC......................................................... 15
Prepared statement of.................................... 16
Robson, Lynn, Robson's Greenhouse, Belleville, Michigan, on
behalf of the American Farm Bureau......................... 6
Prepared statement of.................................... 8
Additional materials supplied:
Johnson, Randel K., Vice President, Labor, Immigration &
Employee Benefits, U.S. Chamber of Commerce, Letter
submitted for the record................................... 40
Josten, R. Bruce, Executive Vice President, Government
Affairs, U.S. Chamber of Commerce, Letter submitted for the
record..................................................... 37
Kendrick, James ``Skipper'', CSP, President, American Society
of Safety Engineers, Letter submitted for the record....... 44
McCracken, Todd O., President, National Small Business
Association, Letter submitted for the record............... 38
OSHA Fairness Coalition, Letter submitted for the record..... 38
Samuel, William, Legislative Director, American Federation of
Labor and Congress of Industrial Organizations (AFL-CIO),
Statement submitted for the record......................... 46
Shimabukuro, Jon O., Legislative Attorney, American Law
Division, Congressional Research Service, Memorandum on
``Covered Parties Under the Equal Access to Justice Act,''
Submitted for the record................................... 34
Memorandum on ``Size Standards and Covered Employers
Under Selected Statutes,'' Submitted for the record.... 33
H.R. 2731, THE OCCUPATIONAL SAFETY AND HEALTH SMALL EMPLOYER ACCESS TO
JUSTICE ACT OF 2003
----------
Wednesday, September 17, 2003
U.S. House of Representatives
Subcommittee on Workforce Protections
Committee on Education and the Workforce
Washington, DC
----------
The Subcommittee met, pursuant to call, at 2 p.m., in room
2175, Rayburn House Office Building, Hon. Charlie Norwood
[Chairman of the Subcommittee] presiding.
Present: Representatives Norwood, Biggert, Kline, Owens,
and Majette.
Staff Present: Stephen Settle, Professional Staff Member;
Loren Sweatt, Professional Staff Member; Chris Jacobs, Staff
Assistant; Kevin Smith, Senior Communications Counselor; Kevin
Frank, Professional Staff Member; and Deborah L. Samantar,
Committee Clerk/Intern Coordinator.
Peter Rutledge, Minority Senior Legislative Associate/
Labor; Maria Cuprill, Minority Legislative Associate/Labor; and
Margo Hennigan, Minority Legislative Assistant/Labor.
Chairman Norwood. A quorum being present, the Subcommittee
on Workforce Protections of the Committee on Education and the
Workforce will now come to order. We are holding this hearing
today to hear testimony on H.R. 2731, ``The Occupational Safety
and Health Small Employer Access to Justice Act of 2003.''
Under the Committee rule 12(b) opening statements are
limited to the Chairman and the Ranking Minority Member of the
Subcommittee. Therefore, if other Members have statements they
will be included in the hearing record.
With that, I ask a unanimous consent for the hearing record
to remain open 14 days to allow Member's statements and other
extraneous material referenced during the hearing to be
submitted in the official hearing record. Without objection, so
ordered.
OPENING STATEMENT OF HON. CHARLIE NORWOOD, CHAIRMAN,
SUBCOMMITTEE ON WORKFORCE PROTECTIONS, COMMITTEE ON EDUCATION
AND THE WORKFORCE
Chairman Norwood. Good afternoon and welcome, and my
apologies for being a minute late. We are assembled today to
conduct a legislative hearing on H.R. 2731, the Occupational
Safety and Health Small Employer Access to Justice Act of 2003.
H.R. 2731 proposes that very small employers be able to recover
attorney's fees and costs in appropriate circumstances when
they prevail in litigation instituted by OSHA.
This is in fact the second hearing on this very important
matter. This past June the Subcommittee held a hearing to take
testimony on the single provision contained in H.R. 1583. As
background I decided to introduce H.R. 2731 as a freestanding
bill because I thought we needed to learn more about the impact
of awarding attorney's fees and costs to small business owners
in workplace safety and health litigation. I did not want the
importance of this issue to be lost among other issues or
receive less focus than is appropriate.
Now, this need for additional information grew in large
part from some very disturbing testimony we received from small
employers during the June 2003 hearing. Specifically, we heard
two small business owners and an expert in the field of
workplace safety and health law passionately argue that they
believed OSHA was using the threat of litigation as a way to
gain financial leverage over them and other small employers
like them. What we were told painted a picture of small
employers receiving OSHA citations, and with the firm belief
that they had not violated any standard or duty to their
employees, they desperately made efforts to defend themselves
and save their representations. In one case, we were told that
the employer promptly contacted a lawyer following the receipt
of his citation and asked about the cost of obtaining help in
defending himself against OSHA lawyers. This employer learned
something that should not surprise any of us, that competent
lawyers don't come cheaply, and that even in the simplest of
cases that these fees could easily climb to unaffordable levels
for many small business operations in America.
In contrast, we learned that the word is on the street that
more often than not OSHA is often willing to settle the cases
far under the proposed penalty levels. They are willing to do
this to avoid the burden of litigation. Economically, we were
told this translates to a very simple equation. Often all an
employer has to do is admit that they have violated the law and
pay a small fine regardless of whether they in their hearts and
minds believe that they are innocent. If they are willing to
abandon their principles they can get off with a fine
substantially less than the cost of litigation.
This is certainly not what I think Congress intended when
it crafted the Occupational Safety and Health Act. This is a
Hobson's choice that insults our concept of fairness in
government instituted litigation. There is a gain for lawyers,
not small business owners who are trying to keep their heads
above water in a competitive marketplace so that they can pay
their employees salaries. Think about it. Is this the type of
intimidating tactics we want associated with OSHA at a time
when Congress has directed them to partner with small
businesses and to help them reduce their rate of injury and
illness through compliance assisted efforts?
As I said, however, I am speaking today on the basis of
what we have heard so far. But this is why I think it is so
important that we learn more, so I have set three objectives
for this hearing.
First, I want to develop a better understanding of why
small employers believe so passionately that OSHA is using
litigation for financial leverage to force them to admit fault
even when there is none present. The burden of proof is on the
Secretary to prove a violation of the Act and I understand that
no one in OSHA wants to be proven wrong and unjustified in
their actions. But sweeping mistakes under the rug through the
use of financial leveraging is wrong and should not be
tolerated.
Second, in terms of litigation directed at small employers,
we need to know whether the threat of having to pay attorneys
fees would be enough to force OSHA to pay more fairly and bring
this into a better balance. Understand the last thing in the
world we want is to create an incentive for OSHA to avoid
instituting meritorious cases. But will the possibility of
having to pay attorney's fees and costs force OSHA to be just a
bit more selective in their pursuit of nonmeritorious or
marginal cases?
Last, if we determine that the award of attorney's fees to
us provides some incentive for a more fair administration of
justice, where should we draw the line on whom should we be
able to recover? Is 1.5 million in net worth an effective
threshold? How does this figure work in various industry
sectors? And what would be the most cost effective threshold to
bring this into balance and achieve a desired fairness?
I hope we can answer some of these questions from the side
of the victims of this practice today because the next step is
to get answers from OSHA lawyers about these practices.
In closing, I leave everyone with this thought. It seems to
me that if OSHA is not pursuing frivolous litigation in cases
on the margin on merit, if they are not using these financial
leveraging techniques then this legislation will have no impact
on OSHA at all. It shouldn't cost OSHA one red cent if all
these cases are legally sound.
[The prepared statement of Chairman Norwood follows:]
Statement of Hon. Charlie Norwood, Chairman, Subcommittee on Workforce
Protections, Committee on Education and the Workforce
Good afternoon and welcome.
We are assembled today to conduct a legislative hearing on H.R.
2731, the ``Occupational Safety and Health Small Employer Access to
Justice Act of 2003.
H.R. 2731 proposes that very small employers be able to recover
attorney's fees and costs, in appropriate circumstances, when they
prevail in litigation instituted by OSHA.
This is, in fact, a second hearing on this very important measure.
This past June, this Subcommittee met to take testimony on H.R. 1583,
the ``Occupational Safety and Health Fairness Act of 2003.'' The
current content of HR 2731 was then a single provision contained in HR
1583.
As background, I decided to introduce H.R. 2731 as a free-standing
bill because I thought we needed to learn more about the impact of
awarding attorney's fees and costs to small business owners in
workplace safety and health litigation. I did not want the importance
of this issue to be lost among other issues, or receive less focus than
is appropriate.
Now, this need for additional information grew, in large part, from
some very disturbing testimony we received from small employers during
the June 2003 hearing. Specifically, we heard two small business owners
and an expert in the field of workplace safety and health law,
passionately argue that they believed OSHA was using the threat of
litigation as a way to gain financial leverage over them and other
small employers like them.
What we were told painted a picture of small employers receiving
OSHA citations and, with a firm belief that they had not violated any
standard or duty to their employees, they desperately made efforts to
defend themselves and save their reputations.
In one case, we were told that the employer promptly contacted a
lawyer following the receipt of his citation, and asked about the cost
of obtaining help in defending himself against OSHA's lawyers. This
employer learned something that should not surprise any of us--that
competent lawyers don't come cheaply, and that even in the simplest of
cases, that these fees could easily climb to unaffordable levels for
many small business operations.
In contrast, we learned that the word is on the street that more
often than not, OSHA is often willing to settle the cases far under the
proposed penalty levels. They are willing to do this to avoid the
burden of litigation.
Economically, we were told, this translates to a very simple
equation. Often, all an employer has to do is admit that they have
violated the law, and pay a small fine, regardless of whether they, in
their hearts and minds, believe they are innocent. If they are willing
to abandon their principles, they can get off with a fine substantially
less than the cost of litigation.
This is certainly not what I think Congress intended when it
crafted the Occupational Safety and Health Act. This is a ``Hobson's
choice'' that insults our concept of fairness in government instituted
litigation--it is a game for lawyers, not small business owners who are
trying to keep their heads above water in a competitive marketplace so
they can pay their employee's salaries.
Think about it--is this the type of intimidating tactics we want
associated with OSHA at a time when Congress has directed them to
partner with small business and help them reduce their rates of injury
and illness through compliance assistance efforts?
As I said, however, I am speaking today on the basis of what we
have heard so far. But, this is why I think it is so important that we
learn more.
So, I have set three objectives for this hearing: First, I want to
develop a better understanding of why small employers believe so
passionately that OSHA is using litigation for financial leverage to
force them to admit fault, even when there is none present. The burden
of proof is on the Secretary to prove a violation of the Act--and, I
understand that no one at OSHA wants to be proven wrong and unjustified
in their actions. But, sweeping mistakes under the rug through the use
of financial leveraging is wrong and cannot be tolerated.
Second, in terms of litigation directed at smaller employers, we
need to know whether the threat of having to pay attorney's fees would
be enough to force OSHA to play more fairly and bring this into better
balance. Understand, the last thing in the world we want is to create
an incentive for OSHA to avoid instituting meritorious cases. But, will
the possibility of having to pay attorney's fees and costs force OSHA
to be just a bit more selective in their pursuit of non-meritorious and
marginal cases?
Lastly, if we determine that the award of attorney's fees does
provide some incentive for a more fair administration of justice, where
should we draw the line on whom should be able to recover. Is $1.5
million in net worth an effective threshold? How does this figure work
in various industry sectors? And, what would be the most cost effective
threshold to bring this into balance and achieve a desired fairness.
I hope we can answer some of these questions from the side of the
victims of this practice today, because the next step is to get answers
from OSHA's lawyers about these practices.
In closing, I leave everyone with this thought--it seems to me that
if OSHA is not pursuing frivolous litigation and cases on the margin of
merit--if they are not using these financial leveraging techniques--
then this legislation will have no impact at all on OSHA. It shouldn't
cost OSHA one red cent if all these cases are legally sound.
______
Chairman Norwood. I would now turn to my friend from New
York, Mr. Owens, for any comments he may care to make in his
opening statement. Mr. Owens.
OPENING STATEMENT OF HON. MAJOR R. OWENS, RANKING MEMBER,
SUBCOMMITTEE ON WORKFORCE PROTECTIONS, COMMITTEE ON EDUCATION
AND THE WORKFORCE
Mr. Owens. Thank you, Mr. Chairman. I too want to welcome
the witnesses for the afternoon and tell them that I hope that
our voting patterns don't inconvenience you too much this
afternoon. Second, I want to commend my Republican colleagues
for finally getting around to holding a hearing on this issue.
Normally hearings are held first before legislation is
considered. That has not been the case with this issue.
In the 105th Congress, this Subcommittee held hearings on
and considered legislation to require the National Labor
Relations Board to pay the attorney's fees and costs of small
employers and unions in cases in which the Board did not
prevail. That ill conceived legislation barely passed the House
202 to 200 and would have been defeated was it not for the fact
that a number of Democratic Members had accompanied President
Clinton on a trip to Africa. The bill died in the Senate
without even a hearing.
In the subsequent Congress, H.R. 1987 was introduced but
differed from its predecessor in part because it now required
OSHA as well as the Labor Board to pay attorney's fees and
costs to certain employers in any case in which the agency did
not prevail. H.R. 1987 was reported by the Subcommittee on a
party line vote but it was never taken to the floor. No
hearings were ever held on H.R. 1987. In fact the Republicans
sought to impose a new standard on OSHA that would have made it
significantly more difficult for the agency to protect workers
without ever creating any type of record to justify that
change.
I therefore want to commend Chairman Norwood for finally
getting around to holding a hearing on this issue, though I
note that the first hearing on this should have been held 4
years ago. We are 4 years and 15 minutes late today, but at
least democracy is now moving forward.
The issue before us is whether OSHA, apart from all other
Federal agencies, should be required to pay attorney's fees
even in cases where the agencies is substantially justified in
bringing the charge. And as in all cases they would not bring a
charge if it was not justified. Generally Federal agencies may
be required to pay opposing parties' attorney's fees if the
agency's position is not substantially justified. Under H.R.
2731, OSHA would be required to pay certain employers'
attorney's fees in any case or proceeding in which it did not
prevail regardless of the reason why the agency did not prevail
and even if OSHA is substantially justified in bringing the
complaint.
As I have said, this is the not the first time we have had
to consider this issue. In my view the likely consequence of
H.R. 2731 is that OSHA would be less likely to issue complaints
against those employers. More safety and health violations will
go uncorrected and more workers may be injured or killed as a
consequence. There is no private right of action under the OSHA
Act. If OSHA prevails to enforce the law, workers have no other
means of doing so. In effect H.R. 2731 appears to place a
higher priority on compensating employers for the legal fees
than on protecting the safety and health of workers.
I am interested in what today's witnesses will have to say
on this matter, but I have very serious reservations regarding
this legislation.
Thank you very much, Mr. Chairman. I yield back the time
and we must go to vote.
Chairman Norwood. I thank the witnesses for your patience.
If you will excuse us, we will recess for three votes. I
apologize to you. It is just the life we lead up here and we
will be back just as fast as we can. I am sure we will be the
first ones back. We will stand in recess.
[recess.]
Chairman Norwood. We have a very distinguished panel of
witnesses before us today and a very patient panel of
witnesses, and we thank you all very much and apologize to you
for the disruptions. If I may, I would like to introduce you to
the Subcommittee.
Our first witness is Mr. Lynn Robson, owner of Robson's
Greenhouse, which is located on a 10-acre farm in Belleville,
Michigan. The greenhouse was founded in 1929 by his father
Robert and the third generation of Robsons is presently
learning the family trade. The Robson family does most of the
work themselves, building expansions to their greenhouses over
the off season and relying on several seasonal workers during
the early spring. Mr. Robson is testifying on behalf of the
American Farm Bureau.
We welcome our second witness, Mr. James Knott, Sr.,
President and Chairman of the Board, Riverdale Mills
Corporation, which is located in Northbridge, Massachusetts.
