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109th Congress                                             Rept. 109-61
                        HOUSE OF REPRESENTATIVES
 1st Session                                                     Part 1

======================================================================
 
OCCUPATIONAL SAFETY AND HEALTH SMALL EMPLOYER ACCESS TO JUSTICE ACT OF 
                                  2005

                                _______
                                

                 April 18, 2005.--Ordered to be printed

                                _______
                                

    Mr. Boehner, from the Committee on Education and the Workforce, 
                        submitted the following

                              R E P O R T

                             together with

                             MINORITY VIEWS

                        [To accompany H.R. 742]

      [Including cost estimate of the Congressional Budget Office]

      The Committee on Education and the Workforce, to whom was 
referred the bill (H.R. 742) to amend the Occupational Safety 
and Health Act of 1970 to provide for the award of attorneys' 
fees and costs to small employers when such employers prevail 
in litigation prompted by the issuance of a citation by the 
Occupational Safety and Health Administration, having 
considered the same, report favorably thereon without amendment 
and recommend that the bill do pass.

                                Purpose

    The purpose of H.R. 742, the ``Occupational Safety and 
Health Small Employer Access to Justice Act of 2005,'' is to 
assist small businesses in defending themselves against 
government bureaucracy, specifically, less-than-meritorious 
cases brought against them by the Occupational Safety and 
Health Administration (OSHA). The bill provides that a small 
business (defined as a business with less than 100 employees 
and a net worth of no more than seven million dollars) may 
recover attorneys' fees when it prevails in an adjudicatory 
action brought by OSHA. The legislation is intended to prevent 
non-meritorious lawsuits from proceeding and to provide small 
employers the means to adequately represent themselves against 
actions brought by OSHA.

                            Committee Action


                             109TH CONGRESS

    H.R. 742, the ``Occupational Safety and Health Small 
Employer Access to Justice Act of 2005,'' was introduced by 
Congressman Charlie Norwood on February 10, 2005, and was 
referred to the Committee on Education and the Workforce and 
held at full committee. In light of the extensive legislative 
record developed with respect to substantively identical 
legislation in the 107th and 108th Congresses, the Committee 
held no hearings on the bill prior to markup.
    On April 13, 2005, the Committee favorably reported the 
bill to the House of Representatives, without amendment, by a 
roll call vote of 27 to 18.
    H.R. 742 is substantively identical to H.R. 2731 as passed 
by the House in the 108th Congress.

                             108TH CONGRESS

    On April 3, 2003, comprehensive OSHA reform legislation, 
H.R. 1583, the ``Occupational Safety and Health Fairness Act of 
2003,'' was introduced in the House. The Subcommittee on 
Workforce Protections held a hearing on H.R. 1583 on June 17, 
2003.\1\ At this hearing, the Subcommittee heard testimony from 
Mr. Brian Landon of Canton, Pennsylvania, testifying on behalf 
of the National Federation of Independent Businesses; Mr. John 
Molovich, Health and Safety Specialist, United Steelworkers of 
America, of Pittsburgh, Pennsylvania; Mr. Ephraim Cohen, a 
small business owner from New York; and Arthur Sapper, Esq., an 
attorney of the law firm McDermott, Will & Emery in Washington, 
DC, testifying on behalf of the U. S. Chamber of Commerce. 
Legislation incorporating section 6 of H.R. 1583 was 
subsequently introduced as H.R. 2731, the ``Occupational Safety 
and Health Small Employer Access to Justice Act of 2003,'' on 
July 15, 2003.
---------------------------------------------------------------------------
    \1\ See Hearing on H.R. 1583, ``The Occupational Safety and Health 
Fairness Act of 2003,'' before the Subcommittee on Workforce 
Protections, Committee on Education and the Workforce, U.S. House of 
Representatives, 108th Congress, First Session, Serial No. 108-20 
(hereinafter ``Hearing on H.R. 1583'').
---------------------------------------------------------------------------
    An additional legislative hearing on H.R. 2731 was held on 
September 17, 2003.\2\ At that hearing, the Subcommittee heard 
testimony relating to the ability of small businesses to 
recover attorneys' fees from OSHA from Mr. Lynn Robson, 
Robson's Greenhouse, Belleville, Michigan, testifying on behalf 
of the American Farm Bureau; Mr. James Knott, Riverdale Mills, 
Northbridge Massachusetts, testifying on behalf of the National 
Association of Manufacturers; Mr. Scott Nelson, Public Citizen 
Litigation Group, Washington, DC; and Ms. Anita Drummond, 
Senior Director, Legislative and Regulatory Affairs, Associated 
Builders and Contractors, of Arlington, Virginia.
---------------------------------------------------------------------------
    \2\ See Hearing on H.R. 2731, ``The Occupational Safety and Health 
Small Employer Access to Justice Act of 2003,'' before the Subcommittee 
on Workforce Protections, Committee on Education and the Workforce, 
U.S. House of Representatives, 108th Congress, First Session Serial No. 
108-32 (hereinafter ``Hearing on H.R. 2731'').
---------------------------------------------------------------------------
    On May 5, 2004, the Committee on Education and the 
Workforce discharged the Subcommittee on Workforce Protections 
from further consideration of the bill, and proceeded to 
consider H.R. 2731. An amendment by Subcommittee Chairman 
Norwood in the nature of a substitute was accepted by unanimous 
consent. The substitute: (a) changed the short title of the 
bill from the ``Occupational Safety and Health Small Employer 
Access to Justice Act of 2003'' to the ``Occupational Safety 
and Health Small Business Day in Court Act of 2004;'' and (b) 
raised the net worth threshold for a small businesses to be 
able to recover attorneys' fees under the bill from one million 
dollars to seven million dollars. The Committee ordered H.R. 
2731, as thus amended, favorably reported to the House of 
Representatives by a roll call vote of 24 yeas and 20 nays.
    On May 18, 2004, H.R. 2731 passed the House of 
Representatives as amended by a vote of 233 yeas and 194 
nays.\3\
---------------------------------------------------------------------------
    \3\ Pursuant to the rule providing for its consideration, H. Res. 
645, the bill was deemed amended to address a technical error relating 
to the bill's short title upon adoption of the rule. Further to the 
provisions of H. Res. 645, upon approval of the bill it was enrolled 
with four other bills (H.R. 2728, H.R. 2729, H.R. 2730, and H.R. 2432) 
and thus transmitted to the Senate.
---------------------------------------------------------------------------

