----------------------------------------------------------------------------------------------------------------
Source: OSHA IMIS database, analyzed by OSHA, Directorate of Standards and Guidance and Directorate of
  Construction.

    For the FEA's supplemental data as shown in Table IV-10, OSHA, as
previously noted, carefully reviewed and selected from the IMIS
database only those cases determined preventable by full compliance
with the provisions of the final standard. As a result, OSHA did not
need to apply a probability prevention rate to estimate the number of
preventable fatalities. As itemized above, OSHA identified 30
preventable fatalities over the four-year period, 2006-2009, for an
average of 7.5 fatalities prevented annually by full compliance with
this final standard. This supplemental analysis supports OSHA's
conclusions that the problem of confined-space fatalities did not
diminish in the construction industry over this period, and that the
regulated community still needs the final standard. OSHA does not
believe this supplemental analysis is necessary, but believes that it
will aid the public in understanding OSHA's conclusions.
    It is important to note that the approach used in this estimation
is conservative in that there are other fatal events that were likely
preventable but not included in the IMIS database. For example, the
Bureau of Labor Statistics' Census of Fatal Occupational Injuries for
2011 showed 111 fatalities in construction from exposure to harmful
substances or environments, and 123 fatalities from contact with
objects and equipment (these numbers include 4 fatalities in new
single-family housing construction from contact with objects and 10
fatalities in residential remodeling from exposure to harmful
substances or environments). Some fatal injuries that are preventable
by the final standard may not appear in the IMIS database because the
database only includes accidents involving a fatality or a catastrophe
with three or more injuries that result in hospitalization.
Estimation of Averted Injuries
    In a 1994 report to OSHA, the Confined Spaces Work Group of the
Advisory Committee on Construction Safety and Health (ACCSH) estimated
that the ratio of lost time injuries (LTI) to fatalities in confined
spaces was approximately 100:1 for general industry and 200:1 for
construction (see ACCSH, 1994, pg. 6). In the PEA, OSHA used this range
of 100 to 200 LTIs per fatality to estimate the number of injuries
prevented by the proposed rule. At the public hearing on the proposed
rule, the Edison Electric Institute's representative noted, ``There's
no explanation or support for the assertion that there has been under-
counting of injuries, however, and we cannot discern any basis for
multiplying these numbers by 100 and 200'' (ID-210, Tr. p.99). As noted
above, OSHA explained that those estimates came from the ACCSH report,
which was the best available evidence. The commenter did not dispute
those numbers or, more importantly, provide any alternatives numbers as
its best evidence. Perhaps the commenter mistakenly concluded that OSHA
multiplied the IMIS injury numbers by 100 and 200; however, the
multiplication applied to the numbers of fatalities, because OSHA does
not have data on the number of non-fatal injuries.
    In this FEA, OSHA provided updated estimates of the number of non-
fatal injuries involving confined spaces in construction and further
clarified the basis for its estimates. As a preliminary matter, the
Agency notes again that OSHA's IMIS database, which is the source of
information about fatal accidents, does not report most injuries. As
noted above, the IMIS database includes only accidents involving a
fatality or a catastrophe with three or more injuries that result in
hospitalization. Therefore, the IMIS database seldom captures injuries
involving accidents that do not result either in a fatality or
hospitalization of three or more workers.\43\ Because OSHA

could not find a data source for reliable estimates of non-fatal
injuries in confined spaces in construction,\44\ OSHA again relied on
the expertise of ACCSH for these estimates.
---------------------------------------------------------------------------

    \43\ The Survey of Occupational Injuries and Illnesses (SOII)
produces annual estimates of counts and rates of new workplace
injuries and illnesses, but also is subject to under-reporting for a
variety of reasons, including missing cases, the reporting of sample
cases from large establishments, timeliness of updates to the logs
and data collection, and employer doubts about the recordability of
some cases (see Ruser, 2008). Furthermore, OSHA is unable to confirm
the determination of accidents in ``confined spaces'' as defined by
SOII and, therefore, relied on OSHA's IMIS database.
    \44\ OSHA takes note of the AGCA survey finding of only 2
confined-space injuries among the 74 responding employers (ID-0222,
p. 29). However, this finding does not furnish a basis for
estimating the number of injuries preventable with full compliance
with this rule due to its lack of representativeness. Not all of the
respondents even had confined spaces on their job sites. Moreover,
AGCA designed the survey explicitly not to learn about injuries in
confined spaces, but ``to determine the impact of compliance costs
for contractors under OSHA's Proposed Rule on Confined Space [sic].
. . . '' It instructed respondents to ``carefully review the
background information detailed below . . . before submitting your
information. OSHA's proposed rule for confined space [sic] in
construction is complicated, costly to implement, and does not
provide significant increases in safety above the existing general
industry standard.'' The survey did not provide a definition of a
confined space or otherwise seek to ensure that the person filling
out the survey was familiar with the appropriate definition.
---------------------------------------------------------------------------

    Recognizing the age of the ACCSH Work Groups' LTI estimates of
100:1 and 200:1, OSHA attempted to corroborate these estimates using
data from the BLS CFOI and the BLS Survey of Occupational Injuries and
Illnesses (SOII). According to BLS,\45\ in 2009, there were a total of
4,090 occupational fatalities and 3,277,700 nonfatal occupational
injuries for private industry overall, and 834 fatalities and 251,000
nonfatal injuries for the construction industry. Using these estimates
of fatalities and injuries, the ratio of injuries to fatalities is
800:1 for all private industries, and 300:1 for the construction
industry.
---------------------------------------------------------------------------

    \45\ Table A-1, Fatal Occupational Injuries by Industry, Event
and Exposure, available at http://www.bls.gov/iif/oshwc/cfoi/cftb0241.pdf, and Table 2, Number of Nonfatal Occupational Injuries
and Illnesses by Case Type and Ownership for Selected Industries,
2009 News Release USDL 10-1451, available at http://www.bls.gov/news.release/pdf/osh.pdf.
---------------------------------------------------------------------------

    In light of the large injury-to-fatality ratios apparent in the
recent CFOI and SOII data, OSHA confirmed that the ratios recommended
by the expert ACCSH Confined Spaces Work Group are reasonable and
conservative, and used the average of the two ratios (150 injuries per
fatality) in this FEA to estimate the number of non-fatal injuries.
Calculations relating publicly reported injury-to-fatality statistical
data in construction also confirm the reasonableness of the estimates
OSHA used.\46\
---------------------------------------------------------------------------

    \46\ See, for example, Dong, X., et al. (2011).
---------------------------------------------------------------------------

    Based on OSHA's annual estimate of 5.2 confined-spaces-in-
construction fatalities avoided when fully complying with the
provisions of this standard, and the 91 percent preventability rate,
OSHA estimated that there would have been a total of between 520 and
1,040 confined-spaces-in-construction non-fatal injuries during the
period of 1992 to 2000, with a midpoint of 780 as the total number of
non-fatal injuries avoided each year when fully complying to the
provisions of this standard. Applying a similar methodology of a 100:1
to 200:1 fatality-to-injuries ratio to the supplemental data in Table
IV-10, OSHA estimates that, given 30 fatalities between the period of
2006 to 2009, there would be a total of 3,000 and 6,000 non-fatal
injuries prevented by the final standard in that time period, or an
average of 750 and 1,500 (with a midpoint of 1,125) injuries prevented
per year.
Assignment of Monetary Values to Avoided Injuries and Fatalities
    In the PEA, OSHA used a willingness-to-pay approach to estimate a
monetary value of $50,000 for each prevented injury and $6.8 million
for each prevented fatality. One commenter stated that the estimated
value of $50,000 per prevented injury had ``absolutely no foundation or
source for accuracy'' and was ``substantially inflated,'' but did not
provide any specifics or suggest an alternative (ID-100). The AGCA
report suggested that OSHA instead use workers' compensation claims,
which it estimated to be $242,770 per fatality and $31,664 per injury
(ID-222).
    Workers' compensation claims do not reflect a willingness-to-pay
approach or represent the full costs associated with workplace
fatalities and injuries. Workers' compensation systems cover medical
expenses and partial payment of wages lost as a result of workplace
accidents, or, in the case of fatalities, burial costs and part of lost
future wages. However, workers' compensation does not cover other costs
resulting from fatalities and injuries, such as pain and suffering.
Therefore, it would be inaccurate to base estimates of total societal
costs of injuries and illnesses on workers' compensation claims.
    As in the PEA, and following the approach recommended by OMB
Circular A-4 (OMB, 2003) and common analytic practice, OSHA developed
estimates of the benefits of avoided injuries and fatalities in this
FEA based on the willingness-to-pay to avoid a marginal increase in the
risk of a fatality or injury, as explained below. In addition, in this
FEA, OSHA updated the estimated monetary value of reductions in
fatalities and injuries presented in the PEA from 2002 to 2009 dollars.
While a willingness-to-pay (WTP) approach clearly has theoretical
merit, an individual's willingness to pay to reduce the risk of
fatality may underestimate the total willingness to pay, which could
include the willingness of others--particularly the immediate family--
to pay to reduce that individual's risk of fatality.\47\
---------------------------------------------------------------------------

    \47\ See, for example, Thaler and Rosen (1976), pp. 265-266;
Sunstein (2004), p. 433; or Viscusi, Magat and Forrest (1988), the
last of whom write that benefits from improvement in public health
``consist of two components, the private valuation consumers attach
to their own health, plus the altruistic valuation other members of
society place on their health.'' This paper uses contingent
valuation methods to suggest that the effect of altruism could
significantly alter willingness-to pay estimates for some kinds of
health improvement. There are, however, many questions concerning
how to measure this and the conditions under which it might matter.
---------------------------------------------------------------------------

    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 realized in actual labor
markets.\48\ A number of academic studies, as summarized in Viscusi &
Aldy (2003), show 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.\49\ OSHA used this approach in many recent proposed
and final rules. (See, for example, 69 FR 59305, 59429 (Oct. 4, 2004)
and 71 FR

10099 (Feb. 28, 2006), the preambles for the proposed and final
hexavalent chromium rule, and 78 FR 56274, 56388 (Sept. 12, 2013), the
preamble for the proposed respirable crystalline silica rule.) The
Agency views the WTP approach as the best available, and relied on it
to monetize benefits. 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 valued at approximately $7 million in
2000 dollars. Using the GDP Deflator (U.S. BEA, 2010), this $7 million
base number in 2000 dollars yields an estimate of $8.7 million in 2010
dollars for each fatality avoided.50 51
---------------------------------------------------------------------------

    \48\ See, for example, the discussion of wage compensation for
risk for union versus nonunion workers in Dorman and Hagstrom
(1998).
    \49\ For example, if workers are willing to pay $90 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 $90 divided by \1/
100,000\, or $9,000,000. 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 $9,000,000.
    \50\ The Agency notes that two recent studies mentioned in this
chapter--Kniesner et al. (2010) and Kniesner et al. (2012)--report
similar estimates. The median quintile estimate of the imputed value
of an avoided fatality in Kniesner et al. (2010) is $9.2 million in
2010 dollars, while Kniesner et al. (2012) provide a range of
estimates between approximately $5 million and $12 million in 2012
dollars. For the purpose of this PEA, OSHA chose to rely on the
Viscusi and Aldy (2003) meta-analysis rather than the two more
recent individual studies.
    \51\ An alternative approach to valuing an avoided fatality is
to monetize, for each year added to a life, an estimate from the
economics literature of the value of that statistical life-year
(VSLY). See, for instance, Aldy and Viscusi (2007) for a discussion
of VSLY theory and FDA (2003), pp. 41488-9, for an application of
VSLY in rulemaking. OSHA did not investigate this approach.
---------------------------------------------------------------------------

    OSHA views these estimates as the best estimates currently
available, and will use them to monetize avoided fatalities and
injuries resulting from this final standard.
Net Benefits
    Table IV-11, which repeats Table IV-1 for the convenience of the
reader, provides a summary of the estimated costs, benefits, and net
benefits of the final standard, using discount rates of 7 percent and,
alternatively, 3 percent, as recommended by OMB Circular A-4. OSHA
estimated the total benefits of the final standard to be $93.6 million
annually--of which $45.2 million come from prevented fatalities and
$48.4 million from prevented injuries. OSHA took the annualized costs
of $60.3 million, using a 7 percent discount rate, from Table IV-13 in
Chapter 6 of this FEA. OSHA estimated net benefits of the final rule to
be $33.3 million annually, using a 7 percent discount rate. OSHA
estimated that compliance with the final standard will provide $1.55 of
benefits per dollar of cost.

