Document oDEwLXVw57KbYODZ0Q944pmQX

t-ac * ft 'v*' ? * ^v ' i fe7' _ \ n* -.,>.. . ---n Y' / '*V IMPACT OF PROPOSED OSHA STANDARD FOR ASBESTOS n#rl l# ''.THE' UNITKD .STATES^, ":; > ' def^rtmen V' of "labor *& IMPACT OF PROPOSED OSHA STANDARD FOR ASBESTOS First Report to tie mnm*- states department of labor C-74413 April 28, 1972 101 Arthur D Little Inc TABLE OF CONTENTS Lilt of '! i X.isfi vf ih' *, r i' Panels of Ea-pe-t*? Consulted is This Study Page iii iv v ! EXECUTIVE SUMMARY I. INTRODUCTION! STUDY SCOPE AM) APPROACH 1 3 II. FACTORS INFLUENCING THE IMPACT OF ALTERNATIVE STANDARDS 3 III, CONSTRAINTS ON THE IMPLEMENTATION OF STANDARDS 7 A. ACCURACY OF MEASUREMENT 7 B. AVAILABILITY OFSKILLEDPERSONNEL 8 C. LACK OF FORK PRACTICE STANDARDS 9 . 7 ' 10 E,, LACX OF DATA ON SMALL BUSINESSES IV, BENEFITS FROMASBESTOS EXPOSURECONTROL STANDARDS 14 16 V. COSTS 21 A. INDUSTRY CATEGORIES STUDIED 21 B. ECONOMIC IMPACT ON SHIPBUILDING AND REPAIR 28 , ECONOMIC IMPACT ON MANUFACTURERS 34 D, APPLICATORS 37 E, I>: OLICATIOHS FOR OTHER STANDARDS 38 VI, COlLItC^IONS . 41 ii .. 102 Arthur D Little Inc BCRMC-M&S-002678 LIST OF TABLES Table Mo. 1 ifetiawtad fiuia to Meet Standards 2 Astni/iis-Eelated Disease Status of 100 Workers (Extcos Morbidity and Mortality) at the End of m Vcaav of Exposure to Asbestos 3 1971 Sales of Asbestos-Containing Products 4 Private Shipbuilding: Panel Estimates of Dollar Cost for Compliance with Standards 5 Private Shipyards: Median Panel Estimates of Possible Allocation for Compliance 6 Estimates of Dollar Cost ' lor Ccmpiiance wU'.n Standards (cost increment rser *-r.cer/pr ir4&vstry segment) 7 Ubeat ladwtr;.: Median Panel Estimates of Poc^ibK oi6oa.'^f Allocation for Compliance Page H 18 26 29 31 35 39 103 CRMC-M&S-002679 iii Arthur D Little Inc Figara .go,.... 2. 2 3 4 LIST OF FIGURES Mbmtm Msi-ag snd K&mfacturing Facilities in tks `Voltes. States < Avbmtm Kt-safaeturicg Facilities Region V iwiis Vs Ml/vLtm *nz Manufaetariag Facilities: l^praa I, r, - in U S. Shipyards, Private and Navy Page 23 24 25 34 CRMC-M&S-002680 .iv Arthur D Little Inc PANELS OF EXPERTS Private Shipbuilders L. 1* Tmple ' Bath Iron Works Corporation Narrv 2- Howard Bcf.fj -hera Steal Corporation E fi, Secor Electric Boat Division Sena?i Dynamics. Corporation Paul J. Sousa A" General Dynamics Corporation, Quincy I. E, Daughdrill Ingalls Nuclear Shipbuilding J, Samuel Stratton Ingalls.Nuclear-Shipbuilding H- Jones Levi age ton. ihipbuilding Company Manuel C. Isldse National Sis&l rod Shipbuilding Company T. 71 Ray lawpeut' News Shipbuilding and Dry Dock Company ?. A. Stubblefield tfewpoet News Shipbuilding and Dry Dock Company - K. P. Redford Norfolk Shipbuilding J. M. Ballinger Sun Shipbuilding Joha. 3 Cc>aKU-X'd Todd FhipyCorporation CRMC-M&S-002681 Arthur D Little Inc Asbestos Industry John L. Rainey American Asbestos Textile Corporation W. H. Beasley Cement Asbestos Products Company A.- %\ Alpine Certadn^teec5 Products Corporation GAJ Corporation Ales Kutsufc Meehaaieal Rubber Division Garlock lac. Frank 1, Ztemeraan Sold Bond Building Products (Division of national Gypsum Company) E. C. Brett H. K. Porter Company, Inc. Edmund M. leaner Jehns-Hanvlll^ Corporation Willicx> /. I?, / ':ry Johrs^Manvillc Corporation Charles -A. K'eisisan Kantile floors lac. Gay Gabrielson, Jy. Nleolet Industries, Inc. John 1. Harsh Raybestos-Msnhattan, Inc. Health Panel E, A. Gaenslar Boston University School of Medicine Thomas E. Davison, H.D. Johns-'ManviXXe Corporation ri . 10G Arthur D Little. Inc Health Panel (continued) J,, C. McDonald, M.D. McGill University Lewis J. Cr.nlley National Institute of Occupational Safety and Health Howard Ayrr National institute of Occupational Safety and Health George 11. Wright, M.D, St* Luke's Hospital* and Gaae~Wsters Reserve University ' Hans Weill * M.D, Tulane University School of Medicine W. Clark Cooper, M.D. University of California, Berkeley Philip Interline University of Pittsburgh cm Sna Barfcoo ? MSC, USN C. S. Navy 2. J. Selakoff * M.D. Mt, Sinai School of Medicine vii . . 107 Arthur D Little Inc EXECUTIVE SUMMARY This study was undertaken to identify the impact of proposed standards for asbestos. Data were obtained from a variety of sources, cross checked, and interpreted in terms of potential benefits to workers and costs to Industry. Attention was also given to the expected effect of proposed alternative standards' on shipbuilding, the principal Federal impact area,and cm the regions of the country most likely to be affected. Major findings are included here along with conclusions. Separate appendices contain data and descriptions of the methods employed. CONCLUSIONS (1) Reduction of the exposure of workers to asbestos dust from present levels to 3-fibers/ce will significantly reduce asbestos-related diseases and achieve more than 99% of the benefits attainable from the central of dust levels. {2} Capital and .operating, costs for meeting a 5-fiber/cc standard represent .important added costs to an industry that has a low rate of return on Investment. Although the ability to absorb or pass on these costs is marginal, it seems likely that only the textile industry will find it difficult to continue operations. On-board ship repair will be severely curtailed if the 5-fiber level Is enforced in this working environment. (3) A 2-fiber standard, if uniformly enforced, would require capital investment on trie part of industry that is at least twice that required to meet she 5-fiber standard. Capital requirements are very probably more than the industry can meet within a two-year period. Increased operating costs reflected in higher unit prices l 108 Arthur D Little Inc will intensify foreign, competition. The textile industry will be forced to shut down; workers in manufacturing along with those in application activities will be affected adversely by increased costs and setae operational shut-downs. Shipbuilding costs will increase but the major impact will fall on repair