IV. Summary of Final Economic Analysis, Regulatory Flexibility Analysis, and Environmental Impact Assessment Summary

In accordance with Executive Order 12866, OSHA has developed a final economic analysis to support the final standard for personal protective equipment (PPE) in the shipyard industry. The Agency has also analyzed the standard's impact on small entities, as required by the Regulatory Flexibility Act, and its potential to cause adverse environmental impacts, as required by the National Environmental Policy Act. The final rule, which will be codified as subpart I of the shipyard employment standards (29 CFR 1915), covers the use of personal protective equipment for the head (e.g., hard hats), eyes (e.g., goggles), feet and hands (e.g., shoes and gloves), and body (e.g., chemical protective clothing), contains the respirator requirements that have been part of OSHA's shipyard standards since 1971, and adds requirements for personal fall protection systems and positioning device systems.

Injuries in the shipyard industry are frequent and severe. The shipyard industry (SIC 3731) has the second highest rate of lost workday injuries and illnesses (37.8 per 100 full-time workers), according to the BLS publication "Occupational Injuries and Illnesses: Counts, Rates, and Characteristics, 1992" (published in April 1995). The industry also has one of the highest average number of lost workdays per injury (more than 40 percent of lost workday injuries involve more than 10 days away from work, according to the same BLS publication).

To address those shipyard injuries that result from the failure to use PPE or from the use of inadequate PPE, and to raise the minimum standard of PPE use in the industry to the level of technology currently available, OSHA has developed this final rule. The rule requires employers to meet minimum specifications for PPE employed to protect the eyes and face, hands and body, and feet, as well as those for respiratory protection, lifesaving, and personal fall protection equipment. In addition, the final rule requires employers to conduct hazard assessments, include specific elements related to PPE in the training they provide to their workers, document training and hazard assessments, require the use of body harnesses in place of body belts after a phase-in period, and ensure the use of locking snaphooks on personal fall protection equipment. Rulemaking participants from the shipyard industry report that most employers in the industry are already in compliance with the requirements of the final standard. For example, one industry representative stated "* * * most shipyards require employees to wear personal protective equipment in all areas beyond the office doors. * * * We've already identified and protected our employees and our visitors because of the hazardous work environment" [January 25, 1995 public meeting, Transcript page 9].

The economic analysis identifies a number of benefits that employers and employees will experience as a result of compliance with the standard. For example, the Agency has concluded that the rule's requirements for body harnesses and locking snaphooks will reduce the risk of fatal falls, and these requirements will also reduce the severity of the injuries resulting from non-fatal falls. In addition, the final rule is estimated to prevent about 1,550 lost workday injuries annually and 12,650 non-lost workday injuries caused by the failure to use PPE or the use of inadequate PPE.

The Agency estimates that employers in the affected industry will incur estimated annual costs of compliance of $163,000. These costs, which average about $2 per covered employee, will not impose substantial economic impacts on affected firms in any size-class. OSHA has also evaluated the impacts of compliance costs on the average small shipyard and has determined that, even under a no cost pass through assumption, worst case impacts on such establishments will average no more than $100 annually. OSHA has therefore concluded that this standard will not impose an undue burden on small firms; in addition, the standard will not have an adverse effect on the environment.

Introduction

Executive Order 12866 requires the Agency to perform an analysis of the costs, benefits, and regulatory alternatives of its regulatory actions. If a regulation is deemed "significant" by the Administrator of OMB's Office of Information and Regulatory Affairs (OIRA), OIRA reviews the regulation and OSHA's economic analysis. A regulatory action is considered significant if it imposes annual costs on the economy of $100 million or more or has an adverse effect on the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities. This final rule directly affects only one well-defined industry, the shipbuilding and ship repair industry, and the estimated costs of compliance are far below the $100 million threshold. OSHA has therefore concluded that the promulgation of this final standard for personal protective equipment in shipyard employment is not a significant action under the guidelines of E.O. 12866.

As required by the OSH Act and its judicial interpretations, the Agency must demonstrate that all of its regulations are both technologically and economically feasible, and specifically that this is the case for this rule. The Agency has concluded that this standard meets both tests of feasibility. A summary of the Agency's feasibility assessment of the final rule is presented in the following section of the Economic Analysis.

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 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 on Environmental Quality (CEQ) (40 CFR Part 1500), and OSHA's DOL NEPA Procedures (29 CFR Part 11).

This summary of the economic analysis includes an overview of the affected industry and employees at risk, the estimated benefits of the rule, the technological feasibility of the standard, the estimated compliance costs shipyard employers will incur, the impact of those costs on firms in the shipyard industry, the results of the regulatory flexibility and economic analysis, and a discussion of regulatory and non-regulatory alternatives. The full text of the economic analysis is in the shipyard PPE docket (Docket S-045).

Industry Profile

The American shipyard industry has been in a long-term decline since 1981 when the federal government ended subsidies 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 "bottom-up" review of the armed forces called for a major reduction in the number of active combat ships, and consequently has caused a drop in the number of future orders. U.S. Navy orders, which averaged 19 per year in the 1980's, are projected 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 five years.