                        Table IV-11--Net Benefits
                       [Millions of 2009 dollars]
------------------------------------------------------------------------
                                            7% Discount     3% Discount
                                               rate            rate
------------------------------------------------------------------------
                            Annualized Costs
------------------------------------------------------------------------
Evaluation, Classification, Information            $12.4           $12.2
 Exchange, and Notification.............
Written Program, Issue Permits, Verify               4.2             4.2
 Safety, Review Procedures..............
Provide Ventilation and Isolate Hazards.             2.8             2.7
Early Warning System and Atmospheric                11.4            11.3
 Testing or Monitoring..................
Attendant...............................             3.6             3.6
Rescue Capability.......................             8.2             7.6
Training Provisions.....................            11.3            11.3
Other Requirements......................             6.4             6.3
                                         -------------------------------
    Total Annual Costs..................            60.3            59.2
------------------------------------------------------------------------
                             Annual Benefits
------------------------------------------------------------------------
Number of Injuries Prevented............                     780
Number of Fatalities Prevented..........                     5.2
Monetized Benefits......................                   $93.6
------------------------------------------------------------------------
                      Net Annual Monetized Benefits
                          (Benefits Less Costs)
------------------------------------------------------------------------
                                                   $33.3           $34.4
------------------------------------------------------------------------

Potential Net Benefits of the Individual Provisions of the Rule
    As indicated in Table IV-11, the estimated benefits of the final
standard are nearly 50 percent larger than the estimated costs.
Nevertheless, it is possible that the costs of particular provisions
could exceed their benefits. To address this possibility, OSHA
conducted a supplemental analysis of the net benefits of the individual
provisions of the final rule that have associated costs.
    Because the final rule contains jointly interacting and overlapping
provisions, there are two logistical issues with performing a
provision-by-provision sensitivity analysis of whether benefits exceed
costs in this case: (1) The available data do not permit OSHA to
determine the numbers of accidents that every combination of provisions
could prevent; and (2) a simple marginal analysis will not fully
address the question of whether benefits exceed costs for the rule as a
whole. It might, for example, take two or more provisions to prevent a
class of accident: An analysis of the effects of a requirement to do x
if situation y is the case would be dependent on not only the
requirement to do x if situation y is the case, but also a requirement
to train workers to do x, as well as a requirement to inform workers of
when y is the case. In such circumstances, while each provision alone
might pass a marginal benefit-cost test, all of the provisions together
might not pass a benefit-cost test because the provisions would prevent
the same accidents. The three provisions, each costing $5 million (for
a total cost of $15 million), might prevent only $12 million worth of
accidents because the three provisions would prevent the exact same
accidents. Thus, even if a provision-by-provision sensitivity analysis
were possible for

this rule, that analysis might still not demonstrate the total benefits
of the overall combination of provisions. Moreover, for the purpose of
determining whether benefits of a rule exceed the costs, one cannot
simply test each provision individually, but must find ways to examine
situations involving likely joint effects of the provisions of the
rule.
    This provision-by-provision analysis addresses both of these
problems and takes the form of a break-even sensitivity analysis that
compares the potential benefits of a set of provisions against the
costs of those provisions and, separately, all provisions that, when
combined, achieve those particular benefits. Thus, a break-even
sensitivity analysis in this case represents an estimate of the
percentage of potentially preventable accidents that an individual
provision, or a combination of provisions, must prevent for the
benefits to equal the costs. Any percentage of preventable accidents a
provision or combination of provisions prevents that are greater than
this percentage would result in benefits exceeding costs.
    For each narrative of the 30 preventable confined-spaces-in-
construction fatalities and injuries for the period 2006-2009 presented
in Table IV-10, OSHA listed the sets of provisions of the final rule
that, if followed, would potentially prevent the fatalities. For some
provisions, such as requirements to evaluate and classify spaces and to
develop and implement permit systems, the narratives do not clearly
state whether or not employers met these requirements. In these cases,
OSHA listed those provisions as being among those that would
potentially prevent the fatality, even though it is possible that the
employer took steps to implement the required provisions. For other
provisions, such as those for early warning system and atmospheric
testing or monitoring, the narratives do not clearly state that there
was such monitoring, but it seems unlikely that someone would enter
some of these extremely dangerous atmospheres had information on that
danger been available as a result of an early warning system and
atmospheric testing or monitoring. Finally, it is clear from the
descriptions that employers simply did not follow provisions relating
to ventilation and hazard isolation. Table IV-12 shows the aggregate
results for each set of provisions organized according to the
organization of costs provided in Chapter 5. Table IV-12 then monetizes
the prevented fatalities and injuries associated with each cost
category and compares that monetized total to the estimated costs for
each cost category. Finally, OSHA estimated the percentage of benefits
that a given provision needs to produce zero net benefits (that is,
when the estimated value of the prevented injuries and fatalities
equals the estimated cost of the related provision). Any percentage
greater than zero net benefits will produce positive net benefits.
Table IV-12 also shows the results of this analysis.
    Before examining the benefits attributable to the provisions of the
final standard, OSHA examined the break-even sensitivity of the
standard as a whole and found that if compliance with the standard
prevented 45 percent of the fatalities recorded, then the benefits
would equal the costs; with any higher percentage prevention, benefits
would exceed the costs. OSHA considers it a near certainty that
compliance with the final standard would achieve this level of
benefits. For example, full compliance with the final standard would
avoid almost all fatalities involving asphyxiation, and 60 percent of
the accidents involved asphyxiation. Thus, if full compliance with the
final standard prevents just one class of accidents, the standard would
result in benefits that exceed costs.
    To discuss the results shown in Table IV-12, OSHA will consider the
results for each provision in turn, as described in the following
paragraphs.
    Evaluation and Classification: The portions of the standard covered
by this cost category are only effective if combined with other
measures. Evaluation and classification alone, without taking the
further steps needed to ameliorate the hazards, would be largely
pointless. The need for this provision, in the context of benefit-cost
analysis, is to assure that employers do not have to treat every
confined space as containing hazards; rather, it allows employers to
simply restrict entry or to implement the subsequent parts of their
confined-spaces program only when a hazard exists within a given
confined space.
    This set of provisions is critical to reducing the costs of all
other provisions more than directly preventing fatalities. If the
evaluation and classification provisions reduce the costs of the
standard as a whole by 5 percent ($3.1 million costs of this provision
divided by $60.3 million costs of the remaining provisions), then these
provisions will be useful. Given the vast number of confined spaces
that do not require the ensuing steps, these provisions are almost
certainly cost effective, and are necessary given the standard as a
whole has positive net benefits--as was shown above.
    To further evaluate the necessity and benefit of the evaluation and
classification provisions, it is necessary to examine state programs.
Only two of the accidents examined from 1992-2000 and 2006-2009
occurred in states with comprehensive programs similar to what OSHA is
proposing. Five accidents occurred in states that required some
provisions included in OSHA's confined-spaces-in-construction rule,
such as ventilation and atmospheric monitoring, but did not require
evaluation or permit systems. This result may suggest that there may be
advantages to a full, comprehensive program that explicitly requires
evaluation and classification. However, OSHA has not been able to do
any quantitative analysis of the rates of confined space fatalities in
these states as against other regulatory regimes.
    Information Exchange: The exact economic benefits of information
exchanges are particularly difficult to pinpoint. Nevertheless, the
benefits of these provisions will exceed the cost if the final standard
prevents 10 percent of the potentially affected accidents.
    Permit Programs: Table IV-12 shows that if these provisions prevent
4 percent of the accidents where they are potentially relevant, then
the benefits will equal the costs, and if they prevent more than 4
percent, the benefits will exceed the costs. A system of permits might
prevent, or have been a key part of preventing, many fatalities. As a
result, achieving a 4 percent prevention rate seems reasonable.
Further, at least 12 percent of the accidents potentially prevented by
this provision (Incidents 2 and 13) involved casual entry (e.g., to
retrieve a dropped item), or entry prior to testing, that a proper
permit system would completely prevent. Preventing these two accidents
alone would assure that the benefits of the provision exceed the costs.
    Early Warning Systems, and Atmospheric Testing and Monitoring:
Early warning systems, and atmospheric testing and monitoring, can
prevent accidents that result in asphyxiation or caused by explosive
gases, or where early warning of oncoming liquids would prevent
drowning. The presence of atmospheric testing or monitoring data would
prevent most of these accidents because it is unlikely that anyone
would knowingly enter a space with a lethal or explosive atmosphere,
especially when provisions are in place to assure against unauthorized
entry. Table IV-12 shows that if these provisions prevent 14 percent of
the accidents for which they are potentially

relevant, then the benefits will equal the costs, and if they prevent
more than 14 percent of the accident, the benefits will exceed the
costs. OSHA believes that it is likely that atmospheric monitoring
could prevent a much higher percentage of these accidents. In addition,
there is one accident potentially prevented by an early warning system.
    Requirement for an Attendant: This heading includes the provisions
that require an attendant whenever an employee enters a permit-required
confined space, such as Sec. Sec.  1926.1204(f), 1926.1209(f) and
1926.1209(h). These provisions function in conjunction with the
requirements for adequate rescue capacity. In the absence of
appropriate rescue capacity, persons standing by a confined space may
attempt a rescue that exposes them to the hazard. Table IV-12 shows
that if these provisions prevent 6 percent of the accidents in which
the person who died entered a confined space completely alone, then the
benefits will equal the costs, and if the provisions prevent more than
6 percent of the accidents, the benefits will exceed the costs. OSHA
believes that it is reasonable that appropriately trained and equipped
attendants could prevent this percentage of accidents.
    Ventilation and Hazard Isolation: The standard generally requires
the use of ventilation when possible to address atmospheric hazards,
but it can be difficult for the purposes of this sensitivity analysis
to determine in which situations ventilation, rather than PPE, might be
sufficient. It is clear, however, that when ventilation is appropriate,
assuring its effectiveness would completely prevent ventilation-related
fatalities. The same is true for hazard-isolation methods such as
deactivating and locking out electrical sources and creating by-passes
for water around confined spaces. Table IV-12 shows that if these
provisions prevent 3 percent of the accidents for which they are
potentially relevant, then the benefits will equal the costs, and if
they prevent more than 3 percent of these accidents, the benefits will
exceed the costs. Therefore, even if proper ventilation or isolation
prevented one in five of the fatalities identified as potentially
avoidable with proper ventilation or isolation, then the benefits of
these provisions would exceed the costs. While the exact number of
situations in which ventilation or isolation would have been the
hazard-reducing measure of choice is uncertain, OSHA is confident that
at least 3 percent of those identified would require ventilation or
isolation.
    Rescue Capacity: These provisions include all requirements related
to rescue, including the requirement for non-entry rescue whenever
feasible. Table IV-12 shows that if these provisions prevent 9 percent
of the accidents for which they are potentially relevant, then the
benefits will equal the costs, and if they prevent more than 9 percent
of the accidents, the benefits will exceed the costs. Given that 15
percent of the accidents for which OSHA identified inadequate rescue
capacity as a factor in a fatality involved deaths of additional
workers during an attempted rescue, then following provisions for non-
entry rescue would reasonably prevent more than 9 percent of all
accidents involving inadequate rescue capacity. However, if employers
follow all other provisions of the rule, then there will be less need
for rescue. As a result, this set of provisions will be necessary if
other provisions are not available or are not followed 9 percent of the
time, or if conditions change after the confined-space entry in ways
that result in a need for rescue.
    Equipment: These provisions cover the requirement that employers
provide adequate lighting and other equipment needed for confined-
spaces work as specified in Sec.  1926.1204(d). Table IV-12 shows that
if these provisions prevent 47 percent of the accidents for which they
are potentially relevant, then the benefits will equal the costs, and
if they prevent more than 47 percent of the accidents, the benefits
will exceed the costs. However, as noted above, OSHA did not include
many of the accidents that proper equipment would prevent, such as
accidents caused by vehicles hitting persons working near a confined
space or illnesses caused by improper clothing. As a result, it is
likely that OSHA underestimated the number of fatalities and injuries
prevented by proper equipment.