operations. It will act be possible to achieve a 2-fiber level In on-board repair in private* yards at any cost within the next two years. Strict enforcement here will v2~i.11.Xy Xss.d. to oirci^n ccn~_ petition and possibly to the reduction of an important capability. Navy yards face equally difficult problems and cos tly solutions in attempting to meet this level. The major impact of the standard will occur in the following states: New Jersey. Pennsylvania, North Carolina, South Carolina. California. Illinois, Ohio.Connecticut, and Massachusetts. (4) In, view of the strong expectation that a 2-fiber level will have an economic impact as least twice.that of a 5-fiber standard appears to be cost-effective at this time. (5) Adopting a 5-fiber standard now will result in major benefits and produce the experience that may reveal, if reviewed within 30 months, that a 2iber standard can be achieved with an impact considerably less than is now believed and more precisely known than is possible at present. On the other hand, serious economic consequences can be expected, throughout all segments of this industry unless the cost of compliance vith recommended asbestos dust exposure levels can be"spread over s longer time period, particularly the textile and ship repair/conversion operations. 2 10 Arthur D Little Inc INTRODUCTION: STUDY SCOPE AND APPROACH 'Arthur D. Little, Inc. {ADI.) was retained by the U. S. Department of Labor to assess tbs impact of the proposed Occupational Safety and Health Administration (OSHA) standard for asbestos. The impact was to be evaluated in tanas of benefits and costs to both Federal and non-Federal activities, We were also to develop, apply, and evaluate techniques for use in subsequent impact determinations. To provide an intensive study that would meet the OSHA deadline, an interdisciplinary teas of professionals was formed, with access to other specialists. The team included a representative of OSHA, who was directly involved throughout the work; the participating ADL staff included individuals experienced in techniques such as the DELPHI process and its extensions, technical personnel who have worked with the materials studied, and ind?4stry experts familiar with the production methods for manufacturing them. Working closely with industry (manufacturers, applicators, and private shipyards) and the various unions directly involved, the t&m identified panels of personnel with appropriate expertise and sought their responses to a series of questions regarding control of the asbestos hazard and the costs end benefits of alternative no Arthur D Little Inc CRMC-M&S-002686 standards. These panel represented the following groups: (1) The medical and health professions, for determining benefits. (2) the ashestog'industry, for determining costs. (3) Frigate shipbuilding end.ship repair-, _ for determining costs. (4) E. S. Havy shipyards, for determing costs. Shipbuilding was chosen became of the heavy use of asbestos in ships end the continuing seed to replace this material in ship maintenance and repair, and also because it is the chief Federal impact urea. The responses of the panelists were supplemented and checked by a review of relevant published informatics, visit to a small crossactios of the industry, and examination of information in ADL's own files. Using all-of these sources, the team developed estimates of the probable impact of the alternative standards. This report presents the study finding and resulting recommendations. A separately bound set of Appendices describes the methods employed is the study# including the instruction to panel members, and pro vides data in more detail than space permits here. The responses of & few panelist were still outstanding at the time of this writing. It is not expected that these responses will materially alter the conclusions reached. CRMC-M&S-002687 111 4 Arthur D Little Inc II. FACTORS INFLUENCING THE IMPACT OF ALTERNATIVE STANDARDS An inspect study requires analysis of the alternatives being con sidered and the sleustio-a to which- these will be applied, in order to determine 'whet factors eater into the overall costs and benefits of each alternative. On the basis of the emergency standard, published is the Federal Register os, December 7, 1971, and the majority and minority views of the Secretaryfs Advisory Committee on the Asbestos Standard, as well, as the testimony provided in public hearings by the medical profession, industry, labor, and government, we initially determined the key factors to be as follows: (1) Threshold Limit Values (TLV), represented in this report as fl her levels -or time weighted averages (TWA), and their relation, to health. (2) The degree of confidence in result# possible with monitoring and analysis methods employed. (3) Interpretation of instructions in the OSHA Compliance Oper ation Manual for the Compliance Safety and Health Officers. (4) The procedures of the medical examination program and the choice of physicians for the program. <5) The labeling of products containing asbestos. 112 5 Arthur D Little Inc CRMC-M&S-002688 (6) The anticipated direct costs, both initial investment and -annual operating. (?) The method' of disposal of waste materials containing asbestos,' (8) Eequiresesis for record-keeping---medical and industrial. (9) Potential unemployment as a result of shut-down decisions, (ID) Potential impact of the standard on foreign trade and the international balance of payments (11) The effect of the standard on Federal agency budgets. These factors were used m a guide in preparing questions for the panels and obtaining and analysis of other data. As work progressed, other factors affecting impact were identified sad incorporated into the study. 