Regulations (Preambles to Final Rules) - Table of Contents Regulations (Preambles to Final Rules) - Table of Contents
• Record Type: Occupational Exposure to 1,3-Butadiene
• Section: 8
• Title: Section 8 - VIII. Summary of the Final Economic Analysis

VIII. Summary of the Final Economic Analysis

As required by Executive Order 12866 and the Regulatory Flexibility Act of 1980 (as amended 1996), OSHA has prepared a Final Economic Analysis to accompany the final standard for occupational exposure to 1,3-butadiene (BD). (The entire analysis, with supporting appendix material, has been placed in the BD rulemaking docket. See Exhibit 137.) The purpose of the final economic analysis is to:

* Describe the need for a standard governing occupational exposure to 1,3-butadiene;

* Identify the establishments and industries potentially affected by the standard;

* Evaluate the costs, benefits, economic impacts and small business impacts of the standard on affected firms;

* Assess the technological and economic feasibility of the standard for affected establishments, industries, and small businesses; and

* Evaluate the availability of effective non-regulatory approaches to the problem of occupational exposure to 1,3-butadiene.

Need for the Standard

OSHA's final BD standard covers occupational exposures to this substance, a high-volume chemical used principally as a monomer in the manufacture of a wide range of synthetic rubber and plastic polymers and copolymers. In all, about 9,700 employees are estimated to be exposed to BD. However, for 2,100 of these employees in the petroleum refining industry, BD exposures are below the action level. The largest group of exposed workers is found in the BD end-product industry. Other BD operations in which workers are exposed are crude BD production, BD monomer production, and transportation terminals handling BD monomers (stand-alone terminals).

There is strong evidence that workplace exposure to BD poses an increased risk of cancer. Animal bioassays have shown BD to be a source of significant risk for tumors at multiple sites (i.e. lung tumors, heart hemangiosarcomas, lymphomas and ovarian tumors). BD may also potentially cause both male and female reproductive effects. To protect all BD-exposed workers from these adverse health effects, the final standard lowers the airborne concentration of BD to which workers may be exposed from the current permissible exposure limit (PEL) of 1,000 ppm as an 8-hour time-weighted average (8-hour TWA) to 1 ppm, and adds a short term exposure limit (STEL) of 5 ppm, measured over 15 minutes. (For a detailed discussion of the risks posed to workers from exposure to BD, see the Quantitative Risk Assessment and Significance of Risk sections of the preamble, above.) OSHA's final BD standard is similar in format and content to other health standards issued under Section 6 (b)(5) of the Act. In addition to PELs, the standard requires employers to monitor the exposures of workers; establish regulated areas when exposures may exceed one of these PELs; implement engineering and work practice controls to reduce employee exposures to BD; develop an exposure goal program; provide respiratory protection to supplement engineering controls where such controls are not feasible, are insufficient to meet the PELs, are necessary for short infrequent jobs, or in emergencies; provide medical screening; train workers about the hazards of BD (also required by OSHA's Hazard Communication Standard); and keep records relating to the BD standard. Recognizing that workers exposed to BD are at significant risk, an industry-labor working group joined together to develop joint recommendations for the final standard for BD. This group's recommendations form the basis for OSHA's final rule. The contents of the standard are explained briefly in Chapter I of the final economic analysis and in detail in the Summary and Explanation (Section X of the preamble, below).

Chapter II of the economic analysis describes the uses of BD and the industries in which such use occurs. Exposure to 1,3-butadiene occurs as a result of exposure to the monomer. Once BD is in polymer form, the exposure is minimal to non-existent. In all, OSHA analyzed 5 types of processes in which BD exposure occurs: crude BD production, where the feedstock for BD monomer is produced; BD monomer production, in which BD is refined from crude BD to a 99 percent pure monomer; BD product manufacture, where BD monomer is converted to various polymer products; stand-alone terminals, which receive, store and distribute BD monomer; and petroleum refineries, where BD may occur as an unwanted byproduct in some types of refining units. Table VIII-1 shows these industry operations and the number of workers affected by the final rule. A total of 255 facilities are estimated to be potentially affected by the standard. These establishments employ 9,700 workers who are estimated to be exposed to BD in the course of their work. The industry operation with the largest number of directly exposed employees is BD product manufacture, which has 6,500 exposed employees (over two-thirds of the total).


