(except die-casting).
332111....................  Iron and steel forging......            4,089                5              774        1,175,666             4.71           55,316             0.07             1.40
332112....................  Nonferrous forging..........              784                1              774        1,431,874             4.71           67,371             0.05             1.15
332115....................  Crown and closure                         992                1              774        1,715,882             4.71           80,733             0.05             0.96
                             manufacturing.
332116....................  Metal stamping..............           27,154               35              775        1,146,408             4.71           53,939             0.07             1.44
332117....................  Powder metallurgy part                  2,072                3              774        1,580,975             4.71           74,386             0.05             1.04
                             manufacturing.
332211....................  Cutlery and flatware (except            2,217                3              774          391,981             5.22           20,476             0.20             3.78
                             precious) manufacturing.
332212....................  Hand and edge tool                     19,535               25              774          770,858             5.22           40,267             0.10             1.92
                             manufacturing.
332213....................  Saw blade and handsaw                   2,296                3              774          975,698             5.22           50,967             0.08             1.52
                             manufacturing.
332214....................  Kitchen utensil, pot, and                   0                0              N/A          826,410             5.22           43,169              N/A              N/A
                             pan manufacturing.
332323....................  Ornamental and architectural            9,527               14              694          695,970             4.70           32,737             0.10             2.12
                             metal work.
332439....................  Other metal container                   5,279                7              788        1,027,511             3.58           36,822             0.08             2.14
                             manufacturing.
332510....................  Hardware manufacturing......           11,863               15              777          776,986             5.22           40,587             0.10             1.92
332611....................  Spring (heavy gauge)                    1,927                2              786        1,774,584             5.22           92,698             0.04             0.85
                             manufacturing.
332612....................  Spring (light gauge)                    4,960                6              774        1,085,302             5.22           56,692             0.07             1.36
                             manufacturing.
332618....................  Other fabricated wire                  19,946               26              774          778,870             5.22           40,685             0.10             1.90
                             product manufacturing.
332710....................  Machine shops...............          416,115              537              774          649,804             5.80           37,677             0.12             2.06
332812....................  Metal coating and allied              613,903              885              694          602,598             4.85           29,254             0.12             2.37
                             services.
332911....................  Industrial valve                        5,886                8              774        1,294,943             6.81           88,146             0.06             0.88
                             manufacturing.
332912....................  Fluid power valve and hose              4,491                6              774        1,350,501             6.81           91,927             0.06             0.84
                             fitting manufacturing.
332913....................  Plumbing fixture fitting and            1,505                2              774          811,318             6.81           55,226             0.10             1.40
                             trim manufacturing.
332919....................  Other metal valve and pipe              2,710                3              781        2,164,960             6.81          147,367             0.04             0.53
                             fitting manufacturing.
332991....................  Ball and roller bearing                 1,132                1              774        1,808,246             6.81          123,086             0.04             0.63
                             manufacturing.
332996....................  Fabricated pipe and pipe               12,453               16              774        1,237,265             6.81           84,220             0.06             0.92
                             fitting manufacturing.
332997....................  Industrial pattern                      8,917               12              774          503,294             6.81           34,259             0.15             2.26
                             manufacturing.
332998....................  Enameled iron and metal                 3,287                5              690          725,491             6.81           49,384             0.10             1.40
                             sanitary ware manufacturing.
332999....................  All other miscellaneous                55,981               72              774          933,734             6.81           63,558             0.08             1.22
                             fabricated metal product
                             manufacturing.
333319....................  Other commercial and service           19,776               26              774        1,127,993             4.86           54,803             0.07             1.41
                             industry machinery
                             manufacturing.
333411....................  Air purification equipment              4,745                6              774        1,152,661             4.55           52,480             0.07             1.47
                             manufacturing.
333412....................  Industrial and commercial               1,675                2              774        1,454,305             4.55           66,214             0.05             1.17
                             fan and blower
                             manufacturing.
333414....................  Heating equipment (except               6,087                8              777          901,560             4.55           41,047             0.09             1.89
                             warm air furnaces)
                             manufacturing.
333511....................  Industrial mold                        43,738               56              774          716,506             5.29           37,898             0.11             2.04
                             manufacturing.
333512....................  Machine tool (metal cutting             8,756               11              776          911,891             5.29           48,233             0.09             1.61
                             types) manufacturing.
333513....................  Machine tool (metal forming             4,666                6              774        1,308,768             5.29           69,225             0.06             1.12
                             types) manufacturing.
333514....................  Special die and tool, die              65,867               85              774          816,990             5.29           43,213             0.09             1.79
                             set, jig, and fixture
                             manufacturing.
333515....................  Cutting tool and machine               31,406               41              775          771,162             5.29           40,789             0.10             1.90
                             tool accessory
                             manufacturing.
333516....................  Rolling mill machinery and              1,361                2              774        2,243,812             5.29          118,683             0.03             0.65
                             equipment manufacturing.
333518....................  Other metalworking machinery            6,766                9              774          965,694             5.29           51,079             0.08             1.51
                             manufacturing.
333612....................  Speed changer, industrial               3,318                4              774        1,393,898             2.63           36,617             0.06             2.11
                             high-speed drive, and gear
                             manufacturing.
333613....................  Mechanical power                        3,114                4              774        2,113,156             2.63           55,511             0.04             1.39
                             transmission equipment
                             manufacturing.
333911....................  Pump and pumping equipment              7,209                9              774        1,343,868             4.58           61,500             0.06             1.26
                             manufacturing.
333912....................  Air and gas compressor                  4,228                5              774        1,644,664             4.58           75,266             0.05             1.03
                             manufacturing.
333991....................  Power-driven handtool                   2,212                3              774        2,158,268             4.58           98,770             0.04             0.78
                             manufacturing.
333992....................  Welding and soldering                   3,835                5              774        1,331,521             4.58           60,935             0.06             1.27
                             equipment manufacturing.
333993....................  Packaging machinery                     9,742               13              774          809,474             4.58           37,044             0.10             2.09
                             manufacturing.
333994....................  Industrial process furnace              5,631                7              774        1,324,790             4.58           60,627             0.06             1.28
                             and oven manufacturing.
333995....................  Fluid power cylinder and                3,955                5              774          916,613             4.58           41,947             0.08             1.84
                             actuator manufacturing.

333996....................  Fluid power pump and motor              2,670                3              774        1,417,549             4.58           64,872             0.05             1.19
                             manufacturing.
333997....................  Scale and balance (except               1,947                3              774        1,527,651             4.58           69,911             0.05             1.11
                             laboratory) manufacturing.
333999....................  All other miscellaneous                32,637               42              774          871,700             4.58           39,892             0.09             1.94
                             general purpose machinery
                             manufacturing.
334518....................  Watch, clock, and part                  1,322                2              774          586,350             5.94           34,844             0.13             2.22
                             manufacturing.
335211....................  Electric housewares and                     0                0              N/A          847,408             4.21           35,703              N/A              N/A
                             household fans.
335221....................  Household cooking appliance               722                1              698        2,228,319             4.21           93,883             0.03             0.74
                             manufacturing.
335222....................  Household refrigerator and                  0                0              N/A        4,917,513             4.21          207,184              N/A              N/A
                             home freezer manufacturing.
335224....................  Household laundry equipment                 0                0              N/A        1,767,776             4.21           74,480              N/A              N/A
                             manufacturing.
335228....................  Other major household                       0                0              N/A        1,706,991             4.21           71,919              N/A              N/A
                             appliance manufacturing.
336111....................  Automobile manufacturing....            2,147                3              774        1,507,110             2.04           30,752             0.05             2.52
336112....................  Light truck and utility                   795                1              774        1,089,801             2.04           22,237             0.07             3.48
                             vehicle manufacturing.
336120....................  Heavy duty truck                          943                1              774        4,371,350             2.04           89,196             0.02             0.87
                             manufacturing.
336211....................  Motor vehicle body                     12,371               16              774        1,720,545             2.04           35,107             0.04             2.20
                             manufacturing.
336212....................  Truck trailer manufacturing.            5,147                7              774        2,706,375             2.04           55,223             0.03             1.40
336213....................  Motor home manufacturing....            1,193                2              774        2,184,388             2.04           44,572             0.04             1.74
336311....................  Carburetor, piston, piston              1,329                2              774          870,496             2.04           17,762             0.09             4.36
                             ring, and valve
                             manufacturing.
336312....................  Gasoline engine and engine             11,683               15              774          867,703             2.04           17,705             0.09             4.37
                             parts manufacturing.
336322....................  Other motor vehicle                     8,618               11              774        1,383,831             2.04           28,237             0.06             2.74
                             electrical and electronic
                             equipment manufacturing.
336330....................  Motor vehicle steering and              2,876                4              774        1,543,436             2.04           31,493             0.05             2.46
                             suspension components
                             (except spring)
                             manufacturing.
336340....................  Motor vehicle brake system              2,386                3              774        1,378,684             2.04           28,132             0.06             2.75
                             manufacturing.
336350....................  Motor vehicle transmission              6,390                8              774          864,746             2.04           17,645             0.09             4.38
                             and power train parts
                             manufacturing.
336370....................  Motor vehicle metal stamping            5,759                7              778        1,519,875             2.04           31,013             0.05             2.51
336399....................  All other motor vehicle                16,021               21              774        1,369,097             2.04           27,936             0.06             2.77
                             parts manufacturing.
336611....................  Ship building and repair....          212,021               65            3,252          770,896             5.86           45,188             0.42             7.20
336612....................  Boat building...............          391,950              121            3,247        1,101,324             5.86           64,557             0.29             5.03
336992....................  Military armored vehicle,                   0                0              N/A        1,145,870             6.31           72,296              N/A              N/A
                             tank, and tank component
                             manufacturing.
337215....................  Showcase, partition,                   28,216               36              774          866,964             4.54           39,387             0.09             1.96
                             shelving, and locker
                             manufacturing.
339114....................  Dental equipment and                   79,876               87              922          657,192            10.77           70,773             0.14             1.30
                             supplies manufacturing.
339116....................  Dental laboratories.........        1,040,112            6,664              156          326,740            10.77           35,187             0.05             0.44
339911....................  Jewelry (except costume)              533,353            1,532              348          673,857             5.80           39,054             0.05             0.89
                             manufacturing.
339913....................  Jewelers' materials and                86,465              218              397          919,422             5.80           53,285             0.04             0.74
                             lapidary work manufacturing.
339914....................  Costume jewelry and novelty           100,556              368              274          454,292             5.80           26,329             0.06             1.04
                             manufacturing.
339950....................  Sign manufacturing..........           89,586              140              639          521,518             5.80           30,225             0.12             2.12
423840....................  Industrial supplies,                   50,612               95              531        2,432,392             3.44           83,567             0.02             0.64
                             wholesalers.
482110....................  Rail transportation.........              N/A              N/A              N/A              N/A              N/A              N/A              N/A              N/A
621210....................  Dental offices..............          320,986            6,506               49          562,983             7.34           41,328             0.01             0.12
                                                         ---------------------------------------------------------------------------------------------------------------------------------------
                            Total.......................       15,745,425           25,544              616
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
\a\ Profit rates were calculated by ERG, 2013, as the average of profit rates for 2000 through 2006, based on balance sheet data reported in the Internal Revenue Service's Corporation Source
  Book (IRS, 2007).
Source: U.S. Dept. of Labor, OSHA, Office of Regulatory Analysis, based on ERG (2013).