                                Summary

    H.R. 742 demonstrates that Congress understands the plight 
of the small business owner who feels that there is no merit to 
an OSHA inspector's citations, but who has limited financial 
resources to defend the company against a well-financed, well-
represented government agency. This burden is hardest on small 
businesses that would be better served by reinvesting financial 
resources into the company and its employees rather than 
fighting non-meritorious citations. Small businesses should be 
focused on what they do best, creating jobs for working 
Americans, rather than draining their resources fighting 
government bureaucracy.
    The Occupational Safety and Health Small Employer Access to 
Justice Act of 2005 would amend the Occupational Safety and 
Health Act (OSH Act) to provide that businesses of 100 or fewer 
employees and seven million dollars or less in net worth can 
recover attorneys' fees and expenses paid to successfully 
defend against a meritless OSHA citation. This would ensure 
that small businesses have the incentive to adequately 
represent themselves against OSHA, a government agency with 
vastly superior legal funds and legal resources. It is further 
intendedthat H.R. 742 will provide an incentive to OSHA to 
examine carefully the cases it brings against small businesses to 
ensure that they are truly meritorious.

                            Committee Views

    In 1980, Congress passed the Equal Access to Justice Act 
(EAJA), 28 U.S.C. Sec. 2412 et seq., to enable small 
enterprises who successfully challenge government enforcement 
actions to recover their legal fees. In so doing, Congress 
recognized the disproportionate burden on small businesses when 
they engage in a legal challenge against the federal 
government. As Senator Pete Domenici stated upon introduction 
of EAJA in the Senate, ``[S]mall 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.'' \4\
---------------------------------------------------------------------------
    \4\ 125 Cong. Rec. 1437 (1979) (statement of Sen. Pete V. Domenici 
upon introduction of EAJA).
---------------------------------------------------------------------------
    A review of EAJA applications filed at the Occupational 
Safety and Health Review Commission (OSHRC) demonstrates that 
very few employers actually avail themselves of this fee-
shifting program. In Fiscal Year 2003, only three applications 
were filed (with only one party granted a paltry $3,100), 
despite an annual average of 80,000 violations issued by OSHA 
in almost 40,000 workplace inspections conducted. Over time, 
the chart below demonstrates that a miniscule amount of 
employers are availing themselves of the opportunity to recover 
legal fees:


    H.R. 742 strengthens and enforces the ability of a small 
employer to recover fees from OSHA under EAJA by making two 
significant changes to current law and practice under EAJA.
    First, H.R. 742 specifically targets its relief to small 
businesses who may be particularly vulnerable to legal 
harassment by OSHA. While EAJA establishes a threshold for 
recovery by a prevailing small business of 500 or less 
employees and a net worth of seven million dollars, HR. 742 
targets relief by creating a smaller pool of applicants, 
defining the size standard as less than 100 employees and seven 
million dollars or less net worth.
    A review of small business size standards indicates that 
there is no standard definition in the federal government for a 
``small business.'' In fact, the Small Business 
Administration's North American Industry Classification System 
(NAICS) consists of 37 different size standards covering 1,151 
industry activities. These size standards vary in the measure 
of small business to include annual receipts or number of 
employees, thus offering no single or ready definition. In that 
light, and based on the record evidence before it, the 
Committee determines that the size standard in H.R. 742 covers 
a reasonable number of small enterprises that could benefit 
from access to attorneys' fees if successful in fighting OSHA.
    Second, under EAJA, an employer may not recover attorneys' 
fees if the agency can show that its actions were 
``substantially justified.'' As discussed in more detail below, 
this provision has significantly hindered the ability of 
employers to recover attorneys' fees from OSHA, and has had a 
deterrent effect on attempts to do so. Accordingly, H.R. 742 
provides that with respect to recovery from OSHA, this EAJA 
requirement shall not apply.

         THE ECONOMIC PRESSURE ON EMPLOYERS TO SETTLE WITH OSHA

    With respect to adjudicatory actions under OSHA, testimony 
before the Workforce Protections Subcommittee repeatedly 
demonstrated that companies settled with OSHA rather than 
fighting to clear their name (and avoid paying fines and 
penalties) simply because settling was more cost efficient than 
pursuing even a valid legal appeal to its conclusion. The 
testimony received by the Subcommittee indicated that OSHA 
consistently negotiates penalties downward to avoid litigation 
even though they may be wrongly pursuing a case. Small 
businesses do not have the resources to actively engage in 
costly litigation when a much smaller settlement is being 
offered. OSHA and its attorneys, backed by the national fisc, 
is an unfair opponent for a small business with limited 
resources, even if truth is on the business' side.
    Witnesses before the Committee stressed the need for 
relief. For example, Ms. Anita Drummond, Senior Director of 
Legislative and Regulatory Affairs for the Associated Builders 
and Contractors, urged passage of this legislation because:

          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? [sic] The 
        math is pretty simple.\5\
---------------------------------------------------------------------------
    \5\ Testimony of Anita Drummond, Hearing on H.R. 2731, at 19.

