Serial No. 105-105


Printed for the use of the Committee on Education

and the Workforce

Table of Contents *







Appendix A – Written Statement of Hon. Charlie Norwood *

Appendix B – Written Statement of Charles Jeffress *

Appendix C – Written Statement of Marshall J. Breger *

Appendix D – List of Fashion Trendsetters and Award Programs Descriptions *

Appendix E – Written Statement of John R. Fraser *

Appendix F – Written Statement of Stanley W. Levy *

Appendix G – Written Statement of Baruch A. Fellner *

Appendix H – Reprint of Law Review Article, "Interpretive Rules, Policy Statements, Guidances, Manuals, and the Like – Should Federal Agencies Use Them To Bind The Public?" by Robert A. Anthony *

Appendix I – Reprint of Law Review Article, "Interpretive Rules, Legislative Rules and Spurious Rules: Lifting the Smog" by Robert A. Anthony *

Appendix J – Reprint of Law Review Article, "The Supreme Court and the APA: Sometimes They Just Don’t Get It" by Robert A. Anthony *

Table of Indexes……………………………………………………………………...441

Friday, May 8, 1998


U.S. House of Representatives

Committee on Education and the Workforce

Subcommittee on Oversight and Investigations

American Worker at a Crossroads Project

Washington, D.C.




The subcommittee met, pursuant to call, at 9:30 a.m., in Room 2175, Rayburn House Office Building, Hon. Peter Hoekstra [chairman of the subcommittee] presiding.

Present: Representatives Hoekstra, Norwood, Mink, and Scott.

Staff Present: Jan Faiks, Worker Project Director

Paul Boertlien, Worker Project Communications Director

Stevan Johnson, Worker Project Office Manager

William Matchneer, III, Worker Project Chief Counsel

Kimberly Reed, Worker Project Counsel

Stephen Settle, Worker Project Counsel/Investigator

Arturo Silva, Worker Project Media Assistant;

Rob Borden, Professional Staff Member

John Flannery, Minority Worker Project Counsel

Laura Efurd, Legislative Director for Mrs. Mink

Denise Forte, Legislative Assistant for Mr. Scott.


Mr. Norwood. [Presiding] A quorum being present, the Subcommittee on Oversight and Investigations of the Committee on Education and the Workforce will come to order.


The subcommittee is meeting today to hear the testimony for the American Worker at a Crossroads Project. Under rule 12(b) of the committee rules, any oral open statements at the hearing are limited to the Chairman and the Ranking Minority Member. This allows us to hear from the witnesses sooner and help Members keep to their very busy schedules. Therefore, if other Members have statements, they can be included in the hearing record.


Witnesses should be advised that any additional information or testimony that they would like to have entered into the hearing record may be done in the next 3 days.


Before I introduce the panel of witnesses, I have an opening statement that I would like to make.



I have called this hearing today to determine whether the U.S. Department of Labor is acting arbitrarily to enact the political agenda of the White House.


Today we will hear testimony and ask questions about various lists published by Department agencies to honor companies with exemplary workplace practices as defined by the Department of Labor. We will also hear about new OSHA compliance programs enabling companies to avoid the probability of inspection by voluntarily adopting workplace practices that go beyond those required by the law.


In their efforts to reward some companies, the Department is punishing others. Companies not included on the lists are stigmatized, and their reputations are damaged.


It is the duty of this subcommittee to make sure that they are being treated fairly by our government. The best way to ensure fair treatment is to determine the integrity of the lists published. This is very, very serious business. Our government should not be releasing information on companies that will affect their economic success without proper oversight of the information released.


Before this hearing is over, this subcommittee should have the answers to the following questions:


Does criteria exist for determining which companies get on the lists published by the Women’s Bureau, OFCCP, and the Wage and Hour Division?


Before new regulations are issued, notice and comment rulemaking are required under the Administrative Procedures Act. Are these lists subject to any similar requirements before they are made available to the public?


Is legal recourse available to the companies left off of these lists?


This hearing is about more than a few controversial lists put out by the Department of Labor. It is about holding the government accountable to the laws that govern it. It is about ensuring that the government does not act outside those laws in order to favor certain people or organizations over others. It is about making sure that the checks and balances on each of the three branches of government guaranteed by our Constitution are not subverted.


Upon entering office, President Clinton assigned Vice President Al Gore to introduce reforms and innovations in the way government does its business. These reforms were supposed to make our government operate more effectively and efficiently. Some of the reforms and innovations were long overdue; some weren’t worth the paper they were written on.


I will be disappointed if this subcommittee discovers that these lists and OSHA compliance programs are an attempt by the Clinton administration to regulate American taxpayers without being bothered by the law or congressional oversight. The Department of Labor may think backdoor regulations on business are the kind of innovation the Clinton administration wants, and they may be right. But, it is not the kind of innovation the American people want, and it is not the kind that I think this Congress is going to tolerate. More regulations translate into bigger government. Backdoor regulations translate into less accountability by the federal government to the American people.


I can assure you, an unaccountable big government is not an innovative concept. It is a reality, unfortunately, that many Americans live with every day. It is a reality that I would like very much to make a distant memory.


Before making any judgment on the Department of Labor’s decisions to publish its honors list, this subcommittee is obligated to get the facts. I hope very much that this hearing will achieve that objective.



See Appendix A for the Written Statement of Hon. Charlie Norwwod



Now I yield to the Ranking Minority Member, Mrs. Mink, for whatever statement you would like to make.



Mrs. Mink. Thank you very much. The Minority welcomes all of the witnesses who have come to this subcommittee hearing. I, as a representative of the Minority, have no preconceived conclusion as to the appropriateness, propriety, justification of the rules or protocol or plans or programs that the Department of Labor has put into effect.


In discussing some of our concerns, particularly in the garment industry, the Chair of the subcommittee and I, I think, are very much in line in terms of trying to look at the grievances of the workers in that industry insofar as the industry’s inability to enforce minimum wage standards and working conditions and overtime pay and a number of other aspects. And we are discomforted increasingly by the notion that perhaps the government is not prepared or ill prepared to move to help the workers in these instances.


So I think that I come from the perspective that the government has a responsibility to make sure that the laws of this Nation are adhered to and has the authority and obligation to formulate policies and plans that can seek the goal, and that is compliance, with our labor laws.


So I come to the hearing today, together with my colleagues on the Minority, interested to hear what the industry has to say about enforcement, about the Labor Department’s plans, and equally interested in determining the justification, outlook, prospects, outcomes of the programs that the Labor Department has put into place, in the interest of seeking greater compliance and perhaps even prevention of the industry and other people in it from easy access to violations of labor standards and labor laws.


So I welcome this hearing today and look forward to the testimony that our witnesses are going to present. Mr. Chairman, I apologize that around 10:00 a.m. I must leave, and my colleague Mr. Scott will occupy the Ranking position. Thank you.



Mr. Norwood. Mrs. Mink, we will miss you, but I will enjoy having Mr. Scott on my right.


Ladies and gentlemen of the subcommittee, I would like to now introduce to you our panel of witnesses. I need to remind our witnesses that they have been invited to speak for 5 minutes before the subcommittee. As I mentioned earlier, witnesses may submit additional copy or information for the record if they see fit to do so.


We are truly fortunate, I believe, to have a group of people with us today who will share with this subcommittee some of their thoughts and some of their experiences. I need to remind my colleagues and the witnesses that this is not a Department of Labor bashing session. It is, however, part of an ongoing conversation with the American worker about what works and what doesn’t in the American workplace.


I would like to thank each of the witnesses for coming today. I value what each of you has to add to our conversation on the American workplace.


We will pose questions after all of the members of the panel have completed their testimony.


We have first, the Honorable Charles Jeffress, who is Assistant Secretary at OSHA, Department of Labor, and a good Tarheel. Welcome, Mr. Jeffress. We look forward to your comments this morning.


Next, Mr. John Fraser is Acting Administrator, Wage and Hour Division at the Department of Labor here in Washington, D.C. We welcome you, sir. Thanks very much for being with us.


Stanley W. Levy is chairman of the Labor Committee, California Fashion Association in Los Angeles, California. He has extensive experience and knowledge of the fashion and apparel industry. He has received the highest of awards by the Labor Department and was appointed by President Clinton to the White House Apparel Industry Partnership. Mr. Levy, thank you very much for being with us today.


Baruch A. Fellner is a partner with Gibson, Dunn & Crutcher, LLP, and is representing the United States Chamber of Commerce in Washington, D.C. Mr. Fellner for 8 years served as counsel for both the appellate litigation and regional litigation in the OSHA Division in the Department of Labor. Before that he served at the appellate court branch of the NLRB for more than 4 years. Sir, we welcome you here this morning.


Later this morning, I believe we will have one other witness come up, and at that time I will introduce him.



Mr. Norwood. With that, Mr. Jeffress, if we could start with you, please, sir.





Mr. Jeffress. Thank you, Mr. Chairman.


I appreciate this opportunity to testify before the subcommittee about the Occupational Safety and Health Administration's efforts to form partnerships that allow us to do a better job of protecting workers in this country.


I will discuss briefly two of OSHA’s primary partnerships: The Voluntary Protection Program, sometimes referred to as VPP, and the Cooperative Compliance Program, sometimes referred to as CCP. I will try to avoid the use of the acronyms, but I give them to you in advance in case we need them.


The enforcement programs of this new effort, this new direction of OSHA, are smart. They are fair. They are protective of employees. They recognize exemplary efforts by employers.


Our improved approach enables the agency to focus our time and resources on the most hazardous worksites while spending less time or no time at all at safer ones. Responsible employers are treated differently from those who neglect their employees. I believe that is exactly the direction Congress has asked us to go. I believe that is what we have been doing the last few years.


The Voluntary Protection Program was initiated in July of 1982. It recognizes exemplary companies, which go beyond the minimum requirements prescribed by OSHA standards for protecting workers. VPP participants are exempt from routine inspection, are monitored by OSHA to ensure that workers are involved in the program and that hazards are eliminated. It is consistent with Congress’ desire, as expressed in section 2(b) of the Occupational Safety and Health Act of 1970, which calls for "encouraging employers and employees in their efforts to reduce the number of occupational safety and health hazards at their places of employment, and stimulating employers and employees to institute new and to perfect existing programs for providing safe and healthful working conditions."


The Voluntary Protection Program has been lauded in Congress and praised by the business community. In fact, the August 4th, 1997 edition of Fortune Magazine described the Voluntary Protection Program this way, and I quote, "Widely praised as government reinvention at its best and OSHA’s way of getting more bang for its buck, VPP offers a kind of blueprint for creating a safer workplace."


Sixteen years ago, VPP began with a handful of participants, 11 sites. Today there are more than 400 sites covering over 300,000 workers. This program works. The lost workday case rates of VPP participants average up to 90 percent below the national average for other employers, and in 1992 the General Accounting Office of Congress reported that one VPP participant had reaped benefits of $4.26 for every dollar invested in the program.


For OSHA, the advantages of VPP are that the agency does not waste inspection resources on firms that are meeting our requirements, and we are able to draw attention to safety and health programs through recognition of superior performance.


The second program is the Cooperative Compliance Program, which grew out of a pilot program in Maine called the Maine 200. The Ford Foundation recognized that program as one of the 25 most innovative programs in government in 1995, and it won the award from the Foundation.


In November of 1997, we expanded this concept to the entire country through what we call our Cooperative Compliance Program, offering employers a choice between enforcement and partnership. By the time OSHA initiated the CCP, our agency had spent months publicizing the program through State program meetings, outreach with potentially affected employers and employees, with associations and with unions. More than 20,000 people attended our sessions throughout the country, where folks had been invited to discuss the CCP and its impact on their business.


For years, we have been criticized for sending our inspectors to safer workplaces while failing to focus sufficient attention on those facilities with serious problems. Two years ago, we began collecting injury and illness data from individual worksites for the first time. In 1997, we surveyed 80,000 workplaces, primarily in manufacturing, and used the data to target our enforcement efforts to the individual workplaces with the highest injury rates. Based on the survey results, we identified employers who had lost workday injury and illness rates roughly twice the national average. Those employers were placed on OSHA’s primary inspection list.


We offered these employers an alternative to traditional enforcement. Employers joining the program could agree to work to reduce injuries and illnesses and to implement a safety and health program. Each employer also agreed to involve workers in the process of identifying and correcting hazards and implementing the program. And in return, we agreed to remove them from our primary inspection lists and place them on a secondary list.


Participation was completely voluntary; yet almost 90 percent of the 12,000 employers invited to enter the CCP chose to do so. This program helps us leverage our resources, helps us protect more workers than we could through traditional enforcement and because CCP participants agreed to step up their safety and health efforts, it enables them to forego scheduled inspection visits at many of their facilities. We have more resources to dedicate to those employers who choose not to step up their safety and health programs.


Let me mention there is no penalty for employers who elect not to join the CCP. It is a voluntary program. It does not add to employer duties. It simply describes how the agency will allocate our resources to enforce those duties. Two Federal circuit courts of appeal have upheld OSHA’s ability to establish such inspection assignment systems based upon neutral and objective criteria without resorting to administrative rulemaking.


Mr. Chairman, I share your concern that Federal agencies should be held accountable for our actions. Whether or not those decisions are subject to the notice and comment provisions of the Administrative Procedures Act, I am delighted to tell you that the new OSHA is acting very responsibly here and is acting the way Congress and businesses have asked us to act. I believe we are more effective at protecting workers through these new programs than we have been previously. Thank you.



See Appendix B for the Written Statement of Charles Jeffress



Mr. Norwood. Thank you very much, Mr. Jeffress. We will be delighted to have a dialogue after we hear from all the witnesses.



Mr. Norwood. Let me welcome Mr. Breger. I am sorry about the time slot and the information that you had, but we are delighted you are here. Ladies and gentlemen of the subcommittee, I would like to introduce you to Marshall J. Breger. Mr. Breger is a professor of law at Columbus Law School, Catholic University of America here in Washington, D.C.


Mr. Breger is a former Solicitor of the Department of Labor and former Chairman of the Administrative Conference of the United States. Professor, I do appreciate you being here today. I look forward to your testimony and your unique outlook on all of this. And if we may, we would love to hear from you for 5 minutes, please.




Mr. Breger. Well, I thank you, Mr. Chairman. I apologize that I was not aware of the change of schedule. I also apologize because I have a severe cold, and I will talk low, and I may be extra brief as well.



Mr. Norwood. Professor, just pull that microphone close to you and speak as low as you like.



Mr. Breger. Thank you very much.


I am here today to talk about some regulatory strategies at the Department of Labor that promotes superogatory compliance. That is to say compliance above and beyond the literal letter requirements of the law. Ordinarily, we think this is a good thing, and in many respects it is a good thing to have more compliance. But on occasion, the structure of these programs can lead one to have some concern as to their statutory authority, as to their regulatory authority and as to their accountability. So I want to just briefly review some of these programs and point out some of the concerns that one might have.


