Presented ToHouse Committee on Small Business
Speaker(s)Watchman, Gregory R.
Mr. Chairman and Members of the Subcommittee:
Thank you for the opportunity to testify on OSHA's plans to develop a Safety and Health Program Standard. This rulemaking is extremely important for America's workers, and OSHA is pleased to respond to the Small Business Committee's interest in it. It is important to emphasize that OSHA does not have a proposed rule yet and that it is in the process of seeking public comment as it develops a proposed rule.
Each year, thousands of workers die in accidents or from occupational diseases while working to provide for themselves and their loved ones. Despite the progress that has been made since OSHA's inception in 1970, six thousand Americans die each year from workplace injuries. Tens of thousands more die from illnesses caused by workplace exposures, and millions more suffer non-fatal workplace injuries. Injuries cost U.S. businesses over $110 billion annually.
The good news is that many of these tragedies are preventable. Experience shows that a systematic approach to workplace safety and health can substantially reduce work-related injuries and illnesses. Workplace safety and health programs provide such an approach.
Safety and health programs have helped many employers achieve lower injury and illness rates. Under OSHA's Voluntary Protection Programs, for example, employers that have set up comprehensive safety and health programs have experienced injury rates substantially below the average for their industry. In addition, every dollar employers spend on safety and health programs is estimated to save them between $4 and $6 in workers' compensation expenses, reduced employee turnover, and other related costs. A variety of studies, including analyses by the General Accounting Office, have recounted the benefits of safety and health programs--they are good for workers and good for business.
While many options exist for protecting workers from life-threatening or other workplace hazards, OSHA can't do the job alone. By implementing their own safety and health programs, employers and their workers can help OSHA improve workplace safety without a significant infusion of new resources. The programs can also help employers and workers together identify and eliminate hazards on which OSHA may not have standards. For example, in OSHA's Maine 200 program, employers who established safety and health programs have identified and abated a total of 134,434 hazards in nearly 4 and one half years. In contrast, experience during the four preceding years suggests that OSHA would have identified fewer than 20,000 hazards or violations using traditional enforcement methods.
Despite the clear benefits of adopting safety and health programs, many employers have not utilized them. OSHA attempted to encourage employers to act nearly a decade ago. In 1989, OSHA issued voluntary Safety and Health Management Guidelines. The guidelines described program elements successfully used by employers, and were widely distributed. Safety and health professionals, corporations and labor unions endorsed the guidelines. Then-Secretary of Labor Lynn Martin wrote to 600 chief executive officers of major companies urging them to implement their own programs. Since that time, some OSHA standards, including Process Safety Management and Permit-Required Confined Spaces, have required that employers establish hazard-specific safety and health programs.
Today, about half the States have some form of safety and health program requirement. A federal safety and health program standard is needed to advance nationwide worker protection.
PROGRAMS THAT WORK
Safety and health programs have long been accepted in the safety and health community as a mainstay of worker protection. The states and employers that rely on them have seen dramatic results. As for States, after the State of Oregon instituted a safety and health program requirement and other reforms, employers there experienced significant reductions in occupational injury and illness rates and double-digit declines in their workers' compensation rates. According to some estimates, if we were to duplicate Oregon's success nationwide, we would prevent 754,000 lost workday injuries. Colorado's experience is equally striking. Several years ago, the State began providing premium dividends to employers who established worker protection programs. In 1993, Colorado reported that the 517 firms participating in the program had reduced accidents by 23 percent and accident costs by 62 percent, generating an estimated $23 million in savings for firms in the first year of the program.
One notable success story in private industry involves Boise Cascade's paper mill in Rumford, Maine. The paper mill established a safety and health program after a 1989 inspection in which OSHA found 3,000 violations. After the program was implemented, the company's workers' compensation costs plummeted--from $1.3 million in 1988 to $37,000 in 1993. In another example, the Business Roundtable reported that, after implementing a safety and health program, Air Products and Chemicals, Inc. reduced workplace injuries by more than half in a five-year period, saving $1.7 million in workers' compensation.
Accountability improves safety. When employers and employees work together to systematically eradicate hazards, money and lives are saved. During 1991 and 1992, the Argonaut Insurance Company evaluated the effectiveness of its management accountability program. The program emphasized accountability and routine safety activities like new employee orientation, toolbox meetings and enforcement of PPE rules. High level managers were held accountable for incident rates and costs of accidents among their employees. The study found that losses decreased by 36 percent among the firms using this technique, while a control group saw losses increase by 96 percent.
In contrast, the tragedy that killed 25 workers at Imperial Foods in Hamlet, North Carolina, occurred at a company without a safety and health program. Imperial Foods had no ongoing, systematic approach to protect the safety of their employees from fire hazards or other safety problems. Those workers might still be alive today if their employer had actively implemented a safety and health program. In fact, the State of North Carolina responded to the Imperial Foods tragedy by requiring that certain employers with 11 or more employees operate safety and health programs.
As noted above, Voluntary Protection Program members have also seen the benefits that safety and health programs provide. Since 1982, OSHA has been approving workplaces with exemplary safety and health management programs for participation in its Voluntary Protection Programs. Participating employers have lost-workday injury rates ranging 35-90 percent below the national average.
