Regulations (Preambles to Final Rules) - Table of Contents Regulations (Preambles to Final Rules) - Table of Contents
• Record Type: Electric Power Generation, Transmission, and Distribution;Electrical Protective Equipment
• Section: 5
• Title: Section 5 - V. Regulatory Impact Assessment

V. Regulatory Impact Assessment

A. Introduction

The Occupational Safety and Health Administration (OSHA) has determined that there is a significant risk to the health and safety of workers who are exposed to the hazards of electric power generation, transmission, and distribution. To protect workers from the unique hazards encountered in these work environments, OSHA is issuing this final standard on electric power generation, transmission, and distribution and the revised general industry standard on electrical protective equipment (29 CFR 1910.269 and 29 CFR 1910.137).

The final standard in 1910.269 addresses work practices to be used during the operation and maintenance of electric power generation, transmission, and distribution installations. Additionally, 1910.137 incorporates revisions made to the general industry standard on electrical protective equipment. These revisions primarily consist of performance-oriented requirements that are consistent with the latest national consensus standards.

Executive Order 12886 requires that a regulatory analysis be conducted for any rule having major economic consequences on the national economy, individual industries, geographical regions, or levels of government. In addition, the Regulatory Flexibility Act of 1980 (5 U.S.C. 601 et seq.) requires federal agencies to determine whether a regulation will have a significant economic impact on a substantial number of small entities.

Consistent with these requirements, OSHA has prepared this Regulatory Impact and Regulatory Flexibility Analysis for the standards on electric power generation, transmission, and distribution and on electrical protective equipment. This analysis includes an estimate of affected industries and employees, estimated benefits, the technological feasibility of the standards, estimated compliance costs, nonregulatory alternatives, and a discussion of the economic and environmental impacts of these final standards.

B. Industries and Employees Affected by the Standard

The final standard in 1910.137 consists of revisions made to the general industry standard on electrical protective equipment. Those industries which utilize equipment necessary for electrical protective measures are affected by the scope of this rule. However, OSHA anticipates that these revisions will primarily impact industries involved in electric power generation, transmission, and distribution and industries in the non-utility sector involved with the cogeneration of electric power. This final standard is, therefore, considered to have a de minimis effect on all other industries.

Thus, on the basis of OSHA's analysis, these final standards will cover the electric utility industry (SIC 491 and part of SIC 493), contract power line workers, contract line-clearance tree trimmers, independent power producers, industrial generators of electric power, and establishments that perform high-voltage electrical work (including contractors). As Table 7 shows, there are 12,074 affected establishments within the scope of these final standards, and 382,073 employees who are considered exposed.

Within the three phases of electric power operations (that is, generation, transmission, and distribution), employees encounter a variety of occupational hazards. Although many of these hazards are specific to a particular phase, electricity is the most common source of occupational fatalities and serious injuries throughout. The consequences of inadvertent contact with high-voltage electricity are often death or serious injuries such as second-degree and third-degree burns, amputation of limbs, damage to internal organs, and neurological damage.

Electric power generation, transmission, and distribution employees also face occupational hazards other than electrocution. For example, high-pressure steam might be released inadvertently during maintenance work on multi-story boilers, machinery might accidentally be activated during maintenance work, or employees might fall from ladders, scaffolds, poles, or other elevations.

C. Benefits

The final standards mandate a comprehensive approach for the control of the hazards discussed earlier. Included in the standards are provisions for electrical protective equipment, initial training requirements, CPR training, lockout/tagout, equipment inspections, and live-line maintenance, among others. The majority of benefits are expected to be achieved in electric utilities, which account for approximately 80 percent of fatalities to be prevented and nearly two-thirds of the lost-workday injuries to be prevented.

The final rules are expected to significantly reduce the number of fatalities and injuries involving electrical contact, flash burns, and thermal burns, as well as other accidents involving uncontrolled exposure to occupational hazards. The rules are expected to prevent at least 59 fatalities and 323 lost-workday injuries per year. Several provisions within 1910.269 reference existing OSHA standards. By increased recognition of these referenced standards, through employee training and administrative emphasis on hazard recognition (through job briefings, for example), OSHA estimates that an additional 2 fatalities and 1,310 lost-workday injuries will be prevented annually. Table 8 shows the summary of total benefits expected to be achieved through promulgation of the final rules.

