Presented ToSubcommittee on Government Programs and Oversight and the Subcommittee on Paperwork and Regulatory Reform of the Committee on Small Business
Thank you for the opportunity to testify today about the Occupational Safety and Health Administration's activities with regard to small businesses, and on how the Agency deals with risk analysis and risk characterization in the development of its regulatory programs.
The Occupational Safety and Health Administration was established in 1970 to assure safe and healthful conditions for working men and women. The Agency's mission is to save lives, prevent workplace injuries and illnesses, and protect the health of America's workers. This mission continues to be compelling because, despite considerable progress, there are more than 6,000 fatal workplace injuries, tens of thousands of fatal work related illnesses, and millions of non-fatal injuries and illnesses every year, and a significant number of these occur in the smallest of workplace settings. The major tools OSHA uses to address this needless waste of human resources include the development and enforcement of regulations, the provision of free consultation for smaller businesses, and technical assistance to employers and employees alike.
OSHA believes that risk analysis is a necessary and appropriate tool for linking sound policy decisions with sound science. The Agency has nearly 17 years of experience in conducting risk analyses to support occupational safety and health regulations. The result of OSHA's approach to risk assessment has been the development of a body of regulations that address and reduce significant risk and are both technologically and economically feasible. OSHA regulations, such as those for asbestos, vinyl chloride, cotton dust, cadmium, confined space entry, and fall protection, have saved thousands of lives and even more job related injuries and illnesses.
Much of the risk assessment debate focuses on allegations that agency's are addressing marginal risks and are imposing major regulatory burdens to achieve minimal reduction. However, OSHA routinely regulates risks that pose clear and evident danger to workers. A complicated risk assessment is not necessary to determine that hundreds of workers lose their lives every year as a result of falls or electrocutions. On the health side, OSHA regulations often address risks that threaten the lives of as many as 1 in 100 exposed workers. For example, OSHA estimates that the risk associated with a working lifetime exposure to ethylene oxide at the limit existing prior to OSHA regulation ranged from 63 to 109 excess cancer deaths per 1000 exposed workers. These risks would not be considered marginal by any policy maker.
OSHA's recently published methylene chloride standard is a good example of regulation based on careful analysis. OSHA spent 10 years refining a comprehensive cancer risk assessment for this dangerous substance and is confident the rule strikes an appropriate balance between protecting workers and assuring that compliance is feasible. OSHA's rulemaking began in 1985 after a petition from the United Auto workers and several other unions. We published an advance notice of proposed rulemaking in 1986, and a notice of proposed rulemaking in 1991. The NPRM thoroughly discussed pharmacokinetics (which is the study of the metabolism of toxic agents by various species) and risk assessment issues, and helped open an important dialogue regarding the MC risk assessment. In 1992, OSHA held public hearings during which two primary issues were raised: (1) that OSHA should seriously consider the pharmacokinetic and mechanistic data generated on MC; and (2) that OSHA should adequately characterize the uncertainties associated with the methylene chloride risk assessment, in particular if pharmacokinetic analyses were used. We then re-opened the rulemaking record in both 1994 and 1995 to receive and analyze scientific information related to the methylene chloride risk assessment.
It is also important to note that OSHA does not act independently when dealing with matters of science related to occupational health issues. The National Institutes for Occupational Safety and Health (NIOSH) was created by Congress to conduct research and make recommendations concerning new or improved occupational safety and health standards, and OSHA works closely with their scientists on a wide range of health science issues.
OSHA has paid close attention to small business impacts throughout the MC process, and took all the actions required by the Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA), the Paperwork Reduction Act (PRA) and the Regulatory Flexibility Act. This is not simply a claim that OSHA is making; it has been documented by the General Accounting Office.
Throughout the rulemaking process, OSHA has actively solicited and has received input from many small businesses. We also opened the record in 1994 solely to provide additional opportunity for small businesses to comment. We requested comments regarding the standard's impact in our Federal Register notices, informal public hearings, and site visits and meetings with small businesses. Because the economic analysis identified significant economic impacts on a substantial number of small entities, OSHA conducted a full Final Regulatory Flexibility Analysis in accordance with the Regulatory Flexibility Act and SBREFA.