Mr. Knott's company produces wire mesh for lobster traps and
prisons and Mr. Knott has been in the lobster industry for over
6 decades. Mr. Knott is testifying on behalf of the National
Association of Manufacturers (NAM). We welcome you, sir.
Mr. Scott Nelson is an attorney and Acting Director with
Public Citizen Litigation Group in Washington, D.C. He has also
served in private practice with the firm of Miller, Cassidy,
Larocca and Lewin. Mr. Nelson holds undergraduate degrees and
law degrees from Harvard University.
Our final witness is Ms. Anita Drummond, Director of Legal
and Regulatory Affairs for the Associated Builders and
Contractors in Arlington, Virginia. She has previously worked
in private practice and as an advocate and assistant chief
counsel for the Small Business Administration.
Before the witnesses begin their testimony I would like to
remind all the Members that we will be asking questions after
the entire panel has testified. In addition, Committee rule 2
imposes a 5-minute limit on all questions.
Before you ladies and gentlemen is a timer. If you will pay
some attention to that, red, caution and green. I pay some
attention to it too, but I know you have gone to great trouble
and expense and distance to be here so I try to give you as
much leeway as I can once it turns red, but be aware there is a
limit. With that, Mr. Robson we would like to start with you,
sir, and we would love to hear your testimony.
STATEMENT OF LYNN ROBSON, ROBSON'S GREENHOUSE, BELLEVILLE,
MICHIGAN, ON BEHALF OF THE AMERICAN FARM BUREAU
Mr. Robson. Good afternoon, Chairman Norwood. My name is
Lynn Robson. On behalf of the Michigan Farm Bureau I would like
to thank you for the opportunity to testify in support of H.R.
2731. I own and manage my own 10-acre nursery in Belleville,
Michigan. My father founded the business in 1929. My sons who
are planning to take over 1 day are now learning the family
trade. We grow bedding plants and potted plants for markets and
direct sale. We are known for our petunias.
For much of the year the family does all the work
themselves. During the early spring we employ no more than six
or seven seasonal workers to help water and market the plants.
Last August my family decided to build an addition to the
greenhouse. As with most family farms, we are building in the
off season. That is when the trouble started. Tim, a good
friend of mine who had come by to visit, was lending me a hand
in building the greenhouse. An inspector from Michigan
Department of Consumer Services--that is our OSHA--drove up.
The inspector informed us that we had violated a construction
lift standard. You see, while we were visiting Tim had climbed
on a pallet secured to a tractor and was helping me bolt
together the frame of the greenhouse.
By the way, in agriculture it is customary when a visitor
drops by the farm to lend a helping hand. Neither Tim nor I
were doing anything dangerous. It is common practice among
family farmers. It is the way that we have always done things.
That is why I was surprised with the inspector's reaction. I
tried to explain that I am not a contractor, I am just a small
farmer. I also explained that he was not and has not been and
will not be my employee. He was just visiting and doing what
all of us do in the industry, which is help each other.
A few weeks later I received a ticket in the mail violating
something called general duty clause, which I still haven't a
clue of what that means. I thought I was being cited for a man
lift violation. I didn't even have any employees at the time.
In August it is in the off season.
A few points. First, I thought I was supposed to follow the
agriculture standards. That is what I have always been
following. I would like to think that I am doing a good job. I
have never been cited before or had to pay any Workman's Comp
claim. Most of my employees have been with me more than 10 or
15 years so I figure I must be doing something right.
Second, I am still not clear on the legal charges against
me or what I am supposed to do. I run a very small, safe
operation. Everybody knows that. I guess the inspectors
eventually figured that out because they cut my fine in half.
They also told me that they want to meet with me and talk about
a settlement. But they keep rescheduling the meeting. It has
been more than a year now.
Third, I have talked about getting a lawyer. It would cost
less to pay the fine and be done with it, but I don't think I
have done anything wrong. It cuts against the grain to pay a
fine when I feel I am innocent. I have also asked whether I
should recover any legal fees. Why shouldn't OSHA have to pay
it if I am proven innocent? Everybody tells me that it is a
possibility, but it might just complicate matters.
Last and more importantly, I care when OSHA claims that I
have created a hazard. In a small community people care about
what friends and family and employees and the general community
think about your business. I would never put anybody in harm's
way, especially my family. They do most of the work. I believe
in safety and health. I believe in doing what is right, but I
also believe OSHA should do what is right. Any time a small
farmer like me receives a citation there are very serious
consequences.
I wish I could describe how disruptive this whole process
has been. I am here today because there are very few
consequences. OSHA inspectors make mistakes. It is far too easy
for the government to keep the pressure up if I admit I am
wrong regardless of whether I believe it in my heart. So I am
going to fight as long as I can. It is the principle of the
matter. I don't think the government should be allowed to
change the rules in the middle of the game. If they want to
impose construction standards on farmers, then fine. But don't
come at me through the back door. Come at me straight.
More importantly, many small farmers are facing similar
situations today. It is happening to me and it is happening to
them. The problem is most of them are not going to fight when
they should. It is simply easier to pay the ticket. I am here
today because I don't think that is right. I don't think it is
right to deny small farmers their day in court just because it
is easier. That is why small farmers across America will
support H.R. 2731. It will help level the playing field against
the cause of OSHA to think about the consequences of their
actions.
I would also urge the Subcommittee to raise the net worth
threshold. In my industry farmers are asset rich but cash poor.
I am a very small farmer and barely qualify. I have spoken with
other small farmers and they don't feel they might qualify. Mr.
Chairman, if there is any way to raise the threshold I think
many farmers would benefit.
Thank you, Mr. Chairman, for your leadership in introducing
this bill. I would encourage the Subcommittee to follow your
leadership and pass it swiftly. Thank you for your time.
[The prepared statement of Mr. Robson follows:]
Statement of Lynn Robson, Belleville Greenhouse, Belleville, Michigan,
on behalf of the American Farm Bureau
My name is Lynn Robson. On behalf of the American Farm Bureau
Federation, I would like to thank you for this opportunity to testify
in support of H.R. 2731, the OSHA Small Employer Access to Justice Act.
I own and manage a small, 10-acre nursery in Belleville, Michigan.
My father founded the business in 1929. My sons, Nicholas and Kevin,
are planning to take over one day and are now learning the family
trade. We grow bedding and potted plants for local markets and direct
sales. We are known for--and are especially proud of--our petunias.
For much of the year, my family does all the work themselves.
During early spring, no more than six or seven seasonal workers are
employed to help water and market the plants.
Last August, my family decided to build an addition to a
greenhouse. As with most family farms, we were building the addition in
the off-season.
That's when the trouble started. Tim, a good friend of mine, who
had come by to visit, was lending me a hand when an inspector from
Michigan's Department of Consumer and Industry Services--that's our
OSHA--drove up.
The inspector informed us that I had violated a construction lift
standard. You see, while he was visiting, Tim had climbed onto a pallet
secured to a tractor, and was helping me bolt together the frame of the
greenhouse.
As an aside, in agriculture, it is customary when a visitor drops
by for them to lend a hand. Neither Tim nor I thought we were doing
anything dangerous. It's a common practice that most family farmers
undertake. It's the way we have always done things.
That is why I was so surprised when the inspector informed me of a
violation. I tried to explain that I was not a contractor,
subcontractor or any other ``-or'' related to the construction
industry. I'm just a small farmer. I also explained that Tim was not,
has not been, and will not be, my employee. He was just visiting and
doing what all of us in this industry do--help each other.
A few weeks later I received a ticket in the mail for violating
something called the ``general duty'' clause. And it's a serious
violation of the general duty clause. I'm still not sure what that
means. I thought I was being cited for violating a construction
standard. I didn't even have employees at the time. August is the off-
season.
A few points: First, I thought that I was supposed to follow the
agriculture standards. That is what I've been following, and I would
like to think I'm doing a good job. I routinely have safety inspections
by my family, insurance companies, and consultants. I have never been
cited before, had an injury, or had to pay a worker's compensation
claim. The average length of employment of my employees is more than 15
years, so I figure I must be doing something right.
Secondly, I am still unclear about the legal charges against me,
and what I am or was supposed to do. I run a very small, very safe
operation. Everyone knows that. I guess the inspectors eventually
figured that out, because they have since cut the fine in half. They
have also told me they want to meet to talk about settlement, but they
keep rescheduling the meeting. It's been more than a year now.
Thirdly, I have talked about getting a lawyer. I learned it would
cost far less to just pay the fine and be done with it. But I don't
think I've done anything wrong and it cuts against the grain to pay a
fine when I feel I am innocent. I have also asked whether I should try
to recover my legal fees. Why shouldn't OSHA have to pay if I'm proven
innocent? The answer: It's possible but I may just complicate matters.
Lastly, and more importantly, I care very, very much when OSHA
claims that I have created a hazard. It's a charge that most of
America's small farmers would want to fight. In a small community,
people care about what friends, family, employees and the general
community think about a business owner. I would never subject anyone to
hazards, especially my family. They do most of the work we are talking
about. I believe in safety and health. I believe in doing what is right
but I also believe in OSHA doing what is right.
Any time a small farmer like me, or any other small employer
receives a citation, there are very serious consequences. I wish I
could describe just how disruptive this whole process has been. I am
here today because I now believe there are few consequences for OSHA
inspectors when they make mistakes. It is far too easy for the
government to keep up the pressure until I agree to admit doing
something wrong, regardless of whether I believe in my heart I did.
So I am going to fight as long as I can. It's the principle of the
matter. I don't think the government should be allowed to change the
rules in the middle of the game. If they want to impose construction
standards on farmers, then fine, but don't come at me through the back
door. Come at me straight.
More importantly, many small farmers are facing similar situations
today. I am like every small farmer in America. If this is happening to
me, it's happening to them. The problem is that most of them are not
going to fight when they should. It is simply more expedient to pay the
ticket. Just an hour consultation with a lawyer can cost more.
I am here today because I don't think that's right. I don't think
it's right to deny small farmers their day in court, just because of
expedience. That is why small farmers across America will support H.R.
2731. It will help level the playing a field a bit and cause OSHA
personnel to think about the consequences of their actions.
Thank you, Mr. Chairman, for your leadership in introducing this
bill. I would encourage the committee to follow your leadership and
pass it swiftly.
Additionally, I would urge the committee to raise the net-worth
threshold. In my industry, we have a saying: farmers are asset rich but
cash poor. I'm a very small farmer, and have spoken with others. Mr.
Chairman, I think many family farmers would benefit from such an
increase.
Thank you all for your time.
______
Chairman Norwood. Thank you, Mr. Robson. I can't wait to
get to questions with you. I was in the nursery business too. I
have been in that bucket a lot of times on that tractor. I
understand.
Mr. Knott, it is now your turn to testify, sir.
STATEMENT OF JAMES KNOTT, RIVERDALE MILLS, NORTHBRIDGE,
MASSACHUSETTS, ON BEHALF OF THE NATIONAL ASSOCIATION OF
MANUFACTURERS
Mr. Knott. Good afternoon, Mr. Chairman and Members. I am
very pleased to appear before this Subcommittee on behalf of
the National Association of Manufacturers, commonly called NAM.
The NAM is the nation's largest and oldest multi-industry trade
association. NAM represents 14,000 members, including 10,000
small and mid-sized companies and 350 member associations
serving manufacturers and employees in every industrial sector
of all 50 States.
My name is James M. Knott, Sr., and I have been in business
since 1942, when as a 12-year-old I put my first lobster traps
into the Atlantic Ocean. Along the way I came up with a plastic
coated wire mesh lobster trap far superior to the traditional
wooden traps, and this same mesh also rings many American
prisons and protected Kuwait's border with Iraq, and the U.S.
Government took it down recently because it is no longer
needed. But there will be some other business I am sure.
Through all my hard work and success I remained loyal to
the business routes in the lobster business as I still fish for
lobsters as a Commonwealth of Massachusetts licensed commercial
fishermen. In addition to serving as the Director of NAM, I
have been appointed as a volunteer Small Business
Administration Regulatory Fairness Board member with the SBA
Office of the Ombudsman. I am dedicated to making sure that
America's small businessmen and women are treated fairly in the
regulatory enforcement process.
My first encounter with OSHA occurred when a young OSHA
inspector tried to conduct an inspection but only succeeded in
demonstrating his ignorance of OSHA regulations. His final
report contained about 15 noncompliances, all of which were
eventually proved untrue. This didn't occur until I filed an
appeal, went to the OSHA offices in Boston, met with an OSHA
lawyer and presented my arguments. The inspector simply didn't
know or understand what he was supposed to do. Eventually his
ignorance wasted a whole lot of time and money for me and for
all of us who pay his salary.
An interesting sidelight to this first encounter was my
plant engineer's story about the inspector. While the
inspection was going on he said I know that guy. He used to
work at a bakery where I was a plant engineer before they went
out of business. He was on the production line bagging buns.
Our company has received numerous safety awards, including
the statewide group winner of the Massachusetts Safety Council,
and from the National Safety Council's Central Mass chapter. We
have received those three times in three different years.
I have also participated in a voluntary inspection program
with the Commonwealth of Massachusetts Department of Labor that
would eliminate the need for us to have an OSHA inspection for
1 year. This evidence was presented to an OSHA inspector as he
arrived at our facility during that 1 year timeframe. The
leader of the group said they don't know what they are doing.
We are going to do a wall to wall inspection today. I knew I
could tell the inspectors to leave the premises and get a
warrant if they wanted to, but I decided to cooperate and let
them do a wall to wall inspection. During the inspection, much
of which I attended, they made a number of outlandish comments
and clearly demonstrated their lack of knowledge. The most
interesting of all involved a hole in Riverdale Street, a
street that I own that is on top of the Riverdale Dam, a dam
that created the Riverdale Mill Pond in 1753 from the waters of
the Blackstone River, waters I use to generate electricity with
a 1901 hydro power turbine I restored in 1984. The hole was
created by a flood that had washed some fill out from under the
street. The hole was less than 6 feet deep, and we filled it
with 13 cubic yards of self leveling concrete later in the day.
That is about the size of a full sized station wagon. When the
OSHA inspector arrived on the scene he saw that one of my plant
maintenance men with whom I have worked with more than 40 years
had lowered a ladder into the hole, had climbed down it a rung
above the bottom to measure the hole so he would be able to
determine how much self leveling concrete to order. One wall of
the hole was a poured concrete sluice way that conveyed water
under the street and into the hydro power pit. The other wall
was a hole and the other wall was the dirt at its natural angle
of repose. As my maintenance man was climbing back the OSHA
inspector said get out of that trench, you are violating our
trench regulation. My mature and experienced maintenance man
attempted to explain to the inspector what he was doing, that
the hole was not a trench. OSHA inspector told my man he didn't
want to hear any excuses.
A few weeks later I received an OSHA document that said
among many other things I had endangered a man's life by
violating the OSHA trenching regulation. I have read the OSHA
manuals from cover to cover on several occasions, and I found
that the inspector was as ignorant as I had suspected. He
didn't know the OSHA definition of what a trench is. An OSHA
regulated trench is five or more feet deep. The hole was less
than five feet deep and trenches certainly don't have one
poured concrete wall and the other dirt at its natural angle of
repose.
The total fine as a result of the inspection was $4,500. I
called OSHA and they said appealing this thing is going to cost
you a lot of time and money. I can cut the fine in half if you
would like to settle the matter. I said the fine isn't the
problem. The problem is that OSHA has created a public document
that says I endangered a man's life. The inspector does not
know the regulations. The next communication was from a U.S.
attorney in the Boston office. He went on to say I know OSHA
offered to cut the fine in half. I can cut it in half again if
you want to settle the matter. I said I want to get that
inspector up on a witness stand and have my lawyer demonstrate
to the judge that he doesn't know the OSHA regulations. The
attorney said I will see you in court.
