The cost of regulation

New Congress focuses on the development of new standards and the burdens they may bring

By Kyle W. Morrison, senior associate editor

OSHA is skirting its requirements under the Small Business Regulatory Enforcement Fairness Act, some witnesses at a Feb. 15 House subcommittee hearing suggested.

The act requires reviews of economic impact on small businesses for some agencies’ proposed rules. Such a review did not take place for two recent OSHA measures – a noise standard interpretation and a musculoskeletal disorder reporting requirement. Although both initiatives have since been withdrawn by OSHA (at least temporarily), several panelists saw the moves as evidence OSHA was operating through “regulatory fiat” rather than a traditional rulemaking process.

Thomas Sullivan, an attorney at Nelson Mullins Riley & Scarborough LLP in Washington, stressed that OSHA working with small businesses when developing standards could help reduce costs. “Constructive input by small firms provides OSHA with valuable insight that allows for the agency to draft proposals that will work on ‘Main Street,’” he said. “OSHA benefits when it embraces the SBREFA process as a constructive dialogue.”

Under questioning from Rep. George Miller (D-CA), Sullivan said he was not suggesting OSHA regulations have no benefits – only that small businesses are disproportionately impacted by regulatory costs. By working with small businesses, OSHA could improve benefits of any given regulation, he said.

New standards or agency initiatives also could lead to job losses, some witnesses said. For example, complying with requirements from a new noise interpretation would have cost thousands of jobs, according to Stuart Sessions, a consultant testifying on behalf of the Coalition for Workplace Safety, an employer organization.

Tammy Miser, executive director of Lexington, KY-based United Support and Memorial for Workplace Fatalities, took issue with suggestions that additional regulations kill jobs. OSHA has issued only two new standards in the past 10 years – cranes and derricks and hexavalent chromium – and both only affect a small fraction of businesses, according to Miser.

“I don’t see this huge avalanche of regulations,” she said. “It’s more like a drought.” A supporter of a combustible dust standard, Miser said a lack of regulations costs lives, and deadly incidents could lead to worksite closings and job loss.

The hearing was the first in the new Congress convened by the House Education and the Workforce Committee’s Workforce Protections Subcommittee. Days earlier, subcommittee chair Rep. Tim Walberg (R-MI) said in a House floor speech that although “commonsense” rules are needed to promote workplace safety, “onerous” regulations should not block job creation.

Citing figures from the Small Business Administration’s Office of Advocacy, Walberg said OSHA regulations cost businesses with fewer than 500 employees between $650 and $781 per employee.

Walberg singled out the proposed MSD reporting requirement as one that would have “overwhelmed” small businesses in paperwork and possibly increased fines. Although the rule was on hold, Walberg said he felt uneasy about the withdrawal being temporary.

Walberg also expressed reservations about OSHA’s recent emphasis on enforcement programs. “There are serious questions about whether OSHA’s punishment-before-prevention approach to workplace safety is really in the best interests of the workers,” he said.

He made his Feb. 11 comments in support of a resolution directing House committees to review existing and proposed regulations and their effect on economic growth (H.Res. 72). The resolution passed 391-28 in a largely bipartisan vote.

In light of recent attention given to the financial burden of regulation, OSHA administrator David Michaels issued a statement Feb. 15 saying his agency looks into costs when developing new standards. “Many OSHA standards cost little and easily can be adopted by employers with nominal effect on the bottom line,” he said.