Regulations (Preambles to Final Rules) - Table of Contents|
| Record Type:||Occupational Exposure to Asbestos|
| Title:||Section 4 - IV. Final Regulatory Impact and Regulatory Flexibility Analysis|
IV. Final Regulatory Impact and Regulatory Flexibility Analysis
In this final revision to the asbestos standard for construction, general industry and shipyards, OSHA is lowering the permissible exposure limit in all affected industry sectors to 0.1 f/cc as an 8-hour time-weighted average. In addition, OSHA is revising ancillary requirements in the current standard to respond to three issues remanded to the Agency by the Court. These issues involved expanded competent person training, clarification of the definition for small-scale, short-duration construction projects, and reporting and transfer requirements in construction. Also, permissible controls in brake and clutch operations are addressed in a revision to the standard for general industry.
Executive Order 12866 requires that a regulatory impact analysis be prepared for any regulation that meets the criteria for a "significant regulatory action." Among these criteria, relevant to this rulemaking is the requirement that the rule have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities.
Consistent with these requirements, OSHA has made a determination that the final revised standard will constitute a significant regulatory action. Accordingly, OSHA has prepared this Final Regulatory Impact and Regulatory Flexibility Analysis to demonstrate the technological and economic feasibility of the final revision.
B. Industry Profile
Characteristics and Properties of Asbestos
Asbestos is the generic term applied to a group of naturally-occurring, fibrous silicates characterized by high tensile strength,(1) flexibility, and resistance to thermal, chemical, and electrical conditions. According to the Bureau of Mines, a number of silicates occur naturally in fibrous form, however, not all of these mineral forms are labeled asbestos. Historically, only minerals with (1) commercial importance (2) a crystalline structure with fiber growth along two planes (i.e., lengthwise) and (3) sufficient fiber growth such that the fibers can be identified, separated, and processed, are given the name asbestos [Campbell, 1977].
__________ Footnote(1) Tensile strength is defined as the resistance of a material to a force tending to tear it apart.
Asbestos silicates are divided into two mineral groups: serpentine and amphiboles. Both groups are widely distributed in the earth's crust in many igneous and metamorphic rocks. In rare instances, these mineral deposits contain sufficient quantities of usable asbestiform minerals rendering it profitable to mine for commercial asbestos. Some types of commercial asbestos have the properties of softness, silkiness and flexibility that, among other uses, permits them to be spun into thread from which cloth can be woven. This variety, found in the serpentine group and given the name chrysotile, is by far the most abundant of the asbestos minerals, comprising over 90 percent of world production. Five other commercial varieties -- riebeckite (crocidolite), grunerite (amosite), anthophyllite, tremolite, and actinolite -- belong to the amphibole group and, unlike the serpentines, are characterized by hard and brittle fibers. Chrysotile, amosite, and crocidolite all have extremely high tensile strengths and have been used extensively as reinforcers in cements, resins, and plastics.
Asbestos Production, Consumption, and Use
In the production process, asbestos ore is mined and then milled to achieve a homogeneous, graded input. Raw asbestos is shipped to primary industries to be processed into intermediate or finished products. For some goods, secondary manufacturing may be necessary to complete the production process. The finished product is then sold to construction/ consumer industries for application, installation or erection without further modification.
Domestically used asbestos fibers are technically classified into seven quality categories, or grades, with the longer, higher-strength fibers given lower-numbered grade levels.
Table 1 presents the 1992 distribution of asbestos consumption in the United States, by end use, type and grade. Historically, Grades 1, 2 and 3 were used for relatively refined uses such as textiles, electrical insulation, and pharmaceutical and beverage filters. With the introduction of ceramic fibers, fibrous glass, cellulose fibers and other substitutes, use of asbestos in these and other products has declined in recent years. As Table 1 shows, U.S. consumption of chrysotile asbestos is concentrated in Grade 7, whose shorter, lower-strength fibers are used as reinforcers in coatings and compounds, clutch facings and brake linings (friction products), packing and gaskets, and roofing products.
Table 1. -- U.S. Asbestos Consumption By End Use, Type and Grade
(For Table 1, Click Here)
Total U.S. asbestos consumption declined 6 percent in 1992 from a level of roughly 35 thousand metric tons(2) a year earlier. Of the 32.8 thousand metric tons used in final products in 1992, 31.6 thousand metric tons were imported, at a value of $7.2 million dollars (not shown in table). World production in 1992 was an estimated 3.1 million metric tons [Bureau of Mines, 1993, Table 1].
__________ Footnote(2) According to the Bureau of Mines, 1991 apparent consumption of asbestos in the United States was 34,765 metric tons [Bureau of Mines, 1993, Table 1]. Total consumption shown in table 1, taken from another Bureau of Mines table, differs from the first estimate by roughly 800 metric tons. The difference may be partly accounted for by the exclusion of the "Other" category from 1991 total in Table 1.
In July 1989, the Environmental Protection Agency issued a final rule under section 6 of the Toxic Substances Control Act to prohibit the future manufacture, importation, processing, and distribution of asbestos in almost all products. The Asbestos Ban and Phaseout Rule (40 CFR 763.160) was scheduled to eliminate asbestos in most commercial products in three stages over seven years beginning in 1990 and ending in 1996. EPA's asbestos rule was challenged in U.S. court by the asbestos industry. In October 1991, the U.S. Fifth Circuit Court of Appeals vacated and remanded most of the ban and phaseout rule to EPA. As a result of the Court decision, most asbestos products are no longer subject to the ban and phaseout rule. The Court chose to let stand EPA's authority to ban products that no longer are being produced in or imported into the United States.
Consumption of asbestos products in the United States has declined in recent years due to technological, regulatory and economic factors. U.S. manufacturers have modified product design to either (1) accommodate the use of asbestos substitutes or (2) eliminate the need for fibrous materials altogether. Examples of asbestos substitutes include aramid fiber, carbon fiber, cellulose fiber, ceramic fiber, fibrous glass, organic fiber, steel fibers, and wollastonite. The following products have been successfully introduced as alternatives to asbestos: aluminum, vinyl and wood siding; aluminum and fiberglass sheet; asphalt coatings; ductile iron pipe; polyvinylchloride pipe; prestressed and reinforced concrete pipe; and semimetallic brakes. Although the introduction of asbestos substitutes and alternatives enables manufacturers to avoid contact with asbestos, many of these surrogates pose occupational health hazards of varying degrees.
Despite the decline in U.S. consumption of asbestos, foreign markets continue to demand U.S. asbestos products. The export and re-export of asbestos fibers and asbestos products from the United States was valued at $140.8 million in 1992, an increase of 14 percent from the 1991 level. Leading importers of American asbestos materials were Canada, Japan, Mexico, the United Kingdom, and Germany. At the same time, three members of the European Community -- Germany, the Netherlands, and Italy -- are taking legislative steps to ban the use of asbestos. Effective dates for the ban initiatives ranged from July 1993 to 1995. In addition, Finland and Poland are phasing out the importation and use of asbestos [Canadian Mineral Yearbook, 1993, p. 10.4].
Asbestos Exposure in General Industry
OSHA has determined that the following general industry groups will be affected by the revision to the asbestos standard: primary manufacture of asbestos friction materials (SIC 3292); primary manufacture of asbestos gaskets and packings (SIC 3053); primary manufacture of asbestos adhesives, sealants, and coatings (SIC 2952); primary manufacture of asbestos-reinforced plastics (SIC 3089); general automotive repair (SICs 551, 554 and 753) and shipbuilding and repair (SIC 3731).
In addition, secondary gaskets and packings and secondary auto remanufacturing fall under the scope of the revised standard. However, few impacts, if any, are anticipated for these industry groups due to their low current exposure levels (below the revised PEL of 0.1 f/cc).
"Primary Manufacturing." Primary manufacturers use asbestos fiber as a raw material in the production of an intermediate product to be further processed or fabricated into a finished product. As shown in Table 2, two processes -- fiber introduction and product finishing/dry mechanical -- are common to all primary manufacturing operations and, according to risk profiles in earlier reports [RTI, 1985; ICF, 1988], have a high potential for generating airborne asbestos fiber.
Table 2. -- Estimated Population at Risk From Occupational Exposure to Asbestos Repair, and Ship Repair [By industry/process] __________________________________________________________________________ | | Number | Number | Number | | of | of | of | Process | affect- | workers | full-time- Sector | group | ed es- | ex- | equivalent | | tablish-| posed | exposed | | ments | | workers(a) ________________________|________________|_________|_________|_______________ | | | | General Industry | | | | | | | | Primary manufacturing: | | | | Friction materials....| All............| 25 | 1,415 | 1,415 | Introduction...| | 323 | 323 | Wet Mechanical.| | 390 | 390 | Dry Mechanical.| | 389 | 389 | Other..........| | 314 | 313 Gaskets and packings..| All............| 9 | 168 | 168 | Introduction...| | 63 | 63 | Wet Mechanical.| | 23 | 23 | Dry Mechanical.| | 39 | 39 | Other..........| | 43 | 43 Coatings and sealants.| All............| 75 | 1,181 | 1,181 | Introduction...| | 803 | 803 | Other..........| | 378 | 378 Plastics..............| All............| 1 | 18 | 18 | Introduction...| | 4 | 4 | Wet Mechanical.| | 1 | 1 | Dry Mechanical.| | 2 | 2 | Other..........| | 11 | 11 Secondary manufacturing:| | | | Gaskets and packings..| Dry Mechanical.| 71 | 2,142 | 2,142 Auto remanufacturing..| Dry Mechanical.| 62 | 1,761 | 1,761 Services: | | | | Automotive repair.....| Dry Mechanical.| 329,000 | 676,000 | 126,750 | | | | Shipyards | | | | | | | | Ship repair.............| All............| 18 | 985 | 241 | Wet Removal/ | | | | Repair........| | 788 | 193 | Dry Removal/ | | | | Repair........| | 197 | 48 | |_________|_________|__________ Total...............| .............. | 329,261 | 683,670 | 133,676 ________________________|________________|_________|_________|__________ Sources: U.S. Dept. of Labor, OSHA, Office of Regulatory Analysis, based on CONSAD, 1990, and OSHA, 1994 Footnote(a) Totals in this column show the number of full-time-equivalent workers exposed to asbestos at any level.
"Friction materials." Asbestos friction products include brake linings (i.e. linings for drum brakes, disc pads for disc brakes, and brake blocks), clutch facings, and industrial linings for equipment and appliances. Based on EPA survey data [ICF, 1988] and discussion with industry experts, OSHA and CONSAD estimate that 25 plants, employing a total of 1,415 workers, currently manufacture primary friction materials [CONSAD, 1990; OSHA, 1994].
"Gaskets and packings." Asbestos gaskets are used in static situations to avoid leakage, whereas asbestos packings are used in dynamic applications, such as pumps and valves, to control leakage where motion takes place. According to OSHA and CONSAD's profile of the industry, 130 production workers in 7 establishments are exposed to asbestos.
"Coatings and sealants." Asbestos fiber is used as a filler and reinforcer in asphalt and tar-based surface coatings. These products are then used as roof sealants, waterproofing coatings, automobile undercoatings, protective coatings for underground pipelines, anti-condensation coatings for low-temperature refrigeration services and fireproofing for structural steel. OSHA estimates that 1,181 production workers in 75 coatings and sealants plants are affected by the revised standard.
"Primary manufacture of plastics." Asbestos-reinforced plastic molding compounds are used in the electronic, automotive, and printing industries. Primary manufacturers of asbestos-reinforced plastics produce molding compounds in pellet or flake form. These plastics are used in commutators and rotors in electrical and automotive applications. Based on OSHA and CONSAD's industry profile [CONSAD, 1990; OSHA, 1994], OSHA projects that one plastics plant, employing eighteen workers, will be affected by the revised standard.
"Automotive repair." The general automotive repair and service sector includes establishments involved in brake and clutch repair work and maintenance. The major source of asbestos exposure in this sector occurs when compressed air is used for blowing the residual dust from the brake lining assembly. In addition, minor exposures in brake repair can occur during spray applications and when handling cloths and other supplies contaminated with asbestos fibers. Replacement of clutch assemblies can also lead to fiber release. CONSAD estimates that approximately 329,000 automobile repair shops and garages, brake and clutch repair establishments, and motor vehicle dealers, employing 676,000 workers, will be affected by the revision to the asbestos standard. OSHA is mandating specific engineering controls and work practices that will affect this sector.
"Shipbuilding and repairing -- historical contact with asbestos in shipyard work." The revision to the shipyard asbestos standard affects the shipbuilding and repairing industry, SIC 3731. Shipbuilding and repairing is a large-scale manufacturing activity that requires both skilled and unskilled labor. Shipyard work can be categorized into three main operations: (1) ship construction, (2) ship repair, and (3) ship overhaul. Asbestos exposure occurs during those conversion, repair, or overhaul operations where asbestos-containing components are removed or repaired.
Asbestos products were used extensively on American ships from the early 1940s through the late 1970s in joiner bulkhead systems in living space; for insulation of steam and hot water pipes, boilers, and tanks in machinery space; in ceiling tile; and in fire-resistant sheets in bulkheads [RTI, 1985]. However, after 1973, new specifications reduced the use of asbestos on ships regulated by the Maritime Administration (MARAD). Use of asbestos was only permitted in insulation cement in lagging for machinery casings and in lagging cloth.
Since 1978, specifications for government-subsidized ships have required the elimination of all asbestos lagging and insulation materials. Therefore, current ship building activities ordinarily do not generate any worker exposure to asbestos. However, OSHA believes that all ships delivered before 1975 contain extensive asbestos insulation materials, and that ships delivered between 1975 and 1978 contain asbestos in the form of insulating cement on machinery casings. Potential asbestos exposures occur when workers contact these materials during maintenance and repair activities [OSHA, 1986].
"Occupational exposure to asbestos." The greatest potential for occupational exposure to asbestos occurs during removal activities due to sawing, tearing, cutting, and scraping operations. Additional sources of asbestos exposure, involving a small number of shipyard workers, occur during repair activities such as removal and installation of gaskets [OSHA, 1986]. Whenever possible, asbestos is thoroughly wetted during removal activities. However, wet removal in nuclear reactor compartments is not permitted because of possible radiation contamination.
Shipyards are owned by both the private sector and the U.S. Navy. Private sector shipyards can be classified into three categories: (1) major shipyards engaged in construction and/or repair with drydocking facilities; (2) smaller "second-tier" shipyards that service inland waterways and coastal commerce and that build and repair smaller vessels; and (3) "topside" repair facilities that work on ships while they remain in the water.
The number of reported firms in SIC 3731, Ship Building and Repairing, has differed in recent years among traditional data sources. Many "firms" classified within the industry are very small, perform shipyard work only intermittently, or are marginal firms with short tenure. The 1987 Census of Manufactures included 590 shipyards (287 with twenty or more employees) operated by 547 companies [Dept. of Commerce, 1990a]. The Commerce Department's 1993 Industrial Outlook estimates a total of 585 establishments [U.S. Industrial Outlook, 1993]. However, in 1987, the Commission on Merchant Marine and Defense reported the existence of only 305 "working" shipyards [Merchant Marine Commission, 1987]. In their 1991 Report on Survey of U.S. Shipbuilding and Repair Facilities, the Maritime Administration reported that "over 200 privately-owned firms are involved in repairing ships in the United States" [Dept. of Transportation, 1991]. In addition to the private-sector shipyards, there are currently eight Navy-owned shipyards and two Navy-owned ship repair facilities [U.S. Industrial Outlook, 1993].
Employment in the shipbuilding and repair industry -- as high as 184,000 in 1981 -- was 118,000 in October 1992 according to the Bureau of Labor Statistics [BLS, 1993]. Employment has also declined in government-owned shipyards. In 1990 the five largest firms employed 81,000 workers while the 12 largest firms (all with at least 1,000 workers) employed 98,000 workers [Dept. of Transportation, 1990].
The largest percentage of asbestos work is performed in major shipyards [OSHA, 1991 (Ocken, p. 395)]. OSHA and CONSAD identified a range of 13 to 23 major shipyards as potentially affected by the revision to the asbestos standard [OSHA, 1994]. These establishments employ approximately 74,000 to 80,500 workers, of which an estimated three percent, or 2,220 to 2,415 workers, perform maintenance and repair activities [RTI, 1985; OSHA, 1994].
- As shown in Table 2, OSHA analyzed impacts in two areas of ship repair:
wet removal/repair and dry removal/repair. Dry removal and repair occur in ship compartments, such as in nuclear powered vessels, where wet methods are infeasible. Based on OSHA and CONSAD's profile of the ship repair industry, OSHA estimates that 18 shipyards, employing 985 workers, are affected by the revised standard.
