Testimony by Arthur G. Sapper on Workforce Protections - Assessing the Impact on Small Business
Testimony of Arthur G. Sapper before the Subcommittee on Workforce Protections of the Committee on Education and the Workforce of the United States House of Representatives, on behalf of the United States Chamber of Commerce on H.R. 1583 - Assessing the Impact on Small Business
June 17, 2003
Good afternoon, Chairman Norwood and Members of the Subcommittee. My name is Arthur G. Sapper. I am a member of the OSHA Practice Group of the law firm of McDermott, Will & Emery, an international firm. The OSHA Practice Group is one of the most prominent of its kind in the United States.
I am testifying today on behalf of the U.S. Chamber of Commerce. I am a member of the Chamber's Labor Relations Committee and its OSHA Policy Subcommittee.
For over twenty-nine years, I have been deeply involved in OSHA law. For twelve of those years, I served in the Government. I spent over ten years at the Occupational Safety and Health Review Commission, where I became Deputy General Counsel. I also spent two years at the Federal Mine Safety and Health Review Commission as its Special Counsel. For the past sixteen years, I have advised employers regarding their obligations under the Occupational Safety and Health Act of 1970, 29 U.S.C. §§ 651-678, and I have litigated some of the path-breaking cases under the statute. I have written and lectured on OSHA law. I have helped to co-author treatises on the OSH Act, including the well-known American Bar Association treatise, OCCUPATIONAL SAFETY AND HEALTH LAW (2d ed. 2002). I was for nine years an adjunct professor at Georgetown University Law Center, where I taught a graduate course in OSHA law.
Many of the U.S. Chamber's members are small- and medium-size companies. The burden of OSHA enforcement falls with special weight upon them, for they can but rarely afford to defend themselves against OSHA charges. Unfair aspects of OSHA enforcement – and there are unfair aspects – make it especially difficult for them to assert their rights and even sometimes deprive them of a fair hearing entirely. We therefore encourage the subcommittee to favorably report H.R. 1583, the Occupational Safety and Health Fairness Act of 2003.
H.R. 1583 is a moderate and limited bill. It is narrowly targeted at some of the worse problems with OSHA enforcement. It does not affect OSHA's rulemaking authority. It does not affect OSHA's inspection authority. It does not take away any power that Congress in 1970 intended that OSHA have. Yet, it will make important improvements in the OSH Act, for it will enhance public respect for the fairness of OSHA enforcement, which is essential if the Act is to be effective.
I will discuss the provisions of the bill in order.
Section 2 – Giving Small Employers A Needed Break
This provision gives to employers – especially small employers – the same right to seek relief from a default judgment possessed by nearly every other litigant in the Nation. If a small employer fails to file an answer to a complaint on time in almost any other court, that court has the power to relieve the small employer of the default, and give him a day in court. But that is not true under the OSH Act. According to a recent decision by the U.S. Court of Appeals for the Second Circuit, which I will soon describe, an employer flatly loses its opportunity to defend itself before the Occupational Safety and Health Review Commission, and will be deemed guilty, if it misses a rigid fifteen working-day deadline to file a notice contesting an OSHA citation, even if the employer had a good excuse for missing that deadline. The employer is out of luck and the government wins without even proving its case.
The Facts of the Le Frois Case – An Undisputed Case of Excusable Neglect
Take the case of Russell P. Le Frois Builder, Inc. OSHA issued citations and $11,265 in proposed penalties to that company by certified mail. A secretary for the company got the envelope from the post office, and put it with the day's other mail on the front seat of her car. The envelope with the OSHA citation apparently slipped behind the seat, where it was found after the fifteen-working-day contest deadline expired. The company had used the same mail pickup system for 18 years and had not previously had a problem with it. Le Frois promptly filed a notice of contest, and asked the independent Occupational Safety and Health Review Commission for "a chance to tell our side and to defend ourselves." The Commission excused the lateness of the notice of contest, finding this to be a case of excusable neglect.
OSHA agreed that the Le Frois case involved excusable neglect. But OSHA appealed anyway to the U.S. Court of Appeals for the Second Circuit – and won, with one judge dissenting. Chao v. Russell P. Le Frois Builder, Inc., 291 F.3d 219 (2d Cir. 2002). OSHA convinced the court that the Review Commission lacked the power to relieve an employer from a default on the ground of excusable neglect.