D. Technological Feasibility

In assessing the technological feasibility of these final rules, OSHA reviewed existing electric power generation, transmission, and distribution practices and electrical protective equipment practices among the affected industries. Based on this review, OSHA considers the implementation of the final rules to be technologically feasible.

The final rule in 1910.269 has included several new provisions or requirements that differ from the proposed rule. These new modifications primarily involve personnel time to develop programs and procedures and to train employees. Any equipment required to comply is either currently in use or readily available. OSHA has determined, based on its review, that all of the work practices and specifications required by the final standard are consistent with equipment procurement, installation, and work practices widely accepted in these industries.

E. Costs of Compliance

The cost of compliance with the final standards were estimated using the baseline of current electric utility practices. Electric utilities have had to comply with other parts of OSHA standards since 1970, and have been subject to various national consensus standards such as the National Electrical Safety Code and those of the American Society for Testing and Materials. Since many costs have already been incurred to comply with these standards, this analysis covers incremental costs that will need to be incurred to comply with new requirements imposed by 1910.137 and 1910.269.

Compliance costs of the standards were based on industry profile information, current compliance rates, unit costs for required equipment, and hourly compensation of labor. For each provision of the standard, OSHA estimated initial costs and annual recurring costs. Initial costs represent up-front expenditures for program development and equipment. Any equipment that will need to be purchased was then annualized over the expected life of the resource in order to show these costs on an annual basis. Other ongoing expenditures incurred annually include refresher training, equipment maintenance, and inspections. OSHA summed the annualized capital costs and ongoing costs to estimate total annual costs.

OSHA estimates that the first year cost of compliance with the final rule will be $40.9 million and that the annual cost of compliance thereafter will be $21.7 million. Table 9 outlines the first year costs and annual costs by each sector affected by the final rule.

F. Nonregulatory Alternatives

The primary objective of OSHA's standards for electric power generation, transmission, and distribution work and for electrical protective equipment is to reduce the number of employee fatalities and injuries associated with the hazards involved in this work. OSHA believes these standards will eliminate to a considerable degree the worker risk experienced within the scope of the rules.

The Agency examined the nonregulatory approaches for promoting safety practices within industries that generate, transmit, and distribute electric power, including: (1) economic forces generated by the private market system, (2) incentives created by workers' compensation programs or the threat of private suits, and (3) related activities of private agencies. Following this review, OSHA determined that the need for government regulation arises from the significant risk of job-related injury or death caused by inadequate safety practices for electric power generation, transmission, and distribution work. Private markets fail to provide enough safety and health resources due to the lack of information on risk, immobility of labor, and externalization of part of the social costs of worker injuries and deaths. Workers' Compensation systems do not offer an adequate remedy because premiums do not reflect specific workplace risk and liability claims are restricted by statutes preventing employees from suing their employers. While certain voluntary industry standards exist, their scope and approach fail to provide adequate protection for all workers. Thus, OSHA has determined that a federal standard is necessary.

G. Economic Impacts

OSHA assessed the potential economic impact of the final standards on the affected industry sectors and has determined that impacts on prices, profits, and sales will be modest for most industries. In order to determine the economic feasibility of the standards, OSHA compared first-year compliance costs and recurring annual costs with revenue per firm (to produce price impact estimates) and before-tax profits per firm (to produce profit impact estimates) by Standard Industrial Classification (SIC) Code. Revenue and profit data were derived from Dun & Bradstreet databases.