"Market conditions in the shipbuilding industry." During the 1980s, the shipbuilding industry experienced a sharp decline in output due to (1) competition from subsidized foreign shipbuilders; (2) decreased demand for new ships caused by excess supply; (3) the elimination of some subsidies for U.S. shipbuilders; and (4) a relaxation of the requirements for foreign ships entering the U.S. commercial fleet. No commercial ships were built in the United States between 1985 and 1990, and only four have been built or under construction since 1990. However, due to the requirements of the Jones Act, American shipyards still build all vessels used in domestic commerce -- smaller ships, barges, and tugboats. Industry forecasts also predict that the demand for commercial ships will "increase significantly" during the 1990s due to the need for replacement of an aging world merchant fleet [U.S. Industrial Outlook, 1993]. It remains to be seen what fraction of this business may be won by U.S. shipbuilders.
In contrast to the declining market for commercial ship construction, the market for ship repair and conversion work is strong. The U.S. Industrial Outlook reports that "the demand for some ship repair services * * * exceeds what is currently available in certain areas." In addition, investments by U.S. shipyards to improve, expand, and modernize repairing facilities are proceeding. Investment in fiscal year 1992 was $215 million, contrasted with $176 million for purchases of plant, machinery and equipment in 1991 [U.S. Industrial Outlook, 1993].
Asbestos in Construction
The construction industry is the principal market for asbestos materials and products in the United States, accounting for 68 percent of the asbestos consumed in 1992 [Bureau of Mines, 1993]. Asbestos products used in construction include asbestos-cement pipe, asbestos-cement sheet, coatings, compounds, packings, and roofing products.
With the decline in consumption of raw asbestos in U.S. manufacturing coupled with the introduction of asbestos substitutes into product design, the asbestos construction industry has shifted away from activities associated with installing asbestos products. Instead, in the last decade concern over the public risk presented by damaged asbestos in place, as well as the practical need to maintain aging interior sections in commercial and residential buildings, has directed the asbestos construction industry to the areas of demolition, removal, and renovation. In addition, custodial personnel occasionally come into contact with asbestos during their housekeeping duties.
- The construction industry is comprised of a large number of firms:
approximately 536,300 establishments in 1987, employing just over 5 million workers [Dept. of Commerce, 1990b]. Of this industry total, 423,500 establishments, or 79 percent, employed fewer than 10 workers, while only 9.3 percent had 20 or more employees. The prevalence of small firms is partially related to the ease of entry into the construction industry. To establish a construction firm generally requires minimal capitalization; many firms, in fact, achieve success by carrying little overhead and adapting their services to industry trends. Furthermore, a sizable share of proprietorships in the industry are composed of self-employed individuals who contract their own services, and who shift back and forth from employee status to self-employment status as opportunities change.
In construction, unlike manufacturing, the typical industry end-product is highly differentiated and is produced at a site selected by the purchaser. Due to this degree of product specificity, each worksite usually has its own pattern of material use, building methods, and number and mix of workers. Thus, considerable variation may exist in actual worker use of, or contact with, asbestos materials and products. Although the occasional use of asbestos products appears to be the norm -- particularly given the changing material use patterns in new construction -- some workers (e.g. asbestos pipe installers and abatement/removal specialists) continually come into contact with asbestos materials and products.
Worker mobility, resulting in considerable shifting among both job sites and employers is another characteristic of the industry. Workers tend to identify with their craft or occupation, not with their employer [Lange and Mills, 1979]. Cyclical changes in the economy and seasonal work patterns cause variability of job opportunities, with a large portion of workers frequently entering and exiting the industry. Collectively, these factors make it very difficult to estimate the total number of workers exposed to asbestos and the duration of their exposure.
Based upon profiles of the asbestos construction industry by OSHA and CONSAD [OSHA, 1994; CONSAD, 1990], OSHA in this final RIA has estimated the number of construction workers potentially exposed in the areas affected by the standard -- that is, where asbestos products are installed, replaced, removed, or managed in place. Affected construction activities are found within the following general sectors: new construction; abatement and demolition; building renovation and remodeling; routine maintenance; and custodial work. Table 3 presents OSHA's profile of the population at risk from occupational exposure to asbestos in construction. Below are descriptions of the construction activities categorized within the general sectors affected by OSHA's revised asbestos standard.
Table 3. -- Estimated Population at Risk From Occupational Exposure to Asbestos During New Construction, Abatement, Renovation, Routine Maintenance Work and Custodial Activities ________________________________________________________________________ | Annual | Annual | | number of | number of | Annual full- | workers | workers | time-equiva- Construction activity | potentially | potentially | lent per- | exposed | exposed | son -- years | (lower | (upper | of exposure | bound) | bound) | (a) ____________________________|_____________|_____________|________________ | | | New Construction............| 494 | 4,260 | 2,377 A/C Pipe Installation.....| 224 | 2,100 | 1,162 A/C Sheet Installation....| 270 | 2,160 | 1,215 Asbestos Abatement and | | | Demolition.................| 55,101 | 79,361 | 21,295 Asbestos Removal..........| 44,491 | 66,476 | 16,518 Encapsulation.............| 4,610 | 6,885 | 1,615 Demolition................| 6,000 | 6,000 | 3,163 Renovation/Remodeling.......| 60,735 | 95,914 | 60,735 Drywall Renovation........| 51,300 | 51,300 | 51,300 Built-Up Roofing Removal..| 2,235 | 19,444 | 2,235 Removal of Flooring | | | Products.................| 7,200 | 25,170 | 7,200 Routine Maintenance in | | | Public, Commercial and | | | Residential Buildings......| 128,867 | 740,237 | 25,771 Repair/Replace Ceiling | | | Tiles....................| 13,686 | 38,650 | 725 Repair/Adjust | | | HVAC/Lighting | 39,434 | 60,793 | 2,091 Other Work Above Drop | | | Ceilings.................| 4,847 | 5,636 | 299 Repair Boiler.............| 7,218 | 180,984 | 1,126 Repair Plumbing...........| 7,218 | 180,984 | 1,126 Repair Roofing............| 24,040 | 127,621 | 2,404 Repair Drywall............| 3,576 | 80,231 | 3,576 Repair Flooring...........| 28,848 | 65,338 | 14,424 Routine Maintenance in | | | Industrial Facilities......| 243,454 | 631,046 | 2,711 Remove/Install Gaskets, | | | Small Scale..............| 58,122 | 61,623 | 378 Remove/Install Gaskets, | | | Large Scale..............| 11,083 | 109,662 | 211 Remove/Repair Boiler | | | Insulation, Small........| 22,204 | 26,172 | 169 Remove/Repair Boiler | | | Insulation, Large........| 4,156 | 48,827 | 79 Remove/Repair Pipe | | | Insulation, Small........| 22,204 | 26,172 | 169 Remove/Repair Pipe | | | Insulation, Large........| 4,156 | 48,827 | 79 Miscellaneous | | | Maintenance, Small.......| 44,593 | 49,957 | 312 Miscellaneous Maintenance,| | | Large....................| 8,312 | 89,974 | 158 Miscel. Telecommunications| | | Maintenance, Small.......| 32,544 | 48,240 | 354 Miscel. Telecommunications| | | Maintenance, Large.......| 36,080 | 121,592 | 802 Custodial Work in Public, | | | Commercial and Residential | | | Buildings: | | | Sweeping, cleaning, | | | dusting activities.......| 1,126,000 | 3,665,000 | 223,160 Custodial Work in | | | Industrial Facilities: | | | Sweeping, cleaning, | | | dusting activities.......| 143,355 | 535,768 | 31,442 |_____________|_____________|________________ Total...................| 1,758,006 | 5,751,586 | 367,491 ____________________________|_____________|_____________|________________ Sources: U.S. Dept. of Labor, OSHA, Office of Regulatory Analysis, based on OSHA, 1986, and OSHA, 1994. Footnote(a) Totals in this column show the number of full-time-equivalent workers exposed to asbestos at any level.
"New construction." New construction activities account for the bulk of asbestos materials and products consumed in a typical year. Major products include asbestos-cement pipe, asbestos-cement sheet, coatings and compounds, and roofing products. As depicted in Table 1, these construction products comprised over half (19 thousand metric tons) of the total U.S. asbestos consumption in 1992.(3)
__________ Footnote(3) Total consumption of asbestos-cement sheet was approximated as 50 metric tons for the purpose of this calculation.
"Asbestos-cement pipe." Asbestos-cement pipe (A/C pipe) is used chiefly for transporting drinking water in a pressurized condition and to provide drainage for storm water, sewage and other liquid waste. Approximately 90 percent of A/C pipe purchases are of pressure water pipe [AIA, Ex. 117, 1991]. A/C pipe is also used in industrial applications, to carry gaseous products, and as an electrical conduit for heating, cooling and gas venting [ICF, 1988].
Use of A/C pipe in the United States is concentrated in the Mountain, Pacific and Southwest regions. In 1991, the Asbestos Information Association commented [Ex. 117] that "pre-cut, pre-tapped pipe has received tremendous marketplace acceptance and represents a large majority of sales." This is significant because the use of pre-cut, pre-tapped pipe may reduce or eliminate some types of field fabrication activities.
A/C pipe is composed of 15-25 percent asbestos, 42-53 percent Portland cement, and 34-40 percent ground silica sand. The use of raw asbestos in the production of A/C pipe fluctuated somewhat but remained fairly constant during the mid-1980s (26,100 metric tons in 1983, 37,000 metric tons in 1984, 32,691 metric tons in 1985) [ICF, 1988] but has declined dramatically since: 7,900 metric tons in 1989, 1,700 metric tons in 1992 [Bureau of Mines, 1993]. The use of substitutes for asbestos and the overall slump in new construction in the early 1990s probably account for much of the decline in asbestos consumption in A/C pipe. Based on OSHA and CONSAD's profile of the industry, OSHA estimates that 224 to 2,100 workers, or an average of 1,162 workers, are exposed to asbestos during installation of A/C pipe.
"Asbestos-cement sheet." Asbestos-cement sheet (A/C sheet) has a variety of uses as a structural, technical and decorative material in large residential buildings, electrical utilities, industrial plants, schools, and hospitals. A/C sheet includes flat sheet, corrugated sheet, and roofing and side shingles. Of these four main types of A/C sheet, all, as of the date of ICF's market survey, were produced in the United States with the exception of corrugated sheet [ICF, 1988]. According to ICF, flat A/C sheet has the following principal applications:
* Wall lining in factories and agricultural buildings * Fire-resistant walls * Curtain walls * Industrial partitions * Soffit material (covering the underside of structural components * Interior and exterior decorative paneling. Specialized applications of flat A/C sheet include its use in cooling towers, as laboratory table tops and fume hoods, and as a component of vaults, ovens, safes, heaters, and boilers.
Asbestos-cement shingles are used as siding and roofing for residential and commercial buildings. According to results from ICF's market survey, demand for roofing shingles represents 70 percent of consumption in the A/C shingle market while demand for siding shingles constitute the remainder of the market.
A/C sheet may contain anywhere from 15 to 40 percent asbestos, in combination with cement and, occasionally, silica [Cogley, et al., 1982]. In recent years, manufacturers have substituted other materials for asbestos in the production of A/C sheet; meanwhile, due to unit price differences, alternative construction components such as pre-cast concrete and cement/wood board have replaced A/C sheet in the building industry [OSHA, 1986]. Together, these factors have contributed to a decline in asbestos consumption in the A/C sheet market from levels of roughly 11,000 metric tons of raw asbestos in the early 1980s [OSHA, 1986] to a 1992 consumption of under 100 metric tons (see Table 1). OSHA estimates that, the population at risk during A/C sheet installation ranges from 270 to 2,160 workers, or an average of 1,215 employees.
"Asbestos abatement and demolition." Increased health concerns regarding the potential release of asbestos fibers have prompted a desire to remove or encapsulate such materials in existing buildings. In response to this demand, a variety of specialty contractors and construction trades have become active in asbestos abatement, particularly in schools, where EPA regulations have indirectly generated a large market for this type of service.
The asbestos abatement industry experienced extraordinary growth in the 1980s due to legal, regulatory, economic and health-related factors. Rifkin-Wernick Associates [Rifkin-Wernick, 1990], specialists in analyzing the asbestos industry, estimate that combined public and private building ownership spent $4.2 billion in 1989 for services and products related to asbestos abatement in their properties. This level of abatement expenditures represented an increase of 24 percent over levels in 1988. According to Rifkin-Wernick, asbestos construction activities associated with demolition, renovation, and operations and maintenance accounted for around 90 percent of abatement expenditures; the remainder of abatement expenditures satisfied legal or economic considerations while addressing lower-level safety concerns.
Rifkin-Wernick reports that approximately 50 percent of asbestos abatement business in 1989 occurred in eight states: California, New York, Texas, Pennsylvania, Illinois, Ohio, Florida and Michigan. Of the $4.2 billion in abatement expenditures in 1989, commercial buildings (offices, retail establishments, hotels/motels and warehouses) accounted for $1.4 billion in abatement services. Industrial buildings accounted for nearly $1 billion in asbestos abatement expenditures, while abatement in schools totaled $800 million, or roughly one-fifth of the industry.
In early 1990, 2,100 asbestos abatement contractors operated in the United States under either state certification or some other license. Rifkin-Wernick estimates that abatement contractors in 1989 employed 161,000 workers, of which 98,000 were full-time. Firm size in the industry was generally small: 80 percent of contractors employ fewer than 50 people and over half of asbestos contractors have no part-time employees.
Contractor revenues in 1989 totaled $3.6 billion. Rifkin-Wernick classified contractors by revenue size and geographic radius of operation. National contractors are defined as conducting business beyond 1,000 miles of headquarters and with revenues above $20 million. Regional contractors, in Rifkin-Wernick's classification system, tend to operate 250 to 1,000 miles from the main office and earn revenues of $5 million to $20 million. Finally, local contractors operate primarily within a 250-mile radius of home and earn under $5 million. Table 4 presents Rifkin-Wernick's 1990 assessment of contractor market concentration for two earlier years and market projection for 1994.
Table 4. -- Market Concentration [1987-1994] _________________________________________________________________________ | 1987 | 1989 | 1994 | | |(projected) __________________________________________|_______|________|_____________ Number of Contractors: | | | National............................... | 8 | 20 | 15 Regional............................... | 100 | 200 | 150 Local.................................. | 1,200 | 1,872 | 500 |_______|________|_____________ Total................................ | 1,308 | 2,092 | 665 Revenues ($ Million): | | | National............................... | $155 | $832 | $1,050 Regional............................... | 362 | 1,720 | 2,250 Local.................................. | 517 | 1,086 | 470 | | | Total................................ | 1,034 | 3,638 | 3,770 Market Share (%) | | | National............................... | 15% | 23% | 28% Regional............................... | 35% | 47% | 60% Local.................................. | 50% | 30% | 12% |_______|________|_____________ Total................................ | 100% | 100% | 100% Revenues Per Contractor ($ Million): | | | National............................... | $19.3 | $41.6 | $70.0 Regional............................... | 3.6 | 8.6 | 15.0 Local.................................. | 0.4 | 0.6 | 0.9 |_______|________|_____________ Total................................ | 0.8 | 1.7 | 5.7 __________________________________________|_______|________|______________ Source: Rifkin-Wernick, 1990.
In developing its profile of the abatement and demolition industry, OSHA [OSHA, 1994], recognized the growth in market specialization observed by Rifkin-Wernick and other experts. Therefore, OSHA applied lower-bound worker population estimates to the cost and benefit analysis. For all of abatement and demolition, OSHA estimates a full-time workforce of 21,295 persons.(4)
__________ Footnote(4) OSHA notes that its estimate for the number of full-time abatement workers is lower than Rifkin-Wernick's 1989 estimate. OSHA believes that this discrepancy may possibly be due to three factors: 1) the cyclical decline in the industry during the recession of 1990-1991 and subsequent slow recovery; 2) increased specialization among abatement workers and the adoption of labor-saving technologies and work practices; and 3) the inclusion of abatement workers in other activity groups within OSHA's industry profile.
"Renovation and remodeling." The principal general renovation activities that entail occupational exposure to asbestos are: the demolition of drywall (including removal of transite panels), the removal of built-up roofing containing asbestos roofing felts, and the removal of asbestos flooring products. OSHA and CONSAD [OSHA, 1994] estimate that anywhere from 60,735 to 95,914 workers -- all of whom are full-time professionals -- may be at risk from asbestos exposure during renovation and remodeling. OSHA believes that specialization has emerged in the industry to the extent that a lower-bound estimate of the workforce is appropriate in this impact analysis. Consequently, OSHA estimates that 60,735 full-time-equivalent workers in renovation and remodeling of asbestos-containing buildings are affected by the revised standard.
"Drywall demolition." The occupational exposure to asbestos associated with the demolition and renovation of drywall results primarily from the release of asbestos fibers from the spackling, tape, and joint compounds used to produce a smooth surface across the entire wall. Although the use of asbestos in drywall tape and spackling compound is now prohibited, asbestos-containing finishing materials were routinely used in drywall application through the early 1970s. Thus, the demolition and renovation of drywall in any building constructed prior to the mid-1970s is likely to expose workers to friable asbestos.