The Upshot – Excusable Neglect is Irrelevant
The Review Commission thus stands nearly alone among the courts of the Nation in lacking the power to relieve an employer of a procedural default caused by neglect that is excusable. If this result makes no sense, that is because sense has nothing to do with it. OSHA's litigation position and the decision of the Second Circuit turn instead on a hyper-technical reading of the OSH Act and judicial deference to OSHA. The decision holds that Section 12(g) – in which Congress ordered the Commission to apply court rules, including a rule permitting relief from default judgments – was overridden by Section 10(c) of the OSH Act, which makes uncontested citations final and not subject to review.
I will spare the Subcommittee my technical analysis of the matter. Suffice it to say that Section 2 of H.R. 1583 would do away with this unequal result and put employers on the same footing as nearly every other litigant in the Nation: They will have the right to ask for relief from a default judgment and, after explaining, have a reasonable opportunity to obtain that relief. This section would permit the Commission to grant relief in rather narrow circumstances – when the default is due to "mistake, inadvertence, surprise, or excusable neglect." That language is taken directly from Federal Rule of Civil Procedure 60(b), which has long been interpreted by the Commission and the courts to permit relief if there is a legitimate reason.
For that reason, the change brought about by this section will be modest. Under the bill, comparatively few employers will qualify for relief from default. The effect on OSHA's enforcement program will be small. But small employers will notice it. They will know that under the OSH Act they can at least have a shot at justice. Why is a shot at justice important? Because the consequences of being unable to appeal an OSHA citation can be severe and far-reaching. They include:
Payment of proposed penalties. Penalties can range up to $7000 for "serious" and non-serious violations, from $0 to $70,000 for each "repeated" violation, and $5000 to $70,000 for each "willful" violation.
Inclusion of the citation on the employer's "history of previous violations," which raises subsequent penalties, and which is available to the public to see on the Web.
Exposure to subsequent "repeated" or "willful" violations, even if the subsequent violation occurred at a different workplace or years later.
Disqualification in some jurisdictions from bidding on public construction contracts. E.g., CAL. GOV'T CODE § 14661(d)(2)(B)(vi)(II).
Use of the citation against the employer in civil litigation.
A requirement to abate the cited condition. This might require that a factory be rebuilt or a construction method be abandoned. It might require that a machine be modified to meet specifications in an inapplicable standard. See, e.g., Losli, Inc., 1 BNA OSHC 1734 (OSHRC 1974), where a failure to contest a citation meant that a metal shear had to be modified to meet inapplicable specifications for power presses – a nonsensical result.
Moreover, there is more than one way that small employers can innocently fail to timely contest a citation, aside from losing a mail envelope. For example, a notice of contest sent to the wrong agency – to the Review Commission rather than OSHA – is ineffective.
Equitable Tolling – An Unequal and Empty Promise
OSHA in the Le Frois case mentioned to the court that employers might still be able to get relief, under a doctrine known as equitable tolling. The problems with that suggestion are two-fold. First, it results in pointless inequality. Inasmuch as equitable tolling is a narrower doctrine than excusable neglect, employers like Le Frois or Losli, who should get a hearing, would not. There is no reason why employers should not be granted the same right to obtain relief from a default judgment as any litigant in the Nation.
Second, equitable tolling would grant employers an avenue of relief so narrow as to be illusory. Generally, equitable tolling is available only where OSHA's behavior was improper or misled the employer with respect to the requirements for contesting a citation and the employer has been diligent in preserving its rights. Again, it would never reach cases like Le Frois or Losli. There is also a grave doubt that equitable tolling would apply at all; even the Second Circuit had doubts on this point.
Section 2 of H.R. 1583 is a much-needed corrective, and we respectfully urge that it be reported favorably.
Section 3 – Reserving Willful Charges for The Truly Willful
An accusation of a "willful" violation against an employer is a serious matter, and is not taken lightly by an employer. It is an accusation that you are lawless. The penalties are increased ten-fold, to $70,000 per violation with a $5,000 minimum. The allegation can expose you to criminal prosecution and could help strip you of the protection of the workers' compensation system from personal injury lawsuits. OSHA issues a harsh press release castigating you. You are treated as a near criminal.