One example is the Fair Labor Fashion Trendsetter List in the Wage and Hour Division of the Department of Labor. It is designed to accredit companies who have, quote, "gone the extra mile" in their compliance with the Fair Labor Standards Act, and it includes retailers and manufacturers who have agreed to contract with suppliers who privately monitor their contractors through site visits. Many also agree to guarantee the wages of their contractors and employees.


Another example is the Women’s Bureau’s "Working Women Count Honor Roll," which was launched in 1994 to quote, "recognize employers, organizations and others who implement policies and practices that value work women do."


Third is the office of Federal Contract Compliance Programs, the OFCCP, Special Exemplary Volunteer Efforts, or EVE Awards. They also give out EPIC Awards, Exemplary Public Interest, as well as a number of other awards. I should point out that the OFCCP awards differ from some of these others in that they didn’t purport to add any new obligations. They simply give an award for companies who have met the obligations that they have under law; and, secondly, they are grounded in the Executive Order which founded the OFCCP.


Finally, there are some programs in OSHA, the Voluntary Protection Program and the Cooperative Compliance Program, which my colleague here at the table I heard talk about already, so I won’t take your time.


Now, one of the difficulties with these programs is that some of them lack statutory authority. VPP has no explicit statutory mandate. But Section 2 of the OSHA Act provides a general authorization for OSHA to, I am quoting, "encourage employees and employers to reduce the number of occupational safety and health hazards at their places of employment." That may be a sweep under which the VPP and CCP can be brought in.


But in contrast, the Trendsetters program lacks any apparent statutory authorization whatsoever; neither does the Women’s Bureau program.


Now, again, one can argue why should we be concerned if there is a nonstatutory program that promotes compliance?


I think it is generally a good thing for companies to go beyond the letter of the law. However, in some instances the programs to get the award might require companies to do things that they would not otherwise have to do under law. In some cases, it might require them to do things that Congress has specifically refused to mandate companies to undertake, and in some cases it could require the agencies to engage in activity for which they lack budgetary authority.


I think we should be quite leery of programs that are set up to do good when they are set up without statutory warrant, without Congress having said they want these programs to be undertaken.


Now, the situation gets even more complicated because many of these programs lack any regulatory authority. There are no regulations, certainly no traditional notice and comment rulemakings, which undergird the basics of these programs. And what do I mean by basics? What the standards are to get in a program; what the rules to be thrown out of the program are; what kind of appeal procedures might exist if you are to be thrown out.


In some instances, again taking the Trendsetters program, it was created in a press release. The standards are listed in the press release drawn up more for the evening news than for the companies, for the regulated community, or for the workers to really understand what is involved, and there is no indication of what it takes to stay on the list, and indeed there is no indication as to what occurs if you are going to be removed from the list.


In at least one instance, a company was, "suspended from the list," a term of activity which hitherto hadn’t existed in the Trendsetters program. It allowed the government, allowed the Department, to say, we didn’t throw you off. We just suspended you. But the suspension was indefinite and had the same effect as being thrown off.


So I think, again, if agencies want to go ahead with these programs, they should go the extra mile and at least put the basic structure of the program under a traditional APA rulemaking regime. Otherwise, they are going to find themselves in considerable trouble when there is a conflict in the program, a conflict between companies, and the government, between workers and companies and the government.


All of this matters much less when the government is handing out carrots, when it is simply praising. But it matters a great deal when the government is using sticks. When not being part of this program allows the government to assign blame. When, in fact, you are suspended from the program, the world purports to think that you are involved in the use of sweatshops or that you don’t care enough about women to be part of the Women’s Bureau Honor Roll. Or, when you feel that if you don’t enter into the VPP or the CCP, you will be run up against the full panoply of the OSHA enforcement regime.


So I think that the government needs to recognize that when these programs are used not just for carrots, but for sticks, when they are used not just for praise, but for blame, traditional accountability mechanisms that are part of the Administrative Procedures Act should be utilized.


So in sum, I don’t deny the value of these superogatory compliance programs. I think they have good intentions, and many of them have good results. I think that there has to be great concern that they remain voluntary and not become coercive. I think there has to be particular concern that they have a statutory base and that they have regulatory boundaries that provide for the kind of accountability which we all want in an administrative law program.


Mr. Chairman, I thank you. I would be happy to take any questions you may have.



Mr. Norwood. Thank you very much, Professor Breger. I appreciate your comments.



See Appendix C for the Written Statement of Marshall J. Breger



Mr. Norwood. Before I came to Congress, Mrs. Mink, I had always heard OSHA had a big warehouse up here full of sticks. I’ve been looking for it ever since. I’ve even asked my friends from North Carolina if they can help me locate it. Maybe we can exchange some of those for carrots.



Mrs. Mink. They are more like cotton balls.


Mr. Norwood. Yes. You ought to be in business, and you will see how cotton-like they are.



Mr. Norwood. Mr. Fraser, we would be delighted, sir, to hear from you now.






Mr. Fraser. Thank you, Mr. Chairman. Thank you for inviting our testimony today about initiatives in the Department to recognize employers that have taken exemplary steps to achieve important workplace goals.


Secretary Herman wants you to know that she is proud of the Department’s programs to acknowledge and applaud companies with policies that protect workers. We welcome this opportunity to tell you about the Office of Federal Contract Compliance Programs’ Exemplary Voluntary Efforts Awards and the Wage and Hour Division’s Trendsetter List. I will also briefly reference and discuss the Women’s Bureaus Working Women Count Honor Roll programs that you have described.


Mr. Chairman, I did bring with me today a brief description of these programs that, with your permission, we would like to include in the record of the hearing.



Mr. Norwood. So ordered.



See Appendix D for the List of Fashion Trendsetters and Award Programs Descriptions



Mr. Fraser. OFCCP is the agency charged with ensuring that companies doing business with the Federal Government do not discriminate in employment and practice affirmative action to ensure equal employment opportunity for all individuals, including minorities, women, individuals with disabilities, and Vietnam-era veterans. The agency enforces Executive Order 11246, which prohibits discrimination and requires Federal contractors and federally-assisted construction contractors to take affirmative action to assure equal employment opportunity without regard to race, color, gender, religion and national origin.


OFCCP also enforces section 503 of the Rehabilitation Act of 1973 and related claims under Title I of the American with Disabilities Act, and the Vietnam-era Veterans Readjustment Assistance Act.


Wage and Hour is responsible for enforcing the minimum wage, overtime, and child labor laws under the Fair Labor Standards Act and several other labor laws. As we described to this subcommittee in a hearing a couple of weeks ago, since 1991 we have substantially stepped up our efforts in the garment industry to stop what are pervasive workplace abuses. Our No-Sweat Initiative involves a multi-pronged approach to involve all segments of the industry in an effort to increase compliance and end worker abuse in the production of the clothes we wear. Like Mr. Jeffress indicated, we are proud that this initiative was nationally recognized with an Innovations in American Government Award from the Ford Foundation and the John F. Kennedy School of Government.


Achieving compliance with the workplace laws we enforce is the primary mission of OFCCP and Wage and Hour. Our programs fulfill this mission through a comprehensive strategy of enforcement, education to encourage and increase voluntary compliance, partnerships to leverage limited resources and join together the influence of all stakeholders in the regulated communities, and recognition of exemplary steps being taken to promote and achieve compliance. What today’s hearing focuses on is one prong of this strategy to recognize exemplary efforts by employers.


The EVE Awards and the Trendsetters Lists are intended to advance voluntary compliance with the law by recognizing companies whose exemplary efforts further compliance with worker protection laws. Both initiatives are rooted in the firm belief that most companies want to comply with the law, and that their commitment and participation is essential to ensure that workers’ rights and opportunities are respected.


Our employment laws are designed to protect workers in the workplace, but government enforcement alone is not enough. It is important to highlight the meaningful steps businesses are taking to ensure that their goods, products and services are not the result of abusive or discriminatory workplace conditions. We want to seek out companies with the best workplace practices, applaud them for their efforts and accomplishments, and hold them up for others to imitate. These are carrot programs, in Mr. Breger’s term.


The EVE Awards and the Trendsetters List are based on the same approach. Companies are nominated or nominate themselves for recognition. No one is forced into these programs. Information on nominees’ policies is submitted to the agency and evaluated by a committee that selects qualifying nominees on the basis of appropriate and public criteria. Nominees not selected for the Trendsetter List or an EVE Award are contacted and encouraged to reapply.


OFCCP initiated the EVE Award in 1983, during the Reagan administration under Secretary of Labor Raymond Donovan. The Secretary’s Opportunity 2000 award was added to the EVE Award program in 1988 on the initiative of Secretary of Labor Ann McLaughlin, and that program was expanded in 1994 to include the Exemplary Public Interest Contributions Award.


The Trendsetters List from Wage and Hour began in 1995 under Secretary of Labor Reich as a part of the overall strategy, the No Sweat strategy, that we described in detail for this committee a couple of weeks ago. This program responded to criticism from the apparel industry and members of the apparel industry community that our garment enforcement strategy was simply highlighting the wrongdoers, the most egregious violators, and it was painting a very bad picture of an industry that tarred all of the members of the industry. So the Trendsetters List was designed and intended to respond to industry requests that the Department not portray this industry as consisting only of scofflaws, and that is how the Trendsetters List came into being.


And finally, let me briefly turn to the Working Women Count Honor Roll, a recognition program developed by the Department’s Women’s Bureau. Women’s Bureau, of course, is charged by the Congress with promoting the interests of working women in this country. And in 1994, the Women’s Bureau organized an initiative to survey working women, what they like most and least about their jobs.


That survey with responses from a quarter of a million working women, identified consensus that there were three key areas of primary concern: Pay and benefits, balancing work and family responsibilities, and a lack of respect and opportunity on the job. And in part to address these concerns, the Department developed the Working Women Count Honor Roll. Again, this was a voluntary program. Employers could submit a pledge to initiate a new policy or practice that would significantly address one of these three principal concerns.


There were about 1,300 companies who made such pledges. Those companies were provided an opportunity to apply to be included on the honor roll of companies taking exemplary steps to address the issues of primary concern to working women, and 849 organizations were so honored in a report issued by the Department last year.


I have very briefly summarized, Mr. Norwood, the parameters of these programs. As I said, we have brought a description of them. I would like to just summarize by saying that the Department is committed to recognizing companies that are committed to promoting and achieving compliance with important worker protections, and like the Department of Labor are committed to fostering the well-being of their employees.


For better or worse, the companies that violate the law and abuse their workers often capture the headlines. The vast majority of businesses that try to do the right thing and succeed go unheralded. The Department is proud of its role in trying to shine the spotlight on some of these companies, to applaud them for their efforts and to help them lead their industries by example.


With that, Mr. Chairman, I will conclude and again be prepared to answer any questions.



See Appendix E for the Written Statement of John R. Fraser



Mr. Norwood. Thank you very much, Mr. Fraser.


You can assure the Secretary that I suspect most of us agree with her that her heart is right; the intent is correct. This hearing is about the process – and it is this process that should concern every American. When a few people at the Labor Department can put up a list – good guys and bad guys – because as hard as I know you try, politics does enter into it, and there are certain examples out there where we know that has happened. So, thus, the hearing.



Mr. Norwood. Mr. Levy, we would be delighted to hear from you now.






Mr. Levy. Thank you very much, sir.


I would like to start with a prayer from a book called Dear God, Children’s Letters to God, which I just got at the bookstore the other night. "Dear God, please help the Democrats and the Republicans to get along. That way we could all get along with other places, too, like Russia and the Arabs and the Vietnams."


I was just struck by that. It was the first page I opened to when I saw the book, and I thought I would share it with everybody.



Mr. Norwood. Is an "amen" appropriate at this time?





Mr. Levy. Let me just explain a little bit about my background. From 1992 until early 1996, I was the general counsel of Guess?, Inc., a leading American fashion and apparel company. In 1992, the media and the public were just beginning to become aware of the sweatshop issue. Rolene Otero, the Los Angeles District Director of the DOL’s Wage and Hour Division, came up with the idea of industry monitoring of contractors to help eliminate sweatshops. She found statutory authority for the program.


In 1992, I negotiated on behalf of Guess? the very first historic industry-setting precedent voluntary agreement with the Department of Labor to monitor its contractors for compliance with the Fair Labor Standards Act. Professor Breger was the Solicitor of the Department of Labor at the time.


A great deal of my practice today involves advising and representing fashion and apparel companies in developing and implementing programs and procedures to assure that their products are produced in factories worldwide, and especially in the United States, which are free of child labor, slave labor, and sweatshop conditions.


The California Fashion Association, on whose behalf I am here, was created several years ago at the suggestion of Los Angeles Mayor Richard Riordan, with seed funding by the city. Members of the California Fashion Association include fashion, apparel, and accessory manufacturers; textile companies; garment contractors; and trade associations; and the service industries, accountants, lawyers, banks and factoring companies.


The California fashion industry generates in excess of $20 billion a year in revenue to the Californian and American economy and provides jobs to over 140,000 people. In addition to the hundreds of small, medium, and large fashion and apparel manufacturers in California, there are over 5,000 registered contractors. Those are small businesses in the Los Angeles area. The California fashion industry is the second largest employer in the State of California with over 115,000 apparel workers in the city of Los Angeles alone, compared to 88,000 in all of New York State.


The California Fashion Association has been at the forefront of publicly supporting the Department of Labor’s monitoring program and encouraging monitoring of independent contractors for compliance with applicable Federal and State law, because we believe that there is statutory and regulatory authority for it. The California Fashion Association works closely with DOL and regularly sponsors training programs for manufacturers, contractors, accountants, lawyers, and compliance services.


Although I have not always agreed with their positions, I have always found the district, regional, and national staff of the Department to be professional, constructive, responsive, and receptive to try to resolve matters concerning anti-sweatshop issues in the apparel industry. I would like to specifically commend John Fraser, Suzanne Seiden, and Ray Glass, all of whom are here, because I work with them on a regular basis, and again, I think their contributions are outstanding.


In December 1995, the Department launched its Trendsetter List. It was and is, in my opinion, an ill conceived and poorly executed program without specific statutory or regulatory authority or any of the safeguards or accountability of the Administrative Procedures Act. I believe its purpose was to publicly embarrass or coerce manufacturers into entering into agreements with the Department of Labor to monitor their contractors for compliance.