                               Table IV-12--Comparison of Benefits Associated With Individual Cost Categories and Costs *
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                Percentage
                                                    Estimated                 Estimated                                                           of
                                       Number of    number of    Monetized    number of                 Total monetized value                 potential
                                       fatalities   fatalities    value of     injuries    Monetized     of annual fatalities                  benefits
           Cost provision             potentially    per year      annual      per year     value of         and injuries         Costs of    needed to
                                      affected by  potentially   fatalities  potentially    injuries   potentially affected by   provision    break even
                                       provision   affected by      \a\      affected by      \b\           the provision                     with costs
                                      (2006-2009)   provision                 provision                                                          \c\
                                                                                (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
All.................................           30          7.5  $65,250,000         1125  $69,750,000             $135,000,000  $60,300,000           45
Evaluation and Classification.......           30          7.5   65,250,000         1125   69,750,000              135,000,000    3,100,000            2
Information Exchange................           18          4.5   39,150,000          675   41,850,000               81,000,000    9,300,000           11
Permit System.......................           22          5.5   47,850,000          825   51,150,000               99,000,000    4,200,000            4
Early Warning System and Atmospheric           18          4.5   39,150,000          675   41,850,000               81,000,000   11,300,000           14
 Testing or Monitoring..............
Ventilation and Hazard Isolation....           22          5.5   47,850,000        487.5   51,500,000               99,000,000    2,800,000            3
Attendant...........................           13         3.25   28,275,000        487.5   30,225,000               58,500,000    3,600,000            6
Rescue Capability...................           20            5   43,500,000          750   46,500,000               90,000,000    8,200,000            9
Training............................           29         7.25   63,075,000       1087.5   67,425,000              130,500,000   11,300,000            9
Equipment...........................            3         0.75    4,350,000        112.5    6,975,000               13,500,000   6,3000,000           47
--------------------------------------------------------------------------------------------------------------------------------------------------------
* In 2009 dollars.
\a\ Based on an estimated value of $8.7 million per fatality avoided.
\b\ Based on an estimated value of $62,000 per injury avoided.
\c\ Costs of provision divided by total monetized value of fatalities potentially prevented by the provision.
* Note: OSHA did not apportion the benefits of a prevented fatality among the provisions that could prevent the fatality; instead, the Agency attributed
  the entirety of the benefits of a prevented fatality to each provision that could prevent the fatality.
Source: OSHA, Directorate of Standards and Guidance, Office of Regulatory Analysis.

5. Technological Feasibility
    In accordance with the OSH Act, OSHA must demonstrate that
occupational safety and health standards promulgated by the Agency are
technologically feasible. OSHA demonstrates that a standard is
technologically feasible ``by pointing to technology that is either
already in use or has been conceived and is reasonably capable of
experimental refinement and distribution within the standards
deadlines.'' American Iron and Steel Inst. v. OSHA (Lead II), 939 F.2d
975,

980 (D.C. Cir. 1991) (per curiam) (internal citation omitted). OSHA
reviewed each of the requirements imposed by the final rule and
determined that compliance with the requirements of the rule is
technologically feasible for all affected industries, that employers
can achieve compliance with all of the final requirements using readily
and widely available technologies, and that there are no technological
constraints associated with compliance with any of the final
requirements.
    Several factors support OSHA's determination regarding the
technological feasibility of the final rule. First, OSHA concluded that
compliance with existing Sec.  1910.146 was technologically feasible
when it promulgated those standards in 1993 (58 FR 4539), and that
conclusion held true over OSHA's two decades of experience with that
standard. Likewise, this conclusion holds true with respect to
provisions in the final rule that OSHA based on the existing general
industry standard. A number of commenters stated that they are
complying with the general industry standard in construction
operations, which also supports a finding of technological feasibility.
(See e.g., ID-047, -075, -086, -092, -120, -124, -180).
    Second, the provisions in the standard not based on the existing
standard are also technologically feasible. The new standard requires
employers to identify confined spaces at their worksites, establish a
written program and issue permits for qualifying confined spaces,
exchange information on the hazards of permit spaces with other
affected employers, train affected employees, provide for rescue and
emergency services, and assign duties to authorized entrants,
attendants, and supervisors. None of these requirements, including the
new requirements not in Sec.  1910.146, present any technological
feasibility concerns. These provisions simply require observation of
hazards, training, and communication among all parties, including
employees and all employers at a worksite--all of which are clearly
feasible.
    In Section III of the preamble to the final rule, ``Summary and
Explanation of the Final Rule,'' OSHA responded to issues associated
with the technological feasibility of specific provisions. In that
section of the preamble, OSHA discussed technological feasibility
concerns raised by rulemaking participants and the technological
feasibility of provisions that differ from the general industry rule,
including the requirement for continuous monitoring of atmospheric
hazards in final Sec.  1926.1203(e)(2)(vi) and Sec.
1926.1204(e)(1)(ii). In addressing potential concerns about the
technological feasibility of continuous monitors that would be capable
of identifying various types of atmospheric hazards, OSHA included an
exception that applies if the employer can demonstrate that the
appropriate devices are not commercially available for this purpose.
    One commenter suggested that requirements to exchange information
and coordinate entry operations represent ``an unnecessary burden'' and
``in some cases may be infeasible,'' which OSHA takes to mean
technologically infeasible, for the homebuilding industry (ID-124).
Although this commenter cited industry statistics indicating that
homebuilders tend to be small businesses that rely on subcontractors to
handle specialized tasks, the commenter failed to show how this
situation renders multi-employer communication requirements of the rule
technologically infeasible for that industry. OSHA does not mandate any
particular equipment for coordinating communications, and the Agency
did not find evidence in the record suggesting that the exchange of
information and entry coordination, which OSHA believes already occurs
in the course of regular communications conducted by employers on
construction worksites, is infeasible. At a time when most individuals
have mobile phones, remote communication should be possible in most
locations. In any case, in construction work, home-building contractors
are able to successfully communicate with a variety of specialists
about what work needs to be done and at what time. Therefore, there
should be no feasibility problems in communicating essential safety
information in the same way.
    There was only one other provision of the proposed standard that
elicited concerns from industry stakeholders about technological
feasibility. That provision, which appears as Sec.
1926.1204(e)(1)(iii) of the final standard, requires that employers
provide an early warning system that will detect non-isolated
engulfment hazards as a part of the permit-required confined space
program. Such hazards can result, for example, when runoff from a heavy
storm upstream in a sewer flows downstream into the work area. As noted
in the IMIS reports, an employee died in 2009 when a rainstorm sent
water rushing into a 24-inch pipe inside which the employee was
working. Other examples would be if sewage, sand, grain, or other
``flowable'' solid substances flow into the area in which an employee
is working.
    Two commenters questioned the availability of early warning system
technology (ID-059 and -098). A third commenter (ID-216) raised similar
objections and, in particular, expressed concerns about the technical
demands imposed on the employer to account for all of the factors
involved in properly positioning the system.
    In response to these comments, OSHA observes that manufacturers
have designed early warning systems for years to alert workers to
migrating engulfment hazards, including migrating engulfment hazards
present in a space subject to final Sec.  1926.1204(e)(1) (see, for
example, http://www.memecosales.com/products/level/blok-aid/ or http://www.flygt.com/en-us/Pumping/Products/Monitoring-and-Control-equipment/Pages/Alarm-telemetry.aspx). The range of available early warning
systems runs from customized high-flow warning devices to simple fluid-
level meters with audible alarms. The wide availability and application
of such systems attest to their affordability and practicability under
a range of circumstances. OSHA also notes that, in a series of
stakeholder meetings in October 2000, various participants discussed
the range of early warning systems, including monitors, cameras, and
attendants positioned upstream outside confined spaces (see transcripts
of stakeholder meetings, available at https://www.osha.gov/doc/reference_documents.html). The commenters generally characterized the
systems as easy to implement and commonly used.
    Even though this technology is clearly available, the standard does
not require employers to use a device such as the early warning system.
An employer may determine that an effective compliance solution would
simply be to position detection and monitoring devices to provide early
warning, or to station an employee to accomplish that function. In any
case, given the option of using an employee to provide direct
observation as one potential method of fulfilling the requirement,
there is no doubt that the requirement may be accomplished with
existing technology.
    In conclusion, employers can achieve compliance with all of the
requirements of the final standard with readily and widely available
technologies or through the use of human observers. To demonstrate
technological feasibility, OSHA must establish a ``reasonable
possibility that the typical firm will be able to . . . meet the
[standard's

requirement] in most of its operations.'' Lead II, 939 F.2d at 980
(internal citation omitted). Given the wide availability of options for
early warning systems, the final rule meets this legal test.
6. Costs of Compliance
Introduction
    In this chapter, OSHA presents the estimated costs of the final
rule for confined spaces in construction. These are the costs that
employers would incur to achieve full compliance with the final rule,
relative to the current baseline. They do not include costs employers
incurred to achieve current compliance with the existing requirements.
    Table IV-13 presents OSHA's estimate of the total annualized costs
of the final rule by provision and by industry sector, expressed in
2009 dollars. As OSHA typically does, it annualized capital costs over
the estimated useful life of the equipment, and annualized one-time
costs over 10 years. Consistent with OMB's Circular A-4 (OMB, 2003),
OSHA calculated annualized costs using two alternative discount rates:
7 Percent and 3 percent. As shown, OSHA estimated the total annualized
cost of the final rule to be about $60.3 million using a discount rate
of 7 percent, and $59.2 million using a discount rate of 3 percent.

  Table IV-13--Annualized Compliance Costs of OSHA's Final Standard for
              Confined Spaces in Construction, by Provision
------------------------------------------------------------------------
       Provision or hazard control        7 Percent rate  3 Percent rate
------------------------------------------------------------------------
Evaluation, Classification, and              $12,363,600     $12,208,018
 Notification...........................
    Classify............................         948,249         948,249
    Notice..............................       2,091,862       1,936,279
    Information Exchange................       9,323,489       9,323,489
Issue Permits, Verify Safety, Review           4,196,574       4,190,373
 Procedures.............................
    Annual Review.......................         154,746         154,746
    Issue Permits.......................       2,710,594       2,710,594
    Written Program.....................       1,331,234       1,325,033
Ventilation and Hazard Isolation........       2,830,611       2,748,652
    Isolation...........................         784,364         771,079
    Vent................................       2,046,247       1,977,573
Atmospheric Monitoring..................      11,395,322      11,282,168
    Test Prior/During...................      10,661,160      10,551,394
    Calibrate...........................         734,162         730,773
Standby Person..........................       3,623,866       3,623,866
Rescue Capability.......................       8,157,084       7,576,244
    Rescue..............................       5,745,876       5,379,002
    Retrieval...........................       2,411,208       2,197,241
Training................................      11,340,155      11,296,556
    Training............................       5,696,017       5,676,653
    Supervisor Training.................       5,644,139       5,619,903
Other Requirements......................       6,402,728       6,269,690
    Clothing............................       2,744,697       2,744,697
    Barriers............................       2,801,408       2,723,063
    Communication Equipment.............         624,044         584,200
    Lighting............................         183,363         171,656
    Alarms..............................          61,252          57,644
                                         -------------------------------
        Total Compliance Costs..........      60,321,976      59,207,135
------------------------------------------------------------------------
Source: U.S. Department of Labor, OSHA, Directorate of Standards and
  Guidance, Office of Regulatory Analysis-Safety.