One might expect that a provision such as this would be surrounded by protections to prevent its abuse. Sadly, that is not so. In fact, no penalty provision of the Act is more susceptible to abuse by OSHA, and no penalty provision is in fact abused like this one is. I can tell you from decades of experience that OSHA regularly accuses employers of committing "willful" violations even though the employer was guilty at most of negligence. Negligence is bad, but it is not willfulness. Other provisions of the OSH Act penalize negligent employers.
Why is this provision of the Act so abused by OSHA? Because there is no definition of willfulness in the Act and, as a result the courts and the Commission have been all over the lot on what it means. "Willful," as the Supreme Court has stated, is "a word of many meanings." Ratzlaf v. United States, 510 U.S. 135, 141 (1994). Judge Learned Hand stated: "It's an awful word! It is one of the most troublesome words in a statute that I know. If I were to have the index purged, 'willful' would lead all the rest in spite of its being at the end of the alphabet." MODEL PENAL CODE AND COMMENTARIES, § 2.02, at 249 n.47 (Official Draft and Revised Comments 1985), quoting ALI Proceeding 160 (1955).
The case law on willfulness under the OSH Act has vindicated Judge Hand's view. It has supposedly established this "test" for willfulness – "intentional disregard of, or plain indifference to, the Act's requirements." E.g., Conie Construction, Inc. v. Reich, 73 F.3d 382, 384 (D.C. Cir. 1995). Any litigator will tell you that this vague formula fails to answer the most fundamental question, "What must the employer know to violate the law 'willfully?'" Must the employer know what the law is, i.e., what the OSHA standard says? Must the employer know that he or she is breaking the law? Suppose the employer knows what the OSHA standard says but believes in good faith that that a legal defense applies, such as infeasibility? Suppose the employer knows nothing about OSHA or its standards; then what must OSHA show? That there was arguably a hazard? That there was a hazard? That there was so clearly a hazard that the employer's behavior was reckless? Suppose the employer does not think that there is a hazard but a reasonable person would think so? That is negligence, but is it willfulness?
The case law on willfulness is in such a state of confusion that it is impossible to answer these questions confidently or to summarize it rationally. Take, for example, the following statements from the Commission's decision in Morrison-Knudsen Co., 16 BNA OSHC 1105 (OSHRC 1993): "Willfulness is negated by evidence that the employer had a good faith opinion that the conditions in its workplace conformed to OSHA requirements. But the test of good faith is an objective one, i.e., whether the employer's belief concerning the factual matters in question was reasonable ." This is a nonsensical statement, for good faith is necessarily subjective, not objective. Yet, the Commission has repeated it numerous times. Worse, this statement permits OSHA to accuse employers of willfulness for being merely negligent. For example, in Atlantic Battery Co., 16 BNA OSHC 2131 (OSHRC 1994), the Commission stated that a violation was willful because the employer "should have known" that its behavior was "incorrect." Another example of the vagueness and unpredictability of the plain indifference "test" can be found in Anderson Excavating & Wrecking Co., 17 BNA OSHC 1890 (OSHRC 1997), aff'd, 131 F.3d 1254 (8th Cir. 1997), where both a sharply-divided Commission and the Eighth Circuit found willfulness on a rationale that amounted to negligence.
A further indication of the nebulousness of the case law on willfulness can be found in OSHA's own Field Information Reference Manual. It permits OSHA officials to allege that an employer who did not know that he was breaking any law nevertheless committed a willful violation if the employer knew that a hazard was present but made "little ... effort" to correct it. This "little effort" test is easily susceptible to abuse. Suppose the employer honestly believed that he had done all he feasibly could? Suppose that the employer's actions were wrong but not reckless? I have seen employers in these circumstances – and even weaker circumstances – get accused of willful violations.
The upshot is that we have a "I know it when I see it" test for willfulness. The uncertainty resulting from the lack of a clear definition permits almost anyone to be called a willful violator, fosters litigation, and results in similarly situated persons being treated differently. The OSH Act is national legislation and its words require a uniform meaning.
There is a test for willfulness that is sensible and clear. In McLaughlin v. Richland Shoe Co., 486 U.S. 128 (1988), the Supreme Court held under the Fair Labor Standards Act that a violation is willful only if the employer knew that he was breaking the law or recklessly disregarded whether he was. That is basically the right approach, for it states in clear and plain terms what the employer's state of mind must be.
