Rhetoric has been flying this year, especially in the Republican-controlled House of Representatives, about the “burdens” of federal regulations. Many of these members seem to despise EPA rules, CSPS rules, healthcare rules, and OSHA rules. Many of their talking points come from groups like the Heritage Foundation with their reports “Red Tape Rising: Obama’s Torrent of New Regulations,” and “Rolling Back Red Tape: 20 Regulations to Eliminate,” and the U.S. Chamber of Commerce’s multi-media “Regulations: Restoring Balance” campaign. Many House members were embolden early in the congressional term to make health, safety and environmental regulations and agencies the target of oversight when they passed H.Res. 72. The resolution, which was introduced on February 8 and passed three days later, directed 10 key congressional committees
“…to inventory and review existing, pending, and proposed government regulations by agencies within their jurisdiction…for their effect on jobs and economic growth.”
By my count, in the 60 days the House has been in session this year, nearly 120 hearings on “regulatory burdens,” “regulatory reform,” “regulations harming small businesses,” “regulatory impediments to job creation,” and the like, have been conducted.
One such hearing, entitled “Lifting the Weight of Regulations: Growing Jobs by Reducing Regulatory Burdens” was held last week in the House Small Business Committee. The Committee Chairman, Sam Graves (R-MO), called the hearing to examine two bills (H.R. 527, the Regulatory Flexibility Improvements Act of 2011, and H.R. 585, the Small Business Size Standard Flexibility Act of 2011) purported to
“remove loopholes in the Regulatory Flexibility Act (RFA), the Small Business Regulatory Enforcement Fairness Act (SBREFA) process and strengthen the power of the [Small Business Administration’s] Office of the Chief Counsel for Advocacy.”
I wholeheartedly agree with parts of the Chairman’s opening statement such as
“regulations can have benefits. They can protect our food supply, ensure that drugs work, and keep financial markets transparent,”
and agree that there are costs associated with such rules. Where my views depart from his is the notion that the “intended benefits” of a proposed rule be “balanced against” the new rule’s “economic costs.”
The notion that a cost-benefit test tells us whether health, safety and environmental regulations are reasonable was debunked masterfully by Professors Lisa Heinzerling and Frank Ackerman in their 2005 book “Priceless: On Knowing the Price of Everything and the Value of Nothing.”
The witnesses at the June 15 hearing were Mr. Frank S. Swain of Baker & Daniels, a Washington, DC law and lobbying firm. Mr. Swain served during the Reagan Administration as Small Business Administration’s (SBA) Chief Council for Advocacy, was legal counsel to the National Association of Independent Business in 1980 when the organization worked on drafting the orginal RFA. Mr. Harry J. Katrichis of the lobbying firm The Advocacy Group, was another witness. Mr. Katrichis was the House Republican members’ chief counsel on the Small Business Committee for 10 years. He also worked with Mr. Swain at SBA’s Office of Advocacy. The Chairman’s final witness was Ms. Jane C. Luxton, an attorney who specializes in environmental law at the Washington, DC law firm Pepper Hamilton.
Despite the hearing’s tile “Lifting the Weight of Regulations,” I didn’t see many examples in their written testimony about specific regulations that impede job creation. It would have been a real dud if not for the one witness selected by the ranking (minority) member of the Small Business Committee. Congresswoman Nydia Velazquez (D-NY) invited University of Pennsylvania professor Adam Finkel, ScD to provide a different point of view about “regulatory reform.” He noted how his own educational opportunities were possible because his father worked for 47 years as a sales rep for a 160-person small business in Jamestown, NY. Dr. Finkel urged members of the Committee to get beyond
“…hopelessly overbroad, accusations about the entire regulatory system as it affects small business,
and set out to rebuke unsubstantiated and untrue assertions about regulations, including:
*regulations are too stringent because risk assessors are determined to exaggerate the dangers we face;
*small business operators have too little access to the regulatory process; and
*agencies hold their noses and listen to small business input, only to go their merry ways and dismiss their concerns or say they can’t possibly be accommodated.