    The structure of the equations which calculate the costs is the
following equation:
[GRAPHIC] [TIFF OMITTED] TR04MY15.000

Where TC = Total Cost, k subscripts each cost category, j subscripts
each industry type, i subscripts the project size, NP is the number
of projects in that size category, NC is the current non-compliance
rate, H is the number of hours, and UC is the unit cost.

    Using a discount rate of 7 percent, OSHA estimates that the
annualized compliance costs for the major provisions of the final
standard are as follows: Evaluation and classification of enclosed
spaces, information exchange, and notification ($12.4 million);
developing and reviewing written programs, issuing entry permits, and
verifying the safety of confined spaces ($4.2 million); isolating
hazards and providing sufficient ventilation ($2.8 million); conducting
atmospheric monitoring ($11.4 million); having an attendant ($3.6
million); planning and providing rescue capability ($8.2 million);
providing training ($11.3 million); and other requirements ($6.4
million).
Estimating Compliance Costs
    The approach to compliance-cost estimation in this FEA follows the
approach in the PEA and in the CONSAD analysis. However, the cost

estimates in this FEA changed relative to the PEA to reflect changing
construction practices over time, changes from the proposed to the
final rule (including more closely aligning the final rule with the
confined-spaces rule for general industry), and OSHA's responses to
comments on the proposal and on the PEA.
    For each type of construction activity identified by the CONSAD
expert panel, OSHA took an estimate of the total number of construction
projects from the F.W. Dodge data (the same source used for the PEA)
and applied a category-specific number of confined spaces per project
to derive the number of confined spaces. OSHA then used the number of
confined spaces along with other pertinent estimates to determine the
number of affected workers, and applied unit-cost estimates to
calculate the costs of each provision of the standard, taking into
account current compliance. OSHA derived many of the costs of this
final rule by multiplying hourly wages by the labor hours required to
fulfill a given requirement. As previously noted, OSHA annualized
equipment purchase costs based on the estimated useful life of the
equipment, and annualized one-time expenditures over a 10-year period.
    AGCA presented an alternative economic analysis, prepared by Dr.
Helvacian, of the compliance costs of the proposed rule, stating that
the analysis in the PEA ``must be updated for the most recent data on
establishments, employees, wages and benefits, and for prices for
construction machinery and equipment'' (ID-222). In this FEA, OSHA
updated its analysis of compliance costs to reflect more recent data,
when these data were available. Specifically, to account for changes in
wages and prices over time, OSHA updated the wages and capital and
equipment costs presented in the PEA to 2009 dollars based on the
percentage change in the GDP price deflator from 2002 to 2009,
published by the U.S. Commerce Department, Bureau of Economic
Analysis.\52\ Dr. Helvacian's economic analysis was based partially on
a survey of AGCA's member employers. The survey respondents have an
average of 98.8 confined spaces per job, with a median of 3 spaces per
job. This large disparity between the average and the median suggests
the possibility that there was widespread misunderstanding among the
respondents regarding what constitutes a confined space. By comparison,
the average number of confined spaces per project based on the CONSAD
report is 5.7, with an average of 193 entries per project.\53\ OSHA
believes that it would be unsound to extrapolate the commenter's survey
results, based on only 74 respondents and 5 categories of construction
projects, to the entire construction industry. In contrast, CONSAD
based its estimates on results stratified by 25 project categories
organized by project size. Furthermore, OSHA notes that adjusting the
estimated average number of confined spaces and entries to reflect the
commenter's reported median estimate would reduce OSHA's estimated
compliance costs.
---------------------------------------------------------------------------

    \52\ Source: http://www.bea.gov/iTable/iTable.cfm?ReqID=9&step=1#reqid=9&step=3&isuri=1&903=13.
    \53\ This estimate excludes single-family housing projects. OSHA
added these projects to the analysis in this FEA.
---------------------------------------------------------------------------

    OSHA chooses not to adopt the commenter's estimated number of
confined spaces. OSHA believes that the research conducted by CONSAD
continues to provide detailed information that is not available
elsewhere (for example, information related to entries into confined
spaces and the distribution of confined spaces across construction
projects). Therefore, OSHA finds that the CONSAD report, with
appropriate updates and adjustments for the changing rule provisions
and industry practices, provides the best available data related to
entries into confined spaces in construction, and continues to rely on
data published in that report to estimate compliance costs.
    Dr. Helvacian's analysis also suggested that the number of hours
required to comply with the proposed rule was greater than that
estimated in the PEA (ID-222). However, although the report provided
some aggregate time estimates, they were not sufficiently detailed for
OSHA to analyze the estimates by specific requirements. Furthermore,
OSHA notes that Dr. Helvacian based the survey results on the AGCA
members' understanding of the proposed rule rather than the final rule,
which the survey's introduction described as ``complicated, costly to
implement, and does not provide significant increases in safety above
the existing general industry standard'' (ID-222). For these reasons,
OSHA is not adjusting its time estimates based on the AGCA survey
results.
    OSHA received a number of comments stating that many construction
contractors were already complying with the general industry standard.
For example, an association of utility contractors commented that its
members ``enter into confined spaces on a regular basis in the course
of their construction operations. They have been using the General
Industry Standard (29 CFR 1926.146) since it was issued in 1993 and
have customized their confined space programs and training to comply
with that standard'' (ID-075). Another commenter, a construction-safety
consultant, stated that employers were already complying with a state
standard on confined spaces, which the state based on OSHA's general
industry standard (ID-047). Tom Skaggs, representing the Mechanical
Contractors Association of America, testified that the industry was
successfully protecting workers ``through voluntary compliance with
OSHA's general industry standard'' (ID-210, Tr. p. 278; see also ID-180
for his written testimony). Other commenters also stated that much of
the construction industry adheres to the general industry standard
(e.g., ID-086, -092, -120, -124).
    Based on these comments, and in light of the changes from the
proposed rule to the final rule that more closely align the final rule
with the general industry rule, OSHA revised its estimated rates of
current industry compliance upward in this FEA for many of the
provisions of the final rule. Table IV-6, introduced earlier in Chapter
3 of this FEA, presents these revised compliance rates. Because the
final rule requirements concerning information exchange, continuous
monitoring, and early warning systems and rescue vary from the general
industry rule, the Agency did not adjust the estimated compliance rates
related to these provisions in this FEA.
    To adjust compliance rates, OSHA used information on state
confined-space standards for construction. The states that have
confined space standards for construction are: California, Kentucky,
Maryland, Michigan, Minnesota, Virginia, Washington, and Alaska. These
eight states have different confined-space requirements that comply
with some or all of the OSHA requirements in the final rule, depending
on the state. OSHA assumed that the original CONSAD compliance rate
would be applicable in states without state standards, and assumed full
compliance with the provisions of the standards specific to each of
these eight states. The content of the state construction standards
varies by state, so OSHA calculated weighted average compliance rates
for each provision of the standard based on the proportion of
establishments in each state having that provision. As the record
shows, this approach may underestimate the actual compliance rates
since many construction employers have come into compliance with the
general industry

standard, and, therefore, with provisions of this final rule, whether
or not they are located in the states with confined-space standards for
construction. These employers come into compliance with the general
industry standard because, in part, they perform both general industry
and construction work. OSHA also modified some compliance rates from
the CONSAD report to account for large projects having greater
compliance rates than smaller projects within the same activity type.
    Table IV-14 presents the estimated unit costs associated with each
requirement in the final rule. Following this table is a discussion of
OSHA's estimated compliance costs by requirement.

   Table IV-14--Unit-Cost Estimates for Controls Necessary To Achieve
                   Compliance With the Final Standard
------------------------------------------------------------------------
         Activity or equipment                Unit cost/useful life
------------------------------------------------------------------------
Construction supervisor wage (including  $42.16 per hour.
 benefits).
Skilled worker wage (including           $29.60 per hour.
 benefits).
General construction employee wage       $24.93 per hour.
 (including benefits).
Clerical employee wage (including        $22.53 per hour.
 benefits).
Unskilled worker wage (including         $22.67 per hour.
 benefits).
Confined-space notification signs......  $18.92/5 years.
Host employer/controlling contractor     8 minutes of supervisor time.
 information exchange.
Controlling contractor/entry employer    20 minutes of supervisor time
 information exchange.                    for each entity involved.
Controlling contractor/other worksite    5 minutes of supervisor time
 employer information exchange.           for 10 percent of employers.
Entry coordination.....................  10 minutes of supervisor time
                                          for 3 supervisors per
                                          coordinated entry.
Written program........................  1 hour per project.
Issue permits/maintain records/review    10 minutes of supervisor time
 procedures.                              and 5 minutes of clerical time
                                          per permit issued.
Implement and verify alternative entry   5 minutes of supervisor time
 procedures.                              and 5 minutes of clerical time
                                          per non-permitted space entry.
Time to isolate a hazard (e.g., with     5 minutes skilled employee
 double block and bleed method, lockout/  time.
 tagout system, etc.).
Lock...................................  $13.80/2 years.
Tag....................................  $1.61 each.
Portable ventilation system............  $1,332/5 years.
Operation and maintenance costs for      Add 10% per year to cost of
 ventilation system.                      system.
Set up ventilation system..............  10 minutes skilled employee
                                          time.
Ventilate confined space prior to entry  45 minutes skilled employee
                                          time.
Set up atmospheric monitoring equipment  20 minutes skilled employee
                                          time per entry.
Atmospheric-monitoring equipment (three- $1,000/5 years.
 gas monitor).
Atmospheric-monitor calibration test...  1 calibration per 160 hours of
                                          use.
Attendant..............................  1 additional construction
                                          employee for duration of entry
                                          for anywhere from 3 hours to
                                          3,400 hours.
Establish rescue procedures............  1 hour supervisor time per
                                          project.
Entry rescue equipment.................  $5,328.56 per set/5 years.
Non-entry rescue equipment.............  $3,248.54/20 years.
Rescue team training...................  For each team of 4 employees:
                                          16 hours skilled worker time
                                          (4 hours per employee) plus 4
                                          hours supervisor time; plus
                                          for 1 employee: 4 hours
                                          skilled worker time for CPR
                                          training.
Training for entrants and attendants...  Entrants (3-75 workers per
                                          project): 0.25 hours
                                          construction worker time;
                                          attendants (2-6 workers per
                                          project): 0.25 hours
                                          construction worker time; plus
                                          1.5 minutes supervisor time
                                          per trained worker and 1.5
                                          minutes clerical time per
                                          worker.
Training program development...........  4 hours supervisor time plus 1
                                          hour clerical time for program
                                          development plus 6 hours
                                          supervisor time for training
                                          plus 1 hour clerical time per
                                          project.
Disposable coveralls...................  $8.94 per set.
Traffic barricades (pair)..............  $165.64/3 years.
Barricade tape.........................  $2.12 per 100 feet.
Sign...................................  $18.92/5 years.
Installation of sign or barricade......  5 minutes per sign or
                                          barricade.
Two-way radios.........................  $214.13/3 years.
Safety lantern for emergency lighting..  $19.04/3 years.
Air horn for emergency evacuation......  $23.79/3 years.
------------------------------------------------------------------------
Sources: Wage data from Bureau of Labor Statistics. Other data from
  CONSAD report, Tables 6.1, 6.2, D.1, and D.2; and OSHA, Directorate of
  Standards and Guidance, Office of Regulatory Analysis-Safety.