On occasion, drywall renovation involves contact with sprayed- and troweled-on fireproofing and other asbestos surfacing material. Information on the frequency of contact with high-risk asbestos-containing material during drywall renovation is limited but suggests that a minor percentage of projects are affected [CONSAD, 1985]. OSHA estimates that 20 percent of drywall renovations involve contact with high-risk ACM. A breakdown of the worker population for drywall renovation is given below under BENEFITS.
"Built-up roofing removal." Built up roofs constructed with asbestos roofing felts generally have long useful lives of 20 or more years. CONSAD [CONSAD, 1990] used Bureau of Mines data on production of roofing felt in the 1960s to estimate that approximately 80,000 tons of asbestos-containing roofing products will be removed annually.
"Removal of asbestos flooring products." Asbestos flooring products, also termed "resilient floor coverings," include vinyl/asbestos floor tile, asphalt/asbestos floor tile, and sheet flooring backed with asbestos felt. Asbestos flooring products are estimated to be in over 3.6 million buildings [EPA, 1984]. Although these floors have a useful life of approximately 25-30 years, they are generally replaced more often [RFCI, 1990].
- "Routine maintenance in public, commercial and residential buildings."
Routine building maintenance activities can involve exposure to asbestos because of the presence of products containing asbestos. Worker exposure can be a result of direct contact with the asbestos materials and products or can result from disturbance of settled dust in the vicinity of asbestos-containing materials (for example, when work above a drop ceiling is performed where asbestos-containing insulation or fireproofing was used). Maintenance activities that can involve asbestos exposure include: adjustment or repair of HVAC ductwork or lighting (above a drop ceiling); replacement of drop ceiling tiles; repair of leaking water or steam pipes; boiler maintenance or repair activities; and repairs to roofing, drywall or flooring. Workers at risk during these activities include in-house building maintenance personnel, contract maintenance crews, and special trades contractors. Based on an industry profile by CONSAD [CONSAD, 1990], OSHA estimates that anywhere from 128,867 workers to 740,237 workers are potentially exposed while performing routine maintenance activities in public, commercial and residential buildings.
For this economic impact analysis, OSHA assumed that owners of affected buildings will minimize compliance costs by applying maintenance personnel -- whether in-house or contract -- to asbestos projects on a full-time basis, where possible. Under this assumption, the absolute number of affected workers would equal the lower-bound estimate for the population at risk (128,867 workers). In terms of person-years of exposure (number of persons exposed over a year of eight-hour days), the lower-bound population at risk equates to 25,771 full-time-equivalent persons, as shown in Column 3 in Table 3.
Renovation, maintenance, and repair operations comprise a significant portion of total construction activity. In 1987, receipts from maintenance and repair operations alone were $50.4 billion, or 10 percent of total construction receipts [Dept. of Commerce, 1990b].
"Routine maintenance in industrial facilities." In general industry, routine maintenance and repair can involve the disturbance of asbestos- containing materials and products (ACM), including such products as gaskets, pipe and boiler insulation, electronic components and structural building materials. Asbestos industrial materials and products are most widely used in (1) the manufacture of malt beverages, paper products, chemicals, petroleum products, glass and ceramics, iron and steel, and fabricated metal products; (2) telephone communications; (3) electric utilities; and (4) other public utilities (gas, water, sanitary services). Occupational exposure to asbestos fibers can occur among maintenance workers directly involved in disturbance of ACM as well as among production workers near the maintenance work site.
For this final analysis of the costs and benefits of the revised asbestos standard, OSHA identified five general types of routine maintenance in industrial facilities, listed below.
* Gasket removal and installation * Boiler removal and installation * Pipe removal and installation * Miscellaneous maintenance * Miscellaneous telecommunications maintenance
Miscellaneous maintenance includes the variety of building maintenance (ceiling work, roofing, drywall, etc.) described above under "Routine Maintenance in Public, Commercial, and Residential Buildings." Miscellaneous telecommunications maintenance includes 1) removal of electronic components, particularly line card resistors, insulated with asbestos and 2) placement or removal of communications wire and cable.
Table 3 presents the range of workers in general industry potentially exposed to asbestos during routine maintenance tasks. In this impact analysis, OSHA assumes that, to minimize compliance costs, affected establishments will concentrate asbestos maintenance duties among a group of trained specialists. Shown in Column 3 in the table are OSHA's estimates for full-time populations at risk for each maintenance activity. For all of general industry, a total of 2,711 full-time-equivalent persons perform construction-related duties.
- "Custodial work in public, commercial and residential buildings."
Asbestos exposure in public and commercial buildings can occur during a variety of tasks involving disturbance of asbestos or asbestos-containing materials, in addition to routine maintenance activities described above. Custodial work in buildings with ACM can include any of the following types of activities: sweeping; cleaning; dusting; mopping; vacuuming; stripping and buffing of vinyl-asbestos floor tile; and clean-up after asbestos removal or other significant asbestos construction work.
A recent EPA-sponsored study of asbestos exposure among custodial workers in Missouri reports frequency and duration of custodial activities [Wickman, et al., 1992]. Modeling a custodial worker profile on the Missouri study and on building survey data from EPA, OSHA and CONSAD estimated the range of workers potentially at risk [OSHA, 1994]. OSHA estimates that anywhere from 1.1 million to 3.7 million workers are at risk from asbestos exposure during custodial work.
OSHA believes that there is presently little specialization in asbestos custodial work and that the actual number of workers at risk approximates the average of the lower-bound and upper-bound number of workers. In terms of person-years of exposure over work weeks consisting of eight-hour days, OSHA estimates that 223,160 full-time-equivalent workers are at risk during custodial disturbance of asbestos or asbestos-containing materials.
"Custodial work in industrial facilities." Custodial work in industrial facilities largely resembles custodial work in public, commercial, and residential buildings and was identically modeled by CONSAD. The workforce at risk performing custodial activities in industrial facilities ranges from 143,355 to 535,768 workers, as shown in Table 3. Taking the average of this range and calculating the full-time-equivalent population, OSHA estimates that 31,442 person-years of exposure occur in general industry annually during custodial work.
C. Assessment of Regulatory and Non-Regulatory Alternatives Introduction
The declared purpose of the Occupational Safety and Health (OSH) Act of 1970 is "* * * to assure so far as possible every working man and woman in the Nation safe and healthful working conditions and to preserve our human resources * * *" Thus, the Act requires the Secretary of Labor, when promulgating occupational safety and health standards for toxic materials or harmful physical agents, to set the standard " * * * that most adequately assures, to the extent feasible, on the basis of the best available evidence, that no employee will suffer material impairment of health or functional capacity * * *" On the basis of this congressional directive, OSHA has responded to the Court of Appeals by issuing a final revision to the asbestos standard, the intent of which is to further reduce the adverse health effects associated with occupational exposure to asbestos. This chapter reviews regulatory and non-regulatory alternatives that OSHA considered and found to be inadequate for full remediation of the occupational hazards of asbestos.
Private Markets and Occupational Health
Economic theory suggests that the need for government regulation is greatly reduced where private markets work efficiently and effectively to allocate health and safety resources. The theory typically assumes perfectly competitive labor markets where workers, having perfect knowledge of job risks and being perfectly mobile among jobs, command wage premiums that fully compensate for any risk of future harm. Thus, theoretically, the costs of occupational injury and illness are borne initially by the firms responsible for the hazardous workplace conditions and, ultimately, by the consumers who pay higher prices for the final goods and services produced by these firms. With all costs internalized, private employers have an incentive to reduce hazards wherever the cost of hazard abatement is less than the cost of the expected injury or illness. The resultant level of safety and health is considered "efficient" in the sense that it minimizes the sum of the costs of hazard prevention and of injury or illness. Perfectly competitive labor markets, however, do not exist for many industrial markets. OSHA, therefore, believes that it must take appropriate actions to provide greater worker protection against exposures to toxic substances.
Evidence indicates that market forces have not been effective in reducing excessive occupational exposure to asbestos, thereby contributing to the development of diseases related to it. In spite of the hazards associated with asbestos, the social costs of production have not been internalized, in part because of market imperfections and the existence of externalities. Consequently, the amount of protection that the private market will offer to workers differs from the socially desired level, for the following reasons.
First, evidence on occupational health hazards in general suggests that, in the absence of immediate or clear-cut danger, employees and employers have little incentive to seek or provide information on the potential long-term effects of exposure. When relevant information is provided, however, employers and employees might still find informed decision making a difficult task, especially where long latency periods precede the development of disease. Moreover, if signs and symptoms are nonspecific -- that is, if an illness could be job-related or could have other causes -- employees and employers may not link disease with exposure.
Second, even if workers were fully informed of the health risks associated with exposure to asbestos, many face limited employment options. Non-transferability of occupational skills and high regional unemployment rates sharply reduce a worker's expectation of obtaining alternative employment quickly or easily. A worker employed in resurfacing automobile brakes, for example, could find it difficult to apply occupational skills to a new job in searching for a safer workplace. In many regions of the country, the practical choice for workers is not between a safe job and a better paying but more hazardous position, but simply between employment and unemployment at the prevailing rates of pay and risk. In addition to the fear of substantial income loss from prolonged periods of unemployment, the high costs of relocation, the reluctance to break family and community ties, and the growth of institutional factors such as pension plans and seniority rights serve to elevate the cost of job transfer.
In addition to the market imperfections, externalities result in employers and employees settling for an inefficiently low level of protection from toxic substances. For the competitive market to function efficiently, only workers and their employers should be affected by the level of safety and health provided in market transactions. In the case of occupational safety and health, however, society shares part of the financial burden of occupationally induced diseases, including the costs of premature death, excess sickness, and disability. Individuals who suffer from occupationally related illness are cared for and compensated by society through taxpayer support of social programs, including welfare, Social Security, and Medicare. These combined factors of labor market imperfections and the existence of externalities prevent the market from delivering an optimal supply of healthful working conditions in industries where asbestos hazards exist.
Tort Liability and Asbestos Litigation
Greater reliance on the use of liability under tort law is one of the examples of a non-regulatory alternative identified and set forth by the Office of Management and Budget guidelines for implementing Executive Orders 12866 and 12291. Prosser [Prosser, 1971] describes a tort, in part, as a "civil wrong, other than a breach of contract, for which the court will provide a remedy in the form of an action for damages," although he says that "a really satisfactory definition has yet to be found."
If the tort system effectively applied, it would allow a worker whose health has been adversely affected by occupational exposure to asbestos to sue and recover damages from the employer. Furthermore, the tort system would shift the liability of direct costs of occupational disease from the worker to the firm under certain specific circumstances. The tort system has had limited success in shifting the cost of occupational disease. The limitations of the system are discussed in the following paragraphs.
Asbestos product liability litigation as a means of reducing worker exposure to asbestos has proven effective in some areas, but cumbersome to resolve. The difficulties are inherent in the litigation process as it relates to asbestos products and in the nature of the diseases associated with asbestos.
With very limited exceptions, however, the tort system is not a viable alternative in dealings between employees and their employers. All states have legislation providing that Workers' Compensation is either the exclusive or principal remedy available to employees against their employers. Thus, tort law can only be applied to third-party suppliers of a hazardous substance. It is often difficult, however, to demonstrate cause, which is a necessary prerequisite for the successful application of tort liability against these suppliers.
First, knowledge of the worker exposure must exist. The worker and/or the physician must be aware of both the magnitude and duration of exposure to asbestos and the causal link between the disease and the occupational exposure. Furthermore, it could be extremely difficult to isolate the role of occupational exposures in causing the disease, especially if workers are exposed to many toxic substances. Second, the liable party must be identifiable, but workers may have several employers over a working lifetime. Third, the scientific and medical evidence available to support the contention that the disease was caused by job-related exposure must withstand judicial standards for proof of causality. This task is very difficult because of the long latency periods associated with asbestos-related diseases.
The costs associated with producing information and with litigation itself may be quite substantial. First, information is a public good, which means that once produced it can be transmitted inexpensively to any number of individuals without diminishing the quality or quantity of the information. It is, therefore, difficult to control distribution once the information is produced. A producer of information may find that information produced at great expense can be acquired freely by potential customers, and that, consequently, the market for the information has virtually disappeared. As a result, public goods are typically underproduced relative to what is considered economically efficient. This general undersupply of information adversely affects the workers' awareness of the cause of their illness and thus reduces the likelihood that they will pursue tort liability suits.
Second, legal proceedings impose costs on both plaintiffs and defendants. Victims of torts must incur legal fees associated with bringing about court action. In deciding whether to sue, the victim must be sure that the size of the claim will be large enough to cover legal expenses. In effect, the plaintiff is likely to face substantial transaction costs in the form of legal expenses. These are commonly set at a 33 percent contingency for the plaintiff's lawyer, plus legal expenses. The accused firm must also pay for its defense. A report prepared by the Research Triangle Institute [RTI, 1982], contains some data pertaining to legal costs and the size of awards. One investigator, for example, found that an average ratio of legal costs to proceeds was 37 percent for a sample of cases. The data, however, do not separate legal fees paid by the defendants and plaintiffs.
The majority of occupational disease tort activity has involved workers exposed to asbestos. These employees could avoid the exclusive remedy of Workers' Compensation by suing suppliers, whereas asbestos exposures are best controlled by employers.
In a consolidated class-action case in 1990, a Texas court awarded more than $3.5 million in compensatory damages to 2,366 workers who had been exposed to asbestos in refineries. Punitive damages were to be awarded on the basis of gross negligence on the part of the suppliers [Dallas Morning News, 1990].
In 1993, a settlement was reached in a lawsuit involving future personal injury claims against 20 asbestos product manufacturers represented by the Center for Claims Resolution (Carlough v. Amchem Products, Inc). It would provide $1 billion over the next ten years to settle about 100,000 claims as people exposed to the manufacturers' products contract asbestos-related conditions. Payments would depend on the type of condition and attorneys' fees would be capped at 25 percent of each payment [BNA, 1993]. The settlement was reached by parties aware of the decades-long impasses in asbestos litigation that have frustrated the tort liability process.
It is unusual for insurance and liability costs to be borne in full by the specific employer responsible for the risk involved. For firms using insurance, the premium determination process is such that premiums only partially reflect changes in risk associated with changes in asbestos or other hazardous exposures. This results in the so-called "moral hazard problem," which is the risk that arises from the possible dishonesty or imprudence of the insured. As the insured has paid for an insurance company to assume some of his or her risks, he or she has less reason to exercise the diligence necessary to avoid losses. This transfer of risk is a fundamental source of imperfection in markets.
For firms that self-insure or carry liability insurance with a large deductible, the costs of a single claim may be fully borne by the firm. Very small firms, and large firms with a large number of claims, however, may fail to meet the full costs by declaring bankruptcy, as has happened with Johns Manville and other former asbestos producers. The attempts at financial restructuring by defendants of asbestos litigation further reduce the chances that workers who contract asbestos-related diseases as employees of these companies or as employees of companies that used their products will collect compensation [Washington Post, 1990].
The Workers' Compensation system came about as the result of perceived inadequacies in liability or insurance systems to compel employers to prevent occupational disease or compensate workers fully for their losses. This system was designed to internalize some of the social costs of production, but in reality it has fallen short of compensating workers adequately for occupationally related disease. Thus, society shares the burden of occupationally related adverse health effects, premature mortality, excess morbidity, and disability through taxpayer support of social programs such as welfare, Social Security disability payments, and Medicare.
Government Regulations and Rejected Alternative Standards
In order to compensate for market imperfections (some of which are detailed above), a number of federal and state regulations have been promulgated in the attempt to improve the allocation of resources. While some of these regulations may have a limiting effect on occupational exposures to asbestos, OSHA does not believe that these regulations obviate the need for an OSHA standard regulating occupational exposure to asbestos.
OSHA's current permissible exposure level (PEL) for asbestos of 0.2 fibers per cubic centimeter (f/cc) does not eliminate all significant risk to workers. Given the recent health evidence of carcinogenic and non-carcinogenic hazards, OSHA believes that to fully protect workers it is necessary to lower the asbestos PEL and establish ancillary provisions.
For public, commercial, residential and industrial buildings, OSHA rejected, on the basis of cost and feasibility considerations, alternative approaches requiring owners to conduct up-front inspections for asbestos-containing materials or to inspect before ACM is disturbed. These approaches have also been examined by the Environmental Protection Agency. An analysis by EPA's contractor [Abt, 1992] projected potential compliance costs of $13.2 billion to $16.2 billion for an up-front survey approach and potential costs of $3.2 billion to $14.5 billion for an identify-before-disturb option. OSHA's approach, instead, specifies parameters for making reasonable assumptions about the presence of asbestos-containing materials within building components and notifying and protecting maintenance workers, custodians and building occupants as prescribed elsewhere in the revised standard.