At the time the Department first came out with the Trendsetter List, California manufacturers were already at the vanguard of having monitoring programs in place and already achieved significant results in reducing sweatshop-like conditions at contractors. As this subcommittee heard on March 31st from John Fraser of the Wage and Hour Division, although there is much more that needs to be done, through their voluntary monitoring programs, apparel companies and especially those in California have brought about a much higher level of compliance with the Fair Labor Standards Act in California than is the case, for example, in New York. Over 60 percent of the registered contractors in southern California are monitored, and the compliance rate is over 75 percent, meaning all those companies, over 75 percent, are in compliance with the minimum wage and overtime provisions of the Fair Labor Standards Act.


On December 5th, 1995, the DOL published its first Trendsetter List, which is defined as, "a list of retailers and manufacturers which have all pledged to help eradicate sweatshops in America and to try to ensure that their shelves are stocked only with ‘No Sweat’ garments."


The Trendsetter List states that it is "not a where-to-shop list." However, in 1995, the DOL issued the first list at the height of the Christmas shopping season. In 1996, it issued a new list the Wednesday before Thanksgiving, knowing that the day after Thanksgiving is the biggest shopping day of the year.


Most fashion and apparel companies chose not to apply for inclusion on the list. They were offended by the bully pulpit nature of the list and wouldn’t participate. They did not participate because they knew that the list included many companies that did virtually all their manufacturing outside the United States, and so there would be no violations in the U.S. Others refused to participate because of the hypocrisy, saying the list was not an endorsement or a shopping list when they felt that is exactly what it was.


Many very good, reputable companies, with excellent track records on compliance had no interest in going high-profile and being publicly named because they knew they would be a target for other groups with other causes. For that reason, the California Fashion Association and one national trade association urged its members not to comply.


I would like to just give one example of the misuse and then conclude. In early 1997, the media reported that UNITE, the Union of Needletrades and Industrial Textile Employees, wanted one apparel company which it was trying to organize kicked off the Trendsetter List for good. That company was on the list and never applied to be on the list. Although the DOL acknowledged in writing that the company’s domestic monitoring program appeared to meet the monitoring standards, the DOL placed the company on probation or suspended it.


The DOL questioned whether the company’s intention to move part of its contracting operations to Mexico, a move certainly encouraged by NAFTA, was in keeping with "demonstrated commitment to labor laws" and then requested information as to how the company would assure itself that its contractors in international locations complied with applicable work standards. The company protested that as not being part of either the written criteria or anything else, but nevertheless submitted information showing that it had in place an international monitoring program.


It didn’t matter to the Department that its standards spoke only in terms of the Fair Labor Standards Act and not foreign laws. It didn’t matter to the Department that it has no jurisdiction over the National Labor Relations Act or the NLRB. It didn’t matter that the company didn’t have any kind of agreements with the union on any level. The DOL said that because UNITE had filed charges with the NLRB about its move to Mexico, it was keeping Guess? suspended from the list. Ten months labor, the NLRB dismissed all of those charges, but the company remained suspended, and it has been used as an example to a lot of people as a bad company.


And just to give an indication about the list being a shopping list, I noticed in the May issue, for example, of Consumer Reports, there is an article about the Trendsetter List, indicating that these are the companies where you might want to buy.


In conclusion, let me just say the following, sir that the DOL’s goal of achieving acceptable levels of compliance with the Fair Labor Standards Act in the American fashion apparel industry is admirable and well within its statutory authority. The program of asking manufacturers to monitor for compliance is also well within its authority.


When the DOL first approached the fashion and apparel industries, there appeared to be widespread violations. At least those companies that have responded, those violations have been turned around over 180 degrees, where now there is well in excess of 75 percent compliance. And although the results by no means are perfect, they are much better than they were, and the industry is committed to doing that.


However, bully pulpit-type programs, such as the Trendsetter List, which through informal rewards and chastisements try to force or embarrass companies, are outside the scope of the DOL’s authority. They are having the effect of encouraging companies to move more of their production out of the United States to avoid the reaches not of the DOL enforcement, but of the DOL publicity machine, such as the Trendsetter List. They will have the tragic effect of potentially forcing thousands of independent small American businesses to close and cost tens of thousands of American workers to lose their jobs.


The DOL must be careful to create only statutory programs, which, at the same time they protect American workers’ rights, protect the American businesses, which employ them and therefore protect their jobs. The protection of a worker’s rights begins with protecting his job, and I believe it is important that we keep those jobs in the United States. And that is why I think this program, as well-intentioned as it might have been, just does not have the statutory and regulatory basis to provide to companies the assurances and protections they need under the act. Thank you.



See Appendix F for the Written Statement of Stanley W. Levy



Mr. Norwood. Mr. Levy, we do appreciate your comments and look forward to a discussion here amongst all of us in just a few minutes.



Mr. Norwood. Mr. Fellner, we are excited to hear from you now.





Mr. Fellner. Mr. Chairman, members of the committee, good morning. I am appearing this morning not only as counsel for the United States Chamber of Commerce and seven other associations in their challenge to OSHA’s most comprehensive enforcement initiative in its 28-year history, the so-called Cooperative Compliance Program or CCP, I am also here as an observer and participant in the development of OSHA law and policy during the last three decades.


Let me state at the outset that OSHA has extraordinarily important business to do, and it has extraordinarily competent people that it is doing it with. I know them. I have worked with them in the past. They are people who are honorable and of extraordinary good faith.


The question this morning is whether OSHA is attempting to accomplish its objectives by undermining bedrock principles of representative democracy reflected in the Administrative Procedures Act, the OSH Act and the fourth amendment of the Constitution.


In the winter of 1997, approximately 12,000 worksites received letters from OSHA telling them that they would be inspected wall-to-wall if they did not, in OSHA’s words, comply with certain new OSHA requirements. They were given less than 60 days to decide whether they wanted to sign an agreement committing them to CCP obligations that are unpromulgated, that are not assumed by 6 million other workplaces in this country, and, if they declined, subjecting them to unlimited inspections.


Now, let me state clearly, as a former attorney for the Labor Department and as someone who now represents employers in OSHA matters, that the very threat of a comprehensive OSHA inspection is extraordinarily daunting and intimidating. With all due respect to Congresswoman Mink, it is not a cotton ball. Government agents’ mere entry into a business place is threatening. The fourth amendment recognizes this. So does a long line of Supreme Court decisions.


But OSHA wall-to-wall inspections are notorious. Indeed, the Federal courts have acknowledged this on more than one occasion. Employers fear the disruption of their business, they fear the many hours they will have to devote to OSHA inspections, and, of course, they fear the government finding an error no matter how trivial or technical and the prosecution that could follow.


I had a client inspected under OSHA’s new CCP program where the inspection team consisted of five OSHA inspectors who said that they would be in the facility for at least 2 weeks. It consumed more than 150 hours of that company’s time before the United States Court of Appeals for the District of Columbia stayed the CCP program on February 17 of this year.


This then was the government power brought to bear in OSHA’s Cooperative Compliance Program. Business had a Hobson’s choice – between certain inspection and open-ended regulation without notice and comment. Such a choice, I would suggest, punctures any pretense that the program was "cooperative" or "voluntary." It is the reason that many of us call the program a coercive compliance program.


I should add that I have heard several reports of OSHA compliance officers calling employers and warning them how extensive and onerous inspections would be if they did not join OSHA’s CCP.


OSHA has touted, indeed we heard from Assistant Secretary Jeffress this morning that 10,000 workplaces enlisted in its CCP program rather than being comprehensively searched. That is a measure of the program’s coerciveness, not its popularity.


Now, we have presented to the Court of Appeals for the District of Columbia extensive arguments as to why this program violates the Administrative Procedures Act and the fourth amendment to the Constitution. I will not dwell on those arguments this morning, but suffice it to say that they apparently appealed to the court at least preliminarily. The court took the unusual step of staying the CCP program, something it did after weighing the substantial likelihood that we would prevail on the merits.


What I would like to emphasize this morning is the danger programs such as CCP pose to employment policy and to good democratic government. Notice and comment are not an obstacle to good government. They are handmaidens to informed government and to participatory democracy. OSHA has circumvented those values here, and I will suggest that it has done so for a reason. It has done so in order to impose requirements that have not and in all likelihood could not be justified in notice and comment or upheld on judicial review.


The foremost of those requirements is ergonomics. We have shown in our brief that the CCP program was intended from the start to address supposed ergonomic conditions. OSHA targeted industries that it believed needed ergonomic regulation.


Now, as this Congress well knows, ergonomics is the most controversial exercise in OSHA’s history. I believe that OSHA would have enormous difficulty justifying ergonomic regulation in notice and comment rulemaking. I am confident that it would have even greater difficulty defending such a rule upon judicial review. And, of course, this body has prohibited OSHA from issuing an ergonomic regulation this fiscal year by law.


The CCP instruction is a plain attempt to circumvent these restrictions of the OSH Act and the Appropriations Act. It is a plain attempt to force ergonomic changes without the opportunity for informed decision-making and participatory democracy that notice and comment provide. As a policy matter and as a matter of sound and fair government, this must be a concern to all.


A second principal requirement of the CCP instruction is comprehensive health and safety programs. Now, this sounds like a good idea. In many respects it is a good idea. This is OSHA’s top priority for notice and comment rulemaking, and it has been for several years at the top of its agenda. Most recently, however, in the Federal Register, the agency said that the proper scope and nature of a comprehensive program standard was undetermined, and that the costs and the benefits were also undetermined. And yet, the agency would impose that unexamined requirement on thousands of American businesses under the threat of intruding on their fourth amendment rights.


It would also do so without considering the TEAM Act implications of comprehensive safety programs that has troubled the Congress for years.


Again, this is not how policy should be made. The careful consideration of regulatory initiatives, particularly in such controversial arenas as ergonomics, is what good government is about. If speed is the casualty of thoughtful regulation, then it is a cost that society must bear in the interests of informed democratic government.


Finally, we live in an age of euphemisms – "reinventing government," "partnering with government," "cooperatively complying" with what turns out to be forcible and jerry-built government edicts, such as in this case. Currently, there is too much government regulation of business. Reducing the size of the Federal Register is a good idea, but it will be a change for the worse, not for the better, if we trim the Federal Register by trading government in the sunshine and published laws for covert, coercive, and unexamined Federal directives.


Thank you for the privilege of participating this morning. I look forward to your questions.



Mr. Norwood. Thank you, Mr. Fellner.



See Appendix G for the Written Statement of Baruch A. Fellner



Mr. Norwood. I will have to say that many of us do agree that the OSHA police are alive and well. I also believe that Mr. Jeffress would not have some of that occurring out in the field when he knows about it and when he can put a stop to it.


I hope today in our questioning process that we can actually have a discussion among ourselves about this, because I view this as very, very important. I know all of you do, too. I would remind you that if you wish to speak to each other through this process, please speak through the Chair, rather than to one another. That will help make this, Mr. Scott, a little more comfortable for us all. Mr. Scott, it is the two of us. I have a long, long list of questions. I intend to ask every one of them. I will be delighted to alternate back and forth with you as we share the time.


Professor Breger, in preparation for this hearing, I kept running across the term "fundamental procedural fairness." I want you to explain for the record, why is this concept so very important in administrative law?



Mr. Breger. I think that by "fundamental procedural fairness" you may mean the notion that the regulated party knows what is expected. That the government enforces only actions where it has previously given warning that these actions are inappropriate or illegal or will be fined. That the government will cut square corners in its interaction with the regulated community. I think these are part of the notion of fundamental fairness in the enforcement context.



Mr. Norwood. Does that mean, Professor that companies don’t have an opportunity to fight back if there is no rulemaking process? They have no way to defend themselves?



Mr. Breger. No, I don’t think that is the case. There are two different ways in which an agency can move to enforce or to develop regulatory policy. One is through adjudication, where the agency says, we think you have violated the law, or we think you have violated a regulation, and we are going to bring you up through our enforcement process. You might call it "court lite," L-I-T-E, and the question of how "lite" will determine the question of whether there has been the fundamental fairness that you talk about.


But where the question is whether the company or the regulated entity has a fair warning that the action that he is accused of or it is accused of is one, which is proscribed by the statute or by regulation; that will have to be determined in a hearing.


A second way of moving forward is rulemaking, which is an effort to deal with a wide range of issues, presumably similarly situated, in one rulemaking. In situations where Congress has so authorized, rulemaking can have the force of law. That is to say, the agency can promulgate a rule that will be treated, then, as if it were a statute. In order to do so, it has to follow a set of precise procedures.


If it is formal rulemaking, rulemaking on a record, which we call section 554 rulemaking, it will have to have opportunity for a hearing, for cross-examination of each witness.


If it is not such a requirement of such formal rulemaking, it can be what is called notice and comment rulemaking. Notice and comment rulemaking requires that the agency issue a notice in the Federal Register saying this is what I want to issue a rule on. This allows an opportunity for people to comment and give the agency their views; that it study those comments; that it respond to them in the Federal Register when it issues its final rule; that it publishes also a concise basis of the rule. The word "concise" can be taken perhaps lightly, because it can be 200 or 300 pages and the purpose of the rule, in which it responds to the comments that it receives.


The benefits of this process are that the agency will learn from the regulated community what its problems are, what its concerns are, where it may be going too far or not going too far. Once the rule is passed or promulgated, then if the company violates that regulation, there can be enforcement.


So, there are two ways that an agency can go. The concern in both ways, in either way, rather, is that the company have fair warning, fair warning that the activity that it is engaged in is not appropriate, is illegal, violates a statute, or regulation.



Mr. Norwood. Thank you very much. I will come back to that. I notice that the red light even works for the Chairman, too. Mr. Scott, I think it is your turn.



Mr. Scott. Thank you, Mr. Chairman.


Mr. Jeffress, I have been a little bit concerned about all of the panel discussion, because it focused on process and procedure and not on what the ultimate goal of all this work is all about. What harm would be done if you just closed up shop and stopped enforcing the laws?



Mr. Jeffress. I think we can look at the injury and death rate on the job in this country before 1970, when OSHA was created, to see that the mortality rate has dropped by 50 percent since OSHA was created. That will tell you what would happen if OSHA disappears.



Mr. Scott. How much of that reduction was because of OSHA oversight and enforcement?



Mr. Jeffress. I think what our experience would show is that its attention to safety and health – the discussion of safety and health – brings about changes in the workplace. Ultimately whether the workplace is safer or not is a result of what employers and employees working together achieve at that particular workplace. But, whether or not it gets raised to a level that causes folks to take action, I think, is in part a function of the role that OSHA plays.


We make 34,000 inspections a year. There are 6 million workplaces out there, but we have an impact on many of them simply because we exist and continue to raise these questions.



Mr. Scott. The VPP program encourages employers to improve their worksites voluntarily in a cooperative effort. Has this resulted in better injury rate reduction than the running around, randomly catching people in technical violations?



Mr. Jeffress. It has helped in two important ways. One, the companies that participate in this or apply to participate or aspire to participate in this program are motivated to improve their safety and health performance, and the average among the companies that participate in this program is better by half than the national average in terms of injury and illness rate experience.


