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bizjournals.com Washington Bureau, May 17, 2004
Congress may help small biz fight OSHA by Kent Hoover
Jim Knott could become a role model for small-business owners if Congress passes legislation that would enable small firms to recover their legal costs when they fight OSHA and win.
Knott, who owns Riverdale Mills Corp. in Northbridge, Mass., has spent $120,000 fighting the Occupational Safety and Health Administration over three sets of citations he felt were unjustified. He could have saved a lot of money by simply paying the fines -- they totaled less than $20,000 and OSHA offered to cut them in half -- but he felt "an obligation" to fight overzealous regulators.
"These people are domestic enemies," he says. "They are damaging the economy of the United States."
OSHA dropped its charges in one case, and Knott lost the other two appeals. But his ferocity in battling regulators paid off when he recovered $68,000 in legal costs from the Environmental Protection Agency. A judge in that case ruled agency's accusations against Knott's company were unfounded.
A seldom-used federal law allows businesses to recover their legal costs when they prevail against the government, but agencies don't have to pay if they can show their actions were "substantially justified."
This provides a broad loophole for agencies that is difficult -- and costly -- for small businesses to overcome, business groups say. They have asked Congress to pass legislation that would force OSHA to pay a small business's legal fees whenever the agency loses a case.
The House Education and Workforce Committee passed the legislation by a 24-20 party-line vote May 5.
Sponsor Rep. Charles Norwood, R-Ga., says the bill would "force OSHA to think twice" before pursuing cases "of dubious merit."
The legislation also would "level the playing field" by making small businesses more willing to fight unfair OSHA citations rather than simply settling cases for economic reasons, he says.
"Many small businesses simply do not have the resources to compete with OSHA's team of legal experts," Norwood says. "We're trying to give them the encouragement to stand up when they think they're right."
Bill 'one more way to weaken OSHA' Democrats, however, say the bill would gut OSHA's ability to enforce safety standards.
"This legislation is just one more way to weaken OSHA," says Rep. Lynn Woolsey, D-Calif.
OSHA officials would be "intimidated" by the prospect of having to pay a small business's legal costs, says Rep. Major Owens, D-N.Y. As a result, the agency might not cite companies unless it were 100 percent sure it would win in court, he says.
"All this bill is going to do is say to OSHA that on those close-call cases, don't bring the case," says Rep. Robert Andrews, D-N.J.
Democrats also say there is no evidence that OSHA is out of control and wreaking havoc on innocent small businesses.
OSHA issued employers citations for 83,760 violations in fiscal 2003, an 8 percent increase over the year before. Nearly 60,000 of these violations were considered to be serious.
But the average penalty for a serious violation was only $1,000, and OSHA seeks fines of more than $50,000 in only about 200 cases a year, according to the Public Citizen Litigation Group.
Democrats want OSHA to increase its fines against businesses and charge company owners with felonies in cases where workers die because management deliberately ignored safety standards.
"Causing the death of an employee on the job through willful violation of worker safety standards should not be treated as a trivial federal offense," says Sen. Jon Corzine, D-N.J.
Criminalizing OSHA violations, however, could jeopardize the agency's progress on getting companies to enter into voluntary agreements to improve safety programs, says Rep. John Boehner, R-Ohio.
Workplace fatalities and injuries continue to drop every year -- a sign, he says, that OSHA's emphasis on compliance assistance along with enforcement is working.
------ OSHA Reforms The House Education and Workforce Committee approved four bills May 5 dealing with appeals of OSHA citations:
* H.R. 2828 allows the Occupational Safety and Health Review Commission to make exceptions to the 15-day deadline for employers to appeal OSHA citations.
* H.R. 2729 increases the size of the review commission from three to five members.
* H.R. 2730 gives the review commission, not OSHA, the final say over interpreting OSHA standards.
* H.R. 2731 requires the federal government to pay the legal costs of small businesses who prevail in cases brought against them by OSHA.
Source: Committee on Education and the Workforce ------
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