Regulations (Preambles to Final Rules) - Table of Contents|
| Record Type:||Respiratory Protection|
| Title:||Section 6 - VI. Summary of the Final Economic Analysis|
VI. Summary of the Final Economic Analysis
In the Final Economic Analysis, OSHA addresses the significant issues related to technological and economic feasibility and small business impacts raised in the rulemaking process. This analysis also explains in detail the Agency's findings and conclusions concerning pre-standard (baseline) conditions, such as respirator program practices, in establishments in the regulated community, and discusses how and why the requirements of the standard are expected to reduce employee exposures. The preamble to the revised rule and the Final Economic Analysis are integrally related and together present the fullest statement of OSHA's reasoning concerning this standard. The Final Economic Analysis has been placed in the rulemaking docket.
This analysis of OSHA's revised Respiratory Protection standard (29 CFR 1910.134) has been conducted in accordance with Executive Orders (EOs) 12866 and 12875, the Regulatory Flexibility Act (as amended in 1996), the Small Business Regulatory Enforcement Fairness Act (SBREFA), the Unfunded Mandates Reform Act (UMRA) and the Occupational Safety and Health Act. The standard is a "significant" rule as defined by EO 12866, a "major" rule as defined by Sec. 804 of SBREFA, and a "significant" rule as defined by UMRA.
The purposes of this Final Economic Analysis are to:
OSHA's final Respiratory Protection standard covers the use of respiratory protection in general industry, construction and shipyard employment, as well as marine terminals and longshoring. In all, about 5 million employees are estimated to use respirators. 1 Workers use respirators to protect themselves from a wide variety of occupational exposures. Respirators are used, at least to some extent, in virtually every industry, although the extent of respirator use varies by industry. Manufacturing and construction have relatively heavy respirator use; in contrast, use in many service industries is very limited.
Chapter II of the economic analysis describes the pattern of respirator use within each affected industry. To develop this profile, the Agency analyzed the results of several OSHA-sponsored nationwide surveys. The results of OSHA's analysis appear in Table VI-1. The Agency estimates that approximately five percent of workers wear respirators at some time, and that approximately 1.3 million establishments, or about 20 percent of all establishments, have employees who use respirators. Approximately 900,000 of these establishments are very small, i.e., have fewer than 20 employees. For a discussion of the number of firms identified by the Small Business Administration (SBA) as small, see Chapter V.
The new standard is programmatic in nature, reflects current practice at many facilities, and does not require the use of new technology. Thus, OSHA finds that the standard is clearly technologically feasible for affected firms of all sizes.
The benefits that will accrue to respirator users and their employers are substantial and take a number of forms. Chapter IV of the analysis describes these benefits, both in quantitative and qualitative forms. The standard will benefit workers by reducing their exposures to respiratory hazards. Improved respirator selection procedures, better fit test procedures, and improved training, all areas strengthened by the revised standard, will contribute substantially to greater worker protection. Estimates of the benefits of the standard are complicated by uncertainties about the effectiveness of the standard and the number of covered work-related illnesses. The Agency estimates that the standard will avert between 843 and 9,282 work-related injuries and illnesses annually, with a best estimate (expected value) 2 of 4,046 averted illnesses and injuries annually. In addition, the standard is estimated to prevent between 351 and 1,626 deaths annually from cancer and many other chronic diseases, including cardiovascular disease, with a best estimate (expected value) of 932 averted deaths from these causes.3
The annual costs employers in the affected establishments are estimated to incur to comply with the revised respirator standard total $111 million.4 These costs, which are presented in detail in Chapter III of the full economic analysis, are annualized over a 10-year horizon at a discount rate of 7 percent; Table VI-2 shows annualized costs by provision of the standard. The most costly provisions are those requiring annual fit testing of respirators and annual refresher training. These two provisions together account for approximately 90 percent of the standard's compliance costs. As a rule, costs are largely determined by the extensiveness of respirator use in affected establishments. This analysis did not attempt to factor in the offsetting value of cost savings from regulatory changes, such as dropping the existing standard's prohibition against contact lens use, providing for greater uniformity for substance-specific health standard respirator provisions, or allowing employers to use licensed health care providers in addition to physicians to perform medical evaluations.