The second way it helps is these companies who are recognized as exemplary promise and, in fact, do mentor other companies who have not achieved this level. So when it comes to a company that is struggling, looking for help, some of those are reluctant to call OSHA, for various reasons. We have now exemplary companies that they can call, and the VPP companies have promised to assist, and, in fact, in many, many cases are assisting other companies to improve their programs.



Mr. Scott. Mr. Fellner, do you acknowledge that without OSHA there would be a lot more injuries and you are not suggesting that OSHA be any less vigorous in its enforcement, are you?



Mr. Fellner. As I said in my opening statement, Congressman Scott, I believe that OSHA has an extraordinarily important mandate, and in many respects it is performing that mandate well.



Mr. Scott. I have to confess that I am not as concerned about the procedural aspects of this, because I trust you to – if they skip a step to…



Mr. Fellner. Keep them honest?



Mr. Scott. Keep them on track. I am much more focused on the substantive. Substantively, how can they better reduce injuries and deaths in the workplace, better than the VPP program?



Mr. Fellner. The VPP program is, as you know, Congressman, not the subject or the focus of our principal lawsuit in the Court of Appeals. Indeed, the VPP program stands in sharp contrast with, if you will pardon me using the other acronym, the CCP program, the Cooperative Compliance Program.


As Professor Breger properly pointed out in his remarks, VPP is a carrot. CCP is a stick. The problem with CCP is it gave employers a choice, which is not a meaningful one, I might add, between a comprehensive, wall-to-wall inspection, and I think everyone in this room knows the impact of that. I attempted to describe that earlier or assuming obligations that no other employer has to assume, and assuming a watchdog status by OSHA and its employees with regard to a signed commitment to nine requirements, including ergonomics and comprehensive health and safety programs, without regard to whether those in this room believe that ergonomics and CHSP are good or bad ideas. They are controversial ideas. They are the kinds of ideas that OSHA itself has acknowledged deserve sunshine. They deserve notice and comment. They deserve the kind of process that leads to good government.


It seems to me that when you are clubbing employers with wall-to-wall inspections in order to and I quote from Mr. Jeffress’s testimony "to leverage OSHA’s resources so that they don’t have to enforce, but that they will be achieving their requirements, their goals," without duly promulgating. Mr. Chairman, appropriate rules and regulations, it seems to me that that is where process becomes extraordinarily important.



Mr. Scott. Mr. Jeffress, let me ask you to kind of respond to that, whether or not you are using CCP to backdoor some requirements that you couldn’t get through the front door.



Mr. Jeffress. Thank you, Mr. Scott. The Cooperative Compliance Program is based upon data that employers gave us. OSHA does not base it upon some arbitrary decision. We asked employers what their injury and illness experience was and, using their own data, identified which employers had the highest rates, what were the most dangerous, the most at-risk workplaces in America. Those are the ones that we targeted for our efforts, which I believe, are what Congress wants us to do.



Mr. Scott. I think part of the criticism is you are requiring them to do things that could not be required by statute and regulation.



Mr. Jeffress. That is right. We then had 12,000 people on our list. The question is how does OSHA work with 12,000 of the most dangerous workplaces in America? Do we address them all?


What we said in our directive was, people on this list, you are among the most dangerous workplaces in America, you are on our list to be inspected. But as a carrot –and Mr. Fellner suggests this program was a stick – we suggested that if you as an employer want to invest in your own safety and health protection for your employees, if you want to make, improve, or implement a program for yourselves, then we will put you on a secondary inspection list and reduce your chances of inspection. That was the carrot. This program, in fact, is a carrot.


If the employer chose not to invest in their safety and health program, then they were no worse off than if we had never had the program, because we had the list. We were not requiring a safety and health program or an ergonomics program that was subject to any more regulation, any more penalties, and any more requirements than what they were last year, what they will be next year.


Those requirements in terms of the general duty of an employer to provide a workplace free of recognized hazards have continued all along. This program does not impose additional duties or additional burdens or anything beyond what they are required to do. There will be no additional penalties if someone doesn’t implement a safety and health program. But in terms of our resources, we said, for those folks who, in fact, invest in their safety and health program, we will offer them a carrot of a reduced chance of OSHA inspections.


Mr. Scott. Mr. Breger, do you want to respond, sir?



Mr. Breger. I just would point out that if you hit someone enough times with a carrot, it can be very much like a stick. In particular, I think the point of concern for this body should be that some of the "carrots" that are offered are programs or proposals that Congress has specifically chosen either not to include in the panoply of OSHA Act or rather, the armamentarium or OSHA Act arsenal or OSHA weapons, has told OSHA not to do for the moment – that is specifically worker-management committees and ergonomics programs. That is to say, the carrots include activities that Congress has said it doesn’t want OSHA to require.


Thank you.



Mr. Norwood. Thank you, Mr. Scott.


Somehow or other, Mr. Jeffress, your answers get me off track. I want to make the comment that I think we ought, Mr. Scott, to agree on the goals of a safer and healthier work force. We agree on the goals of no sweatshops.


This hearing, though, is about the process, which, for some of us, that is just as important as anything that happens in this town, that we do follow the Constitution, we do follow the law, we follow it precisely, and that is what we are really here to discuss today. Mr. Jeffress, just a quick answer, if you please, so I can get back on track.


I have noted your comment that deaths in the work force over the last 25 years or 28 years have been reduced by 50 percent, and we are all very, very pleased about that. Could you tell me what happened to the death rate in the work force 25 years before you guys got in business?



Mr. Jeffress. The rate was declining before 1970. It has declined at a much faster rate since 1970.



Mr. Norwood. What percent was it?



Mr. Jeffress. I will have to look that up. I will be happy to get back to you.



Mr. Norwood. Do any of those guys behind you know the answer to that?



Mr. Jeffress. I will be happy to ask. We will get back to you.



Mr. Norwood. Okay. I will bring it back up.


Professor Breger, building on my first question and your response, an article I read or encountered repeatedly mentions the "capture" theory, and I think this refers to situations where special interests may subvert government objectives to their own interests. Why should this so-called capture theory concern congressional oversight committees, and how does this concept play into issues of procedural fairness?



Mr. Breger. Well, the theory of agency capture is one in which the regulated community is said to have "captured" the regulator, the agency. Perhaps the most famous example of that charge was the FTC, in the 1960s and 1970s, in which the charge was made in a very well-known book by Ralph Nader which resulted in a significant shake-up in the Federal Trade Commission.


Now, one of, I think, the benefits of procedures, and, of course, one of the safety mechanisms that is provided by the procedures in the Administrative Procedures Act, is that, at least in some instances, it can protect against improper use of agency activity when there is capture.


To some extent it is a problem, because if the industry has captured the agency, it may not want the agency to do anything. So therefore, the Administrative Procedures Act will not make a difference because the agency won’t be doing anything. But to the extent to which the agency may be acting on behalf of one group that has "captured" it. Let us say in the ICC in its heyday, the railroads as against the barge owners, or if it is alleged that unions have a very strong influence in an agency as against companies who the unions want to organize, in those situations the lack of procedures in agency activity, I think, creates a real danger.



Mr. Norwood. I don’t want to beat this to death, but aren’t we talking about here, basically, fundamental fairness, what I consider a real cornerstone of the government…



Mr. Breger. Again…



Mr. Norwood. …to be fair to people?



Mr. Breger. Again, the purpose of the Administrative Procedure Act, and the procedure of administrative law generally, is to try to ensure that there is fundamental fairness in the actions of agencies. And indeed, before you had the Administrative Procedures Act, the court would judge agency activity on the basis of such standards, as was it fundamentally fair.


Mr. Norwood. Does anyone on the panel disagree with that? Everyone agrees that one outside entity – even though they may be very friendly to a Federal agency – they have no business of using that Federal agency to work on their opponent?


Mr. Fellner, your testimony focuses on this notice and comment requirement in an OSHA context. Professor Breger’s testimony and yours seem to basically address the same issue. Is that correct?



Mr. Fellner. I believe that is accurate, Mr. Chairman.



Mr. Norwood. Mr. Levy, the issues of fundamental fairness apply equally, I think, as I heard your statement, too; is that correct?



Mr. Levy. Yes, sir. Again, there was no notice in advance, no opportunity for public comment by anybody about the Trendsetters, what the standards were, what the criteria were, how they were going to be measured, who was going to make that decision, what effect foreign manufacture had on any of this. That is correct.



Mr. Norwood. Mr. Fraser and Mr. Jeffress, you agree that perhaps we should have had some of those things in order to run a fair and open agency?



Mr. Fraser. Mr. Chairman, in the case of the EVE Awards, the Trendsetters List, and Working Women Count Honor Roll, we are talking about public processes in which companies and other entities were invited to participate on a voluntary basis, with a clear understanding of what the purpose of the programs were, which was to applaud exemplary efforts by employers.


None of this was done in the dark. Nobody had to decide to submit an application or put themselves forward to participate in this program. All of these were based on fully public processes. As I indicated in my statement, in the case of the Trendsetters List, it was done to respond to an explicit, oft-repeated criticism from the industry, to paint a different picture of employers in the apparel industry in this country.



Mr. Norwood. Mr. Levy, do you agree with that?



Mr. Levy. There had been criticism of the Department of Labor only pointing out who the bad guys were. But as I said, there were companies that were placed on the list that never asked to be placed on the list.


I know one company that had applied for the list and was kept off because the night before the Department of Labor heard that there was going to be an expose on television about some of their foreign labor practices, so the company did not make the list. That was exactly the kind of thing I was referring to.


Or the question was, okay; I want to apply for the list. These are the written standards. Why aren’t you holding me to those? Why are you now talking about an NLRA enforcement or going to NAFTA, to manufacture offshore? What does that have to do with the criteria?


It would have been one thing to engage in a dialogue. Especially the fact that the majority of American apparel companies have not applied for the list says something about the nature of it. It is very coercive in nature, and it is leading the American public to a misapprehension of who are the good manufacturers, because a lot of companies decided they did not want the profile because they would be targets.



Mr. Norwood. Professor?



Mr. Breger. Even if it is the case, as Mr. Fraser suggests, the criteria for application were known. A company was completely free and voluntary to apply and once you were accepted and put on the list, there is absolutely no doubt that being taken off or suspended or demoted is a significant punishment. There is very little doubt that in the record the reasons for being taken off, suspended, or demoted are not clear. The standards for doing so are not clear. The process for that happening to a company is one known only to the Wage and Hour Division, not to the public.


So, even if it is the case that it was voluntary, the initial decision to apply was voluntary, certainly the issue of suspension, demotion, being thrown off was not, and all of the procedures attendant thereon were not open to the public and known, and transparent.



Mr. Norwood. Mr. Fellner?



Mr. Fellner. We are dealing with a continuum, Mr. Chairman, between the so-called voluntary list, as far as Trendsetters is concerned. We have not spent much time yet this morning talking about the involuntary list of the 12,000 employers that have been described this morning, and repeatedly prior to this morning by Mr. Jeffress and others, as the high hazard, as the worst companies in this country. Allow me a moment to suggest what it is that puts those 12,000 facilities on that list, and to challenge OSHA with regard to its statement of policy.


There is a surface appeal to the notion that if companies have a relatively high lost workday incident rate, that there must be something wrong, or more wrong with that kind of a company than if you have got a low number. The evil here, however, is that OSHA’s policy-making is guided by numbers alone.


Let’s look a little behind those numbers. Companies themselves in good faith generate those numbers when they record injuries on the OSHA 200 form. There are a variety of guidelines, and there is a separate discussion as to whether those guidelines have the force of law.


Let’s not tarry too much on that, but there are a variety of guidelines that American employers have been abiding by in good faith that require you, for example, to record a fatality as one item on their record-keeping, and to record two cold compresses as one item on that record-keeping form. There is no distinction that is drawn between the two.


In point of fact, by OSHA’s own admission, the reason that they have primarily put employers on that list of 12,000 bad employers is because of overexertion issues, because of ergonomic issues, which all of us understand are extraordinarily controversial. If you filter them out, the numbers would be extraordinarily low, and OSHA would have no business in those workplaces in the first place.



Mr. Norwood. Comment, Mr. Jeffress?



Mr. Jeffress. I have several, Mr. Chairman.


First, I would note that you asked earlier for Mr. Fraser and I to respond to the issue of notice and comment.



Mr. Norwood. Right.



Mr. Jeffress. The Voluntary Protection Program, which is mentioned in Mr. Breger’s article, which was initiated some years ago, the proposed guidelines were published in the Federal Register. We asked for comment, and based on comments received, we published revised guidelines. That program was subject not to a standard-setting activity in that it is not a standard, but in terms of notice and comment to affected parties, and revising the guidelines, and publishing them in the Federal Register based on comments. That program has been through that process.


In terms of the Cooperative Compliance Program, which is an inspection assignment program, which the Federal courts have said is not subject to notice and comments when OSHA designs an inspection assignment system nevertheless, we went throughout the country holding hearings with and meetings with associations, with unions, with stakeholders.


We did nine pilot programs throughout the country for a couple of years before we ever went national with this. We worked out particular problems. Missouri and Colorado’s associations had particular problems with the program. There were extensive comments, suggestions, responses, and modifications to the programs based on public input for this program, even though we are not required by Federal law to have comments on our inspection assignment system. So it is important to keep that in mind, that these programs have been the subjects of extensive public review and participation in the design of the programs.


In terms of Mr. Fellner’s recent comments, I would remind you that he is a counsel of record in the lawsuit of the Chamber of Commerce, et al. v. U.S. in this program, and his speeches to the jury have been very interesting and persuasive.


I am not going to debate that case. It belongs in court. I notice that the Chamber has provided their brief in that case on the table over here and for the record here at this hearing. The U.S. Department of Labor’s brief is not due until May 20. I would be happy if you would like to hold the record open to provide you the Department of Labor’s brief in that same case, but I don’t think this is the appropriate forum to debate that particular case.


I think it is important to understand that when we look at how they got the 12,000 employers who were identified, it was the employers’ own numbers of people who missed time from work because of an illness on the job. This is not a matter of simply two compresses being applied successively, this is a matter of people who lose time from work or are hurt so bad they cannot work the next day. That is the nature of the injury or illness that got people on this list.



Mr. Norwood. We do not intend to have court here, and I haven’t heard Mr. Fellner bring it up. I have only heard you. I don’t intend to let that happen here. I will let you know that. Mr. Levy, you wanted to comment on that?



Mr. Levy. Thank you.


I just wanted to say that with respect to the Trendsetters List, it seems to me that the Department of Labor has no jurisdiction with respect to enforcing foreign labor laws. And yet, although they do not say publicly, they have said privately that the foreign labor practices of the company is one of the criteria.