Evaluation and Identification, Information Exchange, and Notification
    The proposed standard required employers to evaluate confined
spaces and their hazards, and to classify them as one of several types
of confined spaces. In the PEA, OSHA estimated that compliance with the
requirements would primarily involve a supervisor's time to categorize
the confined space and evaluate its hazards.
    Many commenters found the proposed multiple classification system
for confined spaces unnecessarily burdensome. One commenter stated that
``[t]he four new classifications . . . will require drastic changes to
existing confined space programs at great financial expense to the
construction industry'' (ID-124). Another commenter objected to ``the
cost to the contractor for re-educating employees in the new
terminology,'' and supported the continued use of the ``the existing

process'' in Sec.  1910.146, the general industry standard (ID-035).
    In contrast to the proposed standard, the final rule requires
employers to evaluate confined spaces and their hazards (i.e.,
determine whether a workspace is a confined space and identify the
types of hazards that workers may encounter), and to identify those
confined spaces that are permit spaces or covered by alternate
procedures. This simplified requirement mirrors the requirements of
OSHA's general industry standard for confined spaces. OSHA estimates
that the time required to evaluate confined spaces as permit-required
spaces would be substantially less than the time required to comply
with the more complex proposed classification system, and, therefore,
the Agency estimated an average time of about 12 minutes to evaluate a
permit space and identify hazards. OSHA believes this estimate is
appropriate given the many comments indicating that employers are
already familiar with the general industry rule and its required
classification process. For example, one commenter, which surveyed its
members about the proposed standard, reported that ``identifying
confined spaces [is] currently performed as part of normal business
activities,'' and that ``within the past 15 years, many contractors
have become accustomed to 29 CFR 1910.146 and have adjusted their
safety programs to comply with this standard'' (ID-222).
    For purposes of estimating the extent of current compliance, OSHA
considers that projects in compliance with the proposed requirements to
issue entry permits would also be in compliance with the final
requirements for evaluating spaces as permit-required or not.
Therefore, OSHA bases its compliance rates for these provisions on the
compliance rates estimated for the provisions related to issuing entry
permits. OSHA calculated the annual compliance cost for evaluating and
classifying confined spaces by multiplying the supervisor's hourly wage
rate by the number of hours per project required to identify and
evaluate confined spaces, which can vary by project type. OSHA applied
this total to the percentage of projects not already in compliance and
summed across all projects. Using this approach, OSHA estimates an
annualized cost of about $948,249 to comply with this requirement.
    For example, to see how OSHA determined the cost of classification,
we will examine one of the 25 types of projects: Construction on
warehouses. Within this category there were 130 small projects, 220
medium projects, and 23 large projects.
    The total cost for the large projects was derived by taking the
number of projects (23) times the current non-compliance rate (42%)
times the number of hours per project (1.5). This calculation yields a
product of 14.49 hours. Multiplying that number by the unit cost
($42.16 per hour)--the cost of an hour of supervisor's time--yields
$610.90, the cost of classification of large warehouse construction
project confined spaces.
    To determine the total cost of classification of all permit
required confined spaces, the costs of all types of projects (small,
medium, and large) for all 25 types of construction, weighted by each
project-cell-types current non-compliance rate, are summed up. A total
of 94 cells are added up to produce the total cost of classification.
    The final rule includes specific requirements for employers at
worksites with confined spaces to share information they may have about
the hazards confronting their workers or other workers. One commenter
stated that ``[i]t is essential to add in the costs to implement this
proposed rule by all the employers on each construction site . . . , ''
and that the ``estimated time necessary to attend to each confined
space on each construction project by the proposed controlling
contractor is 6 to 8 hours'' (ID-100). In providing this estimate, the
commenter delineates several requirements that fall under the duties of
entry employers and host employers. The commenter correctly notes the
requirement that the controlling contractor exchange information with
other worksite employers; however, by counting requirements for entry
employers with the requirements for controlling contractors, the
commenter overstates the time burden on controlling contractors.
Another comment, in the report prepared by Dr. Helvacian, noted that
employers had concerns about the costs of complying with requirements
for ``information gathering'' and ``information sharing and
coordination'' (ID-222). Although OSHA believes that employers on
construction sites currently conduct the information exchange described
in this chapter as part of their usual and customary business
practices, in this FEA (unlike in the PEA) the Agency included
estimated costs for information-exchange requirements, as follows.
    Under final Sec.  1926.1203(h)(1) and (h)(2), the host employer and
the controlling contractor must exchange information about known permit
spaces, such as location, past experiences with hazards in the spaces,
and other pertinent information. Neither the host employer nor the
controlling contractor has to enter the confined spaces to obtain this
information. OSHA estimates that supervisors for the host employer and
the controlling contractor will engage in eight minutes of conversation
per project to fulfill this information-exchange requirement.
    Under final Sec.  1926.1203(b)(2), (h)(2), (h)(3), (h)(5), and (i),
controlling contractors and entry employers must exchange information
about permit spaces and their hazards. They also must share most of
this information with employee representatives. OSHA estimates the
information exchange requirement can be fulfilled with an average of 20
minutes of communication (one pre-entry and one post-entry
conversation, each lasting 10 minutes) per project between a supervisor
for the controlling contractor and an entry employer plus a worker-
authorized representative of that entry employer
    Under final Sec.  1926.1203(h)(2), before entry operations begin,
the controlling contractor must provide information about the permit-
required spaces to employers with employees whose activities could
foreseeably expose them to a hazard in the permit-required space. OSHA
expects that employers on a worksite will not usually have employees
engaged in work that could foreseeably expose them to such a hazard. To
estimate the cost of compliance with this provision, OSHA anticipates
that the controlling contractor's supervisor will engage in one 5-
minute conversation with 10 percent of all non-entry employers on a
worksite. OSHA calculated the number of non-entry employers on a
worksite from estimates made by CONSAD of the number of non-entry
workers on projects, assuming an average employer size of 20 employees.
    Under final Sec.  1926.1203(h)(4), the controlling contractor must
coordinate entry operations when multiple employers enter
simultaneously or when an employer makes an entry while other work
performed at the site (outside the confined space) may result in a
hazard in the confined space. To obtain the cost of compliance with
this information-exchange provision, OSHA estimates that the
controlling contractor and two employers will engage in one 10-minute
conversation per coordinated entry. To estimate the number of
coordinated entries, OSHA used estimates in the CONSAD report on the
number of simultaneous entries per project. OSHA assumes that all
estimated simultaneous entries will require coordination, and estimates
that

10 percent of all entries will be subject to hazards as a result of
work outside the confined space.
    Although the CONSAD report did not provide direct estimates of
compliance rates for the information-exchange requirements, OSHA
believes that these compliance rates are similar to the compliance
rates associated with the requirements for notification to non-entrant
employees (ID-003, Table D.2). OSHA also believes it is reasonable to
assume that projects in compliance with requirements addressing
notification to non-entrant employees would also be in compliance with
requirements addressing employer-to-employer communication.
    OSHA calculated the annual compliance cost for information exchange
on each project by multiplying the supervisor's hourly wage rate by the
number of hours per project for each type of required information
exchange. To estimate the cost of information exchange between host
employers and controlling contractors, OSHA modeled eight minutes of
three supervisors' time per project. Similarly, to estimate the cost of
information exchange between controlling contractors and entry
employers, OSHA modeled 20 minutes of supervisor time for the
controlling contractor, a worker-authorized representative, and each of
the entry employers on the project. To estimate the cost of information
exchange between the controlling contractor and employers on the
worksite having employees whose work may result in a hazard in the
confined space, OSHA modeled five minutes of supervisor time for the
controlling contractor and 10 percent of non-entry employers present.
Finally, to estimate the cost of coordinating simultaneous entries,
OSHA modeled 10 minutes for 3 supervisors (i.e., the controlling
contractor and two entry employers) for each such entry. For all of
these calculations, OSHA applied the totals to the percentage of
projects not already in compliance (i.e., 1 minus the compliance rate)
and summed these values across all projects. Using this approach, OSHA
estimates an annual cost of approximately $9.3 million to comply with
the information-exchange requirements in the final rule.
    One commenter stated that the requirements to exchange information
and coordinate entry operations represent ``an unnecessary burden'' and
``in some cases may be infeasible'' (ID-124). OSHA addresses this
comment as a technological-feasibility issue in the section on
technological feasibility, but the commenter's unsupported argument
also would fail if directed at economic infeasibility. Although this
commenter cited home-building industry statistics indicating that
homebuilders tend to be small businesses that rely on subcontractors to
handle specialized tasks, the comment did not explain how this
condition renders the multi-employer and communication requirements of
the rule economically infeasible for that industry.
    Under final Sec.  1926.1203(b) and (c), employers must inform
exposed employees of the existence of permit spaces and the dangers
they pose. In the PEA, OSHA estimated that complying with this
requirement involved an average of five minutes per notified worker. In
the FEA, the Agency no longer includes such notification costs. Rather,
OSHA followed the PEA in assuming that employers will achieve
compliance with the notification requirement by posting a sign at each
confined space. OSHA estimates that signs have a five-year life, and
that installation takes five minutes per sign. The Agency calculates
the cost of signs as the unit cost of one sign times the number of
signs per project, and calculates the installation costs as five
minutes (\1/12\ of an hour) times the unskilled worker's hourly wage
times the number of signs per project. OSHA applies these totals to the
percentage of projects not already in compliance, summed across all
projects. Treating the installation cost as a recurring cost, and
treating signs as a capital cost with a useful life of five years, OSHA
estimates that the annualized cost of signs, including materials and
labor, to be $2.0 million.
    Two stakeholders representing utility contractors, in similarly
worded comments, stated that notifying non-authorized entrants ``could
mean informing 25-100 or more employees on the jobsite, which would be
extremely time consuming'' (ID-124 and ID-075). However, OSHA believes
that, beyond posting the signs, there should be no additional costs
associated with the requirement to inform exposed employees of the
existence of permit spaces and the danger posed by unauthorized entry.
OSHA notes that, under 29 CFR 1926.21(b)(2), employers must already
provide general training to employees engaged in construction work to
ensure that they recognize the hazards on the worksite, including
applicable signage warning of hazards. As one commenter stated, ``In
reference to warning employees not to attempt an unauthorized rescue,
it should be part of every construction employee's training . . .
because this warning applies to all construction rescue operations''
(ID-075).
    In summary, OSHA estimates the total annualized costs related to
the final requirements for evaluation and classification, information
exchange, and notice to employees to be $12.1 million.
Written Program, Permit Issuance, and Annual Review
    The proposed standard required that employers on worksites with
confined spaces either develop a confined-space program and maintain a
copy of the written program, or, alternatively, maintain a copy of the
standard at the site. For analytical purposes, OSHA assumed that
employers would choose the least-cost alternative and maintain a copy
of the standard at the site in lieu of developing a written program. In
contrast, final Sec.  1926.1203(d) is similar to the general industry
provision in that it requires entry employers to develop and implement
a written permit-space program, and final Sec.  1926.1204(n) requires
employers to review the permit-space program.
    In this FEA, OSHA estimates one hour of supervisor time per project
to write a program. OSHA based this estimate on the paperwork-burden
determination made in the proposed rule for developing such a program,
which no commenter disputed. OSHA also notes the wide availability of
written model permit-space programs provided by government entities,
trade associations, and others, that employers could adapt with a
limited number of revisions to comply with the new standard (see, for
example, http://www.purdue.edu/rem/home/booklets/ConSpProg.pdf). OSHA
calculated compliance costs associated with the requirement to develop
a written program as a one-time cost consisting of one hour times the
supervisor's hourly wage times the number of projects. OSHA applied
this total to the percentage of projects not already in compliance, and
annualized the costs using assumptions on the share of projects that
are new to a contractor each year--yielding a total annualized cost of
approximately $1.3 million. OSHA notes that, in practice, an employer
is likely to develop one, somewhat generic, program, and then apply it
later to other projects. Given the ready availability of model programs
online and elsewhere, adapting one with limited revisions to a
company's particular needs is not especially difficult or time
consuming. In addition, following the PEA, OSHA estimates five minutes
of supervisor time per program for the annual review, and computes the
cost for this review as five minutes (\1/12\ of an hour) times the
supervisor's hourly wage times the number of