As a solid researcher will do, Finkel backs up is statements with references. Finkel also explained:
“We know how important small business is to our overall economy and to our local communities, but the difference between ‘a needless, job-killing mandate’ and a life-saving ‘wise restraint that makes us free’ is partly subjective, and partly what cost-benefit analysis exists to distinguish between. Are automobile drivers ‘groaning under the weight’ of speed limits? Should local, state, and federal agencies provide ‘small driver compliance guides’ to help us get the most from our cars while obeying the law? The answers to questions like these might suggest that the clash between small business and regulatory agencies is becoming onesided, and could use a dose of perspective. Indeed, I think the evidence is fairly compelling that providing more small-business access and demanding more obeisance from the agencies is a solution in search of a problem.”
He provided evidence from OSHA’s most recent health standard, a rule published in 2006 to protect workers exposed to the carcinogen hexavalent chromium (Cr(VI)). During the required special review of the draft rule by a group of small businesses, Finkel reported that these employers made 38 different recommendations to OSHA to improve the rule, and the agency adopted 34 of them. Like me, he correctly notes that this same type of input can occur during the regular rulemaking process. I wonder, as does Finkel, why small businesses are treated as a special class deserving of the right to review a draft rule before it is even proposed. (There are no special panels convened of injured workers or widows of deceased workers to examine why a proposed OSHA rule is not tough enough. These individuals simply participate in the regular notice-and-comment process.)
Dr. Finkel also had the gumption to tell the Committee members that if they want agencies like OSHA to collect more data and do more analysis before new regulations are issued, the agencies will need funding from Congress to do it.
“Analyses cost money – far less than the money we waste by not knowing enough, but they can’t be done for free. I testified before House committees five or six times in the 1990s about the opportunities to put hundreds of thousands of dollars into doing better scientific and economic analyses at the agencies, and thereby save billions of dollars in needless private-sector control expenditures and needless illness and environmental damage. Since then, the number of required analyses has proliferated substantially, while agency analytic budgets and staff continue to fall. Pardon my bluntness, but a bill like HR 527, which requires agencies to conduct intricate and highly speculative analyses of specific indirect effects of regulation, while providing no resources to do so, is a set-up.”
His moxie didn’t stop there:
“Through statutes and Executive Orders, the agencies are now supposed to think in each rulemaking about nearly 30 different ways in which over-regulation or underregulation can disproportionately affect individuals’ economic productivity or their health and safety. Small businesses are not the only constituency in the tail of the cost distribution (there are required analyses of impacts on local governments, on property holders, on energy suppliers), and the agencies are also supposed to care about the tail of the risk distribution (e.g., children’s health, environmental justice). Small business analysis already dominates all these other considerations. A recent GAO report documented convincingly that agencies spend far more effort analyzing small-business impacts than any other special aspect of risk or cost. …In the face of all the disparate impacts we ignore, the last thing we need is more study of the (small-business) impacts we already know best.”
This, and the rest of what Dr. Finkel said, was just too much for some of the Committee members to swallow, but they still couldn’t seem to get enough of him. Of the 20 or so questions asked of the witnesses, nearly all of them were directed at Dr. Finkel. For example, in this 5 minute video clip, Congressman
Cong. Landry: “Dr. Finkel, let me tell you about a conversation I had last week with a very successful business owner in my district. He had sold his business. He had created hundreds of jobs. He was in a non-compete, and when that non-compete ended, him and his partner decided to go back into the drilling business and when they sat down and put their profile together, and how they wanted to put their business and move it forward, they decided they were going to build the largest shallow water barge, drilling barge in the world, and one of the most advanced.”
“When they looked at the cost, because we have a lot of fab [fabrication] yards in my district, and the cost and regulations, and red tape, that they had to do to build that barge, that they decided they were going to build that barge in Singapore. And while they were contemplating the construction of this barge, and where they were going to implement this barge, where they were going to put it out for contract, they got a proposal to purchase a drilling company, an American drilling company for about 60 percent of the cost of the drilling barge they were going to build. They made a determination that they didn’t want to do business in America anymore. That they were going to build this barge in Singapore and they were going to float it and send this barge to Nigeria to drill because it is more business friendly in Nigeria than it is in this country.”