D. Benefits of the Revision to the Final Asbestos Standard Introduction
The inhalation of asbestos fiber has been clearly associated with three clinical conditions: asbestosis, mesothelioma (a cancer of the lining of the chest or abdomen), and lung cancer. Studies have also observed increased gastrointestinal cancer risk. Risk from cancer at other sites, such as the larynx, pharynx, and kidneys, is also suspected.
Initial exposure limits for asbestos were based on efforts to reduce asbestosis which was known to be associated with asbestos exposure. The reduction in cases of asbestosis, however, resulted in workers living long enough to develop cancers that are now recognized as associated with asbestos exposure. The following discussion of the benefits associated with a reduction in exposures, therefore, focuses on the number of cancer cases avoided within the exposed work force. The results are expressed in terms of deaths avoided because these cancers almost always result in death.
OSHA calculated expected benefits following promulgation of the final revised asbestos standard for workers employed in the general industry, shipyards, and construction sectors. In this benefits analysis, the following types of preventable asbestos-related cancer mortalities were evaluated: (1) Preventable lung cancers, (2) preventable mesotheliomas, and (3) preventable gastrointestinal cancers. The risk assessment used to derive OSHA's estimate of the number of cancers prevented is discussed in Chapter 5 of the regulatory impact analysis of the 1986 final asbestos standard [OSHA, 1986]. For this analysis, OSHA updated the 1986 risk assessment to include 1991 data on the gender and age distribution within affected industry sectors [BLS, 1991] and the 1991 mortality rates associated with malignant neoplasms of respiratory and intrathoracic organs [NCHS, 1993].
The benefits of a reduction in the PEL depend upon current exposure levels, the number of workers exposed, and the risk associated with each exposure level. OSHA's estimates for current exposures, the number of full-time equivalent workers exposed, and the exposure levels after compliance with the revision to the final rule are presented in Table 5 for general industry and shipyards and Table 6 for construction.
Table 5. -- Estimated Occupational Exposure to Asbestos and Reduction in Cancer Risk in General Industry and Shipyards as a Result of the Final Revision to the Standard __________________________________________________________________________ | | Represen- | | | | Number | tative | | | | of | exposure | | Level | | full- | levels | Current | of | Sector | time- | absent |exposure |exposure | Reduction | equiva- | respira- | level | (f/cc) | in | lent | tory | (f/cc) | after | cancer | exposed | protec- | | final | deaths | workers | tion | | rule | | | (f/cc) | | | ____________________|_________|___________|_________|_________|__________ | | | | | General Industry: | | | | | Primary | | | | | Manufacturing: | | | | | Friction | | | | | Materials...... | 1,415 | 0.1419 | 0.0390 | 0.00651 | 0.0510 Gaskets and | | | | | Packings....... | 168 | 0.0999 | 0.0430 | 0.00718 | 0.0067 Coatings and | | | | | Sealants....... | 1,181 | 0.0970 | 0.0420 | 0.00701 | 0.0458 Plastics......... | 18 | 0.0638 | 0.0540 | 0.00902 | 0.0009 Services: | | | | | Automotive Repair.| 126,750 | 0.017 | 0.0170 | 0.00294 | 1.9768 Shipyards: | | | | | Wet Removal/ | | | | | Repair......... | 193 | 0.42 | 0.1162 | 0.00739 | 0.0244 Dry Removal/ | | | | | Repair......... | 48 | 3.7 | 0.1889 | 0.01202 | 0.0099 |_________|___________|_________|_________|__________ Total...........| 129,774 | ......... | ....... | ....... | 2.12 ____________________|_________|___________|_________|_________|__________ Source: U.S. Department of Labor, OSHA, Office of Regulatory Analysis, based on CONSAD, 1990, Table 3.2, OSHA 1986, Table V-1, and the rulemaking record.
Table 6. -- Estimated Occupational Exposure to Asbestos and Reduction in Cancer Risk In Construction As A Result Of The Final Revision To The Standard
(For Table 6, Click Here)
OSHA calculated annual preventable cancers associated with the revised standard through a five-step procedure. First, OSHA estimated baseline occupational exposure levels -- in terms of 8-hour time-weighted average fiber levels -- for all affected sectors using data from the record and from previous asbestos regulatory impact analyses. Then, applying the OSHA/Nicholson risk assessment model to baseline exposures and the associated populations at risk, OSHA calculated baseline cancers among affected workers. In the third step, OSHA estimated occupational exposure levels as a result of compliance with the final standard, using assigned protection factors for designated controls. OSHA then projected total residual cancers following promulgation of the standard. Finally, OSHA calculated the number of compliance-related preventable cancers by subtracting the number of residual cancers from the number of baseline cancers.
Occupational Exposure Profile
For each sector affected by the revised asbestos standard, OSHA assessed current occupational exposures using data from past regulatory impact analyses and the rulemaking records for this final standard and for previous OSHA asbestos standards. Principal sources of exposure data for this final RIA were Economic and Technological Profile Related to OSHA's Revised Permanent Asbestos Standard for the Construction Industry and Asbestos Removal and Routine Maintenance Projects in General Industry prepared by OSHA's contractor CONSAD Research Corporation [CONSAD, 1985]; Economic Analysis of the Proposed Revisions to the OSHA Asbestos Standards for Construction and General Industry, also by CONSAD [CONSAD, 1990]; OSHA's 1986 final asbestos regulatory impact analysis [OSHA, 1986]; and OSHA's regulatory analysis of the excursion limit [OSHA, 1988].
Average exposures and the range of exposures reported in CONSAD [CONSAD, 1985, 1990] and OSHA  were developed from a review of the record for the rulemaking proceeding that led to promulgation of the current OSHA asbestos standard. Baseline exposures described in the literature and reported by CONSAD in 1985 generally reflected the use of minimal engineering controls and the virtual absence of respiratory protection. These baseline exposures were reported by OSHA in its 1986 RIA and served to establish baseline risk estimates for affected workers prior to compliance with the final standard promulgated in 1986. In its 1986 RIA, OSHA assumed that the controls implied by compliance with the 1986 standard would result in specified rates of effectiveness and would lead to benefits in preventable cancers.
In this final RIA for the revised asbestos standard, OSHA developed an exposure profile for affected occupational groups using representative data from the 1986 RIA, from CONSAD reports [1985, 1990] and from the rulemaking record. For each affected sector, OSHA estimated baseline exposures using the following assumptions: (1) Where reasonable and appropriate, engineering controls and work practices assigned in the 1986 RIA were assumed to be in current use; (2) where engineering controls and work practices were not sufficient to reduce maximum exposures to a PEL of 0.2 f/cc and an excursion level of 1.0 f/cc, OSHA assumed that the least-cost respiratory protection would be applied. OSHA's baseline exposure profile for this revision to the asbestos standard thus reflects industry application of controls, work practices and respirators to achieve permissible limits established under the OSHA 1986 and 1988 rulemakings.
Table 5 presents average baseline exposure levels for general industry and shipyards and Table 6 presents average baseline exposure levels for construction. Tables 5 and 6, in addition, show average baseline exposure levels in the absence of respiratory protection and other primary controls and work practices (Column 2 in Table 5, Column 3 in Table 6), taken from representative data in the rulemaking record (see [CONSAD, 1985] and [CONSAD, 1984]). Also shown in Table 6 are representative exposure levels (Column 4) in the absence of respiratory protection. Fiber levels prior to respirator use were estimated by applying, to potential mean exposure levels (Column 3), protection factors for wet methods, glove bags and other controls judged currently in use, at hypothetical application levels of 100 percent.
Mean exposures in nearly all sectors are estimated to be at or below the current PEL and excursion limit, consistent with the assumptions in the 1986 RIA and 1988 excursion limit analysis of 100 percent compliance with the final standards. For most of the sectors presented in the tables, OSHA's estimated current exposure levels were determined by applying, to baseline exposures in the absence of controls, protection factors ranging from 10 to 1000, adjusted to reflect current application of controls. In that real-world application of engineering controls and work practices is under 100 percent in nearly all asbestos construction sectors, mean current exposure levels (Column 5) can exceed representative (hypothetical) fiber levels absent respirators (Column 4).
Also shown in Tables 5 and 6 are OSHA's estimated exposure levels following the final revision to the standard. OSHA projected exposure levels for each affected General Industry, Shipyards, and Construction activity by applying protection factors to average baseline exposures. OSHA calculated protection factors for each activity by assuming that controls have a multiplicative effect in reducing exposures, that is, the cumulative protection provided by a set of controls is the product of individual protection factors. OSHA assigned protection factors to all significant controls and calculated cumulative protection factors for all affected sectors. Cumulative protection factors were then applied to baseline exposures in order to determine exposures resulting from compliance with the final revised standard. As shown in Column 3 in Table 5 and in Column 5 in Table 6, projected exposures are quite low (some below the level of detection), commensurate with the high degree of protection provided by the controls required by, or, in some cases, implied by the revised standard.
Estimates of Cancers Prevented, by Industry
"Benefits to workers in direct contact with asbestos." Tables 5 and 6 present OSHA's estimated annual benefits to employees affected by the revised standard. Quantified benefits represent the total of avoided cases of death from lung cancers, mesothelioma, and gastrointestinal cancers. In general industry and shipyards, OSHA projects that wider use of engineering controls, work practices and respiratory protection will result in 2.1 avoided cancer deaths. In construction, expected benefits total 40.5 avoided cancers. Of these total avoided deaths resulting from compliance with the revised construction standard, 26.3 deaths will be avoided through protection of personnel directly exposed to asbestos-containing material. However, OSHA's analysis does not quantify benefits among those workers that may be secondarily exposed while present at sites where asbestos work is being done. Among workers secondarily exposed are construction tradespersons -- for example, plumbers, electricians, and ceiling tile installers -- whose activities can be complementary to, or immediately succeed, asbestos work. Since OSHA's revised asbestos standard will reduce ambient asbestos levels at these sites, any exposure among these workers would also be reduced.
In custodial work in industrial buildings and in commercial and residential buildings, where 13.5 avoided cancers are projected, estimated baseline average exposures (0.046 f/cc) lie below the revised PEL and are derived from data in the asbestos exposure literature [Wickman, et al. 1992]. OSHA's estimate of current exposures to custodians and other building service workers recognizes that these workers may not be receiving the protection afforded other "construction" workers who encounter asbestos on a more frequent basis. Service workers may, in fact, at times be exposed to asbestos at levels exceeding the current PEL and excursion limit. OSHA believes that employees performing custodial duties such as cleaning, sweeping, dusting, vacuuming and floor maintenance presently receive minimal protection from asbestos exposure. This revised asbestos standard explicitly addresses risks to employees performing custodial tasks; consequently, in this final analysis OSHA examined the occupational risks and estimated the expected benefits to service workers in industrial, commercial and residential buildings.
"Long-term exposures to building occupants." Data from the asbestos exposure literature reveal that ambient outdoor exposures to asbestos are quite low, averaging roughly 0.00007 f/cc. Regarding indoor exposures, the Health Effects Institute -- Asbestos Research reports that for 1,377 air samples from 198 different buildings with asbestos-containing materials (ACM), mean exposures were on the order of 0.00027 f/cc, with 90th and 95th percentiles of 0.0007 f/cc and 0.0014 f/cc [HEI-AR, 1991].
The HEI-AR report indicates that improper handling of asbestos fibers can contribute significantly to higher exposure levels to building occupants, even after completion of all asbestos removal jobs at a building. Of 18 building projects where interior perimeter samples were taken, asbestos levels increased in 12 buildings after abatement. The higher exposures were attributed to leakages in glove bags and improper work practices. While the effect of these removal efforts on exposures varied widely, some exposures increased by a factor of 750 [HEI-AR, 1991, p. 5-30]. In at least one case, a building with previously non-detectable asbestos levels later was found to have detectable levels of airborne asbestos.
OSHA believes that the controls mandated by the standard -- such as negative pressure enclosures, wet methods, critical barriers, and HEPA vacuums, to name a few of the more protective controls -- not only should help lower exposures to employees working in and around them, but should also be nearly 100 percent effective in preventing migration of stray asbestos. Controls required by the revised standard are therefore expected to enhance protection of service workers and building occupants. While any building owner can choose to have ACM removed from a property, owners of buildings with higher concentrations of asbestos, and therefore greater exposure potential for building employees and occupants, are relatively more likely to opt for removal.
Low-level asbestos concentrations can become elevated and remain elevated for long periods of time, as residual asbestos is disturbed. Recent long-term data suggest that after a year's time, exposure levels cease to fall and may actually rise [Wall Street Journal, 1993]. If new asbestos fibers are continually introduced to the general building environment, background asbestos levels could remain elevated and potentially increase.
Based on the Environmental Protection Agency's 1984 survey of buildings [EPA, 1984], OSHA estimates that approximately 156 million maintenance and custodial projects occur annually in 648,000 commercial and residential buildings in which friable asbestos may be disturbed [OSHA, 1994]. Buildings containing friable asbestos constitute less than 20 percent of all buildings with asbestos-containing materials and are believed to have the highest exposure levels. Applying data from the Energy department and Census bureau, OSHA estimates that an average of 18 employees per building are at risk annually from stray asbestos exposures in commercial buildings with friable asbestos, yielding an estimated total population of 11.7 million employees (648,000 buildings x 18 employees per building) [Dept. of Energy, 1986; Dept. of Commerce, 1993]. In this analysis OSHA assumed, based on data from HEI-AR on the distribution of asbestos exposures in public buildings, that higher-risk buildings have a mean current baseline exposure of 0.0014 f/cc (95th percentile of HEI-AR data), in the absence of OSHA-mandated controls. OSHA further assumed that the use of OSHA controls would lower mean background asbestos exposures to levels (0.00035 f/cc) projected by OSHA for custodial workers. Applying these exposure levels to the asbestos risk model, OSHA estimated that 14.2 cancers would be prevented annually among building occupants. It should be noted that this estimate is based solely on exposures to employees working in commercial and residential buildings and does not include exposures to residents and other non-employees, such as students, who may also be exposed while in these buildings.
Other Health Benefits
"Asbestosis." Applying pre- and post-regulation exposures to the asbestosis risk model detailed in the 1986 RIA, OSHA estimates that compliance with the revised final rule will prevent approximately 14 cases of disabling asbestosis annually, among workers directly exposed to asbestos in general industry, shipyards, and construction. In addition, non-quantified benefits of avoided cases of asbestosis are anticipated for building occupants and others secondarily exposed. As these cases represent disabilities and not deaths, they are not included in the total estimated benefits. Asbestosis cases often lead to tremendous societal costs in terms of health care, worker productivity, and in the quality of life to the affected individual. Their prevention, therefore, would have a positive economic effect.
"Reduction of solvent exposures." Presently, approximately 25 percent of auto service establishments rely upon solvent sprays to control asbestos exposure. The most commonly used solvent has been 1-1-1 trichloroethane, a neurotoxin. OSHA attempted to establish a short-term exposure limit for this substance in the 1989 Air Contaminants rulemaking [54 FR 2333], but that rulemaking was stayed by the courts for technical reasons. The revision to the final asbestos rule, by discouraging the use of solvent spray as a control method, will prevent peak trichloroethane exposures to over 150,000 workers. Moreover, 1-1-1 trichloroethane, a chlorofluorocarbon, has been linked with depletion of the ozone layer, thereby possibly contributing to development of skin cancers. Partly as a result of this, some automotive service establishments have switched to a spray based on perchloroethylene, a flammable carcinogen. OSHA believes that as these establishments select control technologies that are feasible alternatives to solvent spray, there will be reduced risks of cancer and fires (from rags contaminated with solvent) as a consequence of the revision to the standard.
"Building reoccupation." Significant economic benefits may be derived from lowering asbestos exposures to long-term building occupants. The more rapidly that building owners, whether private or public, can put their asbestos-contaminated building areas back into use, the sooner they can derive explicit or implicit "rental" value. For example, the HEI-AR report discusses an asbestos abatement job at a college building with pre-abatement exposure levels of 0.0002 f/cc [HEI-AR, 1991, p. 5-37]. Shortly after abatement, exposure levels of 0.065 f/cc were measured. After 26 weeks, exposure levels were measured at 0.0008 f/cc. Reoccupation occurred after 35 weeks, when exposures had decreased to 0.0004 f/cc. In this example, the building was not deemed usable for eight months, until exposures began to approach pre-abatement levels.
EPA's asbestos National Emission Standards for Hazardous Air Pollutants (NESHAP) require that asbestos be lowered to specified levels (although not as low as pre-abatement levels) before certain buildings can be reoccupied. These requirements have been built into many asbestos abatement contracts for liability reasons. OSHA calculated, as a hypothetical example, that if reoccupation of portions of 5,000 office buildings, with an annual rental value of $100,000 each, were delayed for 6 months in order for asbestos levels to settle, there would be a deadweight economic loss of $250 million to building owners and society.