TABLE VIII-1.--INDUSTRY OPERATIONS AND NUMBER OF WORKERS AFFECTED BY
                        THE FINAL RULE FOR 1,3-BUTADIENE
_________________________________________________________________________
                                          |             |
                                          |             |  Number of
                                          | Number of   | facilities
                                          |  affected   | in industry
                                          |  workers    |     (a)
__________________________________________|_____________|_______________
Crude 1,3-Butadiene Production............|          540|           27
1,3-Butadiene Monomer Production..........|          552|           12
1,3-Butadiene Polymer Product Manufacture.|        6,461|        (c)71
Standard-Alone Terminals..................|           50|            5
                                          |_____________|_______________
    Subtotal..............................|        7,603|          115
                                          |_____________|_______________
Petroleum Refining Sector.................|     (b)2,100|          140
                                          |_____________|_______________
    Total.................................|        9,703|          255
__________________________________________|_____________|_______________
  Source: U.S. Department of Labor, OSHA, Office of Regulatory
Analysis, 1996.
  Footnote(a) Some facilities may fall under several industry sectors.
For example, 9 monomer facilities are also crude producing facilities.
  Footnote(b) Potential exposures to 1,3-butadiene are low and of
extremely short duration in refining.
  Footnote(c) Represents number of processes and not necessarily
plants.

Chapter III of the analysis assesses the technological feasibility of the final standard's requirements, and particularly its PELs, for firms in the 5 industry operations with employee exposure identified in the Industry Profile. OSHA finds, based on an analysis of exposure data taken on workers performing the BD-related tasks identified for each operation, that compliance with the standard is technologically feasible for establishments in the industries studied. With few exceptions, employers will be able to achieve compliance with both PELs through the use of engineering controls and work practices. The few exceptions are maintenance activities, such as vessel cleaning, which have traditionally often involved the use of respiratory protection.

The exposure data relied on by OSHA in making its technological feasibility determinations were gathered by NIOSH in a series of site visits to plants in the affected industries. These data show that many facilities in the affected industries have already achieved the reductions in employee exposures required by the final rule. At least some workers in every job category work in facilities that have already achieved the PEL requirements. OSHA's analysis of technological feasibility evaluates employee exposures at the operation or task level to the extent that such data are available. In other words, the analysis identifies relevant exposure data on a job category-by-job category basis to permit the Agency to pinpoint those BD-exposed workers and job operations that are not yet under good process control and will thus need additional controls (including improved housekeeping, maintenance procedures, and employee work practices) to achieve compliance. Costs are then developed (in Chapter V of the economic analysis) for the improved controls needed to reach the new levels.

The benefits that will accrue to BD-exposed employees and their employers, and thus to society at large, are substantial and take a number of forms. Chapter IV of the analysis describes these benefits, both in quantitative and qualitative form. At the current baseline exposure levels to BD, the risk model estimates that 76 cancer deaths will be averted over a 45-year period. By reducing the total number of BD-related cancer deaths from 76 deaths to 17 deaths over 45 years, the standard is projected to save an average of 1.3 cancer deaths per year. Table VIII-2 shows these risk estimates. In addition to cancer deaths, the standard may prevent male and female reproductive effects.


