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XII. Economic Impact and Regulatory Flexibility

An analysis of revenue and profit data provided in the 1987 RIA indicates that the costs to comply (without consideration of cost savings) with these amendments would not have a significant adverse impact on a substantial number of small entities nor on the economy as a whole. In only the fiberboard industry are costs expected to be as much as 0.1 percent of revenue, and costs are expected to be less than 1 percent of profits in all but a few industries. The greatest potential impact on profits would be in the hardwood plywood industry, where compliance costs are estimated to be 5.4 percent of profits.

Smaller establishments should not be disproportionately impacted. Although it is possible that a small number of marginal firms may have to cease operations, OSHA estimates that most of these firms should be able to absorb the costs of this standard. Most of the costs in the hardwood plywood industry are attributed to the capital and operating costs associated with the introduction of LEUF resins, and these costs are directly proportional to sales. In the furniture industry, most of the engineering control costs would be absorbed by a minority of larger plants. Human resource costs, such as removal protection and training are generally proportional to the number of employees, and therefore would not have a disproportionate impact on small businesses. The requirement to give employees six month removal compensation might be more burdensome to small businesses due to limited availability of alternate jobs, but this should be a particularly rare event. Since the likelihood of encountering such formaldehyde-sensitive employees is directly related to the number of employees in a business, this provision is not expected to impact a substantial number of small entities. Estimates of average compliance costs per establishment, as a percentage of revenues and profits are provided for all affected industries in Table IV.

     Table IV - Cost of Proposed Amendments to Formaldehyde Standard
                      as a Percentage of Revenues and Profit

(For Table IV, Click Here)

[57 FR 22290, May 27, 1992]