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Regulations (Preambles to Final Rules) - Table of Contents
• Record Type: Confined and Enclosed Spaces and Other Dangerous Atmospheres in Shipyard Employment
• Section: 4
• Title: Section 4 - IV. Final Regulatory Impact Analysis, Regulatory Flexibility Certification, and Environmental Impact Assessment

IV. Final Regulatory Impact Analysis, Regulatory Flexibility Certification, and Environmental Impact Assessment

A. Summary

The Agency has concluded that the final Subpart B standard for confined spaces in shipyards is technologically and economically feasible. Subpart B incorporates the approach of the previous standard and subpart A (as it applies to subpart B) while mandating new, comprehensive program elements such as training, duty to other employers, and rescue.

The Agency estimates that the final rule will result in no new significant costs for the industry. In addition, the Agency finds that the final Subpart B is the most cost-effective approach. The Agency agrees with its Shipyard Employment Standards Advisory Committee (SESAC) that the current approach of making confined and enclosed spaces and other dangerous atmospheres safe before entry and using Marine Chemists and competent persons to test and certify spaces has succeeded well and will continue to provide a safe working environment for employees.

                   |  Final   |  Number   | Number of |  Annual | Annual
   Standard        |  rule    | of deaths | injuries  |  costs  |  cost
 (CFR cite)        |  date    | prevented | prevented |  first  |  next
                   |(FR cite) | annually  | annually  |   5 yrs | 5 yrs
                   |          |           |           |  (mill) | (mill)
                   |          |           |           |         |
Grain handling     | 12-31-87 |       18  |       394 | 5.9-33.4| 5.9-33.4
 (1910.272)        | (52 FR   |           |           |         |
                   | 49622)   |           |           |         |
                   |          |           |           |         |
HAZWOPER           | 3-6-89   |       32  |    18,700 |     153 | 153
 (1910.120)        | (54 FR   |           |           |         |
                   |  9311)   |           |           |         |
                   |          |           |           |         |
Excavations        | 10-31-89 |       74  |       800 |     306 | 306
 (Subpart P)       | (54 FR   |           |           |         |
                   | 45,954)  |           |           |         |
                   |          |           |           |         |
Process safety     | 2-24-92  |      330  |     1,917 |   880.7 | 470.8
 Mgmt (1910.119)   | (57 FR   |           |           |         |
                   |  6356)   |           |           |         |
                   |          |           |           |         |
Permit-required    | 1-14-93  |       54  |     5,041 |   202.4 | 202.4
 confined spaces   | (58 FR   |           |           |         |
 (1910.146)        |  4462)   |           |           |         |

In addition, extending the scope of Subpart B to land-side activities will benefit the industry and its workers by ensuring that land-side work activities are covered by a protective standard. Most of the industry has been following Subpart B for confined space work on land-side for some time. Because workers and the tasks and hazards are essentially the same whether on vessels or land-side, employing separate standards for each would have the potential to create confusion and actually increase the risk of an incident occurring. The full regulatory impact analysis is in docket S-050.

B. Introduction

Executive Order 12866 requires the Agency to perform an analysis of the costs, benefits, and regulatory alternatives of its "significant regulatory actions." A significant regulatory action is one that is likely to result in a rule that may:

(1) 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;

(2) Create a serious inconsistency or otherwise interfere with an action taken or planned by another agency;

(3) Materially alter the budgetary impact of entitlements, grants, user fees, loan programs or the rights and obligations of recipients thereof; or (4) Raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in this Executive Order. This final rule directly affects one well-defined industry, the shipbuilding and ship repair industry, but there are no new costs of compliance. Accordingly, the promulgation of the confined and enclosed spaces and other dangerous atmospheres standard for shipyard employment is not a "significant regulatory action" for the purposes' of E.O. 12866.

As required by the OSH Act and its judicial interpretations, the Agency must demonstrate that this regulation is both technologically and economically feasible for the shipyard industry. The Agency has concluded that this standard meets both tests of feasibility.

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. The Assistant Secretary certifies that this rule will not have such an impact, as the rule imposes no new cost on firms.

The Agency must also review this standard in accordance with the requirements of the National Environmental Policy Act (NEPA) of 1969 (42 U.S.C. 4321 et seq.), the Guidelines of the Council of Environmental Quality (CEQ)(40 CFR part 1500), and OSHA's DOL NEPA Procedures (29 CFR part 11).

This summary of the Agency's analysis includes an overview of affected industries and employees, estimated benefits, the technological feasibility of the standard, estimated compliance costs, regulatory flexibility analysis, economic and environmental impacts, a discussion of the regulatory and non-regulatory alternatives to this final standard, and the existence of significant risk. The full text of the regulatory analysis has been placed in the shipyard confined space's Docket S-050.

OSHA created the Shipyard Employment Standards Advisory Committee (SESAC) in 1988 to advise the Agency in consolidating the shipyard standards. The committee was made up of representatives from industry, labor, government, and professional organizations. Besides making recommendations to the Agency about its regulations, the committee also provided information about current industry practices and the costs and benefits of various rules and alternatives. This information has been reviewed carefully by the Agency in developing the Regulatory Analysis of the final rule.