    In the Committee's view, it is inappropriate for the 
government to force a small business owner to admit wrong doing 
or pay a fine simply because a cost benefit analysis determines 
that settlement is more cost effective than pursuing justice. 
The lack of relief is even more onerous when small business 
owners readily admit that attempting to fight costs too much 
money. As Mr. Lynn Robson, testifying before the Subcommittee 
---------------------------------------------------------------------------
on Workforce Protections, acknowledged:

          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? \6\
---------------------------------------------------------------------------
    \6\ Testimony of Lynn Robson, Hearing on H.R. 2731, at 7.
---------------------------------------------------------------------------

   OSHA CAN AVOID AN AWARD OF FEES BY ARGUING THAT ITS POSITION WAS 
                      ``SUBSTANTIALLY JUSTIFIED''

    A second concern heard by the Committee is that under 
current EAJA law, OSHA is too readily able to avoid an award of 
fees by arguing that its position was ``substantially 
justified''--a legal term of art that, as a practical matter, 
represents a very low threshold for OSHA to meet and thus 
preclude an award of fees under EAJA. With a cadre of 
specialized lawyers backed by the federal treasury, it is far 
too easy for OSHA to come up with some purported justification 
for its bringing the case, thus tying the employer up in a 
second round of litigation as to whether OSHA's actions were 
``substantially justified.'' As testimony before the 
Subcommittee on Workforce Protections evidenced:

          [I]t is difficult and expensive to prove that OSHA's 
        position was not ``substantially justified'' even if it 
        was [sic]. Even if a small employer proves that he or 
        she is innocent and OSHA should not have brought the 
        case, that employer must still start another 
        proceeding, incurring even more expenses, to prove that 
        OSHA's position was not ``substantially justified.'' 
        This is a formidable deterrent to seeking fees, 
        particularly since OSHA can meet this test relatively 
        easily.\7\
---------------------------------------------------------------------------
    \7\ Testimony of Arthur G. Sapper, Esq., Hearing on H.R. 1583, at 
68.

    The Committee agrees with the witnesses that small business 
owners are placed in an untenable situation when trying to 
argue against a federal government entity. This concern is 
particularly acute in the context of OSHA litigation, given the 
complex body of law surrounding the OSH Act, which includes 
statutory, regulatory and interpretive law, and interpretive 
disagreements among OSHA and OSHRC, all of which make it more 
difficult for a small concern to seek relief under EAJA.
    Congress made clear that small businesses should be given 
more leverage in all judicial proceedings through the enactment 
of EAJA. H.R. 742 reinforces this position and 
addressesconcerns specific to OSHA and the OSH Act, by providing an 
effective and meaningful tool with which small businesses can defend 
themselves.

                               CONCLUSION

    The twenty-six year history of EAJA demonstrates that small 
businesses are not getting equal access to justice. Current law 
and practice under EAJA, particularly in the context of OSH Act 
litigation, has proven ineffective in leveling the playing 
field as Congress intended. H.R. 742 is a targeted bill that 
seeks relief for a narrow segment of businesses in this 
particular litigation context. By allowing employers with 100 
or fewer employees and seven million dollars or less of net 
worth to recover attorneys' fees if they successfully challenge 
an adverse ruling from OSHA, the Occupational Safety and Health 
Small Employer Access to Justice Act of 2005 implements this 
much-needed balance and ensures that the law works as Congress 
intended.

                      Section-by-Section: H.R. 742


                         SECTION 1. SHORT TITLE

    This act may be cited as the ``Occupational Safety and 
Health Small Employer Access to Justice Act of 2005.''

             SECTION 2. AWARD OF ATTORNEYS' FEES AND COSTS

    This section amends the Occupational Safety and Health Act 
of 1970 by adding a new section 32 and renumbering sections 32 
through 34 as 33 through 35. The new section 32 provides that 
an employer who is the prevailing party in an adversary 
adjudication under the OSH Act, which at the time the action 
was initiated had not more than 100 employees and a net worth 
of not more than $7,000,000 shall be awarded attorneys' fees 
pursuant to the section 504 of title 5 of U.S. Code 
irrespective of whether the position taken by OSHA was 
``substantially justified.''

                       Explanation of Amendments

    No amendments were adopted by the Committee.

              Application of Law to the Legislative Branch

    Section 102(b)(3) of Public Law 104-1, the Congressional 
Accountability Act (CAA), requires a description of the 
application of this bill to the legislative branch. H.R. 742 
amends the Occupational Safety and Health Act (OSH Act) to 
provide that a small business (defined as a business with less 
than 100 employees and a net worth of no more than seven 
million dollars) may recover attorneys' fees when it prevails 
in an adjudicatory action brought by OSHA. Section 215 of the 
CAA applies certain requirements of the OSH Act, to the 
legislative branch. The Committee intends to make the 
provisions of this bill available to legislative branch 
employees and employers in the same way as it is made available 
to private sector employees and employers under this 
legislation.

                       Unfunded Mandate Statement

    Section 423 of the Congressional Budget & Impoundment 
Control Act requires a statement of whether the provisions of 
the reported bill include unfunded mandates. The Committee 
received a letter regarding unfunded mandates from the Director 
of the Congressional Budget Office and as such the Committee 
agrees that the bill does not contain any unfunded mandates. 
See infra.