      TABLE VIII-2.--WORKER EXPOSURE TO BD AND LUNG CANCER RISK
          OVER 45 YEARS AT CURRENT EXPOSURE LEVELS AND LEVELS
                    EXPECTED UNDER THE STANDARD

____________________________________________________________________
                             |  8-hour time weighted average (ppm)
                             |______________________________________
                             |  0-0.5 | 0.5-1.0 |   1   |  1.0-2.0 |
_____________________________|________|_________|_______|__________|
Lifetime Excess Cancer Risk  |        |         |       |          |
  (per thousand workers)(a)..|   2.05 |   6.1   |  8.1  |   12.15  |
Baseline Number of Workers   |        |         |       |          |
  Exposed....................|   5697 |   354   |  156  |     598  |
Estimated Excess Deaths in   |        |         |       |          |
  Baseline (Existing PEL)(b).|     12 |     2   |    1  |       7  |
Predicted Number of Workers  |        |         |       |          |
  Exposed at New PEL.........|   7177 |   426   |    0  |       0  |
Predicted Excess Deaths      |        |         |       |          |
  at New PEL(b)..............|     14 |     3   |    0  |       0  |
_____________________________|________|_________|_______|__________|

___________________________________________________________________
                             |  8-hour time weighted average (ppm) |
                             |_____________________________________|
                             | 2.0-5.0| 5.0-10.0| 10+(c)|  Total   |
_____________________________|________|_________|_______|__________|
Lifetime Excess Cancer Risk  |        |         |       |          |
  (per thousand workers)(a)..|   28.1 |    60   |  480  | ........ |
Baseline Number of Workers   |        |         |       |          |
  Exposed....................|   320  |   440   |   38  |   7603   |
Estimated Excess Deaths in   |        |         |       |          |
  Baseline (Existing PEL)(b).|     9  |    27   |   18  |     76   |
Predicted Number of Workers  |        |         |       |          |
  Exposed at New PEL.........|     0  |     0   |    0  |   7603   |
Predicted Excess Deaths at   |        |         |       |          |
  New PEL(b).................|     0  |     0   |    0  |     17   |
_____________________________|________|_________|_______|__________|
  Footnote(a) Based on OSHA 1-stage Weibull time-to-tumor model for
lung tumors.
  Footnote(b) Computed as level of lifetime risk times the number of
exposed workers.
  Footnote(c) Based on a median exposure for these workers of 60 ppm.
  Source: Office of Regulatory Analysis, OSHA; Department of Labor.

The costs employers in the affected industries are estimated to incur to comply with the standard total $2.9 million in 1996 dollars. These costs, which are presented in Chapter V, the full economic analysis, are annualized over a 10-year horizon at a discount rate of 7 percent. Table VIII-3 shows annualized costs by provision of the standard; the most costly provisions are those requiring engineering controls ($1.6 million per year) and respiratory protection ($0.7 million per year). Table VIII-4 analyzes compliance costs by operation and shows that BD products manufacture will incur over two-thirds of the standard's costs of compliance.


TABLE VIII-3.--ANNUAL COSTS OF THE FINAL BUTADIENE STANDARD, BY
                                PROVISION
______________________________________________________________________
                                                         |  Annualized
                         Provision                       |    costs
_________________________________________________________|____________
Engineering Controls.....................................|  $1,551,000
Exposure Goal Program....................................|     104,000
Respirators..............................................|     685,000
Exposure Monitoring......................................|     364,000
Objective Data...........................................|       3,000
Medical Surveillance.....................................|      72,000
Leak and Spill Detection.................................|      27,000
Regulated Areas..........................................|       4,000
Information and Training.................................|      12,000
Recordkeeping............................................|      29,000
                                                         |  __________
  Total..................................................|   2,851,000
_________________________________________________________|_____________

TABLE VIII-4.--ANNUAL COSTS OF THE FINAL BUTADIENE STANDARD, BY
                            INDUSTRY SECTOR
______________________________________________________________________
                                                         |  Annualized
                      Industry sector                    |    costs
_________________________________________________________|____________
Crude Production.........................................|    $333,000
Monomer..................................................|     210,000
BD Products..............................................|   2,252,000
Stand-Alone Terminals....................................|      53,000
Petroleum Refining.......................................|       3,000
                                                         |  ___________
    Total................................................|   2,851,000
_________________________________________________________|_____________

Chapter VI of the economic analysis analyzes the impacts of compliance costs on firms in affected operations. The final rule is clearly economically feasible: annualized compliance costs are less than 0.5 percent of estimated sales in every industry and are less than 4 percent of profits in every industry (see Table VIII-5). Costs of this magnitude will not affect the viability even of marginal firms.