Recently American shipyards have received new orders for construction of commercial ships (Wall Street Journal Nov. 15, 1995). These orders result mainly from a new Federal loan guarantee program approved by Congress but also are due to exchange rates that have made American-made products cheaper relative to foreign-produced goods. Wage rates in American shipyards were already well below those of some important foreign competitors, such as Germany and Japan, whose governments heavily subsidize their shipbuilding industries. A new global trade accord that would end shipbuilding subsidies may be signed in the near future. This would allow American shipyards to compete internationally, increase commercial ship construction, and increase employment levels in the industry. The Agency estimates that employment in American shipyards will end its decline and level off or increase slightly for the next two to three years. Future employment levels depend on funding for the guaranteed loan program, exchange rates and the relative price of American versus foreign-built ships, foreign governments' level of subsidy to their shipyards, and the status and terms of a global accord to end subsidy programs.

Employment in the shipbuilding industry declined 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 was 106,000 by late 1993. The most recent BLS "Employment and Earnings" (May 1995) estimates the same level of employment and reports that about 79,000 of these employees are production workers. In 1994, the value of output from American shipyards was approximately $9.5 billion (1994 Industrial Outlook estimate). Based on Dun & Bradstreet's estimated mean return for the shipyard industry of 2.9 percent, the industry earned approximately $275 million in 1994.

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 each. The Agency estimates that approximately 300 firms engaged in ship repair employ fewer than 20 employees. Many of these small firms perform contracting for larger firms; those that do so already follow the PPE guidelines of the employing shipyards.

Employees at Risk

Numerous sources confirm that about 75 percent of shipyard employees are production workers, including the 1987 Census of Manufactures (Bureau of the Census 1990) and CONSAD Research Corporation (1986). The Agency thus concludes that an estimated 79,000 production workers in this industry are now exposed to workplace hazards that may require the use of PPE of the types covered by the final rule.

Technological Feasibility

Equipment to meet the final PPE standard, such as hard hats, gloves, and safety shoes, is readily available and widely used throughout the industry. Off-the-shelf safety programs that include guidance on the conduct of hazard assessments, as well as training program materials, are readily available, and these programs are also well established throughout the industry. "Hazard assessments are a standard practice at EBDiv. [Electric Boat Division]" [Ex. 9-10]. "Shipyards are safety conscious. Every shipyard in the Hampton Roads area has a safety program and a safety officer * * * STASR shipyards have safety programs with many of the PPE standards already in place. The [proposed standard's] PPE training and recordkeeping requirements are, in some cases, redundant" [South Tidewater Association of Ship Repairers, Ex. 9-3].

Training documentation is usually maintained by shipyard employers in a computer database. The Agency therefore concludes that the final PPE standard is technologically feasible. The performance-oriented criteria of the standard should also allow technological innovation to improve PPE protection in the future.

Costs

The preliminary cost estimates prepared by OSHA to support the proposed shipyard PPE standard published in 1988 included compliance costs that shipyard employers would incur to comply with a number of proposed requirements for respirator use. However, the final standard does not include any new respirator requirements, because the Agency expects to publish a final rule addressing respirator use in all industries in the near future. Thus, this final rule includes only those respirator provisions that have been included in OSHA's shipyard rules since 1971.

In response to the preliminary Regulatory Impact Analysis (1988), OSHA received only one comment on the costs of the proposed standard. Peterson Builders [Ex. 6-14], referring to the proposed requirement for foot protection in Section 1915.156, stated that buying protective footwear for all employees -- which the commenter interpreted as being required by the proposed standard -- would be costly and unnecessary. The Agency has recently clarified its policy on the purchase of PPE to make clear that employers do not have to purchase equipment that may also have personal use; OSHA believes that the costs of PPE will therefore be substantially less than this commenter expected. In addition, as noted above, OSHA's 1988 Preliminary Regulatory Impact Analysis (see Docket S-045) noted that the use of PPE in shipyards is already widespread.

On April 6, 1994 OSHA published a final standard for PPE in general industry (59 Federal Register No. 66). On July 6, 1994, the Agency reopened the record for the shipyard PPE standard to incorporate the general industry PPE docket into the shipyard PPE docket and to propose the addition of several elements from the general industry standard to the shipyard standard. These elements included requirements for: certification of workplace hazard assessments; certification of training; specification of training elements; the phasing out of body belts in favor of body harnesses; and the replacement of non-locking snaphooks with locking snaphooks. The Agency's intent in taking this action was to make the PPE standard consistent where possible in both shipyards and the general industries. Following the comment period, a Federal Register notice announcing a public meeting and containing additional discussion of some of the issues raised by the reopening was published on December 13, 1994. A public meeting was held on January 25, 1995 to hear testimony about the proposed changes to the shipyard standard introduced during the reopening of the record.

Representatives of the shipyard industry and industry associations opposed the new requirements for work place hazard assessments and the certification of such assessments. First, the industry asserted that job-related activities in shipyards are unique because a shipyard is not a fixed "workplace." Instead there is a constant shifting of trades between work locations as employees move among various shops and vessels; in addition, in ship repair and overhauling, the vessels being worked on constantly change. According to these commenters, it is not possible for designated shipyard employees to continuously assess the hazards of a "workplace" that is constantly changing. According to one participant, a better approach would be to perform hazard assessments by trade to determine the level of PPE required [South Tidewater Association of Ship Repairers, Ex. 9-3]. Numerous commenters agreed with this view [Exs. 9-1, 9-7 through 9-12].

As discussed above in relation to final rule Sec. 1915.152(b), OSHA agrees that it is appropriate to allow employers flexibility in organizing their hazard assessment efforts. The Agency has underscored the performance-oriented nature of that provision by adding a note to the final rule which states that hazard assessments conducted according to the trade or occupation of affected employees are acceptable so long as they address any PPE-related hazards to which employees are exposed in the course of their work activities.