  Statement of Oversight Findings and Recommendations of the Committee

    In compliance with clause 3(c)(1) of rule XIII and clause 
(2)(b)(1) of rule X of the Rules of the House of 
Representatives, the Committee's oversight findings and 
recommendations are reflected in the body of this report.

     Budget Authority and Congressional Budget Office Cost Estimate

    With respect to the requirements of clause 3(c)(2) of rule 
XIII of the House of Representatives and section 308(a) of the 
Congressional Budget Act of 1974 and with respect to 
requirements of 3(c)(3) of rule XIII of the House of 
Representatives and section 402 of the Congressional Budget Act 
of 1974, the Committee has received the following cost estimate 
for H.R. 742 from the Director of the Congressional Budget 
Office:

                                     U.S. Congress,
                               Congressional Budget Office,
                                    Washington, DC, April 15, 2005.
Hon. John A. Boehner,
Chairman, Committee on Education and the Workforce,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 742, the 
Occupational Safety and Health Small Employer Access to Justice 
Act of 2005.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Tom Bradley.
            Sincerely,
                                      Elizabeth M. Robinson
                               (For Douglas Holtz-Eakin, Director).
    Enclosure.

H.R. 742--Occupational Safety and Health Small Employer Access to 
        Justice Act of 2005

    Summary: H.R. 742 would amend the Occupational Safety and 
Health Act to permit small employers with 100 or fewer 
employers and net worth of not more than $7 million to be 
awarded attorney fees and expenses if they prevail against the 
Occupational Safety and Health Agency (OSHA) in administrative 
or court proceedings.
    CBO estimates that implementing H.R. 742 would cost $4 
million in 2006 and $39 million over the 2006-2010 period, 
subject to the availability of appropriated funds. H.R. 742 
would not affect direct spending or revenues.
    H.R. 742 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA) 
and would impose no costs on state, local, or tribal 
governments.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of H.R. 742 is shown in the following table. 
The costs of this legislation fall within budget function 550 
(health).

------------------------------------------------------------------------
                                By fiscal year, in millions of dollars--
                               -----------------------------------------
                                 2005   2006   2007   2008   2009   2010
------------------------------------------------------------------------
                    SPENDING SUBJECT TO APPROPRIATION
 
OSHA Spending Under Current
 Law:
    Estimated Authorization       464    478    491    505    519    533
     Level....................
    Estimated Outlays.........    467    471    484    498    512    526
Proposed Changes:
    Estimated Authorization         0      9      9      9      9     10
     Level....................
    Estimated Outlays.........      0      4      7      9      9     10
OSHA Spending Under H.R. 742:
    Estimated Authorization       464    487    500    514    528    543
     Level....................
    Estimated Outlays.........    467    475    491    507    521    536
------------------------------------------------------------------------
\1\ The 2005 level is the amount appropriated for that year for the
  Occupational Safety and Health Agency. The amounts for 2006 though
  2010 are baseline projections that assume annual increases for
  anticipated inflation.

    Basis of estimate: For this estimate, CBO assumes that the 
bill will be enacted in the fall of 2005, that the estimated 
amounts will be appropriated for each year, and that outlays 
will follow historical spending patterns for similar activities 
authorized under the Equal Access to Justice Act (EAJA).
    H.R. 742 would amend the Occupational Safety and Health Act 
to allow employers with 100 or fewer employees and less than $7 
million in net worth to be awarded reasonable attorney fees and 
expenses if they prevail in an adversarial adjudication or a 
court proceeding in which they contest a citation made by OSHA. 
Under the EAJA, the payment of fees and expenses would be made 
from the agency's discretionary appropriations. CBO estimates 
that implementing H.R. 742 would cost $4 million in 2006 and 
$39 million over the 2006-2010 period, subject to the 
availability of appropriated funds.
    Currently under the EAJA, a prevailing party with fewer 
than 500 employees and less than $7 million in net worth may 
recover their legal expenses, but only when it is found that 
the action brought by the United States is not substantially 
justified or when special circumstances would make an award 
unjust. In practice, OSHA actions (that is, citations pursuant 
to the Occupational Safety and Health Act) have nearly always 
met those standards.(Only a handful of employers with 100 or 
fewer employees were awarded fees and expenses after prevailing against 
OSHA in 2003.) Regardless of whether OSHA's actions were substantially 
justified or the award unjust, OSHA would be required, under H.R. 742, 
to pay fees and expenses of small employers who prevail in 
administrative or court proceedings.
    According to data from the agency, each year OSHA issues 
citation in about 28,000 cases across all employer groups. 
Employers with fewer than 101 employees accounted for about 70 
percent of that caseload. (Most small employers cited by OSHA 
are construction-related firms.) Only about 7 percent of the 
citations made to small firms are contested, or about 1,400 
cases per year. Of these contested cases, CBO estimates that 
about 400 would involve either adjudication in an 
administrative proceedings or judicial review, based on the 
percentage of all contested cases that reached these levels 
over the past two years.
    In addition, CBO assumes that small employers would prevail 
against OSHA on at least one count in over half of the cases 
that reach the required administrative or judicial level. This 
assumption is based on the historical rate at which all 
employers prevail when they contest OSHA citations. In 2006, 
CBO assumes OSHA would reimburse small employers about $40,000 
in legal costs, on average, when they prevail in overturning 
OSHA actions. That assumptions is based on a survey of OSHA 
awards to small employers in 2003 and the expectation that the 
awards will grow with inflation. CBO assumed the average award 
under H.R. 742 would be 50 percent higher than under current 
law because reductions for substantial justification would be 
removed.
    Intergovernmental and private-sector impact: H.R. 742 
contains no intergovernmental or private-sector mandates as 
defined in UMRA and would impose no costs on state, local, or 
tribal governments.
    Estimate prepared by: Federal Costs: Tom Bradley. Impact on 
State, Local, and Tribal Government: Leo Lex. Impact on the 
Private Sector: Peter Richmond.
    Estimate approved by: Peter H. Fontaine, Deputy Assistant 
Director for Budget Analysis.