"Asbestos liability savings." As discussed in the section on REGULATORY AND NON-REGULATORY ALTERNATIVES, asbestos liability has become a major area of tort litigation. Roughly $8 billion has been spent on asbestos litigation in the last decade [Wall Street Journal, 1992; OSHA, 1986]. The dollar amount of awards has exploded in the last decade. Industry observers forecast that up to $80 billion will be spent on asbestos abatement over the next 20 years, largely as a result of a fear of lawsuits [Wall Street Journal, 1992].
Building owners commission asbestos removal in an attempt to eliminate, or at least reduce, the probability of future lawsuits. Although the likelihood of future lawsuits is uncertain, building owners presumably calculate that the "expected" cost of such lawsuits would run over $4 billion a year, on average (using the 20-year forecast given above). If an individual building owner spends $50,000 to remove the asbestos from a building to avert potential future lawsuits, the owner may be implicitly calculating that such an expenditure will effectively eliminate a 5 percent chance that the owner will have to pay out over $1 million in a lawsuit.
Unfortunately, the evidence suggests that such attempts to reduce the probability of lawsuits, in the absence of proper protections, may be in vain. As discussed elsewhere in this BENEFITS section, recent evidence suggests that such removal attempts, in the absence of proper protections, may actually increase building occupants' exposure to asbestos. Ultimately, exposure to asbestos is the impetus for lawsuits. While it might be arguable, from an exposure standpoint, that the building owner's most economical choice would be to encapsulate existing asbestos, the path of minimizing liability is driving many building owners to actually remove the asbestos. It appears that successful avoidance of liability is guaranteed only by taking all feasible measures to minimize exposures to occupants during removal. Thus, spending an additional $5,000 for worker health to complete a $50,000 removal operation could ultimately prevent a $1 million lawsuit.
This analysis suggests, then, that the asbestos standard's requirements for engineering controls and work practices, including the use of negative pressure enclosures and other isolation efforts, if successful in averting lawsuits, would have a market value of upwards of $4 billion a year (the minimum value of averting lawsuits). Note that there need not actually be over $4 billion a year in lawsuits; the market behavior of owners willing to pay for asbestos abatement simply reflects the market value to those owners of minimizing the likelihood of lawsuits, in effect acting as a type of insurance policy. Moreover, as discussed above, it is not necessary that such efforts be 100 percent successful in preventing lawsuits -- the estimated effectiveness in reducing the probability or value of potential lawsuits possesses considerable value. Additionally, it is not necessary that such controls dramatically reduce exposures to building occupants, although OSHA's analysis indicates that they will, as long as it is established that all feasible measures were taken to minimize asbestos exposures to building occupants so that owner negligence cannot be the grounds of a lawsuit. If instituting the asbestos controls mandated by the OSHA standard were only marginally effective in reducing the probability of lawsuits, say by 10 percent, the use of these preventative measures would still possess a value of over $400 million.
Finally, asbestos removal efforts reflect concern over liability claims from building occupants, and perhaps custodians and maintenance personnel. It does not include the value of prevented claims from workers who must remove the asbestos. The revised asbestos standard eliminates significant risk to the extent feasible, as defined by law, and thereby minimizes secondary liability created by attempts to minimize primary liability.
E. Technological Feasibility and Compliance Costs
This section examines the technological feasibility and estimated costs of compliance for the final revised asbestos standard.
"General industry." OSHA's 1986 Regulatory Impact Analysis [OSHA, 1986] described in detail the controls that would be necessary in order to achieve a PEL of 0.2 f/cc in each of the affected sectors in general industry. OSHA determined that compliance with the 0.2 f/cc PEL was feasible through the use of wet methods, engineering controls, and housekeeping practices. In addition, for the following operations compliance with the PEL of 0.2 f/cc was generally not achievable without the use of respirators: the dry mechanical process in A/C pipe manufacturing and the dry mechanical, wet mechanical, and nuclear ripout processes in ship repair. Compliance with the 1.0 f/cc excursion limit promulgated in the 1988 rulemaking was also expected to lead to occasional respirator use in high-exposure activities throughout primary and secondary manufacturing [OSHA, 1988].
For the revised PEL of 0.1 f/cc, some manufacturing operations will need to supplement engineering controls and work practices with respiratory protection. In all, 2,345 workers (or less than 1 percent of the 682,685 workers exposed in all affected industry sectors) in general industry are expected to need respirators at least part of the workday in order to maintain exposures below the revised PEL. Since all affected employers in general industry will be able to comply with the proposed PEL through the use of engineering controls or, where necessary, respirators, OSHA concludes that the proposed PEL is technologically feasible.
In addition to respirators, ancillary controls will also be needed in affected industry/process groups as a result of the lowering of the PEL. These controls include:
* Regulated areas; * Disposable protective clothing and gloves; * Changerooms and lockers; * Shower rooms; * Lunch areas; and * Annual update of the written compliance program.
All ancillary controls required by the revised general industry standard are currently in extensive use throughout industry and are therefore technologically feasible.
Paragraph (k)(7) Care of asbestos-containing flooring material, prohibits for the first time, sanding and high-speed (greater than 300 RPM) stripping of floor material. This new housekeeping paragraph also requires that burnishing and dry buffing of asbestos-containing flooring be performed only when a finish on the flooring is sufficient to prevent contact with ACM. Evidence from the record indicates that many building maintenance personnel are currently meeting these requirements (Tr. 2/7/91 at 4256-4270, Ex. 7-91). Therefore, new Paragraph (k)(7) is technologically feasible.
Lastly, the final revision to the current standard requires certain engineering controls and work practices for brake and clutch repair and services. These requirements include the mandatory use of a negative pressure enclosure/HEPA vacuum method, a low pressure/wet cleaning method, or an alternate method capable of reducing exposure levels to or below levels achieved by the enclosure/HEPA vacuum method. Brake shops performing fewer than six brake or clutch repair jobs per week are permitted to use Method [D] Wet Methods in revised Appendix F of 1910.1001. According to the National Automobile Dealers Association, both the enclosure/HEPA vacuum method and the low pressure/wet cleaning method are currently in use throughout the automotive brake and clutch repair industry (Ex. 7-104); therefore, the revised control requirements for brake and clutch repair are judged by OSHA to be technological feasible.
"Construction." The evaluation of technological feasibility in construction focused on the various combinations of engineering controls, work practices, and respiratory protection necessary to reduce current exposures to achieve compliance with the final PEL of 0.1 f/cc. In addition, OSHA examined a number of engineering controls, work practices, and ancillary requirements which will directly and indirectly contribute to reducing employee exposures. Exposures to asbestos in the construction industry were classified into six activity categories:
* "New construction" -- including the installation of asbestos/cement (A/C) pipe and sheet. New construction falls under Class III asbestos work as defined in the revised asbestos standard. * "Asbestos abatement" -- including both asbestos removal and encapsulation with a polymeric coating, or enclosure. Asbestos abatement falls under asbestos work Classes I and III as defined in the revised standard. * "Demolition" -- involving asbestos removal prior to the demolition of all or part of a building or industrial facility that contains asbestos materials. Demolition falls under asbestos work Class I as defined in the revised standard. * "General building renovation and remodeling" -- including drywall demolition involving the removal of pipe and boiler insulation, fireproofing, drywall tape and spackling, acoustical plasters, transite panels, built-up roofing and flooring products. Renovation and remodeling generally involve contact with generic building materials and would therefore fall under asbestos work Class II as defined in the revised standard. * "Routine facility maintenance in commercial/residential buildings and in general industry" -- including maintenance and repair activities involving disturbance of asbestos materials and products (for example, repair of leaking steam pipes, ceiling tiles, roofing, drywall, or flooring; or adjustment of HVAC equipment above suspended ceilings). Routine maintenance falls under Class III asbestos work as defined in the revised standard when asbestos-containing materials (ACM) are disturbed during the maintenance activity; and under Class IV asbestos work as defined in the revised standard when maintenance involves minor, incidental contact with ACM. * "Custodial Work" -- including sweeping, dusting and other housekeeping duties that occasionally expose building maintenance and custodial personnel to asbestos. Custodial work falls under Class IV asbestos work as defined in the revised standard.
To support the regulatory impact analysis for the 1986 asbestos standard, CONSAD derived baseline exposure levels for each construction activity from a database that included personal and area air samples, OSHA inspection reports, expert testimony, and various published reports [CONSAD, 1990]. The technological feasibility assessments for this final revised standard were influenced by expected exposure reduction following the promulgation of the 1986 asbestos standard, and by a review of the literature, including submittals to the OSHA docket (H-033e).
OSHA determined in 1986 that, for a variety of construction activities, it was feasible to reach the current PEL of 0.2 f/cc through the use of available engineering controls and work practices (i.e., without the need for respiratory protection). These construction activities included:
* Asbestos/cement (A/C) pipe installation; * Asbestos/cement (A/C) sheet installation; * Floor products installation; * Plumbing repairs in commercial/residential buildings; * Floor repairs in commercial/residential buildings; * Gasket removal and installation in general industry; and * Pipe insulation repairs in general industry.
For the remaining activities, respiratory protection was necessary in order to reach the current PEL of 0.2 f/cc. OSHA assumed that employers would choose the most cost-effective approach and supply their workers with half-mask supplied-air respirators (or full-facepiece supplied-air respirators for asbestos removal projects) in order to eliminate the need for exposure monitoring [OSHA, 1986]. Thus, in the 1986 RIA, OSHA assumed that workers in many higher-risk construction activities would be provided supplied-air respirators.
OSHA now believes that the prior analytical assumption of widespread use of supplied-air respirators may not be consistent with field experience. OSHA believes that supplied-air respirators are used in many construction activities -- particularly removal and demolition, where exposures tend to be highest. For other construction activities where peak exposures are generally lower and episodic, many abatement and maintenance personnel appear to be complying with the current standard using a combination of engineering controls, work practices and lighter respirators.
Construction employers also appear to meet the requirements for daily monitoring (1926.58(f)(3) in the current standard) by compiling historical exposure data documenting compliance with the current OSHA PEL during representative projects. OSHA anticipates that some construction employers will meet the requirements of revised Paragraph (f) Exposure assessments and monitoring, through the use of selective initial monitoring to establish an historical exposure data record, which can form the basis for achieving all necessary requirements of the standard. Where exposures may exceed levels documented by objective data, additional respiratory protection may be necessary, and is judged by OSHA to be technologically feasible based on field experience and information in the rulemaking record [Corn, 1992; HEI-AR, 1992].
As in the standard for general industry, OSHA is proposing the prohibition of high-speed sanding and the use of highly abrasive pads during asbestos floor tile work. In CONSAD's 1985 study [CONSAD 1985] and in OSHA's 1986 RIA [OSHA, 1986], exposures during floor tile installation, removal, and sanding were reported to be generally below 0.2 f/cc when the recommendations of the Resilient Floor Covering Institute were followed. These recommended practices included wet sweeping and handling, and the prohibition of power sanding and blowing asbestos dust. OSHA estimated current exposures in floor repair at 0.024 f/cc under the assumption that the Institute's recommended practices have been adopted by a majority of establishments. Therefore, the prohibition of high-speed sanding in the current proposal is not expected to significantly affect floor repair.
With the final PEL of 0.1 f/cc, additional respiratory protection may be necessary. Specifically, some projects involving A/C pipe installation, A/C sheet installation, floor removal, floor repair, large-scale gasket removal, pipe repair, and custodial work in industrial, commercial and residential buildings would require the use of half-mask respirators to meet the revised PEL. In addition, drywall demolition projects may need to upgrade their respiratory protection to full-facepiece negative-pressure respirators to meet the lower permissible exposure limit.
Assessing current respirator usage and predicted demand under the revised standard, OSHA concludes that nearly all construction activities will require respiratory protection during at least part of the project-day in order to comply with the 0.1 f/cc PEL. Based on the lower-bound exposure estimates provided in the literature and reported in CONSAD [CONSAD, 1990, 1985], it appears that a variety of routine maintenance activities and some abatement jobs may be able to achieve the proposed PEL of 0.1 f/cc without respirators. From its analysis of current exposures, OSHA anticipates that only in small-scale gasket removal and installation will respiratory protection not be necessary for most project-days.
The other incremental controls necessary to comply with OSHA's final asbestos standard, include (depending upon the construction activity):
* HEPA vacuums or HEPA vacuum/ventilation systems; * Wet methods; * Glove bags; * Regulated areas (air-tight or demarcated with caution signs); * Critical barriers; * Protective disposable clothing; * Impermeable drop cloths; * Decontamination area (adjacent to regulated area or remote showers and changerooms); * Lunch areas; * Competent person supervision; * Training; * Medical exams; * Recordkeeping (exposure assessment, medical exams and training); * Notification of building owners and employees by contractors; * Notification of contractors and building occupants by building owners;
Based on information in the record and in OSHA's inspection files, OSHA observes that many construction employers currently apply these controls in varied combinations and at varied levels of utilization. OSHA estimated that for construction employers, rates of current compliance range from roughly 20 percent to 80 percent, depending on the control requirement and construction activity. Therefore, OSHA believes all controls are technologically feasible for the appropriate construction activities. In conclusion, therefore, OSHA projects that the final revisions to the asbestos construction standard will be technologically feasible because all of the provisions, including the lowered PEL, can be met using existing engineering controls, respiratory protection and work practices.
"Shipyards." Historically, exposure to asbestos in shipyards took place during shipbuilding and ship repair. At present, the majority of asbestos activity aboard maritime vessels involves repair and maintenance of machinery and plumbing with asbestos insulation. In this final rulemaking, the revised asbestos standard for shipyards, Sec. 1915.1001, applies most of the requirements given in the revised asbestos construction standard.
For the two main shipyard activities affected by the revised asbestos standard -- wet removal/repair and dry removal/repair -- comment in the record [Ex. 7-77, Ex. 7-85] suggests that employers are able to achieve the revised PEL of 0.1 f/cc through the use of engineering controls and, where necessary, respiratory protection. The OSHA Shipyard Employment Standards Advisory Committee [Ex. 7-77] commented that on many shipyard projects, exposure levels have been reduced to levels considerably below the revised PEL. Moreover, to a large extent employers appear to be currently applying the ancillary controls and work practices required in the revised construction standard (and applied to the revised shipyard standard) [Ex. 9-23]. Therefore, on the basis of evidence in the record, OSHA believes the revised shipyard standard is technologically feasible.
OSHA estimated the costs of complying with the final revisions to the asbestos standard for general industry, construction and shipyards. OSHA's cost assumptions and methodologies are based upon an OSHA/CONSAD technical analysis of the final rule [OSHA, 1994]; OSHA's PRIA [OSHA, 1990]; CONSAD's final report supporting the PRIA ; the rulemaking record; and previous regulatory analyses performed by OSHA [OSHA, 1986], CONSAD [CONSAD, 1985] and Research Triangle Institute [RTI, 1985].
Cost data for control mechanisms were obtained from published price lists of equipment suppliers and from other information collected by OSHA and CONSAD. Wage data were taken from the U.S. Department of Labor's Bureau of Labor Statistics' Employment and Earnings (BLS, 1993a) and Employment Cost Indexes and Levels (BLS, 1993b). Unit costs are expressed, as appropriate, on a per-establishment, -crew, -project, -worker, project-day, and worker-day basis, using industry profile data presented in the OSHA/CONSAD technical analysis [OSHA, 1994] and in CONSAD's prior analyses [CONSAD, 1990, 1985].
To derive estimates of the annual incremental compliance costs for the revised asbestos standard, the estimated unit cost factors for the controls were multiplied by the estimated number of required control resources. In order to develop net annual compliance cost estimates, these gross annual cost estimates were then adjusted using estimates of current application of controls. Costs were estimated on an annual basis, with total annual costs calculated as the sum of annualized initial costs and annual recurring costs. Initial costs were annualized over the service life of the equipment or administrative activity, at a discount rate of 10 percent.
The section below presents the estimated costs to general industry, followed by the costs to construction and to shipyards.
"General industry." In developing the annual compliance cost estimates for general industry, unit cost estimates were first developed for each of the control practices and ancillary measures required by the revised standard for each of the industry/process groups affected by the proposed standard. The annual compliance costs for each affected industry/process group were then computed by combining the unit cost data with the number of units of each type of control practice needed per year to achieve compliance with OSHA's proposed standard. Compliance costs were also adjusted to reflect current compliance with the required control practices.
"Manufacturing." The industry/process groups in manufacturing with exposures above the revised PEL of 0.1 f/cc will require the implementation of a set of uniform control practices, including written compliance programs, regulated areas, respirators (including the respirator unit, accessories, fit testing and cleaning), disposable protective clothing and gloves, change rooms and lockers, shower rooms, and lunch rooms. Other controls, while necessary for compliance with the revised standard, are also required by the current asbestos standard and, thus, will not create an incremental burden. Controls assumed by OSHA to be currently in place include periodic monitoring; prescribed methods of compliance; employee information and training; medical surveillance; and recordkeeping.