projects not already in compliance--yielding an estimated annual
compliance cost of about $155,000.
    Final Sec.  1926.1205 requires employers to issue entry permits,
and final Sec.  1926.1206 specifies the information employers must
include in the permits. In the PEA, OSHA estimated that compliance with
the requirements to issue written entry permits when necessary, and to
review procedures periodically, would primarily involve supervisor
time; OSHA estimated that 15 minutes of supervisor time per permit
issued was sufficient for this purpose. For this FEA, OSHA estimated
compliance costs associated with issuing permits separately from the
compliance costs associated with the annual review of the permit-space
program. Following the analysis by CONSAD, OSHA estimates that
compliance with these provisions will involve 10 minutes of supervisor
time to issue a permit, 5 minutes of clerical time to write the permit,
as well as 5 minutes of supervisor time to provide written verification
regarding the safety of non-permit spaces, and 5 minutes of clerical
time for recordkeeping for non-permit spaces. The total estimated
annual costs in this final standard associated with issuing entry
permits and written verifications of safety are $2.7 million.
    In summary, OSHA estimates that the annualized costs of the final
requirements to provide a written program, issue written permits, and
conduct an annual review of the program total to $4.2 million.
    One commenter stated that the requirement to develop a confined-
space program might require the assistance of a third party, and
asserted that program development could cost contractors $10,000 (ID-
112). However, the commenter did not explain the basis for the $10,000
estimated cost of program development, and did not specify which
elements of ``program development'' were in its estimate. For example,
OSHA separately estimated the costs of providing a written confined-
space program and developing a training program. Furthermore, OSHA
notes that the final rule does not require employers to engage a third
party in the development of a confined-space program. Indeed, a variety
of examples of confined-space programs are widely available on the
Internet, which employers may adapt for their needs; in addition, OSHA
will provide a small entity compliance guide to aid employers in
developing such programs.
Isolating Hazards and Providing Ventilation
    Final Sec. Sec.  1926.1203(e) and 1926.1204 refer to isolating
hazards and providing ventilation to ensure safe entry conditions for
permit-required spaces and confined spaces covered by alternate
procedures. As in the PEA, OSHA estimates that isolating hazards and
providing ventilation would require the time of a skilled construction
employee, additional costs for locks and/or tags, the purchase costs,
and the operating and maintenance costs for a portable ventilation
system. OSHA included the unit costs for these items in Table IV-14
above. OSHA received no specific comments on the preliminary compliance
costs in the PEA related to these provisions. While recognizing that
isolation costs may vary according to the hazards isolated, OSHA
nevertheless considers the cost estimates in the PEA for blanking and
bleeding and lockout/tagout to be reasonable estimates of isolation
costs; therefore, OSHA applied the same cost methodology to this
section of the final standard.
    OSHA estimated isolation costs by multiplying the skilled worker
hourly wage times 10 minutes (\1/6\ or an hour) times the number of
entries per project requiring blanking, plus the skilled worker hourly
wage times 5 minutes (\1/12\ of an hour) times the number of entries
per project requiring double block and bleed, plus the skilled worker
hourly wage times 10 minutes (\1/6\ of an hour) times the number of
entries per project requiring lockout/tagout, plus the cost of tags and
locks annualized over a 2-year useful life. OSHA applied these totals
to the percentage of projects not already in compliance, summed across
all projects. Similarly, OSHA estimated ventilation costs as the
purchase costs and operating and maintenance costs for portable
ventilation systems applied to the percentage of projects not already
in compliance, summed across all projects. OSHA based this estimate on
a unit cost of about $1,332 per portable ventilation system, annualized
over a useful life of 5 years, and 10 minutes (\1/6\ of an hour) of
setup time multiplied by the unskilled worker hourly wage. The Agency
applied these totals to the percentage of projects not already in
compliance, summed across all projects. Based on this method, OSHA
estimates total annualized costs related to isolating hazards and
providing ventilation to be $2.5 million for this final rule.
Monitoring, Early Warning Systems, and Attendants
    Final Sec. Sec.  1926.1203(e) and 1926.1204(e) set forth
requirements for monitoring hazards, which generally include continuous
monitoring, or periodic monitoring of sufficient frequency, to ensure
acceptable entry conditions, as well as an early warning system for
non-isolated engulfment hazards. The monitoring provision reflects the
requirements in Sec.  1910(d)(5) of the general industry standard,
while the requirement for an early warning system is unique to the
construction standard (that is, not included in the general industry
standard).
    Costs related to monitoring and early warning consist of both
equipment costs and labor costs associated with attendants and other
employees who perform these functions. The following paragraphs include
a discussion of the costs related to attendants and other employees who
perform monitoring and early warning for hazards under specified
conditions.
    One commenter stated that the early warning system for engulfment
hazards will be ``quite expensive for a contractor to purchase, install
and maintain with calibration'' (ID-098), while some other commenters
suggested that the requirement for an early warning system would force
employers to hire more employees for the purpose of monitoring for
these hazards (ID-059 and ID-112). OSHA provides a choice to employers
for how they comply with the early warning requirement: They may use
early-warning equipment or they may rely on personnel to provide
warning. OSHA expects that employers will do whatever is less costly;
in some cases this will be a worker exclusively assigned to monitoring
duty, and in other cases it will be cheaper to use a monitoring device.
OSHA calculated the costs based on the use of personnel to perform this
function because it is simpler to calculate on a per-instance basis;
however, OSHA does not expect that the cost of purchasing a device
would be significantly higher on a per-instance basis when employer can
use the device over a number of projects and over several years. In
some cases the equipment cost will be lower than the labor estimates
included in this analysis.
    OSHA expects that incumbent workers can discharge the early
warning-monitoring duty, and estimates the total cost as the
construction worker's hourly wage multiplied by the number of entry
hours per project, which varies by project. OSHA applied these totals
to the percentage of projects

not already in compliance, summed across all projects. Based on this
method, OSHA estimates total annualized costs of $3.6 million to comply
with the requirement to provide an early warning system.
    To assign costs to the use of equipment required to monitor
atmospheres in confined spaces, OSHA estimated in the PEA that gas
monitors have an average useful life of 2.5 years, and that their unit
cost (in 2009 dollars) is $1,660. One commenter (ID-222, p. 12) stated
that an average monitor would cost ``around $2,000,'' and that an
employer would need to have two units and additional sensors due to
reliability problems with such equipment. The Agency notes that
employers in general industry have successfully used monitoring
equipment under the general industry standard, and the Agency believes
that reliable equipment is commercially available. Moreover, based on
OSHA research, the price of a gas monitor has fallen to around $1,000,
and industry practice suggest that a gas monitor has a useful life of 5
years; these are the estimates used in this FEA.
    OSHA estimated 20 minutes of supervisor time to set up the
monitoring equipment, taking into account the possibility that, in some
cases (with a test occurring after 160 hours of use--a conservative
estimate according to industry experts). OSHA calculated the costs
related to monitoring as the equipment cost ($1,000) annualized over a
useful life of 5 years, plus operating and maintenance costs equal to 5
percent of equipment costs, plus calibration costs based on use time,
plus observation and testing costs based on the duration of entries,
which varies by project. OSHA applied these totals to the percentage of
projects not already in compliance, summed across all projects. Based
on these calculations, OSHA estimates that annualized compliance costs
for monitoring total to $11.3 million.
    A commenter stated that employers had concerns about the
recordkeeping cost of retaining monitoring data for 30 years (ID-222).
However, OSHA notes that although employers must make exposure records
for employees exposed to hazards available for 30 years under pre-
existing OSHA requirements (i.e., 29 CFR 1910.1020), this final rule
does not require that routine monitoring records be kept for 30 years.
    Final Sec.  1926.1204(f) requires employers to post an attendant
outside the permit space for the duration of authorized entry
operations, and final Sec.  1926.1209 sets forth the duties of
attendants, which include assessing the entrants and the conditions
inside and outside the permit space to detect prohibited conditions and
summoning rescue and other emergency services. The requirement for an
attendant is similar to a requirement in the general industry standard.
In this FEA, as in the PEA, OSHA estimates that the cost of posting an
attendant is the wage rate of a skilled construction worker multiplied
by the time that entrants spend in the confined space.
Rescue Capability
    The proposed standard sets forth several requirements for non-entry
and entry rescue, including provisions for preparing, protecting, and
training entry-rescue employees. In the PEA, OSHA estimated that
compliance with rescue-related provisions would have a total annualized
cost of approximately $9.6 million, including costs for non-entry
rescue and in-house entry rescue teams for many construction projects.
One comment characterized the estimated costs related to rescue
``planning and compliance'' as ``drastically low and inaccurate'' (ID-
124). Several commenters seized on the proposed requirement to summon
an entry-rescue team whenever an employer initiates a non-entry rescue.
For example, at the hearing, testimony from the National Utility
Contractors Association suggested that the proposed rule required
employers to have ``a standby entry rescue team that can respond to the
incident in a timely manner'' (ID-210, Tr. p. 177). Another commenter
stated that the rescue requirements are ``unreasonable and burdensome''
(ID-075). This commenter, representing utility contractors, elaborated
on its concerns:

    It is not always practical or feasible to have a rescue team
onsite and it is very expensive to have a team on standby unless it
is the local fire/police rescue squad. The proposed rule should be
revised to permit entry into the average PRCS without having a
rescue team onsite or on standby. Most fire department rescue squads
can handle the majority of confined space rescues, such as manhole,
pipe, vault and underground tank rescues. However, due to liability,
most fire departments will not assume the responsibility of being
the designated rescue team on standby, although they will respond to
a call and perform the rescue. In our opinion it is safer to have
professionals respond than to depend on employees who have had some
training and probably no experience handling an actual rescue. Id.
(emphasis in original).

    Other commenters suggested that rescue equipment costs could be
high. One commenter stated: ``At the very least, the equipment would
include a tri-pod, retrieval device, ventilation equipment, air
monitors, two air-supplied respirators, air cart and air bottles or air
compressor designed to provide breathing air, stokes stretcher and
necessary equipment to package the victim and much more'' (ID-075).
Another commenter stated that the ``rescue equipment required could
vary greatly. A Confined Space Rescue Team Kit, consisting of a tripod,
rescue harnesses/helmets, blower, rope, hardware, software, etc., can
easily cost upwards of $17,000 per set'' (ID-112).
    In response to these and other comments, OSHA revised the
requirements for rescue and emergency services for the final rule. For
example, OSHA dropped the requirement in proposed Sec.  1926.1211(h)(2)
that required employers to summon an entry-rescue team every time they
initiated non-entry rescue. OSHA also clarified the Agency's preference
for non-entry rescue, which typically consists of a retrieval system
and is, therefore, less expensive than entry rescue. Moreover, it
appears that some of the commenters mistakenly included costs for
equipping contracted rescue services (rather than in-house services of
employees) when asserting that OSHA's estimates were too low; employers
would not incur such costs as the result of this final rule, and OSHA,
therefore, did not include these costs in this analysis.
    Final Sec.  1926.1204(i) requires employers to develop and
implement procedures for: Providing rescue and emergency services,
including procedures for summoning emergency assistance in the event of
a failed non-entry rescue; rescuing entrants from permit spaces;
providing necessary emergency services to rescued employees; and
preventing unauthorized personnel from attempting a rescue. Paragraph
(a) of Sec.  1926.1211 specifies the criteria according to which
employers can choose rescue and emergency services; Sec.  1926.1211(b)
specifies requirements for employers who choose to designate their own
employees as the rescue service; and Sec.  1926.1211(c) sets forth
requirements related to retrieval systems used to facilitate non-entry
rescue from permit spaces. These provisions are similar to the general
industry standard for confined spaces. For cost-estimation purposes in
the PEA, OSHA judged that entry employers would designate employees who
use self-contained breathing apparatuses to provide entry rescue
services. OSHA also determined that the rescue-related compliance costs
incurred by these employers include expenditures for training and
equipment. The Agency used the time of