         Statement of General Performance Goals and Objectives

    In accordance with Clause (3)(c) of House Rule XIII, the 
goal of H.R. 742 is to provide that a small business (defined 
as a business with less than 100 employees and a net worth of 
no more than seven million dollars) may recover attorneys' fees 
when it prevails in an adjudicatory action brought by OSHA. The 
Committee expects the Department of Labor to implement the 
changes to the law in accordance with these stated goals.

                   Constitutional Authority Statement

    H.R. 742 amends the Occupational Safety and Health Act, and 
thus falls within the scope of Congressional powers under 
Article I, section 8, clause 3 of the Constitution of the 
United States to the same extent as does the OSH Act.

                           Committee Estimate

    Clause 3(d)(2) of Rule XIII of the Rules of the House of 
Representatives requires an estimate and a comparison by the 
Committee of the costs that would be incurred in carrying out 
H.R. 742. However, clause 3(d)(3)(B) of that rule provides that 
this requirement does not apply when the Committee has included 
in its report a timely submitted cost estimate of the bill 
prepared by the Director of the Congressional Budget Office 
under section 402 of the Congressional Budget Act.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

OCCUPATIONAL SAFETY AND HEALTH ACT OF 1970

           *       *       *       *       *       *       *



                   AWARD OF ATTORNEYS' FEES AND COSTS

  Sec. 32.
  (a) Administrative Proceedings.--An employer who--
          (1) is the prevailing party in any adversary 
        adjudication instituted under this Act, and
          (2) had not more than 100 employees and a net worth 
        of not more than $7,000,000 at the time the adversary 
        adjudication was initiated,
shall be awarded fees and other expenses as a prevailing party 
under section 504 of title 5, United States Code, in accordance 
with the provisions of that section, but without regard to 
whether the position of the Secretary was substantially 
justified or special circumstances make an award unjust. For 
purposes of this section the term ``adversary adjudication'' 
has the meaning given that term in section 504(b)(1)(C) of 
title 5, United States Code.
  (b) Proceedings.--An employer who--
          (1) is the prevailing party in any proceeding for 
        judicial review of any action instituted under this 
        Act, and
          (2) had not more than 100 employees and a net worth 
        of not more than $7,000,000 at the time the action 
        addressed under subsection (1) was filed,
shall be awarded fees and other expenses as a prevailing party 
under section 2412(d) of title 28, United States Code, in 
accordance with the provisions of that section, but without 
regard to whether the position of the United States was 
substantially justified or special circumstances make an award 
unjust. Any appeal of a determination of fees pursuant to 
subsection (a) of this subsection shall be determined without 
regard to whether the position of the United States was 
substantially justified or special circumstances make an award 
unjust.
  (c) Applicability.--
          (1) Commission proceedings.--Subsection (a) shall 
        apply to proceedings commenced on or after the date of 
        enactment of this section.
          (2) Court proceedings.--Subsection (b) shall apply to 
        proceedings for judicial review commenced on or after 
        the date of enactment of this section.

                              separability

      Sec. [32] 33. If any provision of this Act, or the 
application of such provision to any person of circumstance, 
shall be held invalid, the remainder of this Act, or the 
application of such provision to persons or circumstances other 
than those as to which it is held invalid, shall not be 
affected thereby.

                             appropriations

      Sec. [33] 34. There are authorized to be appropriated to 
carry out this Act for each fiscal year such sums as the 
Congress shall deem necessary.

                             effective date

      Sec. [34] 35. This Act shall take effect one hundred and 
twenty days after the date of its enactment.

                             MINORITY VIEWS

  H.R. 742 Will Severely Limit the Ability of the Occupational Health 
                   Administration To Protect Workers