Again, that gets into the question of where is their jurisdiction to make that claim? They have no jurisdiction over the National Labor Relations Act. Yet, if a company has charges pending against them, or at least filed by a union, that is another basis for not making the Trendsetters List at this point.


Again, I think that the goal of both compliance with American labor law by American companies, but also standards worldwide, are very, very important. But I think that there should be a proper rulemaking procedure in place where there is an opportunity for public comment and a real standard set, so the companies know what they are.


As I said, the majority of companies did not even want to be part of this. That is why it was not a carrot, a true carrot, it really was a stick. I think that was the best indication is that companies chose not to be considered for it.


But there was the case, especially in the beginning, when companies were put on who did not apply. So therefore, they were really at a disability. Those were the companies that were very much at risk.



Mr. Norwood. Is the Trendsetters List a where-to-shop, a government endorsement? Is that what it is?



Mr. Levy. It says at the bottom that it is not a where-to-shop list. But every time it has been released at the height of the shopping season – the first time December 5th and the second time just before Thanksgiving.


They have deliberately chosen those days at the height of the Christmas season, number one. All kinds of organizations around the country then took advantage of it and used it as a listing of where to shop, just like Consumer Reports. It says, okay, these are the things you should consider. You might want to look at who is on the Trendsetters List as to who you buy from.



Mr. Norwood. If it wasn’t a where-to-shop, what was the point of that?



Mr. Levy. That is exactly my question, what was the point of it? To say these are the Trendsetter companies, but oh, no, no, we are just publishing this before Christmas, but we don’t want you to think about where to shop from this list.



Mr. Norwood. To keep our train of thought going here, and then it is Mr. Scott’s turn, but Mr. Fraser, why don’t you follow that up with answering the question how the government decides who is going to be placed on the where-to-shop list and who would not be placed on the government-endorsed list?



Mr. Fraser. Mr. Chairman, this is not a where-to-shop list. Unfortunately, Mr. Levy has several facts wrong. I guess it is important to straighten out the facts at this point.


Let me start by answering your question. There are four criteria for inclusion or consideration of inclusion on the Trendsetters List. Those have been publicly articulated since the very beginning, since this became an idea for how to respond to industry suggestions that we find ways to recognize the good guys, the people who are taking extra steps to try to end sweatshops in this country.


First is a demonstrated commitment to labor laws. Second is cooperation with law enforcement when contractors or suppliers are found in violation of the Fair Labor Standards Act. The third criteria were efforts to educate suppliers on the requirements of the FLSA. The fourth criteria was monitoring work conditions at suppliers’ worksites.


Everybody who has been included on the Trendsetters List made application to do so. Here is the document. I would ask the committee to consider including it in the record; that is, the application from the company that Mr. Levy says did not apply.


The criteria, as I articulated them to you, are really quite broad. We are looking to shine the spotlight on companies that are truly taking extraordinary steps to change what are pervasive abusive labor practices in the garment industry, not just in the United States, but internationally. We wanted to include and recognize companies that indisputably are demonstrating leadership in the industry. Companies’ decisions not to apply I don’t think undermines the value of that recognition.



Mr. Norwood. Why do you want to demonstrate the leaders?



Mr. Fraser. To get compliance, we feel we have to have a comprehensive program that pushes all the buttons that need to be pushed to get compliance.



Mr. Norwood. I agree. Why don’t you do that and keep it private, and you have accomplished your goal?



Mr. Fraser. You can’t accomplish the goal, Mr. Norwood, that way. We have an enforcement component, a strong enforcement component, to our garment program. We have an education program where we feel we need to encourage voluntary compliance by educating employers and providing compliance assistance to employers about their compliance obligations, so all those employers who want to comply will be able to do so. We tried to develop partnerships with the organizations that Mr. Levy represents, and has represented, to get them to encourage the same kind of compliant behaviors that we are, through our enforcement and education programs.


The recognition component of these programs also tries to encourage companies to want to be held up as a model of positive, forward-thinking, constructive, and having effective policies and practices, corporate policies and practices.



Mr. Norwood. Why do they want to be held up as a model?



Mr. Fraser. I think it would be helpful, Mr. Chairman, to have some of those companies here. There are hundreds of companies that have been recognized in these three Department of Labor programs that came forward and said, we want to be held up as a model.


In the Trendsetters List, we have Phillips, and Van Heusen. We have Carson Pirie Scott, we have Chorus Line, Eddie Bauer, Reebok, Esprit de Corp, Jessie McClintock, Jones Apparel, Kellwood, and on and on. 34 companies, representing more than 100 apparel lines, that wanted to come forward and be recognized as leaders in promoting labor standards compliance by their suppliers. It will be good to ask them that question.


In the Working Women Count Honor Roll, almost 900 companies came forward to make application to be recognized for their leadership in addressing concerns of working women.


In the EVE Awards, in the Secretary’s Opportunity 2000 Award, the EPIC Award, they have recognized more than 100 companies. You would recognize many, many of the names of those companies that have been recipients of EVE Awards and the Secretary’s Opportunity 2000 Award.



Mr. Norwood. Gentlemen, keep the thought, and it is Mr. Scott’s time. I am coming right back to this as soon as I give him plenty of time.



Mr. Scott. Thank you, Mr. Chairman. Mr. Levy, are you presently employed by Guess?



Mr. Levy. Yes, I do work for Guess?



Mr. Scott. Do they support the Trendsetter program?



Mr. Levy. They do not currently support the Trendsetter program.



Mr. Scott. Did they support it at one time?



Mr. Levy. At one time they were supportive of the program, yes.



Mr. Scott. I guess they stopped supporting it when they were taken off the list?



Mr. Fraser. Mr. Scott, if I may just insert, Guess? remains on the Trendsetters List. Guess? has been on the list, but with a notation, in a probationary status since November of 1997, or 1996, excuse me.



Mr. Levy. Mr. Scott, if I can answer that. When Guess? was told that now the criteria dealt with whether or not its move to Mexico was an indication of being a Trendsetter, or whether or not it was in a labor dispute with the union was an indication of whether or not it was a Trendsetter, it felt that the ground rules and the criteria had changed, and it was no longer willing to support it, because it had nothing to do with whether or not Guess? had been at the forefront of trying to improve labor conditions at contractors in the United States. At that point, Guess? said, we can no longer support this program because the criteria have changed.



Mr. Scott. I will ask Mr. Fraser a question. The suggestion is made that some of these programs may have encouraged companies to move their operations to Mexico.



Mr. Fraser. Mr. Scott, obviously that is not the intent, nor in any stretch of the imagination the potential result. Secretary Herman has said over and over again what she wants to accomplish with the No Sweat Initiative is to provide decent working conditions and pay for garment workers and create a thriving domestic garment industry.


Guess?, Incorporated, was placed on probation on the Trendsetters List in the fall of 1996 because we found that 40 percent of Guess? contractors who were the subject of investigation were violating the Fair Labor Standards Act. This is 3 years after Guess entered into an agreement with the Department of Labor to monitor its suppliers, to educate its suppliers, and take other steps designed to increase compliance.


We found that Guess? was not abiding by the terms of this 1992 agreement with the Department of Labor. We found that the workers in these…



Mr. Scott. Mr. Fraser, is Guess? contesting these allegations? Is this still going on?



Mr. Fraser. No, sir. We found that the workers who were subject to the violations in the 40 percent of these shops were owed almost $200,000 in back wages. We found that Guess’? monitoring program was ineffective, and placing Guess? on probation on the Trendsetters List was at their request, as opposed to being removed from the list.


Subsequently, two sets of charges were filed and accepted for investigation by the National Labor Relations Board. One involving a runaway shop – a runaway shop, as I understand it, under the National Labor Relations Act, is a charge that an effort was being made to move operations in order to avoid unionization. That charge was accepted for investigation by the National Labor Relations Board. My understanding is that that issue was resolved within the last month, not 10 months after it was brought, as Mr. Levy’s testimony indicates.


There were a second set of charges brought that were accepted for investigation by the NLRB that Guess? had retaliated against workers for union-organizing activities. That charge was found to be meritorious by the National Labor Relations under the National Labor Relations investigation. My understanding was that set of charges has come to a resolution only within the last week or so.


So there were three reasons for our decision to place Guess? on probation – to take them off the Trendsetters List. These were very serious allegations. Placing Guess? on probation, as opposed to removing the company from the list, was based on conversations with the company and the company’s desire. That was my understanding.



Mr. Scott. Did they have fair notice as to the process by which they would get into this probationary status?



Mr. Fraser. I was not personally involved in this, Mr. Scott. My understanding was that there were extensive discussions between Department of Labor staff and Guess? representatives during the course of these deliberations.



Mr. Scott. Mr. Levy, let me just say, I assume this is getting worked out in another forum.



Mr. Levy. Actually, not, sir. I was directly involved in those discussions. There were some questions. First of all, earlier in the year, in 1996, Guess? had asked the Department of Labor to come in and inspect its monitoring program. It found that it was 100 percent in compliance. All the contractors were in compliance, and Guess? had frequently, as most manufacturers do, met regularly with the Department of Labor about its compliance program.


The Department of Labor came in and did a second investigation and found that there were, according to them, significant violations. They thought there were violations of 15 contractors. It turned out there were only five violations. They gave Guess? 60 days to correct its program under the agreed suspension. Within 60 days, Guess? had submitted a new program, after hours and hours of meeting with the Department of Labor. They said in writing that that program appears to meet the guidelines set with the Department of Labor.


Now the DOL is raising new issues. They raised the fact about Guess’? move to Mexico. They raised these National Labor Relations Board charges, all of which were, in our opinion, outside the jurisdiction of the Department of Labor. It was an issue which became a national issue, because most other apparel companies knew about it and said, this was one of the reasons why, in the beginning, we didn’t want to get on the Trendsetter List. Because, we could be a target, and the ground rules had, in fact, changed.


That is really the question about not having a rulemaking procedure in place. I believe if the Department had in the beginning said that it wanted to, as part of its standards, talk about foreign labor practices or issues involving the National Labor Relations Act, that there was absolutely no statute or regulatory authority for them to do that.


As I said, I don’t want to get into a debate about Guess? here because we do have ongoing discussions. But just in the theory of Trendsetter List, that was the problem with the entire way it was set up, and the fact that the Department felt it could, in effect, change the ground rules with no notice to anybody and no opportunity to be heard.



Mr. Scott. Mr. Fellner, you have raised questions about this list of 12,000 and how people got on the list of 12,000. Shouldn’t OSHA have some mechanism in terms of use of resources and targeting the resources where they are most needed?



Mr. Fellner. Yes, it should, Congressman Scott.



Mr. Scott. Other than objective standards of lost days, fatalities, and other injuries, what standards should be used?



Mr. Fellner. That is a very complex question. Obviously, the expert agency is in the best position to focus on a more qualitative, rather than quantitative, judgment.


Let me suggest that there is at least one State plan, if you will, having its own OSHA program, the State of Washington which is beginning to examine and I am not endorsing it, because it has its problems as well beginning to examine its own CCP program. It is having initial discussions.



Mr. Scott. Before you get to the CCP, the question of developing a list of targeted firms, I assume we want to target where they are most needed. How should that list be compiled?



Mr. Fellner. If I may, the predicate for the Washington State program is precisely your question, to which companies and industries should they be offering their brand of CCP program? And they have recognized, at least in preliminary documents, Congressman Scott, that numbers alone, whether they are LWDI numbers, lost workday incident rate numbers, or workers compensation numbers, to which they have access, those numbers alone may guide them to the wrong companies.


Let me give you an example, a very subtle example which OSHA has not yet exercised. Washington State has recognized that a major component to the statistics of why employees may take a day off is because their back is hurting them is because of "overexertion," injuries like what we talked about before as ergonomics. They have now put that at the bottom of their list. They are attempting to weed out, to de-emphasize, those overexertion numbers they are talking about.


In addition, there are a variety of other categories that the State of Washington is beginning to look at in order to try to make the number alone not be the driving criterion insofar as which companies get on the list. The first of being solicited to join, and secondly, being solicited to comply with certain kinds of requirements.


If I can flip the question, with your kind indulgence for one moment, what is OSHA actually doing when it declares, as it has now declared, when it is enforcing the interim enforcement program? They obviously can’t enforce CCP. Now what OSHA has declared is they are taking 3,300 employers and will be inspecting them, without an opportunity, as they describe it, of partnering with OSHA.


Basically what they are saying is that with respect to those 3,300 employers, they are going to get a wall-to-wall inspection. With respect to some construction employers, they are going to get inspections. The rest of the 6 million workplaces in the United States are off pardon the expression, scott-free, unless there is a complaint, unless there is a death or multiple injuries.


In other words, if there is a complaint, if the cow has already left the barn, they will be inspected. But anticipatory deterrent inspections will not take place in 6 million workplaces under this program of prioritization. That is the way OSHA wants to use its resources. I am certain that my clients that do not happen to be perhaps on their list of 3,300 inspections are delighted with the fact that OSHA as a deterrent agency has decided to turn off its light.



Mr. Scott. Mr. Jeffress, if you are not on the 12,000 list, does that mean you are not going to get an inspection?



Mr. Jeffress. No, sir. We have a variety of means for determining who gets an inspection. We do 34,000 inspections a year. As Mr. Fellner said, 3,300 will be inspected according to this alternative inspection system.



Mr. Scott. In that 3,300, do you go back to how they were selected?



Mr. Jeffress. We took the same data employers provided to us that was used in the CCP program and looked a it in terms of which industries are the most hazardous, which locations within those industries are the most hazardous sites, and identified the 3,300 most hazardous sites.



Mr. Scott. The other 6 million worksites, are they subject to the same inspections they might have been had you not targeted 3,300?



Mr. Jeffress. They are still subject to all the same rules and regulations.


In terms of our inspections, we prioritize inspections by local emphasis programs and national emphasis programs. For instance, we are targeting employers who work with silica. We are targeting employers who have amputations from power presses. We are targeting employers who dig trenches. We are targeting particular hazards.


So other employers, depending on hazards, may be still targeted for inspection, and still subject to inspection. At the risk of hitting Mr. Fellner over the head with another carrot, I suggest those folks who do not have risks at their workplaces are not places we ought to go.



Mr. Scott. Mr. Fellner, is it your position that the procedures by which they target the most dangerous places and the allocation of the resources ought to be subject to APA disclosure and process and public hearing?



Mr. Fellner. The principal way of regulating how those employers are selected is through the fourth amendment of the Constitution. I have read in the trade press that he has announced that special emphasis programs would be suspended during this period of time when the 3,300 employers are being inspected. That is the position that he has been quoted at. If he would like to clarify that position today, I would be delighted to hear it, for purposes of advising my clients.