a skilled construction worker to estimate the labor costs associated
with training four employees in rescue operations, conducting practice
rescue operations, and training one employee in CPR. Separately, OSHA
estimated costs of retrieval lines for employers electing non-entry
rescues. Thus, for the proposed rule, the Agency estimated costs for
entry rescue and non-entry rescue separately.
    Final Sec.  1926.1211(c) requires employers to use non-entry
rescue, such as retrieval equipment, unless the retrieval equipment
would increase the overall risk of entry or would not contribute to the
rescue of the entrant. Therefore, for this FEA, OSHA estimated that
employers that use non-entry rescue (retrieval lines) would not also
designate employees for entry rescue for the same project, but would
instead continue to rely solely on emergency services in the event of
non-entry rescue failure. OSHA estimated a unit cost per entrant of
$3,250 for retrieval systems. The cost of retrieval systems includes
the cost of harnesses, which, according to one commenter, cost $100
each and have a useful life of 5 years (ID-112). However, harnesses are
a small part of a retrieval system's total cost. In addition to the
equipment cost of retrieval lines for each entrant, employers using
non-entry rescue would incur additional costs, including one hour of
supervisor time to establish rescue procedures and one hour of practice
annually for a supervisor and team of 4 non-entry rescuers.
    OSHA judges that, when employers do not employ non-entry rescue,
they will rely on in-house rescue teams only when entrants use a self-
contained breathing apparatus, and will rely on outside rescue service
in other situations. OSHA estimates one hour of supervisor time to
establish rescue procedures for all employers electing entry-rescue
procedures. Following the PEA, OSHA modeled additional costs only for
employers using in-house rescue teams; these costs include one hour of
practice annually for a supervisor and a team of four rescuers, as well
as costs for annual training, CPR training, and entry-rescue equipment.
    OSHA did not receive any comments addressing its method of
estimating costs for employers using in-house rescue services.
    In the PEA, OSHA estimated that confined-space entry-rescue team
kits will cost approximately $5,330 per unit (in 2009 dollars). While
rescue team kits as such are not required by the standard, they are a
simple way for an employer to obtain the equipment typically necessary
for an adequate rescue team. OSHA concurs with the comment that unit
costs for these rescue kits can vary considerably, but a review of
commercially available kits shows that the estimate developed by OSHA
is reasonable. For example, one commercially available system priced at
$2,735 includes a tripod rescue/retrieval system, blower, gas monitor
with calibration capability, and a harness. Another system, priced at
$4,450, includes a two-way communication system, talk box, cable
splitter, operator headset, face masks, speaker harnesses, cables,
hooks, and connectors. Confined-space rescue kits are available at a
price range of $3,000-$4,500. These kits typically include a wide range
of items such as a tripod with bag, spine splint, collar kit, 4:1
rescue kit, full-body harnesses, tag line, belay line, anchor sling,
continuous-loop sling, handled ascender, helmets, ascending stirrup,
rope pad, rope guard, and carabiners.\54\ Based on these prices, and
given that OSHA estimated costs for communication devices, ventilation
equipment, and gas monitors elsewhere in this analysis, OSHA believes
that its estimate of $5,330 for a rescue kit more accurately reflects
the requirements of the standard than does the estimate of $17,000
suggested by the commenter. Indeed, OSHA's cost estimate may be an
overestimate of the true cost to the extent that a particular confined
space covered by the final standard may not require some of the
equipment included in commercially available kits.
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    \54\ See http://www.majorsafety.com/index.cfm/product/450_105/confined-space-tripod-rescue-system-with-bw-gasalert-max-xt-and-blower.cfm; http://www.rocknrescue.com/acatalog/Con-Space-Rescue-Kit-3.html#aCSI_2dRES_2dKIT3; http://www.rocknrescue.com/acatalog/Skedco-Evac-Confined-Space-Rescue-Kit.html.
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    The final rule requires non-entry rescue unless the retrieval
equipment would increase the overall risk of entry or would not
contribute to the rescue of the entrant. To calculate compliance costs,
OSHA estimated that employers will use non-entry rescue with retrieval
lines for projects whenever required under the standard, and will
select entry rescue for all other projects. OSHA estimated that, for
all projects, one hour of supervisor time is necessary to set up
procedures, and estimates this cost as the supervisor's hourly wage,
applied to all projects not already in compliance. In addition, OSHA
estimated costs for projects that use non-entry rescue based on the
equipment costs for retrieval lines ($3,250) multiplied by the number
of entrants on a project. The Agency annualized this cost over a useful
life of 20 years, with the total applied to the percentage of projects
not already in compliance, adjusted for the number of projects with
retrieval lines onsite but not properly used. OSHA estimated four hours
of skilled worker time per year to capture the cost of non-entry rescue
practice, and applied this total to the percentage of projects not
already in compliance.
    OSHA estimated costs for projects using entry rescue as the cost of
providing in-house rescue for a subset of projects. For all other
projects, OSHA estimated that employers will rely on local emergency
responders to provide entry rescue, as most employers who have programs
do today. For projects using in-house rescue, OSHA calculated the cost
of 2 days of entry-rescue training for 4 skilled construction workers
(16 hours times 4 workers times the skilled construction worker's
hourly wage), 4 hours of CPR training for one skilled worker, and a set
of rescue equipment annualized over a useful life of 5 years. OSHA
estimated 4 hours of skilled worker time per year to capture the cost
of non-entry rescue practice, and applied this total to the percentage
of projects not already in compliance. Based on this method, OSHA
estimates that the annualized costs for the requirements in the final
standard to provide rescue capability total to $8.3 million.
Training
    Final Sec.  1926.1207 sets forth requirements for training
entrants, attendants, and supervisors to ensure safe performance of the
duties assigned under the standard.
    In the PEA, OSHA estimated that annualized training costs
associated with the proposed standard would total to $8.1 million. As
stated in the PEA, this total reflected an adjustment to the estimates
in the CONSAD report based on comments received from potentially
affected small businesses, and the findings and recommendations made by
a panel of reviewers. Several commenters stated that training under the
proposed rule would be expensive. However, since the final rule
represents a significant simplification of the requirements in the
proposed rule, OSHA reduced the cost estimates accordingly. OSHA
further notes that, although it anticipates that most affected
employers will train workers once using a procedure that covers many
topics, and conduct refresher training as appropriate along with
training newly arrived employees, the Agency modeled training costs on
a per-project basis to be consistent with the rest of the CONSAD-
derived analysis. This assumption, along with the unit-

cost figures used, results in a large and inflated estimate of the
training costs.
    OSHA notes that the duties of entrants and attendants as set forth
in the final standard are now similar to the duties of comparable
employees covered by the general industry standard, and that many
commenters stated that they were already complying with the general
industry standard. In addition, 29 CFR 1926.21(b), a decades-old
provision applicable to confined spaces in construction, already
requires some training on the characteristics of confined spaces and
associated safety practices. Many comments echoed the statement that
``affected construction workers are already extremely familiar with the
existing general industry standard'' (ID-148). Therefore, consistent
with the observations above, OSHA believes that the training required
for employees will be less extensive than was suggested by the Agency's
preliminary training cost estimates.
    For this final analysis, OSHA estimates that the costs associated
with training entrants and attendants would primarily involve
supervisor and employee time necessary for the supervisor to conduct
the training. For this FEA, OSHA estimated that employers will spend
four hours of supervisor time plus an hour of clerical time developing
or revising the training programs for entrants, attendants, and
supervisors. OSHA estimates 15 minutes of training for entrants and
attendants (1 supervisor and 1 clerical worker are modeled to provide
training to a class of 10 entrants). OSHA also includes 1 hour of
supervisor training, and 6 minutes of supervisor time to provide the
training, per project (again, assuming a class size of 10). As a
reminder, most supervisors are already familiar with the general
industry rule and, therefore, with many provisions of this final rule.
Based on these underlying unit costs, OSHA estimates that the
annualized training-related costs under the final standard will be
$11.3 million.
Other Compliance Costs
    Other compliance costs associated with the final standard include
providing disposable coveralls when necessary, emergency lights,
traffic barriers, and communication equipment. OSHA identified these
costs in the PEA and received no specific comments on the compliance
costs for these requirements. Therefore, the Agency used the same
methodology in this FEA to estimate these costs.
    OSHA modeled the clothing costs based on workers wearing disposable
coveralls. The Agency multiplied the number of worker entries requiring
disposable coveralls for each project type (by activity and size) by
the number of projects in that category that are not currently in
compliance and by the unit-cost for disposable coveralls of $8.94 per
set. The number of entries requiring this clothing is a subset of the
entire number of entries. The estimated annual cost for disposable
overalls comes to $2.7 million.
    To calculate the costs of emergency lights, OSHA estimated the
number of simultaneous entries for each project type. OSHA then
multiplied that number by the unit cost of a lantern, $19.04, and
annualized it over a useful life of 3 years. Finally, OSHA multiplied
the cost per project by the number of projects not in compliance for
each category, and summed across categories. The resulting cost is
about $193,000 a year.
    To calculate the costs of traffic barriers, OSHA added costs for
traffic barricades and barricade tape. The Agency estimated that 50
percent of all projects require these controls. OSHA then annualized
the unit cost of $165.64 for a traffic barricade over 3 years, and the
unit cost of barricade tape at $2.12. The total annualized cost of
these barriers comes to $2.9 million.
    To calculate the costs of communication equipment, OSHA assumes
that employers use two-way radios. OSHA estimated using this equipment
for each simultaneous entry. The useful life of this equipment is
typically three years. OSHA multiplied annualized costs by the number
of simultaneous entries per project and by the number of projects not
in compliance per category, and summed the results across categories.
The total annual communication costs come to about $55,000.
    The total annualized costs for these other requirements come to
$6.5 million.
Respiratory Protection
    In this FEA, OSHA did not include costs for respiratory protection
for two reasons. First, OSHA designed the final rule to prevent an
employee's exposure to confined-space hazards whenever possible,
thereby obviating the need for respirators and other PPE in those
cases; the provisions of the final rules designed to prevent such
exposure include training, information exchanges, and a program that
ensures appropriate testing and evaluation, monitoring, planning, and
control of the space to prevent unauthorized entry (including
unauthorized rescues). This approach is fundamental to OSHA's
regulatory policy, which recognizes a hierarchy of controls consisting
of engineering controls when possible, then work-practice controls when
engineering controls are not possible, and finally personal protective
equipment only when the other controls are not feasible.\55\ Second,
consistent with the design of the final rule, none of the safety
benefits estimated in this FEA were attributable to respiratory
protection. The Agency believes that it would be inconsistent to
attribute costs, but not benefits, to respiratory protection (unless,
of course, the respiratory protection requirement generates costs but
not benefits).
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    \55\ The following excerpt from the preamble to OSHA's Cadmium
standard at 57 FR 42101, 42340 (Sept. 14, 1992) provides a typical
summary of OSHA's concerns about reliance on PPE and the importance
of the hierarchy of controls:
    Engineering controls are preferred by OSHA for a number of
reasons. Engineering controls are reliable, provide consistent
levels of protection to large numbers of workers, can be monitored
continually and inexpensively, allow for predictable performance
levels, and can remove toxic substances from the workplace. Once
removed, the toxic substances no longer pose a threat to the
employee. Moreover, the effectiveness of engineering controls does
not depend to any marked degree on human behavior, and . . . the
operation of equipment is not as vulnerable to human error as is the
use of personal protective equipment . . .
    Respirators are another, important method of compliance.
However, to be used effectively, respirators must be individually
selected; fitted and periodically refitted; conscientiously and
properly worn; regularly maintained; and replaced as necessary. In
many workplaces, these preconditions for effective respirator use
are difficult to achieve with sufficient consistency to provide
adequate protection. The absence of any of these preconditions can
reduce or eliminate the protection the respirator provides to the
employee.
    Because there are so many ways that respirators can be rendered
ineffective and so many potential problems associated with their
use, OSHA has traditionally relied less on respirators than on
engineering and work-practice controls in the hierarchy of controls.
For example, where work is strenuous, the increased breathing
resistance of certain types of respirators may contribute to an
employee's health problems and may reduce the acceptability of
wearing a respirator to employees. Although experience in industry
shows that most healthy workers do not have physiological problems
wearing properly chosen and fitted respirators, common health
problems can cause difficulty in breathing while an employee is
wearing a respirator.
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    This treatment of respiratory protection in the FEA is
fundamentally different from OSHA's earlier treatment of respiratory
protection in the PEA. In the PEA, OSHA included costs for employers to
provide respiratory protection. These costs included the purchase of
the appropriate type of respirator (e.g., self-contained breathing
apparatus, powered air purifying respirators, dust masks), time and
materials for cleaning respirators, and other necessary equipment such
as a