Affected industries included SIC 0783, Shrub and Tree Services (line-clearance tree trimmers); SIC 1731, Electrical Work (high-voltage contractors); SIC 491, Electric Services (electric utilities and independent power producers); and SIC 493, Combination Electric and Gas, and Other Utility Services (electric utilities and independent power producers). Industrial generators and high-voltage customers were identified in SIC 13, Oil and Gas Production; SICs 20-39, Manufacturing; SICs 42-48, Transportation and Communications; SICs 50-57, Wholesale and Retail Trade; SICs 60-65, Finance, Insurance, and Real Estate; and SICs 70-87, Services.

Impacts were separately identified for large firms (20 or more employees) and small firms (1 to 19 employees). Among large firms in the electric utility industry, first-year price impacts were estimated to be less than 0.1 percent, assuming full cost pass through of contract power line workers' compliance costs. Estimated maximum profit impacts for large electric utilities in the first year were not expected to exceed 0.5 percent of pre-tax profits, also assuming full cost pass through of contract power line workers' compliance costs. For large line-clearance tree-trimming contractors, first-year price impacts were estimated to be 1.1 percent with maximum profit impacts of 13.1 percent. However, OSHA believes that large line-clearance tree-trimming firms will be able to pass the compliance costs through to their customers and therefore will not experience the decreased profits associated with the maximum profit impact scenario.

Large firms in the non-utility industry were identified among the independent power producers, industrial generators, high-voltage customers, and high-voltage contractors. First-year price and profit impacts for independent power producers are not expected to exceed 0.1 percent and 0.7 percent, respectively. Among industrial generators, first-year price impacts across all affected industries did not exceed 0.11 percent. First-year profit impacts in the industrial generating sector were generally less than 1.0 percent, with the highest impact (2.0 percent) occurring in SIC 82, Education Services. In industries with high-voltage customers, the first-year price impacts across all affected industries did not exceed 0.1 percent. First-year profit impacts for high-voltage customers were less than 1.0 percent in most industries, with the highest impact (1.2 percent) occurring in SIC 82, Education Services. Among high-voltage contractors, first-year price and profit impacts were not expected to be greater than 0.1 percent and 0.4 percent, respectively. OSHA concluded that these low levels of impact make the standards economically feasible for impacted large firms in all affected industries.

Pursuant to the Regulatory Flexibility Act of 1980 (5 U.S.C. 601 et seq.), OSHA assessed the impact of the final standards on small businesses. Within the electric utility industry, small businesses are not expected to experience price or profit impacts in excess of 0.2 percent even assuming full cost pass-through of contract power line workers' compliance costs. Estimated price impacts for small line-clearance tree trimmers were less than 0.6 percent, while the maximum estimated pre-tax profit impact was 8.2 percent. However, OSHA believes that small line-clearance tree-trimming firms will be able to pass the compliance costs through to their customers and therefore will not experience the decreased profits estimated under the maximum profit impact scenario. In the non-utility industries, only the independent power producer sector was identified as having affected small businesses. Small independent power producers are not expected to experience price impacts in excess of 0.1 percent or profit impacts in excess of 1.0 percent. Therefore, consistent with the Regulatory Flexibility Act, OSHA has concluded that the standards are economically feasible and will have no significant impact for small firms.

Thus, OSHA concludes that the economic impacts on affected industry groups will be small. It is not anticipated that small businesses will be disproportionately affected by the standards. OSHA also examined international trade and environmental issues and concludes that the standards will have no major negative impacts in those areas.