TABLE VIII-5.--ESTIMATED SALES AND PROFITS OF ESTABLISHMENTS AFFECTED
                    BY THE 1,3-BUTADIENE RULE

____________________________________________________________________
                                             |     |   Sales per   |
                                             |     |    average    |
                                             | SIC | establishment |
                                             |     |    ($000)     |
_____________________________________________|_____|_______________|
Crude 1,3-Butadiene Production...............| 2869|       $53,998 |
1,3-Butadiene Monomer Producion..............| 2869|        53,998 |
1,3-Butadiene Product Production             |     |               |
  --ABS Resins, Butadiene Copolymers         |     |               |
    (< 50% butadiene).........................| 2821|        38,000 |
  --Butadiene Copolymers (.50% butadiene),   |     |               |
    Neoprene, Nitrile Rubber, Chloroprene    |     |               |
    Rubbers, EPDM Polymers, Styrene-Butadiene|     |               |
    Rubber, (SBR Latex), Polybutadiene.......| 2822|        16,243 |
  --Adipontrile/Hexamethylene................| 2869|        53,998 |
  --Fungicides...............................| 2879|        42,694 |
Petroleum Refining...........................| 2911|       525,273 |
Stand-Alone Terminals........................| 4226|         2,400 |
_____________________________________________|_____|_______________|


____________________________________________________________________
                                             |  Pre-tax  |Annualized|
                                             |profit per |cost per  |
                                             |average es-|establish-|
                                             |tablishment|   ment   |
                                             |  in SIC   |          |
_____________________________________________|___________|__________|
Crude 1,3-Butadiene Production...............| $5,645,237|  $12,341 |
1,3-Butadiene Monomer Producion..............|  5,645,237|   17,502 |
1,3-Butadiene Product Production             |           |          |
  --ABS Resins, Butadiene Copolymers         |           |          |
    (< 50% butadiene).........................|  2,015,155|   31,724 |
  --Butadiene Copolymers (.50% butadiene),   |           |          |
    Neoprene, Nitrile Rubber, Chloroprene    |           |          |
    Rubbers, EPDM Polymers, Styrene-Butadiene|           |          |
    Rubber, (SBR Latex), Polybutadiene.......|  1,328,956|   31,724 |
  --Adipontrile/Hexamethylene................|  5,645,237|   31,724 |
  --Fungicides...............................|  1,681,885|   31,724 |
Petroleum Refining...........................| 19,100,851|       22 |
Stand-Alone Terminals........................|    287,273|   10,556 |
_____________________________________________|___________|__________|


____________________________________________________________________
                                             | Cost as   | Cost as  |
                                             |percentage |percentage|
                                             | of sales  | of profit|
_____________________________________________|___________|__________|
Crude 1,3-Butadiene Production...............|      0.02 |      0.22|
1,3-Butadiene Monomer Producion..............|      0.03 |      0.31|
1,3-Butadiene Product Production             |           |          |
  --ABS Resins, Butadiene Copolymers         |           |          |
    (< 50% butadiene).........................|      0.08 |      1.57|
  --Butadiene Copolymers (.50% butadiene),   |           |          |
    Neoprene, Nitrile Rubber, Chloroprene    |           |          |
    Rubbers, EPDM Polymers, Styrene-Butadiene|           |          |
    Rubber, (SBR Latex), Polybutadiene.......|      0.20 |      2.39|
  --Adipontrile/Hexamethylene................|      0.06 |      0.56|
  --Fungicides...............................|      0.07 |      1.89|
Petroleum Refining...........................| Negligible|Negligible|
Stand-Alone Terminals........................|      0.44 |      3.67|
_____________________________________________|___________|__________|
  Source: US Department of Labor, OSHA, Office of Regulatory Analysis,
1996. Negligible denotes less than 0.005 percent.