The shipyard industry also opposed the requirement for certification of hazard assessments because, in the opinion of commenters, certification would require employers to expend resources for new paperwork activities "for the convenience of the Agency" that would not result in additional safety for production workers [Ex. 9-11]. Industry commenters also were concerned that certification might increase their liability when injuries occur. Other shipyards that currently rely on worker involvement to analyze risks feared that certification would disrupt that process [January 25, 1995 public meeting transcript pages 28 and 41-47]. The shipyard industry also opposed the certification of hazard assessments on the grounds that these assessments would be redundant, since the industry already performs many PPE-related hazard assessments for individual health and safety standards such as hearing conservation, lead, confined spaces, respirator use, and other OSHA standards.

In its Federal Register notice on December 13, 1994 announcing a public meeting on shipyard PPE issues, the Agency asked for information on whether simple documentation would suffice in place of certification. In testimony at the public meeting and in comments submitted following the meeting, industry representatives stated that they did not oppose documentation of hazard assessments. In fact, they reported that it is routine in the industry to conduct such assessments and to document them:

* * * hearing conservation, respiratory protection, hazard communication, lockout/tagout, lead abatement, blood-borne pathogens, medical surveillance programs * * * [are] programs that are already in place that [require] us to do hazard assessments of the workplace in order that we provide PPE * * * Where hazard assessment does not exist, and it would be hard for me to say where it doesn't in the shipyard industry, we'd recommend that an annual assessment be made. [Shipbuilders Council, January 25, 1995 public meeting transcript page 11].

Commenters within the shipyard industry also opposed the general industry PPE requirement to certify training, largely for the same reasons as those noted above for the certification of hazard assessments -- the creation of potential new legal liability and unnecessary paperwork. In its December 13, 1994 announcement, the Agency suggested that simple documentation could be used in lieu of certification, and the final rule requires documentation rather than certification.

Commenters were generally supportive of the standard's training requirements and the specific elements of training mandated by the rule. Commenters stated that the PPE training elements proposed by the Agency were practiced throughout the shipyard industry, as was the maintenance of training logs -- usually in the form of a computer database:

We support the general requirement for training as it does serve to enhance a safer working environment [Shipbuilders' Council [Ex. 9-9]].

We are already complying with this proposed standard [for training] and we suspect many other shipyards are also complying. * * * Our new hire orientation programs covers all areas of PPE and would meet the new requirements proposed in the standard [Tampa Shipyards, Ex. 9-8].

We'd recommend this documentation [for training] be in the form of training logs, which most of us already keep on the computer [Shipbuilders' Council January 25, 1995 public meeting, Transcript page 13].

There was widespread support among industry commenters for the use of body harnesses in place of body belts:

Electric Boat Division utilizes body harnesses for all of its fall protection needs. * * * [Ex. 9-10].

BIW/Local S6 has implemented a policy which is consistent with the construction industry standard in that only body harnesses may be used in fall arrest systems and body belts may be used in positioning device systems [Bath Iron Works Ex. 11-7].

Without a doubt, the majority of our membership endorses the use of harnesses. Most of us already have those in place [Shipbuilders' Council January 25, 1995 public meeting, Transcript page 14].

However, Newport News Shipbuilding (NNS), which employs about 20 percent of all shipyard employees, opposed the phase-out of body belts in favor of harnesses. NNS relies almost completely on body belts for fall protection, although the shipyard did report using a small number of harnesses. Several small yards also still rely on body belts for fall protection and questioned the utility of changing to body harnesses since they had experienced no injuries due to the use of body belts [Exs. 9-1, 9-3 and 9-11]. At the public meeting, NNS stated that replacing over 4,700 body belts would be a burden and therefore that a seven-year phase-in period would be needed to reduce the economic impact. The company reported that a review of several years' accident records failed to show that falls of employees using body belts resulted in any severe injuries. NNS did not introduce its data on falls into the record, however. A cost analysis presented by NNS at the hearing showed that body belts cost NNS $43 each and, on average, lasted 7 years; harnesses cost $140 and have a working lifetime of 3 years.

Most other shipyards and industry associations reported that they had switched to harnesses from belts. These commenters reported that, although harnesses cost more than belts, they provide greater protection and are cost effective.

We * * * endorse the use of body harnesses as a safety method for employees. While the cost of a body harness is usually twice the amount of body belts, the added safety factor to the employee is well worth the money, and in the long run will save the company money is case of an accident [Atlantic Marine Ex. 9-9].

In fact many of our yards already use them [harnesses]. We find them to be very effective, and everybody seems to certainly feel a lot safer with them [Shipbuilders' Council January 25, 1995 public meeting, Transcript page 23].

At the public meeting on January 25, 1995, representatives of the American Insurance Service [Tr. 59] stated that body harnesses would prevent injuries that could occur in falls involving employees wearing body belts. In addition, they said that it is difficult to rescue a worker in a body belt after a fall since he or she typically is hanging "nose to toes," or upside down. Several falls involving employees (in other industries) wearing body belts had resulted in fatalities when the fallen worker had slipped out of his/her body belt. The insurance representatives also asserted that the cost of harnesses should not preclude the inclusion of a harness requirement in the rule because industry has known that the change to harnesses was going to occur, body belts are usually "expense" items, and, if treated as a capital expense, will have been fully depreciated by the effective date of the regulation. The association did not provide any data demonstrating that the injuries associated with falls in body harnesses was less severe than those in belts. Belts were estimated to cost $35 each and harnesses $75 each. Harnesses were estimated to last an average of 2 to 4 years.