I called my lawyer, who knows much more about the protocol
of the legal system than I do and I told him to begin a
discovery process. A few days after the motion was filed, my
attorney received a notice from the court and it said the joint
motion to dismiss has been granted. When he called me with the
news, I was furious and told him I wanted to get that inspector
on the witness stand to expose him. My lawyer, with whom I have
worked more than 40 years, said so would I, but there is
nothing we can do because the judge has dismissed the case.
More seriously was a time when an OSHA inspector was
accompanied by two armed Federal marshals. I had previously
refused this same inspector entry to my factory without a
warrant because I had just passed an OSHA inspection mere
months before. The inspector was simply there to harass me
because I hadn't bent to OSHA's will. He put together a series
of nonsensical complaints for which the fine was $8,400. I went
through my now standard operating procedure, but this time
there was no cut the fine in half shakedown offers if I just
wouldn't contest OSHA's preposterous ruling, I turned the case
over to my attorney and waited for my day in court. Five days
later, before the day in court, my lawyer called me on his
conference room phone and introduced me to the attorney who was
going to prosecute the case. The attorney said, Mr. Knott, I
have read your appeal and I am willing to eliminate three of
the seven complaints but we have got you on four and I would
like to know if you are willing to pay the fine so we don't
have to go to court. I said I want to go to court. But let me
tell you what I am going to tell the judge about each of the
ridiculous and fallacious complaints. He said, OK, let's start
with the working platform that doesn't have a guardrail. I said
the platform is not a working platform. It is a storage rack.
And there is no way it could be used with a guardrail. If I had
a guardrail someone would have to go up on the rack, remove the
guardrail every time something was put on a rack and that would
be a greater hazard than there is now. The Assistant U.S.
Attorney said we will eliminate that. Let's go on to the next.
The remaining three were as ridiculous and fallacious as the
guardrail. I presented my arguments.
Chairman Norwood. Mr. Knott, you are considerably over the
5 minutes. I am thoroughly enjoying your testimony. Would you
like it wrap up?
Mr. Knott. Let's see. My problem with H.R. 2731 is the same
as the one beside me, that the numbers are too small. I think
the SBA definition of a small business should be 500 employees
and I think the net worth is too small. We are an asset rich
country, which is one of the reasons why I am able to compete
with China because we have high speed equipment that permits us
to compete.
Chairman Norwood. Sir, do we all do have your written
testimony?
Mr. Knott. Yes, thank you.
Chairman Norwood. And everyone here will look at it.
[The prepared statement of Mr. Knott follows:]
Statement of James Knott, Riverdale Mills, Northbridge, Massachusetts,
on behalf of the National Association of Manufacturers
Good afternoon, Mr. Chairman and members.
I am pleased to appear before this subcommittee on behalf of the
National Association of Manufacturers (NAM). The NAM is the nation's
largest and oldest multi-industry trade association. The NAM represents
14,000 members, including 10,000 small and mid-sized companies and 350
member associations serving manufacturers and employees in every
industrial sector and all fifty states.
My name is James M. Knott, Sr. I have been in business since 1942
when, as a 12-year old, I put my first lobster traps into the Atlantic
Ocean. Along the way I came up with a plastic-coated, wire mesh lobster
trap far superior to traditional wooden traps. This same mesh also
rings many American prisons and protects Kuwait's border with Iraq.
Through all my hard work and success, I have remained loyal to my
business roots in the lobster business as I still fish for lobsters as
a Commonwealth of Massachusetts Licensed Commercial Lobsterman.
Unfortunately all my business experiences haven't been as pleasant.
My first encounter with OSHA occurred when a young OSHA inspector
imperiously tried to conduct an inspection but only succeeded in
demonstrating his ignorance of OSHA regulations. His final report
contained about fifteen non-compliances--all of which were eventually
proved untrue. This didn't occur until I filed an appeal, went to the
OSHA offices in Boston, met with an OSHA lawyer and presented my
arguments.
The inspector simply didn't know or understand what he was supposed
to do. Eventually, his ignorance wasted a whole lot of time and money.
An interesting sidelight to this first encounter was my plant
engineer's story about the inspector. While the inspection was going
on, he said, ``I know that guy. He used to work at a bakery where I was
plant engineer before they went out of business. He was on the
production line bagging buns.''
Our company has received numerous safety awards including the
statewide group winner of the Massachusetts Safety Council and from the
National Safety Council's Central Mass. Chapter. I have also
participated in a voluntary inspection program with the Commonwealth of
Massachusetts' Department of Labor and that would eliminate the need
for us to have an OSHA inspection for one year.
This evidence was presented to an OSHA inspector as he arrived at
our facility during that one year time frame. The leader of the group
said, ``They don't know what they're doing; we're going to do a wall-
to-wall inspection today.''
I knew I could tell the inspectors to leave the premises, and get a
warrant, if they wanted, but I decided to cooperate and let them do a
wall-to-wall inspection.
During the inspection, much of which I attended, they made a number
of outlandish comments and clearly demonstrated their lack of
knowledge.
The most interesting of all involved a hole in Riverdale Street, a
street that I own, that is on top of the Riverdale dam, a dam that
created the Riverdale millpond in the 1700's, from the waters of the
Blackstone River; waters I use to generate electricity with a 1901
hydropower turbine I restored in 1984.
The hole was created by a flood that had washed some fill out from
under the street; the hole was less than six feet deep and we filled it
with 13 cubic yards of self-leveling concrete, later in the day
(thirteen yards is about the volume of a full-sized station wagon).
When the OSHA inspector arrived on the scene he saw that one of my
plant maintenance men, with whom I have worked for more than forty
years, had lowered a ladder into the hole and had climbed down to a
rung above the bottom, to measure the hole, so he would know how much
self-leveling concrete to order.
One wall of the hole was a poured concrete sluiceway that conveyed
water under the street and into a hydropower-turbine pit; the other
wall of the hole was dirt at its natural angle of repose.
As my maintenance man was climbing back up the ladder, the OSHA
inspector said, ``get out of that trench, you are violating our
trenching regulation!''
My mature and experienced maintenance man attempted to explain to
the inspector what he was doing, and that the hole was not a trench.
The OSHA inspector told my man that he didn't want to hear any
excuses, the hole was a trench.
A few weeks later I received an OSHA document that said, among many
other things, that I had endangered a man's life by violating the OSHA
trenching regulation.
I have read OSHA manuals from cover to cover, on several occasions
and found that the OSHA inspector was as ignorant as I had suspected.
He didn't know the OSHA definition of what a trench is: an OSHA-
regulated trench is five or more feet deep, the hole was less than
five-feet deep and trenches certainly don't have one poured concrete
wall and another wall of dirt, at its natural angle of repose.
The total fine, as a result of the inspection, was $4,500.00.
I called OSHA and they said, ``Appealing this thing is going to
cost you a lot of time and money, I can cut the fine in half if you'd
like to settle the matter.''
I said, ``The fine isn't the problem. The problem is that OSHA has
created a public document that says I endangered a man's life; the
inspector doesn't know the regulations.''
The next communication was from a U.S. attorney in the Boston
office of the Justice Department.
He went on to say, ``I know OSHA offered to cut the fine in half,
but I can cut the fine in half again if you want to settle the
matter.''
I said, ``I want to get that inspector up on the witness stand and
have my lawyer demonstrate to the judge that he does not know the
regulations.''
The attorney said, ``I'll see you in court.''
I called my lawyer, who knows much more about the protocol of the
legal system than I, and told him to begin a discovery proceeding with
interrogatories and the production of, notes, photographs, videos and
documents related to the case.
A few days after the motion was filed, my attorney received a
notice from the court that said, ``the joint motion to dismiss the case
had been granted.''
When he called me with the news, I was furious! I told him I wanted
him to get the inspector on the witness stand to expose him.
My lawyer, with whom I have worked for more than forty years said,
``so would I, but there's nothing we can do because the judge has
dismissed the case.''
More seriously was the time an OSHA inspector was accompanied by
two armed federal marshals. I had previously refused this same
inspector entry to my factory without a warrant because I had just
passed an OSHA inspection mere months before. This inspector was simply
there to harass me because I hadn't bent to OSHA's will.
He put together a series of nonsensical complaints for which the
fine was $8,400.
I went through my now-standard operating procedure, and appealed
the case.
This time, there were no ``cut-the-fine-in-half'' shakedown offers
if I just wouldn't contest OSHA's preposterous ruling. I turned the
case over to my attorney and waited for my day in court.
Five days before the day in court, my lawyer called me on his
conference phone and introduced me to the attorney who was going to
prosecute the case.
The attorney said, ``Mr. Knott, I've read your appeal and I'm
willing to eliminate three of the seven complaints, but we've got you
on four and I'd like to know if you're willing to pay the fines so we
don't have to go to court.''
I said, ``I want to go to court, but let me tell you what I'm going
to tell the judge about each of the ridiculous and fallacious
complaints.'' He said, ``Okay, let's start with the working platform
that doesn't have a guardrail.''
I said, ``The platform is not a working platform, it is a storage
rack and there's no way it could be used with a guard-rail.''
If it had a guardrail someone would have to go up on the rack and
remove the guardrail every time something was put on or taken off. That
would create a much greater hazard than there is now.
The Assistant U.S. Attorney (AUSA) said, ``We'll eliminate that
one, let's go on to the next.''
The remaining three were as ridiculous and fallacious as the
storage-rack guardrail.
I presented my arguments and the AUSA agreed to eliminate each one.
My attorney and the AUSA shut off the conference phone and held a
private conference. A few minutes later, my attorney got back on the
phone and said, ``The attorney is willing to dismiss the case if we
will agree not to seek damages for this time-consuming event.''
I said, ``I'm so busy for the next few weeks that I need to close
this case despite the fact that I would like the opportunity to expose
these inspectors for what they do.'' The case was closed by exchanging
paperwork.
All of the above is thoroughly documented. I go into much greater
detail in my personal written statement.
My experience with OSHA shows how its inspectors can get totally
out of control, and H.R. 2731 is a step in the right direction. The one
exception I take with the bill is the size requirement for small
business being set way too low for those that would be able to get
their attorneys' fees back if they prevailed. This section of the bill
needs to be changed to reflect a true small business definition. I
along with the NAM believe that a better definition would be the SBA
definition. The most common size standards are 500 employees for most
manufacturing and mining industries.
Please also reconsider these small net worth figures you have set
in the bill. In today's modern manufacturing world we are very asset
rich in machinery and equipment but this surely does not make us a so-
called big business.
Thank you Mr. Chairman and committee members for your time and
attention to this matter. I would be happy to answer to any questions
you may have for me.
______
Chairman Norwood. Mr. Nelson, you are now recognized for 5
minutes or so.
STATEMENT OF SCOTT NELSON, PUBLIC CITIZEN LITIGATION GROUP,
WASHINGTON, D.C.
Mr. Nelson. Good afternoon, Mr. Chairman and Members of the
Subcommittee. Thank you for inviting me here today. Since my
testimony is set forth in writing I will just summarize the
points that are made there in.
I would like to start by explaining one thing that is not
explained in my testimony. My organization Public Citizen is a
frequent litigant with the Federal Government of the United
States and in that capacity we have considerable experience
with the Equal Access to Justice Act, which generally governs
our entitlement to attorney fees if we prevail, just as under
current law it governs the entitlement of an OSHA enforcement
action target if that person prevails in litigation before the
agency or in court. The Equal Access to Justice Act generally
provides--.
Chairman Norwood. Pull that mike up. There you go. Turn
that baby on.
Mr. Nelson. Thank you, Mr. Chairman. The Equal Access to
Justice Act generally provides--by the way I will say people
don't usually ask me to talk louder so I appreciate it. The Act
generally provides that litigants before Federal agencies or in
the courts get fees if the agency's position was not
substantially justified. That provision applies in a broad
variety of enforcement actions and in actions where citizens
are forced to bring suit against the government in order to
obtain its compliance with the law. It reflects--and I am not
here to present the Federal Government's interest in that
substantial justification standard, but it apparently reflects
Congress' judgment that for the run of cases the no substantial
justification standard is appropriate for determining whether
or not a prevailing party should obtain fees. That may be right
or wrong, but the issue posed by this legislation is whether a
special exception should be created for OSHA enforcement
actions. It seems to me that turns on whether there is some
need to chill OSHA enforcement beyond what the no substantial
justification standard already does, whether there is a problem
with OSHA enforcement that justifies the conclusion that OSHA
as compared to other Federal agencies should be singled out for
a special standard to discourage its enforcement actions.
Now, the law already would provide that if an OSHA action
is frivolous, if it lacks a substantial justification, as some
of the instances that we have heard discussed today would
suggest may happen from time to time, that someone who prevails
against OSHA can already get fees. The question is, is OSHA so
out of control that a special law is needed to tighten the
standard? I think that while no one who litigates with the
Federal Government would deny that Federal agencies, including
OSHA, sometimes act unreasonably, that the evidence that OSHA
singularly deserves to have this special standard is lacking.
OSHA's overall enforcement effort, by the account of the
leaders of this Administration, needs to be stepped up, not cut
back. Its enforcement effort on the whole is relatively modest.
There are a fairly small number of contested cases each year.
Very few of them go to hearing. And in even fewer is there a
determination that OSHA has failed to carry its burden or has
behaved unreasonably. In addition, OSHA's penalties are
relatively modest. The typical violation involves a penalty, a
serious violation involves a penalty of about $900 and OSHA's
procedures are designed to accommodate small businesses.
In our view, while it can certainly be said that OSHA, like
every other Federal agency, sometimes oversteps its bounds, the
case for sending a message that OSHA enforcement activities as
compared to those of other Federal agencies need to be singled
out, to be discouraged through this type of legislation has not
been met.
Thank you, Mr. Chairman.
[The prepared statement of Mr. Nelson follows:]
Statement of Scott Nelson, Public Citizen Litigation Group, Washington,
DC
Good afternoon, Mr. Chairman and members of the Subcommittee, and
thank you for inviting me to testify before you this afternoon. The
subject of my testimony is H.R. 2731, titled the ``Occupational Safety
and Health Small Employer Access to Justice Act of 2003.'' H.R. 2731
would provide that certain small employers who prevailed in OSHA
enforcement actions at the administrative level or in the courts would
be entitled to receive attorneys' fees even if OSHA could show that its
position was ``substantially justified,'' which would otherwise
preclude an award of attorneys' fees under the ordinary standards of
the Equal Access to Justice Act (EAJA). For the reasons that follow,
the creation of a special exception to the EAJA's no-substantial-
justification requirement applicable solely to OSHA enforcement actions
is not warranted.
The EAJA is the basic attorney fee-shifting statute applicable to
litigation and adversary administrative proceedings involving the
federal government. In general, it provides that individuals (except
the very wealthy), small businesses, certain nonprofit organizations,
and charitable organizations can recover attorneys' fees when they
prevail in litigation against the federal government and the federal
government cannot show that its position was substantially justified.
The no-substantial-justification requirement is applicable in a
wide variety of situations in which people of limited means are forced
to litigate their rights against our powerful government. The great
majority of EAJA cases involve Social Security claimants--obviously not
persons of substantial means--who, even when they prevail against the
federal government and succeed in obtaining benefits to which they are
entitled, must face the additional burden of litigating over whether
the government's position was substantially justified before they may
obtain attorneys' fees. The same is true of individual litigants in
veterans' benefits cases, and a similar rule applies to parties who
prevail against the United States in cases involving income taxes.