    As a point of clarification, OSHA would like to draw attention to
industries with captive foundries. There are three industries with
captive foundries whose annualized costs for very small entities
approach five percent of annual profits: NAICS 336311 (Carburetor,
piston ring, and valve manufacturing); NAICS 336312 (Gasoline engine
and engine parts manufacturing); and NAICS 336350 (Motor vehicle
transmission and power train parts manufacturing). For very small
entities in all three of these industries, the annualized costs as a
percentage of annual profits are approximately 4.4 percent. OSHA
believes, however, that very small entities in industries with captive
foundries are unlikely to actually have captive foundries and that the
captive foundries allocated to very small entities in fact belong in
larger entities. This would have the result that the costs as
percentage of profits for these larger entities would be lower than the
4.4 percent reported above. Instead, OSHA assumed that the affected
employees would be distributed among entities of different size
according to each entity size class's share of total employment. In
other words, if 15 percent of employees in an industry worked in very
small entities (those with fewer than 20 employees), then OSHA assumed
that 15 percent of affected employees in the industry would work in
very small entities. However, in reality, OSHA anticipates that in
industries with captive foundries, none of the entities with fewer than
20 employees have captive foundries or, if they do, that the impacts
are much smaller than estimated here. OSHA invites comment about
whether and to what extent very small entities have captive foundries
(in industries with captive foundries).
    Regardless of whether the cost estimates have been inflated for
very small entities in the three industries with captive foundries
listed above, there are two reasons why OSHA is confident that the
competitive structure of these industries would not be threatened by
adverse competitive conditions for very small entities. First, as shown
in Appendix VI-B of the PEA, very small entities in NAICS 336311, NAICS
336312, and NAICS 336350 account for 3 percent, 2 percent, and 3
percent, respectively, of the total number of establishments in the
industry. Although it is possible that some of these very small
entities could exit the industry in response to the proposed rule,
courts interpreting the OSH Act have historically taken the view that
losing at most 3 percent of the establishments in an industry would
alter the competitive structure of that industry. Second, very small
entities in industries with captive foundries, when confronted with
higher foundry costs as a result of the proposed rule, have the option
of dropping foundry activities, purchasing foundry products and
services from businesses directly in the foundry industry, and focusing
on the main goods and services produced in the industry. This, after
all, is precisely what the rest of the establishments in these
industries do.
e. Regulatory Flexibility Screening Analysis
    To determine if the Assistant Secretary of Labor for OSHA can
certify that the proposed silica rule will not have a significant
economic impact on a substantial number of small entities, the Agency
has developed screening tests to consider minimum threshold effects of
the proposed rule on small entities. The minimum threshold effects for
this purpose are annualized costs equal to one percent of annual
revenues and annualized costs equal to five percent of annual profits
applied to each affected industry. OSHA has applied these screening
tests both to small entities and to very small entities. For purposes
of certification, the threshold level cannot be exceeded for affected
small entities or very small entities in any affected industry.
    Table VIII-12 and Table VIII-13 show that, in general industry and
maritime, the annualized costs of the proposed rule do not exceed one
percent of annual revenues for small entities or for very small
entities in any industry. These tables also show that the annualized
costs of the proposed rule exceed five percent of annual profits for
small entities in 10 industries and for very small entities in 13
industries. OSHA is therefore unable to certify that the proposed rule
will not have a significant economic impact on a substantial number of
small entities in general industry and maritime and must prepare an
Initial Regulatory Flexibility Analysis (IRFA). The IRFA is presented
in Section VIII.I of this preamble.
3. Impacts in Construction
a. Economic Feasibility Screening Analysis: All Establishments
    To determine whether the proposed rule's projected costs of
compliance would threaten the economic viability of affected
construction industries, OSHA used the same data sources and
methodological approach that were used earlier in this chapter for
general industry and maritime. OSHA first compared, for each affected
construction industry, annualized compliance costs to annual revenues
and profits per (average) affected establishment. The results for all
affected establishments in all affected construction industries are
presented in Table VIII-14, using annualized costs per establishment
for the proposed 50 [mu]g/m\3\ PEL. The annualized cost of the proposed
rule for the average establishment in construction, encompassing all
construction industries, is estimated at $1,022 in 2009 dollars. It is
clear from Table VIII-14 that the estimates of the annualized costs per
affected establishment in the 10 construction industries vary widely.
These estimates range from $2,598 for NAICS 237300 (Highway, street,
and bridge construction) and $2,200 for NAICS 237100 (Utility system
construction) to $241 for NAICS 238200 (Building finishing contractors)
and $171 for NAICS 237200 (Land subdivision).
    Table VIII-14 shows that in no construction industry do the
annualized costs of the proposed rule exceed one percent of annual
revenues or ten percent of annual profits. NAICS 238100 (Foundation,
structure, and building exterior contractors) has both the highest cost
impact as a percentage of revenues, of 0.13 percent, and the highest
cost impact as a percentage of profits, of 2.97 percent. Based on these
results, even if the costs of the proposed rule were 50 percent higher
than OSHA has estimated, the highest cost impact as a percentage of
revenues in any affected construction industry would be less than 0.2
percent. Furthermore, the costs of the proposed rule would have to be
more than 650 percent higher than OSHA has estimated for the cost
impact as a percentage of revenues to equal 1 percent in any affected
construction industry. For all affected establishments in construction,
the estimated annualized cost of the proposed rule is, on average,
equal to 0.05 percent of annual revenue and 1.0 percent of annual
profit.
    Therefore, even though the annualized costs of the proposed rule
incurred by the construction industry as a whole are almost four times
the combined annualized costs incurred by general industry and
maritime, OSHA preliminarily concludes, based on its screening
analysis, that the annualized costs as a percentage of annual revenues
and as a percentage of annual profits are below the threshold level
that could threaten the economic viability of any of the construction
industries. OSHA further notes that while there would be

additional costs (not attributable to the proposed rule) for some
employers in construction industries to come into compliance with the
current silica standard, these costs would not affect the Agency's
preliminary determination of the economic feasibility of the proposed
rule.
    Below, OSHA provides additional information to further support the
Agency's conclusion that the proposed rule would not threaten the
economic viability of any construction industry.

                    Table VIII-14--Screening Analysis for Establishments in Construction Affected by OSHA's Proposed Silica Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                     Annualized
                                         Total        Affected       costs per     Revenues per   Profit rate   Profits per    Costs as a    Costs as a
     NAICS            Industry        annualized   establishments     affected    establishment       \a\      establishment   percentage    percentage
                                         costs                     establishment                   (percent)                   of revenues   of profits
--------------------------------------------------------------------------------------------------------------------------------------------------------
236100.........  Residential          $23,288,881         55,338            $421     $2,002,532          4.87        $97,456          0.02          0.43
                  Building
                  Construction.
236200.........  Nonresidential        39,664,913         44,702             887      7,457,045          4.87        362,908          0.01          0.24
                  Building
                  Construction.
237100.........  Utility System        46,718,162         21,232           2,200      4,912,884          5.36        263,227          0.04          0.84
                  Construction.
237200.........  Land Subdivision..     1,110,789          6,511             171      2,084,334         11.04        230,214          0.01          0.07
237300.........  Highway, Street,      30,807,861         11,860           2,598      8,663,019          5.36        464,156          0.03          0.56
                  and Bridge
                  Construction.
237900.........  Other Heavy and        7,164,210          5,561           1,288      3,719,070          5.36        199,264          0.03          0.65
                  Civil Engineering
                  Construction.
238100.........  Foundation,          215,907,211        117,456           1,838      1,425,510          4.34         61,832          0.13          2.97
                  Structure, and
                  Building Exterior
                  Contractors.
238200.........  Building Equipment     4,902,138         20,358             241      1,559,425          4.34         67,640          0.02          0.36
                  Contractors.
238300.........  Building Finishing    50,259,239        120,012             419        892,888          4.34         38,729          0.05          1.08
                  Contractors.
238900.........  Other Specialty       68,003,978         74,446             913      1,202,048          4.48         53,826          0.08          1.70
                  Trade Contractors.
999000.........  State and local       23,338,234            N/A             N/A            N/A           N/A            N/A           N/A           N/A
                  governments \d\.
                                    --------------------------------------------------------------------------------------------------------------------
                 Total.............   511,165,616        477,476           1,022  .............  ............  .............  ............  ............
--------------------------------------------------------------------------------------------------------------------------------------------------------
\a\ Profit rates were calculated by ERG, 2013, as the average of profit rates for 2000 through 2006, based on balance sheet data reported in the
  Internal Revenue Service's Corporation Source Book (IRS, 2007).
Source: U.S. Dept. of Labor, OSHA, Office of Regulatory Analysis, based on ERG (2013).

b. Normal Year-to-Year Variations in Profit Rates
    As previously noted, the United States has a dynamic and constantly
changing economy in which large year-to-year changes in industry profit
rates are commonplace. A recession, a downturn in a particular
industry, foreign competition, or the increased competitiveness of
producers of close domestic substitutes are all easily capable of
causing a decline in profit rates in an industry of well in excess of
ten percent in one year or for several years in succession.
    To demonstrate the normal year-to-year variation in profit rates
for all the manufacturers in construction affected by the proposed
rule, OSHA presented data in the PEA on year-to-year profit rates and
year-to-year percentage changes in profit rates, by industry, for the
years 2000--2006. For the combined affected manufacturing industries in
general industry and maritime over the 7-year period, the average
change in profit rates was 15.4 percent a year.
    What these data indicate is that, even if, theoretically, the
annualized costs of the proposed rule for the most significantly
affected construction industries were completely absorbed in reduced
annual profits, the magnitude of reduced annual profit rates are well
within normal year-to-year variations in profit rates in those
industries and do not threaten their economic viability. Of course, a
permanent loss of profits would present a greater problem than a
temporary loss, but it is unlikely that all costs of the proposed rule
would be absorbed in lost profits. Given that, as discussed in Chapter
VI of the PEA, the overall price elasticity of demand for the outputs
of the construction industry is fairly low and that almost all of the
costs estimated in Chapter V of the PEA are variable costs, there is a
reasonable chance that most firms will see small declines in output
rather than that any but the most extremely marginal firms would close.
    Considering the costs of the proposed rule relative to the size of
construction activity in the United States, OSHA preliminarily
concludes that the price and profit impacts of the proposed rule on
construction industries would, in practice, be quite limited. Based on
ERG (2007a), on an annual basis, the cost of the proposed rule would be
equal to approximately 2 percent of the value of affected, silica-
generating construction activity, and silica-generating construction
activity accounts for approximately 4.8 percent of all construction
spending in the U.S. Thus, the annualized cost of the proposed rule
would be equal to approximately 0.1 percent of the value of annual
construction activity in the U.S. On top of that, construction activity
in the U.S. is not subject to any meaningful foreign competition, and
any foreign firms performing construction activities in the United
States would be subject to OSHA regulations.
c. Impacts by Type of Construction Demand
    The demand for construction services originates in three
independent sectors: residential building construction, nonresidential
building construction, and nonbuilding construction.
    Residential Building Construction: Residential housing demand is
derived from the household demand for housing services. These services
are provided by the stock of single and multi-unit residential housing
units. Residential housing construction represents changes to the
housing stock and includes construction of new units and