C. Industry Profile

The American shipyard industry has been in a long-term decline since 1981 when the Federal government ended subsidy programs for commercial ship construction. In the period 1976-1980, the industry built an average of 64 merchant vessels per year. Only five commercial ships have been built since 1988. The decline in merchant vessel construction in the 1980's was partially offset by a large increase in military ship construction. However, the end of the military competition with the former U.S.S.R. has resulted in a sharp drop in military ships on order. The recently completed "bottom-up" review of the armed forces has called for a major reduction in the number of active combat ships, and consequently a drop in the number of future orders. U.S. Navy orders, which averaged 19 per year in the 1980's, is estimated to fall to 8 per year during the period 1994-1999. Ship repair and construction of inland vessels and barges has remained constant during the past 5 years.

Employment in the shipbuilding industry had fallen from 177,000 in 1984 to about 125,000 by 1987 and remained near that level until 1992. The Bureau of Labor Statistics estimates that employment in the industry had fallen to 106,000 by late 1993. It is likely that employment will continue to fall to below 100,000 in the next few years. In 1992 the value of output from American shipyards was approximately $9.9 billion. Based on Dun & Bradstreet's estimated mean return for the shipyard industry of 2.9 percent, the industry earned approximately $287 million.

The Agency estimates that there are approximately 500 firms in SIC 3731, and a majority of these have fewer than 50 employees. Employment in the shipyard industry is highly concentrated. The ten largest shipyards employ approximately 70 percent of all shipyard workers, and only the 100 largest firms have as many as 100 employees. The Agency estimates that approximately 200 firms engaged in ship repair employ fewer than 11 employees.

D. Population at Risk

Based on data in the 1987 Census of Manufacturers, 75 percent of shipyard employees are production employees. Data from CONSAD Research Corporation's 1986 report to OSHA estimated that 76.6 percent of shipyard workers were production workers. Relying on the 1987 Census of Manufacturers, the Agency concludes that there are approximately 79,500 production workers (75 percent of 106,000 total employees) who are potentially involved in confined space entry in shipyard employment and are therefore exposed to confined space hazards.

E. Technological Feasibility

The shipyard industry has been applying the previous Subpart B on vessels for approximately 30 years - and to some extent on land-side activities. While the revised final standard mandates new elements such as training, rescue, and duty to other employers, it makes no fundamental change in the way shipyards perform confined spaces' work. Technologies such as atmospheric testing instruments, ventilation equipment, and respirators have been in use for many years throughout the industry. As the new standard does not require any new technology or engineering or other controls, the Agency concludes that this new confined space standard is technologically feasible. The performance-oriented criteria of the standard should also allow technological innovation to achieve compliance.

F. Costs and Benefits

Several elements in the final rule could impose costs on the shipyard industry: requirements for training of production workers; duty to other employers (contractors and subcontractors); extending the scope to land-side operations; and specifications for self-rescue and rescue teams. The Shipyard Employment Safety Advisory Committee (SESAC) recommended that all of these provisions be included in the final confined spaces standard to make the rule comprehensive. Submissions to the docket by the shipyard industry, unions, and professionals in the maritime industry indicate that these elements would not impose new costs on shipyards but would in essence codify current industry practice. Testimony at SESAC's meetings also consistently indicated that the elements of the new standard would impose no new costs on the industry (SESAC transcript Sept. 3, 1992, pp. 471-503). The Agency therefore concludes that the new Subpart B is economically feasible, and will have no effect on profits or the cost of output of the shipyard industry.

A benefit of the final rule is to eliminate a paperwork requirement of reporting the identity of shipyard competent persons to the Agency on two forms and to clarify the duties of the competent person, Certified Industrial Hygienist, and Marine Chemist. The Agency believes that full compliance with existing Subpart B would eliminate the average of one to two annual fatalities. However, the Agency also concludes that mandating the new comprehensive elements of the final standard (for training, duty to other employers, and rescue) will contribute to compliance and discipline in applying Subpart B and will reduce the number of fatalities. The Agency also concludes that increasing the oxygen content to 19.5 percent by volume, specifying the order of atmospheric testing, and limiting oxygen to no more than 22 percent by volume reduces significant risk relative to the requirements of existing Subpart B. The shipyard industry largely conforms to these practices at the present time.

G. Regulatory Alternatives

The Agency also believes that the proposed rule is the most cost-effective regulatory alternative for this industry. If the general industry "permit-entry confined spaces" standard (29 CFR 1910.146) were applied to land-side activities - or all shipyard work - costs would be incurred to re-train shipyard production workers in a second procedure for entering and working in confined spaces, for attendants, and for establishing a written program. The Agency estimates that this would cost the industry approximately $104 million annually. These costs are not as high as estimates found in the comments to the docket because the final general industry permit spaces rule differed significantly from the proposed rule, especially on the number of attendants that would be required. Adopting the general industry confined spaces for only land-side shipyard operations could also result in increased risk of accidents if shipyard workers had to apply two distinct standards to their work. Confined space work is routine in shipyards and employees frequently shift back and forth between land-side and vessels.