Similarly, persons or organizations who prevail in litigation
establishing that an agency such as OSHA has failed to carry out a
statutory mandate (such as the issuance of standards for protection of
workers) are also not entitled to an award under the EAJA if the
government's position was substantially justified. For example, my
organization, Public Citizen, recently prevailed in litigation
establishing that OSHA's decade-long delay in taking action to protect
workers against the risks posed by hexavalent chromium was unreasonable
and violated the Administrative Procedure Act. As difficult as it is to
prevail in such litigation, establishing an entitlement to attorneys'
fees would have required us to litigate over whether the agency's
actions were ``substantially justified,'' a task we decided not to
attempt to undertake.
The ability of persons and organizations to obtain fees under EAJA
has recently been even further limited by the federal courts'
application to EAJA of the Supreme Court's decision in Buckhannon Board
and Care Home, Inc. v. West Virginia Dept. of Health and Human
Resources, 532 U.S. 598 (2001). Buckhannon held that a fee award
claimant whose litigation was a catalyst in bringing about the result
desired (for example, through a settlement) but who did not obtain a
court order formally granting relief was not a ``prevailing party.''
The application of Buckhannon to EAJA cases has further limited the
ability of persons who litigate against the federal government to
obtain fees for their efforts, even when those efforts succeed.
H.R. 2731 would single out one class of litigants (small
businesses) in one category of cases (OSHA enforcement proceedings) and
relieve them of the burden of alleging that the agency's position was
``not substantially justified'' when they seek attorneys' fees. These
litigants are no more deserving of consideration, no more lacking in
resources, no more put upon by the government, and no more at a
disadvantage in relation to the government's litigation resources, than
the many other litigants in other types of cases who would remain
subject to the no-substantial-justification requirement when they
sought attorneys' fees. Singling out these litigants for special
treatment that is denied to, for example, Social Security disability
claimants and disabled veterans, is unfair and unjustified.
Moreover, if new exceptions were to be created, OSHA enforcement
proceedings would not be the place to start. There is insufficient
reason to believe that these proceedings present a special problem that
needs to be addressed, and there is a significant likelihood that this
legislation would further weaken OSHA enforcement efforts to the
detriment of American workers.
To begin with, there is little reason to think that OSHA
overenforces worker safety and health regulations against either small
or large businesses. As both Secretary of Labor Chao and OSHA
Administrator Henshaw have emphasized in their public statements,
American workers continue to suffer occupational injuries and diseases
from causes that OSHA's standards are designed to prevent. Even under
its current leadership, which can hardly be described as hostile or
unsympathetic to the needs of business, OSHA has stressed a need for
increased enforcement (especially directed at serious violations and
repeat violators), not weaker enforcement efforts.
The numbers also help tell the story. According to the annual
appropriations requests of the Occupational Safety and Health Review
Commission (OSHRC), over the last several fiscal years OSHA's workplace
inspections (which have ranged between about 34,000 and 38,000
annually) have generated about 2,100-2,400 new contested case filings
with the OSHRC each year. Of those cases, the great majority settled,
and only 95 to 156 actually were disposed of after a hearing by an ALJ.
Even fewer, ranging from 15 to 37, were subject to review proceedings
before the Commission itself and disposed of on the merits; and only a
handful ever reached the courts. <SUP>1</SUP>
---------------------------------------------------------------------------
\1\ These figures are taken from OSHRC's fiscal year 2004 budget
request, which is available at http://www.oshrc.gov/budget/
cong20041c.html.
---------------------------------------------------------------------------
Moreover, these cases for the most part do not involve onerous
penalties. In only about 200 cases a year does the agency even seek
penalties that would exceed $50,000. <SUP>2</SUP> OSHA's figures show
that even for what it considers ``serious'' violations, its average
penalty in fiscal year 2002 was $977, and in fiscal year 2001, the
average was $930. <SUP>3</SUP> Moreover, the adjudicatory proceedings
used in OSHA enforcement actions are calibrated to accommodate the
needs of small employers in simple cases: Approximately 1/3 of the new
cases filed before OSHRC are assigned to its ``E-Z'' trial track, which
is designed to help minimize expenses. <SUP>4</SUP> Moreover, OSHA has
instituted outreach programs specifically designed to assist small
businesses with compliance, and OSHA's standard-setting process is
required by statute to ensure that the needs of small businesses
receive special consideration when OSHA establishes the rules that
businesses must live by.
---------------------------------------------------------------------------
\2\ This data also comes from OSHRC's fiscal year 2004 budget
request.
\3\ This figure is taken from OSHA's website, http://www.osha.gov/
pls/oshaweb/owadisp.show--document?p--table=NEWS--RELEASES&p--id=9863.
\4\ This figure, again, comes from OSHRC's fiscal year 2004 budget
request.
---------------------------------------------------------------------------
The picture, overall, is hardly one of an agency that is out of
control. The number of OSHA enforcement actions that actually involve
contested adjudications is fairly small, the penalties are generally
modest, and the substantive and procedural standards are already
supposed to accommodate the interests of small-business litigants. The
number of cases in which the agency actually brings an unwarranted
enforcement action (let alone one that is without ``substantial
justification'') is undoubtedly small. Most cases settle, which is
probably desirable, and though that would likely continue to be the
case regardless of the passage of this legislation, the legislation
might undesirably tip the scales in ways that would make settlements
more favorable to employers and less beneficial to the workers OSHA is
supposed to protect.
This is not to say that instances of unfairness cannot be found in
the annals of OSHA enforcement. The same is true, however, in many
other agencies. The question is whether there is a special need for a
different rule for OSHA, and the answer, I submit, is no. Moreover, the
creation of a special rule in this context could carry with it
substantial costs. Enforcement actions against very small businesses
will in the majority of cases be aimed at redressing and deterring
dangerous conditions by recovering modest financial penalties. If
enforcement personnel fear that failure to win even a case that is
demonstrably substantially justified may result in an award of fees
against the agency that would significantly exceed the expected
penalty, they will likely be overdeterred from bringing meritorious
proceedings against businesses who fall within the scope of the
legislation. The result may be a skewed set of enforcement priorities
and a risk of injury, illness, or even death to workers. Given that,
even according to OSHA, too many workers continue to be subject to
workplace injuries and diseases (indeed, OSHA Administrator Henshaw
recently stated that 16 workers a day still die in this country from
occupational causes <SUP>5</SUP>), the balance should be struck in
favor of protecting workers, not inhibiting enforcement. As OSHA
continues to remind us, we need more enforcement of workplace safety
standards, not less.
---------------------------------------------------------------------------
\5\ http://www.osha.gov/pls/oshaweb/owadisp.show--document?p--
table=NEWS--RELEASES&p--id=10188
---------------------------------------------------------------------------
Thank you.
______
Chairman Norwood. Thank you, Mr. Nelson. And just so you
know, I would be happy to have this same provision in the law
for every Federal agency. I think it would be very appropriate.
But I have jurisdiction over OSHA. So that is why we are
talking about OSHA today and not all the other Federal agencies
that I wish other Chairmen would do the same thing for.
Ms. Drummond, you are now recognized for 5 minutes or so.
STATEMENT OF ANITA DRUMMOND, DIRECTOR, LEGAL AND REGULATORY
AFFAIRS, ASSOCIATED BUILDERS AND CONTRACTORS, ARLINGTON,
VIRGINIA
Ms. Drummond. Good afternoon. Chairman Norwood and Members
of the Subcommittee, my name is Anita Drummond. I am Director
of Legal and Regulatory Affairs for Associated Builders and
Contractors. I would like to thank the Subcommittee for holding
this hearing today on the Occupational Safety and Health Small
Employer Access to Justice Act of 2003. This issue is of
significant interest to ABC members not just under the OSHA
regulations but all Federal legislation. Our members are
frequently faced with the tremendous cost of defending
citations, and I will be summarizing my comments in order to
appreciate the time of the Subcommittee.
ABC is a national trade association of 23,000 contractors,
primarily very small contractors of all various specialties.
There is a vast disparity in resources between small business
owners and Federal agencies. Because of these inequalities in
the litigation environment small businesses and individuals are
often forced to choose between settling with the government to
avoid litigation costs regardless of the merits of their case.
To address this concern, the Equal Access to Justice Act, EAJA,
was passed to level the playing field, particularly for small
businesses, and to encourage the Federal Government to ensure
that the claims that they are pursuing are worthy of this
effort.
Under current law an employer may only recover attorney's
fees and costs, as Mr. Nelson indicated, under the
substantially justified standard. This does not require that
the government show a substantial likelihood of success in
prevailing. In fact the courts have been very mixed in their
determination of what the standard means. The Supreme Court
simply says that it is a reasonable basis in law and fact. And
you have very mixed court decisions on what exactly that means.
In the OSHA environment there are many technical and
complex regulations and they are subjected to tremendous
interpretation. And I will discuss specifically the general
duty clause which has been referenced by the witnesses. The
ambiguities are rampant under the standard. And, in fact, when
there are environments where a Federal agency may have mixed
interpretations there have been courts to determine it didn't
matter if there were mixed interpretations, that the defense
that a small business posed was not sufficient to get
prevailing wages under EAJA. This wasn't OSHA in this case. It
was a Coast Guard case. The Coast Guard had mixed
interpretations of its own standard but a small business
couldn't rely on those ambiguities to prove that the agency
wasn't substantially justified. The standard simply didn't work
in any kind of predictable manner, which is exactly what a good
legal system does. It has predictability and you can make good
decisions.
In the OSHA environment there is a 90 percent settlement
rate. Well, the reason there is a 90 percent settlement rate is
because of the issues that have been discussed. When the agency
continually says, well, we will settle, we will cut your fees;
it is easier for small business. It can easily cost $20,000 to
litigate a defense on a citation that is for $8,400? The math
is pretty simple. However, it has other implications for public
policy. And these are the issues that obviously the
Subcommittee has to deal with for public policy discussion. If
a small business is cited and settles, that citation does go on
the public record. And the way that plays out, and I will use
the example of a public procurement system. A public
procurement system that looks into a small business' record to
determine if they can play ball and we use the Federal
Government, can small businesses have a larger share of the
Federal procurement pie, can they play ball, if a contracting
officer determines that they don't comply, that they have too
many citations, they are not going to let them have a shot
under an RFP situation. There is legislation that has been
introduced by Members of the House that would require the
Federal Government to maintain a data base of all the citations
that businesses have and that the contracting officer would
rely on. That is the kind of implications that are in play, and
I know this is outside the purview of this Subcommittee. But
the concept is that the system isn't accurately reflecting who
may or may not be the bad players, and second, it is not giving
those small players an opportunity to defend themselves.
I want to address specifically the worker safety issue. ABC
is critically committed to worker safety, and we would like to
see the OSHA's resources focus on--and let's use the
construction industry specifically--on fatalities and major
industries. And when you look at some of the citations--there
are many of them for the small things--but not for worker
fatalities and injuries for electrocution, falls, the terrible
problem we have with trucks backing up on people. Those are
where the problems are, and we would actually support major
enforcement efforts for the serious violations.
And what I am trying to say is if you enact this
legislation, it does not necessarily kill OSHA, but it should
allow them to shift resources to enforcement on the very
serious areas of worker safety. And I don't want to discount
that, because for construction--which happens to be an
inherently dangerous industry in many ways--we would support
efforts that would assure the agency's efforts are being
supported.
I know that is a little off of my written testimony, but I
thought it was important to address in the context of safety,
which is critically important to this Subcommittee.
Thank you and I welcome your questions.
[The prepared statement of Ms. Drummond follows:]
Statement of Anita Drummond, Senior Director, Legislative and
Regulatory Affairs, Associated Builders and Contractors, Arlington,
Virginia
INTRODUCTION
Good morning, Mr. Chairman and members of the Subcommittee on
Workforce Protections. My name is Anita Drummond and I am the Director
of Legal and Regulatory Affairs for the Associated Builders and
Contractors (ABC). I would like to thank Chairman Norwood and the
members of the subcommittee for the opportunity to address this
important piece of legislation, The Occupational Safety and Health
Small Employer Access to Justice Act of 2003 (H.R. 2731). This issue is
of great significance to the members of ABC, that frequently are faced
with the tremendous costs associated with regulatory compliance and
costs associated with defending unproven citations. I will be
summarizing my comments, but I would request that my full statement be
submitted for the official record.
ABC is a national trade association representing more than 23,000
merit shop contractors, subcontractors, material suppliers and
construction-related firms in 80 chapters across the United States.
ABC's membership represents all specialties within the U.S.
construction industry and is comprised primarily of firms that perform
work in the industrial and commercial sectors of the industry.
ABC's diverse membership is bound by a shared commitment to the
merit shop philosophy within the construction industry. This philosophy
is based on the principles of full and open competition unfettered by
the government, and nondiscrimination based on labor affiliation and
the awarding of construction contracts to the lowest responsible
bidder, through open and competitive bidding. This process assures that
taxpayers and consumers will receive the most for their construction
dollar.
According to the U.S. Census Bureau, in 2000, there were 701,947
construction firms in the United States. Of those firms, nearly all
employ fewer than 20 employees and would likely benefit to some degree
from the types of reform offered in H.R. 2731.
THE EQUAL ACCESS TO JUSTICE ACT (EAJA)
The size of the federal government and the complexity of many of
our nation's laws and regulations are intimidating - especially to the
small business community. There is a vast disparity in resources and
expertise between small business owners and the federal agencies.
Because of this inequality, small businesses and individuals often are
forced to choose between settling with the federal government to avoid
costly litigation, regardless of the merits of the case, or defending
themselves and facing the exorbitant legal fees. This situation stands
directly contrary to the original intent of the Equal Access to Justice
Act (EAJA), which was to level the playing field for small businesses
and encourage the federal government to ensure that the claims it
pursues were worthy of its efforts.
Under current law, an employer may only recover attorney's fees and
costs incurred in defending an OSHA citation under EAJA--which permits
small businesses to recover fees in certain circumstances, as employers
are at a great disadvantage against agencies with vast resources.
However, EAJA only allows recovery by small businesses if OSHA fails to
show that it was ``substantially justified'' for issuing the citation.
Additionally, the OSH Act's many technical and complex requirements
have made it fairly simple for OSHA to develop creative arguments to
justify their actions. As a result, EAJA has proven to be less
effective in cases dealing with OSHA. In order to fulfill the true
intent of EAJA, a small entity (business owners and individuals) that
prevails in court against OSHA should be able to recoup their costs and
attorney fees.
Fortunately, H.R. 2731 allows small employers to recover costs and
attorney's fees if the employer successfully defends itself against an
OSHA citation--regardless of whether OSHA can show justification for
the citation.
LEGISLATIVE RECOMMENDATIONS
ABC and its member companies are dedicated to safety for all
workers. Significantly, ABC is a partner for safety with OSHA. This
program tracks companies' injury and illness rate and loss workday
rates and identifies problems in development before a problem becomes
more serious. Serious injuries and fatalities are ABC's primary
concern. ABC offers numerous safety and health training programs at its
80 chapters. For instance, we recently launched a crane operator
education and certification program because crane accidents have such
severe risks. Additionally, the ABC National Safety Committee created
the Safety, Training and Evaluation Process, or STEP, in 1990. STEP, an
OSHA recognized program, is an objective, self-evaluation tool that is
used by construction contractors to assess their safety policies and
procedures.
Chairman Norwood's proposed legislation represents a small step
towards assisting the good actors - and the very smallest companies -
that maintain a safe workplace. ABC strongly supports the intention of
this legislation to level the playing field between an agency and the
very smallest of companies when a citation is made. The mechanism--a
prevailing party awards of costs and fees - proposed in H.R. 2731 is
commonly adopted by federal, state, and local governments to address
inequities in prosecution of statutes between the parties.
A provision that grants costs and attorney's fees to the prevailing
party is not intended to act as a tool to punish or restrict the
actions of a plaintiff. Rather, prevailing party provisions allow
defendants to more wisely use their resources without assumed losses,
regardless of the merits of their case. Under the current EAJA system,
winners lose in terms of money and the reputation of their company.