modifications, renovations, and repairs to existing units. A number of
studies have examined the price sensitivity of the demand for housing
services. Depending on the data source and estimation methodologies,
these studies have estimated the demand for housing services at price
elasticity values ranging from -0.40 to -1.0, with the smaller (in
absolute value) less elastic values estimated for short-run periods. In
the long run, it is reasonable to expect the demand for the stock of
housing to reflect similar levels of price sensitivity. Since housing
investments include changes in the existing stock (renovations,
depreciation, etc.) as well as new construction, it is likely that the
price elasticity of demand for new residential construction will be
lower than that for residential construction as a whole.
    OSHA judges that many of the silica-generating construction
activities affected by the proposed rule are not widely used in single-
family construction. This assessment is consistent with the cost
estimates that show relatively low impacts for residential building
contractors. Multi-family residential construction might have more
substantial impacts, but, based on census data, this type of
construction represents a relatively small share of net investment in
residential buildings.
    Nonresidential Building Construction: Nonresidential building
construction consists of industrial, commercial, and other
nonresidential structures. As such, construction demand is derived from
the demand for the output of the industries that use the buildings. For
example, the demand for commercial office space is derived from the
demand for the output produced by the users of the office space. The
price elasticity of demand for this construction category will depend,
among other things, on the price elasticity of demand for the final
products produced, the importance of the costs of construction in the
total cost of the final product, and the elasticity of substitution of
other inputs that could substitute for nonresidential building
construction. ERG (2007c) found no studies that attempted to quantify
these relationships. But given the costs of the proposed rule relative
to the size of construction spending in the United States, the
resultant price or revenue effects are likely to be so small as to be
barely detectable.
    Nonbuilding Construction: Nonbuilding construction includes roads,
bridges, and other infrastructure projects. Utility construction (power
lines, sewers, water mains, etc.) and a variety of other construction
types are also included. A large share of this construction (63.8
percent) is publicly financed (ERG, 2007a). For this reason, a large
percentage of the decisions regarding the appropriate level of such
investments is not made in a private market setting. The relationship
between the costs and price of such investments and the level of demand
might depend more on political considerations than the factors that
determine the demand for privately produced goods and services.
    While a number of studies have examined the factors that determine
the demand for publicly financed construction projects, these studies
have focused on the ability to finance such projects (e.g., tax
receipts) and socio-demographic factors (e.g., population growth) to
the exclusion of cost or price factors. In the absence of budgetary
constraints, OSHA believes, therefore, that the price elasticity of
demand for public investment is probably quite low. On the other hand,
budget-imposed limits might constrain public construction spending. If
the dollar value of public investments were fixed, a price elasticity
of demand of 1 (in absolute terms) would be implied. Any percentage
increase in construction costs would be offset with an equal percentage
reduction in investment (measured in physical units), keeping public
construction expenditures constant.
    Public utility construction comprises the remainder of nonbuilding
construction. This type of construction is subject to the same derived-
demand considerations discussed for nonresidential building
construction, and for the same reasons, OSHA expects the price and
profit impacts to be quite small.
d. Economic Feasibility Screening Analysis: Small and Very Small
Businesses
    The preceding discussion focused on the economic viability of the
affected construction industries in their entirety and found that the
proposed standard did not threaten the survival of these construction
industries. Now OSHA wishes to demonstrate that the competitive
structure of these industries would not be significantly altered.
    To address this issue, OSHA examined the annualized costs per
affected small and very small entity for each affected construction
industry. Table VIII-15 and Table VIII-16 show that in no construction
industries do the annualized costs of the proposed rule exceed one
percent of annual revenues or ten percent of annual profits either for
small entities or for very small entities. Therefore, OSHA
preliminarily concludes, based on its screening analysis, that the
annualized costs as a percentage of annual revenues and as a percentage
of annual profits are below the threshold level that could threaten the
competitive structure of any of the construction industries.

                    Table VIII-15--Screening Analysis for Small Entities in Construction Affected by OSHA's Proposed Silica Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                       Annualized
                                              Total       Affected      costs per   Revenues per   Profit rate   Profits per   Costs as a    Costs as a
       NAICS              Industry         annualized       small       affected      entities         \a\        entities     percentage    percentage
                                              costs       entities      entities                    (percent)                  of revenues   of profits
--------------------------------------------------------------------------------------------------------------------------------------------------------
236100............  Residential Building   $18,527,934        44,212          $419    $1,303,262          4.87       $67,420          0.03          0.62
                     Construction.
236200............  Nonresidential          24,443,185        42,536           575     4,117,755          4.87       200,396          0.01          0.29
                     Building
                     Construction.
237100............  Utility System          30,733,201        20,069         1,531     3,248,053          5.36       174,027          0.05          0.88
                     Construction.
237200............  Land Subdivision....       546,331         3,036           180     1,215,688         11.04       134,272          0.01          0.13
237300............  Highway, Street, and    13,756,992        10,350         1,329     3,851,971          5.36       206,385          0.03          0.64
                     Bridge Construction.
237900............  Other Heavy and          5,427,484         5,260         1,032     2,585,858          5.36       138,548          0.04          0.74
                     Civil Engineering
                     Construction.
238100............  Foundation,            152,160,159       115,345         1,319       991,258          4.34        42,996          0.13          3.07
                     Structure, and
                     Building Exterior
                     Contractors.

238200............  Building Equipment       3,399,252        13,933           244     1,092,405          4.34        47,383          0.02          0.51
                     Contractors.
238300............  Building Finishing      36,777,673        87,362           421       737,930          4.34        32,008          0.06          1.32
                     Contractors.
238900............  Other Specialty         53,432,213        73,291           729     1,006,640          4.48        45,076          0.07          1.62
                     Trade Contractors.
999000............  State and local          2,995,955        13,482           222           N/A           N/A           N/A           N/A           N/A
                     governments [d].
                                         ---------------------------------------------------------------------------------------------------------------
                    Total...............   342,200,381       428,876           798  ............  ............  ............  ............  ............
--------------------------------------------------------------------------------------------------------------------------------------------------------
\a\ Profit rates were calculated by ERG, 2013, as the average of profit rates for 2000 through 2006, based on balance sheet data reported in the
  Internal Revenue Service's Corporation Source Book (IRS, 2007).
Source: U.S. Dept. of Labor, OSHA, Office of Regulatory Analysis, based on ERG (2013).

     Table VIII-16--Screening Analysis for Very Small Entities (Fewer Than 20 Employees) in Construction Affected by OSHA's Proposed Silica Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                          Affected     Annualized
                                              Total       entities      costs per   Revenues per   Profit rate   Profits per   Costs as a    Costs as a
       NAICS              Industry         annualized     with <20      affected      entities         [a]        entities     percentage    percentage
                                              costs       employees     entities                    (percent)                  of revenues   of profits
--------------------------------------------------------------------------------------------------------------------------------------------------------
236100............  Residential Building   $13,837,293        32,042          $432      $922,275          4.87       $44,884          0.05          0.96
                     Construction.
236200............  Nonresidential          10,777,269        35,746           301     1,902,892          4.87        92,607          0.02          0.33
                     Building
                     Construction.
237100............  Utility System           8,578,771        16,113           532       991,776          5.36        53,138          0.05          1.00
                     Construction.
237200............  Land Subdivision....       546,331         3,036           180     1,215,688         11.04       134,272          0.01          0.13
237300............  Highway, Street, and     4,518,038         8,080           559     1,649,324          5.36        88,369          0.03          0.63
                     Bridge Construction.
237900............  Other Heavy and          1,650,007         4,436           372       834,051          5.36        44,688          0.04          0.83
                     Civil Engineering
                     Construction.
238100............  Foundation,             81,822,550       105,227           778       596,296          4.34        25,864          0.13          3.01
                     Structure, and
                     Building Exterior
                     Contractors.
238200............  Building Equipment       1,839,588         7,283           253       579,724          4.34        25,146          0.04          1.00
                     Contractors.
238300............  Building Finishing      21,884,973        50,749           431       429,154          4.34        18,615          0.10          2.32
                     Contractors.
238900............  Other Specialty         30,936,078        68,075           454       600,658          4.48        26,897          0.08          1.69
                     Trade Contractors.
999000............  State and local                N/A           N/A           N/A           N/A           N/A           N/A           N/A           N/A
                     governments [d].
                                         ---------------------------------------------------------------------------------------------------------------
                    Total...............   176,390,899       330,786           533  ............  ............  ............  ............  ............
--------------------------------------------------------------------------------------------------------------------------------------------------------
\a\ Profit rates were calculated by ERG, 2013, as the average of profit rates for 2000 through 2006, based on balance sheet data reported in the
  Internal Revenue Service's Corporation Source Book (IRS, 2007).
Source: U.S. Dept. of Labor, OSHA, Office of Regulatory Analysis, based on ERG (2013).

e. Differential Impacts on Small Entities and Very Small Entities
    Below, OSHA provides some additional information about differential
compliance costs for small and very small entities that might influence
the magnitude of differential impacts for these smaller businesses.
    The distribution of impacts by size of business is affected by the
characteristics of the compliance measures. For silica controls in
construction, the dust control measures consist primarily of equipment
modifications and additions made to individual tools, rather than
large, discrete investments, such as might be applied in a
manufacturing setting. As a result, compliance advantages for large
firms through economies of scale are limited. It is possible that some
large construction firms might derive purchasing power by buying dust
control measures in bulk. Given the simplicity of many control
measures, however, such as the use of wet methods on machines already
manufactured to accommodate them, such differential purchasing power
appears to be of limited consequence.
    The greater capital resources of large firms will give them some
advantage in making the relatively large investments for some control
measures. For example, cab enclosures on heavy construction equipment
or foam-based dust control systems on rock crushers might be
particularly expensive for some small entities with an unusual number
of heavy equipment pieces. Nevertheless, where differential investment
capabilities might exist, small construction firms might also have the
capability to achieve compliance with lower-cost measures, such as by
modifying work practices. In the case of rock crushing, for example,
simple water spray systems can be arranged without large-scale
investments in the best commercially available systems.
    In the program area, large firms might have a slight advantage in
the delivery of training or in arranging for health screenings. Given
the likelihood that small firms can, under most circumstances, call
upon independent

training specialists at competitive prices, and the widespread
availability of medical services for health screenings, the advantage
for large firms is, again, expected to be fairly modest.
f. Regulatory Flexibility Screening Analysis
    To determine if the Assistant Secretary of Labor for OSHA can
certify that the proposed silica rule will not have a significant
economic impact on a substantial number of small entities, the Agency
has developed screening tests to consider minimum threshold effects of
the proposed rule on small entities. The minimum threshold effects for
this purpose are annualized costs equal to one percent of annual
revenues and annualized costs equal to five percent of annual profits
applied to each affected industry. OSHA has applied these screening
tests both to small entities and to very small entities. For purposes
of certification, the threshold levels cannot be exceeded for affected
small or very small entities in any affected industry.
    Table VIII-15 and Table VIII-16 show that in no construction
industries do the annualized costs of the proposed rule exceed one
percent of annual revenues or five percent of annual profits either for
small entities or for very small entities. However, as previously noted
in this section, OSHA is unable to certify that the proposed rule will
not have a significant economic impact on a substantial number of small
entities in general industry and maritime and must prepare an Initial
Regulatory Flexibility Analysis (IRFA). The IRFA is presented in
Section VIII.I of this preamble.
4. Employment Impacts on the U.S. Economy
    In October 2011, OSHA directed Inforum--a not-for-profit Maryland
corporation (based at the University of Maryland)--to run its
macroeconomic model to estimate the employment impacts of the costs of
the proposed silica rule.\20\ The specific model of the U.S. economy
that Inforum used--called the LIFT model--is particularly suitable for
this work because it combines the industry detail of a pure input-
output model (which shows, in matrix form, how the output of each
industry serves as inputs in other industries) with macroeconomic
modeling of demand, investment, and other macroeconomic parameters.\21\
The Inforum model can thus both trace changes in particular industries
through their effect on other industries and also examine the effects
of these changes on aggregate demand, imports, exports, and investment,
and in turn determine net changes to GDP, employment, prices, etc.
---------------------------------------------------------------------------

    \20\ Inforum has over 40 years experience designing and using
macroeconomic models of the United States (and other countries).
    \21\ LIFT stands for Long-Term Interindustry Forecasting Tool.
This model combines a dynamic input-output core for 97 productive
sectors with a full macroeconomic model with more than 800
macroeconomic variables. LIFT employs a ``bottoms-up'' regression
approach to macroeconomic modeling (so that aggregate investment,
employment, and exports, for example, are the sum of investment and
employment by industry and exports by commodity). Unlike some
simpler forecasting models, price effects are embedded in the model
and the results are time-dependent (that is, they are not static or
steady-state, but present year-by-year estimates of impacts
consistent with economic conditions at the time).
---------------------------------------------------------------------------