6 113 CRMC-M&S-002689 III. CONSTRAINTS ON THE IMPLEMENTATION OF STANDARDS There ax Important limitations to the effective implementation of asbestos exposure standards. We believe that it is essential to take these limiting factors into account in the formulation of a final set of standards. A. Accuracy of Measurement The measurement of fiber levels yields highly variable results under the best of circumstances. The many sources of error are neither adequately understood nor likely to be taken into account in the interpretation of fiber counts. We found few individuals responsible .for making dust level assessments who were prepared to provide a statistical basis for confidence la their measurements; fewer still had any confidence at all in measurements of samples having 2 fibers or less per cubic centimeter. The inevitable result is lack of confidence in exposure measures. This will continue until the prin cipal sources of variability are understood, statistically described, and translated into assessment strategies. These strategies must be expressed in measurement procedures and Interpretative guidance. If widely disseminateds such procedures and guidance may make it feasible to interpret dust measures as the highly variable indices they are of hazards to worker. 114 7 Arthur D Little inc The potential iapset of inadequate fiber counting is, in our opinion, extremely serious, Controversies are certain to arise over borderline measures that later prove to be statistical artifacts. If enforcement depends heavily on uncertain and ''behind the scenes" measurement, the OSSA objective of fair and consistent enforcement cannot be achieved. We therefore regard dependence on time-weighted averages (TWA) and con sequently ea fiber counts m a weak sad undesirable basis for enforce ment at this time. Certainly, existing methods cannot distinguish between 2 fibers and 5 with specifiable reliability. While fiber levels are important as a guide in the formulation of standards, work practices offer a more easily understood and enforceable basis for compliance. B. Availability of Skilled Personnel Closelyrelated to the measurement constraints is the limited number of experienced individuals available now or in the near future for making and interpreting fiber counts. At present, the Public Health labora tory at Salt Lake City, Utah, is the reference facility for counting fibers| samples are mailed to it. It seems inevitable that even minimal enforcement procedures based primarily on fiber counts will quickly produce a backlog in the Salt Lake City laboratory. If the capacity of this facility were to be increased, it could still meet only a portion of the expected demand for the evaluation of samples. State-level compliance procedures will demand additional inspectors skilled in sampling and laboratory technicians who can count and interpret fiber levels. Competing for these personnel will be 8 115 CRMC-M&S-002691 ArthurDLittleln industry with its own requirements for monitoring fiber counts in order to comply.with the standards. To react responsibly to a standard based on fiber counts, the asbestos industry and the applicators will need to make frequent counts.' Sine these'groups lack the organisational integration of a Federal agency or" a labor mion, their utilization of limited personnel resources will inevitably be inefficient. In any event, we foresee a demand for people. Until larger numbers of trained and experienced technicians are available to sake and interpret fiber counts9 implementation of a standard relying strongly on TWA will be Impractical. C. Lack of Work Practice Standards An appealing alternative to reliance on TWA's that would do much to avoid the limitations discussed above is to apply work practice standards. In fact, the Secretary's Asbestos Standard Committee recognized the need for work practice guidelines as an important element of the standards package. However, under the pressure of a fixed deadline, the committee could not investigate the adequacy of available work practice standards. The problem Is that no adequate standards exist--they remain to be developed. Unless a full set of practices is developed for protecting workers from asbestos dust hazards enforcement will have to depend solely oa fiber counts, with their disadvantages of poorly understood reliability and lit a CRMC-M&S-002692 Arthur D Little! industry with its am requirements for monitoring fiber count* in order to comply with the standards. To react responsibly to a standard based on fiber counts, the asbestos Industry and the applicators will need to make frequent counts. Since these groups lack the organizational integration of a Federal agency or even a labor union, their utilization of limited personnel resources will inevitably be inefficient. In any event, we foresee a demand for people. Until larger numbers of trained and experienced technicians are available to make and interpret fiber counts, implementation of a standard relying strongly on TWA will be impractical. C. Lack of Work Practice Standards An appealing alternative to reliance on TWA's that would do much to avoid the limitations discussed above is to apply work practice standards. In fact, the Secretaryfs Asbestos Standard Committee recognized the need for work practice guidelines as an important element of the standards package. However, under the pressure of a fixed deadlines the committee could not Investigate the adequacy of available work practice standards. The problem is that no adequate standards exist--they remain to be developed. Unless a full set of practices is developed for protecting workers from asbestos dust hazards, enforcement will have to depend solely ou fiber counts, with their disadvantages of poorly understood reliability and lio CRMC-M&S-002693 Arthur D Little frr insufficiently trained hygienist, sad compliance will be difficult since work practices are so important determinant of worker expostore to asbestos dust hazards. We therefore believe that the development of work practices, and their interpretation for use by affected employees and OSEA, should be given high priority in the effort to establish and enforce standards. D. Time