H.R. 1583 takes that same approach. It essentially codifies Richland Shoe and applies it to the OSH Act. Under that definition, willfulness charges will be reserved for employers who deserve it. Negligence alone will not suffice. The bill states that –
A violation is willful only if the employer
(1) knew that the alleged condition violated a standard, rule, order or regulation and, without a good faith belief in the legality in its conduct, knowingly disregarded the requirement of the standard, rule, order, or regulation, or
(2) knew that employees were, or that it was reasonably predictable that employees would be, exposed to a hazard causing or likely to cause death or serious physical injury and recklessly disregarded the exposure of employees to that hazard.
Paragraph (1) essentially permits a willful violation to be found if the employer knew that he was breaking the law – not should have known he was violating the law. Paragraph (2) essentially permits a willful violation to be found if the employer knew of a condition endangering employees and recklessly disregarded it – not negligently disregarded it. The great merit of this definition is that it is clear and understandable, and we much commend this definition to the subcommittee.
Section 4 – Preserving the Fairness of Penalty Assessment
This section of the bill preserves those features of penalty assessment under the OSH Act that make it fair and reasonable. It does not overrule or change anything. This section is nevertheless helpful because OSHA's lawyers have attacked some of these features. This section of the bill would end the controversy by codifying the case law.
For example, the case law to date has made clear that penalty assessment by the Review Commission is de novo – i.e., the Commission is not bound by what OSHA proposes but is to assess a penalty based on the record made at trial. Nevertheless, OSHA's lawyers have repeatedly tried to get the Review Commission and the courts to be initially bound by OSHA's proposal. The Commission has so far rejected the attempts. This is surely correct, for OSHA's argument would take penalty assessment away from the Commission, turn it over to the prosecutor, and put the burden on the employer to disprove the propriety of OSHA's proposed amount. The phrase "and de novo" in the bill would put an end to that attempt, and make clear that penalties are to be set by the impartial Commission, not a zealous prosecutor, and are to be based on evidence, not the fact that OSHA proposed them.
Another example concerns the financial condition of the employer and whether the employer rapidly complied after being notified of a violation. OSHA's attorneys have argued that the financial condition of the employer may not be taken into account because the Act does not explicitly say that the Commission may consider that factor. They point, by contrast, to Section 110(i) of the Federal Mine Safety and Health Act of 1977, 30 U.S.C. § 801 et seq. That statute expressly requires consideration of "the effect on the operator's ability to continue in business, and the demonstrated good faith of the person charged in attempting to achieve rapid compliance after notification of a violation." The bill would codify the Commission's holdings.
The bill would also codify repeated holdings by the Commission that the number of endangered employees is a relevant factor in penalty assessment. It would also codify holdings that, unless a violation is peculiar to an individual employee, the number of endangered employees pertains to the gravity of the violation rather than to the number of violations. These holdings keep penalties from artificially attaining grossly inflated levels. The bill would also make explicit what, in my experience, has so far been implicit – that if an employer is found to have committed a "repeated" violation, relevant factors in determining the proper amount of the penalty include the recentness and proximity of substantially similar previous violations by the employer. OSHA's Field Information Reference Manual looks to similar factors to determine to whether to allege a "repeated" violation at all. The bill would just make clear that these same factors may be considered with respect to the penalty amount as well.
Mr. Chairman, in reviewing Section 4, it occurred to us that it may perhaps impose on OSHA a greater administrative burden than is warranted. It might be read as requiring OSHA to discover and consider in every case the employer's financial condition, the employer's efforts to comply or abate, and the degree of responsibility or culpability for the violation by persons other than the employer. Although OSHA may know some of the facts pertaining to these factors, OSHA should not in every case have to gather evidence about these particular factors and consider them before initially proposing a penalty. To relieve OSHA of this implied burden, we respectfully suggest that the substance of Section 4 be retained but that it be recast along the following lines:
(j)(1) The Commission shall have authority to assess all civil penalties provided in this section, giving due and de novo consideration to the evidence of the appropriateness of the penalty with respect to at least the following factors:
(i) the size of the business of the employer;
(ii) the gravity of the violation, considering at least the probability of harm, the nature and extent of the harm, and the number of affected employees;
(iii) the good faith of the employer;
(iv) the history of previous violations; and
(v) in the case of repeated violations, the recentness and proximity of substantially similar previous violations by the employer.