“And I can tell you the OSHA regulations are destroying our fabrication yards down there. …In fact, it’s so ridiculous that during the BP oil spill, they would make the shrimpers come in during the daytime because it was too hot for them to collect oil in the water. And when they shrimpers said “it makes more sense for us to collect this oil at night,” they [OSHA] said “regulations don’t allow that.” …Now, tell me how regulations are not smothering our economy? Tell me how those OSHA regulations are not trumping, are not causing the unemployment rate to be 9 percent or greater, it’s really not 9 percent, it’s 14 percent or greater, it’s just that those people are not looking for work anymore.”
The exchange between the Congressman and Dr. Finkel continued, but I’m going to interrupt it to comment on Mr. Landry’s assertion that an OSHA regulation prohibited workers from doing oil clean-up at night. It struck me as odd and raised my curiousity because I followed OSHA’s activities during the height of the clean-up. OSHA was indeed fixated about the risk of heat stress and stroke for the workers along the Gulf coast.
OSHA’s assistant secretary called heat stress one of the most serious health concerns for the emergency response workers. When I heard Congressman’s Landry’s remark, I found it hard to believe that OSHA had such a policy. I spoke to a knowledgeable source in OSHA headquarters who said the agency did not/does not have a policy explicitly prohibiting night-time oil-spill clean-up work. I also contacted Mr. Landry’s office. I spoke several times with his very helpful communication’s director, Millard Mule, and asked for any specifics he might be able to provide about this alleged OSHA policy. I was interested in information such as the name of the employer or shrimpers who relayed the claim to the Congressman, or a document that refers to the OSHA policy.
With no more than a couple of days, Mr. Mule was unable to provide additional insight on this matter. He promised to do so and I’ll be keeping in touch with him. Mr. Mule agreed that it’s important to get straight the facts.
It wouldn’t surprise me if misinformation about all kinds of policies, laws and regulations was making its way up-and-down the Gulf coast in the aftermath of the Deepwater Horizon disaster. It also wouldn’t surprise me if a manager, or trainer, or even co-worker invoked a “that’s against OSHA regulations” edict in an effort to compel someone to do or not do something—whether or not OSHA actually has a safety rule on the topic. I guess in some people’s eyes, using an OSHA threat might be more convincing rather than just saying:
“I don’t want you to do that, or our company has a policy against that, or we’ll get dinged by our insurance company if you get hurt doing that.”
With the help of Cong. Landry’s communications director, I hope we can get to the bottom of OSHA’s alleged policy that prohibits oil spill clean-up work at night. If you worked in the Gulf and heard about this policy, or you work for OSHA and can shed some light on it, please do so in the comment section below.
After Cong. Landry wondered outloud how regulations like OSHA’s “are not smothering our economy?” and causing the unemployment rate to be 14 percent or greater, Dr. Finkel offered his experience on hearing from and about family members who have lost loved ones in workplace accidents “because of lapses, negligence, mistakes.”
Cong. Landry: “But isn’t that the role of the legal system? Is that not the role of the legal system to determine whether or not businesses are operating in a fair, safe environment for their workers? If workers are getting injured and deaths are being caused, isn’t that what the plaintiffs lawyers do? And when they go in and they impact those small businesses, those small businesses have a choice of whether they want to pay those types of fines and settlements or whether or not they want to make their work environment safer.”
As an attorney with a law degree from Loyola University, Congressman Landry should probably know that filing a lawsuit against your employer after you’ve been injured or killed on the job isn’t an option for most U.S. workers.