Neither measurement difficulties nor the lack of qualified people and work practices guidelines are permanent constraints. They can and no doubt will be corrected in time m developments new under way gain momentum. With strong support, that time can be shortened. Sven with support, though, it must be recognized that the processes of developing and disseminating improved measurement and interpretation methods, obtaining more trained people, and establishing adequate work practice standards will take time--up to three years. Similarly, it will take time for Industry to develop and implement ways to remove health hazards. Data from the asbestos industry od the shipyards make this clear. Table 1 suxnnarizes responses on this issue from the panel of experienced representatives of the asbestos industry and similar groups from the private shipyards. Median estimates of when each Industry as a whole (all companies employing 20 or more workers) can meet each of three fiber levels show at a first glance that only a 12-fiber standard can be met immediately-- and only in private shipyards engaged in new construction. The 117 10 CRMC-M&S-002694 Arthur D Little Jr Standard Fiber Level 2 Median Range TAMM 1 ESTIMATED TIME TO MEET STANDARDS Private Shipyards Asbestos Industry Building 1975 Repair 1991 1980 - 1973 Nevcxv+1976 Not feasible Fever <------f 1977 5 Median Range 1973 1977 1977 *--*1972 Never-*1975 1975 . 1990 <-------- > 1974 12 Median Range . .. 1972 1974+ 1973 1977-f-->1972 1997+-+1972 1983 4--------*1973 11 * CRMC-M&S-002695 Arthur D Little Jr Asbestos industry believes that it cannot meet the 12-fiber standard until 1973, while private shipyards cannot bring fiber counts to this level on board ship (repair activities) until mid-year 1974. Some representatives maintain that the time for achieving this level will extend to 1983 for industry and 1997 for on-board ship repair. Even allowing for the reluctance of industry to change and the fact that the panels were directed to take "...into account competing requirements for capital and realistic Increases in operating costa," compliance will require time. Our own observations of processing activities support the general conclusion that not all elements are able to meet the 12-fiber level instantly. We are further persuaded of this by the fact that the panel responses reflect only the larger in dustrial units. The companies with fewer than 20 employees--491 of all companies--will wry probably require more time still if they are to meet a 12-fiber standard. Turning now to the estimates of when each industry (companies with 20 or more employees) can 'meet 5-fiber and 2-fiber standards, we find, as one would expect, that longer intervals are anticipated. In addition, the estimates range more widely for these than for the 12-fiber standards. On the basis of the median estimates, however, it is clear that in both private shipbuilding and the asbestos industry a change from a 5-fiber to a 2-fiber standard will take longer than the change from present levels to the 5-fiber standard. It is also clear from the number of respondents who state that the 119 12 Arthur D Little fnc CRMC-M&S-002696 2-fiber level can "never" be net or that it is "not feasible" in the foreseeable future, that the estimates reflect considerable uncertainty over how to achieve the lower level. The one favorable prospect is in shipbuilding, where the shortest estimate given for full compliance is 1973 and the median value is only two years longer, 1975. Even here, though, the estimates range as high as 1980. Thus, the industry with the most favorable prospects for reducing dust levels will still take three years to achieve a 2-fiber goal. Again, our own assessments from direct observation confirm the expectation that it will take longer to change from a 5-fiber standard to a 2-iber standard than to achieve.the 5-fiber level. Even an extreme discounting of the panel estimates suggests that as much as five or more years will be required in certain portions of the asbestos industry to meet the 2-fiber level and that ship repair will take even longer to achieve that level-^-if^t^^^^^achieved^at^^all. The requirement for time to introduce changes seems unlikely to be over come entirely by strong enforcement, maximum will, or even appealing incentives. The economic consequences of ignoring this time con straint are described in Section V of this report. The Navy shipyards illustrate time constraints for compliance with various standards in a special situation. In addition to the fact that they constitute the principal Federal activity involving asbestos, the Navy shipyards are of interest because they have been making a concerted effort for several years toward the reduction of dust levels. Expectations concerning the time to comply therefore 13 1^0 Arthur D Little Inc CRMC-M&S-002697 reflect a "running start" on the part of the Navy, in light of the showcase dust control program at Puget Sound Naval Shipyard. Responses from the Navy shipyards on time to comply are incomplete at the time of this writing. A Navy survey, incorporating questions addressed to this study is now under way with data arriving daily. The incomplete responses, however, indicate that the earliest time by which all Navy onshore building activities can comply with the 5"fiber standard is 1974, although approximately half the planned effort to reach this goal has been expended. A 2-fiber level appears not to be achievable until 1975 or later. These estimates are in agreement with our Informed judgment concerning planning, funding, and implementation lead times* Work aboard ship is another matter. As in the case of private ship repair, achievement of a 2-fiber level does not seem to be possible in the foreseeable future. It is not expected that even a 5-fiber standard can be met in the foreseeable future for repair work. Thus, the Navy, where a strong effort is well under way, can meet the 5-fiber standard, but