Regulations (Preambles to Final Rules) - Table of Contents Regulations (Preambles to Final Rules) - Table of Contents
• Record Type: Safety Standards for Stairways and Ladders Used in the Construction Industry
• Section: 4
• Title: Section 4 - IV. Regulatory Impact Assessment and Regulatory Flexibility Analysis

IV. Regulatory Impact Assessment and Regulatory Flexibility Analysis

Introduction

In accordance with Executive Order 12291 (46 FR 13193, Feb. 17, 1981) OSHA has analyzed the economic impact of this final rulemaking. Under the criteria established in Executive Order 12291, the promulgation of this revision of subpart X will be a "minor" action. This rule will not cause a major increase in costs or prices for consumers, individual industries, government agencies or geographic regions, and will not result in significant adverse effects on competition, employment, investment, productivity, innovation, or on the ability of United States-based enterprises to compete with foreign-based enterprises in domestic or export markets.

Revised subparts L, M, and X cover surfaces and areas that are currently covered under the existing subparts L and M. OSHA has reorganized these subparts in order to construct a more logical ordering of its standards and to facilitate employers in finding the sections appropriate to their concerns.

Affected industries and population at risk. The entire construction industry would be affected by the changes to the existing subparts L and M in view of the extensive use of ladders and stairways in all sectors of the industry. In terms of the two-digit Standard Industrial Classification (SIC) codes, OSHA determined that the revision could potentially affect all firms in SIC 15 (Building Construction--General Contractors and Operative Builders), SIC 16 (Construction Other Than Building Construction--General Contractors), and SIC 17 (Construction--Special Trades Contractors). In 1987, there were approximately 540,000 establishments affected by subparts L and M. The majority of business firms classified under SIC 17 are subcontractors to the general contractors classified under SICs 15 and 16. Rather than classifying these sectors by their two-digit SIC designations, OSHA used the type of finished construction product as the basis for classifying the construction industry into the following four general sectors:

1. Single-family housing,

2. Other residential, (e.g., hotels, apartments),

3. Nonresidential (e.g., commercial and institutional buildings), and

4. Heavy construction (e.g., bridges, utilities).

OSHA estimated that all of the approximately 4.5 million construction workers frequently work on ladders and stairways.

Significance of risk. On the basis of data from the Supplementary Data System (SDS) and Occupational Injury and Illness (OII) reports from the Bureau of Labor Statistics (BLS), OSHA estimates that the annual number of injuries in construction due to falls from ladders and stairways would be 208,260.

In addition, there are approximately 36 fatalities associated with falls from ladders and stairways in construction each year.

Consequently, OSHA concludes that the construction injuries and fatalities due to falls from ladders and stairways present a significant hazard which should be reduced.

Feasibility. OSHA determined that compliance with the revised subpart X will be technologically feasible because it requires the use of readily available technology and equipment, such as sufficiently strong stair rails and ladders.

Benefits. Benefits from this revision to the standard would accrue to those workers who are at risk from hazards associated with practices involving ladders and stairways in the construction industry. OSHA estimates that full compliance with the revised standard would prevent approximately 24 fatalities, 18,757 injuries (of which 8,722 would have been lost workday injuries and 10,035 would have been non-lost workday injuries), and 156,996 lost workdays (see table A). OSHA also determined that full compliance with the existing standard would prevent 21 fatalities, 17,800 injuries (of which 8,277 would have been lost workday injuries and 9,523 would have been non-lost workday injuries), and 148,986 lost workdays. Under conditions of full compliance, therefore, the revised standard would be more protective than the existing standard as three more fatalities would be prevented, 957 more injuries would be prevented (including 445 lost workday injuries and 512 non-lost workday injuries), and 8,010 fewer workdays would be lost.

Table A -- Fatalities and Injuries Preventable by Full Compliance
With the Revised and Existing Standards

Nature of accident Number of accidents prevented
Difference Revised standard Existing standard
Fatalities 24 21 3
Injuries: Lost workday 8,722 8,277 445
Non-lost workday 10,035 9,523 512
Total 18,757 17,800 957
Lost workdays 156,996 148,986 8,010

Source: U.S. Department of Labor, OSHA, Office of Regulatory Analysis.