Mr. Scott. When you suggested an equal protection problem when you target resources at certain groups, but if you have probable cause to target, then don’t you lose that argument?



Mr. Fellner. There are two issues involved in the Barlows case, as well as the Camaro case, and let me summarize them very briefly.


One, the question is whether OSHA has promulgated a neutral administrative scheme.



Mr. Scott. And he has done that by the numbers?



Mr. Fellner. He has done that by the numbers and we are challenging that, particularly since the industries that he has selected and solicited those numbers in range from manufacturing on the one hand to ornamental tree and shrub on the other hand.


Now, he has selected those industries in what we have referred to as a hodgepodge fashion. The notion that they are the exclusive or even the highest LWDI numbers is mistaken. Therefore, we have argued, and we will continue to argue, that even in terms of a neutral administrative scheme, which he has laid out, particularly when some of those industries coincide with specific employers, it seems to me that it is an inappropriate scheme and not a neutral administrative scheme.


Moreover, they are asserting that they are inspecting employers because of what they believe is going on in the workplace, and they think an LWDI number is an accurate barometer of a regulatory violation. It is not. It is not by OSHA’s own admission, because OSHA has admitted that they don't have a regulation to do the work that they want to do with respect to ergonomics. And it is ergonomics that is driving them. Where is the probable cause?


The major probable cause that you have got is that you may have some ergonomic problems, whatever they may be, that can’t be regulated by OSHA, and that does not constitute probable cause.



Mr. Scott. Well, wouldn’t you…



Mr. Norwood. Mr. Scott, I have to leave the chair for a couple of minutes, and I ask that you please proceed.



Mr. Scott. Thank you, Mr. Chairman.



Mr. Scott. [Presiding] What is the legal standard that you are saddled with to prove your case? Isn’t it that the administrative decision had no basis to support the suggestion? It is not that you can prove that they could have done it better; you have a higher standard than that, don’t you?



Mr. Fellner. Well, again, the standard that they have to meet insofar as the Administrative Procedures Act, both sides concede that this is a rule, is whether or not one of the exceptions to the Administrative Procedures Act apply. It is up to the Department of Labor to prove one of two exceptions: Whether it is a procedural rule which guides internal housekeeping of the agency, which we have submitted it is clearly not; or whether it is a general statement of policy, which one court has described as a press release. Any suggestion that the CCP program is only a press release is an inappropriate suggestion.


So when the obligation is on the agency to demonstrate that one of the exceptions to the Administrative Procedures Act allowing them not to proceed by notice and comment applies, then burden of proof is on the agency.



Mr. Scott. In other words, the way they target the ones that they are going to investigate is a matter of policy and not just practice?



Mr. Fellner. The targeting issue is not the exclusive or even the driving issue insofar as the litigation is concerned.



Mr. Scott. Well, my experience as a lawyer wasn’t APA. It was more criminal justice. And I can imagine if we could subject the police to that kind of scrutiny when they targeted my client for one reason or another, we could, as a matter of fact, get some very interesting numbers. We passed a bill out of judiciary suggesting that we ought to keep records of who has been targeted on the highway.



Mr. Fellner. Congressman Scott, your point is extraordinarily well taken, and let me respond with a hypothetical that you will appreciate, I believe, given your background.


I believe that what the Department of Labor is doing is akin to the following: Let’s assume that the police force did a very, very thorough study of high-speed Camaros that are red and drive 80 miles an hour. Ninety-nine percent of the time they conclude that when they see a high-speed Camaro, a late model Camaro that is driving that speed, if they stop it, they are going to find contraband inside. Statistics show it. Let’s assume they have got it dead to right 99 percent of the time. So they promulgate a policy that says, we are going to stop and search every Camaro that is a late model that is going 80 miles an hour, not because it is too fast, but because we are going to find contraband in there. Is there any question in anybody’s mind that that violates the fourth amendment; that that does not constitute probable cause; that you cannot use that as a surrogate for what is going on in the workplace?


Let me suggest to you, Congressman…



Mr. Scott. Let me tell you how people answered the question. They have got racial profiles of a young black male who drives a rental car with Florida license plates up the interstate, they are stopped.



Mr. Fellner. And that is wrong.



Mr. Scott. The only thing you need in addition to that is a furtive glance, which gives you the predicate.



Mr. Fellner. And that is wrong.


Mr. Scott. That is the Virginia Supreme Court.



Mr. Fellner. And that is wrong, and that is basically as simplistic as OSHA’s LWDI is.


There is a lot more going on in workplaces. They have put on lists employers that are the best, not the worst employers. They are arguing that these are the highest hazards, and that is where they ought to be. And that is not where they ought to be.


Mr. Scott. We have gotten a little bit off track. I have been reminded of the track that we are on. Mr. Jeffress, do you want to again defend the way you have selected the 12,000?



Mr. Jeffress. I would just suggest that in this case the drivers of the red Camaros have told us what kind of contraband they have in their cars, and that is the basis why we are going there.



Mr. Scott. I have a couple of other questions if you want to go ahead.



Mr. Norwood. [Presiding] Okay. Well, I can’t stay on Trendsetters for OSHA. Mr. Jeffress, the OSHA 200 form that is filled out by employers, they have to do that, and this contains a report back to the government on lost workday injuries. That is correct. And am I correct to think that from that information that you gather, then, you rather know how to target the industries where the most loss workdays occur? Is that sort of how it works?



Mr. Jeffress. Yes, without going into great detail.



Mr. Norwood. Okay. I want to know how you do this, because it is pretty hard for me to understand, and you probably do. Have you ever been to a UPS facility?



Mr. Jeffress. Myself?



Mr. Norwood. Yes.



Mr. Jeffress. Yes, sir.



Mr. Norwood. Well, you know how they take the packages on and off?



Mr. Jeffress. Yes.



Mr. Norwood. They are paid well, and they are treated well, but it is tough work, there is no question about it. If one of those people should not show up for work one day, and then the following day they show up and the employer says, gee, we are sorry you were out, and they were to say, well, I was out because my back was bothering me from doing this repetitive motion of lifting packages all day. Or they just simply say, I am out. I was out because my back was hurting. How do you determine whether that back injury was from the softball game last night or from moving packages? That would be important for us to know because this is a workplace injury.


So how do we determine in ergonomics if it’s a workplace injury that is so important to keep people from being targeted by you?



Mr. Jeffress. That determination of whether an injury is work-related or not is a determination the employer makes. It is not a determination OSHA makes. The employer takes the report from the employee, evaluates it, and evaluates the kind of work that that employee is doing. There is a period of time to investigate the circumstances surrounding that particular claim before the employer makes a decision that yes, this is work-related, and we will put it on our log.



Mr. Norwood. Tell me, if the employer asked the employee, how did you hurt your back, or what strained your back, and the employee says, well, you can tell, obviously, lifting those packages. Another employee who happened to be at the softball game mentions that, gee, I was at the ballgame last night when he hurt his back. What then does the employer put down on the list?



Mr. Jeffress. The employer has got to use their best judgment.



Mr. Norwood. Oh? You mean if the employee says, I hurt it lifting packages, the employer can write down and say, no, he didn’t, he hurt it playing softball?



Mr. Jeffress. There are many employers that do that.



Mr. Norwood. So what we are saying is – and that is my problem with you and your ergonomics – the medical community can’t determine and it is very difficult for people to know, particularly in repetitive motion, what is the real problem? Was it gardening? Or was it something else other than workplace? And what you do to people who get on this list is pretty important. If you were using more carrots on that crowd rather than sticks, we could say, well, it is hard to tell, but this is useful information. And as far as I can tell, the medical community can’t be of any help to us in this because they do not how to determine strain in the musculoskeletal system. I hope that worries you.



Mr. Jeffress. Mr. Chairman, I think employers are very aggressive about determining what belongs in their logs and what doesn’t. In my experience, they contest those cases where they believe the injury occurred off the job and not on the job. It is in their interest to do so when they believe it occurred off the job, and they do that.


I believe the system is self-policing in the sense that employers have that obligation, have that responsibility, and it makes a difference to them whether they police their logs properly or not.


I do think in terms of the ergonomics area, the medical community is very, very helpful to us in this. There are methods of determining what kinds of motions are likely to cause different kinds of strains and sprains. That is a very helpful tool to use in analyzing whether a particular motion on the job has the potential of causing a particular type of strain or sprain.



Mr. Norwood. But if one of those motions is playing tennis and the job may have a similar kind of motion that is where they can’t determine which it was.



Mr. Jeffress. Mr. Chairman, if you hurt your arm working, and you hurt your arm playing tennis, and both of them contribute to it, who is responsible for that?



Mr. Norwood. You are asking me who is responsible for that? I think the employee has two choices: Don’t play tennis or if you don’t like this job and you feel you are going to be harmed, for God’s sake, look for something else. Mr. Fellner?



Mr. Fellner. My experience, Mr. Chairman, is quite different than Mr. Jeffress’s with respect to record-keeping. In point of fact, record-keeping is by and large guided by the description, particularly with regard to ergonomics, by the description that the employee gives. Employers do not police and go behind the individual activities of their employees when they take a day or two off from work and attribute it to work. They do not have the inclination. They do not have the labor relations interest.


One can only imagine the cataclysms that will occur in the workplace when the decision by the employee to say, it is my back, is challenged by the employer. This is only done in extraordinarily rare cases. And it seems to me that what Mr. Jeffress is basically doing is turning record-keeping on its head. When he is suggesting that employers aggressively, if I am quoting him correctly in his prior response, are taking a look at these ergonomic record-keeping requirements and not putting them down when they don’t have to. He is basically saying he is prepared to reward such aggressive employers who may find themselves in an LWDI category lower than those employers who are not quite so aggressive, who are, in fact, responding and listening to their employees and, it may not be medically accurate, putting down each and every ache and pain of life as if it were a recordable injury.


And it is those employers that are doing a better record-keeping job that are being rewarded by the coercive compliance program.



Mr. Norwood. Back to the process. The Trendsetters List, which seems to be debatable, Mr. Scott, here, as to whether it is a where-to-shop list or whether it is not, Mr. Fraser, state again for me exactly what your job is at the Labor Department.



Mr. Fraser. I am the Deputy Administrator of the Wage and Hour Division and currently acting as the Administrator, sir.



Mr. Norwood. Do you have authority over NLRB?



Mr. Fraser. No, sir.



Mr. Norwood. You have nothing to do with that?



Mr. Fraser. They are not a part of the Department of Labor, no, sir.



Mr. Norwood. The company we were discussing and I don’t want to belabor that company, either, but this makes for a decent discussion, is Guess? You said Guess? Was taken off of the where-to-shop list because 40 percent of their suppliers were not working with the national labor laws?



Mr. Fraser. No, sir.



Mr. Norwood. That was one of the reasons, one of two or three, but that was one of them, was it not?



Mr. Fraser. Forty percent of their suppliers who are subject to investigation by us were found to be violating the Fair Labor Standards Act, which is under our jurisdiction, not paying minimum wage, or overtime.


This is 3 years after we had entered into a formal agreement with Guess? for them to undertake certain measures to assure that their suppliers were in compliance, and we also found that Guess? was not living up to that agreement that had been entered into. That is what propelled us to place Guess on probation on the Trendsetters List.



Mr. Norwood. Now, did you tell them that they had to cease purchasing from these suppliers?



Mr. Fraser. No, sir. We offered Guess? 60 days within which to remedy the deficiencies in their compliance with our agreement with them, and in their monitoring activities they, during that period, submitted a plan of action for remedying those deficiencies, which we told the company would satisfy our concerns. But there were, in the meantime, other issues that I described earlier involving National Labor Relations Act issues that arose in the interim.



Mr. Norwood. Which isn’t under your authority?



Mr. Fraser. No, sir. But the Trendsetter criteria, as I described them before, involve compliance and commitment with compliance to labor laws, and that was labor laws broadly read. We would be concerned if a company were discriminating in employment, which is not under our jurisdiction. We would be concerned if a company were violating the National Labor Relations Act, which is not under our jurisdiction, or any other law that affords protections to employees.



Mr. Norwood. That is sort of what I have understood, and I think there is some of the problem right there. Professor Breger.



Mr. Breger. Well, I don’t know the truth or falsity of the facts of this particular case, but as a matter of principle, I don’t see how the Wage and Hour Division could or should take into account allegations of violations of the National Labor Relations Act. Whether it could take into account proven violations, e.g., if they were found to be guilty, that is another discussion. But, hypothetically this company had a perfect monitoring record in terms of the contractors, and it had zero problems. Then it had an allegation of a violation of the National Labor Relations Act, I don’t think that it is in the jurisdiction of the Labor Department to take into account those kinds of charges, particularly when they are only charges.


Similarly, it is absolutely clear that it would not be within the jurisdiction of the Department to take into account charges or allegations about foreign labor sites, because the FLSA specifically is only applicable to domestic labor activity or domestic workers.



Mr. Norwood. Yes.



Mr. Breger. The problems that occur when there is not an articulated rulemaking, notice and comment rulemaking, or when there is not a publication of what the procedures is that the agency can take into account criteria which it is inappropriate for it to do in deciding that a company should or should not be on the list.



Mr. Norwood. Mr. Fraser, do you want to respond to that?



Mr. Fraser. I have a great deal of respect for my former colleague as the Solicitor of Labor, Mr. Breger. I take it from what he said, Mr. Chairman that he would have given us different advice than his successor did.


It is important to remember I think, or to maintain in context here that we are talking about an effort to recognize good guys, the people who are trying to do the right thing. In these three recognition programs that I have described today, as I have said, we have recognized hundreds of companies and governmental entities and other organizations as entities trying to do the right thing to promote the interests of their employees. We think there is a valuable contribution there.


Of those hundreds of companies, we are focused on one company that, after being recognized for taking exemplary steps, was found to have serious problems. We kept this company on the Trendsetters List. We did not remove them from the list in recognition of these problems. In fact, we wanted to give them an opportunity to correct those problems. In recognition of the fact, as Mr. Breger indicated, that there were charges of serious problems, not proven serious problems, although they subsequently were found at least in one case subsequently were found to be meritorious.


So, I think it is just important to keep in context here the overall framework. We are trying to recognize people for doing the right thing, and companies, employers, other entities really have the choice not to participate to get that recognition if it is not something that they think makes business sense to them. It is something that they think is of value to them as businesspeople; and we do not begrudge anybody for not wanting to participate in these programs.


So I think it is just important to keep the framework here, sir.



Mr. Norwood. Mr. Fraser, we are now at the reason for being here. It has taken a while, but here is where we are. Thomas Jefferson and I are very concerned about Federal agents spreading out across the land eating out our very substance, and that is exactly what you are doing, and we are worried about it because it is a few Federal agents determining who is good and who is bad. That is big time scary to the American people.