       Table 7. - Profile of Establishments and Employees in
                    the Utility and Non-utility industries
__________________________________________________________________________
                          |           | Number of | Number of |
                          | Number of |  affected |  affected | Number of
   Industry Group(1)      |  affected |   large   |   small   |  exposed
                          | establish-| establish-| establish-| employees
                          |   ments   |   ments   |   ments   |
__________________________|___________|___________|___________|__________
Electric Utilities:       |           |           |           |
  Total Utilities         |           |           |           |
  Including:..............|     2,134 |     1,693 |       441 | 242,164
    Investor-Owned,       |           |           |           |
    Cooperatively-Owned,  |           |           |           |
    Publicly Owned,(2)    |           |           |           |
    Federally Owned, and  |           |           |           |
    Contract Power Line   |           |           |           |
    Workers...............| ......... | ......... | ......... |  16,500
__________________________|___________|___________|___________|__________
Total: Electric Utilities.|     2,134 |     1,693 |       441 | 258,664
__________________________|___________|___________|___________|__________
Contract Line-Clearance   |           |           |           |
  Tree Trimmers:          |           |           |           |
    National Arborist     |           |           |           |
    Association...........|        55 |        55 |         0 |  26,932
    Others................|     1,750 |         0 |     1,750 |  10,000
__________________________|___________|___________|___________|__________
Total: Contract Tree      |           |           |           |
  Trimmers................|     1,805 |        55 |     1,750 |  36,932
__________________________|___________|___________|___________|__________
Independent Power         |           |           |           |
  Producers and           |           |           |           |
  Industrial Generators:  |           |           |           |
    Independent Power     |           |           |           |
    Producers.............|     2,160 |        85 |     2,075 |   7,647
    Industrial Generators.|     1,682 |     1,682 |         0 |  20,400
__________________________|___________|___________|___________|_________
Total: IPP's and          |           |           |           |
  Generators..............|     3,842 |     1,767 |     2,075 |  28,047
__________________________|___________|___________|___________|_________
High-Voltage Contractors: |           |           |           |
  Union Contractors.......|       200 |       200 |         0 |   9,750
  Non-Union Contractors...|       200 |       200 |         0 |   9,750
__________________________|___________|___________|___________|_________
Total: High-Voltage       |           |           |           |
  Contractors.............|       400 |       400 |         0 |  19,500
__________________________|___________|___________|___________|_________
High-Voltage Utility      |           |           |           |
  Customers:              |           |           |           |
    Firms Performing      |           |           |           |
    In-House Work.........|     3,893 |     3,893 |         0 |  38,930
__________________________|___________|___________|___________|__________
--------------------------|-----------|-----------|-----------|----------
      Total...............|    12,074 |     7,808 |     4,266 | 382,073
__________________________|___________|___________|___________|__________
  Footnote(1) Refer to the Industry Profile (Chapter II) of the Final
Regulatory Impact Analysis of the Electric Power Generation, Transmission
and Distribution and the Electrical Protective Equipment Final Rules for a
detailed explanation of establishments and employees covered in the final
standards.
  Footnote(2) The number of publicly owned utilities and employees
included among Affected Establishments and Exposed Employees excludes
publicly owned utilities in non-state-plan states.
  Source: OSHA, Office of Regulatory Analysis; Eastern Research Group,
1993.


        Table 8. - Summary of Benefits Associated With the Final
                     Electric Power Generation Standard and the
                   Final Electrical Protective Equipment Standard
__________________________________________________________________________
                                              |    Accident cases
                                              |___________________________
       Type of accident/sector                | Baseline | Prevented by
                                              |          |final standards
______________________________________________|__________|________________
Fatalities:                                   |          |
  Electric utilities(1).......................|     60.7 |       42.6
  Utility contractors                         |          |
    Electrical contractors....................|      9.4 |        6.6
    Line-clearance tree trimmers..............|      8.6 |        5.8
  Non-utility establishments..................|      6.8 |        5.6
                                              |__________|_______________
      Total...................................|     85.5 |       60.6
Lost-Workday Injuries:                        |          |
  Electric utilities(1).......................|  7,773.0 |      917.2
  Utility Contractors                         |          |
    Electrical contractors....................|    529.0 |       62.4
    Line-clearance tree trimmers..............|  1,920.5 |      226.6
  Non-utility establishments                  |          |
    Power line workers........................|  1,856.0 |      259.8
    Power plant employees.....................|    898.0 |      167.0
                                              |__________|_______________
      Total...................................| 12,976.5 |    1,633.1
______________________________________________|__________|________________
  Footnote(1) Excludes totals for utility contractors.
  Source: Eastern Research Group.

        Table 9. - Total Costs of Compliance for the Final Rules

(For Table 9, Click Here)

[59 FR 4320, Jan. 31, 1994; 59 FR 33658, June 30, 1994]

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