OSHA agrees with the assessment of most of the commenters from the shipyard industry and the insurance industry who supported the requirement for harnesses in lieu of belts, and the final rule thus contains such a requirement.

Many commenters endorsed the adoption of locking snaphooks over non-locking snaphooks on lifelines [Ex. 9-10 and January 25, 1995 public meeting, Transcript page 52]. Locking snaphooks are already in widespread use in shipyards. At the January 25, 1995 public meeting, representatives from the American Insurance Service demonstrated how, in a "roll-out" situation, lifelines can detach from non-locking snaphooks. Most industry commenters reported that snaphooks were used in their shipyard, and none opposed this change to the standard or raised it as a cost issue.

Based on the record for this rulemaking, the Agency has concluded that the only provisions of the final PPE standard that will impose other than negligible costs on shipyard employers are: the replacement of body belts with body harnesses; the documentation of hazard assessments; the development of training for body harnesses in shipyards not already employing harnesses; and employee training for body harnesses. Only Newport News Shipbuilding (NNS) and a number of small shipyards reported that they still rely on body belts. (Very small shipyards specialize in trades and may not use body harnesses or body belts at all). OSHA has taken the concerns of these commenters into account in the final rule. NNS stated that it currently uses about 4,700 body belts, although no information was available on the breakdown between belts used as positioning devices (this would not be affected by the final rule) and those used for fall protection. To the extent that some of these belts continue to be used for positioning devices, the 4700 figure overstates the number of harnesses to acquire. The Agency estimates that NNS will need to purchase no more than 3,000 harnesses (about 1 for every 5 production workers). The Agency estimates that, in addition to NNS, some smaller employers in the industry may need to buy harnesses to replace body belts, and the Agency estimates that 1,000 harnesses would be purchased by these employers. Based on evidence in the record and information from suppliers, the Agency estimates that body belts cost about $50 and harnesses $100. Body belts are estimated to last an average of 7 years and harnesses 3 years. Thus, body belts supply fall protection at a cost of roughly $7 per year ($50/7 years), while harnesses do so at $33 per year ($100/3 years). Harnesses therefore cost roughly $27 more per year than belts for each affected employee. Since body belts can still be used as positioning devices, the requirement that harnesses be used for fall protection will not end the useful life of these belts. Based on these estimates, OSHA concludes that replacing body belts with harnesses will result in a new annual cost to the industry of approximately $128,000 [(3,000 new harnesses for NNS+1,000 new harnesses for small shipyards) x $27]. Nevertheless, to allow additional time and reduce any potential impacts, the final rule permits shipyards to phase-in compliance with the body harness requirement over two years, which is consistent with the phase-out date in other OSHA standards.

The hazard assessment documentation required by the standard consists of a record, either paper or on a computer or other storage medium, with the date of the hazard assessment, name of person performing the assessment, occupation or operations covered, and a list of the PPE required. Shipyards report that they already incorporate some of this information in their current training materials. The Agency has estimated that it would take each shipyard about an hour to develop a computer-based record format for this documentation and approximately five minutes to record the hazard assessment for each occupation covered. Table 3 summarizes this information for the PPE standard. The total time expended by managers to document hazard assessments is estimated to be 781 hours, a one-time commitment of management resources.

  Table 3. -- Estimate of Amount of Time To Document Hazard
              Assessments, Develop Training Programs for
              Body Harnesses, and Train in Use of Body Harnesses
              for OSHA's Standard on PPE in Shipyards
_____________________________________________________________________
               |        |                 |                         |
               |        |Hazard assessment|  Develop training for   |
               |        |                 |     harnesses           |
               |        |_________________|_________________________|
               | Number |        |        |        |      |         |
  Firm Size    |of firms| Number |Time to | Time   |Number|  Total  |
 (number of    |in size |   of   |document|  to    | of   |  time   |
  employees)   |category| hazard | hazard |develop |firms |   to    |
               |        | assess-| assess-|training| who  | develop |
               |        | ments  | ments  |per firm| must | program |
               |        |(trades)| (hours)|(hours) |do so | (hours) |
_______________|________|________|________|________|______|_________|
               |        |        |        |        |      |         |
1000+..........|     12 |     40 |     36 | ...... | none |       0 |
500-999........|     12 |     30 |     30 |      8 |    6 |      48 |
100-499........|     76 |     30 |    190 |      4 |   76 |     304 |
21-99..........|    100 |     10 |    150 |      4 |  100 |     400 |
11-20..........|    100 |      5 |    125 |      2 |   50 |     100 |
1-10...........|    200 |      5 |    250 |      2 |  100 |     200 |
               |________|________|________|________|______|_________|
  Subtotals    |        |        |        |        |      |         |
               |        |        |        |        |      |         |
   (hours).....| ...... | ...... |(1) 781 | ...... | .... |(1) 1052 |
               |        |        |        |        |      |         |
               |========|========|========|========|======|=========|
Total one-time,|        |        |        |        |      |         |
 or first year,|        |        |        |        |      |         |
 management    |        |        |        |        |      |         |
 resources for |        |        |        |        |      |         |
 hazard        |        |        |        |        |      |         |
 assessments   |        |        |        |        |      |         |
 and           |        |        |        |        |      |         |
 development of|        |        |        |        |      |         |
 training......| ...... | ...... | ...... | ...... | .... | ....... |
First year     |        |        |        |        |      |         |
 management    |        |        |        |        |      |         |
 resources to  |        |        |        |        |      |         |
 conduct       |        |        |        |        |      |         |
 training......| ...... | ...... | ...... | ...... | .... | ....... |
Total          |        |        |        |        |      |         |
 management    |        |        |        |        |      |         |
 time..........| ...... | ...... | ...... | ...... | .... | ....... |
Total employee |        |        |        |        |      |         |
 time..........| ...... | ...... | ...... | ...... | .... | ....... |
_______________|________|________|________|________|______|_________|