Almost all State workers’ compensation laws, including Louisiana’s Labor and Worker’s Compensation statute, an injured or ill worker’s, or the family of a deceased worker’s exclusive remedy is the workers’ compensation system. Suing your employer is prohibited. Those left behind, like Gay and Blaine Cook, whose 25 year old son was killed on-the-job in November 2005 on the Mettiki coal mine property in West Virginia, hardy think the system works well. Their “exclusive remedy” from the worker’s compensation system was $5,000. The check goes out, (here’s the one Mr. and Mrs. Cook received) and the company washes their hands of the “unfortunate” event. The situation is slightly better when the worker leaves dependants and are eligible typically for 66.7% of their loved one’s wages. But as the Kentucky Darby widows learned, you are likely to be scrapped from his employer’s health insurance plan.
If Congressman Landry is interested in opening up the legal systems to injured workers and their families, I’m sure the non-profit United Support and Memorial for Workplace Fatalities would be honored to work with him. Its members have learned the hard way of the inadequacy of workers’ compensation, and would endorse a plan to allow workers and community groups a private right of action against companies that fail to provide a “fair, safe environment.” Moreover, as Dr. Finkel correctly noted, lawsuits occur “after the fact.” Our regulatory agencies, like OSHA and CPSC, are supposed to set standards to help prevent serious injuries from occuring in the first place.
The exchange between Congressman Landry and Dr. Finkel continued, with the Member of Congress asserting:
“Look, OSHA just issued a regulation where our welders are now going to have to wear long sleeves, no-mesh [?] outfits that don’t breathe, and it’s 100 degrees in the shade in Louisiana. How do we keep working under conditions like that? There’s no waiver for that. What do we do?”
The Congressman was referring to a March 2010 memorandum issued by OSHA to its inspectors on “Enforcement Policy for Flame-Resistant Clothing in Oil and Gas Drilling, Well Servicing, and Production-Related Operations.” The memo was needed because there was inconsistency among OSHA inspectors on how to apply a regulation (1910.132(a)) that requires the use of fire-resistent clothing. A 2005 analysis by the Society of Petroleum Engineers, noted that one U.S. worker is killed about every 10 days in the exploration and production sector of the oil and gas industry, and about 16% of these deaths are caused by fires and explosions. The severity and extent of work-related burns can be reduced, including lives saved, when workers wear fire-resistent clothing. The OSHA regulation, which has been on the books for years, is based on the National Fire Protection Association’s (NFPA) standards on “Flame-Resistant Garments for Protection of Industrial Personnel Against Flash Fire.” (NFPA 2112) NFPA is a nonprofit organization established in 1896 to
“reduce the worldwide burden of fire and other hazards on the quality of life by providing and advocating consensus codes and standards, research, training, and education.”
NFPA members include fire marshalls, metropolitan fire chiefs, fire services, engineers and more. NFPA has more than 70,000 members in 100 countries who specialize in fire and injury prevention and safety.
What I found curious was the Congressman’s comment that fire-resistent clothing is necessarily too hot and the fabrics “don’t breathe.” There are small businesses that specialize in selling fire-resistent clothing (FRC), including FRC for hot weather. The firefighters here in central Texas (and elsewhere) are experts on battling our wildfires in the blazing heat and wearing FRC. One company, FRSafety, highlights this message on their website:
“June is here and comfortable FR Clothing is a must for the hot weather! We know that comfort is key to any FR knit shirt so we provide you with cool and comfortable shirts from all the best manufacturers.”
FRSafety and other suppliers also feature clothing that is made in the good old USA.
Congressman Landry proceeded:
“Three people have passed out this summer in one yard complying with OSHA regulations. Now tell me how is that safe? Where is the safety there?”
The congressman is pointing out a potentially deadly environmental health risk—heat—-but he didn’t convince me that the incidents occurred because of an OSHA regulation. If such incidents were investigated we could identify the contributing factors, including whether an OSHA rule played a part. But such incidents are not routinely independently investigated, in fact, under current OSHA regulations, an employer is under no obligation to even report such events to the agency or any other authority. The same is true whether a worker passes out and ends up in the emergency room, or a worker goes to the hospital and has to stay overnight or for multiple days. Under the current regulations, an employer is only required to notify OSHA only if 3 or more workers are hospitalized overnight. (In a few States that run their own OSHA program, such as California, an injury that causes a single employee to be at the hospital for 24 hours or more is reportable to the Cal-OSHA.)