Most participating sites report improved employee morale and productivity as a by-product of their programs. For example, a site operated by Kerr McGee exceeded its production goal by 35 percent. VPP participants have also realized impressive savings from their programs. The VPP sites operated by Mobil Chemical realized a 70% reduction in workers compensation costs over 4 years, saving $1.6 million. A Mobil refinery in Joliet, Illinois cut workers compensation costs by 89 percent over 6 years after establishing a program, and another Mobil workplace saw a 25 percent decrease in absenteeism. The Georgia Power Company saved $4.1 million in workers compensation costs in one year. Clearly, safety and health programs have made a difference in many workplaces, and can be equally valuable resources for many more.
OSHA'S WORKING DRAFT
Our many years of experience with safety and health programs demonstrate that the best programs involve top management leadership, worker participation, clear lines of responsibility, proactive hazard identification, prevention and control, and training. OSHA does not yet have a safety and health program proposal, but has been fashioning a working draft that includes these elements: (1) Employers should take an active role in protecting their workforce from serious hazards; (2) there should be regular communication between employers and employees, encouraging workers to identify hazards and suggest solutions; (3) employers should use self-inspections and accident investigations to find and fix workplace hazards; (4) employers should inform and train workers about the hazards in their work environment; and (5) employers should regularly evaluate the effectiveness of their programs.
The "New OSHA" philosophy is guiding our thinking as we develop a safety and health program proposal. The rule will be flexible and have minimum requirements for low-risk worksites. Responsible employers will be treated differently from those who fail to safeguard their work environment. Third, the Agency will emphasize effectiveness rather than documentation. OSHA's goal is to maximize the benefits resulting from such programs while making implementation as easy as possible.
The General Accounting Office in 1992 "concur[red] with OSHA's assessment of the value of comprehensive safety and health programs." GAO also said consideration should be given to requiring high risk employers to have safety and health programs even if some uncertainty exists about the likely burden, "because the potential number of lives saved or injuries and illnesses averted is high." OSHA is using input from GAO, workers, employers and other stakeholders to fashion a reasonable, balanced approach.
OSHA has sought to involve stakeholders at each stage in this potential rulemaking effort. The Agency has spoken with many individual stakeholders on an informal basis. In addition, OSHA has held a series of facilitated meetings with representatives of business (including the U.S. Chamber of Commerce and the National Federation of Independent Business), labor, state governments, and public health and safety organizations. The Agency held one such meeting during two days in October of 1995. A further set of meetings was held in June of 1996 to discuss revisions to a concept paper. After receiving this extensive input, OSHA shared an initial working draft of a proposed standard with stakeholders in November of last year.
Together with our stakeholders, OSHA is discussing a wide range of issues, including the scope of a proposed standard; the treatment of responsible versus less responsible employers; criteria for citations and penalties; and training requirements. OSHA is making every effort to hear the concerns and understand the priorities of interested parties. Our stakeholders have much to contribute, both in terms of their knowledge of their industries and their history with implementing safety and health programs.
SMALL EMPLOYER CONCERNS
Small and large businesses, alike, need safety and health programs. Even the smallest businesses have significant numbers of workplace fatalities and injuries. Indeed, establishments employing fewer than 10 workers account for 17 percent of employment but over 33 percent of workplace fatalities. Over one million work-related injuries and illnesses each year occur in establishments with fewer than 20 employees. For these reasons, many states, such as Oregon, Washington, and California, require safety and health programs in even the smallest firms.
While seeing the need for safety and health programs, OSHA is especially concerned with providing regulatory flexibility for small businesses. In addition to involving small businesses in general stakeholder meetings, OSHA in the fall of 1995 met with small business owners in Cleveland to discuss the safety and health program concept. In response to suggestions raised by small businesses, the working draft the Agency distributed in November:(1) increased the flexibility and performance-based nature of the standard; (2) was written in plain language; (3) included longer phase-in-periods for small employers; (4) dropped the previous requirement for a written program; and (5) exempted small employers from hazard documentation requirements.
In cooperation with SBA's Office of Advocacy, we plan to hold a series of regional meetings with small business owners next month in four cities: Atlanta, Georgia; Philadelphia, Pennsylvania; Portland, Oregon; and Columbus, Ohio. These discussions will involve the scope of the standard, exemptions for the smallest employers, and any other suggestions or concerns small businesses have about the working draft. Following these meetings, OSHA will work with SBA's Office of Advocacy, OMB, and small business representatives in the SBREFA Regulatory Review Panel Process.
STATUS OF RULEMAKING
OSHA expects to receive valuable input from small businesses during the upcoming series of regional meetings. The Agency also plans to meet with employees, including those who work for small businesses. Following this stakeholder input, OSHA will make appropriate revisions to the draft proposal and begin the process for SBREFA Panel review with SBA's Office of Advocacy and the Office of Management and Budget.
Safety and health programs already make a significant difference in the lives of many of our nation's workers and in the financial bottom line of many businesses. OSHA is working hard with the small employer community and our other stakeholders to draft a sensible, effective standard. The Agency's efforts to work with stakeholders in develop a safety and health program standard are an important example of the kind of cooperative dialogue envisioned by the Regulatory Flexibility Act and SBREFA. OSHA hopes this dialogue will lead to safer, more healthy workplaces for millions of America's workers.