(2) The Commission may additionally consider other appropriate factors, including:
(i) the employer's efforts to comply or abate;
(ii) the degree of responsibility or culpability for the violation by employees or other persons; and
(iii) the financial condition of the employer.
With or without these suggestions, Mr. Chairman, Section 4 would preserve those features of penalty assessment that make it fair and proportional, and we much commend its common sense provisions.
Section 5 – The Vacancy Problem
Section 5 would expand the Review Commission from three to five members. This is a much-needed reform, and we most respectfully urge that it be passed.
For over two thirds of its existence, the Commission has been so paralyzed by frequent vacancies that it has been unable to do its job. For over half the time since 1982, the Commission has had two or fewer members and, for over a third of that time, it has had only two members. For twenty percent of that time, it lacked even a quorum of two. Between 1996 and 1999, it had a full complement for only a third of the time. Recently, the Commission had only one member for nine months during fiscal year 2002, from the end of December 2001 until late August 2002. This chart, based on a table (attached) on the Commission web site, illustrates the problem:
Although two members constitute a quorum, having two members often results in paralysis, for most cases today are so complex that it is rare for two members to vote exactly alike on all the many citations at issue. So cases sit, often for many years, and the backlog mounts as new cases come in. One large and important case has been pending before the Commission for almost eight years.
Production of cases in the Commission Review function has been plagued in recent years by vacancies among the three Commissioners. In the FY 1996-1999 period, three Commissioners were on board for only approximately twelve months out of thirty-six. For more than ten months in FY 1998, only one Commissioner was on board. For the remainder of the FY 1996-1999 period, the Commission operated with only two Commissioners. The Act requires a vote of two Commissioners to take official action. With only one Commissioner, no cases can be decided. Even when two Commissioners are available to vote, deadlocks can occur which prevent rendering a decision. As a result, case production has suffered substantially during the FY 1996-1999 period.
Similar accounts of paralysis can be found in the Commission's more recent budget requests, all of which are on the Web at http://www.oshrc.gov/budget/budget.html.
The absence of members has greatly damaged public respect for the Commission and prevented it from doing what Congress expected – decide cases expeditiously and keep a watch on OSHA's excesses. This would be far less likely to happen if the OSHRC had five members. As I mentioned above, I have served at both the OSRHC , and its counterpart under the Mine Safety Act, the Federal Mine Safety and Health Review Commission (FMSHRC), which has five members. The difference between the two agencies is like night and day. A major reason for this is that the FMSHRC has five members while the OSHRC has only three. Because it has five members, the FMSHRC has enjoyed a much more stable membership than the OSHRC. The FMSHRC can usually be assured of having at least a quorum of three to decide cases. The OSHRC cannot.
We respectfully urge the Congress to expand the Commission to five members.
Section 6 – Leveling the Playing Field Just A Bit
Section 6 of the bill is a modest step in the right direction. It would award attorneys' fees and expenses to the very smallest employers if they win. It applies to employers with not more than 100 employees and a net worth of not more than $1,500,000.
The Equal Access to Justice Act (EAJA) has not succeeded in protecting small employers from erroneous OSHA prosecutions. The principle reason is that, under the EAJA, even if an employer wins, OSHA does not have to pay the employer's attorneys' fees unless OSHA's position was not "substantially justified." That is far too easy a target for OSHA to hit. OSHA's specialized lawyers can almost always come up with a plausible justification for the prosecution, and that is in practice all that they need to show. And it is difficult and expensive to prove that OSHA's position was not "substantially justified" even if it was. 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.
Section 6 will help solve this problem, and somewhat re-open the door to the courthouse for small employers. To be sure, the effect of Section 6 will be modest, as it covers only the smallest of the small employers covered under the EAJA, which applies to employers of 500 employees and not more than $7 million. Few small employers will want to gamble on winning in court. Few will beat OSHA's specialized attorneys. Nearly all will continue to settle at the informal conference stage, to which this provision does not apply. Nevertheless, the prospect of having to pay attorney's fees and expenses will concentrate the minds of OSHA's lawyers and force them to be sure of their legal ground before prosecuting a small employer. It will force them to focus on employers that truly deserve their attention. That will assuredly be a good thing.
