Hill Letter to Norwood on Attorney's Fees

September 17, 2003

The Honorable Charles W. Norwood
Chairman
Subcommittee on Workforce Protections
House Committee on Education and the Workforce
2181 Rayburn House Office Building
Washington, DC 20515

Dear Chairman Norwood:

On behalf of the U.S. Chamber of Commerce, the world's largest business federation representing more than three million businesses of every size, sector and region, I would like to express our support for the Occupational Safety and Health Small Employer Access to Justice Act of 2003, H.R. 2731, which is the subject of today's hearing.

The legislation would provide relief to small businesses that are subject to meritless litigation by the Occupational Safety and Health Administration (OSHA). Specifically, H.R. 2731 provides that a small business can recover their attorney fees and costs when prevailing in a case brought against it by OSHA. This will help level the playing field between small employers and this agency. Simply stated, federal agencies have enormous taxpayer funded resources with which to prosecute employers. The practical result is that small entities, far "outgunned" by the agencies, are under unfair and intense pressure to settle cases regardless of their merits simply to end financially crushing litigation. This provision will provide some relief from this situation by telling small entities that, if they do successfully defend themselves, they can at least recoup their expenses. Concurrently, OSHA will undoubtedly more carefully consider the merits of bringing a complaint against small employers in the first place—as they well should.

Small businesses can theoretically recover their costs now under the Equal Access to Justice Act (EAJA) when prevailing against an agency. However, EAJA in fact allows an agency to escape payment when the agency's position, although defeated, is "substantially justified." Thus, an employer must, in effect, re-litigate the case even after prevailing on the underlying action. Not surprisingly, studies done by the Government Accounting Office have found that the rewards under EAJA are relatively rare and the Congressional Budget Office has noted, "In practice, it is very difficult for a prevailing party to prove that the U.S. government did not have substantial justification in bringing a claim forward." H.R. 2731 closes loopholes by creating a simple rule that if a small business prevails it is entitled to reimbursement of attorney fees.

We would ask that the committee reexamine the current threshold for coverage under H.R. 2731—which is 100 employees or less and $1.5 million or less in net worth. This threshold seems unrealistically low and should be raised. The most commonly used definition for "small business" by the Small Business Administration is a business with 500 employees or less and the net worth figure unduly penalizes any small business with machinery and equipment of any appreciable value.

The Occupational Safety and Health Small Employer Access to Justice Act of 2003 is a simple, narrow bill that provides small employers a fighting chance when confronted with charges by well-funded enforcement agencies. The U.S. Chamber has supported similar legislation in the past, and testified in favor of this provision during a hearing held on June 17, 2003. We applaud your efforts on this important issue.

Sincerely,
R. Bruce Josten
Executive Vice President, Government Affairs
U.S. Chamber of Commerce