  Table 3. -- Estimate of Amount of Time To Document Hazard
              Assessments, Develop Training Programs for
              Body Harnesses, and Train in Use of Body Harnesses
              for OSHA's Standard on PPE in Shipyards

                    [Continued]
_____________________________________________________________
               |        |                                   |
               |        |                                   |
               |        |             Training              |
               |        |___________________________________|
               | Number |          |            |           |
  Firm Size    |of firms| Training | Management |  Number   |
 (number of    |in size | sessions |   time     |    of     |
  employees)   |category|   per    | (hours)    | employees |
               |        |  firm    |            | trained   |
               |        |          |            |  (hours)  |
               |        |          |            |           |
_______________|________|__________|____________|___________|
               |        |          |            |           |
1000+..........|     12 |      150 |        150 |      3000 |
500-999........|     12 |        4 |         24 |       200 |
100-499........|     76 |        2 |        152 |       400 |
21-99..........|    100 |        1 |        100 |       200 |
11-20..........|    100 |        1 |         50 |       200 |
1-10...........|    200 |        1 |        100 |       150 |
               |________|__________|____________|___________|
  Subtotals    |        |          |            |           |
               |        |          |            |           |
   (hours).....| ...... | ........ |        576 |      4150 |
               |        |          |            |           |
               |========|==========|============|===========|
Total one-time,|        |          |            |           |
 or first year,|        |          |            |           |
 management    |        |          |            |           |
 resources for |        |          |            |           |
 hazard        |        |          |            |           |
 assessments   |        |          |            |           |
 and           |        |          |            |           |
 development of|        |          |            |           |
 training......| ...... | ........ | .......... | (2) 1,833 |
First year     |        |          |            |           |
 management    |        |          |            |           |
 resources to  |        |          |            |           |
 conduct       |        |          |            |           |
 training......| ...... | ........ | .......... |   (2) 576 |
Total          |        |          |            |           |
 management    |        |          |            |           |
 time..........| ...... | ........ | .......... | (2) 2,409 |
Total employee |        |          |            |           |
 time..........| ...... | ........ | .......... | (2) 4,150 |
_______________|________|__________|____________|___________|
  Source: Office of Regulatory Analysis.

  Footnote(1) One-time.
  Footnote(2) Hours.

The development of training materials for the use of personal fall arrest systems (body harnesses) imposes a one-time cost for shipyards that are not already using harnesses. Some of the very smallest shipyards who provide specialty trade work will not have or use any harnesses. All large shipyards already use harnesses to some extent, and the Agency has concluded that these shipyards also have developed training materials. Because training videos and written materials on the use of body harnesses are widely available, the Agency has concluded that the time required for establishing such a training program will be small. Table 3 presents the Agency's estimate of the time that firms will expend to develop training for the use of body harnesses; the estimate ranges from 8 hours for firms with more than 500 employees to 2 hours for the smallest employers. The total time required to develop training for body harnesses is estimated to be 1,052 hours of management time.

Firms that do not currently use body harnesses must also train their employees as harnesses are substituted over time for body belts. The cost of this training consists of management or trainers' time to provide training to employees as well as the value of employee wages foregone while training. The Agency estimates a training session will take approximately one hour and that as many as 10 to 20 employees can receive training in a single session. Table 3 presents the Agency's estimate of the number of sessions by firm size that will be necessary for training in body harnesses and the number of employees trained. The Agency estimates that a higher fraction (10 percent or more) of smaller firms' employees will have to be trained due to the nature of their business -- cleaning tanks, repairs over the ship's side, painting and maintenance -- which require the use of harnesses. Among large firms only NNS relies primarily on body belts and uses only a few body harnesses. The Agency estimates that all of NNS's body belts (4,700) will not have to be replaced with harnesses, since compared with smaller yards less work conducted at large shipyards or in new ship construction requires a body harness (rather than a body belt). The Agency has estimated that NNS will replace 3,000 body belts with harnesses. Data for the cost of body harness training is included in Table 6. The Agency estimates that 576 hours of management time and 4,150 hours of employee time will be required for training.

The total one-time cost for documenting hazard assessments, developing harness training materials, and providing training is 2,409 management hours and 4,150 employee hours. Average hourly employee wages for SIC 3731 are about $14.00 per hour ("Employment and Earnings" Bureau of Labor Statistics October, 1994). The Agency estimates that the cost of wages plus benefits is $20 per hour for production employees and $30 per hour for managers.

The total cost of these elements of the standard is approximately $155,000. Annualized over five years at 7 percent, this cost is about $35,000 per year. Added to the annual cost of body harnesses of $128,000, the Agency estimates that the total annualized cost of the PPE standard is $163,000 per year for the shipyard industry.

Economic Impacts

With industry revenues exceeding $9 billion and an estimated profit of $275 million in 1994, the annual estimated compliance costs associated with the standard ($163,000) will not cause a significant impact on the revenues or profits of firms in the shipyard industry.