    In order to estimate the possible macroeconomic impacts of the
proposed rule, Inforum had to run its model twice: once to establish a
baseline and then again with changes in industry expenditures to
reflect the year-by-year costs of the proposed silica rule as estimated
by OSHA in its Preliminary Economic Analysis (PEA).\22\ The difference
in employment, GDP, etc. between the two runs of the model revealed the
estimated economic impacts of the proposed rule.\23\
---------------------------------------------------------------------------

    \22\ OSHA worked with Inforum to disaggregate compliance costs
into categories that mapped into specific LIFT production sectors.
Inforum also established a mapping between OSHA's NAICS-based
industries and the LIFT production sectors. OSHA's compliance cost
estimates were based on production and employment levels in affected
industries in 2006 (although the costs were then inflated to 2009
dollars). Therefore, Inforum benchmarked compliance cost estimates
in future years to production and employment conditions in 2006
(that is, compliance costs in a future year were proportionately
adjusted to production and employment changes from 2006 to that
future year). See Inforum (2011) for a discussion of these and other
transformations of OSHA's cost estimates to conform to the
specifications of the LIFT model.
    \23\ Because OSHA's analysis of the hydraulic fracturing
industry for the proposed silica rule was not conducted until after
the draft PEA had been completed, OSHA's estimates of the compliance
costs for this industry were not included in Inforum's analysis of
the rule's employment and other macroeconomic impacts on the U.S.
economy. It should be noted that, according to the Agency's
estimates, compliance costs for the hydraulic fracturing industry
represent only about 4 percent of the total compliance costs for all
affected industries.
---------------------------------------------------------------------------

    OSHA selected 2014 as the starting year for running the Inforum
model under the assumption that that would be the earliest that a final
silica rule could take effect. Inforum ran the model through the year
2023 and reported its annual and cumulative results for the ten-year
period 2014-2023. The most important Inforum result is that the
proposed silica rule cumulatively generates an additional 8,625 job-
years over the period 2014-2023, or an additional 862.5 job-years
annually, on average, over the period (Inforum, 2011).\24\
---------------------------------------------------------------------------

    \24\ A ``job-year'' is the term of art used to reflect the fact
that an additional person is employed for a year, not that a new job
has necessarily been permanently created.
---------------------------------------------------------------------------

    For a fuller discussion of the employment and other macroeconomic
impacts of the silica rule, see Inforum (2011) and Chapter VI of the
PEA for the proposed rule.

G. Benefits and Net Benefits

    In this section, OSHA presents a summary of the estimated benefits,
net benefits, and incremental benefits of the proposed silica rule.
This section also contains a sensitivity analysis to show how robust
the estimates of net benefits are to changes in various cost and
benefit parameters. A full explanation of the derivation of the
estimates presented here is provided in Chapter VII of the PEA for the
proposed rule. OSHA invites comments on any aspect of its estimation of
the benefits and net benefits of the proposed rule.
1. Estimation of the Number of Silica-Related Diseases Avoided
    OSHA estimated the benefits associated with the proposed PEL of 50
[mu]g/m\3\ and, for economic analysis purposes, with an alternative PEL
of 100 [mu]g/m\3\ for respirable crystalline silica by applying the
dose-response relationship developed in the Agency's quantitative risk
assessment (QRA)--summarized in Section VI of this preamble--to
exposures at or below the current PELs. OSHA determined exposures at or
below the current PELs by first developing an exposure profile
(presented in Chapter IV of the PEA) for industries with workers
exposed to respirable crystalline silica, using OSHA inspection and
site-visit data, and then applying this exposure profile to the total
current worker population. The industry-by-industry exposure profile
was previously presented in Section VIII.C of this preamble.
    By applying the dose-response relationship to estimates of
exposures at or below the current PELs across industries, it is
possible to project the number of cases of the following diseases
expected to occur in the worker population given exposures at or below
the current PELs (the ``baseline''):
     Fatal cases of lung cancer,
     fatal cases of non-malignant respiratory disease
(including silicosis),
     fatal cases of end-stage renal disease, and
     cases of silicosis morbidity.
    In addition, it is possible to project the number of these cases
that would be avoided under alternative, lower PELs.

As a simplified example, suppose that the risk per worker of a given
health endpoint is 2 in 1,000 at 100 [mu]g/m\3\ and 1 in 1,000 at 50
[mu]g/m\3\ and that there are 100,000 workers currently exposed at 100
[mu]g/m\3\. In this example, the proposed PEL would lower exposures to
50 [mu]g/m\3\, thereby cutting the risk in half and lowering the number
of expected cases in the future from 200 to 100.
    The estimated benefits for the proposed silica rule represent the
additional benefits derived from employers achieving full compliance
with the proposed PEL relative to the current PELs. They do not include
benefits associated with current compliance that has already been
achieved with regard to the new requirements or benefits obtained from
future compliance with existing silica requirements, to the extent that
some employers may currently not be fully complying with applicable
regulatory requirements.
    The technological feasibility analysis, described earlier in this
section of the preamble, demonstrated the effectiveness of controls in
meeting or exceeding the proposed OSHA PEL. For purposes of estimating
the benefit of reducing the PEL, OSHA has made some simplifying
assumptions. On the one hand, given the lack of background information
on respirator use related to existing exposure data, OSHA used existing
personal exposure measurement information, unadjusted for potential
respirator use.\25\ On the other hand, OSHA assumed that compliance
with the existing and proposed rule would result in reductions in
exposure levels to exactly the existing standard and proposed PEL,
respectively. However, in many cases, indivisibilities in the
application of respirators, as well as certain types of engineering
controls, may cause employers to reduce exposures to some point below
the existing standard or the proposed PEL. This is particularly true in
the construction sector for employers who opt to follow Table 1, which
specifies particular controls.
---------------------------------------------------------------------------

    \25\ Based on available data, the Agency estimated the weighted
average for the relevant exposure groups to match up with the
quantitative risk assessment. For the 50-100 [mu]g/m\3\ exposure
range, the Agency estimated an average exposure of 62.5 [mu]g/m\3\.
For the 100-250 [mu]g/m\3\ range, the Agency estimated an average
exposure of 125 [mu]g/m\3\.
---------------------------------------------------------------------------

    In order to examine the effect of simply changing the PEL, OSHA
compared the number of various kinds of cases that would occur if a
worker were exposed for an entire working life to PELs of 50 [mu]g/m\3\
or 100 [mu]g/m\3\ to the number of cases that would occur at levels of
exposure at or below the current PELs. The number of avoided cases over
a hypothetical working life of exposure for the current population at a
lower PEL is then equal to the difference between the number of cases
at levels of exposure at or below the current PEL for that population
minus the number of cases at the lower PEL. This approach represents a
steady-state comparison based on what would hypothetically happen to
workers who received a specific average level of occupational exposure
to silica during an entire working life. (In order to incorporate the
element of timing to assess the economic value of the health benefits,
OSHA presents a modified approach later in this section.)
    Based on OSHA's application of the Steenland et al. (2001) log-
linear and the Attfield and Costello (2004) models, Table VIII-17 shows
the estimated number of avoided fatal lung cancers for PELs of 50
[mu]g/m\3\ and 100 [mu]g/m\3\. At the proposed PEL of 50 [mu]g/m\3\, an
estimated 2,404 to 12,173 lung cancers would be prevented over the
lifetime of the current worker population, with a midpoint estimate of
7,289 fatal cancers prevented. This is the equivalent of between 53 and
271 cases avoided annually, with a midpoint estimate of 162 cases
avoided annually, given a 45-year working life of exposure.
    Following Park (2002), as discussed in summary of the Agency's QRA
in Section VI of this preamble, OSHA also estimates that the proposed
PEL of 50 [mu]g/m\3\ would prevent an estimated 16,878 fatalities over
a lifetime from non-malignant respiratory diseases arising from silica
exposure. This is equivalent to 375 fatal cases prevented annually.
Some of these fatalities would be classified as silicosis, but most
would be classified as other pneumoconioses and chronic obstructive
pulmonary disease (COPD), which includes chronic bronchitis and
emphysema.
    As also discussed in the summary of the Agency's QRA in Section VI
of this preamble, OSHA finds that workers with large exposures to
silica are at elevated risk of end-stage renal disease (ESRD). Based on
Steenland, Attfield, and Mannetje (2002), OSHA estimates that the
proposed PEL of 50 [mu]g/m\3\ would prevent 6,774 cases of end-stage
renal disease over a working life of exposure, or about 151 cases
annually.
    Combining the three major fatal health endpoints--for lung cancer,
non-malignant respiratory diseases, and end-stage renal disease--OSHA
estimates that the proposed PEL would prevent between 26,055 and 35,825
premature fatalities over a lifetime, with a midpoint estimate of
30,940 fatalities prevented. This is the equivalent of between 579 and
796 premature fatalities avoided annually, with a midpoint estimate of
688 premature fatalities avoided annually, given a 45-year working life
of exposure.
    In addition, the rule would prevent a large number of cases of
silicosis morbidity. Based on Rosenman et al. (2003), the Agency
estimates that between 2,700 and 5,475 new cases of silicosis, at an
ILO X-ray rating of 1/0 or higher, occur annually at the present PELs
as a result of silica exposure at establishments within OSHA's
jurisdiction. Based on the studies summarized in OSHA's QRA, OSHA
expects that the proposed rule will eliminate the large majority of
these cases.
    The Agency has not included the elimination of the less severe
silicosis cases in its estimates of the monetized benefits and net
benefits of the proposed rule. Instead, OSHA separately estimated the
number of silicosis cases reaching the more severe levels of 2/1 and
above. Based on a study by Buchannan et al. (2003) of a cohort of coal
miners (as discussed in the Agency's QRA), OSHA estimates that the
proposed PEL of 50 [mu]g/m\3\ would prevent 71,307 cases of moderate-
to-severe silicosis (registering 2/1 or more, using the ILO method for
assessing severity) over a working life, or about 1,585 cases of
moderate-to-severe silicosis prevented annually.
    Note that the Agency based its estimates of reductions in the
number of silica-related diseases over a working life of constant
exposure for workers who are employed in a respirable crystalline
silica-exposed occupation for their entire working lives, from ages 20
to 65. While the Agency is legally obligated to examine the effect of
exposures from a working lifetime of exposure,\26\ in an alternative
analysis purely for informational purposes, the Agency examined, in
Chapter VII of the PEA, the effect of assuming that workers are exposed
for only 25 working years, as opposed to the 45 years assumed in the
main analysis. While all workers are assumed to have less cumulative
exposure under the 25-years-of-

exposure assumption, the effective exposed population over time is
proportionately increased. Estimated prevented cases of end-stage renal
disease and silicosis morbidity are lower in the 25-year model, whereas
cases of fatal non-malignant lung disease are higher. In the case of
lung cancer, the effect varies by model, with a lower high-end estimate
(Attfield & Costello, 2004) and a higher low-end estimate (Steenland
et. al., 2001 log-linear model). Overall, however, the 45-year-working-
life assumption yields larger estimates of the number of cases of
avoided fatalities and illnesses than does the 25-years-of-exposure
assumption. For example, the midpoint estimates of the number of
avoided fatalities and illnesses under the proposed PEL of 50 [mu]g/
m\3\ would decline from 688 and 1,585, respectively, under the 45-year-
working-life assumption to 683 and 642, respectively, under the 25-
year-working-life assumption. Note the effect, in this case, of going
from a 45-year-working-life assumption to a 25-year-working-life
assumption would be a 1 percent reduction in the number of avoided
fatalities and a 59 percent reduction in the number of avoided
illnesses. The divergence reflects differences in the mathematical
structure of the risk assessment models that are the basis for these
estimates.\27\
---------------------------------------------------------------------------