The revised asbestos standard for general industry imposes new communication requirements for building and facility owners. In particular, under Paragraph (j)(2)(ii), owners are required to maintain records of information concerning the presence, location and quantity of asbestos-containing material (ACM) and presumed asbestos-containing material (PACM). Under Paragraph (j)(2)(iii), owners of buildings and facilities are required to inform employers of employees who perform housekeeping activities in the presence of ACM or PACM of the presence and location of the ACM or PACM in the area. In this regulatory analysis OSHA treats housekeeping and custodial activities in general industry as construction activities. OSHA's estimated compliance costs for information requirements pertaining to housekeeping/custodial activities are discussed below in the section on compliance costs for the revised construction standard.
Brake and clutch repair. As in the existing OSHA asbestos standard for general industry, automotive repair work is regulated in revised Sec. 1910.1001. In Paragraph (f)(3) employers performing six or more brake or clutch jobs per week are required to use a negative pressure enclosure/HEPA vacuum method, a low pressure/wet cleaning method, or an alternate method proven to achieve results equivalent to those for the enclosure/HEPA vacuum method. OSHA assessed the extent to which control practices are being applied during brake and clutch repair in the automotive services industry and identified the additional resources needed to reach full compliance with the revised standard.
Based on OSHA's and CONSAD's assessment of current industry practice, OSHA believes that only a small fraction of auto repair shops perform fewer than six brake or clutch inspections per week [OSHA, 1994]. Thus, OSHA anticipates that few shops will qualify for the exemption from engineering controls mandated in revised Appendix F. OSHA and CONSAD [OSHA, 1994] estimate that 65 percent of brake shops currently use wet methods and solvent spray systems during brake and clutch work. Under the revised standard, these shops would have to switch to one of the fiber control methods permitted in Appendix F.
For this cost analysis, OSHA assumed most of the shops currently not in compliance with the revised rule, will adopt the low pressure/wet cleaning method as the least expensive option permitted in the revised standard. OSHA estimates that incremental expenditures for equipment, supplies and labor time will total $11.2 million per year.
Comment in the record [Ex. L162-61] points to the potential for substantial cost offsets from use of the low pressure/wet cleaning method. These cost offsets include the reduced need for solvent; reductions in costs associated with housekeeping and with laundering and disposal of contaminated rags and other articles; and improved operating efficiencies. Because of potential cost savings, use of the low pressure/wet cleaning method has grown in recent years. Moreover, concern over the effect of 1-1-1 trichloroethane on the ozone layer has led to a phase-out of the solvent, forcing brake shops to discontinue use of the solvent spray method. Of concern to occupational health specialists is the regular use of solvents among a workforce with minimal protection from exposures. In sum, OSHA believes that cost offsets and environmental and health concerns combine to mitigate the direct costs facing brake shops who must switch to alternative asbestos control systems.
"Current work practices." In addition to work practices in automotive services that meet the revised standard, certain work practices that were required by OSHA's previous standard with a PEL of 2.0 f/cc, and are required by the current standard, as well as by the proposed revisions to the current standard (e.g. wet handling and the collection, disposal, and labeling of wastes in sealed, impermeable bags), are also not identified as additional costs. OSHA believes that wet methods (to the extent that they are feasible), and the use of HEPA vacuums for housekeeping in primary and secondary manufacturing, are already widely in use.
"Total costs for general industry." To derive estimates of the annual incremental compliance costs for the industry/process groups affected by the revised general industry standard, the estimated unit cost factors were first multiplied by estimates of the resources necessary to achieve compliance for that industry/process group. These gross annual cost estimates were then adjusted to account for current compliance rates which were first projected in the 1986 RIA [OSHA, 1986] and were modified as a result of compliance with the excursion limit rule in 1988 [OSHA, 1988] and evidence from the rulemaking record.
For each of the manufacturing processes in the affected industries, CONSAD estimated the number of plants with exposures above the revised PEL of 0.1 f/cc (the number of plants needing controls), the number of processes to be controlled, the number of work stations to be controlled, the number of workers directly exposed, worker-days of exposure per year, and the direct worker-hours of exposure per year. These estimates are based on: the number of establishments in each industry sector, determined by CONSAD from information presented in EPA's ban and phase-out rule [ICF, 1988], and from contacts with industry experts; the percentage of processes within plants with exposures above the proposed PEL of 0.1 f/cc and requiring controls; and finally, characteristics concerning the number of processes per plant, work stations per process, workers per work station, and the frequency and duration of each process in these affected industries. The resource estimates used to develop annual compliance costs are developed in detail in [CONSAD, 1990, Table 3.11].
Based on OSHA and CONSAD's analysis [OSHA, 1994; CONSAD, 1990], OSHA estimates that annual costs of compliance in general industry will total $14.8 million. Table 7 presents compliance costs by control practice, for each industry process, for the industry sector as a whole, and for all of general industry. Examining compliance costs by sector, it can be seen that the largest compliance expenditures will be in auto repair ($11.2 million), followed by friction materials ($2.2 million) and coatings and sealants ($1.2 million).
Table 7. -- Estimated Annual Costs of Compliance For General Industry Sectors
(For Table 7, Click Here)
Comparing costs per provision along the bottom row of the table, incremental costs for engineering controls in auto repair represent the leading expenditure. Other controls bearing significant costs are half-mask respirators ($1.4 million), disposable protective clothing and gloves ($1.1 million), change rooms and lockers ($563 thousand), and shower rooms ($418 thousand).
For secondary manufacture of gaskets and packings and secondary auto remanufacturing, where exposures currently are below the revised PEL, OSHA anticipates little or no incremental costs. Therefore, impacts on establishments in these industry groups will be insignificant.
"Construction." Within the construction industry, 24 unique activities will come under the scope of the proposed revision. These construction activities are found in new construction, asbestos abatement and building demolition, general building renovation and remodeling, and routine facility maintenance and custodial work in public, commercial, and residential buildings and in general industry. Although the construction activities under consideration in this study will require the implementation of different control practices and/or combinations of these practices, the basic characteristics of available control practices are relatively uniform, and the options for combining control practices in the construction industry and during routine maintenance and repair activities in general industry are limited in number.
The control mechanisms considered in this analysis include: * Shrouded tools with HEPA vacuums; * HEPA vacuum/ventilation systems; * HEPA vacuums; * Glove bags; * Critical barriers (including the materials and labor for setting up and taking down; * Regulated areas; * Respirators (including the respirator unit, accessories, fit testing, cleaning, and training); * Disposable protective clothing and gloves; * Impermeable drop cloths; * Wet methods (including the sprayer, wetting agent, and labor); * Decontamination areas (or clean changerooms); * Lunch areas; * Training; * Use of competent person supervision; * Exposure assessments and monitoring; * Medical exams; * Recordkeeping; * Labeling of installed asbestos products; * Notification of building owners and employees by contractors; and * Notification of contractors and building occupants by building owners.
Certain work practices that have been required since OSHA's earlier asbestos standards (e.g., wet handling and the collection and disposal of waste in sealed, impermeable bags) are not included as cost elements.
For each major provision of the revised construction standard, below, OSHA presents cost estimates by type of engineering or administrative control, work practice or personal protective equipment, where appropriate.
(c) "Permissible exposure limits." The revised asbestos construction standard lowers the permissible exposure limit from 0.2 fiber per cubic centimeter to 0.1 fiber per cubic centimeter of air as an eight-hour time-weighted average. The revised standard retains the current excursion limit of 1.0 fiber per cubic centimeter of air as averaged over a sampling period of thirty minutes.
After reviewing both (1) the literature on risk to asbestos in the construction industry and (2) the earlier OSHA rulemaking record (Docket H-033c), CONSAD [CONSAD, 1990, Table 2.8] reported representative exposure levels by construction activity that formed the basis of OSHA's risk estimates in the PRIA. CONSAD presented the range of exposure levels in the absence of respiratory protection for each construction activity. From the raw exposure data, OSHA [1986, 1990] developed arithmetic mean estimates, against which the proposed PELs were compared. OSHA then assigned engineering and respiratory controls as required and implied by the earlier rules.
For this final regulatory impact analysis, OSHA adjusted CONSAD's baseline (pre-1986) exposure levels to reflect likely controls applied since OSHA promulgated final asbestos rules in 1986 and 1988. In adjusting exposures from baseline levels, OSHA attempted to represent realistic reductions in fiber levels under a regulatory regime consisting of a 0.2 f/cc eight-hour PEL, a 0.1 f/cc eight-hour action level, a 1.0 f/cc thirty-minute excursion level, and ancillary controls and procedures. OSHA's adjusted baseline exposures were presented in Section D.
OSHA's revised PEL is expected to lead to wider use of respirators in construction. In particular, OSHA anticipates increased usage of half-mask and full-face cartridge respirators as a result of the revised PEL. For some activities where average exposures are projected to be below the PEL due to the use of engineering controls and work practices, respirators may be necessary where peak exposures occur. OSHA conservatively applied half-mask cartridge respirators, with a protection factor of 10, where peak exposures can exceed ten times the revised PEL; OSHA applied full-facepiece cartridge respirators for activities where peak exposures can exceed 50 times the revised PEL. In all, annual respirator costs will total $24.9 million. Included in this total cost are expenditures for the respirator unit, accessories, filters, training (costs assigned under Paragraph (k) Communication of hazards), cleaning and fit testing.
(d) "Multi-employer worksites." Revised Paragraph (d) expands upon the current requirement that an employer performing asbestos work in a regulated area inform other employers on the site of the nature of the employer's work with asbestos and the existence of, and rules pertaining to, regulated areas. In addition, Paragraph (d) requires:
* Abatement of asbestos hazards by the contractor controlling the source of the contamination -- (d)(2) * Protection of employees adjacent to asbestos worksite -- (d)(3) * Daily assessment by adjacent employers of integrity of enclosures or effectiveness of other control methods relied on by the primary asbestos contractor -- (d)(4) * Supervisory authority by general contractors over the work of the asbestos contractor on the asbestos worksite -- (d)(5).
OSHA anticipates significant compliance costs for three of the four additional requirements in the revised paragraph on multi-employer worksites. For provisions (d)(2) and (d)(3), OSHA believes that compliance with the requirements for PELs [Paragraph (c)] and initial exposure assessment [Paragraph (j)] will ensure compliance with these areas. Regarding daily assessment of work areas, required by (d)(4), OSHA considers these duties to fall under the supervision of competent persons. Compliance costs for competent persons are discussed below under Paragraph (o).
For Paragraph (d)(5), OSHA assumes that after promulgation of the revised standard, asbestos contractors will achieve full compliance and, therefore, that general contractors will rarely need to exercise authority over employee protection.
(e) "Regulated areas." Paragraph (e) specifies the controls required for construction activities designated as regulated areas. OSHA anticipates incremental costs for all construction work defined in the revised standard as Class I, II or III. Incremental costs for regulated areas will stem from the need for caution and warning signs and caution tape at the perimeter of work areas, as required by (e)(2) Demarcation and (k)(6) Signs. OSHA anticipates total costs of $15.8 million for caution and warning signs.
(f) "Exposure assessments and monitoring." Revised Paragraph (f) alters current requirements for initial exposure monitoring, periodic monitoring, termination of monitoring, additional monitoring, employee notification of sampling results, and observation of monitoring. OSHA anticipates that following promulgation of this revised standard, many employers will initially monitor higher-risk sites -- under conditions of full application of controls -- in order to establish compliance with the revised PEL of 0.1 f/cc. Results from initial monitoring can be used as historical, objective data for compliance purposes, consistent with revised (f)(1)(iii) Negative initial exposure assessment.
To estimate monitoring costs in construction, OSHA assumed -- for activities where objective data has not been established -- that employers conducting Class I, II or III work, will purchase monitoring equipment, train a supervisor to conduct monitoring, and have three representative exposure samples analyzed by a laboratory. OSHA assumed that employers conducting Class IV activities will hire an outside industrial hygiene technician to monitor workers and collect three exposure samples. Basing cost analysis on these assumptions, OSHA projects total incremental compliance costs of $40.1 million for exposure monitoring.
(g) "Methods of Compliance." In revised Paragraph (g) Methods of compliance, OSHA has significantly expanded the structure and content of the regulatory text in the current standard. Revised Paragraph (g) prescribes specific engineering controls and work practices for each of the four asbestos construction classes defined in the standard. To satisfy the requirements for ancillary controls, employers are expected to purchase or otherwise adopt the following types of controls and practices: HEPA vacuum/ventilation systems; HEPA vacuums; wet methods; airtight (negative-pressure) regulated areas; drop cloths; mini enclosures; critical barriers; and glove bag systems (with HEPA vacuums). Included in the cost of each control are expenditures for basic equipment, accessories, construction supplies (for barriers and enclosures), smoke testers (for negative-pressure enclosures), and incremental labor resources needed to implement the control, to smoke test (where necessary) and to disassemble the control.
Incremental compliance costs associated with engineering controls and work practices are anticipated for all construction activities affected by the revised standard. The combination of controls vary by activity, depending on current exposure levels, the extent of current compliance assumed by OSHA, and the construction class (as defined in the revised standard) for the work activity. OSHA projects the following annual compliance costs for methods of compliance:
* HEPA vacuum/ventilation systems -- $15.3 million * HEPA vacuums -- $32.5 million * Wet methods -- $55.2 million * Airtight regulated areas -- $2.2 million * Drop cloths -- $13.8 million * Mini enclosures -- $41.6 million * Critical barriers -- $22.2 million * Glovebag systems -- $4.5 million.
(h) "Respiratory protection." Revised Paragraph (h) mandates the use of respirators under particular circumstances during asbestos construction work. As prescribed in the standard, respirators must be worn (1) during all Class I work; (2) during all Class III work when TSI or surfacing ACM or PACM is being disturbed; (3) during all Class II and III asbestos jobs where wet methods are not used or where insufficient or inadequate data prevents development of a negative exposure assessment; or (4) in emergencies. For this final regulatory impact analysis, OSHA identified an additional need for respirators in new construction, during removal and repair of flooring products, during routine maintenance in general industry, and during custodial work in industrial, commercial and residential buildings. Respirators were assigned to construction activities where baseline exposure ranges suggested workers would occasionally exceed the revised PEL. Incremental compliance costs for respirators were presented above under (c) Permissible exposure limits.
(i) "Protective clothing." Paragraph (i) in this final rulemaking has been revised such that protective clothing will be required for all Class I activities and in Class III activities where thermal system insulation or surfacing ACM/PACM is being disturbed in which a negative exposure assessment has not been produced, in addition to the requirement that clothing be worn when the PEL or excursion limit (EL) is exceeded. OSHA anticipates an additional need for protective clothing in the following construction activities where workers may occasionally exceed the PEL:
* A/C pipe installation * A/C sheet installation * Remove flooring products * Repair flooring * Custodial work in industrial buildings * Custodial work in public, commercial and residential buildings.
OSHA assumes that to provide protective clothing to employees as required by the standard, employers will minimize costs by providing to each employee one set of disposable clothing and gloves for each worker-day. For disposal, clothing can be combined with other contaminated waste and sealed in impermeable bags. Summing incremental costs for protective disposable clothing, OSHA estimates total costs of $17.9 million associated with revised Paragraph (i).
(j) "Hygiene facilities and practices for employees." Revised Paragraph (j) provides for decontamination areas, equipment rooms, showers, change rooms, and lunch areas for Class I activities. Class II and Class III activities may conduct decontamination in adjacent areas on impermeable drop cloths, with clothing and equipment cleaned with HEPA vacuums. Decontamination following Class IV activities must be at least as stringent as required for the class of activity within which the Class IV work is being performed.
OSHA anticipates that Class I hygiene requirements will apply for the first time to boiler repair, pipe repair and miscellaneous maintenance in general industry. Annual compliance costs will total $5.5 million for equipment and labor involved with the hygiene facilities in Class I work.
Employers can decontaminate Class II and Class III work using drop cloths and HEPA vacuums, controls required under (g) Methods of compliance. OSHA's estimated costs for drop cloths and HEPA vacuums were presented above in the discussion of revised Paragraph (g).
OSHA assumes that decontamination following Class IV work conducted in regulated areas will be provided by the primary contractor at the job site. Costs for decontamination of Class IV employees, then would be captured by the total decontamination costs for the activity in the regulated area. In addition, OSHA assumed that drop cloths and HEPA vacuums will be needed by custodians following higher-risk activities outside regulated areas. Costs for drop cloths and HEPA vacuums were presented under (g) Methods of compliance, above.