OSHA increased flexibility of compliance in response to comments made by the Small Business Administration and small businesses, themselves--OSHA gave small employers more time to implement the standard's requirements; eliminated a requirement for written compliance plans; and altered training requirements. In addition, OSHA's proposed rule solicited comment on ways to restructure the final standard, achieve OSHA's worker protection goals, and otherwise assure small businesses' capability of protecting their business to the same extent as large businesses. When the Small Business Administration's Office of Advocacy expressed concern about the rule's possible impact on smaller firms in the polyurethane foam manufacturing industry, OSHA conducted an additional analysis of firms with 20-500 employees. As a result, OSHA decided that it would be appropriate to delay the compliance deadlines regarding firms in this industry with 20-99 employees for an additional year. The modifications made to effectuate small businesses' ability to comply are not limited to these items. In fact, several modifications were made in response to small business and SBA concerns.
OSHA has also undertaken a number of steps to implement other aspects of the Small Business Regulatory Enforcement Fairness Act (SBREFA), which was signed by the President in March 1996. OSHA has long been concerned with the effects of its regulations on small entities and has a strong record of reaching out to small business stakeholders and addressing their concerns in the Agency's rulemaking process. Since the passage of SBREFA, OSHA has redoubled its efforts to enhance the involvement of this important group of stakeholders in the process and to identify cost-effective ways of protecting the safety and health of the millions of workers employed in small establishments. Before turning to the Small Business Advocacy Review Panels that are the subject of this hearing, I would like to bring you up to date on the procedures and policies OSHA has implemented to comply with these other sections of the SBREFA law.
Sec. 212 of SBREFA requires agencies to provide a Small Entity Compliance Guide for any final rule that has been determined to have a "significant impact on a substantial number of small entities." For all of its rules, OSHA has traditionally provided guides and other compliance assistance materials--such as the Small Business Handbook--through OSHA's Office of Information and Consumer Affairs.
It has also been OSHA policy to issue a compliance guide with the publication of any new regulation. OSHA's Home Page on the Internet (http://www.osha.gov) contains links to OSHA bulletins, media releases, and OSHA programs and services. For OSHA's recent standard on Occupational Exposure to Methylene Chloride, the Agency will publish a Small Entity Compliance Guide and has already made completed portions of this guide available on our Home Page. In addition, we have produced several interactive, computerized "expert systems" which explain to a small businessman using the system how a standard applies to a particular work situation. OSHA will also continue to issue Fact Sheets, information packets, and copies of the rule to employers requesting them.
Informal Small Entity Guidance
Sec. 213 of SBREFA requires agencies to answer inquiries by small entities on the interpretation and application of Agency regulations to the specific facts and conditions in the small business' workplace. OSHA has a wide array of programs and services to achieve this objective, including the Consultation Program, which provides direct on-site assistance to thousands of employers every year at no cost. This service is strictly confidential and is entirely independent of OSHA's inspection and enforcement efforts; no citations or penalties are issued based on consultation visits.
In addition to the Consultation Program, OSHA offers training grants to non-profit organizations, CD-ROM versions of OSHA regulations, and easy access to OSHA-generated data and information. Sec. 213 also requires agencies to establish a program to respond to small entity inquiries within one year of SBREFA's enactment. OSHA has long had a program to respond to questions asked by businesses of all sizes, especially small businesses. For example, personnel at OSHA's Area, Regional and National offices respond, either orally or in writing, to thousands of inquiries annually. However, to enable the Agency to track the number of such questions better, OSHA is putting in place a system to identify the volume of inquiries received from small businesses. This system will permit OSHA to make an accurate count of such inquiries and this information will be included in the 1998 Report to Congress required by SBREFA. Again, OSHA is in full compliance with this section of the Act.
Section 223 of SBREFA requires that, by March of 1997, agencies have in place a "policy or program ... to provide for the reduction, and under appropriate circumstances for the waiver, of civil penalties for violations of a statutory or regulatory requirement by a small entity." SBREFA lists various factors that the agency may consider in developing its penalty policy, although agencies are free to include other criteria as well. Agencies must also be able to report to Congress, by March 1998, on the scope of their penalty reduction programs or policies, the number of enforcement actions against small entities that qualified for the program or policy, and the total amount (in dollars) of penalty reductions or waivers granted under the program or policy.
Section 17 of the OSH Act specifically requires OSHA to take a number of factors into account when determining the amount of penalty to be levied in a given instance. These factors include: the gravity of the violation, the size of the employer's business, the good faith of the employer, and the employer's history of prior OSHA violations. Consideration of these factors in determining the size of a penalty in a given situation is consistent both with SBREFA and the concepts of the New OSHA: to distinguish between those employers who are trying to protect their workers from job-related safety and health hazards and those who have lagged behind in the area of worker protection. Even before SBREFA, OSHA had in place a penalty policy that recognized the good faith efforts of responsible small employers: under our policy, a small employer who has had no serious, repeat, or willful violation in the last year and who has made a good faith effort to maintain a safe and healthy workplace may receive up to an 80% penalty reduction. For many other-than-serious violations, OSHA waives the penalty entirely.