    \26\ Section (6)(b)(5) of the OSH Act states: ``The Secretary,
in promulgating standards dealing with toxic materials or harmful
physical agents under this subsection, shall set the standard which
most adequately assures, to the extent feasible, on the basis of the
best available evidence, that no employee will suffer material
impairment of health or functional capacity even if such employee
has regular exposure to the hazard dealt with by such standard for
the period of his working life.'' Given that it is necessary for
OSHA to reach a determination of significant risk over a working
life, it is a logical extension to estimate what this translates
into in terms of estimated benefits for the affected population over
the same period.
    \27\ Technically, this analysis assumes that workers receive 25
years worth of silica exposure, but that they receive it over 45
working years, as is assumed by the risk models in the QRA. It also
accounts for the turnover implied by 25, as opposed to 45, years of
work. However, it is possible that an alternate analysis, which
accounts for the larger number of post-exposure worker-years implied
by workers departing their jobs before the end of their working
lifetime, might find larger health effects for workers receiving 25
years worth of silica exposure.
---------------------------------------------------------------------------

    OSHA believes that 25 years of worker exposure to respirable
crystalline silica may be a reasonable alternative estimate for
informational purposes. However, to accommodate the possibility that
average worker exposure to silica over a working life may be shorter,
at least in certain industries (see the following paragraph), the
Agency also examined the effect of assuming only 13 years of exposure
for the average worker. The results were broadly similar to the 25
years of exposure--annual fatalities prevented were higher (788), but
illnesses prevented lower (399), with the lower average cumulative
exposure being offset to a substantial degree by a larger exposed
population. The same effect is seen if one assumes only 6.6 years of
cumulative exposure to silica for the average worker: estimated
fatalities rise to 832 cases annually, with 385 cases of silicosis
morbidity. In short, the aggregate estimated benefits of the rule
appear to be relatively insensitive to implicit assumptions of average
occupational tenure. Nonetheless, the Agency is confident that the
typical affected worker sustains an extended period of exposure to
silica.
    Even in the construction industry, which has an extremely high rate
of job turnover, the mean job tenure with one's current employer is 6.6
years (BLS, 2010a), and the median age of construction workers in the
U.S. is 41.6 years (BLS, 2010b). OSHA is unaware of any data on job
tenure within an industry, but the Agency would expect job tenure in
the construction industry would be at least twice the job tenure with
one's current employer. Furthermore, many workers may return to the
construction industry after unemployment or work in another industry.
Of course, job tenure is longer in the other industries affected by the
proposed rule.
    The proposed rule also contains specific provisions for diagnosing
latent tuberculosis (TB) in the silica-exposed population and thereby
reducing the risk of TB being spread to the population at large. The
Agency currently lacks good methods for quantifying these benefits. Nor
has the Agency attempted to assess benefits directly stemming from
enhanced medical surveillance in terms of reducing the severity of
symptoms from the illnesses that do result from present or future
exposure to silica. However, the Agency welcomes comment on the likely
magnitude of these currently non-quantified health benefits arising
from the proposed rule and on methods for better measuring these
effects.
    OSHA's risk estimates are based on application of exposure-response
models derived from several individual epidemiological studies as well
as the pooled cohort studies of Steenland et al. (2001) and Mannetje et
al. (2002). OSHA recognizes that there is uncertainty around any of the
point estimates of risk derived from any single study. In its
preliminary risk assessment (summarized in Section VI of this
preamble), OSHA has made efforts to characterize some of the more
important sources of uncertainty to the extent that available data
permit. This specifically includes characterizing statistical
uncertainty by reporting the confidence intervals around each of the
risk estimates; by quantitatively evaluating the impact of
uncertainties in underlying exposure data used in the cohort studies;
and by exploring the use of alternative exposure-response model forms.
OSHA believes that these efforts reflect much, but not necessarily all,
of the uncertainties associated with the approaches taken by
investigators in their respective risk analyses. However, OSHA believes
that characterizing the risks and benefits as a range of estimates
derived from the full set of available studies, rather than relying on
any single study as the basis for its estimates, better reflects the
uncertainties in the estimates and more fairly captures the range of
risks likely to exist across a wide range of industries and exposure
situations.
    Another source of uncertainty involves the degree to which OSHA's
risk estimates reflect the risk of disease among workers with widely
varying exposure patterns. Some workers are exposed to fairly high
concentrations of crystalline silica only intermittently, while others
experience more regular and constant exposure. Risk models employed in
the quantitative assessment are based on a cumulative exposure metric,
which is the product of average daily silica concentration and duration
of worker exposure for a specific job. Consequently, these models
predict the same risk for a given cumulative exposure regardless of the
pattern of exposure, reflecting a worker's long-term average exposure
without regard to intermittencies or other variances in exposure, and
are therefore generally applicable to all workers who are exposed to
silica in the various industries. Section VI of this preamble provides
evidence supporting the use of cumulative exposure as the preferred
dose metric. Although the Agency believes that the results of its risk
assessment are broadly relevant to all occupational exposure situations
involving crystalline silica, OSHA acknowledges that differences exist
in the relative toxicity of crystalline silica particles present in
different work settings due to factors such as the presence of mineral
or metal impurities on quartz particle surfaces, whether the particles
have been freshly fractured or are aged, and size distribution of
particles. However, in its preliminary risk assessment, OSHA
preliminarily concludes that the estimates from the studies and
analyses relied upon are fairly representative of a wide range of
workplaces reflecting differences in silica polymorphism, surface
properties, and impurities.
    Thus, OSHA has a high degree of confidence in the risk estimates
associated with exposure to the current and proposed PELs. OSHA
acknowledges there is greater uncertainty in the risk estimates for the
proposed action level of 0.025 mg/m\3\ than exists at the current (0.1
mg/m\3\)

and proposed (0.05 mg/m\3\) PELs, particularly given some evidence of a
threshold for silicosis between the proposed PEL and action level.
Given the Agency's findings that controlling exposures below the
proposed PEL would not be technologically feasible for employers, OSHA
believes that a precise estimate of the risk for exposures below the
proposed action level is not necessary to further inform the Agency's
regulatory action. OSHA requests comment on remaining sources of
uncertainties in its risk and benefits estimates that have not been
specifically characterized by OSHA in its analysis.

[GRAPHIC] [TIFF OMITTED] TP12SE13.008

2. Estimating the Stream of Benefits Over Time
    Risk assessments in the occupational environment are generally
designed to estimate the risk of an occupationally related illness over
the course of an individual worker's lifetime. As previously discussed,
the current occupational exposure profile for a particular substance
for the current cohort of workers can be matched up against the
expected profile after the proposed standard takes effect, creating a
``steady state'' estimate of benefits. However, in order to annualize
the benefits for the period of time after the silica rule takes effect,
it is necessary to create a timeline of benefits for an entire active
workforce over that period.
    In order to characterize the magnitude of benefits before the
steady state is reached, OSHA created a linear phase-in model to
reflect the potential timing of benefits. Specifically, OSHA estimated
that, for all non-cancer cases, while the number of cases would
gradually decline as a result of the proposed rule, they would not
reach the steady-state level until 45 years had passed. The reduction
in cases estimated to occur in any given year in the future was
estimated to be equal to the steady-state reduction (the number of
cases in the baseline minus the number of cases in the new steady
state) times the ratio of the number of years since the standard was
implemented and a working life of 45 years. Expressed mathematically:

Nt=(C--S) x (t/45),

where Nt is the number of non-malignant silica-related
diseases avoided in year t; C is the current annual number of non-
malignant silica-related diseases; S is the steady-state annual number
of non-malignant silica-related diseases; and t represents the number
of years after the proposed standard takes effect, with t<=45.
    In the case of lung cancer, the function representing the decline
in the number of cases as a result of the proposed rule is similar, but
there would be a 15-year lag before any reduction in cancer cases would
be achieved. Expressed mathematically, for lung cancer:

Lt=(Cm--Sm) x ((t-15)/45)),

where 15 <= t <= 60 and Lt is the number of lung cancer
cases avoided in year t as a result of the proposed rule; Cm
is the current annual number of silica-related lung cancers; and
Sm is the steady-state annual number of silica-related lung
cancers.
    A more complete discussion of the functioning and results of this
model is presented in Chapter VII of the PEA.
    This model was extended to 60 years for all the health effects
previously discussed in order to incorporate the 15-year lag, in the
case of lung cancer, and a 45-year working life. As a practical matter,
however, there is no overriding reason for stopping the benefits
analysis at 60 years. An internal analysis by OSHA indicated that, both
in terms of cases prevented, and even with regard to monetized
benefits, particularly when lower discount rates are used, the
estimated benefits of the standard are noticeably larger on an
annualized basis if the analysis extends further into the future. The
Agency welcomes comment on the merit of extending the benefits analysis
beyond the 60 years analyzed in the PEA.
    In order to compare costs to benefits, OSHA assumes that economic
conditions remain constant and that annualized costs--and the
underlying costs--will repeat for the entire 60-year time horizon used
for the benefits analysis (as discussed in Chapter V of the PEA). OSHA
welcomes comments on the assumption for both the benefit and cost
analysis that economic conditions remain constant for sixty years. OSHA
is particularly interested in what assumptions and time horizon should
be used instead and why.
3. Monetizing the Benefits
    To estimate the monetary value of the reductions in the number of
silica-related fatalities, OSHA relied, as OMB recommends, on estimates
developed from the willingness of affected individuals to pay to avoid
a marginal increase in the risk of fatality. While a willingness-to-pay
(WTP) approach clearly has theoretical merit, it should be noted that
an individual's willingness to pay to reduce the risk of fatality would
tend to underestimate the total willingness to pay, which would include
the willingness of others--particularly the immediate family--to pay to
reduce that individual's risk of fatality.\28\
---------------------------------------------------------------------------

    \28\ See, for example, Thaler and Rosen (1976), pp. 265-266. In
addition, see Sunstein (2004), p. 433. ``This point demonstrates a
general and badly neglected problem for WTP as it is currently used:
agencies consider people's WTP to eliminate statistical risks,
without taking account of the fact that others--especially family
members and close friends--would also be willing to pay something to
eliminate those risks.''
---------------------------------------------------------------------------

    For estimates using the willingness-to-pay concept, OSHA relied on
existing studies of the imputed value of fatalities avoided based on
the theory of compensating wage differentials in the labor market.
These studies rely on certain critical assumptions for their accuracy,
particularly that workers understand the risks to which they are
exposed and that workers have legitimate choices between high- and low-
risk jobs. These assumptions are far from obviously met in actual labor
markets.\29\ A number of academic studies, as summarized in Viscusi &
Aldy (2003), have shown a correlation between higher job risk and
higher wages, suggesting that employees demand monetary compensation in
return for a greater risk of injury or fatality. The estimated trade-
off between lower wages and marginal reductions in fatal occupational
risk--that is, workers' willingness to pay for marginal reductions in
such risk--yields an imputed value of an avoided fatality: the
willingness-to-pay amount for a reduction in risk divided by the
reduction in risk.\30\ OSHA has used this approach in many recent
proposed and final rules. Although this approach has been found to
yield results that are less than statistically robust (see, for
example, Hintermann, Alberini and Markandya, 2010), OSHA views these
estimates as the best available, and will use them for its basic
estimates. OSHA welcomes comments on the use of willingness-to-pay
measures and estimates based on compensating wage differentials.
---------------------------------------------------------------------------