A second regulatory alternative would be to apply the general industry standard to all shipyard work. Here the program costs would be as great as the first alternative but the Agency has concluded that there would not be additional benefits. The shipyard confined space standard is in many ways a more restrictive subset of the general industry standard. The additional program-based elements of 1910.146 would not improve the safety of confined space entry in shipyards because the shipyard standard is even more comprehensive in its coverage of hazardous atmospheres. Further, its approach to inspection, testing, and ventilating spaces has become an integral part of the routine work activity in shipyard employment.

Confined and enclosed space and other dangerous atmosphere work in shipyards is unique: it is routine; hazardous atmospheres are common; and the work activity itself frequently introduces or creates hazards. The confined spaces of each ship are different. A ship's interior structure may consist of a series of nested confined spaces, one within the other, each of which may be irregular and accessible through small hatches. Safety procedures based on attendants or quick rescue are not a safe or a practical solution.

Evidence in the record from the industry attests to the success of the shipyard industry in protecting employees during work in confined spaces (Docket S-050: 11-3, 11-6, 11-12, 11-13, 11-17, 11-30). However, fatalities and injuries do occur: OSHA recorded 20 deaths between 1983-1992 in its Fatality Investigation Reports for the shipyard and boat-building industries combined. In every case, OSHA's evaluation indicated that the fatality was caused by a failure to follow the requirements of the previous Subpart B. Although accidents are relatively few given the large number of confined space entries and the hazards involved, the continuing number of fatalities and injuries indicates that a regulation is necessary to maintain safe work practices.

H. International Trade

In accordance with Executive Order 12866, OSHA assessed the effects of the final standard on international trade. The shipyard industry actively competes with foreign shipyards for ship repair and shipbuilding orders. If this OSHA regulation significantly increased the price of products and services of domestic shipyards, foreign shipyards could benefit. OSHA believes, however, that there will be no significant effect on products or services as a result of this regulation.

I. Environmental Impact

The confined spaces standard has been reviewed in accordance with the requirements of the National Environmental Policy Act (NEPA) of 1969 (42 U.S.C. 4321 et seq.), the regulations of the Council on Environmental Quality (40 CFR Part 1500), and DOL NEPA Procedures (29 CFR Part 11). This rule will not result in a significant incremental increase release of hazardous substances into the ambient air. Releases of substances regulated under EPA's SARA Title III or EPA NESHAP standards are subject to reporting and control requirements in those rules.

J. References

1. U.S. Department of Commerce. International Trade Administration. 1993 U.S. Industrial Outlook. 30th Annual Edition.

2. U.S. Department of Transportation. Maritime Administration. Report on Survey of U.S. Shipbuilding and Repair Facilities, 1990.

3. U.S. Department of Commerce. Bureau of the Census. Preliminary Report Industry Service 1987 Census of Manufacturers: Shipbuilding and Repairing (Industry 3731). Washington, D.C.: Government Printing Office, 1990.

4. U.S. Department of Commerce. Bureau of the Census. Preliminary Report Industry Service 1987 Census of Manufacturers: Shipbuilding and Repairing (Industry 3731). Washington, D.C.: Government Printing Office, 1989.

5. CONSAD Research Corp. Data to Support a Regulatory Analysis of the Proposed Standard for Shipbuilding and Repairing. Final Report. Prepared for the U.S. Department of Labor, Occupational Safety and Health Administration, under Contract No. J-9-F-4-0024. Pittsburgh: CONSAD, November 1985.

6. CONSAD Research Corp. Data to Support a Regulatory Analysis of the Proposed Standard for Shipbuilding and Repairing: Subpart B. Prepared for the U.S. Department of Labor, Occupational Safety and Health Administration, under Contract No. J-9-F-4-0024. Pittsburgh: CONSAD, June 1986.

7. Commission on Merchant Marine and Defense. First Report of the Commission of Merchant Marine and Defense, Appendices. Washington, D.C., September 30, 1987.

8. Dun and Bradstreet Financial Data. 1989, 1991. 9. Bureau of Labor Statistics, Employment and Earnings, Nov., 1993. 10. Executive Office of the President. OMB. Standard Industrial Classification Manual. 1987.

11. Main Hurdman/KGM. Profile of the Shipbuilding and Repairing Industry. Prepared for the U.S. Department of Labor, Occupational Safety and Health Administration. Washington, D.C., October 1984. 62 Pp.

12. Shipyard Council of America. "Merchant Shipbuilding" September, 1987; "Naval Shipbuilding" January, 1992; "Ship Construction Report" July, 1991.

13. American Waterways Shipyard Conference. 1989 and 1992 Annual Shipyard Survey. Arlington, Va.

14. Bureau of Labor Statistics, Occupational Injuries and Illnesses in the U.S. by Industry 1992.

15. Selected Occupational Fatalities Related to Ship Building and Repairing as Found in Reports of OSHA Fatality/ Catastrophe Investigations, U.S. Dept. of Labor, OSHA, 1990.

[59 FR 37816, July 25, 1994]

Regulations (Preambles to Final Rules) - Table of Contents

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