Honorable Charles N. Jeffress
Assistant Secretary
for Occupational Safety and Health
Department of Labor
200 Constitution Avenue, N. W.
Washington, D. C. 20210
Dear Mr. Jeffress:
This is in response to the Occupational Safety and Health Administration's (OSHA) September 4, 1997 request that the Chief Counsel for Advocacy waive the Small Business Advocacy Review Panel process required by the Small Business Regulatory Enforcement Fairness Act (SBREFA) (Public Law 104-121) for an OSHA regulation that is expected to have a significant impact on a substantial number of small entities (5 U.S.C § 609 (b)).
CHRONOLOGY
September 19, 1980
The Regulatory Flexibility Act was enacted into law establishing an analytical process to be followed by regulatory agencies. In brief, agencies are required to consider the impact of their regulations on small entities, consider alternatives that are less burdensome that would accomplish the same public policy objectives, and explain the rationale for the regulatory option selected.
May 11, 1994
OSHA announced the establishment of the Steel Erection Negotiated Rulemaking Advisory Committee (SENRAC) in accordance with the Federal Advisory Committee Act (FACA) (5 U.S.C. App. 1), the Negotiated Rulemaking Act of 1990 (NRA) (5 U.S.C. § 56 et seq.) and the Occupational Safety and Health Act (OSH Act) (29 U.S.C. § 656 (b)) to resolve issues associated with the development of a Notice of Proposed Rulemaking on Steel Erection.
March 29, 1996
The Small Business Regulatory Enforcement Fairness Act was signed into law and requires OSHA to convene a Small Business Advocacy Review Panel when a rule would have potential impacts on small entities. The purpose of such a panel is to consult with small entities to obtain advice and recommendations about the potential impacts of the rule and to submit a report on the comments received and the panel's findings
December 19, 1996
OSHA and Advocacy staff met and discussed the rulemaking process. Advocacy requested further analysis of the cost to the fabricators and the impact of the "slippery surface" requirement.
June 19, 1997
OSHA's Steel Erection Negotiated Rulemaking Committee (SENRAC) submitted its report on OSHA's proposed Steel Erection Standard to OSHA.
September 4, 1997
OSHA submitted a written request that the Chief Counsel waive the panel provision of SBREFA for the proposed Steel Erection Standard that resulted from a negotiated rulemaking process pursuant to the Negotiated Rulemaking Act of 1990. The letter also included a summary of the agency's economic impact analysis and its preliminary initial regulatory flexibility analysis (IRFA).
September 17, 1997
In response to OSHA's request for a waiver, the Chief Counsel notified OSHA that, pursuant to 5 U.S.C. § 609 (e), the Chief Counsel would be consulting with small entities affected by the rule. In that letter, OSHA was also notified that this Office would likely request additional economic data on the impact of the rule on the industries affected by its provisions. This information would be needed if the Chief Counsel were to make a determination for the public record, as required by 5 U.S.C. § 609 (e) (1), as to the extent that OSHA had consulted with small entities and had taken their concerns into consideration.
September 29, 1997
Advocacy was notified by the American Institute of Steel Construction that OSHA had dressed and resolved serious concerns the association had raised with Advocacy on August 4, 1997. The AISC was satisfied with OSHA's intent to revise the draft proposed rule with regard to requirements that involved changes in primed steel to avoid "slippery surfaces."
October 22, 1997
Advocacy reiterated its request for the complete regulatory analysis for the small business construction sectors potentially affected by the rule. In addition, this Office requested economic impact data on the small business manufacturing sectors potentially affected by the rule. These sectors include steel fabricators and joist manufacturers.
November 13, 1997
OSHA was again notified of Advocacy's information needs in order for the Chief Counsel to make the public findings required by 5 U.S.C. § 609 (e) (1) in justification for granting a waiver. This draft interagency memo was to be the focus of a meeting between OSHA and Advocacy staffs on or about November 17, 1997.
November 26, 1997
OSHA and Advocacy staffs met to discuss economic impact data issues. Advocacy also reviewed the information it had obtained from the small entities it had consulted as required by 5 U.S.C. § 609 (2). The impact of the rule on small entities within the manufacturing sectors was discussed. OSHA staff indicated it would not prepare the impact analysis on the manufacturing sectors since these sectors are not "regulated" by the rule, despite specific provisions that directly affect the industry.
December 4, 1997
Advocacy reiterated for OSHA the SBREFA standards for granting a waiver and the information needed to make the public findings required by the law.
December 23, 1997
OSHA provided additional information as to the economic impact of the rule on small entities, a copy of which is attached to this letter.
January 20, 1998
OSHA amended the 12/23/97 document that provides additional information on economic impacts.
DISCUSSION
The stated purpose of the Negotiated Rulemaking Act is to bring parties together who will be significantly affected by a rule, to reduce expensive and time-consuming litigation over agency rules, to have the parties engage in face-to-face negotiations and cooperation in developing and reaching agreement on a rule, to benefit from shared information, knowledge, expertise and technical abilities possessed by affected parties, and, hopefully, to shorten the amount of time needed to issue final rules. (5 U.S.C § 581 2 (2) (3) (4) (5)).