Chapter V of the economic analysis analyzes the impact of these compliance costs on establishments in affected industries. The standard is clearly economically feasible: the cost in the average affected establishment is 0.002 percent of sales and 0.03 percent of profits; in the most heavily impacted industry -- business services, SIC 73 -- annualized compliance costs amount to only 0.1 percent of estimated sales and 1.22 percent of profits. In the next most heavily impacted industry -- Special Trade Contractors, SIC 17 -- costs amount only to 0.02 percent of sales and 0.46 percent of profits. These results are shown in Table VI-3.
In the Preliminary Regulatory Impact Analysis developed in support of OSHA's 1994 Respiratory Protection proposal [Ex. 57], the Agency examined the impact of the proposal on different sizes of establishments. Based on that analysis, the Agency certified that the proposed standard would not have a significant economic impact on a substantial number of small entities. Upon review of comments and other data submitted to the record of this rulemaking, the Agency has analyzed the final rule's impact on small entities, as defined by the Small Business Administration (SBA) and in accordance with the Regulatory Flexibility Act. In addition, in order to ensure that even the smallest entities are not significantly impacted, the Agency performed an analysis of impacts on the smallest establishments, i.e., those with fewer than 20 employees.
The impacts of the standard on sales and profits did not exceed 1 percent for small firms in any covered industry, whether the analysis used the SBA's definitions or the fewer-than-20-employee size class definition. Because the incremental costs of the final rule are primarily related to the number of respirator users per establishment and because small entities do not have a higher percentage of respirator users than large establishments, the standard does not have a differential impact on small entities. If the costs of compliance were influenced by economies of scale, such effects would have been demonstrated by OSHA's analysis of the smallest firms, i.e., those with fewer than 20 employees. However, no such effects were seen, even among firms in this smallest size-class. Therefore, the Agency has no reason to believe that establishments or firms in intermediate size groupings, i.e., those in the range between 20 employees and the employment size cutoff for the applicable SBA definition, would experience larger impacts. Finding this, the Agency certifies that the final Respiratory Protection standard will not have a significant adverse economic impact on a substantial number of small entities. The results of OSHA's analysis of small business impacts on firms 5 within the SBA's size classifications are shown in Table VI-4.
Unfunded Mandates Analysis
The final Respiratory Protection standard has been reviewed by OSHA in accordance with the Unfunded Mandates Reform Act of 1995 (UMRA) (2 USC 1501 et seq.) and Executive Order 12875. As discussed in Chapter V, OSHA estimates that compliance with the revised Respiratory Protection standard will require expenditures of more than $100 million each year by employers in the private sector. Therefore, the Respiratory Protection final rule establishes a Federal private sector mandate and is a significant regulatory action within the meaning of Section 202 of UMRA (2 U.S.C. 1532). OSHA has included this statement to address the anticipated effects of the final rule pursuant to Section 202.
OSHA standards do not apply to state and local governments except in states that have voluntarily elected to adopt an OSHA State plan and have then adopted the specific standard in question or one that has been deemed by OSHA to be equally effective. Consequently, the Respiratory Protection standard does not impose a "federal intergovernmental mandate" as defined by Section 421(5) of UMRA (2 USC 658 (5)). The revised Respiratory Protection standard therefore does not impose an unfunded mandate on state and local governments.
Further, OSHA has found that the costs incurred by state and local governments in those states that choose to adopt the standard will be small compared to corresponding state and local government expenditures. If State-plan states adopt the standard, the greatest impact in some states would be on public fire departments. Bureau of the Census data on the amount of revenue dedicated to fire protection by local governments indicate that $14.4 billion was spent on this service in 1992, the latest year for which such data are available [Government Finances]. NFPA data indicate that 75.3 percent of the U.S. population is served by fire departments that employ at least some career firemen [NFPA, p. 15]. This means that approximately 37.7 percent of the population (approximately half of all state and local government employees work in State-plan states) is served by at least partly career fire departments in State-plan states. Assuming the expenditures for fire protection are spread fairly evenly across the population, approximately $5.3 billion is spent on fire protection annually by affected fire departments. As indicated in the cost analysis (see Table VI-2), the total annual cost of the standard for public fire departments in State-plan states is approximately $3.5 million, which means that the costs of compliance constitute less than 0.1 percent of the revenue devoted by these states to fire protection. Costs of this magnitude are clearly an insignificant portion of the total fire protection budget.