    H.R. 742 is a blatant attempt to chill OSHA's exercise of 
statutory responsibility to enforce the OSH Act, by penalizing 
the agency for every instance in which it attempts to do so 
unsuccessfully. Instead of encouraging cooperation between 
employers and OSHA, H.R. 742 encourages defendants to litigate 
matters with OSHA, resulting in fewer settlements, lengthier 
litigation, and ultimately delaying compliance with the OSH 
Act. Enactment of H.R. 742 would put the safety and health of 
hundreds of thousands of workers at risk.
    H.R. 742, the ``Occupational Safety and Health Small 
Employer Access to Justice Act'' seeks to reverse the American 
Rule, under which each party to litigation pays its own costs, 
in a single class of cases, namely, those in which the 
Occupational Safety and Health Administration (OSHA) does not 
prevail in administrative or judicial proceedings against an 
employer or labor organization with not more than 100 employees 
and a net worth of not more than $7 million. Workers have no 
private right of action under the Occupational Safety and 
Health Act (OSH Act). Consequently, workers rely on OSHA to 
protect their rights to a safe and healthful workplace. If OSHA 
is deterred from bringing cases it is not guaranteed to win, 
workers' rights and their health and safety will be severely 
eroded.
    The Majority has failed to provide any evidence that OSHA 
has abused its statutory authority in issuing and prosecuting 
complaints. The Majority has also failed to show that the Equal 
Access to Justice Act provides insufficient redress to 
respondents who prevail in proceedings before the Occupational 
Safety and Health Review Commission (OSHRC).
    Proponents of H.R. 742 do not attempt to suggest that the 
costs imposed by H.R. 742 would be offset by additional 
appropriations to the Department of Labor. As a consequence, 
the additional costs imposed by H.R. 742 must ultimately come 
at the expense of agency efforts to deter and remedy violations 
of the law. Furthermore, H.R. 742 requires taxpayers to 
underwrite the expense of employer violations. H.R. 742 
requires OSHA to pay employers' attorney's fees for any part of 
a case it does not win. As such, if an employer loses ten 
claims, but wins one, an employer may claim entitlement to 
payment as a prevailing party and taxpayers would be 
responsible for the bill.
    Congress has previously considered legislation similar to 
H.R. 740. In the 105th Congress, the Committee reported H.R. 
3246 which, among other provisions, would have required the 
National Labor Relations Board (NLRB) to pay the attorney's 
fees and costs of employers or unions with not more than 100 
employees and a net worth of not more than $1.4 million if the 
agency did not prevail. H.R. 3246 very narrowly passed the 
House on a 202-200 vote and died in the Senate. In the 106th 
Congress, the Committee reported H.R. 1987 which required the 
NLRB and OSHA to pay attorney's fees and costs in any case in 
which they do not prevail to employers (exclusively in the case 
of OSHA) and unions with not more than 100 employees and a net 
worth of not more than $7 million. H.R. 1987 was reported by 
Committee on a party-line vote and was scheduled for floor 
consideration, but ultimately was never brought up on the 
floor. H.R. 2731 was considered in the House in the last 
Congress.
    This type of legislation has come to be known as ``loser 
pays'' legislation, but that is a misnomer. Under H.R. 740, as 
was the case with the previous bills, there is only one set of 
losers. If OSHA does not prevail, no matter how reasonable its 
case, the taxpayers pay the employer's costs. The reverse does 
not also hold true, however. If OSHA wins the case, the 
employer is not required to pay OSHA's costs, no matter how 
weak the employer's case nor how blatant or egregious the 
employer's violation was. In other words, the loser under 
``loser pays'' legislation is the taxpayer.

              H.R. 742 Is Not Limited to Small Businesses

    H.R. 742, despite its stated intent to apply to ``small 
businesses,'' achieves far broader coverage with its enlarged 
net worth and employee requirements. Bureau of Labor Statistics 
data for the first quarter of 1998 show that there were over 
6.5 million private sector establishments with 99 or fewer 
employees, employing 55 million workers, 54% of the private 
sector workforce. These establishments comprise the vast 
majority of American businesses--about 97%.\1\ In contrast, 
Congress traditionally defines ``small business'' for the 
purpose of establishing coverage under a wide range of 
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.'' \2\ 
Similarly, the Americans with Disabilities Act covers employers 
with fifteen or more employees,\3\ as does Title VII of the 
Civil Rights Act of 1964.\4\ Thus, the Majority's definition of 
``small business'' in H.R. 2731 serves a rhetorical purpose 
only; in practice, it achieves nearly-universal coverage.
---------------------------------------------------------------------------
    \1\ See U.S. Census Bureau, Statistics of U.S. Businesses, 
internet: http://www.census.gov.
    \2\ 29 U.S.C. 630(b).
    \3\ 42 U.S.C. 2111(5).
    \4\ 42 U.S.C. 2000e(b).
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                H.R. 742 Is Unsupported by the Evidence

    There is no evidence to justify this radical departure from 
the American Rule, under which each party to litigation bears 
its own costs. The Majority has come forward with nothing to 
demonstrate that OSHA's prosecutorial discretion should be 
changed in this manner. Indeed, the statistics demonstrate 
otherwise. As was stated in 2000:
    OSHA statistics also undermine the contention that OSHA has 
engaged in a practice of prosecutorial abuse. Accordingly to 
the Majority's views, out of nearly 77,000 total violations 
cited in fiscal year 1998, only 2,061 inspections resulted in 
citations that were contested. Once again, the facts have 
condemned the Majority's case. In FY '98, Federal OSHA 
conducted more than 34,000 inspections, 16,396 of which 
resulted in citations at workplaces with fewer than 100 
employees. Sixty percent of these citations were settled 
between OSHA and the employer in informal conferences. 
Employers contested 1,275 or 8% of the citations before the 
Occupational Safety and Health Review Commission. Moreover, in 
FY '98 nineteen (19) OSHA enforcement cases were decided by 
Federal appellate courts. OSHA won a total of 77 percent of 
these cases (Most of which had originated several years before 
FY '98) \5\ These numbers suggest that OSHA neither issues 
citations nor enters into litigation against employers in a 
capricious manner. Since OSHA either settles or wins the vast 
majority of enforcement cases, there is no justification for 
assuming that employers need to be protected against an 
overzealous prosecutorial agency. Instead of encouraging 
cooperation between employers and OSHA, H.R. 742 encourages 
defendants to litigate. Fewer settlements and lengthier 
litigation would delay compliance with the OSH Act. This would 
come at a time when OSHA's commitment to the protection of 
millions of American workers has had a tremendous impact on 
reducing occupational injuries, illnesses and death. As such, 
attempting to alter the agency's prosecutorial discretion could 
prove to be extremely counterproductive and disastrous to 
millions of workers.
---------------------------------------------------------------------------
    \5\ See Data From The Office of the Solicitor For Records, U.S. 
Department of Labor, 1998. See also H. Rpt. 106385, To Accompany H.R. 
1987, Minority Views.
---------------------------------------------------------------------------

