The OSHA Standard
Grain elevator operators did not have a very merry Christmas in 1977. Three grain elevators and two feed mills exploded during the third week of December, killing fifty-nine people and injuring forty-eight others. The Department of Agriculture, hit particularly hard because thirteen federal grain inspectors were killed in the explosions, established a Special Office for Grain Elevator Safety. OSHA was put on the spot. There was intense political pressure to do something about grain elevator safety, but OSHA had little experience with the issue. Lacking its own safety standard, the agency had only its "general duty" clause to back up any enforcement actions. Citations based on this clause require, among other things, proof of a "recognized hazard." NFPA 61B came in handy, since one possible method of establishing a "recognized hazard" is to cite private standards. OSHA did so on numerous occasions after the 1977 explosions. Citations tend to evoke indignation, however, and these cases were no exception. Some of the citations lived up to the agency's reputation for unreasonableness—one firm was cited for an ungrounded coffee pot in an office building detached from the grain elevator, for example—but even those involving seemingly serious violations were met with hostility. Virtually every citation was contested, and OSHA lost almost every one on appeal: 61B was considered too vague in some instances; in others, the review commission that hears appeals from OSHA citations honored the "advisory" nature of the appendix. OSHA had to look elsewhere to advance its enforcement strategy.
To overcome its limited background in grain elevator safety, and in the hope of defusing an already politicized issue, OSHA contracted with the National Academy of Sciences to evaluate possible methods of preventing grain elevator explosions. The first of four NAS reports confirmed the inadequacies of OSHA's experience, criticizing the agency
for emphasizing citations instead of investigating explosions sufficiently to understand the problem.
OSHA adopted a cautious, if not timid, stance. In January 1980, the same month that the Department of Agriculture released its report "Prevention of Dust Explosions—An Achievable Goal," OSHA issued a "request for comments and information and notice of informal public meetings," which posed approximately two hundred questions for public comment. Although it was widely assumed that OSHA intended to propose a grain elevator safety standard, the agency did not start drafting one for two more years. It was waiting for support from the NAS. Testing the political waters in the meantime, OSHA held hearings a few months later in Wisconsin, Louisiana, and Missouri.
The water was hot. The hearings opened an acrimonious debate that shifted locations over the years but never lost its political intensity. Several hundred comments were received in response to OSHA's request, and over two thousand pages of testimony were received at three "informal public meetings." Most of it was extremely negative. This hostility hindered the NAS, which noted the "reluctance of elevator management to cooperate" with their study. The key report, "Prevention of Grain Elevator and Mill Explosions," was released in June 1982. It identified as the two most significant issues in grain elevator safety (1) ignition sources in bucket elevators and (2) dust concentrations throughout facilities. With this background, OSHA began drafting a standard for grain elevators. Within a month, the head of OSHA told a House subcommittee that grain elevator safety was one of the agency's two priority projects, and that a rule would be completed by January 1983. It took much longer than expected, but the agency eventually proposed a regulation, with fourteen basic requirements. Many of these, particularly those concerning ignition-source control in bucket elevators, came directly from the NAS recommendations. One received practically all of the attention: the "action level" for removing layered dust.
Hanging a Number on Dust Control
The action-level concept came from the NAS report, which proposed that corrective action should be taken whenever layered dust exceeded a specified depth (over a 200-square foot area). The NAS did what the NFPA would not: hang a number on dust control. "It was done to satisfy labor and other political groups who felt that without a definite
figure you do not have a club," explains an industry member on the NAS panel. The panel chose one sixty-fourth of an inch as its "club." The number was a compromise, plain and simple. Some panel members argued for one-hundredth of an inch, based on flame propagation experiments and without regard for economic feasibility. One-eighth of an inch, a figure already used in some proprietary standards, was also suggested. One sixty-fourth was somewhere in between.
OSHA engaged in its own search for an agreeable number. Again, the process was predominately political, not scientific. Under more pressure than NAS to take into account the economic impact of its proposals, OSHA considered a higher range of numbers. The argument was between one sixty-fourth and one-eighth. The former had new-found credibility thanks to the NAS; the latter had historical acceptance. OSHA chose historical acceptance.