This is not the first time that the Congress has considered this issue. This Committee has reported out similar legislation, H.R. 1987, the Fair Access to Indemnity and Reimbursement Act, H. Rep. 385, 106th Cong., 1st Sess. (Oct. 14, 1999), which documented the ineffectiveness of the EAJA. The full House on March 26, 1998 passed legislation containing a similar provision as part of a broader bill, Title IV of H. R. 3246, the Fairness for Small Business and Employees Act, 105th Cong., 2d Session (1998).
Now some will argue that this provision will "chill" legitimate enforcement by OSHA, because the expenses will be paid from OSHA's budget. However, the Congressional Budget Office estimated the cost of a previous version of this legislation to OSHA at about only three million dollars per year. This seems to be a small price to pay to make OSHA think twice about the strength of its case before going after the small employer and to inject a little justice into a system that grinds up small employers in litigation costs and effectively denies them the opportunity to vindicate themselves.
Section 7 – Restoring the Review Commission to Its Proper Place
Mr. Chairman, there is a pathology in the enforcement of the OSH Act. It causes unfortunate decisions such as the one discussed earlier concerning an employer's inability to be relieved from a default judgment. It is responsible for a palpable arrogance in OSHA's attitude toward employers. It undermines the rulemaking process. That pathology is the emasculation of the agency that Congress established to be a check on OSHA's excesses – the Review Commission.
That emasculation occurred in Martin v. OSHRC (CF&I Steel Corp.), 499 U.S. 144 (1991), where the Supreme Court held that an OSHA interpretation of an ambiguous regulation must be upheld if the interpretation is merely "reasonable" – even if the court believes that the interpretation is wrong. The decision awards OSHA a home run even if the Review Commission and a court think that OSHA has hit only a foul ball. Some courts have even extended that decision to require deference to OSHA even when OSHA interprets the OSH Act, as opposed to OSHA's own standards. As I shall show later, this course of decisions is contrary to known congressional intent.
I can hardly exaggerate the adverse effects of this decision on the fairness of enforcement under the OSH Act.
As I have said, the decision emasculates the Review Commission as a check on OSHA. Chief Justice John Marshall once said in the landmark case of Marbury v. Madison that the duty of the courts is "to say what the law is." The Review Commission, however, a kind of court, may no longer say what the law is. It may say only whether OSHA is reasonable – not right – when OSHA says what the law is. This prevents the Review Commission, the body that Congress established to act as a check on OSHA, from doing its job.
A clear example of the destructiveness of this doctrine is the Second Circuit's 2-1 decision in Chao v. Russell P. Le Frois Builder, Inc., 291 F.3d 219 (2d Cir. 2002), which, because of CF&I Steel decision, held that the Commission had no power to relieve deserving employers from defaults. The court reached this result because it first held that, as between the impartial Commission and the prosecuting agency, it was OSHA to which the court should defer; about a third of the opinion discussed this deference question.
Another example is Martin v. American Cyanamid Co., 5 F.3d 140 (6th Cir. 1993), rev'g 15 BNA OSHC 1497 (OSHRC 1992), which permitted OSHA to require the re-writing of millions of product labels. After the Hazard Communication Standard was adopted, OSHA decided that chemical labels must state the bodily organs they affect. So, "Do Not Inhale" was not good enough; only "Causes Lung Damage" would do. OSHA could not point to anything in the standard or its legislative history to support its position; it relied only on an ambiguous statement in an appendix to the standard. The Commission held that OSHA's interpretation was wrong. A court of appeals upheld OSHA's interpretation and overruled the Commission – not because OSHA was right, but because it was merely "reasonable."
The American Cyanamid decision illustrates also how the CF&I Steel decision undermines the rulemaking process, in which important policy questions are supposed to be resolved in an open and public manner. The CF&I Steel decision encourages OSHA to resolve important policy questions through the back door, in interpretation letters and compliance directives. The decision encourages OSHA to evade congressionally-imposed requirements for OSHA standards, such as proving "feasibility" and "significant risk." It encourages OSHA to evade congressional oversight, oversight by the Office of Management and Budget under the Paperwork Reduction Act, and the requirements of the Small Business Regulatory Enforcement Fairness Act. For example, in American Cyanamid, OSHA was able to impose a major policy decision without rulemaking and without scrutiny by the Office of Management and Budget under the Paperwork Reduction Act. This is lawmaking without law.