Now, I have been informed by counsel that a group of four or five government employees met and approved applicants for the Trendsetters List, what I really believe is a government endorsement list. Is that true?



Mr. Fraser. We did have a committee, I think. It is true of all three of these programs, that we had a committee that reviewed the applications and assessed those against the criteria that had been publicized and made a determination as to whether the applicants satisfied those criteria. That is correct. In all three of these cases, I believe that to be the case.



Mr. Norwood. Does that bother you any, or am I just an old southern Georgia boy who doesn’t understand?



Mr. Fraser. Sir, as I said before, these were voluntary programs with public criteria.



Mr. Norwood. That is not the result of what you have done. Who in the office…



Mr. Fraser. I believe it is, sir. I believe it is.



Mr. Norwood. What offices and who were represented in this meeting that decided…



Mr. Fraser. For the Trendsetter List?



Mr. Norwood. …who would be good and who would be bad? Who was there?



Mr. Fraser. First of all, sir let me answer your question directly. We had representatives on our evaluation committee from three departmental offices, our International Labor Affairs Office, Wage and Hour, and our Assistant Secretary for Policy.


But it is important, again, to recognize that they were not deciding who was good and who was bad. What they were deciding is who presented information that showed that they were exemplary. And people, as Mr. Levy said…



Mr. Norwood. Now, wait a minute. Mr. Fraser, I am a simple boy. You explain that to me, what you just said. You said we weren’t going to decide who was good or who were bad. We were simply there to find out who was exemplary.



Mr. Fraser. Yes, sir.



Mr. Norwood. I don’t understand that comment.



Mr. Fraser. Because we are not, as Mr. Levy said in his testimony, and I absolutely agree with him, there are many companies that are doing things that address issues and advance the interests of their workers.



Mr. Norwood. Yes.



Mr. Fraser. That did not come forward to be recognized as Trendsetters; have not made application to be recognized for EVE Awards and OFCCP; did not make application to be recognized for Working Women Count Honor Roll.



Mr. Norwood. Right.



Mr. Fraser. This was a decision that this business made about whether they felt there was value to them in having their workplace practices recognized.



Mr. Norwood. Well, did everybody who was looked at, did everybody get on the good guy list?



Mr. Fraser. No, sir. I think probably…



Mr. Norwood. So you made a decision about who was good or bad. How many people were in that room?



Mr. Fraser. I don’t know, Mr. Norwood. I can find out.



Mr. Norwood. Give me a guess. Was it an auditorium?



Mr. Fraser. Oh, no. Three or four or five people.



Mr. Norwood. Three or four people who work for the federal government sat up there and decided, well, everybody wants to get on the good guy list here, and we are going to decide.


Mr. Fraser. We are going to decide whether those criteria are met.



Mr. Norwood. Who is good and who is bad. Who gets to be on the where-to-shop list, which don’t you know what that means? The only reason anybody doesn’t care about that is because it costs them business. That is why they want to be on the good shop list, and that is why Guess? Doesn’t really want to have you take them off the list, because it costs their company money.


Now, three or four Federal bureaucrats sat in a room and decided who was good or bad.



Mr. Fraser. They evaluated public criteria for recognition for these programs, that is correct.



Mr. Norwood. Good. You agree then, three or four Federal employees decided who was good and bad.


Mr. Levy, I need to calm down. Would you please respond?



Mr. Levy. Thank you, sir.



Mr. Breger. Say a prayer.



Mr. Levy. I will repeat the prayer I had at the beginning. I think this young child of 10 years old said it all.


But the issue that came up about what was published was the demonstrated commitment to labor law had two examples: Establish contract provisions obligating suppliers to comply with the Fair Labor Standards Act, and establish a code of conduct. Those were the written examples, and those were and, to the best of my knowledge, today are still the only written examples.


Guess? had made mistakes, no question about it. We deserved to be suspended. We discussed it with them. We said, fine, we would take our lumps because our monitoring program was not as good as we thought. We have a commitment here. Give us a reasonable chance to demonstrate to you. We will work day and night with your labor officials to make every single correction of what we have to do under the Fair Labor Standards Act with our contractors. And we did.


We told them that day and night they could visit our factories. But then they said, all of a sudden, issues about NAFTA and issues about the National Labor Relations Board and the National Labor Relations Act and our foreign business practices were important. We said we never knew that those were the criteria. We never knew that there was someone from the International Labor Division Department of the Department of Labor talking about criteria.



Mr. Norwood. Didn’t that come out in the public hearings or public information period that we had? Didn’t you know they were going to deal with foreign manufacturers?



Mr. Levy. No, I did not. The only information that they published, when they published the Trendsetter criteria under demonstrated commitment to labor laws, were the two I mentioned: Establish contract provisions obligating suppliers to comply with the Fair Labor Standards Act and establish a code of contract.


The thing about cooperating with law enforcement, when Guess? found its contractors were in violation, that money was paid to those workers within 48 hours.


There have been problems. There will continue to be problems here, but Guess?, like hundreds of manufacturers, now are guaranteeing that those back wages are going to be paid because they want to help the American worker, and they will do everything they can to do that.


But when the ground rules changed without any public notice, that is when we felt we were being treated unfairly and our due process rights were being denied to us. And it had a dramatic economic effect because a lot of companies and a lot of people, including the labor unions, which is where the issue came from, our disputes with the labor unions, held up Guess as having been suspended. Guess? is kicked off the list, don’t buy there. You see language in all kinds of union publications, from teachers unions to all kinds of unions, saying, "don’t buy Guess? because they have been kicked off the Trendsetter List," and other things like that.


The interpretation was, of course, which we understood at the time, it dramatically affected our Christmas season because the Department decided this the day before Thanksgiving that we were going to be off; eventhough the list that was published in October, we were on. That is how quickly this all happened.


Guess? was just an interesting paradigm here, and, as I said, it had made mistakes. It corrected those mistakes. But when the rules shifted, that is when I just knew. I think in retrospect, although I was supportive of the Trendsetter List in the beginning, I see now how it has been misguided and misstated, and the companies that said in the beginning, we don’t want to get on because we are going to be targets, were correct in that.


It is very, very coercive, and it puts companies in very difficult positions, especially where there is no public way in which a decision is being made. It is made behind closed doors with three or four people. I think that is very difficult. As I said, I know other companies that were kept off because of their foreign labor practices.



Mr. Norwood. All right. Hold your thought right there. Mr. Fraser, in that meeting of three or four people who decided who was good and who was bad, was the performance of a company operating overseas a consideration in being placed on the Trendsetters List? And if so, did that criteria show up anywhere for anybody to know about it?



Mr. Fraser. Sure, it was, Mr. Chairman.



Mr. Norwood. You are sure it was?



Mr. Fraser. I am sure information indicating serious labor problems in overseas operations of a company was a factor that was given consideration in deliberations about whether a company should be recognized as an exemplary employer.



Mr. Norwood. Is that reasonable?



Mr. Fraser. Yes, sir.



Mr. Norwood. Is it? All right. Go ahead.



Mr. Fraser. Oh, I am sorry.



Mr. Norwood. Is it reasonable that you were considering what was happening overseas in relation to these companies?



Mr. Fraser. Well, I think if this were a different hearing, sir, the question would be, would it be reasonable to ignore information about those activities? Would it be reasonable for the Department of Labor to ignore very serious charges accepted by the National Labor Relations Board for investigation? Would it be reasonable for the Department of Labor to ignore very serious issues about labor standards in overseas operations?


So I think that question really cuts both ways. We felt, in our judgment, the information that bore on international operations, labor standards, compliance, which bore on compliance with other labor laws, was relevant to consideration as to whether to hold somebody out as an example.



Mr. Norwood. Well, to just complete that, did the criteria for this appear anywhere for anybody to know that the three or four of you meeting in a room, who decided who the good guys and who the bad guys are, did that criteria show up anywhere?



Mr. Fraser. The criteria was stated, as Mr. Levy has indicated, generally in terms of…



Mr. Norwood. Mr. Levy, read to me the criteria he speaks of.



Mr. Fraser. I will read it to you, sir. I can see it from here. The first criteria said, demonstrate commitment to labor laws, and two examples are offered.



Mr. Norwood. To international labor laws or United States labor laws?



Mr. Fraser. No, just general labor laws. It doesn’t say either domestic or international.



Mr. Norwood. Don’t you suspect it means United States labor laws?



Mr. Fraser. Well, let me read the two examples. Establish contract provisions obligating suppliers to comply with the Fair Labor Standards Act, which would, of course, apply only to…



Mr. Norwood. That is one of our laws.



Mr. Fraser. …in the United States. And the second is to establish codes of conduct. Codes of conduct typically in the garment industry apply to their international suppliers as well as their domestic suppliers.



Mr. Norwood. Mr. Fellner, do you agree with that, codes of conduct apply to international people?



Mr. Fellner. That is the first I have heard of that.



Mr. Norwood. Mr. Levy, do you agree with that?



Mr. Levy. No, I do not, sir. And most of the charges about foreign violations are made on Hard Copy or television. There is no procedure to make a complaint to the U.S. Department of Labor about a foreign labor practice. These charges are disclosed on television, and then the company has to respond. They are not being made to foreign governments. So there is no procedure in place with regard to these.


Companies establish codes of conduct in the apparel industry to deal with both domestic manufacturing and international manufacturing. Yes, they had it, but there is no procedure to determine, for example, in a foreign situation whether the charges are true or not. There is no foreign government there. Those charges are not submitted to the U.S. Department of Labor. And there is nothing here about the National Labor Relations Act.



Mr. Norwood. Professor, could you comment on that?



Mr. Breger. Well, let me say I, too, have the highest regard for John Fraser, but the problem is he has been getting bad legal advice since 1993. Maybe the American people will figure that out soon.


Even if I could see using the National Labor Relations Act as criteria, I could never see using foreign labor conditions as criteria. The Fair Labor Standards Act, which is the governing law over which all of this is being done, specifically says that it is only designed for the domestic worker and that it has nothing to do with the international arena. So, that the underlying act is very clear that it is for domestic activity. And, therefore, bringing in the international activity is a criteria. It is a criteria that is out of the authority of the agency.



Mr. Norwood. You mean, none of the three in the room had the authority to do that?



Mr. Breger. I am sorry. I think there was no authority to use international labor information in making the decision. That is what I meant to say. I think part of the problem is that the list, you might say, is not like you-are-a-great-employer-everywhere-in-the-world list or you are a great-guy list, a great-guy-or-girl list. But it’s really a, you-have-been-very-good-in-implementing-the-Fair-Labor-Standards-Act list.


And if the list was sort of ratcheted down and just called the Great Fair Labor Standards Act List, we wouldn’t be in this problem. The problem is that the list is ratcheted up that you are a great employer or a great person list, a great company list in all ways. So, therefore, there is some sense that we have to take into account all criteria that have to do with workers anywhere in the world. And I think that is an inappropriate vantage point from which to engage in this kind of activity.



Mr. Norwood. Mr. Fraser, there are only three of you there. Did you think this up or did somebody else?



Mr. Fraser. I would love to take credit for it, Mr. Chairman. But this was a decision of the Department of Labor and the Secretary of Labor at the time to proceed with an effort that had been established in other programs to try to round out our overall compliance programs by, in good faith, contributing to a change in the public perception of this industry, as I indicated before, pervaded by scofflaws.


We felt that was not a fair image. We agreed with the industry that was not a fair image of the industry, and the Secretary of Labor and the Department, in good faith, undertook to find a way to remedy that problem.


I was not in the room.



Mr. Norwood. You weren’t one of the three there?



Mr. Fraser. No, sir.



Mr. Norwood. Oh.



Mr. Fraser. And the people who were in the room were very ably…



Mr. Breger. Nobody was in the room?



Mr. Fraser. I don’t even know if there was a room, frankly.



Mr. Norwood. Were there any elected officials there? I mean, come on.



Mr. Fraser. People who were in the room were very ably assisted by counsel, although Mr. Breger was not in the room, to my knowledge.



Mr. Norwood. That seems to be a shame.



Mr. Fraser. They did their very best to make informed, intelligent, rational, reasonable judgments about whether the people who came forward and asked for this recognition, with the information they presented, should be held out, as I said in my statement, should have the spotlight shined on them, by the Secretary of Labor as an exemplary company in trying to not be pure citizens or fulfill the highest attributes or aspirations of humankind, but in trying to effectively eradicate sweatshops. That is what this Trendsetters List was about. Are these companies, based on the information they have presented, based on the information available, do they warrant, deserve being applauded publicly by the Secretary of Labor as making truly exemplary steps to try to eradicate sweatshops? And that is what it was all about.



Mr. Norwood. Mr. Scott and I would agree with you, that is a great and laudable goal. That is exactly what we want all to do. But that is not why we are here. We are here about the process of how you get to do that.



Mr. Fraser. I understand.



Mr. Norwood. That is very, very important. Let me give you a for instance about how this sets up and see if you can follow it.


I have a cut and sew factory in Valdosta, Georgia. If one of the three that were in that room reviewing applications for the Trendsetters List or the government’s "good guy" list had gotten a phone call from a special interest – and you can visualize a number of special interests ordering them not to place my company on the list – knowing that would be considerably damaging to my company financially, how would I know about it? How would I have any opportunity as an American citizen to fight back in a group of three that are going to destroy my life?



Mr. Fraser. Mr. Chairman, again, in the context of not punishing anybody, but only recognizing exemplary efforts, I agree that if there were secret backdoor communications, I would not know about it.



Mr. Norwood. Is the perception, therefore, secret backdoor communications do occur?



Mr. Fraser. The perception? Well, it is not to me, but I can understand, as you have put it forward, that there is the potential for such a perception if in any case the people, the very talented people, who were charged with this responsibility of evaluating these applications were in any way susceptible to that kind of influence.



Mr. Norwood. Let me break it down another way. There is no question in any mind they are very talented, caring, good Americans. I am not questioning that. But, you know, some people, and certainly not me, but some people have the perception that someone may have called one of them and said, you know, if you will leave Norwood’s cut and sew factory off the list, I have $50,000 for the DNC.


You don’t want to leave yourself with that kind of perception. The one thing they tried to teach me when I tried to learn to be a Congressman, and I don’t know that I have learned it yet, but perception is where it is at. And there are not good feelings about a situation when three Federal bureaucrats go behind closed doors with the potential of breaking American citizens. And we have got to do something about it, and we are going to.


Mr. Scott, are you ready?



Mr. Scott. Yes, Mr. Chairman. I just wanted to make one comment about Mr. Jeffress mentioning this voluntary reporting as if the company could arbitrarily just willy-nilly decide, no, that wasn’t job-related, this wasn’t job-related, none of it was job-related. If it is lost time at work, it comes down to a question of worker’s compensation, so the worker has an incentive to join the issue to make sure it is properly recorded. Otherwise, he can’t get medical and lost wage benefits.