For approximately 3 years, the current rule has been the subject of SENRAC, which held extensive meetings and consultations. The Committee was composed of 4 government officials, 6 representatives of the construction industry, 8 union representatives and 2 consulting firm representatives.
The Committee reached consensus on the rule but it is unclear whether or not it fully took into account the impact of the rule on small entities. Moreover, OSHA's preliminary regulatory flexibility analysis does not contain significant detail on small entity impacts or the alternatives considered, especially with regard to the manufacturing sectors.
Subsequent to receipt of OSHA's request to waive the Small Business Advocacy Review Panel process, Advocacy consulted with a number of small entity representatives and industry members of the SENRAC committee. Several issues were raised about the impact of the rule on the steel manufacturing and fabrication sectors. Advocacy received no information from OSHA on the economic impact of the rule on the manufacturing sectors. As for small entities in the construction sector, Advocacy only received OSHA's preliminary initial regulatory analysis of the rule's impact on small entities within this industry, which contained assumptions undocumented in the IRFA. The underlying data to support the agency's analysis has yet to be provided.
In response to the Chief Counsel's request for additional information on the small entity impacts of the rule, OSHA very recently provided supplemental information on the participation of the steel fabricators in the negotiated rulemaking process, although not as members of SENRAC, and additional information on the economic impacts of the rule on this sector. Since it is unclear whether SENRAC had this information available to it prior to preparation of its June 19, 1997 report, Advocacy believes this analysis needs to be published for public comment in connection with OSHA's notice of proposed rulemaking, along with questions designed to elicit more detailed information from affected entities as to the rule's impact.
CHIEF COUNSEL'S FINDINGS
Despite the Chief Counsel's concerns about the absence of a clear record on SENRAC's
consideration of small entity impacts or its obligations under the Regulatory Flexibility
Act (RFA), the Chief Counsel concludes, pursuant to § 609(e), that further delay will not
advance the effective participation of small entities in the rulemaking process for the
following reasons:
1. SBREFA went into effect two years after the composition of SENRAC was established and its deliberations begun. The composition of SENRAC was determined by the nature of the rule then under consideration, the provisions of which changed as the result of the face-to-face negotiations. Changes made to the rule will affect industries/entities not represented on the committee. The fact that the rule's provisions changed is not entirely an unexpected outcome of the negotiated rulemaking process.
2. The analytical process established by the Regulatory Flexibility Act, as amended by SBREFA, should have been an integral part of the negotiated rulemaking process. It is not clear from the record that the provisions of these laws were considered by the Committee. Moreover, the economic impact analysis provided by OSHA in its preliminary IRFA and in its supplemental information dated December 23, 1997 and amended January 20, 1998 needs additional amplification. OSHA must use the rulemaking process to elicit on the public record the kind of impact information it needs to fashion a final rule that will achieve its safety objectives without unduly burdening small entities and publish its findings in its final regulatory flexibility analysis, which is reviewable by the courts.
3. On November 14, 1997, OSHA and the Chief Counsel for Advocacy received a letter from the Steel Construction Industry Roundtable supporting publication of the proposed rule to allow for comment and participation in public hearings on the work product of SENRAC. The industries affected by this rulemaking were among those supporting this position, including Associated General Contractors of America, Steel Joist Institute, Steel Deck Institute, Steel Erectors Association of American, and
Metal Building Manufacturers Association. This support indicated the industry's belief that the comment period would be sufficient to collect information on the impact of the rule and that the industry wishes to move the rule forward without a panel process.
1. Representatives of small entities, particularly small entities in the manufacturing sectors, informed Advocacy that they are aware of the rule and all of the related SENRAC deliberations. Small entity representatives attended the meetings of SENRAC, submitted information and participated in the process, albeit not as voting members of the Committee. In addition, one manufacturing sector, the American Institute of Steel Construction, has resolved a major issue with the agency before publication of the proposed rule. This awareness of the rule's provisions, the committee's deliberations and the industry's input into the process are key factors in the Chief Counsel's decision.
2. There is some evidence that some sectors of the manufacturing sectors are satisfied with the rule, while others are not. It is the intent of the negotiated rulemaking process that consensus be achieved among committee members, not necessarily among all sectors affected by the rule. Differences, if they are significant and do not unduly undermine the safety concerns addressed by the rule, can be addressed by OSHA through the rulemaking process that is to ensue. The final rule can be changed to address small entity concerns documented through active solicitation of their additional views through the notice of proposed rulemaking and in accordance with outreach requirements of the Regulatory Flexibility Act. The agency can address the issues raised in the agency's final regulatory flexibility analysis, which, as stated above, is reviewable by the courts.
CONCLUSION
THEREFORE the Chief Counsel, after consultation with the Administrator of the Office of Information and Regulatory Affairs, Office of Management and Budget and affected small entities, grants OSHA's request for a waiver of the Small Business Advocacy Review Panel process (5 USC §§609 (b)(3)-(b)(5)) based on the findings set forth above and the following grounds
We further recommend that OSHA provide a copy of the IRFA and any supplemental information to all small entities consulted by Advocacy during this process and conduct public hearings on the impact of the rule on small entities, including the construction and manufacturing sectors.
Submitted January 23, 1998
Jere W. Glover
Chief Counsel for Advocacy
Enclosures: Please contact Sarah Rice (202) 205-6955