for construction only and not immediately. To achieve 2 fibers will take longer and again will be possible only for new construction. E. Lack of Data on Small Businesses Because small businesses are so numerous and widely scattered, any data collection and analytic effort aimed at them is very timeconsuming , Thus, in determining the impact of asbestos standards, our study schedule restricted us to larger companies (20 or more ,, CRMC-M&S-002698 12 Arthur D Little Inc employe*, os noted earlier), which account for. the larger portion of activity in the industry and for which information can more readily be developed and analyzed. This excludes most applicators and Installers of asbestos insulation. We believe that the responses of industry panelists representing the larger units provide useful Indications of the economic impact on applicators, (hi the other hand, lack of data on small businesses prevents an assessment of enforcement problems. If the requirements for enforcement staff and effort posed by small businesses are proportionately greater than those for the larger firms, there is the risk of underestimating the size and range of these requirements. Where a large number of small businesses are involved, care must be taken to allow for adequate resources and probably to simplify enforcement procedures. Another limitation resulting from inadequate data on small businesses is the difficulty this poses for estimating whether or not these units can obtain adequate capital for meeting standards. We under stand that financial relief is available to small businesses which are affected by new OSHA standards through the long-term, low-interest guarantee program of the Small Business Administration. Such relief could reduce some of the risks associated with the application of new standards to small businesses. CRMC-M&S-002699 15 Arthur D Little Inc IV. BENEFITS FROM ASBESTOS EXPOSURE CONTROL STANDARDS Tha case against asbestos dust Is fins and unquestioned by those famil iar with available research data. Sellkoff and others have amply demonstrated an association between exposure to asbestos fibers and increased morbidity. It follows that reduction of the hazard will pro vide increased freedom from disease and longer life for those working with or near asbestos. The question of how closely the goal of zero risk to asbestos-related diseases can be approached requires further exploration. The removal, of this hazard requires changes that inevitably involve the expenditure of time 'and money, and in the world of business (including working men when jobs are at stake) the relationship between benefits and costs is an important issue. Numerous examples of the refusal of people individ ually and collectively to pay even modest inconvenience costs to com pletely remove risks demonstrate that eliminating a hazard at any cost is not always feasible. However, those who must pay the price for removing the hazard may be willing or able to do so within limits. Finding these limits usually involves comparing less then the maximum obtainable benefits with associated costs. This, of course, is the familiar cost/benefit framework for evaluating alternative courses of action. While we do not believe e purely quantitative cost/benefit Arthur D Little inc analysis is feasible or desirable here, the conceptual scheme is useful. In the next section, vt examine the probable costs for various reduc tions (fiber levels) in the hazard of asbestos dust. To place these costs in a perspective that may be useful in setting policy, it is important to estimate the benefits associated with each of several such levels of risk. The crucial data for relating benefits to costs are those establishing the relationship between exposure (as defined by exposure standards for which costs are Identified) to asbestos and the biological response. In this Instance, we are interested in "excess morbidity" or disease attributed to exposure to asbestos. We find, however, that no such . relationship has been established empirically because of the extreme difficulty of obtaining adequate data on a response that occurs long after exposure. Readily available, however, is the experienced judgment of those associated with asbestos and the related diseases. To capture this experience systematically, we employed an adaptation of the DELPHI process. The procedures, described in the Appendices, yielded a conaensus-of-xperts exposure-response curve that describes how benefits improve with the reduction of the hazard in terms of fiber levels. Data on benefits attainable from medical examinations were developed in the same manner. Table 2 shows the median estimates and their range for the eight* panel members who had responded by the time this report was being written. Each estimated the number of instances, among 100 workers exposed during *By the time this report went to press, two additional responses had teen received. However, they did not change either the median or the range. 17 CRMC-M&S-002701 124 Arthur D Little Inc ASBESTOS-RELATED DISEASE STATUS OF 100 WORKERS (EXCESS MORBIDITY AND MORTALITY) AT THE END OF 40 YEARS OF EXPOSURE TO ASBESTOS (PREDOMINANTLY CHRYSOTILE) 0.3 5-0 3.4 5-1 a a 1 8 apa9hJ Maauxt 0 eosg 4a64 Z3 esd 6u0u6o) a s i"T3CJ a A Haj 2 as0< wn *5**ft 0ig.3 U6 03 U , s 600U99 < 69 w* O p2aBH z 8) uB tw3a0. b I* aa m3 a jW0aM0 waa a>a f-4 <b a <h o <*-?4a wo 2 w G-3 wOQSM1 g * ^* St 8) &wi-i CM o O CM o w *_=5 mm* ^s S0P1 9* Q w an d? V an om *4 wdf-H ST- <wVorpO!. Coo* O<rnS1 w< Cr4Sf O WCM1 WfH m^4 /winnst>* ** waaiss 8 8. b 0 a *eH p4aau3aH4 p>aa3aH a. pSIoH 3T<0b3 *mo Saa3 aC aeeauo pp<34HHH asg *a4 ge ?u! pamBH| pcH a <oM w4aaa8h4 JaaaaS cabaa aa c ph uho. aua sl pH Z I ^d + 'S' + i5H "o n e3 +a CN 4OJ aB ^fc-i304j Tz44a0344 pp4aaHH4 <f4hHaaH S0a j4as4 404 4aa6Ma40 p"pVBoa8DHH J4a24 o x4a4 O 8>4H4 *fQ e aahWoo |aaH paa3aH o3o\ OO^ti o>* (Tv " >s xBa: Jba3 8pH opOH 63 a 4aaa4 <"Tph0OH3 p4eaaH4 a 44 44 Jp0CH0 paH paa3H a j4a=4 4 >0 pBaH paH*431 B | a s a Xa < 0 44 bn 3 TBa> oopH k aaau 4pbaH= PBH . 