    \29\ On the former assumption, see the discussion in Chapter II
of the PEA on imperfect information. On the latter, see, for
example, the discussion of wage compensation for risk for union
versus nonunion workers in Dorman and Hagstrom (1998).
    \30\ For example, if workers are willing to pay $50 each for a
1/100,000 reduction in the probability of dying on the job, then the
imputed value of an avoided fatality would be $50 divided by 1/
100,000, or $5,000,000. Another way to consider this result would be
to assume that 100,000 workers made this trade-off. On average, one
life would be saved at a cost of $5,000,000.
---------------------------------------------------------------------------

    Viscusi & Aldy (2003) conducted a meta-analysis of studies in the
economics literature that use a willingness-to-pay methodology to
estimate the imputed value of life-saving programs and found that each
fatality avoided was valued at approximately $7 million in 2000
dollars. This $7 million base number in 2000 dollars yields an estimate
of $8.7 million in 2009 dollars for each fatality avoided.\31\
---------------------------------------------------------------------------

    \31\ An alternative approach to valuing an avoided fatality is
to monetize, for each year that a life is extended, an estimate from
the economics literature of the value of that statistical life-year
(VSLY). See, for instance, Aldy and Viscusi (2007) for discussion of
VSLY theory and FDA (2003), pp. 41488-9, for an application of VSLY
in rulemaking. OSHA has not investigated this approach, but welcomes
comment on the issue.
---------------------------------------------------------------------------

    In addition to the benefits that are based on the implicit value of
fatalities avoided, workers also place an implicit value on
occupational injuries or illnesses avoided, which reflect their

willingness to pay to avoid monetary costs (for medical expenses and
lost wages) and quality-of-life losses as a result of occupational
illness. Silicosis, lung cancer, and renal disease can adversely affect
individuals for years or even decades in non-fatal cases, or before
ultimately proving fatal. Because measures of the benefits of avoiding
these illnesses are rare and difficult to find, OSHA has included a
range based on a variety of estimation methods.
    Consistent with Buchannan et al. (2003), OSHA estimated the total
number of moderate to severe silicosis cases prevented by the proposed
rule, as measured by 2/1 or more severe X-rays (based on the ILO rating
system). However, while radiological evidence of moderate to severe
silicosis is evidence of significant material impairment of health,
placing a precise monetary value on this condition is difficult, in
part because the severity of symptoms may vary significantly among
individuals. For that reason, for this preliminary analysis, the Agency
employed a broad range of valuation, which should encompass the range
of severity these individuals may encounter. Using the willingness-to-
pay approach, discussed in the context of the imputed value of
fatalities avoided, OSHA has estimated a range in valuations (updated
and reported in 2009 dollars) that runs from approximately $62,000 per
case--which reflects estimates developed by Viscusi and Aldy (2003),
based on a series of studies primarily describing simple accidents--to
upwards of $5.1 million per case--which reflects work developed by
Magat, Viscusi & Huber (1996) for non-fatal cancer. The latter number
is based on an approach that places a willingness-to-pay value to avoid
serious illness that is calibrated relative to the value of an avoided
fatality. OSHA (2006) previously used this approach in the Final
Economic Analysis (FEA) supporting its hexavalent chromium final rule,
and EPA (2003) used this approach in its Stage 2 Disinfection and
Disinfection Byproducts Rule concerning regulation of primary drinking
water. Based on Magat, Viscusi & Huber (1996), EPA used studies on the
willingness-to-pay to avoid nonfatal lymphoma and chronic bronchitis as
a basis for valuing a case of nonfatal cancer at 58.3 percent of the
value of a fatal cancer. OSHA's estimate of $5.1 million for an avoided
case of non-fatal cancer is based on this 58.3 percent figure.
    The Agency believes this range of estimates is descriptive of the
value of preventing morbidity associated with moderate to severe
silicosis, as well as the morbidity preceding mortality due to other
causes enumerated here--lung cancer, lung diseases other than cancer,
and renal disease.\32\ OSHA therefore is applying these values to those
situations as well.
---------------------------------------------------------------------------

    \32\ There are several benchmarks for valuation of health
impairment due to silica exposure, using a variety of techniques,
which provide a number of mid-range estimates between OSHA's high
and low estimates. For a fuller discussion of these estimates, see
Chapter VII of the PEA.
---------------------------------------------------------------------------

    The Agency is interested in public input on the issue of valuing
the cost to society of non-fatal cases of moderate to severe silicosis,
as well as the morbidity associated with other related diseases of the
lung, and with renal disease.
a. The Monetized Benefits of the Proposed Rule
    Table VIII-18 presents the estimated annualized (over 60 years,
using a 0 percent discount rate) benefits from each of these components
of the valuation, and the range of estimates, based on risk model
uncertainty (notably in the case of lung cancer), and the range of
uncertainty regarding valuation of morbidity. (Mid-point estimates of
the undiscounted benefits for each of the first 60 years are provided
in the middle columns of Table VII-A-1 in Appendix VII-A in the PEA.
The estimates by year reach a peak of $11.9 billion in the 60th year.)
    As shown, the full range of monetized benefits, undiscounted, for
the proposed PEL of 50 [mu]g/m\3\ runs from $3.2 billion annually, in
the case of the lowest estimate of lung cancer risk and the lowest
valuation for morbidity, up to $10.9 billion annually, for the highest
of both. Note that the value of total benefits is more sensitive to the
valuation of morbidity (ranging from $3.5 billion to $10.3 billion,
given estimates at the midpoint of the lung cancer models) than to the
lung cancer model used (ranging from $6.4 to $7.4 billion, given
estimates at the midpoint of the morbidity valuation).\33\
---------------------------------------------------------------------------

    \33\ As previously indicated, these valuations include all the
various estimated health endpoints. In the case of mortality this
includes lung cancer, non-malignant respiratory disease and end-
stage renal disease. The Agency highlighted lung cancers in this
discussion due to the model uncertainty. In calculating the
monetized benefits, the Agency is typically referring to the
midpoint of the high and low ends of potential valuation--in this
case, the undiscounted midpoint of $3.2 billion and $10.9 billion..
---------------------------------------------------------------------------

    This comports with the very wide range of valuation for morbidity.
At the low end of the valuation range, the total value of benefits is
dominated by mortality ($3.4 billion out of $3.5 billion at the case
frequency midpoint), whereas at the high end the majority of the
benefits are related to morbidity ($6.9 billion out of $10.3 billion at
the case frequency midpoint). Also, the analysis illustrates that most
of the morbidity benefits are related to silicosis cases that are not
ultimately fatal. At the valuation and case frequency midpoint, $3.4
billion in benefits are related to mortality, $1.0 billion are related
to morbidity preceding mortality, and $2.4 billion are related to
morbidity not preceding mortality.

[GRAPHIC] [TIFF OMITTED] TP12SE13.009

b. A Suggested Adjustment to Monetized Benefits
    OSHA's estimates of the monetized benefits of the proposed rule are
based on the imputed value of each avoided fatality and each avoided
silica-related disease. To this point, these imputed values have been
assumed to remain constant over time.
    OSHA now would like to suggest that an adjustment be made to
monetized benefits to reflect the fact that the imputed value of
avoided fatalities and avoided diseases will tend to increase over
time. Two related factors suggest such an increase in value over time.
    First, economic theory suggests that the value of reducing life-
threatening

and health-threatening risks will increase as real per capita income
increases. With increased income, an individual's health and life
become more valuable relative to other goods because, unlike other
goods, they are without close substitutes and in relatively fixed or
limited supply. Expressed differently, as income increases, consumption
will increase but the marginal utility of consumption will decrease. In
contrast, added years of life (in good health) is not subject to the
same type of diminishing returns--implying that an effective way to
increase lifetime utility is by extending one's life and maintaining
one's good health (Hall and Jones, 2007).
    Second, real per capita income has broadly been increasing
throughout U.S. history, including recent periods. For example, for the
period 1950 through 2000, real per capita income grew at an average
rate of 2.31 percent a year (Hall and Jones, 2007) \34\ although real
per capita income for the recent 25 year period 1983 through 2008 grew
at an average rate of only 1.3 percent a year (U.S. Census Bureau,
2010). More important is the fact that real U.S. per capita income is
projected to grow significantly in future years. For example, the
Annual Energy Outlook (AEO) projections, prepared by the Energy
Information Administration (EIA) in the Department of Energy (DOE),
show an average annual growth rate of per capita income in the United
States of 2.7 percent for the period 2011-2035.\35\ The U.S.
Environmental Protection Agency prepared its economic analysis of the
Clean Air Act using the AEO projections. Although these estimates may
turn out to be somewhat higher or lower than predicted, OSHA believes
that it is reasonable to use the same AEO projections employed by DOE
and EPA, and correspondingly projects that per capita income in the
United States will increase by 2.7 percent a year.
---------------------------------------------------------------------------

    \34\ The results are similar if the historical period includes a
major economic downturn (such as the United States has recently
experienced). From 1929 through 2003, a period in U.S. history that
includes the Great Depression, real per capita income still grew at
an average rate of 2.22 percent a year (Gomme and Rupert, 2004).
    \35\ The EIA used DOE's National Energy Modeling System (NEMS)
to produce the Annual Energy Outlook (AEO) projections (EIA, 2011).
Future per capita GDP was calculated by dividing the projected real
gross domestic product each year by the projected U.S. population
for that year.
---------------------------------------------------------------------------

    On the basis of the predicted increase in real per capita income in
the United States over time and the expected resulting increase in the
value of avoided fatalities and diseases, OSHA is considering adjusting
its estimates of the benefits of the proposed rule to reflect the
anticipated increase in their value over time. This type of adjustment
has been recognized by OMB (2003), supported by EPA's Science Advisory
Board (EPA, 2000), and applied by EPA.\36\ OSHA proposes to accomplish
this adjustment by modifying benefits in year i from [Bi] to
[Bi * (1 + [eta])\i\], where ``[eta]'' is the estimated
annual increase in the magnitude of the benefits of the proposed rule.
---------------------------------------------------------------------------

    \36\ See, for example, EPA (2003, 2008).
---------------------------------------------------------------------------

    What remains is to estimate a value for ``[eta]'' with which to
increase benefits annually in response to annual increases in real per
capita income. Probably the most direct evidence of the value of
``[eta]'' comes from the work of Costa and Kahn (2003, 2004). They
estimate repeated labor market compensating wage differentials from
cross-sectional hedonic regressions using census and fatality data from
the Bureau of Labor Statistics for 1940, 1950, 1960, 1970, and 1980. In
addition, with the imputed income elasticity of the value of life on
per capita GNP of 1.7 derived from the 1940-1980 data, they then
predict the value of an avoided fatality in 1900, 1920, and 2000. Given
the change in the value of an avoided fatality over time, it is
possible to estimate a value of ``[eta]'' of 3.4 percent a year from
1900-2000; of 4.3 percent a year from 1940-1980; and of 2.5 percent a
year from 1980-2000. Other, more indirect evidence comes from estimates
in the economics literature on the income elasticity for the value of a
statistical life. Viscusi and Aldy (2003) performed a meta-analysis on
50 wage-risk studies and concluded that the point estimates across a
variety of model specifications ranged between 0.5 and 0.6. Applied to
a long-term increase in per capita income of about 2.7 percent a year,
this would suggest a value of ``[eta]'' of about 1.5 percent a year.
More recently, Kniesner, Viscusi, and Ziliak (2010), using panel data
quintile regressions, developed an estimate of the overall income
elasticity of the value of a statistical life of 1.44. Applied to a
long-term increase in per capita income of about 2.7 percent a year,
this would suggest a value of ``[eta]'' of about 3.9 percent a year.
    Based on the preceding discussion of these two approaches for
estimating the annual increase in the value of the benefits of the
proposed rule and the fact that, as previously noted, the projected
increase in real per capita income in the United States has flattened
in the most recent 25 year period, OSHA suggests a value of ``[eta]''
of approximately 2 percent a year. The Agency invites comment on this
estimate and on estimates of the income elasticity of the value of a
statistical life.
    While the Agency believes that the rising value, over time, of
health benefits is a real phenomenon that should be taken into account
in estimating the annualized benefits of the proposed rule, OSHA is at
this time only offering these adjusted monetized benefits as analytic
alternatives for consideration. Table VIII-19, which follows the
discussion on discounting monetized benefits, shows estimates of the
monetized benefits of the proposed rule (under alternative discount
rates) both with and without this suggested increase in monetized
benefits over time. The Agency invites comment on this suggested
adjustment to monetized benefits.
4. Discounting of Monetized Benefits
    As previously noted, the estimated stream of benefits arising from
the proposed silica rule is not constant from year to year, both
because of the 45-year delay after the rule takes effect until all
active workers obtain reduced silica exposure over their entire working
lives and because of, in the case of lung cancer, a 15-year latency
period between reduced exposure and a reduction in the probability of
disease. An appropriate discount rate \37\ is needed to reflect the
timing of benefits over the 60-year period after the rule takes effect
and to allow conversion to an equivalent steady stream of annualized
benefits.
---------------------------------------------------------------------------