(k) "Communication of hazards." Revised Paragraph (k) supplements the existing hazard-communication requirements in the asbestos standard by introducing provisions for notification of building and facility owners, contractors, employees and building occupants of the presence, location and quantity of asbestos-containing material (ACM) or presumed asbestos-containing material (PACM). The final revisions to (k) also include training requirements that mirror the training required under the EPA ASHARA legislation, for employees working around ACM or PACM. Training required under revised Paragraph (k) appears to strengthen the content of training required under existing (k) by explicitly referencing the EPA Model Accreditation Plan (MAP) and Operations and Maintenance (O&M) worker protection training.(5)
__________ Footnote(5) Revised Paragraph (k) allows employers to substitute -- for Class II activities working with generic building materials -- training suitable to the removal or disturbance of that category of building material.
For this final regulatory impact analysis, OSHA identified incremental compliance costs for employee training and notifications involving building/facility owners, construction employers, construction employees, and building occupants. For the purpose of cost estimation, OSHA categorized employee training into three groups: (1) Classes I and II, (2) Class III, and (3) Class IV.(6) For each of the three categories of training required by the revised standard, OSHA estimated compliance costs as follows:
__________ Footnote(6) Class I training was assumed to require a total of 32 hours, whereas Class II training was assumed to require a total of 24 hours. Total costs for Class I and Class II training are combined in this discussion. * Class I/II -- $51.8 million * Class III -- $35.9 million * Class IV -- $22.6 million.
In that OSHA's training requirements parallel the requirements mandated in EPA's MAP regulation, OSHA attributes to the EPA regulation, training costs in this final revision to the OSHA asbestos construction standard.
To estimate compliance costs of the new notification requirements in revised Paragraph (k), OSHA identified seven unique types of notifications. OSHA assumed that notification among affected parties could involve memos, phone calls, notices or other lower-cost means of communication, ranging in labor time from three to five minutes per project. The types of notifications are given below, along with OSHA's estimated total annual compliance cost.
* Notification by contractor to building owner prior to start of project -- high-risk ACM -- $305 thousand * Notification by contractor to building owner prior to start of project -- low-risk ACM -- $5.0 million * Notification by contractors to employees -- $394 thousand * Notification by contractor to building owner regarding asbestos remaining in building -- $397 thousand * Notification by building owner to building occupants -- high-risk ACM -- $612 thousand * Notification by building owner to building occupants -- low-risk ACM -- $22.3 million * Notification by building owner to all contractors in building -- $6.1 million.
In addition to requirements for notification, Paragraph (k)(2)(iii) requires owners to maintain records of all information indicating the presence, location and quantity of ACM and PACM in the building. OSHA estimated recordkeeping costs of $9.7 million to comply with revised (k).
(l) "Housekeeping." Paragraph (l) is expanded in this final revision to the asbestos construction standard to include a section on care of asbestos-containing flooring material. Included in the new section are a prohibition on sanding of asbestos-containing material; work practices specifying wet methods for floor stripping and adequate floor finish for burnishing and dry buffing; and a requirement that dusting and dry sweeping be performed with HEPA vacuums. OSHA anticipates incremental compliance costs associated with using wet methods and HEPA vacuums during housekeeping duties. Costs for the use of wet methods during custodial work is included in the total costs for wet methods given under (g), above, and are expected to be $55.2 million. Costs for the use of HEPA vacuums during custodial work is included in the total costs for HEPA vacuums given under (g), above, and are expected to be $32.5 million.
(m) "Medical surveillance." Revised Paragraph (m) provides that medical exams be given for all employees whose exposures exceed the PEL or excursion limit for 30 or more days per year, or who are required by the standard to wear negative pressure respirators. For this final RIA, OSHA recognized the extent to which medical exams are currently provided to employees. Therefore, incremental costs were estimated only for employees in those construction activities which previously did not qualify for medical exams but which now appear to meet the qualifications. Activities qualifying for medical exams under the revised standard include the following (along with estimated annual compliance costs):
* A/C pipe installation -- $59 thousand * A/C sheet installation -- $61 thousand * Floor removal -- $828 thousand * Floor repair -- $6.5 million * Large-scale gasket removal in general industry -- $702 thousand * Pipe repair in general industry -- $1.9 million.
Estimated compliance costs for Paragraph (m) include costs for medical exams and for recordkeeping. In all, $10.1 million in annual costs for medical surveillance are expected for affected construction activities.
(n) "Recordkeeping." Revised Paragraph (n) requires that employers establish and maintain records of objective data (in compliance with (f)), exposure measurements, medical surveillance, and training. Revised Paragraph (n) also provides for availability and transfer of records. Incremental recordkeeping costs for each of these areas were presented above.
(o) "Competent person." Paragraph (o) is a new section of the construction standard and provides for competent person training and supervision for Class I, II, and III activities. Consistent with the distinctions among activity classes in (o), OSHA identified two levels of competent person training: Class I/II and Class III. OSHA estimates that costs for annual Class I/II competent person supervision will be $13.5 million; OSHA estimates annual costs of $6.0 million for Class III competent person supervision. OSHA's estimates of competent person training costs are based on an analysis by EPA's contractor Abt Associates [Abt, 1993], of the costs and benefits of the EPA Model Accreditation Plan regulation.
In addition to competent person supervision, the revised standard requires that the person evaluating compliance methods that are alternatives to those in (g) Methods of compliance, be qualified as a project designer [(g)(6)(ii)]. OSHA estimated the costs for training project designers for Class I activities. At an annual cost of $171 thousand, the training burden implied by this requirement is attributed to the EPA MAP regulation, which provides for training of project designers and other competent persons.
"Total construction costs." Based on OSHA's preliminary regulatory impact analysis [OSHA, 1990], preliminary analysis by CONSAD [CONSAD, 1990], and cost analysis of the revised standard by OSHA and CONSAD [OSHA, 1994], OSHA estimated total costs of compliance with the revised PEL of 0.1 f/cc and the ancillary requirements pertaining to regulated areas, methods of compliance, respiratory protection, hygiene facilities, communication of hazards and competent person training. The estimated compliance costs, by control requirement, are shown in Table 8 for each major construction sector. OSHA's estimate of total cost, $476.4 million, is the average cost for a range of construction workers potentially at risk in each of the activities affected by the standard (see [CONSAD, 1990, Appendix A] and [OSHA, 1994]). This estimate of incremental costs, however, includes the training costs -- for workers, supervisors, project designers and competent persons -- that would otherwise be incurred through compliance with the EPA Model Accreditation Plan regulation. Excluding EPA-related training costs, OSHA estimates that $346.5 million in incremental costs are attributed to the OSHA construction standard. Table 9 presents total annual compliance costs by construction activity, for requirements unique to the revised OSHA construction standard.
Table 8. -- Annual Incremental Compliance Costs For OSHA's Revised Asbestos Standard For The Construction Industry, By Construction Category and Control Requirement
(For Table 8, Click Here)
Table 9. -- Net Compliance Costs for OSHA's Revised Asbestos Construction Standard [By Construction Activity, 1993 Dollars] ________________________________________________________________________ | Construction activity | Annual cost ________________________________________________________|_______________ | New Construction: | A/C Pipe Installation.................................| $ 578,189 A/C Sheet Installation................................| 233,602 Abatement and Demolition: | Removal...............................................| 1,089,688 Encapsulation.........................................| 77,611 Demolition............................................| 1,095,692 Remodeling and Renovation: | Drywall Renovation....................................| 4,697,904 Remove Roofing Felts & Coatings.......................| 436,077 Remove Flooring Products..............................| 13,183,683 Routine Maintenance in Public, Commercial, and | Residential Buildings: | Repair ceiling tiles..................................| 9,136,115 Repair HV AC/lighting.................................| 15,612,401 Other Work/Drop Ceiling...............................| 3,937,675 Repair Boiler.........................................| 16,711,380 Repair Plumbing.......................................| 21,730,412 Repair Roofing........................................| 8,392,722 Repair Drywall........................................| 23,276,376 Repair Flooring.......................................| 45,094,590 Routine Maintenance in Industrial Facilities: | Remove Gaskets (Small-Scale)..........................| 10,490,046 Remove Gaskets (Large-Scale)..........................| 2,113,420 Repair Boilers (Small-Scale)..........................| 1,307,159 Repair Boilers (Large-Scale)..........................| 14,134,324 Repair Pipe (Small-Scale).............................| 3,229,996 Repair Pipe (Large-Scale).............................| 2,574,361 Miscellaneous Maintenance (Small-Scale)...............| 22,462,603 Miscellaneous Maintenance (Large-Scale)...............| 4,602,548 Telecommunications Maintenance (Small-Scale)..........| 7,972,794 Telecommunications Maintenance (Large-Scale)..........| 728,523 Custodial Work in Public, Commercial and Residential | Buildings..............................................| 104,338,415 Custodial Work in Industrial Facilities.................| 7,279,509 |_______________ All Activities.................................... | 346,517,816 ________________________________________________________|_______________ Source: U.S. Department of Labor, OSHA, Office of Regulatory Analysis, based on OSHA, 1994; CONSAD, 1990; and the rulemaking record.
"Shipyards." The revised standard for shipyards largely resembles the revised construction standard. OSHA and CONSAD [OSHA, 1994] identified two shipyard activities -- wet removal/repair/installation and dry removal/repair/installation aboard vessels -- where significant contact with asbestos can take place. CONSAD's cost analysis assumes asbestos removal will be performed by abatement specialists currently complying with requirements in the existing asbestos general industry standard (under which asbestos contact during shipbuilding and repairing is presently regulated). Specifically, abatement specialists in shipyards are believed to be currently using the following controls at near-100 percent level:
* HEPA vacuums * Wet methods (where feasible) * Regulated areas with caution signs * Respirators (full-facepiece cartridge respirators and full-facepiece supplied-air respirators) * Disposable protective clothing and gloves * Decontamination units * Lunch areas * Training (General Industry standard) * Exposure monitoring (daily) * Medical Exams * Written compliance plan.
For affected shipyards, OSHA's cost analysis assigned engineering controls and work practices required or implied by the revised asbestos standard. OSHA anticipates incremental costs associated with airtight regulated areas; drop cloths; critical barriers; glove bag systems; worker training and competent person training (Class I); initial exposure monitoring and development of objective data; and notification requirements. In all, OSHA projects annual incremental compliance costs of approximately $229 thousand for the shipbuilding and repairing sector. Of these costs, $137 thousand are associated with training required by the EPA Model Accreditation Plan regulation mandated by the ASHARA legislation. Therefore, net OSHA-related annual costs for ship repair under the revised asbestos standard are expected to total approximately $93 thousand (after rounding). Compliance costs for ship repair are presented in Table 10 by control requirements for affected shipboard activities.
Table 10. -- Estimated Incremental Compliance Costs for Affected Sectors in Shipbuilding and Repairing [By Activity and Control Requirement, 1993 Dollars] ________________________________________________________________________ | Wet | Dry | | removal | removal | | with | with | | repair | repair | Totals | and | and | | installation | installation | ________________________________|______________|______________|_________ | | | HEPA Vacuum/Ventilation System..| 7,236 | 0 | 7,236 HEPA Vacuums....................| 0 | 0 | 0 Wet Methods.....................| 0 | 0 | 0 Regulated Areas (airtight, | | | caution signs).................| 4,294 | 1,073 | 5,367 Regulated Areas (caution signs).| 0 | 0 | 0 Drop Cloths.....................| 179 | 45 | 224 Critical Barriers...............| 385 | 96 | 481 Glove Bag Systems (with HEPA | | | Vacuums).......................| 56,132 | 13,750 | 69,882 Respirators.....................| 0 | 0 | 0 Disposable Protective Clothing | | | and Gloves.....................| 0 | 0 | 0 Decontamination Areas...........| 0 | 0 | 0 Lunch Areas.....................| 0 | 0 | 0 Training -- Class I.............| 105,280 | 26,270 | 131,550 Competent Person Training.......| 3,294 | 0 | 3,294 Competent Person -- Project | | | Designer.......................| 1,680 | 0 | 1,680 Exposure Monitoring (initial)...| 8,983 | 0 | 8,983 Exposure Monitoring | | | (semi-annual)..................| 0 | 0 | 0 Medical exams -- Initial and | | | Recurring......................| 0 | 0 | 0 Notification by Contractor to | | | Facility Owner -- High Risk ACM| 89 | 22 | 112 Notification by Contractor to | | | Facility Owner -- Low-Risk ACM.| 0 | 0 | 0 Notification by Contractor to | | | Employees......................| 15 | 4 | 19 Notification by Contractor to | | | Facility Owner.................| 15 | 4 | 19 Notification by Facility Owner | | | to Facility Occupants -- | | | High-Risk ACM..................| 187 | 47 | 234 Notification by Facility Owner | | | to Facility Occupants -- | | | Low-Risk ACM...................| 0 | 0 | 0 Notification by Facility Owner | | | to Contractors.................| 7 | 2 | 9 Recordkeeping by Facility Owner.| 12 | 3 | 15 |______________|______________|___________ Totals......................| 187,790 | 41,316 | 229,105 |========================================= Totals Net of EPA -- | | | Related Training...........| 77,535 | 15,046 | 92,581 ________________________________|______________|______________|__________ Source: U.S. Dept. of Labor, OSHA, Office or Regulatory Analysis, based on OSHA, 1994; OSHA, 1986; and RTI, 1985.
Aggregate incremental compliance costs. As described above, OSHA estimated compliance costs associated with the revised asbestos standard for General Industry, Construction and Shipyards. Total annual costs for each of the three main parts of the asbestos standard are as follows (excluding EPA-related training costs):
* General Industry -- $14.8 million * Construction -- $346.5 million * Shipyards -- $93 thousand.
Summing compliance costs across affected sectors, OSHA estimates that annual incremental compliance costs of $361.4 million will result following promulgation of the rule.
The next section applies these estimates of incremental compliance costs for an analysis of the economic impacts of the revised asbestos standard.
F. Economic Impact and Regulatory Flexibility Analysis Introduction
OSHA examined the impacts of compliance costs on payroll, sales and profits for firms in general industry, shipyards and construction affected by the revision to the asbestos standard. OSHA's economic impact analysis is presented below.
Data Sources and Methodology
OSHA used a variety of financial indicators and sources of statistical data to assess the impacts on the affected industries. Payroll data for primary manufacturing industries and real estate industries were taken from County Business Patterns, 1990 [Dept. of Commerce, 1993]. Payroll data for construction industries were taken from the 1987 Census of Construction, [Dept. of Commerce, 1990b]. Data on sales were obtained from Dun and Bradstreet's Marketing Information computer database [Dun and Bradstreet, 1992a] for the following industry groups:
* Primary asbestos manufacturing; * Automotive repair; * Shipyards; * Selected groups in general industry where the disturbance of asbestos during routine maintenance falls under the construction standard;
- Selected real estate industries. Data on net value of construction
work (a statistic approximating the sales volume of construction firms) for
the construction sector were taken from the "1987 Census of Construction"
[Dept. of Commerce, 1990b]. OSHA derived pre-tax profit rates using Dun and
Bradstreet post-tax return-on-sales data from Dun's Insight computer database
[Dun and Bradstreet, 1992b] and the 1987 tax code. Pre-tax profits were
calculated using a formula that contains the marginal corporate tax rates for
Impacts in General Industry and Shipyards
"Primary manufacturing." OSHA has determined that the following four industries in primary manufacturing would be affected by the revision to the asbestos standard: SIC 3292, Friction Materials; SIC 3053, Gaskets and Packings; SIC 2952, Coatings and Sealants; and SIC 3089, Plastics. OSHA has concluded that there will be no incremental costs for the secondary manufacturing industries identified in the preliminary regulatory impact analysis because these manufacturers are believed to have already achieved exposure reductions that bring them into compliance with OSHA's new PEL of 0.1 f/cc.
OSHA compared the incremental compliance costs anticipated for the four affected primary manufacturing industries with three financial indicators: (1) Annual payroll per firm, (2) dollar value of sales per firm and (3) pre-tax profits per firm. The comparison with annual payroll conveys the magnitude of compliance costs relative to labor costs. The comparison with sales provides a measure of the extent to which prices would rise to maintain profit levels if a firm is able to pass 100 percent of incremental costs forward to buyers. If firms, for competitive reasons, are unable to pass costs forward and must instead absorb the full impact internally, pre-tax profits would be expected to fall. The comparison with pre-tax profits thus illustrates the maximum financial impact if the firm absorbs 100 percent of the incremental compliance costs.
Table 11 presents the estimated impact of compliance costs in relation to annual payroll, sales, and pre-tax profits per plant in primary manufacturing. Compliance costs as a percentage of sales are modest, averaging 0.6 percent for affected establishments in primary manufacturing (Column 7). However, as shown in Column 8 in the table, profit impacts are relatively high for two sectors: friction materials (26.2 percent) and gaskets and packings (7.3 percent). For reasons given below, OSHA believes that profit impacts will be minimized by the ability of firms to pass forward costs to consumers. The small increases in product prices (less than 2 percent) necessary to cover the increased costs of production would be unlikely to affect the demand for these products.