4aaa4 p4SaaH4 pp4aaHH4 a ea a p4baa0aH40 J4aS4 aBa B 4a3 aaaboB. J4aB4 paH a00 Sa a * 18 ? 126 Arthur D Little Inc CRMC-M&S-002702 40 years, of asbestos!, bronchogenic cancer, and mesothelioma. Column 2, "Ho Excess Disease," shorn the number presumably unaffected by exposure to asbestos dust. Thus, decreasing exposure, from a 30-fiber level to 2 fibers, is associated with a decreasing incidence of disease attributable to asbestos dust. It ia apparent from this set of judg ments that relatively large benefits correspond to the reduction of exposure from 30 to 12 fibers and fro 12 to 5 fibers. The judgments suggest3 however, that a further reduction of the exposure level to 2 fibers is attended by very small benefits--on the order of less than one percent. Even if the data are taken as rough estimates only, they till indicate that relatively little incremental benefit is obtainable through reduction to the 2-fiber level. The objective of removing all risk is very nearly reached once workers are assured of an exposure level no greater than 5 fibers. The costs of further reduction to 2 fibers should be examined carefully, since such costs will yield few additional benefits. Data on bronchogenic cancer and mesothelioma suggest that these diseases are also related to the degree of exposure. The numbers are small, however, and experience more limited than that available for aabeatosla. The only inference we are prepared to draw from these data is that their explicit consideration by the panel members very probably yields better estimates than if they had not been included. Continuing studies of these diseases among asbestos workers should contribute to estimates that better justify interpretation and speculation than these. .. 120 19 Arthur D Little Inc As an extension of tha assessment of benefits, panel members were asked to estimate the "percentage change" in mortality and period of disease associated with various frequencies of medical examination. Here both cost and benefit were Involved. Responses thus far received from the panel members indicate that only for bronchlogenlc cancer does a bene ficial change result from periodic examination. For other diseases, the course of events is not significantly changed by scheduled examina tions that do not respond to first symptoms. The desirable frequency of examination in the one beneficial instance is once each year. Annual examinations, as included in the proposed standard, appear to be con firmed and justified. Additional responses from the panelists concern ing specific examination procedures are provided in the Appendices. t I [ \'r( f i* 127 20 Arthur D Little Inc CRMC-M&S-002704 V. COSTS A. Indir try Categories Studied For purposes of analyses, we have divided users of asbescos into the following categories: (1) Manufacturers of asbestos-containing products which include: (a) Asbestos cement products, high- and low-pressure pipe, corrugated and flat board products (b) Resilient flooring--vinyl asbestos floor tile (c) Friction materials including brake linings (d) Packing and gaskets () Asbestos insulation (f) Asbestos pipes--flooring underlay, pipeline, felt, roofing paper, sheet gasket materials, and electrical insulating papers (g) Asbestos textiles (h) Molded plastics, asbestos-reinforced (i) Paints, roof coatings, caulking compounds, and miscellaneous materials (2) Applicators and Installers of asbestos insulation (3) Private shipyards (4) U. S. Nevy shipyards. 21 . .. 128 Arthur D Little Inc The manufacturers of aabestoa-containlng products in 1971 had gross sales amounting to approximately $1 billion. Table 3 provides a break down of sales. Figures 1, 2 and 3 show the locations of production facilities in the United States having 20 or more personnel--approxi mately 512 of all companies in the case of the manufacturing sector. A majority of the smaller companies have fewer than 10 workers. For the purpose of our analysis, we have used 31,000 as the total number of workers in the manufacturing sector, of whom 1000 are associated with textile manufacturing, an area which has a special problem of com pliance due to the nature of the manufacturing process. The entire sector has bees static in growth and in the employment of capital for improvement of facilities. The application and installation of asbestos Insulation is e widely scattered industry sector, with locations in essentially every major population center in the country. The industry is made up of a large number of small service companies having fewer then 20 workers. The 1971 statistics show that approximately $570 million in gross sales were attained by between 1000 and 1200 firms, both union and non-union. For purposes of our study, we used 36,000 workers. Figure A is a map showing the locations of most of the larger private shipyards in the country and all of the U. S. Navy shipyards. In 1971, approximately 102,000 workers were employed in private ship construction and repair. The Navy yards account for most Federal activity involving 129 22 Arthur D Little Inc CRMC-M&S-002706 FIGURE 2 - ASBESTOS MANUFACTURING FACILITIES1 REGION 5 "24- 131 Arthur D Little Inc TABLE 3 1971 SAT.ES of asbestos-containing products* Asbestos-Cement Products Vinyl Asbestos Floor Tile Friction Materials Packing and Baskets Asbestos Insulation Asbestos Paper and Felt Molded Plastic . Miscellaneous Textiles Subtotal Total $218 MM 190 179 100 41 U0 12 105 $955 MM 38 $993 MM Source: Asbestos Information Association 26 133 Arthur Dljttle inr asbestos. Working with the Navy, va have ascertained that there are 10 shipyards in the country and approximately 1000 men directly involved with asbestos insulation. B. Economic Impact on Shipbuilding and Repair Shipbuilding and repair have a different economic and operational environment from that of other asbestos users. The primary difference is the fact that any impact on shipbuilding and repair will have Federal implications. For the Navy shipyards, this is obvious; defense costs are directly affected. But the private shipyards are almost equally dependent on government support (although tome of it is indirect), and in addition asbestos standards could conceivably have an important Impact on the U. S. position in maritime trade. To anticipate the costs of compliance and identify specific impact Issues, we obtained data from the Navy and the Shipbuilders Council. The latter provided a representative panel whose members supplied data in two phases of a DELPHI process.