Congressional Review of Rules
SBREFA revamped various aspects of Federal regulatory practice with regard to small entities. The Act also established a new mechanism for expedited Congressional review of Agency rules. Congressional review applies to virtually any rule, whether or not the rule has any effect on small entities. Section 801 of SBREFA requires agencies to submit to each House of Congress and to the Comptroller General of the United States a copy of the rule, a concise statement relating to the rule, an indication of whether the rule is a "major" rule, a copy of the cost-benefit analysis of the rule (if any), and other materials. This information must be submitted before the rule can take effect, and it is OSHA practice to forward such materials at the time the rule is submitted to the Federal register for publication. OSHA has scrupulously complied with this section of SBREFA for all final rules issued since that Act became effective.
Analytical Requirements of the Regulatory Flexibility Act (as Amended by SBREFA)
Since 1980, when the Regulatory Flexibility Act (RFA) became law, regulatory agencies have been required to prepare a regulatory flexibility analysis for every notice-and-comment rule they issue, unless the agency issuing the rule certifies in the Federal Register that the rule will not have a "significant impact on a substantial number of small entities." The term "small entities" includes small businesses, small governments, and small non-profit organizations. OSHA has routinely conducted such analyses for its rules over the years, and published the results, along with the rule itself, in the Federal Register.
SBREFA strengthened the Regulatory Flexibility Act in a number of ways: by making the analyses performed under the Act subject to judicial review, by requiring OSHA and EPA to establish Small Business Advocacy Panels for each rule determined to have a significant impact on a substantial number of small entities, and by providing small entity representatives who will be impacted by the rule with an opportunity to review and comment on materials pertaining to the proposed rule. In addition, in response to SBREFA, OSHA is redoubling its efforts to identify regulatory alternatives that will minimize impacts on small entities and that are consistent both with the Agency's mandate and the RFA. Examples of the kinds of impact-minimizing alternatives envisioned by the RFA are reductions in the amount of paperwork required by the rule, greater flexibility in the means of compliance allowed, and reduced reliance on the services of experts.
OSHA was the first Federal agency to convene a SBREFA-mandated Small Business Advocacy Panel. The Panel for OSHA's proposed rule for Occupational Exposure to Tuberculosis was convened on September 10, 1996. The Panel consisted of representatives from OSHA, the Office of Information and Regulatory Affairs (OIRA) within the Office of Management and Budget, and the Office of Advocacy (OA) within the Small Business Administration. This Panel decided on the appropriate materials to send to the small entity representatives, received comments from these representatives, and developed a report on the Panel's findings, which has become part of the rulemaking record for the TB rule.
The small entity representatives provided the Panel with many good suggestions and comments on the draft proposed rule. They pointed to places in the rule that were difficult to understand, questioned the usefulness of certain definitions used in the rule, suggested less costly means of achieving the same goal, and generally provided invaluable "front-line" input that OSHA was able to use to simplify and clarify the proposal. We learned some interesting things from the experience: that many small entity representatives are uncomfortable having their names made public; that reading and assimilating the extensive information provided by the Panel was time-consuming for many representatives, that many small business people are too busy to spend the time to fully review and comment on regulatory materials; that the Panel process is resource intensive for the agencies involved; and that the change from a 60 to 90 day deadline for preparing the Panel report would enable the Panel to make fuller use of the lessons learned from the Review. The work that follows the preparation of the Panel Report is also intensive: in response to the Panel's findings, the Agency addressed the issues raised by the Panel by adding clarifications and explanations, as appropriate, to the proposed rule, the preamble to the rule, and the economic analysis (and particularly the regulatory flexibility analysis). However, while this activity did require significant work by the agency, the proposed regulation and accompanying materials were improved as a result.
Overall, we believe that the Panel process contributed to the rulemaking by providing small entities access to the rulemaking process at the earliest possible time. However, the process has also raised issues for other important stakeholders, who are concerned that small businesses have been given a greater say than others. Among those raising this issue are large businesses, trade associations, and representatives of employees, including those who work in both large and small establishments. SBREFA has been in effect for less than a year, and our experience with it is necessarily limited. Over time, some of these problems will undoubtedly resolve, as procedures are refined and resolutions found; in the meantime, OSHA will continue to lead the way in protecting the safety and health of all employees and minimizing, where possible, the impacts of its rules on their employers.