 Small Employers Are Already Entitled to Recovery of Legal Fees Under 
                                  EAJA

    Not only is there a total lack of evidence of OSHA abuses 
that would warrant this unprecedented shifting of fees in OSHA 
litigation, but there is already a remedy for parties that 
prevail in litigation involving the Board, namely the Equal 
Access to Justice Act (EAJA).\6\ We are unaware of any concerns 
expressed by the Government Reform or Judiciary Committees, the 
Committees that have responsibility for assessing the law, 
which EAJA is failing to achieve Congressional intent. Nor is 
there any evidence that EAJA works differently at OSHA than it 
does in any other agency. Indeed, a GAO report that the 
Majority cited extensively to justify earlier legislation 
similar to H.R. 742 clearly indicated that OSHA's EAJA record 
is typical. The Majority contends, as have the proponents of 
this legislation in previous Congresses, that EAJA has been 
underutilized, that it has been judicially interpreted contrary 
to congressional intent, and that it has failed.
---------------------------------------------------------------------------
    \6\ 5 U.S. at 504 (EAJA).
---------------------------------------------------------------------------
    H.R. 742 penalizes a government agency, an agency 
coincidentally charged with protecting workers' rights, every 
time it loses regardless of how meritorious the action of the 
agency was. Under EAJA, the government must pay the prevailing 
party's fees and costs only in those situations in which the 
government's position was not ``substantially justified,'' or 
where ``special circumstances'' would make fee-shifting 
unjust.\7\ Thus, Congress has never seen fit simply to shift 
the financial burdens of litigation to the government when it 
does not prevail, without regard to the merits of the 
government's position. Nor can it conjure up any reason 
whatsoever to single out proceedings involving OSHA for 
imposition of such a rule.
---------------------------------------------------------------------------
    \7\ Id. at 504(a)(1).
---------------------------------------------------------------------------
    Furthermore, there is no data to back the characterization 
that small businesses have underutilized EAJA with respect to 
administrative and judicial actions under the OSH Act. 
According to a 1999 GAO study, the Department of Labor ranked 
fifth out of 15 Federal agencies, in the number of judicial 
decisions issued with respect to EAJA applications in FY '94. 
Specifically, OSHA awarded approximately $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 
demonstrates that employers, small or large, have spent huge 
sums of money in defense of frivolous suits under the OSH Act.

   Implementation of H.R. 742 Will Further Frustrate the Ability To 
                     Protect the Rights of Workers

    This legislation punishes OSHA for bringing actions that 
are substantially justified but which the agency fails to win 
in whole. Coincidentally, the agency that H.R. 742 chooses to 
so punish is an agency charged with protecting the rights of 
workers. H.R. 742's chilling effect on the willingness of OSHA 
to bring actions on behalf of works is obvious. This is 
particularly troubling in light of the fact that the OSH Act 
does not afford workers a private right of action. Thwarting 
the ability of OSHA to bring actions on behalf of workers is, 
therefore, tantamount to denying workers any recourse in the 
law.
    We strongly believe that workers should have an enforceable 
right to a secure and healthy workplace. H.R. 742 impedes that 
objective. By leaving workers with the legal claim of the right 
to a safe and healthy workplace, while denying workers a 
meaningful ability to enforce that claim, H.R. 742 invites 
disrespect for the law and for the institutions that make and 
enforce the law. H.R. 742 does not simply undermine the rights 
of working men and women; it does a disservice to fundamental 
principles of law and justice.