    \37\ Here and elsewhere throughout this section, unless
otherwise noted, the term ``discount rate'' always refers to the
real discount rate--that is, the discount rate net of any
inflationary effects.
---------------------------------------------------------------------------

a. Alternative Discount Rates for Annualizing Benefits
    Following OMB (2003) guidelines, OSHA has estimated the annualized
benefits of the proposed rule using separate discount rates of 3
percent and 7 percent. Consistent with the Agency's own practices in
recent proposed and final rules, OSHA has also estimated, for
benchmarking purposes, undiscounted benefits--that is, benefits using a
zero percent discount rate.
    The question remains, what is the ``appropriate'' or ``preferred''
discount rate to use to monetize health benefits? The choice of
discount rate is a controversial topic, one that has been the source of
scholarly economic debate for several decades. However, in simplest
terms, the basic choices involve a social opportunity cost of capital
approach or social rate of time preference approach.

    The social opportunity cost of capital approach reflects the fact
that private funds spent to comply with government regulations have an
opportunity cost in terms of foregone private investments that could
otherwise have been made. The relevant discount rate in this case is
the pre-tax rate of return on the foregone investments (Lind, 1982b,
pp. 24-32). The rate of time preference approach is intended to measure
the tradeoff between current consumption and future consumption, or in
the context of the proposed rule, between current benefits and future
benefits. The individual rate of time preference is influenced by
uncertainty about the availability of the benefits at a future date and
whether the individual will be alive to enjoy the delayed benefits. By
comparison, the social rate of time preference takes a broader view
over a longer time horizon--ignoring individual mortality and the
riskiness of individual investments (which can be accounted for
separately) .
    The usual method for estimating the social rate of time preference
is to calculate the post-tax real rate of return on long-term, risk-
free assets, such as U.S. Treasury securities (OMB, 2003). A variety of
studies have estimated these rates of return over time and reported
them to be in the range of approximately 1-4 percent.
    In accordance with OMB Circular A-4 (2003), OSHA presents benefits
and net benefits estimates using discount rates of 3 percent
(representing the social rate of time preference) and 7 percent (a rate
estimated using the social cost of capital approach). The Agency is
interested in any evidence, theoretical or applied, that would inform
the application of discount rates to the costs and benefits of a
regulation.
b. Summary of Annualized Benefits Under Alternative Discount Rates
    Table VIII-19 presents OSHA's estimates of the sum of the
annualized benefits of the proposed rule, using alternative discount
rates at 0, 3, and 7 percent, with a breakout between construction and
general industry, and including the possible alternative of increasing
monetized benefits in response to annual increases in per capita income
over time.
    Given that the stream of benefits extends out 60 years, the value
of future benefits is sensitive to the choice of discount rate. As
previously established in Table VIII-18, the undiscounted benefits
range from $3.2 billion to $10.9 billion annually. Using a 7 percent
discount rate, the annualized benefits range from $1.6 billion to $5.4
billion. As can be seen, going from undiscounted benefits to a 7
percent discount rate has the effect of cutting the annualized benefits
of the proposed rule approximately in half.
    The Agency's best estimate of the total annualized benefits of the
proposed rule--using a 3 percent discount rate with no adjustment for
the increasing value of health benefits over time-- is between $2.4 and
$8.1 billion, with a mid-point value of $5.3 billion.
    As previously mentioned, OSHA has not attempted to estimate the
monetary value of less severe silicosis cases, measured at 1/0 to 1/2
on the ILO scale. The Agency believes the economic loss to individuals
with less severe cases of silicosis could be substantial, insofar as
they may be accompanied by a lifetime of medical surveillance and lung
damage, and potentially may require a change in career. However, many
of these effects can be difficult to isolate and measure in economic
terms, particularly in those cases where there is no obvious effect yet
on physiological function or performance. The Agency invites public
comment on this issue.

[GRAPHIC] [TIFF OMITTED] TP12SE13.010

5. Net Benefits of the Proposed Rule
    OSHA has estimated, in Table VIII-20, the net benefits of the
proposed rule (with a PEL of 50 [mu]g/m\3\), based on the benefits and
costs previously presented. Table VIII-20 also provides estimates of
annualized net benefits for an alternative PEL of 100 [mu]g/m\3\. Both
the proposed rule and the alternative rule have the same ancillary
provisions and an action level equal to half of the PEL in both cases.
    Table VIII-20 is being provided for informational purposes only. As
previously noted, the OSH Act requires the Agency to set standards
based on eliminating significant risk to the extent feasible. An
alternative criterion of maximizing net (monetized) benefits may result
in very different regulatory outcomes. Thus, this analysis of net
benefits has not been used by OSHA as the basis for its decision
concerning the choice of a PEL or of other ancillary requirements for
this proposed silica rule.
    Table VIII-20 shows net benefits using alternative discount rates
of 0, 3, and 7 percent for benefits and costs and includes a possible
adjustment to monetized benefits to reflect increases in real per
capita income over time. (An expanded version of Tables VIII-20, with a
breakout of net benefits between construction and general industry/
maritime, is provided in Table VII-B-1 in Appendix B, of the PEA.) OSHA
has relied on a uniform discount rate applied to both costs and
benefits. The Agency is interested in any evidence, theoretical or
applied, that would support or refute the application of differential
discount rates to the costs and benefits of a regulation.
    As previously noted, the choice of discount rate for annualizing
benefits has a significant effect on annualized benefits. The same is
true for net benefits. For example, the net benefits using a 7 percent
discount rate for benefits are considerably smaller than the net
benefits using a 0 percent discount rate, declining by more than half
under all scenarios. (Conversely, as noted in Chapter V of the PEA, the
choice of discount rate for annualizing costs has only a very minor
effect on annualized costs.)
    Based on the results presented in Table VIII-20, OSHA finds:
     While the net benefits of the proposed rule vary
considerably--depending on the choice of discount rate used to
annualize benefits and on whether the benefits being used are in the
high, midpoint, or low range-- benefits exceed costs for the proposed
50 [mu]g/m\3\ PEL in all cases that OSHA considered.
     The Agency's best estimate of the net annualized benefits
of the proposed rule--using a uniform discount rate for both benefits
and costs of 3 percent--is between $1.8 billion and $7.5 billion, with
a midpoint value of $4.6 billion.
     The alternative of a 100 [mu]g/m\3\ PEL was found to have
lower net benefits under all assumptions, relative to the proposed 50
[mu]g/m\3\ PEL. However, for this alternative PEL, benefits were found
to exceed costs in all cases that OSHA considered.
6. Incremental Benefits of the Proposed Rule
    Incremental costs and benefits are those that are associated with
increasing the stringency of the standard. A comparison of incremental
benefits and costs provides an indication of the relative efficiency of
the proposed PEL and the alternative PEL. Again, OSHA has conducted
these calculations for informational purposes only and has not used
this information as the basis for selecting the PEL for the proposed
rule.
    OSHA provided, in Table VIII-20, estimates of the net benefits of
an alternative 100 [mu]g/m\3\ PEL. The incremental costs, benefits, and
net benefits of going from a 100 [mu]g/m\3\ PEL to a 50 [mu]g/m\3\ PEL
(as well as meeting a 50 [mu]g/m\3\ PEL and then going to a 25 [mu]g/
m\3\ PEL--which the Agency has determined is not feasible), for
alternative discount rates of 3 and 7 percent, are presented in Tables
VIII-21 and VIII-22. Table VIII-21 breaks out costs by provision and
benefits by type of disease and by morbidity/mortality, while Table
VIII-22 breaks out costs and benefits by major industry sector. As
Table VIII-21 shows, at a discount rate of 3 percent, a PEL of 50
[mu]g/m\3\, relative to a PEL of 100 [mu]g/m\3\, imposes additional
costs of $339 million per year; additional benefits of $2.5 billion per
year, and additional net benefits of $2.16 billion per year. The
proposed PEL of 50 [mu]g/m\3\ also has higher net benefits using either
a 3 percent or 7 percent discount rate.
    Table VIII-22 continues this incremental analysis but with
breakdowns between construction and general industry/maritime. This
table shows that construction provides most of the incremental costs,
but the incremental benefits are more evenly divided between the two
sectors. Nevertheless, both sectors show strong positive net benefits,
which are greater for the proposed PEL of 50 [mu]g/m\3\ than the
alternative of 100 [mu]g/m\3\.
    Tables VIII-21 and VIII-22 demonstrate that, across all discount
rates, there are net benefits to be achieved by lowering exposures to
100 [mu]g/m\3\ and then, in turn, lowering them further to 50 [mu]g/
m\3\. However, the majority of the benefits and costs attributable to
the proposed rule are from the initial effort to lower exposures to 100
[mu]g/m\3\. Consistent with the previous analysis, net benefits decline
across all increments as the discount rate for annualizing benefits
increases.
    In addition to examining alternative PELs, OSHA also examined
alternatives to other provisions of the standard. These alternatives
are discussed in Section VIII.H of this preamble.

Table VIII-20--Annual Monetized net Benefits Resulting From a Reduction in Exposure to Crystalline Silica due to
                       Proposed PEL of 50 [mu]g/m\3\ and Alternative PEL of 100 [mu]g/m\3\
                                                   [$Billions]
----------------------------------------------------------------------------------------------------------------
                                     PEL
-----------------------------------------------------------------------------        50                100
                Discount rate                              Range
----------------------------------------------------------------------------------------------------------------
Undiscounted (0%)...........................  Low...........................              $2.5              $1.2
                                              Midpoint......................               6.4               3.4
                                              High..........................              10.2               5.6
Discounted at 3%, with a suggested increased  Low...........................               2.3               1.1
 in monetized benefits over time.             Midpoint......................               5.8               3.1
                                              High..........................               9.3               5.1
3%..........................................  Low...........................               1.8               0.8
                                              Midpoint......................               4.6               2.5
                                              High..........................               7.5               4.1

Discounted at 7%, with a suggested increased  Low...........................               1.3               0.6
 in monetized benefits over time.             Midpoint......................               3.6               1.9
                                              High..........................               5.9               3.3
7%..........................................  Low...........................               1.0               0.5
                                              Midpoint......................               2.8               1.5
                                              High..........................               4.7               2.6
----------------------------------------------------------------------------------------------------------------
Source: U.S. Department of Labor, Occupational Safety and Health Administration, Directorate of Standards and
  Guidance, Office of Regulatory Analysis.