Under the Regulatory Flexibility Act, OSHA is required to determine whether its regulations have a significant impact on a substantial number of small entities. The small firm standards established by the U.S. Small Business Administration (SBA) for industries using 1,3-butadiene are as follows: 1,500 employees for firms in SIC 2911 (petroleum refining); 1,000 employees for firms in SICs 2869 (industrial organic chemicals, which includes BD crude and monomer producers) and 2822 (synthetic rubber); 750 employees for firms in SIC 2821 (plastic Table VIII-5 materials and resins); 500 employees for firms in SIC 2879 (agricultural chemicals, which includes some producers of BD products); and annual receipts of $18.5 million for firms in SIC 4226 (special warehousing and storage, which includes stand-alone terminals). Using these definitions, OSHA identified two small firms among crude BD producers, one small firm among monomer producers, 10 small firms among BD product manufacturers, and no small firms among stand-alone terminals. Because the ownership of one stand-alone terminal could not be identified, OSHA assumed that there would be one small stand-alone terminal. For each of these industries, OSHA estimated revenues and costs for small firms based on the average size of the small firms using BD. The typical petroleum refining establishment has fewer than 1,500 employees. However, because OSHA did not have data on the number of firms with fewer than 1,500 employees, the Agency relied on establishment data to examine possible impacts on small petroleum refineries.

Table VIII-6 presents the results of the regulatory flexibility screening analysis and shows estimated compliance costs and economic impacts relative to revenues and pre-tax income for affected small businesses at the four-digit SIC code level. This approach reflects extreme case impacts because the impacts on small firms are analyzed using average per-establishment compliance costs. As shown in the table, compliance costs as a percentage of industry revenues never reach one percent; they range from less than 0.005 percent to 0.44 percent for establishments in all affected industries. Estimates of compliance costs as a percentage of profits range from less than 0.005 percent to 3.67 percent. Such impacts are not large enough to be significant. In addition, the impacts reflected in the table are likely to be overestimated because Table VIII-6 they are based on extreme-case costs.



TABLE VIII-6.--ESTIMATED SALES AND PROFITS OF ESTABLISHMENTS AFFECTED
                     BY THE 1,3-BUTADIENE RULE

____________________________________________________________________
                           |     |                  | Average sales |
                           |     |  Definition of   |   per small   |
                           | SIC | small entity per | establishment |
                           |     |     the SBA      |  ($million)   |
___________________________|_____|__________________|_______________|
Crude 1,3-Butadiene        |     |                  |               |
  production...............| 2869|1,000 employees...|     51.30     |
1,3-Butadiene Monomer      |     |                  |               |
  production...............| 2869|1,000 employees...|     10.60     |
1,3-Butadiene product      |     |                  |               |
  production:              |     |                  |               |
  ABS Resins, Butadiene....| 2821|  750 employees...|     50.00     |
    Copolymers (< 50%       |     |                  |               |
    butadiene)             |     |                  |               |
  Butadiene Copolymers.....| 2822|1,000 employees...|     24.00     |
    (.50% butadiene),Neopr-|     |                  |               |
    ene, Nitrile Rubber,   |     |                  |               |
    Chloroprene Rubbers,   |     |                  |               |
    EPDM Polymers,         |     |                  |               |
    Styrene-Butadiene Rubb-|     |                  |               |
    er (SBR Latex),        |     |                  |               |
    Polybutadiene.         |     |                  |               |
  Adiponitrile/Hexamethyle-|     |                  |               |
    nediamine..............| 2869|1,000 employees...|     10.60     |
Fungicides.................| 2879|  500 employees...|     30.40     |
Petroleum refining.........| 2911|1,500 employees...|     45.80     |
Stand-alone terminals......| 4226|$18.5million (re- |      2.40     |
                           |     |  ceipts).        |               |
___________________________|_____|__________________|_______________|