                          H.R. 742 and Eric Ho

    The following exemplifies the kinds of injustices that H.R. 
742 would perpetrate.\8\
---------------------------------------------------------------------------
    \8\ The description of these events is derived, almost verbatim, 
from the court's decision in Chao v. OSHRC [Ho], 5'th Cir., No. 03-
60958, 2/21/05.
---------------------------------------------------------------------------
    Eric Ho purchased a defunct hospital and medical office 
building in Houston to develop as a residential property. Ho 
knew there was asbestos onsite, and knew that alteration to 
asbestos-containing materials was to be handled by personnel 
licensed and registered with the Texas Department of Health. 
Instead Ho hired two individuals who in turn hired 11 illegal 
immigrants to do the alterations, including the asbestos 
removal. Work began in January 1998.\9\
---------------------------------------------------------------------------
    \9\ Choa v. OSHRC [Ho], 5'th Cir., No. 03-60958, 2/21/05, at 2.
---------------------------------------------------------------------------
    At the most, the workers were occasionally given dust masks 
not suitable for protection against asbestos. Ho did not 
provide protective clothing. He did not provide a respiratory 
protection program, conduct medical surveillance, conduct 
asbestos monitoring, implement adequate ventilation or debris 
removal, inform workers of the presence and hazards of 
asbestos, or provide any training whatsoever. There is no 
dispute that Ho was aware of work site conditions.\10\
---------------------------------------------------------------------------
    \10\ Id. at 2-3.
---------------------------------------------------------------------------
    On February 2, 1998, a city inspector visited the worksite 
and issued a stop-work order citing the possibility of asbestos 
exposure, and requiring the city's approval be given before Ho 
resumed work. Ho began negotiating with a licensed contractor, 
but while negotiating with the contractor, Ho secretly resumed 
work on the site under the original unsafe conditions. Ho 
directed workers to work at night. Workers ate and some lived 
on site. They had no potable water and only one portable 
toilet. Workers were sometimes allowed to leave the property to 
use a restroom at a nearby commercial facility and food was 
purchased for them, with their money, and brought back to the 
worksite. Ho visited the worksite regularly and was aware of 
these conditions.\11\
---------------------------------------------------------------------------
    \11\ Id.
---------------------------------------------------------------------------
    On March 11, 1998, Ho directed that daytime work resume. 
Thinking he was tapping into a water line in order to wash out 
the building, Ho directed that an unmarked valve be tapped. It 
turned out to be a gas line and there was a subsequent 
explosion injuring one contractor and two workers. The 
following day, Ho summoned all the workers to his office where 
they were given releases to sign, acknowledging receipt of 
$1000 as full payment for their work, and acknowledging receipt 
of $100 to release Ho from any claims arising from the 
explosion and fire.\12\
---------------------------------------------------------------------------
    \12\ Id. at 4.
---------------------------------------------------------------------------
    After the explosion the Texas Department of Health notified 
Ho that the worksite showed levels of asbestos in excess of 
federal and state standards and that the site needed to be 
sealed by qualified personnel. Ho used the same workers he had 
used previously to install plywood over the windows and did not 
give them any protective equipment.\13\
---------------------------------------------------------------------------
    \13\ Id.
---------------------------------------------------------------------------
    OSHA conducted an investigation and cited Ho for 10 serious 
and 29 willful violations, including 11 willful violations for 
failing to provide respirators to 11 employees and 11 willful 
violations for failing to train the 11 employees on the hazards 
of asbestos and safety precautions.\14\ OSHA proposed a penalty 
of $1.48 million.\15\
---------------------------------------------------------------------------
    \14\ Id. at 4-5.
    \15\ Yin Wilczek, ``Fifth Circuit Affirms OSHRC in Split Decision 
Regarding Houston Man's Asbestos Violations,'' Daily Labor Report No. 
35 (Feb. 23, 2005): A8.
---------------------------------------------------------------------------
    Ho challenged the per-employee citations of the respirator 
and training violations and contended he did not violate the 
general duty clause of the OSH Act, or if he did, he did not do 
so willfully.\16\
---------------------------------------------------------------------------
    \16\ Chao v. OSHRC [Ho] 5'th Cir., No. 03-60958, 2/21/05, at 5.
---------------------------------------------------------------------------
    A divided Commission ruled that the violations of the 
respirator and training standards could not be cited on a per-
employee basis because it felt the regulations plainly imposed 
a duty on employers to have a single training program and to 
provide respirators to employees as a group.\17\
---------------------------------------------------------------------------
    \17\ Id. at 6. The Commission affirmed that Ho's violation of the 
respirator and training standards were willful. A divided Commission 
ruled that such violations may only be cited on a per-instance rather 
than a per-employee basis, thus vacating all but two of the respirator 
and training citations. The Commission concluded that the 
Administrative Law Judge's (ALJ) finding that the corporate Ho 
respondents were liable and affirmed the ALJ's finding that the general 
duty violation committed by Ho was not willful.
---------------------------------------------------------------------------
    The Commission increased all penalties for all of the 
confined citations to their maximum and fined Ho $658,000.\18\ 
A Fifth Circuit panel upheld the Commission decision 2-1.\19\ 
Eric Ho was sentenced on August 27, 2003 to 21 months in 
prison, three years of supervised release, and fined $20,000 
for criminal violations of the Clean Air Act for the activities 
that resulted in the OSHA citations.\20\ It is a measure of the 
limitations of enforcement of the Occupational Safety and 
Health Act compared to other laws, weaknesses that H.R 742 
would significantly exacerbate, that there was no criminal 
prosecution of Mr. Ho for directly threatening the health of 
his workers. Instead, he was only criminally prosecuted for 
indirectly threatening the health of the public.
---------------------------------------------------------------------------
    \18\ Yin Wilczek, ``Fifth Circuit Affirms OSHRC in Split Decision 
Regarding Houston Man's Asbestos Violations,'' Daily Labor Report No. 
35 (Feb. 23, 2005): A8.
    \19\ Chao v. OSHRC [Ho].
    \20\ Ohio Department of Health, Asbestos Program Update, Vol. 4, 
Issue 2, Winter 2003 (http://www.odh.state.oh.us/ODHPrograms/Asbes1/
asb_newsltr/winter03.pdf).
---------------------------------------------------------------------------
    The Secretary's contention that Eric Ho should have been 
cited for violating the respirator and training standards on a 
per employee basis was eminently justifiable. Indeed, by the 
Commission's reasoning, an employer who provides a faulty 
respirator to 11 employees will be liable for 11 citations 
while an employer who ignores its duty altogether and does not 
provide a respirator to any employee is liable for only a 
single citation. Nor can the Secretary be faulted for pursuing 
the issue through the appellate court. Therefore, it seems 
especially unfair that the Secretary and taxpayers should be 
punished for such actions. But that is exactly the effect of 
H.R. 742.
    Had H.R. 742 been enacted, despite the fact that the 
position of the Secretary was eminently justifiable while the 
conduct of Eric Ho was criminal, United States taxpayers would 
be required to pay Eric Ho's legal fees. H.R. 742 effectively 
rewards criminal activity on the basis of technicalities.

                                   George Miller.
                                   Carolyn McCarthy.
                                   Danny K. Davis.
                                   Raul M. Grijalva.
                                   Robert E. Andrews.
                                   Lynn C. Woolsey.
                                   Chris Van Hollen.
                                   Ron Kind.
                                   Rush Holt.
                                   Dale E. Kildee.
                                   Betty McCollum.
                                   Tim Ryan.
                                   Ruben Hinojosa.
                                   Donald M. Payne.
                                   Major R. Owens.
                                   David Wu.
                                   Timothy Bishop.
                                   John F. Tierney.
                                   Dennis Kucinich.