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7. Sensitivity Analysis
    In this section, OSHA presents the results of two different types
of sensitivity analysis to demonstrate how robust the estimates of net
benefits are to changes in various cost and benefit parameters. In the
first type of sensitivity analysis, OSHA made a series of isolated
changes to individual cost and benefit input parameters in order to
determine their effects on the Agency's estimates of annualized costs,
annualized benefits, and annualized net benefits. In the second type of
sensitivity analysis--a so-called ``break-even'' analysis--OSHA also
investigated isolated changes to individual cost and benefit input
parameters, but with the objective of determining how much they would
have to change for annualized costs to equal annualized benefits.
    Again, the Agency has conducted these calculations for
informational purposes only and has not used these results as the basis
for selecting the PEL for the proposed rule.
Analysis of Isolated Changes to Inputs
    The methodology and calculations underlying the estimation of the
costs and benefits associated with this rulemaking are generally linear
and additive in nature. Thus, the sensitivity of the results and
conclusions of the analysis will generally be proportional to isolated
variations a particular input parameter. For example, if the estimated
time that employees need to travel to (and from) medical screenings
were doubled, the corresponding labor costs would double as well.
    OSHA evaluated a series of such changes in input parameters to test
whether and to what extent the general conclusions of the economic
analysis held up. OSHA first considered changes to input parameters
that affected only costs and then changes to input parameters that
affected only benefits. Each of the sensitivity tests on cost
parameters had only a very minor effect on total costs or net costs.
Much larger effects were observed when the benefits parameters were
modified; however, in all cases, net benefits remained significantly
positive. On the whole, OSHA found that the conclusions of the analysis
are reasonably robust, as changes in any of the cost or benefit input
parameters still show significant net benefits for the proposed rule.
The results of the individual sensitivity tests are summarized in Table
VIII-23 and are described in more detail below.
    In the first of these sensitivity test where OSHA doubled the
estimated portion of employees in regulated areas requiring disposable
clothing, from 10 to 20 percent, and estimates of other input
parameters remained unchanged, Table VIII-23 shows that the estimated
total costs of compliance would increase by $3.6 million annually, or
by about 0.54 percent, while net benefits would also decline by $3.6
million, from $4,582 million to $4,528 million annually.
    In a second sensitivity test, OSHA decreased the estimated current
prevalence of baseline silica training by half, from 50 percent to 25
percent. As shown in Table VIII-23, if OSHA's estimates of other input
parameters remained unchanged, the total estimated costs of compliance
would increase by $7.9 million annually, or by about 1.19 percent,
while net benefits would also decline by $7.9 million annually, from
$4,532 million to $4,524 million annually.

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    In a third sensitivity test, OSHA doubled the estimated travel time
for employees to and from medical exams from 60 to 120 minutes. As
shown in Table VIII-23, if OSHA's estimates of other input parameters
remained unchanged, the total estimated costs of compliance would
increase by $1.4 million annually, or by about 0.22 percent, while net
benefits would also decline by $1.4 million annually, from $4,532
million to $4,530 million annually.
    In a fourth sensitivity test, OSHA reduced its estimate of the
number of workers who could be represented by an exposure monitoring
sample from four to three. This would have the effect of increasing
such costs by one-third. As shown in Table VIII-23, if OSHA's estimates
of other input parameters remained unchanged, the total estimated costs
of compliance would increase by $24.8 million annually, or by about
3.77 percent, while net benefits would also decline by $24.8 million
annually, from $4,532 million to $4,507 million annually.
    In a fifth sensitivity test, OSHA increased by 50 percent the size
of the productivity penalty arising from the use of engineering
controls in construction. As shown in Table VIII-

23, if OSHA's estimates of other input parameters remained unchanged,
the total estimated costs of compliance would increase by $35.8 million
annually, or by about 5.44 percent (and by 7.0 percent in
construction), while net benefits would also decline by $35.8 million
annually, from $4,532 million to $4,496 million annually.
    In a sixth sensitivity test, based on the discussion in Chapter V
of this PEA, OSHA reduced the costs of respirator cartridges to reflect
possible reductions in costs since the original costs per filter were
developed in 2003, and inflated to current dollars. For this purpose,
OSHA reduced respirator filter costs by 40 percent to reflect the
recent lower-quartile estimates of costs relative to the costs used in
OSHA's primary analysis. As shown in Table VIII-23, the total estimated
costs of compliance would be reduced by $21.2 million annually, or by
about 3.23 percent, while net benefits would also increase by $21.2
million annually, from $4,532 million to $4,553 million annually.
    In a seventh sensitivity test, OSHA reduced the average crew size
in general industry and maritime subject to a ``unit'' of engineering
controls from 4 to 3. This would have the effect of increasing such
costs by one-third. As shown in Table VIII-23, if OSHA's estimates of
other input parameters remained unchanged, the total estimated costs of
compliance would increase by $20.8 million annually, or by about 3.16
percent (and by 14.2 percent in general industry and maritime), while
net benefits would also decline by $20.8 million annually, from $4,532
million to $4,511 million annually.
    In an eighth sensitivity test, OSHA considered the effect on
annualized net benefits of varying the discount rate for costs and the
discount rate for benefits separately. In particular, the Agency
examined the effect of reducing the discount rate for costs from 7
percent to 3 percent. As indicated in Table VIII-23, this parameter
change lowers the estimated annualized cost by $20.6 million, or 3.13
percent. Total annualized net benefits would increase from $4,532
million annually to $4,552 million annually.
    The Agency also performed sensitivity tests on several input
parameters used to estimate the benefits of the proposed rule. In the
first two tests, in an extension of results previously presented in
Table VIII-21, the Agency examined the effect on annualized net
benefits of employing the high-end estimate of the benefits, as well as
the low-end estimate. As discussed previously, the Agency examined the
sensitivity of the benefits to both the number of different fatal lung
cancer cases prevented, as well as the valuation of individual
morbidity cases. Table VIII-23 presents the effect on annualized net
benefits of using the extreme values of these ranges, the high
mortality count and high morbidity valuation case, and the low
mortality count and low morbidity valuation case. As indicated, using
the high estimate of mortality cases prevented and morbidity valuation,
the benefits rise by 56% to $8.1 billion, yielding net benefits of $7.5
billion. For the low estimate of both cases and valuation, the benefits
decline by 54 percent, to $2.4 billion, yielding net benefits of $1.7
billion.
    In the third sensitivity test of benefits, the Agency examined the
effect of raising the discount rate for benefits to 7 percent. The
fourth sensitivity test of benefits examines the effect of adjusting
monetized benefits to reflect increases in real per capita income over
time. The results of these two sensitivity tests were previously shown
in Table VIII-20 and are repeated in Table VIII-23. Raising the
interest rate to 7 percent lowers the estimated benefits by 33 percent,
to $3.5 billion, yielding annualized net benefits of $2.8 billion.
Adjusting monetized benefits to reflect increases in real per capita
income over time raises the benefits by 22 percent, to $6.3 billion,
yielding net benefits of $5.7 billion.
``Break-Even'' Analysis
    OSHA also performed sensitivity tests on several other parameters
used to estimate the net costs and benefits of the proposed rule.
However, for these, the Agency performed a ``break-even'' analysis,
asking how much the various cost and benefits inputs would have to vary
in order for the costs to equal, or break even with, the benefits. The
results are shown in Table VIII-24.

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    In one break-even test on cost estimates, OSHA examined how much
costs would have to increase in order for costs to equal benefits. As
shown in Table VIII-24, this point would be reached if costs increased
by $4.5 billion, or 689 percent.
    In a second test, looking specifically at the estimated engineering
control costs, the Agency found that these costs would need to increase
by $4.5 billion, or 1,318 percent, for costs to equal benefits.
    In a third sensitivity test, on benefits, OSHA examined how much
its estimated monetary valuation of an avoided illness or an avoided
fatality would need to be reduced in order for the costs to equal the
benefits. Since the total valuation of prevented mortality and
morbidity are each estimated to exceed $1.9 billion, while the
estimated costs are $0.6 billion, an independent break-even point for
each is impossible. In other words, for example, if no value is
attached to an avoided illness associated with the rule, but the
estimated value of an avoided fatality is held constant, the rule still
has substantial net benefits. Only through a

reduction in the estimated net value of both components is a break-even
point possible.
    The Agency, therefore, examined how large an across-the-board
reduction in the monetized value of all avoided illnesses and
fatalities would be necessary for the benefits to equal the costs. As
shown in Table VIII-24, an 87 percent reduction in the monetized value
of all avoided illnesses and fatalities would be necessary for costs to
equal benefits, reducing the estimated value to $1.1 million per life
saved, and an equivalent percentage reduction to about $0.3 million per
illness prevented.
    In a fourth break-even sensitivity test, OSHA estimated how many
fewer silica-related fatalities and illnesses would be required for
benefits to equal costs. Paralleling the previous discussion,
eliminating either the prevented mortality or morbidity cases alone
would be insufficient to lower benefits to the break-even point. The
Agency therefore examined them as a group. As shown in Table VIII-24, a
reduction of 87 percent, for both simultaneously, is required to reach
the break-even point--600 fewer mortality cases prevented annually, and
1,384 fewer morbidity cases prevented annually.
    Taking into account both types of sensitivity analysis the Agency
performed on its point estimates of the annualized costs and annualized
benefits of the proposed rule, the results demonstrate that net
benefits would be positive in all plausible cases tested. In
particular, this finding would hold even with relatively large
variations in individual input parameters. Alternately, one would have
to imagine extremely large changes in costs or benefits for the rule to
fail to produce net benefits. OSHA concludes that its finding of
significant net benefits resulting from the proposed rule is a robust
one.
    OSHA welcomes input from the public regarding all aspects of this
sensitivity analysis, including any data or information regarding the
accuracy of the preliminary estimates of compliance costs and benefits
and how the estimates of costs and benefits may be affected by varying
assumptions and methodological approaches.

H. Regulatory Alternatives

    This section discusses various regulatory alternatives to the
proposed OSHA silica standard. OSHA believes that this presentation of
regulatory alternatives serves two important functions. The first is to
explore the possibility of less costly ways (than the proposed rule) to
provide an adequate level of worker protection from exposure to
respirable crystalline silica. The second is tied to the Agency's
statutory requirement, which underlies the proposed rule, to reduce
significant risk to the extent feasible. If, based on evidence
presented during notice and comment, OSHA is unable to justify its
preliminary findings of significant risk and feasibility as presented
in this preamble to the proposed rule, the Agency must then consider
regulatory alternatives that do satisfy its statutory obligations.
    Each regulatory alternative presented here is described and
analyzed relative to the proposed rule. Where appropriate, the Agency
notes whether the regulatory alternative, to be a legitimate candidate
for OSHA consideration, requires evidence contrary to the Agency's
findings of significant risk and feasibility. To facilitate comment,
the regulatory alternatives have been organized into four categories:
(1) Alternative PELs to the proposed PEL of 50 [mu]g/m\3\; (2)
regulatory alternatives that affect proposed ancillary provisions; (3)
a regulatory alternative that would modify the proposed methods of
compliance; and (4) regulatory alternatives concerning when different
provisions of the proposed rule would take effect.
Alternative PELs
    OSHA is proposing a new PEL for respirable crystalline silica of 50
[mu]g/m\3\ for all industry sectors covered by the rule. OSHA's
proposal is based on the requirements of the Occupational Safety and
Health Act (OSH Act) and court interpretations of the Act. For health
standards issued under section 6(b)(5) of the OSH Act, OSHA is required
to promulgate a standard that reduces significant risk to the extent
that it is technologically and economically feasible to do so. See
Section II of this preamble, Pertinent Legal Authority, for a full
discussion of OSHA legal requirements.
    OSHA has conducted an extensive review of the literature on adverse
health effects associated with exposure to respirable crystalline
silica. The Agency has also developed estimates of the risk of silica-
related diseases assuming exposure over a working lifetime at the
proposed PEL and action level, as well as at OSHA's current PELs. These
analyses are presented in a background document entitled ``Respirable
Crystalline Silica--Health Effects Literature Review and Preliminary
Quantitative Risk Assessment'' and are summarized in this preamble in