Without a prevailing wage provision, small businesses simply cannot
afford to fight, regardless of the likelihood of success, unless they
have significant resources to match the government's legal resources.
ABC strongly supports H.R. 2731, but recommends it is amended to
include a provision that assures awards for costs and attorney's fees
are reimbursed directly out of OSHA's budget. Without this link between
enforcement and litigation, behavioral change is unlikely. Currently,
such awards under EAJA are not paid by the enforcing agency.
CURRENT UTILIZATION OF EAJA
The initial cost estimate of EAJA, issued by the Congressional
Budget Office (CBO) prior to the act's original enactment, estimated
that the total awards for all judicial proceedings would be
``approximately $67.7 million in fiscal year 1982, $77.6 million in
fiscal year 1983, and $90 million in fiscal year 1984.'' For
administrative adjudication, the awards were estimated to be ``$19.4
million in fiscal year 1982, increasing to $21.3 million and $22.4
million in fiscal years 1983 and 1984, respectively.'' However, the
General Accounting Office (GAO) issued a report in 1998, analyzing EAJA
data from fiscal year 1982 to fiscal year 1994. The report found that
over the twelve-year span, only 1,593 applications were filed with
federal agencies, of which 604 resulted in an award of fees totaling
approximately $4.5 million, an average of approximately $7,500 per
claim.
According to a document released by the Small Business
Administration, ``during that same time period, only 6,773 applications
were filed in federal court, and 5,642 resulted in awards of fees
totaling $29.6 million, an average of approximately $5,200 per claim.''
GAO also found that ``claims against the Department of Health and Human
Services accounted for about 85 percent of all applications submitted,
about 92 percent of applications granted, and about 56 percent of the
amounts paid.''
The results of the GAO study suggest that EAJA has failed to
achieve its objectives. The combined twelve-year total of $34.1 million
in fees awarded barely reached one-third of CBO's estimates for even
the first year of EAJA's enactment alone. Furthermore, the study
confirms the conclusion reached by researchers (Professors Susan Gluck
Mezey and Susan M. Olson, 1990) that EAJA has primarily become a tool
for individual social security claimants, while playing a much less
significant role amongst its intended beneficiaries. It is clear that
EAJA must undergo some substantial revision if it is to achieve its
initial objectives.
CONCLUSION
In the federal court system, litigants are guaranteed certain due
process rights to ensure that everyone has the opportunity for fair and
impartial adjudication of disputes. However, many of these rights are
systematically denied to employers facing allegations under the OSH Act
because of the prohibitive loss of defense. Often the cards are stacked
so high against employers that they are forced to settle even the most
frivolous claims.
The current system invites abusive prosecution and unjustly imposes
costs on employers that are not violating the law. While damaging to
all businesses, the costs of defense are particularly harmful to small
businesses, like many ABC member firms, that lack the resources to
defend against unreasonable prosecution. ABC strongly supports H.R.
2731 as a first step towards leveling the playing field for small
businesses. We look forward to a constructive dialog on how to improve
both the OSH Act and EAJA in order to create a level playing field for
small businesses. At this time, I am happy to answer any questions the
committee may have.
______
Chairman Norwood. Ms. Drummond, if H.R. 2731 were to become
law, what do you suppose would happen? You say today 90 percent
of the cases were settled, and it is pretty clear--I mean,
anybody understands why they are settled. It is the lesser of
two evils.
What do you think would happen if this became law? How many
would settle then, do you suppose?
Ms. Drummond. Well, I think there are a couple of
questions. First, I would hope that OSHA would assess in its
enforcement efforts where they enforce and how they enforce,
because maybe in an ideal world 100 percent would settle
because they would be going after the right cases; but if they
went after the exact same profile of cases, then I would say 90
percent would no longer settle, that you would have in fact a
lesser percentage, because they felt that they had not violated
the law and had some hope of recouping some costs in attorneys'
fees would in fact defend the case.
Chairman Norwood. Well, the question was intended to assume
that it would be the same.
Ms. Drummond. The same profile, right. But I am hoping that
in the good policy environment, that OSHA may reassess how it
would enforce.
Chairman Norwood. Mr. Robson, have you ever considered
running for Congress?
Mr. Robson. My dad was a supervisor. That is as far as the
family trait goes.
Chairman Norwood. One of the reasons I ran for Congress was
because of an OSHA inspector. It wasn't the only reason, but it
was one of them, and everybody on this Subcommittee loves to
say that they are for working families. And we are. I mean, I
think we are all for working families. Do you consider your
business a working family?
Mr. Robson. Yes. That is all there is, and there are many
of them in our same situation there. And we are such a small
community, that when Robson got hit up for OSHA, within 2 days
the whole neighborhood knew.
Chairman Norwood. Well, of course. Everybody knows.
Mr. Robson. And they want to know what I am going to do,
are you going to send them 300 bucks, And I say, no, I ain't
going to send them 300 bucks. And then the first thing they did
was chop it in half. Well, now, door No. 1, door No. 2, door
No. 3, what is going on there?
Chairman Norwood. I am delighted that you were willing to
fight. More of us need to fight, particularly us working
families who are out there and face this big giant Federal
agency. Tell me exactly what happened. Did you use the bucket
on a tractor? What did they cite you for?
Mr. Robson. We are a little ahead of that now. We have a
set of forks mounted on the front loader on the tractor and had
a pallet on it.
Chairman Norwood. I have got one of those.
Mr. Robson. And we were probably all of 5 foot off the
ground.
Chairman Norwood. I understand.
Mr. Robson. Now, granted we--.
Chairman Norwood. And so you were actually level, then,
rather than standing in the bucket?
Mr. Robson. Until the oil drips, yes. We are very--you know
what I am.
Chairman Norwood. I do know that.
Mr. Robson. That is--
Chairman Norwood. So this guy comes tooling out here, and
he says, gee, you are an absolute criminal. Go on, tell me.
Mr. Robson. Well, they didn't say that that day, because if
they would have started that, I would have probably thrown them
out on the road, which most farmers do. But I didn't do that.
Very nice lady.
Chairman Norwood. I threw mine out, but go ahead.
Mr. Robson. But, no, a very nice lady. I had no problem
with her. And then a month later comes the violation. It had
nothing to do with the money. It was the word ``serious'' on
the violation, and once your business has a serious violation,
then the next one, there is no qualms asked.
Chairman Norwood. And the fine for you to get even with the
Federal Government was--you were to pay how much for being 5
feet off the ground?
Mr. Robson. Three hundred dollars.
Chairman Norwood. Three hundred bucks. But in your mind,
this affected you in your community when they say serious
violation, for which everybody knows that affects your
reputation. That is different, isn't it?
Mr. Robson. I would hope that OSHA is there to help me, not
hinder me.
Chairman Norwood. Well, I wonder what it would have cost
you to obtain an attorney and fight them? Or maybe you have.
Mr. Robson. It has only been a year. So they haven't done
anything yet. I don't know how long it takes to go. It has been
over a year.
Chairman Norwood. Did you consider hiring an attorney and
taking them to court?
Mr. Robson. Basically I believe that when I get in front of
a judge and a normal panel, I don't think I will have much of a
problem. I don't know.
Chairman Norwood. But you still have to pay?
Mr. Robson. Yes. I will have to pay.
Chairman Norwood. So there is no way to win.
Mr. Robson. It is a lose-lose situation.
Chairman Norwood. Or you pay twice as much and clear your
name.
Mr. Robson. But hopefully I am going to help out the next
person coming down the pike that maybe doesn't have the
gumption to maybe go up and change anything.
Chairman Norwood. Well, that is what I am trying to do,
too, with this legislation. It is not fair to make the
taxpayers take on the Federal Government that has an unlimited
amount of dollars from you and me, to take you to court.
Mr. Knott, how much have you ended up spending on legal
fees?
Mr. Knott. Probably up into the hundreds of thousands.
Chairman Norwood. My word.
Mr. Knott. They had a case recently where we had a tank
with hydrogen nitrogen in it. The OSHA inspector came in and
said, this is hazardous to human life. It is a covered tank,
because people have to go in there. I said, that's right, but
we take the cover off and the hydrogen and nitrogen disappear.
And he said, Mr. Knott, I have a Bachelor of Science degree in
chemistry, and I am telling you, you are wrong. So we went
through the proceeding. The fine for that, by the way, for
endangering my associates' lives was $11,250.
So we went to the hearing, and the ALJ found in his favor,
said he has a Bachelor of Science degree in chemistry, so
therefore he knows that hydrogen is really heavier than air,
and Mr. Knott is not a credible witness. So guess what? I
appealed that.
Chairman Norwood. So the fines would have totaled how much?
Mr. Knott. $11,250 was what he wanted, and it will be
probably, I don't know, 5, 6, 7 times that before I get
finished.
Chairman Norwood. So you can't win either.
Mr. Knott. What is that?
Chairman Norwood. You can't win either, at least from an
economic point of view.
Mr. Knott. If the U.S. Court of Appeals, right here in
Washington, D.C., agrees that hydrogen is heavier than air,
then yep, I will be in trouble. And I don't know what the next
step is, but if there is one, I am going to take it.
Chairman Norwood. Well, this bill is about working families
who are trying to run small businesses, which are the backbone
of this country, and that is the whole purpose of what we are
trying to do here.
The other thing is, and I may say this a number of times,
besides protecting working families, the objective of the
legislation is to just give OSHA a reason to stop and think
before they follow forward with some of this questionable
litigation that they do and some of these questionable
citations that they do. That is all we are trying to do. It is
just folks, use some common sense.
Mr. Knott. Let them be at risk.
Chairman Norwood. Well, it is risk against me and you, but
it is a complex. Mr. Owens, you are now recognized for
questioning.
Mr. Owens. What is the net worth of your company, Mr.
Knott?
Mr. Knott. The net worth of my company? It is somewhere--
let's see. It is under $5 million.
Mr. Owens. Under $5 million?
Mr. Knott. Yep.
Mr. Owens. You have less than 500 employees?
Mr. Knott. No. No. No. I have a little over a hundred. And
I started it in an abandoned mill with $87,500. That is all the
cash I had. And the mill was 20,000 square feet, and by the end
of next month, it will be 391,000 square feet. And there are
many OSHA stories that go with that.
Mr. Owens. Do you have a special mission that you set up
for yourself to fight OSHA, because you seem to welcome cases
and want to go after the cases and extend them?
Mr. Knott. I do have a special mission, yes. And you know,
in June 1956 I took an oath, and the oath was that I promised
to uphold the Constitution of the United States and to
protect--
Mr. Owens. Do you consider yourself being harassed by OSHA?
Mr. Knott. And to protect this country against all enemies,
foreign and domestic.
Mr. Owens. Do you have too many violations that you
consider yourself to be a target of harassment?
Mr. Knott. Absolutely. No question about it.
Mr. Owens. How many violations have you gotten?
Mr. Knott. I have probably been through, I don't know, 15
to 20 of those things over the years.
Mr. Owens. Thank you.
Ms. Drummond, what is the pattern? You see, we don't have a
record that OSHA issues that many violations. They don't have
that many inspectors. When you compare the ratio of inspectors
to the number of businesses out there they have to inspect, the
likelihood that you are going to get visited by an OSHA
inspector in your lifetime is very low. But yet you also give
the impression that you are often being harassed by OSHA
inspectors looking at small trivial kinds of problems. Do you
have any statistics just to back that up?
Ms. Drummond. What I wanted to point out is that when an
OSHA inspector goes in--and I would support 100 percent there
are not enough resources at OSHA for proper enforcement
activities, but the enforcement activities aren't as focused as
they should be, and I think there are some attempts to try to
focus on the most serious injuries and illnesses.
There is, instead, that once they are in a site, they are
looking for a violation, and how much time are they spending on
a site that doesn't have--.
Mr. Owens. You represent an association; that people in the
association would contend that they have OSHA inspectors
hanging around quite a bit to the point where they are being
harassed?
Ms. Drummond. I have never represented that they were being
harassed. I represented specifically that when an OSHA
inspector goes to a site, it is hard for an inspector to leave
without giving a citation. And that would be an interesting
statistic for an inquiry, is how many times someone goes on a
site and walks away without a citation and how much time they
are spending. But I would like to say that I am not talking
about the harassment. I am talking about OSHA's focus should be
on the most serious fatalities and injuries, and fatalities
specifically, because they do have limited resources.
Mr. Owens. Thank you.
Mr. Nelson, you did have some figures about the number of
inspections?
Mr. Nelson. OSHA over the last few years has been doing
about 35,000 to 37,000 inspections a year. Contested cases that
get filed with the Occupational Safety and Health Review
Commission are somewhere around 2,200 to 2,400 a year. I can't
speak to the number of violations in comparison to the number
of inspections.
I think it would be interesting in assessing legislation
like this to have something more than anecdotal evidence. I am
not sure whether OSHA can provide that or not, but the notion
that OSHA is over-enforcing or should overlook, when it is at a
workplace, a minor violation that it uncovers seems unwarranted
to me.
Mr. Owens. We have figures over the last 4 years, 6.5
percent of the inspections performed by OSHA resulted in
contested citations, 6.5 percent. Fiscal year 2002, only 5.7
percent resulted in contested citations.
Mr. Nelson. That I think jibes with the number of about
22,000 as compared to 35,000 inspections.
Mr. Owens. Now, there is no private right of action for
workers. If this bill became law, H.R. 2731 became law, to
balance this, might it not be fair to provide workers with a
private right to sue their employer for alleged safety and
health violations?
Mr. Nelson. I would say absolutely. If OSHA decides not to
pursue a violation right now, there is nothing that the workers
can do about it.
Mr. Owens. I think my time is up.
Chairman Norwood. Thank you. Mr. Owens, what was your
percentage on contested violations?
Mr. Owens. 6.5 percent of the inspections resulted in
contested violations over the last 4 years.
Chairman Norwood. Yes. Now, Ms. Drummond, explain why it is
that low. You did earlier, and I don't think--.
Ms. Drummond. It is simply that it is a cost analysis for a
business, and I think that the other witnesses have kind of
attested to that. You have a violation that is going to cost
you $8,400 and you know attorney fees are going to upward of
$20,000. It is not--.
Mr. Owens. The easy trial system would cost you $20,000.
Ms. Drummond. The easy trial system is easier than the
regular system, but I would not say it is cheap.
Mr. Owens. You still think it's $20,000?
Ms. Drummond. I would say it would easily cost--let me use
this example. It would easily cost as much for the defense, I
would say, if you had a reputable attorney, especially in
metropolitan areas, than it would cost for the violation. It is
an easy mathematical decision, but it does go to the heart of
it and I think this gets to the bottom of it, though we are
talking about how do you change OSHA's behavior, I would like
to focus on how do you bring some equity to the process when
you have a very small business--and we are talking very small
business. We are not talking about SBA-size standards. I mean,
the construction industry, it is 27.5 million in receipts. I
mean, that is far different than a million and a half in net
worth.
Even though those are a bit apples and oranges, still there
is a difference. And when you are a business who knows that you
are going to be walking into an environment where you are
probably leveraging those assets in order to take a chance that
you know in your heart, you believe in your heart that you are
right, there was no intent and you would like to clear your
name and you don't want to have long-term consequences, whether
it is in terms of reputation or prohibitions for further
business reasons, there should be some equity that you are not
facing what is perceived to be endless resources. And we all
know that maybe there are finite resources with OSHA, but there
are not endless resources.
Mr. Owens. And you believe one of the actions is more and
better-trained OSHA enforcement folks, fewer mistakes?
Ms. Drummond. Let me say, Congressman Owens that ABC
financed one of its experts in steel erection to help in the
training of compliance officers, in specializing in
construction and especially the steel erection standard, which
was a tremendous rulemaking procedure that was intended to
prevent fatalities in construction and serious injuries. And we
put our money where our mouth is when it comes to training
compliance officers on the construction industry.