The prevention of accidents involves significant nonmonetizable benefits (such as the avoidance of pain and suffering) but also involves substantial monetizable benefits to workers, industry, and society.

Using a willingness-to-pay methodology, the benefits of injuries prevented by the revised standard would be $265 million annually. In addition, approximately 24 fatalities per year would be prevented.

Another measure of the benefits of the reduction of accidents is the savings to industry of Workers' Compensation payments. Full compliance with the revised standard could substantially reduce compensation payments, which cover medical costs and part of lost wages; accidents also cause significant costs to industry through lost productivity, administrative costs, and new hiring and training costs.

Full compliance with the revised standard would prevent approximately 3 fatalities and 957 injuries more than would be prevented by full compliance with the existing standard. The corresponding monetizable annual benefits (not including the lives saved) would be from $6 million to $14 million more than those under the existing standard.

Costs. Using the baseline of current industry practice, OSHA estimated that the total costs of full compliance with the revised standard would be $27.61 million annually, and that the annual costs of full compliance with the existing standard would be $20.11 million.

Thus, the incremental cost increase in going from full compliance with the existing provisions to full compliance with the revised subpart X would amount to $7.50 million, which is attributable to additional labor time associated with increased training and the use of safe work practices. Table B shows the costs of the revised and existing standards by construction sector.

Cost Effectiveness

Full compliance with the revised standard would provide a safer construction work environment but at a higher cost than that provided by full compliance with the existing standard. After carefully evaluating both regulatory and nonregulatory alternatives, OSHA has concluded that the revised subpart X standard is the more cost-effective alternative. The revised subpart X standard will increase the number of lives saved and injuries prevented without unnecessarily burdening industry. As a result, the potential annual monetizable benefits to society may be over $200 million.

OSHA also believes that overall compliance with the provisions of the revised standard is likely to be greater than it has been under the existing standard. This is due to the performance-oriented requirements which increase the flexibility of compliance, and to the training requirements which increase awareness of hazards and compliance with safe work practice requirements. The reorganization and clarification of requirements is also expected to contribute to improved compliance levels.

Table B -- Comparison of Costs of Compliance With the Revised Subpart X and With the Existing Subparts L and M by Construction Sector Baseline: Current

Industry Practice
[Dollar amounts in millions]
Sector
Costs of compliance
Net increase for revised standard
Revised subpart X Existing subparts L and M
Single-family housing 6.98 5.08 1.90
Other residential 4.76 3.47 1.29
Nonresidential 9.74 7.09 2.65
Heavy 6.13 4.47 1.66
Total 27.61 20.11 7.50

Source: U.S. Department of Labor, OSHA, Office of Regulatory Analysis.

Regulatory flexibility certification. Pursuant to the Regulatory Flexibility Act (Pub. L. 96-353, 84 Stat, 1164 [5 U.S.C. 60 et seq.]), OSHA has made an assessment of the impact of the revised standard and has concluded that it would not have a significant impact upon a substantial number of small entities. The important criterion that governs a Regulatory Flexibility Analysis is whether the revised standard would impose significant costs upon small entities. "Significance" is determined by the impact upon profits, market share, and on the entities' financial viability. In particular, the revised standards' effect upon small entities relative to its effect upon large entities needs to be specifically evaluated. That is, OSHA must determine whether the revision will have a relatively greater negative effect on small entities than upon large entities, thereby putting small entities at a competitive disadvantage, and if so, whether there are ways to minimize any differentially adverse effects without increasing worker risk.

If the costs of compliance for small firms are relatively minor and are proportional to the size of the firm, then there is no significant differential effect. In those cases involving larger absolute costs, small firms may have greater difficulty in obtaining financing, and in those cases involving economies of scale in compliance, the burden on small firms will be greater than the burden on large firms. The revised subpart X, however, requires minimal capital expenditures. The costs of compliance primarily depend upon the amount of ladder use and stairway footage, which typically depend upon the scale of operation of the entity. In addition, these costs would be a minimal component of the overall costs of the facilities. As a result, small entities would not be put at a competitive disadvantage due to these compliance costs. Thus, OSHA concluded that this revised standard will not have a significant adverse impact upon a substantial number of small entities.


Regulations (Preambles to Final Rules) - Table of Contents Regulations (Preambles to Final Rules) - Table of Contents