* Information from the Navy on its shipyards comes from the incomplete returns of a survey mentioned earlier. All results of that survey which are applicable to the present study are Included in the Appendices. The impact (cost of compliance) of various asbestos standards in private shipyards is shown in Table 4, which contains the second-phase DELPHI * The DELPHI technique provides for initial and subsequent estimates in separate phases; the Appendices include a description of this technique. 28 135 Arthur D Little Inc PRIVATE SHIPBUILDING: PANEL ESTIMATES OF DOLLAR COST FOR COMPLIANCE WITH STANDARDS (amount/production worker [102,000 workers in 1971J) na uo *43J 5 eo u s 4HwJ TOM3 ft 3eo oCM ( ASM 3 3 I* 3 S 4J XV *OJ uso <uH SAH) H CM ft - 23 <s CM * <s n vO S so S' CM uV * 4OU3MOeoHJ MC SS 11 2^ u 0) w *s JVJ so CSi or*. CM in ao om ft B&OT Oo A * H CM ft - <3 3 3w fuVt MMauo ion co CM Ua bOJ JVO oo. OfM oOauo CM ft na>i CO O CM 00 o CMJ uO Ma> f4t) m . au cn ** O CM b a ai F CM ft u>a SO CJ CM m CM H OV H O SO CM CM ocn oiso cm cn tf cm au results. Protection at the 2-fibsr level appears to be attainable at an estimated capital cost in tvo years of $6.6 million. This represents approximately 0.22 of the annual gross of all privata shipyards--an amount that very probably can be absorbed without uerious consequences. There are, however, several warning signals. One specialty shipyard believes that the 2-fiber level will result in foreign competition that could mean the loss of 1200 jobs. Another panel member maintained with 902 confidence that "vigorous enforcement" of a 2-fiber standard would "shut down 202 of the insulation work." In each case, the potential impact is a serious matter to the company concerned. Whether or not these affects will occur depends on the actual cost increases experi enced and their effect on competition. The interpretation of such possibilities and the assessment of the ability of the industry to accept compliance costs are aided by other data from the panel. The panel reported estimates of the "portion of annual gross" that could be applied to meeting standards while other requirements for capital are also being met. The allocation of 0.012 shown in Table 5 for meeting asbestos standards is well below the estimated capital cost of 0.22 of gross to meat the 2-flber stsndard. The total capability for meeting all health and safety standards, howsver, is more than twice this amount, or 0.52. This suggests that for the industry as a whole, a 2-fiber standard conceivably could be met without disturbing other capital commitments but only at the expense of effort devoted to meeting other standards. 137 30 Arthur D Little Inc The economic impact on private shipbuilding promises to be modest, even for a 2-fiber standard, and we therefore do not foresee a significant Impact at the Federal level for the capital investment requirements of this activity. Operating costs for shipbuilding are expected to increase by less than 0.2% annually. While this impact will result in some pries Increases and a worsening of the U. S. competitive position in ship building, these effects will probably be small. They are unlikely, in our opinion, to result in more than minor and temporary changes in employment levels. Repair and conversion, however, present special problems. The Increases in both capital and operating costs associated with a 2-fiber versus a 5-fiber standard are greater here than In building operations. In fact, one major shipyard maintains that a 2-flber standard would make it nec essary to discharge 1000 employees engaged in repair and conversion work. Others question the feasibility of reducing exposure to the 2-fiber level at any cost. Most assume that respirators will be needed during rip-out operations aboard ships being repaired or converted. Since older ships containing much asbestos will continue to require work for many years, it is clear that these difficult-to-control hazards will be a problem for a long time to come. In view of these special circumstances, it seems unlikely that ship repair operations can be made to conform to the 2-fiber standard in the near future, if at all. The consequence of enforcing a standard at this level is very likely to result in a loss of conversion business, and in time much of the capa bility for conversion, in U. S. yards. 32 r .. 139 Arthur D Little Inc Preliminary indications* of the probable impact of standards on Navy shipyards parallel those reported above for the private yards. Little difficulty will be encountered in nesting a 3-fiber standard for onshore operations. A program currently under way to meat this objective has cost approximately $85,000 per yard to date and is 502 complete. At least this level of expenditure will be necessary to complete the pro gram by 1974. For the Navy to meet a 2-fiber standard will cost approx- a imately $200,000 par yard, with a completion date of 1975, under favor- (| able funding, planning, and approval conditlona. TL*e estimate, however, applies only to onshore work. We are persuaded that it la not feasible for the Navy to meet either a 5-fibar or a 2-flber standard for on-board work. This conclusion has also been reached by the Department of Defense. Shipyards, both private and governmental, can meet the 5-flber standard within the next several years, but not for on-board work. Although costs