Chairman Norwood. Thank you. Just as a personal observation
of somebody who has been in small business all his life, one of
the ways the Federal attorneys win cases is that they have an
unlimited amount of money to spend, and they cause these cases
to be as expensive as they possibly can by dragging them out
and can automatically win that way, because a small business
defendant just can't stand that. It ought not to cost a lot of
money, but that is one of their ways of winning.
Mrs. Biggert, you are now recognized, ma'am, for questions.
Mrs. Biggert. Thank you very much, Mr. Chairman. In 1999
the CBO scored legislation providing for attorney fees for both
the NLRB and OSHA at under $5 million per year. It seems like
that covered employers with $7 million in net worth. This bill
really has a threshold of $1.5 million and less than 100
employees. Does this have significance to the industries like
those that you represent?
Either Mr. Knott or Ms. Drummond.
Ms. Drummond. It does have significance, and I think it may
be well worth the Subcommittee evaluating and discussing with
the SBA how they make their size determinations. Whether you
adopted those size determinations or some sort of formula that
was similar, you really have to look at the capital intensity
of an industry to determine what would be an adequate-size
standard depending on the industry type. Construction has a
very, very low cash-flow issue. You look at manufacturing, they
have intense capital investments. So you may want to determine
if the size standard would be more appropriately evaluated
according to industry types, and the Small Business
Administration has a size standard office that specializes in
that.
Mrs. Biggert. It seems like from the testimony that we have
heard, are there any cases where the business wins?
Ms. Drummond. Few.
Mrs. Biggert. A few?
Ms. Drummond. Few. I am trying to think of one good
example. There are a few. There are so few of them that they
really don't set much of a standard. I mean, even when OSHA was
challenging its prior determination interpretation under the, I
believe it is the Briggs case, the court held that prevailing,
that the small business defendant could not in fact collect,
because they thought it was substantially justified for OSHA to
pursue the case, even though they are now taking a different
interpretation of its regulation. So that is the type of thing
where it is very hard to overcome that substantially justified
standard.
Mrs. Biggert. And what is the next step, just in procedure,
like with the EAJ, and since that probably is the standard for
this bill, to pursue an appeal? How does the appeal work in
this case?
Ms. Drummond. You may go to the court of appeals, or you
may go before the Commission. So going to the court of appeals
is the route I believe that Mr. Knott is taking.
Mrs. Biggert. Is that correct, Mr. Knott, you go right from
OSHA?
Mr. Knott. From the ALJ hearings, you go to the court of
appeals.
Mrs. Biggert. And that is the Federal court?
Mr. Knott. Yes.
Mrs. Biggert. Let me ask just one more question. Let's say
your employer is cited for several different violations and
they win on one count and then lose on the others. Under this
bill, would they still be able to collect attorney fees for the
count that they win on?
Ms. Drummond. The standard for the Federal court system,
and generally adopted by the States for the definition of a
prevailing party, and that applies to other Federal statutes
and State and local statutes that provide prevailing party
awards, the standard is the prevailing party is one who
succeeds in a significant issue and receives some of the relief
sought in bringing the action. So it is really a mixed bag.
So if it is a mixed bag and let's use the scenario you
presented where they win on one issue but then lose on three or
four, it is unlikely, unless it was a significant issue if it
was the primary citation, it was the most serious citations and
the others were only paperwork citations. Then you might see an
environment where the judge would in fact provide that they
would be considered the prevailing party.
Some jurisdictions, such as the 7th Circuit and the 11th
Circuit, have a little bit higher standard, where you have to
substantially benefit from the outcome, which is a little bit
different than some benefit.
Mrs. Biggert. Thank you. Thank you, Mr. Chairman. I yield
back.
Chairman Norwood. Thank you, Mrs. Biggert.
I would now like to recognize my colleague and friend from
Georgia, Ms. Majette. Are you ready for questioning?
Ms. Majette. Thank you, Mr. Chairman, and I thank the
panelists for being here to offer your testimony today.
And let me preface my remarks by saying that I empathize
with the situations that all of you have described, and I do
that from the standpoint of having been an attorney and when I
worked at Legal Aid, we were subject to the issue of attorneys'
fees and how those got paid. I have been a small business owner
as a private practitioner, and then I served as an
administrative law judge on the Workers Compensation Board in
Georgia before serving on the State court. And I resigned that
to come here and have a lot of fun serving in Congress.
So I look at this as a situation from those different
perspectives and the need for balancing the concerns of
employers and small business owners with the need to protect
workers and making sure that they are in an environment that
allows them to do the work that they need to do, in a safe and
secure manner, so that they can be productive employees for
their employers.
And Mr. Knott and Mr. Robson, the situations that you
described really, frankly, should not have happened. And I have
no doubt that those situations were ones that occurred in the
manner in which you described them because of the experiences
that I have had. But it sounds to me and my experience has been
that a lot of times the root of the problem is a lack of
training or poor communication on the part of the--in your case
I guess, Mr. Knott, on the part of the OSHA employee.
And so my question--and I would--if time permits, I would
like each of you to address it from your own perspective. But
would you agree with me that rather than putting in place this
kind of legislation that I think perhaps wouldn't actually
address the root of the problem, that perhaps we should
concentrate on making sure that the OSHA staff and employees
have sufficient training, that they get the skills development
that they need, that they have those communication skills, and
that the OSHA inspectors have the resources that they need to
be able to do the job properly? Because I think in the
situations that you described, something went wrong very early
on, and it shouldn't have gotten to the point at which tens of
thousands of dollars were being expended on lawyers to resolve
the issue.
So if each one of you could address that proposition, I
would appreciate it Mr. Robson, or was that all too
complicated?
Mr. Robson. No. I think we are past that point as far as
the lawyer fees and all that. We have created the monster now,
and we should try to control it a little bit, that is all. I am
not against OSHA. I run a small business. I want my employees
to be safe. I am not against OSHA one iota, period; but they
have gotten too big and too powerful now, and when they come up
against the little man, there is nothing we can do.
Ms. Majette. All right. Thank you. Mr. Knott?
Mr. Knott. I had a classic case involving an--
Chairman Norwood. Pull your mike over just a little bit,
Mr. Knott.
Mr. Knott. I had a classic case involving an accident.
There was a man who had fractured a couple of fingers, and the
OSHA inspector said that his arm had gone between some rolls up
to his elbow, and therefore that was, you know, a very serious
thing. Had his arm gone between those rolls, which is 15
sixteenths of an inch apart, it would have been 18 inches wide.
And when we got that inspector up on the stand we said, how do
you know that the arm went in up to the elbow? ``well, I saw
it'' is what that inspector said.
But anyway, the attorney came out, the prosecuting attorney
came out and I took him for a walk around the plant. And he
took me aside, and he said, ``Mr. Knott, you have got a lot
going on here. I can't understand how a minuscule thing like
this will cause you so much trouble.'' He said, ``Look, give us
a little money and we will go away.'' I said, ``I can't do
that. These inspectors just lie, and I want that exposed.'' He
said, ``Well, I will tell you right now, it is going to cost
you a lot of time and money.'' and by God, he proved it. He
deposed 10 witnesses. We went up to Worcester to the hearing.
It took 3 days, and he had 10 people come up to the hearing,
including me. So this is where the cost goes up.
Now, if I had given him a little money and he would have
gone away, would that be the thing to do? I can't do that. I
really can't do that. I don't think it is right.
Ms. Majette. I see my time is up.
Chairman Norwood. Thank you, Ms. Majette.
Mr. Kline, you are up. Five minutes for questions.
Mr. Kline. Thank you, Mr. Chairman, and I will keep it
under 5 minutes, noting the lateness of the hour and the ordeal
we have already put the witnesses through.
I want to add my thanks to that of my colleagues for your
being here today and for your patience. I know it can be
enormously upsetting and disruptive when we suddenly get up and
walk out and don't reappear for an hour or more and you have
great questions in your mind about what we could possibly be
doing for the good of the country during that period of time,
and we have the same questions.
Having said that, I was just fascinated by the testimony,
and I am sure that Mr. Nelson is right; it would be good to
have some more empirical data to use. But the anecdotal stories
that you have told are very touching. And by coincidence, we
seem to all at one time or another have worked in the nursery
business, so perhaps there is a special attraction or
fascination there.
It is clear that what we are trying to do in this
legislation is make sure that OSHA is doing its job correctly,
is not abusing power and that businesses have a reasonable
recourse. And so, again, in the interest of time and to keep my
time short here, I would like to address my question to Ms.
Drummond.
You are representing some 23,000 businesses, most of them
small businesses in the building and contracting business. We
have talked about the number of cases that are settled or
contested, and you surely have input from your members. If we
pass this legislation, what is your sense of the number of
times that your members would take advantage of this and be
able to fight the big bureaucracy--let's address that first--
and then what the consequences of that might be.
Ms. Drummond. For the smallest companies, and that would be
the very smallest companies, I think that they would at least
feel that they had a good shot at having their story heard
before a party, and that would be an ALJ, that was unbiased and
would give them an opportunity to express themselves and to
assure their side is heard. I think that there would be more
likelihood of challenging it. That doesn't mean that in the end
maybe OSHA does prevail and we find out that, you know, OSHA is
not being abusive. But I think it is important that we find
that out, because in the current system, while not intended to
be unfair, it has a consequence of being unfair because the
smallest companies don't have that opportunity to have their
say. So I think that would be the consequence of it.
Mr. Kline. So your sense is that there is a fairly large
number of your members who would seek to have their day in
court if this legislation were to pass?
Ms. Drummond. Those that fall within the standard. And I
would say to you--I would caveat that that would probably be a
small percentage.
Mr. Kline. I understand the distinction. The point though I
guess what I am trying to get at is if more people were to seek
their day in court, I would think the objective here, of
course, is to make sure, as the Chairman has pointed out, that
the OSHA inspectors are careful to make sure that when they are
bringing a citation, it is for a legitimate offense, knowing
that if they go to court and lose, that they have to pay for it
with appropriated funds, and the inspector, I am sure, would
feel some heat from his or her boss if that were to happen. Is
that your sense of where we are in this?
Ms. Drummond. Yes, Congressman. And then I will respond to
the question regarding whether enforcement education alone
works. And I think unfortunately you do need the carrot and the
stick. And if you do have to bring in an enforcement official
to testify or to be deposed, you may in fact reveal the
discrepancies or the inaccuracies that underlie the citation.
And I think that is important to flesh that out. And if you
have a small business that believes that they have an
opportunity to do that, you are going to have a better system,
and you are going to have an agency that will invest more of
itself in not only educating its enforcement officers on the
law but also investing in them the veracity of their
enforcement activities.
Mr. Kline. Thank you. I yield back.
Chairman Norwood. Mr. Owens.
Mr. Owens. Just one clarification. Mr. Robson, do I
understand correctly you were inspected by the State of
Michigan and not by OSHA?
Mr. Robson. My OSHA.
Mr. Owens. State of Michigan. OK. So you have not dealt
with OSHA at all?
Mr. Robson. Not in a year.
Mr. Owens. We are--.
Mr. Robson. Not in a year. They cited me the citation. I
sent back the paperwork. I am waiting to--.
Mr. Owens. So State of Michigan, huh?
Mr. Robson. Yes.
Mr. Owens. And you have also not hired an attorney, so you
have not paid any legal fees?
Mr. Robson. No.
Mr. Owens. Thank you.
Chairman Norwood. You are here representing the Farm
Bureau?
Mr. Robson. Yep.
Chairman Norwood. Not necessarily your case.
Mr. Robson. Nope.
Chairman Norwood. My observation is in Georgia that they
take their marching orders out of Washington, though, and a lot
of the way they act--I am talking about the Georgia OSHA. They
take it a lot from observing and talking to OSHA out of
Washington.
Let me conclude. I could do this the rest of the day, but
that storm is a-coming, and we all have got to scatter. My
sense of it is that none of us are very far apart here. Are
there enough inspectors? No, and there never will be. Just like
there are only 2,000 Federal agents to deal with illegal
immigrants in this country, there will never be enough Federal
agents to deal with illegal immigrants, and there is never
going to be enough OSHA inspectors. But besides that, we need
to make sure first that they spend their time wisely and they
deal with problems where there is the greatest result for the
community, for the country, in safety and health, and that
obviously is spending their time in the most dangerous
categories out there rather than haphazardly moving around.
And I conclude we need this legislation if you are the only
two people on Earth that have been involved in this. I mean,
there is nothing that gets me going any more than a Federal
agency picking on small working families who are trying to make
a living, and if there is only two, so be it. We need to change
that. That is not what the Federal Government's job is to do,
to find one person or 50, but to mistreat people who are out
there trying to make a living, paying their taxes, doing all
the things the best they know how to do. And for an inspector
of any kind to spend their time--and in some cases it really is
they are after somebody. I know you don't want to hear that,
but it is true. They really, absolutely, pick on people
sometimes, and my observation is that when you get that Federal
badge, you grow 4 feet taller. And I don't even know if I am
complaining about that, but I know that is a fact. Sometimes
they just simply don't know how to deal with people.
So, Mr. Knott and Mr. Robson, if you are the only two
Americans that this bill would help, I think we ought to pass
it, and we ought to sign it into law and live with the
consequences, because the consequence is going to be those
inspectors that have grown 4 feet taller are going to be very
careful that they don't abuse their rights and their
responsibility to help make this country healthier and safer.
And I believe this would do it.
Mr. Kline hit it on the head. All you need to do is a few
of these, and somebody has got a boss over there somewhere who
is going to ask you why you are in court and having to pay the
court costs. And maybe that means they need a new inspector if
he can't stay out of court because he is filing bad complaints.
So I hope that we will be able to pass this in the House
and the Senate. And the next thing immediately to do is pay
attention to what is going on out there should this be law. We
will find out then how many people actually feel like they are
being trounced upon, I guess, by an OSHA inspector, that they
cannot in any way afford to defend themselves or their name, it
is just too costly. Under this new system, we will find out how
many appeals there really would be. And I will tell you what I
will bet. I will bet within 5 years you will find a lot less
appeals, because there is going to be a lot more forethought
given before people start writing tickets.
I thank all of you. I hope all of you are trying to get
home tonight, too. It is going to get wet around here tomorrow.
We are grateful, really grateful for your time and your
willingness to come and testify before the Subcommittee, and we
will keep trucking along and trying to see if we can't do
something up here right and get this thing signed into law.
Thank you all. The Subcommittee is adjourned.
[Whereupon, at 4:33 p.m., the Subcommittee was adjourned.]
[Additional material submitted for the record follows:]
Memorandum from Jon O. Shimabukuro, Legislative Attorney, American Law
Division, Congressional Research Service, on ``Size Standards and
Covered Employers Under Selected Statutes,'' Submitted for the Record
October 8, 2003
TO: House Committee on Education and the Workforce
Attention: Chris Jacobs
FROM: Jon O. Shimabukuro
Legislative Attorney
American Law Division
SUBJECT: Size Standards and Covered Employers Under Selected Statutes
This memorandum responds to your question concerning size standards
and covered employers under selected statutes. The Family and Medical
Leave Act (``FMLA''), the Worker Adjustment and Retraining Notification
Act (``WARN Act''), Title VII of the Civil Rights Act (``Title VII''),
the Age Discrimination in Employment Act (``ADEA''), and the Americans
With Disabilities Act (``ADA'') each define an employer to be either a
person or business entity having more than a specified number of
employees. <SUP>1</SUP> Employers retaining fewer employees than the
number specified by the statute are not subject to the statute's
requirements. You asked for a discussion of Congress's rationale in
adopting the various size standards. Although congressional reports and
debates related to some of the statutes include brief discussion on the
size standards, they still do not provide clear explanations for the
adoption of the specific standards. A review of secondary sources, such
as legal treatises and law review articles, also failed to uncover
Congress's reasons for establishing the various employee thresholds.