The selected number appears to have been favorable to industry. The rejected figure (one sixty-fourth) was, after all, eight times stricter than the one chosen. One-eighth is considered by many to be not only lenient but downright dangerous. An elevator with an eighth of an inch of layered dust, according to an insurance representative, is "a bomb waiting to explode."
But appearances can be deceiving. Industry opposed one-eighth and one sixty-fourth with practically equal vigor. In reality, the disagreement was not about the best action levels; it was about whether to have action levels at all. OSHA wanted a number. Industry did not. "You've got to have a number for it to be enforceable," according to an OSHA official familiar with the agency's bad luck under the general duty clause. For related reasons, industry was opposed to any number. Although it cited the specter of dangerous facilities being in compliance with the rule—those with one-ninth of an inch of dust, for example—industry's real concern was the opposite: seemingly safe facilities being in violation. It is likely that even the best facilities would at some time, in some part of the facility, be in violation of the one-eighth-inch requirement. This would not be a problem if OSHA could be trusted to use good judgment in enforcing the rule. But most elevator operators did not have such confidence. As a result, unreasonable enforcement strategy was of much greater concern than the "false sense of security" some claimed would follow from an action-level approach. The paramount concerns of the National Grain and Feed Association when it later petitioned for a partial stay of the OSHA regulation were the enforcement directives for implementing the housekeeping require-
ments. Unfortunately, the enforcement strategy, including possible methods for heading off unreasonableness, was never seriously discussed during the rulemaking proceedings. Instead, the debate was dominated by a battle of the cost-benefit analysts. The issues they raised were important, but so were many of the ones they ignored.
The Battle of the Cost-Benefit Analysts
The battle itself was costly. First OSHA hired a well-known consulting firm (Arthur D. Little) to analyze its draft proposal. The resulting report was riddled with errors and questionable assumptions. It was so vulnerable to attack that OSHA hired a second firm (Booz, Allen & Hamilton) to massage the data. The NGFA subsequently hired a third consulting firm (G.E.M. Consultants) to attack the conclusions reached by the first two.
On the cost side, estimates prepared for OSHA by Booz, Allen pegged the total initial cost of the standard at $200 million, with annual recurring costs of approximately $137 million. These estimates reflected a series of assumptions about the cost of each of the fourteen provisions in the proposed rule. Industry accepted the Booz, Allen estimates for some of the minor provisions, such as permit systems for hot work (see table 5), but it took issue with most of the others. By
making marginally higher estimates for almost every subsidiary assumption, industry argued that the cost of many provisions were understated by a factor of two. Except for the housekeeping provisions, these differences of opinion did not add up to much. Hundreds of millions of dollars, however, separated the cost estimates for housekeeping. Some of these differences are impossible to evaluate. Other assumptions made by OSHA's consultant seem more reasonable than the industry's. Industry also offered some persuasive indictments of the OSHA estimates. The Booz, Allen study assumed that operators would purchase "dust-tight" vacuum cleaners, even though the National Electric Code requires the more expensive models certified for class (g) environments. In short, it seems safe to assume that the true cost of the rule would fall in between the estimates prepared by the two consultants.
On the benefit side, where estimates are normally subject to more uncertainty, the report prepared for OSHA took a realistic position. It was assumed that the housekeeping provision would prevent approximately 30–50 percent of all fires and 17–32 percent of all explosions. Through a series of calculations intended to gauge the "willingness-to-pay" to avoid property damage and personal injuries, these figures produced an estimated total benefit of approximately $286 million. Industry did not take issue with the specifics of these estimates. Although it is always arguable that things will not work out as well as planned, the estimates prepared for OSHA were not vulnerable to the charge of overoptimism.
The battle of the cost-benefit analysts was not won clearly by either side. Assuming that actual benefits would be between 50 and 90 percent of OSHA's (possibly high) estimates, the rule would yield from $143 million to $286 million in total annual benefits. Estimates of annualized cost, based on the figures presented in table 5 and discounted to present value, ranged from $113 million (OSHA) to $240 million (NGFA). The true cost is likely to be somewhere in between. Therefore, the OSHA standard may or may not generate more benefits in excess of costs—a plausible case can be made for both propositions. Either way, the costs appear to be in the same ballpark as the benefits.