The CF&I Steel decision has the perverse effect of encouraging OSHA to write ambiguities into its standards. Ambiguity enhances OSHA's litigating position and permits it to resolve major policy issues through "interpretation." That is why key provisions of the ill-fated ergonomics standard, for example, repeatedly used the words "reasonable" or "reasonably" to describe the employer's duty.
The decision also encourages in OSHA a palpable arrogance. A safety expert I once knew complained to me shortly after the CF&I Steel decision came out that OSHA had suddenly become arrogant in its behavior. We should have expected this. As a great legal scholar once said, "There is nothing so calculated to make officials and other men disdainful of the rights of their fellow men, as the absence of accountability."
It Wasn't Supposed to Be This Way
The great irony is that it was not supposed to be this way. This we know for certain. The legislative history of the compromise that permitted the passage of the OSH Act indisputably proves that.
In 1970, the Act almost did not pass. Many feared that, if all functions under the Act were placed in the U.S. Labor Department, that agency would become too powerful and the confidence of employers in the fairness of the Act would be shattered. Proponents of giving all powers to the Labor Department argued that a departmental appeals board (i.e., a board established by Cabinet agencies to adjudicate cases brought by an enforcement bureau) would afford sufficient oversight and independence. Such boards decided cases de novo and their views were given deference by the courts. But distrust of internal appeals boards was widespread, and a veto was threatened by the President. To permit the passage of the Act, a compromise was agreed upon: An independent Review Commission would be established as a check on prosecutorial excess.
The legislative history directly addresses whether the Review Commission would defer to OSHA. The author of the compromise, Senator Jacob Javits, specifically assured Congress that the Commission would decide cases "without regard to" OSHA. He stated that adjudication would be conducted by "an autonomous, independent commission which, without regard to the Secretary, can find for or against him on the basis of individual complaints." On the strength of that assurance, Senator Holland immediately declared his support, stating that "that kind of independent enforcement is required ." These remarks appear to be the only piece of legislative history that directly addresses the deference issue.
Deference to OSHA is, of course, contrary to congressional intent, for one cannot both decide cases "without regard to" OSHA and defer to its views. Moreover, deference makes the Commission even more subservient than the department appeals boards that Congress in 1970 specifically rejected as insufficiently independent.
So why did the CF&I Steel decision come out the other way? Unfortunately, the employer's brief in that case did not bring Senator Javits's statement to the Supreme Court's attention. The brief did not quote or cite the remark and, apparently as a result, the Court did not discuss it. The employer, CF&I Steel, was then in bankruptcy, used a sole practitioner with almost no OSHA experience, and apparently could not afford the cost of thorough legal research. The remark was mentioned in only an amicus curiae brief and apparently overlooked.
The Effect on Small Employers
The emasculation of the Commission falls particularly hard on small employers. Large employers can afford to hire experienced OSHA counsel, find the evidence proving that OSHA's position is "unreasonable," and bear the litigation costs. But small employers have no such hope. The result is occasional justice for large employers and no justice for small ones. I have seen with my own eyes small employers have to accept OSHA citations and penalties that the Commission would throw out if it were free to do so. I have had to tell small employers and medium-size employers, "Yes, you are right, OSHA is wrong, but you can't afford to prove it."
But worst of all is the contempt that these decisions breed for the Commission. I will give you an example. For over a quarter century, the Commission has held that a violation cannot be found unless OSHA shows that the employer knew or should have known of the violative condition. The courts have accepted this holding. One would think that OSHA would, therefore, educate its employees and compliance officials on this principle and that it would be reflected in OSHA's Field Information Reference Manual. But neither is the case. I have had settlement conferences with long-time area directors who give me blank stares when I mention the knowledge principle. Their ignorance means that the client will have to contest the citation and then spend time and money tussling with OSHA's lawyers. But small- and medium-size employers can't afford to do that. They often have to accept unjustified citations because OSHA refuses to apply decisions of the Review Commission that it dislikes.
We urge the Congress to restore the Review Commission's proper place under the OSH Act and pass H.R. 1583.
Thank you for permitting me to participate in this afternoon's panel; I look forward to answering any questions that you may have.