“SECRETARY OF LABOR,\t Complainant,\t v.\tOSHRC DOCKET NO. 03-1351AQUATEK SYSTEMS, INC., and itssuccessors,\t Respondent.\t DECISION ON APPLICATION FOR LEGAL FEES AND EXPENSES Respondent Aquatek Systems, Inc., (Aquatek) has filed anapplication for attorney fees and expenses under the Equal Access toJustice Act, 5 U.S.C. \u00a7504, \/et seq.\/ (EAJA), and the Commission\u2019simplementing regulations set forth at 29 C.F.R. \u00a72204.101 through2204.311. Aquatek seeks to recover legal fees and expenses incurred indefending against a 2003 citation alleging violation of 29 CFR1926.501(b)(13). The violation, though originally upheld by this judge,was vacated by the Commission in its order of February 6, 2006. Commission Rule 101, C.F.R. \u00a72204.101 provides:The Equal Access to Justice Act, 5 U.S.C 504, provides for an award ofattorney or agent fees and other expenses to eligible individuals andentities who are parties to certain administrative proceedings (called\”adversary adjudications\u201d) before the Occupational Safety and HealthReview Commission. An eligible party may receive an award when itprevails over the Secretary of Labor, unless the Secretary’s position inthe proceeding was substantially justified or that special circumstancesmake an award unjust.\/Eligibility \/ The party seeking an award for fees and expenses must submitan application within thirty days of the final disposition in anadversary adjudication. 5 U.S.C. 504(a)(2). The prevailing party mustmeet the established eligibility requirements before it can be awardedattorney fees and expenses. Commission Rule 2204.105(b)(4) requires thatan eligible employer be a \”corporation . . . that has a net worth of notmore than $ 7 million and employs not more than 500 employees.\”Commission Rule 2204.105(c) provides: \”For the purpose of eligibility,the net worth and number of employees shall be determined as of the datethe notice of contest was filed.\” Commission Rule 2204.202(a) requiresthe applicant to \”provide with its application a detailed exhibitshowing the net worth of the applicant as of the date of the notice ofcontest \”that provides full disclosure of the applicant\u2019s assets andliabilities and is sufficient to determine whether the applicantqualifies under the standards in this part.\” The citation in this matter was issued on July 10, 2003.Aquatek filed its notice of contest on July 23, 2003. The recordestablishes that Aquatek is a small employer, with only four employees.With its petition, Aquatek has submitted a statement prepared by B.Glenn Graham, C.P.A., setting forth its assets, liabilities and equityas of December 31, 2003 and 2004. Though neither affidavits nor exhibitswere submitted demonstrating Aquatek\u2019s exact net worth on the relevantdate, its submissions are sufficient to show that it employed fewer than500 employees and had a net worth of less than $ 7 million at the timeit filed its notice of contest. It has met the eligibility requirementsof the EAJA.\/Prevailing Party\/ It is undisputed that Aquatek is the prevailing party inthis matter.\/Substantial Justification\/ The burden of persuasion that an award should not be made toan eligible prevailing applicant because the Secretary’s position wassubstantially justified is on the Secretary. \/See \/Commission Rule2204.106(a). \”The test of whether the Secretary’s action issubstantially justified is essentially one of reasonableness in law andfact.\” \/Mautz & Oren, Inc.,\/ 16 BNA OSHC 1006, 1009 (No. 89-1366, 1993).The reasonableness test comprises three parts. The Secretary must show(1) that there is a reasonable basis for the facts alleged; (2) thatthere exists a reasonable basis in law for the theory it propounds; and(3) that the facts alleged will reasonably support the legal theoryadvanced. \/Gaston v. Bowen,\/ 854 F.2d 379, 380 (10th Cir. 1988). Factual Background. Aquatek is a small company engaged invarious types of waterproofing work. At the subject worksite, in Euless,Texas, Aquatek was engaged in waterproofing balconies and breezeways foran apartment complex under construction. When Aquatek arrived on theworksite on January 7, 2003, all but two or three of the balconies hadguardrails. Though Aquatek foreman Ronnie Morris asked the generalcontractor about installing guardrails on the unprotected balconies,none were installed by the time his crews were ready to beginwaterproofing