Just this week, OSHA proposed a change to its reporting requirements and the public comment period on this revision will go on until September 20. I’m sure when the time comes for the Chamber of Commerce, the National Federation of Independent Business, and other business groups to submit their views on the proposal, they will try mightily to make the case that it is too onerous and another “job-killing regulation.”
Another member of the House Small Business Committee who was quite skeptical of Dr. Adam Finkel’s suggestion that some regulations are necessary and can be sensible, was freshman congresswoman Renee Ellmers (R-NC). In this 4 minute video clip from the hearing Ms. Ellmers begins:
“I’m a little confused Mr. Finkel about where we’re at and where your position is. I think you’re stating wholeheartedly that you believe in regulation as it is, is that correct? And that the opportunity to try to fine tune some of that is not necessarily what you think of.”
Finkel: “I believe in smart regulation, and I believe we have a lot of unfinished business to do to protect consumers and workers and the environment. But, I’m an analyst, and I believe that we ought to be looking more carefully and harder at not just total costs and total benefits but at real people who are affected both economically…”
Ellmers (interrupting): “Are you aware that we have had an unemployment rate of 9.1 percent that has been sustained for 23 months now?”
Finkel: “I know where you’re going with that, and the evidence that in any significant amount that rate has anything whatsoever to do with health, safety and environmental regulations is thinner than thin ice.”
Ellmers: Well, let me just tell you my own experience then. Over and over again, we have heard from our small business owners, businesses across the country… saying that government regulation is the #1 problem they are faced with, and the fear of the unknown, the fear of more regulation, the fear of the taxes going up, the fear of all the uncertainty that is out there right now is keeping them from hiring right now. Now, this is the position we are faced with and we are obtaining that information over and over again, and it’s just compiling.”
She went on:
“But what you’re telling me, is you think more along the line of, for instance, let me just, I pulled out a quote from your opening statement…that you feel there will be small businesses that will be created because of regulations, and they’re just waiting to be created. So, in other words, we’re creating a problem which then might spark a big growth environment? Is that what I’m understanding you’re saying?”
Finkel: “I’m surprised that would be at all controversial. The problems that are created through, by what economists call ‘externalities’—the pollution, the safety hazards—when you solve those, sometimes businesses that create the problems are hurt economically, and very often, other businesses come in and take advantage of the market to provide the safe equipment, the pollution control technology. All I’m saying is if you want to think about indirect effects, far upstream—-those come in two flavors. There are positive effects as well.”
Ellmers: “That is true, but basically what you’re saying is there is a winner and a loser. I personally don’t believe that’s true in business. I believe the innovation is this country is outstanding and we all grown as we move along. …You said you didn’t necessarily feel that it was large corporations, that small businesses are sometimes the big culprit of some of these [problems]– Can you expand on that?”
Finkel: “There are studies that suggest that in a lot of industry sectors, the occupational fatality rate is 6 to 8 times higher in small establishments than in large ones. That doesn’t say that we should come down like a ton of bricks on small establishments, but the reality is, these are dangerous places to work, in some cases they are contributing to pollution in others, and I just try to distinguish between [them.] Yes efficiency is a great idea, and you go for the big sources, but it’s problem if everybody is putting CO2 in the atmosphere. You go after the bigs first, and you get most of your benefit there, but if everyone if causing grave risk to their employees, you don’t necessarily just only care about big employers.”
After Cong. Ellmers confirmed for herself that Dr. Finkel can’t be trusted, she needed one final piece of evidence. She said:
“Last question, do you believe in global warming?”
“I’m not a climate scientist, but I’ve worked among them for many years. Of course I do.”
Her microphone was already turned off, but I swear I heard her say
“I knew it. Just like all those other mainstream scientists.”
Celeste Monforton, DrPH, MPH worked with Adam Finkel at OSHA during a previous Republican takeover of the House, their Contract with America, and loads of similar congressional hearings. She believes the overwhelming scientific evidence demonstrating global climate change and has no doubt that it is human-made, primarily by most of us in the U.S.A.