_______________________________________________________________
                           |  Pre-tax profit  |   Annualized   |
                           |    per small     |    cost per    |
                           |  establishment   |  establishment |
                           |     in SIC       |                |
___________________________|__________________|________________|
Crude 1,3-Butadiene        |                  |                |
  production...............|    $5,363,182    |     $12,341    |
1,3-Butadiene Monomer      |                  |                |
  production...............|     1,108,182    |      17,502    |
1,3-Butadiene product      |                  |                |
  production:              |                  |                |
  ABS Resins, Butadiene....|     2,651,515    |      31,724    |
    Copolymers (< 50%       |                  |                |
    butadiene)             |                  |                |
  Butadiene Copolymers.....|     1,963,636    |      31,724    |
    (.50% butadiene),Neopr-|                  |                |
    ene, Nitrile Rubber,   |                  |                |
    Chloroprene Rubbers,   |                  |                |
    EPDM Polymers,         |                  |                |
    Styrene-Butadiene Rubb-|                  |                |
    er(SBR Latex), Polybut-|                  |                |
    adiene.                |                  |                |
  Adiponitrile/Hexamethyle-|                  |                |
    nediamine..............|     1,108,182    |      31,724    |
Fungicides.................|     1,197,578    |      31,724    |
Petroleum refining.........|     1,655,455    |          22    |
Stand-alone terminals......|       287,273    |      10,556    |
___________________________|__________________|________________|


____________________________________________________________________
                           | Cost as perentage | Cost as percentage |
                           |     of sales      |     of profit      |
___________________________|___________________|____________________|
Crude 1,3-Butadiene        |                   |                    |
  production...............|       0.02        |        0.23        |
1,3-Butadiene Monomer      |                   |                    |
  production...............|       0.17        |        1.58        |
1,3-Butadiene product      |                   |                    |
  production:              |                   |                    |
  ABS Resins, Butadiene....|       0.06        |        1.20        |
    Copolymers (< 50%       |                   |                    |
    butadiene)             |                   |                    |
  Butadiene Copolymers.....|       0.13        |        1.62        |
    (.50% butadiene),Neopr-|                   |                    |
    ene, Nitrile Rubber,   |                   |                    |
    Chloroprene Rubbers,   |                   |                    |
    EPDM Polymers,         |                   |                    |
    Styrene-Butadiene Rubb-|                   |                    |
    er(SBR Latex), Polybut-|                   |                    |
    adiene.                |                   |                    |
  Adiponitrile/Hexamethyle-|                   |                    |
    nediamine..............|       0.30        |        2.86        |
Fungicides.................|       0.10        |        2.65        |
Petroleum refining.........|    Negligible     |     Negligible     |
Stand-alone terminals......|       0.44        |        3.67        |
___________________________|___________________|____________________|
  Source: US Department of Labor, OSHA, Office of Regulatory Analysis,
1996. Negligible denotes less than 0.005 percent.


Thus, because this standard will not have a significant impact either on the smallest establishments (as defined by the SBA) or on the typical establishment in this industry, OSHA certifies that this final standard will not have a significant economic impact on a substantial number of small entities.

OSHA also examined the impact of this standard on increased expenditures by State, local or tribal governments. OSHA found that none of the affected employers were State, local, or tribal governments. Further, since the total costs of the standard are $2.8 million, the stand will not increase expenditures for the private sector by more than $100 million. As a result, OSHA certifies that, for the purposes of the Unfunded Mandates Reform Act of 1995, as well as E.O. 12875, this rule does not include any federal mandate that may result in increased expenditures by State, local and tribal governments, or increased expenditures by the private sector of more than $100 million.


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