Benefits

The final shipyard PPE standard will reduce the risk of injury or fatality confronting workers who fall while wearing body belts. After the phase-in period, shipyard workers who fall while wearing body harnesses will experience fewer fatalities or severe injuries as a result of these falls. Although industry and insurance representatives testified to the beneficial effects of harnesses, data in the record are not sufficiently detailed to quantify the magnitude of the reduced risk. Accordingly, OSHA has not quantified this risk reduction or the productivity gains associated with the use of harnesses compared with belts. In addition, the use of locking snaphooks, as required by the final rule, will prevent roll-out thus reducing the risk of fatality or severe injury.

The Agency has also analyzed the more typical PPE-related injuries of lesser severity. OSHA estimates that compliance with the final shipyard personal protective equipment rule will potentially prevent about 1,550 lost workday injuries (15 percent of all shipyard PPE-related lost workday injuries) and about 12,650 non-lost workday injuries (about 46 percent of all shipyard PPE-related non-lost workday injuries). To develop this estimate, the Agency analyzed a sample of over 1,700 shipyard injuries reported on OSHA Form 200's that were collected as part of recent OSHA survey efforts. For each injury or illness in the sample, OSHA judged whether the injury or illness was potentially preventable through the use of the appropriate type of protective equipment. These judgments were based on the injury and illness descriptions on the Form 200. OSHA considered the following types of PPE to be applicable: hard hats, safety glasses and goggles, welding goggles and helmets, face shields, safety shoes, work gloves and other forms of hand protection, and chemical protective gloves, aprons, and other clothing.

To develop its estimate, OSHA first divided the sample injuries and illnesses by severity and estimated the fraction of cases that were judged to be potentially preventable by PPE use. Next, OSHA applied these preventability rates to Bureau of Labor Statistics employment levels for 1994 for the shipyard industry and calculated the number of cases that might be prevented through PPE use. The results of this analysis are shown in Table 4. Of 27,317 shipyard injuries and illnesses without lost-workdays, 12,665 (46.4 percent) were estimated to be potentially preventable through proper use of PPE. Of 9,876 cases involving days away from work, OSHA estimated that 1,549 (15.7 percent) were potentially preventable through compliance with OSHA's PPE requirements. These estimates indicate that over 10 percent of all shipyard injuries (both lost-time and non-lost work time) are potentially preventable through the proper use of safety glasses, while 15 percent are potentially preventable through the use of work gloves or other appropriate forms of hand protection. This analysis of "typical" PPE injuries parallels the benefits analysis performed for the general industry PPE standard, with one exception. In this shipyard analysis, the Agency has reduced its estimate of the number of eye injuries that could be prevented by the use of safety glasses to 50 percent (a figure of about 99 percent was applied in the general industry analysis), because shipyard representatives and OSHA personnel report that the use of basic eye protection is standard practice in shipyards, which are widely recognized as being especially hazardous environments. The Agency concludes that fewer eye injuries occur in shipyards than general industry establishments because employees in shipyards, unlike those in general industry, are routinely required to wear safety glasses.

  Table 4. -- Preventability of Shipyard Injuries
                by Type of PPE (1994)
____________________________________________________________________
                  |                |                |
                  |   Injuries     |   Injuries     |
                  | without lost-  |     with       | All injuries
  Injury          |   workdays     | lost-workdays  |
preventability/   |________________|________________|_______________
  PPE type        |       |        |       |        |       |
                  |Number |Percent |Number |Percent |Number |Percent
__________________|_______|________|_______|________|_______|_______
                  |       |        |       |        |       |
Preventable:      |       |        |       |        |       |
 Hard hat........ |   753 |    2.8 |   133 |    1.3 |   886 |   2.4
 Safety glasses(1)| 3,509 |   12.8 |   346 |    3.5 | 3,855 |  10.4
 Safety goggles.. |   422 |    1.5 |    88 |    0.9 |   510 |   1.4
 Welding goggles/ |       |        |       |        |       |
  helmet......... |   632 |    2.3 |   137 |    1.4 |   769 |   2.1
 Face shield..... | 1,024 |    3.7 |    33 |    0.3 | 1,057 |   2.8
 Safety shoes     |       |        |       |        |       |
  (metatarsal     |       |        |       |        |       |
  guard)......... |   392 |    1.4 |   237 |    2.4 |   628 |   1.7
 Safety shoes     |       |        |       |        |       |
  (toe protection)|   361 |    1.3 |   109 |    1.1 |   470 |   1.3
 Safety shoes     |       |        |       |        |       |
  (sole           |       |        |       |        |       |
  protection).... |   151 |    0.6 |     0 |    0.0 |   151 |   0.4
 Work gloves..... | 5,120 |   18.7 |   406 |    4.1 | 5,526 |  14.9
 Chemical         |       |        |       |        |       |
  protective      |       |        |       |        |       |
  gloves......... |     0 |    0.0 |    48 |    0.5 |    48 |   0.1
 Chemical         |       |        |       |        |       |
  protective      |       |        |       |        |       |
  clothing....... |   301 |    1.1 |    13 |    0.1 |   314 |   0.8
                  |_______|________|_______|________|_______|_______
                  |       |        |       |        |       |
 Total preventable|12,665 |   46.4 | 1,549 |   15.7 |14,214 |  38.2
Not Preventable.. |14,652 |   53.6 | 8,327 |   84.3 |22,979 |  61.8
All injuries..... |27,317 |  100.0 | 9,876 |  100.0 |37,193 | 100.0
__________________|_______|________|_______|________|_______|_______
  Footnote(1) Rate for eye injuries preventable by safety glasses
adjusted downward by 50.0% due to current high rate of   safety glass
use in shipyards.