---------------------------------------------------------------------------
\1\ See FMLA, Sec. 101(4)(A), 29 U.S.C. Sec. 2611(4)(A) (``The term
``employer --(i) means any person engaged in commerce or in any
industry or activity affecting commerce who employs 50 or more
employees for each working day during each of 20 or more calendar
workweeks in the current or preceding calendar year . . .''); WARN Act,
Sec. 2(a)(1), 29 U.S.C. Sec. 2101(a)(1) (``As used in this chapter--(1)
the term ``employer'' means any business enterprise that employs--(A)
100 or more employees, excluding part-time employees; or (B) 100 or
more employees who in the aggregate work at least 4,000 hours per week
(exclusive of hours of overtime)''); Title VII, Sec. 701(b), 42 U.S.C.
Sec. 2000e(b) (``The term ``employer'' means a person engaged in an
industry affecting commerce who has fifteen or more employees for each
working day in each of twenty or more calendar weeks in the current or
preceding calendar year, and any agent of such a person . . .''); ADEA,
Sec. 11(b), 29 U.S.C. Sec. 630(b) (``The term ``employer'' means a
person engaged in an industry affecting commerce who has twenty or more
employees for each working day in each of twenty or more calendar weeks
in the current or preceding calendar year . . .''); ADA,
Sec. 101(5)(A), 29 U.S.C. Sec. 12111(5)(A) (``The term ``employer''
means a person engaged in an industry affecting commerce who has 15 or
more employees for each working day in each of 20 or more calendar
weeks in the current or preceding calendar year, and any agent of such
person . . .'').
---------------------------------------------------------------------------
With respect to two statutes, the FMLA and Title VII, congressional
reports and debates show Congress thinking about the size standards
with regard to small employers. During debate on the FMLA, at least two
members commented on the measure's fifty employee threshold for covered
employers. These comments suggest a general understanding of an intent
to exempt small employers from the FMLA's coverage. The comments do
not, however, provide insight on why Congress chose fifty employees as
the numerical threshold.
In discussing the treatment of temporary staffing organizations
that retain few permanent employees, but assign numerous temporary
employees to client offices, Rep. Butler Derrick noted that ``[s]ince
the 50 employee exemption was included in recognition of the problems
faced by small employers, it would seem inconsistent to require small
temporary help offices to cover their staff employees if they number
less than 50. <SUP>2</SUP> Similarly, Del. Eleanor Holmes Norton
commented that ``[s]mall businesses will be well shielded from the
effects of H.R. 1. It is the family members who work for them who will
still have many struggles. <SUP>3</SUP> The debates on the FMLA do not
otherwise appear to offer a more detailed explanation for choosing
fifty employees as the numerical threshold.
---------------------------------------------------------------------------
\2\ 139 Cong. Rec. 1994 (1993).
\3\ 139 Cong. Rec. 1999 (1993).
---------------------------------------------------------------------------
Although congressional reports that accompanied Title VII do not
explain how the employee threshold in that statute was chosen, a House
report on the Equal Employment Opportunity Act of 1972 (``EEOA''), a
measure that amended Title VII, does discuss the size standard with
regard to small employers. <SUP>4</SUP> Prior to the passage of the
EEOA, persons retaining twenty-five or more employees were considered
to be ``employers'' for purposes of coverage under the statute. The
EEOA amended Title VII to include within the definition of the term
``employer'' persons retaining fifteen or more employees.
---------------------------------------------------------------------------
\4\ See H.R. Rep. No. 92-238, at 20 (1971), reprinted in 1972
U.S.C.C.A.N. 2137, 2155.
---------------------------------------------------------------------------
According to the House report, the change was made in recognition
of discrimination being ``equally invidious whether practiced by small
or large employers.'' <SUP>5</SUP> The House Committee on Education and
Labor, the committee responsible for the report, observed that
---------------------------------------------------------------------------
\5\ Id.
---------------------------------------------------------------------------
[b]ecause of the existing limitation . . . proscribing the
coverage of Title VII to 25 or more employees or members, a
large segment of the Nation's work force is excluded from an
effective Federal remedy to redress employment discrimination .
. . the Committee feels that the [Equal Employment Opportunity]
Commission's remedial power should also be available to all
segments of the work force. <SUP>6</SUP>
---------------------------------------------------------------------------
\6\ Id.
---------------------------------------------------------------------------
The amendment suggests Congress's interest in excluding only the
smallest employers from coverage under Title VII.
While it is possible that Congress was similarly concerned about
small employers when it established the size standards in the WARN Act,
the ADEA, and the ADA, language to support that concern was not found
in a review of the congressional reports and debates that accompanied
those statutes. In general, any discussion of the size standards in the
three statutes appears to have been limited to a reiteration of those
standards. For example, the House report on the ADEA states simply:
``The term ``employer'' is so defined as to include only persons having
25 or more employees for each working day in each of 20 or more
calendar weeks in the current or preceding calendar year. <SUP>7</SUP>
As noted, secondary sources were also unable to explain why Congress
chose the specified employee thresholds.
---------------------------------------------------------------------------
\7\ H. Rep. No. 805, at 11 (1967), reprinted in 1967 U.S.C.C.A.N.
2213, 2223.
---------------------------------------------------------------------------
While Congress seems to have been concerned about small employers
being burdened by the requirements imposed by the five statutes, it is
unclear why the numerical thresholds used in the statutes were chosen.
______
Memorandum from Jon O. Shimabukuro, Legislative Attorney, American Law
Division, Congressional Research Service, on ``Covered Parties Under
the Equal Access to Justice Act,'' Submitted for the Record
October 20, 2003
TO: House Committee on Education and the Workforce
Attention: Chris Jacobs
FROM: Jon O. Shimabukuro
Legislative Attorney
American Law Division
SUBJECT: Covered Parties Under the Equal Access to Justice Act
This memorandum responds to your question concerning the size and
financial standards that are used in the Equal Access to Justice Act
(``EAJA'') to determine who is a ``party'' under that statute.
<SUP>1</SUP> The EAJA seeks to remove economic deterrents to
challenging government action by allowing certain individuals and
organizations to recover attorney fees, expert witness fees, and other
costs when they prevail against the United States. <SUP>2</SUP> Under
the EAJA, a prevailing party may seek costs and fees related to an
adversary adjudication or judicial proceeding. In general, a ``party''
is defined by the EAJA as either (a) an individual whose net worth did
not exceed $2,000,000 at the time the adjudication was initiated or the
civil action was filed, or (b) any owner of an unincorporated business
or any partnership, corporation, association, unit of local government,
or organization with a net worth not exceeding $7,000,000 at the time
the adjudication was initiated or the civil action was filed, and with
fewer than 500 employees at the time the adjudication was initiated or
the civil action was filed. <SUP>3</SUP> An organization described in
section 501(c)(3) of the Internal Revenue Code and a cooperative
association defined in section 15(a) of the Agricultural Marketing Act
shall also be considered ``parties'' regardless of the net worth of the
organization or cooperative association. <SUP>4</SUP>
---------------------------------------------------------------------------
\1\ Equal Access to Justice Act, Pub. L. No. 96-481, tit. II, 94
Stat. 2325 (1980) (amending 5 U.S.C. Sec. 504 and 28 U.S.C. Sec. 2412).
This memorandum supplements an October 8, 2003 memorandum, Size
Standards and Covered Employers Under Selected Statutes. A table that
compares the size standards discussed in that memorandum with the
standards discussed in this memorandum is included.
\2\ See S. Rep. No. 96-253 (1979).
\3\ See 5 U.S.C. Sec. 504(b)(1)(B) (`` party'' means a party, as
defined in section 551(3) of this title, who is (i) an individual whose
net worth did not exceed $2,000,000 at the time the adversary
adjudication was initiated, or (ii) any owner of an unincorporated
business, or any partnership, corporation, association, unit of local
government, or organization, the net worth of which did not exceed
$7,000,000 at the time the adversary adjudication was initiated, and
which had not more than 500 employees at the time the adversary
adjudication was initiated; except that an organization described in
section 501(c)(3) of the Internal Revenue Code of 1986 . . . exempt
from taxation under section 501(a) of such Code, or a cooperative
association as defined in section 15(a) of the Agricultural Marketing
Act . . . may be a party regardless of the net worth of such
organization or cooperative association . . .''); 28 U.S.C.
Sec. 2412(d)(2)(B) (`` party'' means (i) an individual whose net worth
did not exceed $2,000,000 at the time the civil action was filed, or
(ii) any owner of an unincorporated business, or any partnership,
corporation, association, unit of local government, or organization,
the net worth of which did not exceed $7,000,000 at the time the civil
action was filed, and which had not more than 500 employees at the time
the civil action was filed; except that an organization described in
section 501(c)(3) of the Internal Revenue Code of 1986 . . . exempt
from taxation under section 501(a) of such Code, or a cooperative
association as defined in section 15(a) of the Agricultural Marketing
Act . . . may be a party regardless of the net worth of such
organization or cooperative association . . .'').
\4\ Id.
---------------------------------------------------------------------------
You asked for a discussion of Congress's rationale in adopting the
size and financial standards used to determine who is a ``party'' under
the EAJA. Although congressional documents describe a general interest
in making it easier for individuals and small businesses to challenge
government action, they do not provide clear explanations for why the
specific standards were adopted. For example, when the EAJA was
introduced, Sen. Pete V. Domenici explained:
The basic problem this bill seeks to overcome is the inability
of many Americans to combat the vast resources of the
Government in administrative adjudication. In the usual case, a
party has to weigh the high cost of litigation or agency
proceedings against the value of the rights to be asserted.
Individuals and small businesses are in far too many cases
forced to knuckle under to regulations even though they have a
direct and substantial impact because they cannot afford the
adjudication process. In many cases the Government can proceed
in expectation of outlasting its adversary. The purpose of the
bill is to redress the balance between the Government acting in
its discretionary capacity and the individual. <SUP>5</SUP>
---------------------------------------------------------------------------
\5\ 125 Cong. Rec. 1437 (1979) (statement of Sen. Pete V.
Domenici).
---------------------------------------------------------------------------
Similarly, the Senate report that accompanied the EAJA discusses
individuals and small businesses with respect to the term ``party''
without identifying the reasons for choosing the specific standards:
``The definition thus establishes financial criteria which limit the
bill's applications to those persons and small businesses for whom
costs may be a deterrent to vindicating their rights.'' <SUP>6</SUP>
---------------------------------------------------------------------------
\6\ S. Rep. No. 96-253, at 17 (1979).
---------------------------------------------------------------------------
A review of secondary sources, including law review articles, also
failed to uncover Congress's reasons for establishing the size and
financial standards used to define a ``party'' under the EAJA. Although
Congress would appear to have been concerned with the economic
deterrents that prevent individuals and small employers from pursuing
claims against the government, it is not clear why the specific size
and financial standards used in the EAJA were chosen.
______
[An attachment follows:]
[GRAPHIC] [TIFF OMITTED] T0137.001
Letter from R. Bruce Josten, Executive Vice President, Government
Affairs, U.S. Chamber of Commerce, Submitted for the Record
[GRAPHIC] [TIFF OMITTED] T0137.002
Letter from the OSHA Fairness Coalition, Submitted for the Record
October 1, 2003
The Honorable Charles Norwood
Chairman, Subcommittee on Workforce Protections
Committee on Education and the Workforce
U.S. House of Representatives
Washington, DC 20515
Dear Chairman Norwood:
The OSHA Fairness Coalition, being dedicated to bringing greater
balance to the Occupational Safety and Health Act (OSH Act), welcomes
this opportunity to express our support for H.R. 2731, the Occupational
Safety and Health Small Employer Access to Justice Act of 2003. This
important bill would allow small businesses to recover attorney fees
when prevailing in suits against the Occupational Safety and Health
Administration (OSHA). On behalf of the various national trade
associations and business organizations that comprise the OSHA Fairness
Coalition, thank you for holding a hearing on this important issue.
All too often small businesses pay unwarranted fines or settle
meritless suits just to avoid expensive litigation against OSHA, an
agency with seemingly endless resources. Indeed, few small businesses
can afford to pay hundreds of thousands of dollars in attorney fees to
dispute a $500, $1,000, or even $10,000 fine. As a result, meritless
OSHA citations have become one more hidden ``cost of doing business''
that stunts the creation and growth of small businesses--a key source
of American jobs and economic prosperity.
In 1980 Congress attempted to protect small businesses from such
abusive prosecution by enacting the Equal Access to Justice Act (EAJA).
Over the years, however, EAJA has proven ineffective, primarily because
agencies may escape paying fees, by demonstrating that they were
``substantially justified'' in bringing the case or citation, or that
``special circumstances'' existed to deny an award. Exacerbating this
problem are court decisions upholding that an agency need only show
that it had a reasonable basis for issuing the citation to be
``substantially justified.''<SUP>1</SUP> This is particularly troubling
in OSHA cases, where the many technical and complex requirements of the
OSH Act have made it fairly easy for OSHA to come up with creative
arguments to meet these minimal criteria.
---------------------------------------------------------------------------
\1\ See e.g., Pierce v. Underwood, 487 U.S. 552 (1988).
---------------------------------------------------------------------------
As a result, most small businesses choose to settle even the most
meritless cases. Furthermore, employers that are successful against
OSHA after deciding to engage in protracted litigation, end up being
denied attorney fees--thus paying out more in fees than the original
fine. This problem was detailed using both anecdotal stories and
statistical evidence provided in testimony during hearings held on
September 17, 2003, May 10, 1999, and February 5, 1998.
H.R. 2731 remedies these deficiencies in EAJA by closing the
substantial justification and special circumstances loopholes and
awarding small businesses their attorney fees anytime they prevail
against OSHA.
We thank you for your leadership on this issue and look forward to
working with you as H.R. 2731 moves through the legislative process.
Sincerely,
The OSHA Fairness Coalition
______
Letter from Todd O. McCracken, President, National Small Business
Association, Submitted for the Record
October 2, 2003
The Honorable Dr. Charlie Norwood
House Education and Workforce Subcommittee on Workforce Protections
United States House of Representatives
2125 Rayburn House Office Building
Washington, DC 20515
Dear Chairman Norwood:
On behalf of the National Small Business Association (formerly
National Small Business United), I'd like to thank you for your
continued leadership in advocating for small businesses across the
country. As we hear time and again, small businesses need and deserve
protections against an over-reaching government, and we believe that
your bill,, the Occupational Safety and Health Small Employer Access to
Justice Act (H.R. 2731), will do just that.
NSBA supports your efforts to ensure that small businesses get a
fair shake in litigations with the Occupational Safety and Health
Administration. H.R. 2731, if ratified, would allow small business
owners to recoup legal fees spent when successfully defending
themselves against egregious lawsuits filed by federal agencies. By
enabling small businesses to reasonably defend themselves against both
judicial review and adversarial adjudications, this legislation would
ensure that small businesses are empowered to stand up for themselves
rather than settle due to financial constraints.
With the massive bankrolls of taxpayer dollars in the hands of the
federal government, small businesses rarely stand a chance in defending
themselves, and this legislation would alleviate a large proportion off
that problem. Entrepreneurs must be given the same opportunity to
defend their business against egregious enforcements as large
businesses with large checkbooks have, and we believe that H.R. 2731 is
a good start.
H.R. 2731 will level the playing field for small business owners
and encourage OSHA to give more thoughtful consideration to assessing
enforcements against small businesses. We applaud your dedication to
the America's small businesses and look forward to working with you to
ensure their fair treatment by the federal government.