I mean, it is not like it is just total voluntary. There are people with an interest to make sure that it gets properly recorded.


We have talked about the good list and the bad list and how scary that list is. I think it is even scarier if OSHA stopped enforcing the law. I mean, people would be in danger.


Let me ask a question about this list, though. How many companies in the apparel industry are on the list? Since that is one of the areas we are talking about, what percentage of the major apparel companies are on the list?



Mr. Fraser. A small percentage. We have 34 companies on the list representing, I think, about 120 apparel lines, some quite large companies. But it is a small proportion of, what, probably a thousand manufacturers in the apparel industry nationally.



Mr. Scott. If half or two-thirds of the companies were on the list, you would almost have an entitlement to be on the list. And your exclusion from the list, I think, under those circumstances, if you had, say, a majority of the companies making the list, the argument that you have an entitlement to get on the list would be a lot stronger than if it is like the top 1 or 2 percent?



Mr. Fraser. Yes, and it is important to again remember, Mr. Scott, that companies came forward and nominated themselves for inclusion on this list. You know, we didn’t go out and make an effort to try to distinguish between good guys and bad guys.


We evaluated whether companies that came forward and said we want to be recognized for our positive, constructive employment practices. We want to be recognized for our efforts in monitoring our suppliers and the judgment that was made was not looking company by company, good guy over here, bad guy over here, and we are going to then go out and tarnish all of these folks.


The judgment was, among the companies that have come forward and said we want to be recognized as Trendsetters, which of those could show that recognition was warranted? And we did not disclose or release a list of folks who were not selected to the list. We did not in any way try to tarnish anyone who didn’t come forward to apply or wasn’t selected for inclusion on the list.



Mr. Scott. But the point is only a very small percentage.


Mr. Fraser. Very small percentage.



Mr. Scott. Of the companies are on the list? Mr. Jeffress, let’s get back to enforcing the law. How do you enforce the law against OSHA violations with asbestos? Do you have any recent cases where you can show that your enforcement did some good?



Mr. Jeffress. Yes, sir. We have an extensive number of cases where we found both overexposure to asbestos and people who are simply not following the rules. In one case, folks were ripping out asbestos while food products were being packaged in that same factory. Our going in and requiring that process to be stopped was very important in preserving not only the health of the workers, but also the health of some American people.



Mr. Scott. What examples of your enforcement save lives in terms of safety of equipment, protective guards, or whatnot? If you weren’t there enforcing the law, what would be the experience in terms of worker safety around machinery?



Mr. Jeffress. Well, Mr. Chairman, I can show you the results of our fatality investigations, where when rules were not followed. We have people killed on the job. We have a high number of young workers killed on the job. These people who lose their lives not only have lost their lives, but the loss extends to their families, and to their communities. The loss is substantial.


The leading causes of death from the job is murder on the job. This is the second leading cause of death among men and the leading cause for women. We don’t think of murder on the job as being a leading cause of death.


So last week, we issued recommendations on workplace violence and what employers could do to reduce the chances of a late-night retail operation being held up and someone killed on the job. We have a whole host of interventions we use, inspections being one; recommendations, guidelines being another; consultations, education and training to try to reduce the possibility of who will be hurt or killed on the job.



Mr. Scott. One of these voluntary programs requires voluntary cooperation. How do you know that the companies are doing what they say they are doing?



Mr. Jeffress. In the CCP, the Cooperative Compliance Program, at issue here, which the Court has not ruled against but simply said put on hold until we can hold a hearing, in that case, the employer reported to us that they intended to do that. We took them at their word.


We were planning to do a 30 percent follow-up check of the employers that do promise to cooperate with us and partner with us. So there is that kind of audit, that kind of quality control of 30 percent. But if an employer pledges to us that they were going to do this, then we took them at their word and took them off the primary inspection list.



Mr. Scott. Does the cooperative effort involve the workers as well as the employers?



Mr. Jeffress. Yes. We require employee involvement in each of the workplaces that partner with us. Where we knew that a union represented the employees, we sent the local union the same notice we sent the employer. We required the employer to post it so that all the employees can read, in whatever type of workplace, the nature of the partnership.



Mr. Scott. And so if there were violations occurring, you would expect the workers to notify you of certain violations?



Mr. Jeffress. We certainly try to advertise the 800 number that employees can call if they have complaints. We do investigate a substantial number of complaints. And, in fact, self-policing, as I mentioned earlier, is an important part of the program, that employers and employees have some responsibilities in this.



Mr. Scott. Mr. Breger, you indicated the term "fair warning." I guess I just want comments from everybody, what do we do to make sure that the businesses have fair warning as to what the regulations are so that they can comply?



Mr. Breger. Well, one way, and OSHA does this, is to issue standards which lay out ahead of time, in some detail, what is expected. Another way would be to give less formal kind of guidance examples of the kind of activity that an OSHA inspector might focus on if he were to make an examination.


A third way is, I suppose, the responsibility of the employer. He would read or his counsel would read the court cases and see what kind of court cases have been brought by OSHA and, you know, act judiciously. If someone is cited for a certain kind of conduct, he might figure, I better check if I have that kind of conduct in my plant.



Mr. Scott. Mr. Fellner, is fair warning a problem?



Mr. Fellner. Fair warning is the critical issue that is presented by the CCP program, which we have discussed extensively this morning. Fair warning is presented by that program because basically by OSHA’s own language, what they intended to do was to leverage employers to adopt two programs that should have been adopted in standards and, indeed, that OSHA is working night and day, I believe, in terms of trying to transform into standards, one, comprehensive health and safety programs; two, ergonomics.


They are leveraging their resources to try to force the 12,000 employers that we spoke about before to adopt those kinds of programs. There is no fair warning. There is nothing in the Federal Register. There is nothing to tell employers what will satisfy either OSHA in terms of its 30 percent, because they will inspect 30 percent of those 12,000 to find out whether they are complying with their written agreements under CCP. There is nothing that will assure those employers that the employees will be satisfied, because we are dealing with Pandora’s boxes.



Mr. Scott. Mr. Levy.



Mr. Levy. On the fair warning issue, again, when the Trendsetter List was set up, at least from what the written criteria and the examples were, it was all about whether or not you were a Trendsetter with respect to the Fair Labor Standards Act. There was nothing in there about any foreign labor practices and nothing in there about the National Labor Relations Act. I would like to correct the record to the extent I can correct it. I said something that was incorrect.


Guess? had applied in the beginning in 1995 because it thought it was only with respect to the Fair Labor Standards Act, and it was on that basis that it applied. Had it known at the time that there were these other standards, it would have reconsidered that decision. I think a lot of other companies would have been in the same position.


I would just question the authority to deal with the whole issue of foreign labor practices and the National Labor Relations Act with an agency that has no statutory or regulatory jurisdiction there. This really is a due process procedure. We have always felt that how the government intrudes into the lives of individuals or businesses is a critical constitutional issue.


You can’t separate substance from procedure. One does dramatically affect the other, especially here, it affects businesses very, very substantially and the individuals who work in those businesses.



Mr. Scott. Mr. Fraser or Mr. Jeffress, do you want to respond?



Mr. Fraser. Just going to the point of fair warning, aside from the mechanisms that Mr. Breger has discussed and others have talked about, I think it is fair to say that all of our law enforcement organizations take extraordinary steps to try to reach out and educate stakeholders, employers, employees, other stakeholders in the enforcement or in the regulated community. We try to provide compliance assistance, material, and information that make it easy for people to comply voluntarily.


At least in the Wage and Hour Division, about one-fifth of our time is spent in education and outreach activities, which are a part of the overall compliance program of which this recognition component is a part. Do you want to add to that?


Mr. Jeffress. Just one comment. OSHA has been issuing citations in the areas of ergonomics for over 10 years. The CCP program did not impose any new duties. There is not a question here of fair warning of something folks didn’t know about ahead of time.



Mr. Scott. Thank you, Mr. Chairman.



Mr. Norwood. Mr. Scott, with your permission, I will ask a couple of questions and then close this down, if that is all right.



Mr. Scott. Yes.



Mr. Norwood. Professor, I want to get at one question. We had asked you to look into the Honor Roll program administered by the Women’s Bureau, and I would like to get you on record and have some comments from you about the way this program is structured and your concerns about it.



Mr. Breger. Well, I am not an expert on the Honor Roll program. And, of course, its goals are ones that I, and I am sure all of us, share. There is a kind of ironic and intriguing aspect of it. You can’t be put on that program if you are already an exemplary employer in this area. That is to say, if you have been doing all the right things, that are not good enough, and it very explicitly says it in the application material. You have to point up a way that you can correct a flaw. So you have to sort of beat your breast and find a flaw and confess it, and then say, now I will make amends by the following program that I will put forward in my company.


It certainly seems to me that is a very strange proposition and, again, one which I don’t think would have survived a kind of public airing and discussion that is usually associated with the APA rulemaking process.


So I just would point out that, when it comes to the Women’s Bureau, if you already meet their standards, you shouldn’t apply to be put on the Honor Roll. Only the prodigal son or the reformed convict can get an award.



Mr. Norwood. Mr. Jeffress, just so you won’t be disappointed in me, I have saved a few last questions for you. Just tell me, do you guys have a room where two or three of you sit around and decide on who gets inspected and who does not get inspected?



Mr. Fraser. Mr. Chairman, we loan them our room every once in awhile.



Mr. Norwood. Well, you know, I presume they have probably got their own.



Mr. Jeffress. Mr. Chairman, let me assure you that the actions of the Department of Labor, whether it be the Wage and Hour Division on Trendsetters, whether it be the Occupation and Safety Health Administration on issues related to inspection policy, we follow the policy and procedures that are approved by the United States Secretary of Labor. None of us have three folks getting together in a room and make some decision behind closed doors without very clear and affirmative guidance from the Secretary of Labor.



Mr. Norwood. I appreciate it, but I am not assured. Go ahead.



Mr. Jeffress. Well, the question…



Mr. Norwood. So you don’t? You don’t have three or four of you guys sitting around deciding which one of us get inspected?



Mr. Jeffress. We are very careful to have a neutral and objective system of criteria.



Mr. Norwood. Open process?



Mr. Jeffress. That allows for everybody similarly situated to be equally at risk, if you will, for an inspection. Of the 3,300 people on the interim inspection plan list, we are drawing names at random as to which ones we go to when we go to an inspection.



Mr. Norwood. We started the hearing, you and I did, talking about hammers and the warehouse up in Washington. I have come to realize probably the reason I can’t find the hammer warehouse in Washington is that you have it stored in Atlanta. I want to ask you two or three questions for which I don’t expect you to answer me right now, but I would be very grateful if you would answer us in writing just as soon as is possible.


Given the Yerkes situation down in Atlanta, Georgia, Emory University, provided testimony from other primate centers’ directors illustrating that Yerkes is compliant with industry standards. We want to know why was Yerkes penalized with a willful citation now, a willful citation, for not complying with industry standards?


In addition, at the closing meetings with your people down in Atlanta, OSHA requested in writing proposals from Yerkes to help rectify this situation in the future, which I am very pleased that you asked and they responded. Yerkes Emory responded in writing with numerous positive recommendations and voluntary actions that they would enact, and I want to know why OSHA has not responded back instead of simply issuing violations and fines.


Lastly, should OSHA, as the top regulatory and safety agency in the country, not maintain exemplary professional conduct even when the administration encourages cooperation in a non-hostile environment for compliance?


You and I had agreed on a peace treaty, but when you went down to Atlanta you got me involved in it again. So if you will answer those as soon as possible.


Mr. Norwood. Mr. Scott.



Mr. Jeffress. Can I have one word on that?



Mr. Norwood. Of course.



Mr. Jeffress. That case is in litigation, so with your indulgence, the response in writing, since what you are asking for are some of the elements that are to be proved in that case, is likely to be delayed until that case is heard, if that is all right.



Mr. Norwood. Well, I won’t tell anybody.



Mr. Jeffress. One further word, Mr. Chairman. My travel schedule calls me to go to Atlanta on Monday. I would like your permission to enter the State, if I may.



Mr. Norwood. You bet.



Mr. Jeffress. Thank you, sir.



Mr. Norwood. Be careful. We will know you are there, I promise you.



Mr. Jeffress. Yes, sir.



Mr. Norwood. George Mason law professor Robert Anthony could not be here to testify with us today. Like Mr. Breger, Mr. Anthony is a former chairman of the Administrative Conference and one of the most respected writers on the subject of unauthorized rulemaking. Mr. Anthony has sent us reprints of his three most recent important Law Review articles. Without objection, I would now like to offer for the record.



See Appendix H for the Reprint of Law Review Article, "Interpretive Rules, Policy Statements, Guidances, Manuals, and the Like – Should Federal Agencies Use Them To Bind The Public?" by Robert A. Anthony


See Appendix I for the Reprint of Law Review Article, "Interpretive Rules, Legislative Rules and Spurious Rules: Lifting the Smog" by Robert A. Anthony


See Appendix J for the Reprint of Law Review Article, "The Supreme Court and the APA: Sometimes They Just Don’t Get It" by Robert A. Anthony



Mr. Norwood. Mr. Scott, it is your turn to close.



Mr. Scott. Thank you, Mr. Chairman. I want to thank you for holding the hearing. Obviously we have been reminded that all regulations have significant impacts on companies, on their expenses, on their profits. But we ought not to lose sight of the fact that these regulations also save lives and reduce injuries.



Mr. Scott. So we ought not to lose that focus. Regulations are here for a purpose. We need to do the best we can to make sure that they are done the best they can, but never lose focus of the fact that lives and injuries are at stake.



Mr. Norwood. Gentlemen, you have been very patient. You have been excellent. We appreciate very much you being here. I simply have one last comment that I think would help the government, it would help the Labor Department, and it would certainly help my feelings.


There are four programs out there: the Women’s Bureau Honor Roll, Wage and Hour’s Trendsetters List, OSHA’s Cooperative Compliance Program, and OFCCP, Office of Federal Contract Compliance. Those four programs need the sunshine brought in. We want the windows open. I am going to ask you, in my nicest manners, to establish rules and regulations on these programs where there can be public notice and comment, and where there can be congressional review.


Now, that is the nicest way I can say it. I want to mention to you that if you don’t, we are going to find legislative remedy, and we are going to deal with it in the appropriations process, which is the only little weapon a poor old Congressman has got.


But we ask for you, for your sake, for the purpose of perception, open up the windows and let the sunshine in.



Mr. Fraser. We will carry that message back to the Secretary, Mr. Norwood.



Mr. Norwood. Thank you very much, Mr. Fraser. Thank you all, gentlemen.


[Whereupon, at 1:35 p.m., the subcommittee was adjourned.]