compressor or air supply, depending on the type of confined space and
the type of work performed in the space. Furthermore, the Agency used a
relatively low rate of current respirator compliance in the PEA,
resulting in significant estimated costs (approximately $11.6 million
in 2009 dollars) for respirator protection.
    The revised treatment of respirator-protection costs in this FEA
remedies several issues retrospectively identified in the PEA. First,
OSHA designed the final rule to avoid respirator use by relying instead
on training, information exchanges, and a program that ensures
appropriate testing and evaluation, monitoring, planning, and control
of the space to prevent unauthorized entry (including unauthorized
rescues). The costs estimated for respirator protection in the PEA
failed to fully appreciate the underlying logic of the proposed rule to
avoid respirator use whenever possible. Second, OSHA did not attribute
any benefits to respirator protection in the PEA. Removing the
respirator-protection costs in the FEA resolves the inconsistent
treatment of respirator costs and respirator benefits in the PEA.
    The third issue concerns the relatively low rate of respirator
compliance used to estimate the costs of respirator protection in the
PEA. These rates reflected the findings of the 1994 CONSAD report. As
noted earlier in this FEA, some commenters questioned the continued
relevance of the CONSAD report produced in 1994 (ID-222, p. 20). In
light of these comments, OSHA reexamined the CONSAD report and
concluded that, generally, while it is the best available data source
for this rulemaking, the Agency had to make adjustments in particular
areas to reflect updated information. One of these areas involves
CONSAD's outdated assumptions and data regarding respirator use. Based
on surveys conducted in 1993, the CONSAD report assumed a high rate of
non-compliance with the Respiratory Protection standard that existed at
the time, and the PEA included significant respirator costs under the
assumption that the new confined-spaces standard for construction would
have a significant impact on respirator use. However, the CONSAD
assumption did not account for the publication of OSHA's significantly
revised Respiratory Protection standard in 1998 (63 FR 1152 (Jan. 8,
1998)). In that 1998 rulemaking, OSHA reviewed its enforcement data for
the years 1990-1996, acknowledged that many of the respiratory-
protection programs were deficient, and designed the new standard to
improve employer's selection, maintenance, fit testing, and training
for proper respirator use, and ``to provide employers with the tools
needed to implement an effective respiratory protection program'' (63
FR 1160). The rulemaking increased monitoring requirements and
awareness and understanding of the respirator requirements. In light of
these revisions to the Respirator Protection standard subsequent to the
CONSAD report, OSHA concluded that the new standard would significantly
enhanced employer compliance with the respiratory-protection
requirements by reducing misinterpretations and inconsistencies (63 FR
1158). Enhanced compliance increased the respiratory protection
provided to workers, making it unnecessary to rely on the provisions of
this final confined-space rulemaking to protect workers from
respiratory hazards.
    The new confined-spaces standard does not require any additional
respirator use beyond that already required by the existing Respiratory
Protection standard. OSHA believes that the much-reduced need for
respirator protection in confined spaces in the future (as a result of
this final rule) will not increase, and could arguably decrease, future
respirator use in confined spaces in construction relative to current
respirator use.
Annualized Costs by NAICS Industry
    Based on the cost estimates for the individual provisions contained
in this final standard, Table IV-15 shows, by affected industry engaged
in construction activity, annualized compliance costs for all
establishments, annualized compliance costs for all small entities (as
defined by the Small Business Act and the Small Business
Administration's (SBA's) implementing regulations; see 15 U.S.C. 632
and 13 CFR 121.201), and annualized compliance costs for all very small
entities (those with fewer than 20 employees). OSHA annualized the
costs presented in Table IV-15 using the discount rate of 7 percent,
which is, along with a discount rate of 3 percent, recommended by OMB
in Circular A-4.

 Table IV-15--Annualized Costs, by Industry, for All Construction Entities Affected by the Final Confined-Space
                    Standard for All Establishments, Small Entities, and Very Small Entities
----------------------------------------------------------------------------------------------------------------
                                                                                Very small
          NAICS                      Industry                   All           Small entities     entities  (<20
                                                           establishments     (SBA-defined)        employees)
----------------------------------------------------------------------------------------------------------------
221310...................  Water Supply and Irrigation             $51,635            $14,299             $8,738
                            Systems.
236115...................  New Single-Family Housing               813,505            578,128            351,852
                            Construction (except
                            Operative Builders).
236116...................  New Multifamily Housing                 955,662            533,573            174,635
                            Construction (except
                            Operative Builders).
236118...................  Residential Remodelers......          8,277,207          7,853,017          4,342,753
236210...................  Industrial Building                   2,331,853            527,967            175,989
                            Construction.
236220...................  Commercial and Institutional         11,862,610          5,868,843          1,747,634
                            Building Construction.
237110...................  Water and Sewer Line and              8,687,099          4,956,577          1,400,582
                            Related Structures
                            Construction.
237130...................  Power and Communication Line          2,125,111            697,984            105,944
                            and Related Structures
                            Construction.
237310...................  Highway, Street, and Bridge          15,614,845          4,915,948          1,061,237
                            Construction.
237990...................  Other Heavy and Civil                 1,405,363            513,278            145,898
                            Engineering Construction.
238190...................  Other Foundation, Structure,          1,627,010          1,069,906            428,448
                            and Building Exterior
                            Contractors.
238210...................  Electrical Contractors and            1,627,010            877,857            330,259
                            Other Wiring Installation
                            Contractors.
238220...................  Plumbing, Heating, and Air-           2,471,532          1,450,572            551,757
                            Conditioning Contractors.
238310...................  Drywall and Insulation                1,627,010            686,015            203,983
                            Projects.
238910...................  Site Preparation Contractors            844,522            559,703            211,959
                                                        --------------------------------------------------------
                              Total....................         60,321,976         31,103,667         11,241,667
----------------------------------------------------------------------------------------------------------------
Source: U.S. Department of Labor, OSHA, Directorate of Standards and Guidance, Office of Regulatory Analysis-
  Safety.

Time Distribution of Compliance Costs
    Table VI-4 provides the estimated stream of unannualized compliance
costs for 10 years following the effective date of the final standard.

          Table VI-4--Distribution of Compliance Costs by Years
------------------------------------------------------------------------

------------------------------------------------------------------------
Year 1..................................................    $ 93,068,644
Year 2..................................................      50,514,323
Year 3..................................................      50,950,150
Year 4..................................................      55,365,256
Year 5..................................................      50,950,150
Year 6..................................................      76,163,971
Year 7..................................................      55,801,082
Year 8..................................................      50,514,323
Year 9..................................................      50,950,150
Year 10.................................................      55,365,256
------------------------------------------------------------------------
Source: Department of Labor, OSHA, Directorate of Standards and
  Guidance,
Office of Regulatory Analysis-Safety.

7. Economic Feasibility Analysis and Regulatory Flexibility
Determination Introduction
    In this chapter, OSHA investigates the economic impacts of its
final standard on confined spaces in construction. This impact
investigation has two overriding objectives: (1) To determine whether
the final rule is economically feasible for all affected industries,
and (2) to establish if the Agency can certify that the final standard
will not have a significant economic impact on a substantial number of
small entities.
Economic Feasibility
    Section 6(b)(5) of the OSH Act states: ``The Secretary . . . 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. . . .\56\
[Emphasis added.] OSHA interpreted the phrase ``to the extent
feasible'' to encompass economic feasibility. The U.S. Court of Appeals
for the D.C. Circuit supported this interpretation in a 1974
decision.\57\ The court noted that ``Congress does not appear to have
intended to protect employees by putting their employers out of
business . . ., '' \58\ and then proceeded to define the concept of
``economic feasibility'' and to indicate its boundaries:
---------------------------------------------------------------------------

    \56\ 29 U.S.C. 655(b)(5).
    \57\ Indus Union Dep't v. Hodgson, 499 F.2d 467 (D.C. Cir.
1974).
    \58\ Id. at 478.

    Standards may be economically feasible even though, from the
standpoint of employers, they are financially burdensome and affect
profit margins adversely. Nor does the concept of economic
feasibility necessarily guarantee the continued existence of
individual employers. It would appear to be consistent with the
purposes of the Act to envisage the economic demise of an employer
who has lagged behind the rest of the industry in protecting the
health and safety of employees and is consequently financially
unable to comply with new standards as quickly as other employers.
As the effect becomes more widespread within an industry, the
---------------------------------------------------------------------------
problem of economic feasibility becomes more pressing.\59\

    \59\ Id.
---------------------------------------------------------------------------

    Thus, according to the court, OSHA standards would satisfy the
economic-feasibility criterion even if they impose significant costs on
regulated industries and force some marginal firms out of business, so
long as they did not cause massive economic dislocations within a
particular industry or imperil the existence of the industry.\60\ The
implication for analysis of economic impacts is that OSHA must
determine whether its standards will eliminate or alter the competitive
structure of an industry, not to determine whether any individual
plants may close.
---------------------------------------------------------------------------

    \60\ Id.; see also Am. Iron and Steel Inst. v. OSHA, 939 F.2d
975, 980 (D.C. Cir. 1991); United Steelworkers of Am., AFL-CIO-CLC
v. Marshall, 647 F.2d 1189, 1265 (D.C. Cir. 1980).
---------------------------------------------------------------------------

    In practice, the economic burden of an OSHA standard on an
industry--and whether the standard is economically feasible for that
industry--depends on the magnitude of compliance costs incurred by
establishments in that industry and the extent to which they are able
to pass those costs on to their customers. To determine whether a rule
is economically feasible for an industry, OSHA begins with two
screening tests to consider minimum threshold effects of the rule under
two extreme cases: (1) All costs are passed through to customers in the
form of higher prices, and (2) firms absorb all costs in the form of
reduced profits. In the former case, the immediate impact of the rule
would appear as increased industry revenues. In the absence of evidence
to the contrary, OSHA generally considers a standard to be economically
feasible for an industry when the annualized costs of compliance are
less than a threshold level of one percent of annual revenues.
Retrospective studies of previous OSHA regulations show that potential
impacts of such a small magnitude are unlikely to eliminate an industry
or significantly alter its competitive structure.\61\
---------------------------------------------------------------------------

    \61\ See OSHA's Web page, http://www.osha.gov/dea/lookback.html#Completed, for a link to all completed OSHA lookback
reviews.
---------------------------------------------------------------------------

    In the second case, the immediate impact of the rule would appear
as reduced industry profits. Again, in the absence of evidence to the
contrary, OSHA generally considers a standard to be economically
feasible for an industry when the annualized costs of compliance are
less than a threshold level of 10 percent of annual profits. OSHA's
choice of a threshold level of 10 percent of annual profits is low
enough that even if the industry incurred all compliance costs upfront,
the costs could still be met from profits without needing to resort to
the credit market. Assuming a 7 percent discount rate and a 10-year
annualization period, the compliance costs would equal about 70 percent
of first-year profits; the industry could absorb these costs from
profits without resorting to credit markets. The industry analysis
refers to an average firm and its threshold level of profits. Some
firms in any industry are below-average, and under-capitalized, poorly
run, saddled with lawsuits, or operating in a shrinking market. OSHA
cannot guarantee that not a single firm in any industry will become
unprofitable in the first year because of this rule, but rather that
the vast majority of firms will have their profits impacted by 10
percent or less.
    To implement the economic feasibility screening tests described
above, OSHA first compared, for each affected industry, annualized
compliance costs to annual revenues and profits per (average) affected
establishment. The results for all affected establishments in affected
industries are in Table IV-14. Shown in the table for each affected
industry are the total number of affected firms (entities) and
establishments, the percentage of firms affected, annualized costs per
affected establishment, annual revenues per establishment, annual
profits per establishment, annualized compliance costs as a percentage
of annual revenues, and annualized compliance costs as a percentage of
annual profits.
    To estimate costs for different NAICS construction industries, OSHA
developed ``crosswalks'' from project types used in the CONSAD report