those areas. Morris had only that day to complete his workand believed it would take only a few minutes to finish the job.Therefore, rather than halting work, he instructed his crew to completeits work on hands and knees to minimize the workers\u2019 exposure to thefall hazard. Ronnie Morris knew he was violating Aquatek\u2019s safetypolicy, but believed that no one would find out about it. This hearing judge found that the Secretary had establishedher prima facie case, and rejected Aquatek\u2019s assertion that it could nothave known that its supervisor would ignore company work rules, ordirect his crew to work without fall protection. Discounting thetestimony of Kenneth and Ronnie Morris, the company\u2019s owner and thesupervisor involved, this judge found that Aquatek failed to establishit had a relevant work rule that was adequately communicated andeffectively enforced. That finding was based on the involvement of theentire work crew in the cited misconduct, and the presence of asupervisor on the site, as well as the complete absence of any writtendocumentation supporting the existence of a safety program. The Commission reversed, holding that Aquatek had rebuttedthe Secretary\u2019s prima facie showing of knowledge. The Commissionstressed that an employer\u2019s safety program need not be in writing, andfound that the testimony in the record was sufficient to establish boththat Aquatek had a verbal rule prohibiting working without fallprotection, which was adequately communicated and effectively enforced.The Commission further held that there was no need to monitor employeecompliance with work rules in this case, where there was no history ofprior safety violations. The violation was, therefore, vacated. Discussion. In this case, there can be no question that theSecretary was substantially justified in initiating the cited action.Both at the hearing and upon Commission review, the Secretary was foundto have presented enough evidence to establish a prima facie case.Aquatek, however, argues that the Secretary should have anticipated itsaffirmative defense of employee misconduct, conducted furtherinvestigation, and dropped the matter upon learning of Kenneth andRonnie Morris\u2019 intended testimony. Aquatek\u2019s position cannot be supported. First, this case proceeded under the Commission\u2019s E-Z Trialprocedures (now Simplified Proceedings, see Commission Rule 2200.200through 211). Under E-Z (simplified) proceedings, pleadings are notrequired; discovery is not permitted except as ordered by the judge. TheSecretary, therefore, cannot be faulted for failing to conductinvestigations into affirmative defenses that may or may not be pursuedby Respondent at hearing. Secondly, though Aquatek suggests the hearing judge\u2019sopinion was based entirely on the absence of a written safety program,that is not the case. The questions of whether there \/was \/a safetyprogram, either written or verbal, and whether it was effectivelycommunicated and enforced were raised by the Secretary and supported bymultiple factors, including: 1) the lack of any documentation oftraining and\/or enforcement, 2) the unanimity of the violative conduct,and 3) the participation of a supervisor in the misconduct. Commissionprecedent cited in the judge\u2019s opinion recognizes these factors asevidence contraindicating an effective safety program. (Amended Decisionand Order, p. 5) The evidence establishing Aquatek\u2019s safety programconsisted entirely of testimony from Kenneth and Ronnie Morris,Aquatek\u2019s owner and the foreman involved in the cited misconduct. Whilethe Secretary had no physical evidence contradicting the Morrises\u2019testimony, she believed and argued that \u201c[t]he testimony of the Morriseslack[ed] credibility and d[id] not come close to establishing thedefense of employee misconduct.\u201d (Secretary\u2019s Post-hearing Brief, p. 17). In this case, there existed a reasonable basis in law forthe theory propounded by the Secretary. The facts alleged reasonablysupported the legal theory advanced. Because the final resolution of theissues rested on the credibility findings of the hearing judge theSecretary was substantially justified in pressing her position. Based on the foregoing, it is hereby ORDERED that: Aquatek\u2019sapplication for attorney\u2019s fees and expenses is DENIED. \/s\/ BenjaminR. Loye Judge,OSHRCDate: June 26, 2006″