Table 11. -- Estimated Economic Impacts in General Industry As A Result Of The Revision To The General Industry Asbestos Standard
(For Table 11, Click Here)
As evidenced by the disappearance of domestic production of various asbestos-based product lines (e.g., A/C pipe and A/C sheet) over the last several years and the dramatic reduction in the production of other products (e.g., asbestos-containing plastics), many former producers and consumers of asbestos are increasingly substituting other materials for asbestos. The market forces behind increased substitution appear to be related to legal issues, such as liability, and regulatory concerns, such as the attempted Environmental Protection Agency asbestos ban, rather than strictly the effect of product substitution. Even when asbestos-based products are much cheaper than non-asbestos-based products, demand and supply are shifting away from asbestos-based products.
Primary manufacturers appear to have the latitude to raise prices on their products in the short run, but may substitute away from asbestos entirely in the long run. In the friction materials industry, substitute products can be difficult to develop, suggesting a limited cross-elasticity of demand that permits costs to be fairly easily passed along to consumers. For other industries, since the substitution of inputs generally occurs at the site of formerly asbestos-based production, any incremental economic impacts from this rule should be minimal.
In accordance with the Regulatory Flexibility Act, OSHA also examined the impacts on small establishments in primary manufacturing to determine if they would be adversely affected by the final standard. Using data for firms with 19 or fewer employees, OSHA compared compliance costs with annual payroll, sales, and pre-tax profits for affected industries identified as containing small establishments. The affected industries include small firms producing asbestos gaskets and packings in SIC 3053, Gaskets, Packing, and Sealing Devices and producing asbestos coatings and sealants in SIC 2952, Asphalt Felts and Coatings. OSHA has determined that there are currently no small producers of asbestos friction materials and asbestos plastics.
Small-firm impacts for primary manufacturing are shown in Table 11. Under a full cost-pass-through scenario, OSHA projects that compliance costs would be 1.1 percent of sales for gaskets and packings and that compliance costs would be 0.6 percent of sales for coatings and sealants. Costs as a percentage of pre-tax profits, shown in the last column of Table 11, are significantly higher, suggesting that severe profit reductions could be felt by any small firms unable to pass forward incremental compliance costs. However, as discussed above, OSHA believes these firms will be able to pass along most of the costs of compliance by raising prices and will therefore suffer minimal economic impact.
"Automotive repair." Economic impacts in establishments performing automotive brake and clutch repair, presented in Table 12, are expected to be minor as a result of compliance with the revised standard for general industry. As a percentage of sales, compliance costs average 0.01 percent for industry overall and for affected small establishments. As for the worst-case financial impact, compliance costs as a percentage of profits would average 0.21 percent for all of industry and would average 0.26 percent for small establishments. On the basis of these impact estimates, OSHA has therefore concluded that overall impacts in automotive repair will be modest and that there will be no significant differential effect on small businesses as a result of the final standard.
Table 12. -- Economic Impacts Resulting From The Revision To The Asbestos Standard, For Establishments Performing Brake And Clutch Repair __________________________________________________________________________ |Com- | | | Pre- | Com- | Com- |pli- | | | tax | pliance|pliance SIC industry |ance | Sales per | Pre-tax |profit| costs |costs |cost | firm | profit | rate | as a | as a |per | | |(per- | percent|percent |firm | | |cent) | of | of | | | | | sales |profits ____________________|_____|____________|__________|______|________|________ | | | | | | Average Impacts on | | | | | | all Establishments:| | | | | | Brake and Clutch | | | | | | Repair: | | | | | | 551 New and | | | | | | Used Car | | | | | | Dealers........| $34 | $9,577,612 | $129,551 | 1.4 | 0.00(a)| 0.03 554 Gasoline | | | | | | Service | | | | | | Stations.......| 34 | 939,870 | 23,220 | 2.5 | 0.00(a)| 0.15 753 Automotive | | | | | | Repair Shops...| 34 | 223,065 | 12,810 | 5.7 | 0.02 | 0.26 Averages......| 34 | 1,347,958 | 27,269 | 4.4 | 0.01 | 0.21 Impacts on Small | | | | | | Establishments: | | | | | | Brake and Clutch | | | | | | Repair: | | | | | | 551 New and | | | | | | Used Car | | | | | | Dealers........| 34 | 2,589,089 | 30,460 | 1.2 | 0.00(a)| 0.11 554 Gasoline | | | | | | Service | | | | | | Stations.......| 34 | 669,395 | 16,538 | 2.5 | 0.01 | 0.21 753 Automotive | | | | | | Repair Shops...| 34 | 197,139 | 11,321 | 5.7 | 0.02 | 0.30 Averages......| 34 | 467,607 | 13,916 | 4.5 | 0.01 | 0.26 ____________________|_____|____________|__________|______|________|________ Sources: U.S. Dept. of Labor, OSHA, Office or Regulatory Analysis; Dun and Brad Department of Commerce, 1993. Footnote(a) Impacts presented as 0.00% are projected to be below 0.01%.
"Ship repair." The impacts of the revision to the asbestos standard on establishments involved in ship repair are expected to be minimal. Table 13 shows that average price impacts would be 0.07 percent for all establishments and would be 0.1 percent for small establishments if firms were able to charge increased operating costs to their customers, i.e., ship owners. At the opposite extreme in terms of potential financial impact, compliance costs as a percentage of profits would average 0.8 percent for firms of all sizes in ship repair and would average 1.2 percent for small firms in ship repair. Thus, OSHA has concluded that there will be no significant differential effect on small businesses involved in ship repair as a result of the final standard.
Table 13. -- Economic Impacts On Establishments Performing Ship repair As A Result Of The Revision To The Asbestos Standard __________________________________________________________________________ | | | | | Com- | Com- | | | | | pli- | pli- | | | | | ance | ance | Com- | Sales | | Pre- |costs |costs SIC industry |pliance| per | Pre-tax | tax | as a | as a | cost | firm | profit |profit| per- | per- | per | | | rate | cent | cent | firm | | |(per- | of | of | | | |cent) |sales |profits ____________________|_______|____________|___________|______|______|_____ | | | | | | Average Impacts | | | | | | on All | | | | | | Establishments: | | | | | | Ship Repair: | | | | | | 3731 | | | | | | Shipbuilding | | | | | | and Repair......|$12,728| $19,439,148| $1,570,840| 8.1 | 0.07 | 0.81 Impacts on Small | | | | | | Establishments: | | | | | | Ship Repair: | | | | | | 3731 | | | | | | Shipbuilding | | | | | | and Repair......| 12,728| 12,751,431| 1.030,419| 8.1 | 0.10 | 1.24 ____________________|_______|____________|___________|______|______|_____ Sources: U.S. Dept. of Labor, OSHA, Office of Regulatory Analysis; Dun and Bradstreet 1992a, 1992b; U.S. Department of Commerce, 1993.
Impacts Associated With the Revised Construction Standard
"Impacts in the Construction Industry." OSHA estimated economic impacts in construction using three economic impact measures, calculated for each affected industry group. The first measure is the ratio of the average annual compliance cost per affected establishment (or per exposed construction worker) to an estimate of the average payroll per establishment (or per construction worker). As explained above, this measure compares the projected compliance costs to labor costs normally incurred by the establishment.
The second impact measure is the ratio of the average annual compliance cost per affected establishment (or per exposed construction worker) to an estimate of the net dollar value of construction work or sales for an average establishment (or per construction worker). This ratio indicates the relationship of the compliance costs to an establishment or worker's output and indicates the maximum impact on prices assuming 100 percent pass-through of the compliance costs to the consumer.
The third economic impact statistic calculated by OSHA for construction measures the effect of compliance costs on profits. Profit impacts were calculated at the industry level by dividing into compliance costs per establishment, the estimated pre-tax profit per establishment. This index reveals the maximum potential impact on profits under the assumption that compliance costs are fully absorbed by the affected firm. Profit impacts are particularly meaningful when establishments face highly-competitive conditions which prevent the pass-through of compliance costs to customers.
Annual incremental compliance costs per construction firm were estimated using the costs presented above for new construction; asbestos abatement and demolition; general building renovation; routine maintenance in public, commercial, and residential buildings; and custodial work in public, commercial, residential, and industrial buildings (routine maintenance in industrial facilities is analyzed separately below). Table 14 presents average per-worker and per-firm costs and impacts for all affected construction sectors. Table 15 shows estimated costs and impacts for small establishments in affected construction sectors.
Table 14. -- Average Economic Impacts Of The Asbestos Standard For Construction [All Establishments, by Industry]
(For Table 14, Click Here) Table 15. -- Economic Impacts Of The Revision To The Asbestos Standard For Construction [Small Establishments, by Industry]
(For Table 15, Click Here)
Based on OSHA and CONSAD's estimates of the number of affected firms, crews, and workers performing each construction activity and the number of projects conducted by each firm in a year [OSHA, 1994], annual costs for establishments of average size are expected to range from $190 per building for SIC 6512, Operators of Nonresidential Buildings to $2,283 per firm in SIC 1752, Floor Laying and Other Floor Work, Not Elsewhere Classified.(7) As shown in Table 14, costs as a percentage of payroll, sales, and profits are generally low on both a per-worker and per-establishment basis when averaged across a range of firms in affected industries. Costs as a percentage of sales per establishment average 0.13 percent and do not exceed 0.6 percent in any industry. For the impact scenario where cost pass-through is not possible, OSHA projects that profit reductions would average 2.4 percent and would be below 5 percent for all but one industry, floor laying and floor work. For flooring contractors in SIC 1752, profit impacts could exceed 9 percent if employers were forced to fully absorb compliance costs out of retained revenues and were not able to pass costs forward. OSHA believes, however, that profit impacts will not be as severe as depicted in this worst-case scenario, for two reasons.
__________ Footnote(7) Compliance costs for firms in SICs 6512 and 6513 were estimated on a per-building basis, rather than a per-firm basis, due to insufficient data on numbers of buildings owned per firm in these industry groups.
First, it appears that there are few services that compete with floor maintenance directly, and therefore demand for services provided by the industry is relatively inelastic. Secondly, all floor-laying establishments are treated uniformly by the revised standard. Because no individual firm faces unfair regulatory treatment by the revised standard, cost impacts are expected across the majority of industry. Consequently, most affected firms should be able to pass forward costs to customers without significant redistribution of market share. As indicated in Table 14, cost impacts on prices (sales) would be minimal under a full cost-pass-through scenario.
Annual costs for small establishments are expected to range from $128 per building for SIC 6512, Operators of Nonresidential Buildings to $723 per firm in SIC 1711, Plumbing, Heating and Air-Conditioning, as shown in Table 15, Column 4. Small-firm compliance costs as a percentage of payroll, sales, and profits are fairly modest on both a per-worker and per-establishment basis. Costs as a percentage of sales per establishment average 0.13 percent and do not exceed 0.3 percent in any industry, whereas, for the case of zero cost pass-through, costs as a percentage of profits average 2.4 percent. OSHA has concluded that no differential adverse impact will be experienced by small firms in any construction sector when compared to larger firms because the costs of compliance are expected to be roughly equivalent on a per-worker basis.
"Routine maintenance in industrial facilities." In profiling asbestos maintenance activities within general industry, OSHA and CONSAD have assumed that the majority of the work would be performed by plant and maintenance personnel within the establishment. Under this assumption, incremental costs attributed to requirements in the revised construction standard that pertain to these maintenance tasks would financially impact general industry. Therefore, economic impacts associated with routine maintenance in general industry are included in this section on impacts under the construction standard. Impacts in affected general industry sectors are shown in Tables 16 and 17.
Table 16. -- Average Economic Impacts on the Revision to the Asbestos Standard for Construction on Establishments in General Industry Where Routine Asbestos Maintenance is Performed _________________________________________________________________________ | | Compliance cost per | | establishment as | Compliance | a percentage of: | cost per |________________________________ SIC Industry | establish- | | Pre-tax profits | ment | Sales per | per | | establishment | establishment ____________________________|____________|_______________|________________ | | | 2082 Malt Beverages.........| $229 | 0.00(a) | 0(a) 26 Paper Products.........| 3,742 | 0.02 | 0.31 28 Chemicals..............| 697 | 0.00(a) | 0.04 29 Petroleum Refining.....| 584 | 0.00(a) | 0.01 321 Flat Glass.............| 651 | 0.00(a) | 0.07 322 Glass and Glassware....| 651 | 0.01 | 0.07 323 Products of Purchased | | | Glass................| 651 | 0.02 | 0.31 331 Steel Works, Blast | | | Furnaces, and Mills..| 1,036 | 0.00(a) | 0.08 332 Iron and Steel | | | Foundries............| 1,036 | 0.01 | 0.23 34 Fabricated Metal | | | Products.............| 326 | 0.01 | 0.12 4813 Telephone | | | Communications.......| 525 | 0.00(a) | 0(a) 4911 Electric Services......| 1,122 | 0.00(a) | 0.02 493 Comb. Electric, Gas, | | | and Other Utilities..| 1,300 | 0.01 | 0.12 492 Gas Production and | | | Distribution.........| 363 | 0.00(a) | 0.01 4941 Water Supply...........| 264 | 0.01 | 0.08 495 Sanitary Services......| 327 | 0.01 | 0.15 |____________|_______________|______________ Averages...............| 897 | 0.01 | 0.21 ____________________________|____________|_______________|______________ Sources: OSHA, Office of Regulatory Analysis; OSHA, 1994; Dun and Bradstreet, 1992a, 1992b; U.S. Department of Commerce, 1993. Footnote(a) Impacts presented as 0.00% are projected to be below 0.01%. Table 17. -- Economic Impacts of the Revision to the Asbestos Standard for Construction on Small Establishments in General Industry Where Routine Asbestos Maintenance is Performed _________________________________________________________________________ | | Compliance cost per | | establishment as | Compliance | a percentage of: | cost per |________________________________ SIC Industry | establish- | | Pre-tax profits | ment | Sales per | per | | establishment | establishment ____________________________|____________|_______________|________________ | | | 2082 Malt Beverages.........| $229 | 0.01 | 0.28 26 Paper Products.........| 229 | 0.01 | 0.11 28 Chemicals..............| 229 | 0.01 | 0.10 29 Petroleum Refining.....| 229 | 0.00(a) | 0.02 321 Flat Glass.............| 229 | 0.01 | 0.12 322 Glass and Glassware....| 229 | 0.01 | 0.16 323 Products of Purchased | | | Glass................| 229 | 0.04 | 0.68 331 Steel Works, Blast | | | Furnaces, and Mills..| 229 | 0.00(a) | 0.06 332 Iron and Steel | | | Foundries............| 229 | 0.01 | 0.11 34 Fabricated Metal | | | Products.............| 229 | 0.02 | 0.32 4813 Telephone | | | Communications.......| 496 | 0.01 | 0.04 4911 Electric Services......| 221 | 0.00(a) | 0.03 493 Comb. Electric, Gas, | | | and Other Utilities..| 221 | 0.01 | 0.13 492 Gas Production and | | | Distribution.........| 243 | 0.00(a) | 0.03 4941 Water Supply...........| 243 | 0.03 | 0.27 495 Sanitary Service.......| 243 | 0.04 | 0.41 |____________|_______________|_______________ Averages...............| 280 | 0.01 | 0.21 _________________________________________________________________________ Sources: U.S. Department of Labor, OSHA, Office of Regulatory Analysis; OSHA, 1994; Dun and Bradstreet, 1992a, 1992b; U.S. Department of Commerce, 1993. Footnote(a) Impacts presented as 0.00% are projected to be below 0.01%.
Economic impacts from costs of compliance in industrial facilities were computed in terms of price impacts and profit impacts. As shown in Table 16, average economic impacts across all affected establishments are expected to be minimal. Price impacts -- costs as a percentage of sales -- would average 0.01 percent if firms were able to pass forward all compliance costs to consumers. If full cost pass-through is not achievable and affected firms must finance compliance expenditures from retained earnings, OSHA anticipates that profit impacts would be no greater than 0.21 percent.
Table 17 presents economic impacts on small firms in general industry where routine asbestos maintenance takes place. The results suggest that no serious economic consequences are expected from compliance with the revision to the final rule. Impacts on sales average 0.01 percent, whereas impacts on profits average 0.21 percent and are no higher than 0.7 percent for any industry group. Therefore, OSHA concludes that there will be no significant differential effect on small businesses in general industry performing routine maintenance involving contact with asbestos-containing materials.
In this section OSHA presented economic impact projections for affected industry groups in general industry, shipyards and construction. Economic impact measures calculated by OSHA expressed percentage effects of compliance costs on payroll, sales, and profits. On the basis of OSHA's analysis of the economic effects of the revised asbestos standard, OSHA has determined that impacts will be modest for most affected industry groups. Therefore, OSHA judges the revised asbestos standard to be economically feasible.
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- [59 FR 40964, Aug. 10, 1994; 60 FR 33973, June 29, 1995]
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