Country Elevators and Distributional Effects
Aside from cost-effectiveness, the standard was controversial for distributional reasons. Industry and OMB argued that the rule dispropor-
tionately affected country elevators. Between 80 and 100 percent of export terminals and inland elevators were thought to be in compliance with most of the OSHA requirements (other than housekeeping). No more than 15 percent of country elevators were. Large facilities generally had dust-control programs; many country elevators did not. As a result, the costs of the proposal fell much more on country elevators than on other facilities. Yet, as OMB argued, the risks were more significant in larger facilities. OMB took the position that "big" facilities should be covered and "small country elevators" should not. OSHA did not want to exclude any facilities. As an OSHA official testified, "When workers are hurt or killed [we] don't particularly care about the size of the facility." Both positions were less than reasonable. OMB wanted to exempt all "country" elevators, even though some were, by any measure, as large as inland terminals and export facilities. But OSHA's position indicated complete disregard for marginal costs and benefits. The cost of bringing the smallest facilities into compliance would be far out of proportion to the losses likely to occur in those facilities.
A political dispute of surprising dimensions took shape. Both the vice president of the United States and the president of the AFL-CIO got involved when OMB held up the rule for months longer than the normal sixty-day review period. The housekeeping provision was the major bone of contention. In a compromise that pleased practically no one, the proposed rule was released for publication when OSHA, at OMB's insistence, added two alternative proposals for housekeeping: sweeping once per shift or installing pneumatic dust control. It was no secret that OSHA still favored the action-level alternative.
The added alternatives did not cool the political debate. The NGFA organized an impressive campaign to flood OSHA with "worksheets" from elevator operators opposed to all three alternatives. A few congressmen held hearings to allow elevator operators in their home districts to complain that "the people who wrote these standards have never been to a country elevator." OSHA continued to take heat from all sides, with the exception of labor. In what was termed an "unusual alliance," the AFL-CIO supported the proposed rule even though it would have preferred an action level stricter than one-eighth of an inch.
The OSHA Standard Prevails (with Minor Improvements)
The stalemate between OMB and OSHA lasted until there were two more serious explosions. In July 1987, following a fatal explosion in
Burlington, Iowa, Senator Tom Harkin (D-Iowa) complained to the OMB director about delays in releasing the rule. He complained again four months later, following another explosion. The rule was published on the last day of 1987.
The rule contains a major change, but not an actual softening, in OSHA's position on housekeeping. The standard retains the action level of one-eight of an inch for housekeeping—eliminating the ineffective "once-a-shift sweeping" option. OSHA modified the provision, however, by limiting its application to three "priority areas." This seems much more reasonable than the earlier version, which applied to any 200-square-foot area in the facility. It may even help reduce frivolous or unreasonable enforcement actions. But it does little to alter the basic housekeeping tasks required by the rule, since many of the steps used to minimize grain dust in "critical" areas will also minimize it elsewhere. OSHA also moderated the rule slightly to favor country elevators. Some country elevators are exempt from the requirements for alignment and motion detection devices. But none are exempt from the action-level requirement. Country elevators were given three extra years to come into compliance, however. The symbolism of these changes, all conciliatory, far exceeds their actual substantive impact.
The most substantial change in the final standard concerned feed mills, and again the adjustment was in the direction of leniency. In response to arguments that risks are lower in feed mills, OSHA exempted these facilities from the most powerful provisions in the standard: the housekeeping and bucket elevator requirements. OSHA defended this decision, calculating that "the risk of an employee death or injury resulting from an explosion is almost five times greater in grain elevators than in mills." OSHA rejected this line of argument in the case of country elevators, however, justifying the apparent discrepancy on the grounds that "the available data are not sufficient to permit an accurate estimate of the relative risks in large and small elevators." Although nobody was entirely pleased with the final standard, it certainly was reasonable in many respects. An editorial in the trade journal Feedstuffs, often an outspoken critic of OSHA, allowed that "grain elevators and feed mills can be much safer places to work merely as a result of OSHA's attention…. The rules on bin and entry, housekeeping plans, work permits, etc., are needed. A federal edict appears to be the best way to implement such rules." But industry was incensed at the housekeeping requirements and immediately challenged them in court. Labor countered, challenging the exemption for feed mills. The
Fifth Circuit Court of Appeals upheld all but the housekeeping provisions, remanding that issue for "reconsideration of the economic feasibility of the standard."