Sincerely,
Todd O. McCracken
President
National Small Business Association
______
Letter from Randel K. Johnson, Vice President, Labor, Immigration &
Employee Benefits, U.S. Chamber of Commerce, Submitted for the Record
[GRAPHIC] [TIFF OMITTED] T0137.003
[GRAPHIC] [TIFF OMITTED] T0137.004
[GRAPHIC] [TIFF OMITTED] T0137.005
[GRAPHIC] [TIFF OMITTED] T0137.006
Letter from James ``Skipper'' Kendrick, CSP, President, American
Society of Safety Engineers, Submitted for the Record
September 15, 2003
The Honorable Charlie Norwood
Chairman
Subcommittee on Workforce Protections
Committee on Education and the Workforce
U.S. House of Representatives
2181 Rayburn House Office Building
Washington, DC 20515-6100
RE:Comments on HR 2728, HR 2729, HR 2730 and HR 2731
Dear Chairman Norwood:
The American Society of Safety Engineers (ASSE), on behalf of its
30,000 member safety, health and environmental professionals, sincerely
commends you for your continued leadership in advancing occupational
safety and health issues. ASSE appreciates the opportunity to offer the
following comments concerning the series of bills you have introduced
aimed at addressing long-standing fairness issues in occupational
safety and health regulation. As you know, ASSE is a professional
society whose members are dedicated to workplace safety and health and
who deal every day with the same concerns your legislations seeks to
address.
The Society has reviewed these bills and offers these comments to
provide support for your efforts where we can but also to suggest
changes that ASSE believes can help the bills achieve their overall
purpose of improving the ability of small businesses in good faith to
meet federal occupational safety and health requirements without
excessive burdens that may take away incentives to make such
improvements.
HR 2728 -- Occupational Safety and Health Small Business Day in Court
Act of 2003
ASSE understands the reasoning underlying HR 2728, which is to
codify giving some lee way to employers who, because of unique
circumstances or despite their best efforts, miss the 15-day contest
deadline to respond to Occupational Safety and Health Administration
(OSHA) citations and, for the same reason, to give the Occupational
Safety and Health Review Commission (OSHRC), on a case-by-case basis,
the ability to reopen a final order for similar failures to respond.
ASSE's members agree that 15 days can, in some unique
circumstances, be an unnecessarily difficult deadline to meet.
For a truly small business owner who is a sole manager and may be
out of town on vacation, 15 days to contest may not be enough time. For
some small businesses in remote areas, finding the appropriate safety,
health and environmental resources to give advice or help respond
adequately may be difficult in that time frame. For nearly all
businesses in nearly all situations, however, 15 days is time enough,
and as written, the suggested language-- unless such failure results
from mistake, inadvertence, surprise, or excusable neglect --is far too
broad. The language would give too many businesses too easily achieved
excuses for not meeting the deadline and, ultimately, eviscerate the
15-day deadline.
ASSE urges a more practical solution to this problem, which is
simply to expand the 15-day contest time period to 18 days. The 3 extra
days could give just enough additional time to help small companies in
unique situations without unduly compromising the requirement that
employers respond quickly.
HR 2729 -- ``Occupational Safety and Health Review Commission
Efficiency Act of 2003''
HR 2729 contains several provisions aimed at changing OSHRC. ASSE
can only support one of these proposed changes--expansion of the OSHRC
from 3 to 5 members. The work of the OSHRC could be more efficiently
accomplished with the addition of two more members.
ASSE cannot support the other provisions of this bill, however.
Requiring members to be lawyers goes against the history of some very
good, productive OSHRC members who were not lawyers and would mean that
most safety, health and environmental professionals, who ASSE
represents, could not be members no matter how otherwise well qualified
they might be.
Provisions that would give the President dramatically increased
control over OSHRC members appointments also cannot be supported by
ASSE. Giving the President at-will power to extend a member's term
without limit as well as the power to remove a member ``for
inefficiency, neglect of duty, or malfeasance in office'' effectively
takes away any independence of the OSHRC. The power the Presidency has
in making appointments should be power enough. Federal law already
adequately protects the public from members who might abuse or neglect
their responsibilities during their terms of office.
Finally, if it is advisable to expand the OSHRC from three to five
members, as HR 2729 proposes, ASSE does not understand why it would be
advisable to allow OSHRC's powers to be delegated to groups of three
members, where a quorum of two members would be allowed, as HR 2729
also provides. For the same reasons we support an expansion of OSHRC,
we cannot support a provision that would allow as few as two members to
decide issues that can impact worker health and safety.
HR 2730 -- ``Occupational Safety and Health Independent Review of OSHA
Citations Act of 2003''
ASSE agrees that fundamental fairness demands that employers should
have the opportunity for a fair and independent review of any charge
against them as envisioned in the legislative history of the
Occupational Safety and Health Act. Recent case law decisions have
required OSHRC to defer extensively to the Secretary of Labor's
interpretation of standards or enforcement actions, which essentially
alters the burden of proof placed upon employers. This approach is
corrected by HR 2730, which clarifies that, on appeal, OSHRC's
decisions ``with respect to all questions of law'' are to be given
``deference if reasonable.'' OSHRC would then be free to review the
facts and applicable law de novo.
ASSE is sympathetic with the intent of HR 2730, but we cannot
support the bill. Attempting to address the limits on OSHRC's ability
to review cases is a laudable effort. Yet, the phrase ``if reasonable''
only serves to change where the difficult question of appropriate
review is conducted, not solve it. Frankly, we do not see how these
provisions can be rewritten to provide the best, appropriate balance.
If that is the case, ASSE must rely on the judicial decisions have seen
fit to defer to the Secretary of Labor. While not a perfect solution,
at least the Secretary of Labor's decisions are more visible to
Congress and the American people, providing another kind of check and
balance to inappropriate actions.
HR 2731 -- ``Occupational Safety and Health Small Employer Access to
Justice Act of 2003''
Finally, ASSE has evaluated the expansion of relief under HR 2731,
which would entitle employers with fewer than 100 employees and $1.5
million in revenues to attorney fees if they prevail in OSHA
litigation. ASSE understands that it can be extremely difficult, under
current law, for small companies to gain relief by establishing that
OSHA's position was not ``substantially justified'' when going against
the Office of the Solicitor with a great deal of experience in carrying
this minimal burden. As a result, small companies may both ``win'' a
case but ``lose'' because attorney fees could exceed the amount of
proposed civil penalties. Some added protections for truly small
employers are needed.
ASSE supports providing small employers the ability to recover
attorney fees that HR 2731 proposes. However, ASSE can only support its
application to truly small employers. The definition of small employer
in the bill must be lowered to 25 and $1 million in assets. If the
concern is to address a disproportionate burden placed on small
employers in challenging OSHA actions, a 100-employee company with $1.5
million in assets, which the bill defines as a small employer, would
appear to be able to assume the risk of litigation. Awarding attorneys
fees is a dramatic step in limiting the power of the government to
fulfill its enforcement powers and only where experience shows that
individuals or companies may be powerless. That case can be made for
truly small employers.
Conclusion
ASSE appreciates your continued commitment to workplace safety and
health through your thoughtful consideration of practical, workable
means that encourage employers to be invested the welfare of their
employees. ASSE hopes that our comments help you and the Subcommittee
to determine the best way to meet the goal of these bills. Giving small
employers new tools to help them work with OSHA in addressing workplace
safety and health risks is a goal we share with you. As always, ASSE
appreciates your consideration of these comments and looks forward to
continued cooperation with you in enhancing workplace safety and
health.
Sincerely,
James ``Skipper'' Kendrick, CSP
President
American Society of Safety Engineers
______
Statement of William Samuel, Legislative Director, American Federation
of Labor and Congress of Industrial Organizations (AFL-CIO), Submitted
for the Record
The American Federation of Labor and Congress of Industrial
Organizations (AFL-CIO), a federation of 64 affiliated unions
representing 13 million working men and women and their families,
appreciates the opportunity to submit this testimony in opposition to
H.R. 2731, the ``Occupational Safety and Health Small Employer Access
to Justice Act of 2003.''
H.R. 2731 would amend the Occupational Safety and Health Act (OSH
Act) to require the Secretary of Labor to pay attorneys' fees and
expenses to prevailing employers, as defined in the bill, in any
administrative or judicial proceeding concerning an enforcement action
initiated by the Occupational Safety and Health Administration (OSHA)
or a successful legal challenge by the employer to any OSHA rule or
regulation.
The AFL-CIO strongly opposes this bill. In our view, the bill is
misguided and would seriously weaken enforcement of the OSH Act at a
time when greater, not less, enforcement of the law is sorely needed.
Each year, millions of workers are injured or made ill from job
hazards. Sixteen workers die on the job each day, and the number would
be far higher if deaths from occupational diseases such as cancer and
black lung disease were included. At its current budget levels, OSHA's
enforcement reach is severely limited. In fiscal year 2002, 887 federal
OSHA inspectors conducted 37,565 inspections in workplaces falling
under federal OSHA's jurisdiction. (State OSHA plans conducted 59,872
inspections in the workplaces falling within their jurisdiction). At
its current staffing and inspection levels, it would take federal OSHA
115 years to inspect each workplace under its jurisdiction just
once.<SUP>1</SUP>
---------------------------------------------------------------------------
\1\ AFL-CIO, Death on the Job: The Toll of Neglect (April 2003), at
5.
---------------------------------------------------------------------------
The penalties assessed by OSHA for violations of the law are
exceedingly modest. In fiscal year 2002, OSHA assessed a total of $73
million in penalties against employers for 78,433 violations of the law
- an average penalty of only $928. The average penalty for a serious
violation of the OSH Act, defined as a hazard posing a ``substantial
probability that death or serious physical harm could result,'' 29
U.S.C. Sec. 666(k), is only $867 out of a possible $7000.<SUP>2</SUP>
---------------------------------------------------------------------------
\2\ AFL-CIO, Death on the Job: The Toll of Neglect (April 2003), at
4.
---------------------------------------------------------------------------
These statistics show that more, not less, enforcement of the OSHA
law is needed to protect American workers from job hazards. But H.R.
2731 would chill enforcement of the law and would divert much-needed
resources from enforcement and standard-setting to paying the attorneys
fees and costs of employers that successfully fight an OSHA citation or
an OSHA rule.
Under the age-old American Rule, each party to litigation pays its
own expenses. This is true not only in private litigation but also in
cases in which the government acts as public prosecutor to enforce
consumer protection laws, environmental laws, safety and health laws,
and labor laws. The Equal Access to Justice Act (EAJA) provides a
limited exception to the American Rule. Under EAJA, organizations with
no more than 500 employees and a net worth of no more than $7 million,
can recover their fees and costs if they prevail in administrative or
judicial proceedings against any United States government agency, but
only if they meet two conditions. First, an award is proper under EAJA
only if the agency's position was not substantially justified. Second,
an award can only be made if there are no special circumstances that
would make the award unjust. 5 U.S.C. Sec. 504.
H.R. 2731 would create a special exception from the American Rule,
and from EAJA, for legal proceedings under the OSH Act. Employers that
prevailed in administrative or judicial proceedings under the OSH Act
would be entitled to fees and costs from OSHA without having to show
that the government's position lacked substantial justification and
that there are no special circumstances that would make an award
unjust.
There is no credible reason for carving out this exception either
to the American Rule or to EAJA. By subjecting OSHA to the payment of
attorney's fees and costs every time the agency loses a case to an
employer falling within the bill's definition, the bill would seriously
weaken OSHA's effectiveness.
Notwithstanding the bill's title as being directed to ``small''
employers, the bill's reach is broad. It applies to all employers with
not more than 100 employees and a net worth of not more than $1.5
million. Bureau of Labor Statistics data for the first quarter of 2000
show that there were nearly 7.4 million private sector establishments
with 99 or fewer employees--or 97.7 percent of all private sector
establishments. In contrast, Congress traditionally defines ``small
business'' for the purpose of establishing coverage under a range of
other employment-related laws by imposing a far smaller ceiling on the
size of the workforce. The Age Discrimination in Employment Act, for
example, applies to employers who have ``twenty or more employees for
each working day in each of twenty or more calendar weeks in the
current or preceding calendar year.'' 29 U.S.C. Sec. 630(b). Title VII
of the Civil Rights Act, 42 U.S.C. Sec. 2000e(b), covers employers with
fifteen or more employees. But almost all private sector establishments
would fall within the employee threshold for coverage established by
H.R. 2731.
Nor would the bill's limitation in coverage to employers with less
than $1.5 million in net worth necessarily limit its broad reach. In
particular, many businesses in the service sector have limited capital
assets and would fall within the $1.5 million net worth limit.
Telemarketing companies, building services providers, and personnel
agencies are but a few examples of lowcapital industries whose
employers could fall within the $1.5 million definition (and who would
similarly fall within the 100-employee threshold). If the definition
were based on $1.5 million in annual sales as opposed to net worth,
fully 41 percent of companies would fall within the definition,
according to Dun & Bradstreet data.
Statistics under the OSH Act belie any claim that small employers
are under tremendous pressure to settle OSHA citations in order to
avoid the high cost of litigating them. First, as already discussed,
monetary penalties under the OSH Act are exceedingly modest--an average
of only $928 per violation of the law. Moreover, under the OH Act, the
penalty may be reduced according to the size of the business. Employers
with between 1 and 25 employees may receive a penalty reduction of up
to 60%, while those with between 26 and 100 employees may receive a
reduction of up to 40%.<SUP>3</SUP>
---------------------------------------------------------------------------
\3\ OSHA Instruction CPL 2.103.
---------------------------------------------------------------------------
According to OSHA, the agency awarded $192,494 in EAJA fees during
Fiscal Years 1987 - 1997, in 28 cases. This amounts to an average EAJA
award of $6,874, a statistic which hardly shows that employers--small
or large--have expended huge sums of money in defense of merit's suits
under the OH Act.
In fiscal year 2002, employers contested only 8.1 % of all OH Act
citations issued against them.<SUP>4</SUP> Clearly, this is not because
they face prohibitively high penalties if they choose to forego
settlement and pursue their administrative and judicial remedies. But
H.R. 2731 would provide a monetary incentive for more employers to
challenge OSHA citations, to spare no expense, and to drag out
litigation of the case, because at the end of the day they could
recover their attorneys fees and costs if they prevailed.
---------------------------------------------------------------------------
\4\ BNA Occupational Safety & Health Reporter (Jan. 9, 2003), at S-
9
---------------------------------------------------------------------------
As previously, indicated, EAJA currently provides for fee awards if
the government's position is not ``substantially justified.'' EAJA thus
penalizes--and deters--the filing of insubstantial complaints. No
rational public policy would be furthered by discouraging OSHA from
issuing citations that are substantially justified, but as to which the
government ultimately is unable to carry its burden of proof. Rather,
the inevitable result of such a rule, which would penalize the
government every time it loses, would be to chill the issuance of
meritorious citations in close cases on behalf of employees exposed to
unsafe working conditions.
It is important to point out that H.R. 2731 is not limited to
enforcement proceedings initiated by OSHA. By its terms, H.R. 2731
applies to any administrative or judicial proceeding, meaning that
qualifying employers could recover their attorneys fees and costs for
successfully challenging an OSHA standard or regulation in court. While
OSHA has been quite successful in defending its rules and standards,
this provision will create a huge financial incentive for businesses to
fight OSHA's rules even more routinely and aggressively, given the
possibility of recovering their attorneys fees and costs at the end. As
a result, OSHA will be even more reluctant to issue much-needed
workplace safety rules to protect workers.
Unless H.R. 2731 were accompanied by increased appropriations to
pay the awards the bill requires, the net effect of enacting this
legislation would be to diminish the resources available for the
enforcement of the OSH Act. As previously indicated, OSHA already
operates under a very tight budget--a budget that this Administration
repeatedly has sought to cut. Passage of this bill would further reduce
the resources available for implementing and enforcing the OSH Act, to
the detriment of working men and women who depend on OSHA to protect
their safety and health on the job.
For all these reasons, the AFL-CIO believes that H.R. 2731 is
misguided and one-sided and should be rejected.
<all>