The remainder of this section summarizes OSHA's findings, as required by Section 202 of UMRA (2 USC 1532):
This standard is issued under Section 6(b) of the OSH Act.
This standard has annualized costs estimated at $111 million, primarily in the private sector, and is estimated to save hundreds of lives per year from cancer and cardiovascular disease. Compliance will also prevent thousands of illnesses annually that would have been caused by acute and chronic overexposures. The standard will impose no more than minimal costs on state, local or tribal governments, substantially less than $100 million. OSHA pays 50 percent of State plan costs, although the Agency does not provide funding for state, local or tribal governments to comply with its rules as employers.
OSHA does not anticipate any disproportionate budgetary effects upon any particular region of the nation or particular state, local, or tribal governments, or urban or rural or other types of communities. The principal costs of this standard are to control worker exposures associated with programmatic provisions such as annual fit testing and training, activities that are engaged in by thousands of establishments in hundreds of SIC codes that are widely distributed throughout the country. Chapters III and V have provided detailed analyses of the costs and impacts of the standard on particular segments of the private sector. OSHA has analyzed the economic impacts of the standard on the industries affected and found that compliance costs are no more than 0.1 percent of sales for establishments in any industry, and consequently that no plant closures or job losses are anticipated in the affected industries. As a result, impacts on the national economy would be too small to be measurable by economic models.
Pursuant to Section 205 of the UMRA (2 USC 1535), after having considered a variety of alternatives outlined in the Preamble and in the Regulatory Flexibility Analysis, the Agency has concluded that the final rule is the most cost-effective alternative for implementation of OSHA's statutory objective of reducing significant risk to the extent feasible.
Environmental Impact Analysis
The final Respiratory Protection standard has been reviewed in accordance with the requirements of the National Environmental Policy Act (NEPA) of 1969 (42 U.S.C. 4321 et seq.), the regulations of the Council of Environmental Quality (CEQ) (40 CFR part 1500), and DOL NEPA procedures (29 CFR part 11). As a result of this review, OSHA has concluded that the rule will have no significant environmental impact.
Bureau of the Census, Government Finances, Series GF, No. 5,
annual, as reported in the Statistical Abstract of the United
States, 1995. GPO, 1995.
Bureau of the Census, Government Finances, Series GF, No. 5, annual, as reported in the Statistical Abstract of the United States, 1995. GPO, 1995.
Footnote(2) OSHA believes that, for the purposes of this rulemaking, the most reasonable way to summarize the uncertainties in benefits estimates via a single numerical estimate is to use the expected value; that is, the average of all plausible values weighted by their relative probabilities. For simplicity's sake, OSHA will refer to this point estimate as the "best estimate." (Back to Text)
Footnote(3) Because this regulation will not directly affect the benefits for the estimated 5% of employees who wear respirators as a result of OSHA's substance-specific health standards (except to the extent that uniformity of provisions improve compliance), and these respirator-wearing employees are included in the benefits estimates presented here, the benefits of the revised respiratory protection standard are somewhat overestimated. In particular, deaths and illnesses caused by exposures to such OSHA-regulated substances as asbestos and lead may in fact account for a disproportionate share (more than 5%) of the occupational illnesses and deaths attributed by this analysis to the respirator standard. This means that OSHA's benefits estimates are likely to be overstated by more than 5%. Nevertheless, OSHA believes that the substantial majority of the benefits resulting from appropriate respirator use can be properly attributed to the respirator standard.(Back to Text)
Footnote(4) Because this regulation does not directly affect the costs for the estimated 5% of employees who wear respirators as a result of OSHA's substance-specific health standards, and these respirator users are included in the cost estimates, the costs are somewhat overestimated. Because costs are approximately proportional to the number of employees affected, the magnitude of this overestimate is likely to be about 5%. (Back to Text)
[63 FR 1152, January 8, 1998]
|Regulations (Preambles to Final Rules) - Table of Contents|