  Source: Bureau of Labor Statistics. 1992. Survey of Occupational
Injuries and Illnesses; OSHA estimates based on analysis of Form 200
Shipyard Injury Database. Estimates of the number of 1992 injuries
and illnesses extrapolated to 1994 based on decline in shipyard
employment of 14.4 percent over this period.

OSHA also used data supplied by the BLS describing the distribution of shipyard lost-workday cases by body part injured to develop disaggregated estimates of the number of preventable injuries. These estimates are shown in Table 5. OSHA estimates that 90 percent of the head, scalp, and toe injuries are potentially preventable. OSHA also judged PPE to be effective, at lower rates, in preventing face, eye, foot, hand and finger injuries.

 Table 5. -- Preventable Shipyard Injuries and Illnesses
             by Severity and Body Part

____________________________________________________________________
                      |        |            |            |
                      |        |  Number    | Share of   |
                      | Number |    of      | injuries   | Number of
  Injury severity     |   of   |extrapolated|preventable | injuries
    /body part        |  1992  |  1994      |   (4)      | prevented
                      |injuries|injuries(3) |(percentage)|
______________________|________|____________|____________|__________
                      |        |            |            |
Injuries and illnesses|        |            |            |
  without lost        |        |            |            |
  workdays(1).........| 31,900 |     27,317 |       46.4 |   12,665
Lost-workday injuries |        |            |            |
  and illnesses:(2)   |        |            |            |
   Head, unspecified..|     73 |         63 |      100.0 |       63
   Ear(s).............|      0 |          0 |        0.0 |        0
   Eye(s).............|  1,080 |        925 |   (5) 61.7 |      571
   Face...............|     51 |         44 |       75.0 |       33
   Scalp..............|     91 |         78 |   (6) 90.0 |       70
   Neck...............|    350 |        300 |        0.0 |        0
   Arm(s), Unspecified|     49 |         42 |        0.0 |        0
   Elbow..............|    265 |        227 |        0.0 |        0
   Forearm............|    128 |        110 |        0.0 |        0
   Wrist..............|    478 |        409 |       12.5 |       51
   Hand(s)............|    508 |        435 |       38.9 |      169
   Finger(s)..........|    720 |        617 |       37.9 |      234
   Upper extremities, |        |            |            |
     multiple.........|      0 |          0 |        0.0 |        0
   Trunk, unspecified.|      0 |          0 |     (6) NE |        0
   Abdomen............|     88 |         75 |        0.0 |        0
   Back, Unspecified..|    954 |        817 |        0.0 |        0
   Back, lumbar.......|  1,198 |      1,026 |        0.0 |        0
   Back, thoracic.....|    168 |        144 |        0.0 |        0
   Chest..............|    289 |        247 |        5.3 |       13
   Hip................|    306 |        262 |        0.0 |        0
   Shoulder(s)........|    601 |        515 |        0.0 |        0
   Trunk, Multiple    |        |            |            |
     parts............|      0 |          0 |        0.0 |        0
   Lower extremities, |        |            |            |
     multiple.........|      0 |          0 |        0.0 |        0
   Leg(s), unspecified|     59 |         51 |        0.0 |        0
   Thighs.............|     89 |         76 |        0.0 |        0
   Knee(s)............|  1,073 |        919 |        0.0 |        0
   Lower leg(s).......|    123 |        105 |        0.0 |        0
   Leg(s), multiple...|      0 |          0 |        0.0 |        0
   Ankle(s)...........|    624 |        534 |        0.0 |        0
   Foot/feet..........|    488 |        418 |       60.0 |      251
   Toe(s).............|    123 |        105 |       90.0 |       95
   Lower extremities, |        |            |            |
     multiple.........|      0 |          0 |        0.0 |        0
   Multiple body parts|    674 |        577 |        0.0 |        0
Lost workday injuries |        |            |            |
  continued:          |        |            |            |
   Circulatory system.|      0 |          0 |        0.0 |        0
   Digestive system...|      0 |          0 |     (7) NE |        0
   Excretory system...|      0 |          0 |        0.0 |        0
   Nervous system.....|      0 |          0 |        0.0 |        0
   Respiratory system.|      0 |          0 |        0.0 |        0
   Body parts, NEC....|    163 |        140 |     (7) NE |        0
   Unclassifiable.....|    720 |        617 |        0.0 |        0
                      |________|____________|____________|__________
   Total lost-workday |        |            |            |
     injury...........| 11,533 |      9,876 |       15.7 |    1,549
All injuries and      |        |            |            |
  Illnesses...........| 43,433 |     37,193 |       38.2 |   14,214
______________________|________|____________|____________|__________
  Footnote(1) Bureau of Labor Statistics. 1992 Survey of Occupational
Injuries and Illnesses.
  Footnote(2) Bureau of Labor Statistics. 1992 Survey of Occupational
Injuries and Illnesses, unpublished data. Injury and illness data by
body part available only for cases with lost workdays.
  Footnote(3) Estimates of the number of 1992 injuries and illnesses
extrapolated to 1994 based on decline in shipyard employment of 14.4
percent over this period.
  Footnote(4) OSHA estimates based on analysis of Form 200 Shipyard
Injury Database. Estimate of preventable share for non lost-workday
injuries based on the overall ratio of preventable non-lost-workday
cases in the Form 200 database.
  Footnote(5) Rate for eye injuries preventable by safety glasses
adjusted downward by 50.0% due to current high rate of safety glass
use in shipyards.
  Footnote(6) OSHA estimate. No observations for this injury category
in Form 200 database.

Regulatory Alternatives

The Agency concludes that the proposed rule is the most cost-effective regulatory alternative for this industry. One alternative considered was to apply the general industry PPE standard to the shipyard industry. However, if the general industry PPE standard (29 CFR 1910.132) were applied to the shipyard industry in its entirety, it would impose unnecessary costs in the form of paperwork because it could require shipyards to adopt new training and documentation programs. Shipyards have long had both comprehensive and specialized safety programs and their own databases for maintaining training logs, accident data, and other information. The final rule builds on the tools the industry has already developed and thus avoids imposing unnecessary costs and other burdens on shipyard employers.

Regulatory Flexibility

As required by the Regulatory Flexibility Act of 1980 (as amended by Title II, Subtitle D of the Contract with America Advancement Act of 1996), OSHA assessed the economic burden faced by small establishments in complying with this final rule. In comments to the record for this standard, no comments specifically addressed either the Regulatory Flexibility Analysis or its conclusion that the standard would impose no significant impact on small firms. In that analysis, the Agency identified the increased use of respirators as the main source of new costs for all shipyards, but this element has been dropped in the final standard.

The Agency has concluded that small shipyards in the industry have as much need of additional personal protective equipment as other shipyards. The industry has one of the highest injury and illness rates of any industry. Since the largest shipyards report injury and illness rates at or below the industry average, the Agency has concluded that the rate of preventable injuries and illnesses are at least as great in smaller yards. In addition, many of the production operations are the same for larger and smaller shipyards. Since the standard requires employers to identify and protect workers from risk by occupation or trade, the Agency concludes that the risks for each trade are similar irrespective of the size of the shipyard. The objectives of the standard are to reduce the risk of PPE-preventable injuries in shipyards.

Although no public comments were specifically addressed to issues in the Regulatory Flexibility Analysis, many of the comments applied to situations faced by smaller shipyards. However, the Agency believes that smaller yards are not impacted in a significantly different manner or scale than larger shipyards. The comments by smaller shipyards about feasibility were similar to the larger yards: questioning the utility of body harnesses rather than body belts and the need to certify hazard assessments and training.

The Agency considered applying the General Industry PPE standard as an alternative for small establishments in the shipyard industry, but testimony and comments in the docket support the Agency's decision that the final standard will more effectively meet the risk in shipyards at lowest cost.

As can be seen in Table 3, the Agency estimates that there are 200 firms in the shipyard industry with 10 or fewer employees, 100 firms with 11-20 employees, and 100 firms with 21-99 employees. The Agency believes that for the shipyard industry, firms with fewer than 100 employees is a "small" firm. Therefore, for purposes of this Regulatory Flexibility Analysis, the Agency estimates that there are approximately 400 "smaller" businesses with an estimated 8,000 employees. From data in Table 3, smaller firms will require 525 management hours to document hazard assessments, 250 management hours to develop training for body harnesses, and 250 management hours to provide training, and 550 employee hours for training. Costs for these elements, which are a one-time cost, total $38,450, which is equivalent to an $8,700 annual cost (annualized over 5 years at 7 percent). Other new annual costs for small firms are estimated at $13,500 for 500 body harnesses to replace body belts. Total annual costs for smaller shipyards are then an estimated $22,200, or an average of about $55 per smaller shipyard. The Agency has provided a phase-in period of two years to allow smaller shipyards time to accomplish this shift.

OSHA concludes that this standard will not impose a significant impact on a substantial number of small entities, and that the phase-in for body harnesses will further alleviate any impacts that do occur.

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 virtually no effect on the prices of products or services as a result of this regulation.

Environmental Impact

The shipyard PPE 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 (CEQ) (40 CFR part 1500), and DOL NEPA Procedures (29 CFR part 11). There will be no additional incremental release quantities related to this standard. Releases of substances regulated under EPA's SARA Title III or EPA NESHAP standards are subject to reporting and control requirements.

Non-Regulatory Alternatives

The primary objective of OSHA's standard for PPE is to minimize the number of shipyard employee injuries and risk of fatalities. The Agency examined non-regulatory approaches for promoting PPE use, including (1) incentives created by workers' compensation programs or the threat of private suits, and (2) requirements of the U.S. Navy and U.S. Coast Guard. Following this review, OSHA determined that the need for government regulation arises from the significant risk of job-related injury or death. Private markets fail to provide enough safety and health resources due to the externalization of part of the social cost 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. The U.S. Navy and U.S. Coast Guard require shipyards to follow safe procedures when performing work for them or when constructing merchant vessels; however, most firms do not come under this scrutiny. Thus, OSHA has determined that a federal standard is necessary.

References

1. U.S. Department of Commerce. International Trade Administration. 1994 U.S. Industrial Outlook.

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 Manufactures: 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 Manufactures: 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, 1994. 9. Bureau of Labor Statistics, Employment and Earnings, May, 1995. 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. Sulowski, Andrew, "Selecting Fall Arresting Systems," National Safety News, Oct. 1979.

16. Hearon, Bernard F. and Brinkley, James W., "Fall Arrest and Post-Fall Suspension: Literature Review and Direction for Further Research," Air Force Aerospace Medical Research Laboratory, Aerospace Medical Division, Air Force Systems Command, Wright-Patterson Air Force Base, Ohio.

17. United States Technical Advisory Group, Ex. 9-33 submitted to the Powered Platform rulemaking, Docket S-700A.

[61 FR 26321, May 24, 1996]