of building operations will increase, with a consequent risk in the loss of business to foreign competition, we expect this impact to be modest and acceptable. Even a 2-flber standard probably can be met in the near tans for building operations, but possibly never for repair and conversion. The effect of enforcing this standard would be to reduce employment through some loss of demand to foreign competitors snd greatly limit the nation's capability for repairing ships in its own yards. Observations reported above on time constraints add support to our view that compliance within two years to a 2-fiber standard is not feasible for shipyards. * Based on incomplete data from the Navy survey mentioned earlier. ... Ill) 33 Arthur D Utile Inc C. Economic Impact on Manufacturers We assessed Che impact on the manufacturing sector of the industry via tvo distinctly separate routes. First, we used the responses of the industry panel, with 1C members representing various manufacturing sub sectors. Because of time constraints, only one phase of questioning was possible. Second, we analyzed costs at several plant locations to check the validity of the estimates submitted by panelists. Table 6 presents the findings of the panel. The upper figure represents the cost increment per worker, while the lower figure represents the total costs per segment of industry (textiles, other manufacturing, and application and installation), based on multiplying the cost increment per worker by the number of workers. The percent of gross is based on 1971 gross sales. We find that the predicted capital cost ranges from $54 million for meeting the 12-fiber limit to $80 million for meeting the 2-fiber limit. Our own assessment, after visiting selected plants, is that to meet the 5-fiber limit would cost from $740 to $1770 per worker, depending on the size of the operation. The panel estimated a range of $550 to $5000 with a median of $1634 per worker to achieve the same result. These estimates seem reasonably consistent with our own. With regard to technical feasibility, we judge that the 5-fiber level is achievable. Even with the best available techniques, however, we do no know whether a 2-fiber limit could be met. (In fact, we cannot be completely certain about the 5-fiber limit until the best available equipment has been installed and evaluated.) Thus, a reliable assessment ... 14i 34 Arthur D Little inc ' ` % r, - ' ' 7fTfl' s''WKe^e4(ilt* -r ** 'T r of the validity of the "guesstimates" put forth on the cost of compli ance to the 2-fibr level is not really possible until technical feasi bility has bees established. In the meantime, the estimates shown in Table 6 are the best that have been developed. Specifically analyzing the components of the manufacturing industry, we find that textile manufacturing receives the biggest impact from asbestos standards is terms of capital cost. With the increasing pres sure from substitute products and imports and the price sensitivity of the product, it is doubtful that this segment of the Industry will remain in business very long, regardless of the level at which the fiber limit is set. The increased pressure of capital spending and attendant in creases in operating cost will in all likelihood eventually cause asbestos textile producers to shut down their facilities. This will result in loss of employment for an estimated 1000 workers (a majority in OSHA Region IV, and the rest in Regions I, II, and V). - The other manufacturing industries have the capacity to handle expendi tures to meet the 5-fiber level and to pass on to the customer their increases in operating costs. If the 2-fiber level is pushed, the need for capital, which may have been estimated on the low side, will be great and may force corporate managements to reconsider their position in the industry. The manufacture of asbestos-containing products is a low-rate-of-return business, and the requirement for large sums of money beyond the normal rata-of-return capabilities will probably cause major dislocations within the industry. If the time frame to comply with the * 143 3b Arthur D Little Inc standards allows the industry to make the appropriate expenditures over a period of time with full assurance of technical success, then the industry can cope with the situation. Prom an operating cost standpoint, the increase in costs would not materially affect the position of asbes tos in the markets it serves. We have investigated the possibility of substitute materials replacing asbestos in products now In use and find that there ia no major threat to the use of natural asbestos in the end-use market. As long as the current price structure is not completely destroyed, the consumption pattern of the industry will probably not be adversely affected by price increases resulting from added operating coats to meet any of the standards. Work practices, disposal techniques, medical examination programs, and respirator programs in most cases can be treated as an operating expense, and these costs could be passed on to the customer without affecting the position of the products in the Industry. D. Applicators Applicators and installers of asbestos Insulation are almost entirely employed by small companies. The workers in this group handle asbestos only part of the time, estimated on the average at 25X of their working time. Referring to Table 6, we find that the capital investment required for compliance in this sector is 3% of gross revenues for a 12-fiber level, 144 37 Arthur D Little Inc 5% for a 5-fiber level, and 6% for a 2-fiber level. Operating costs are estimated at 3% of gross revenues for a 12-fiber level, 6Z for a 5-fiber level, and 13% for a 2-fiber level. Since most of the applicators are small businesses, a 5-fiber standard would probably cause some dislocations of companies; however, the principal effect is likely to be reluctance on the part of the applica tors to handle asbestos, forcing the substitution of higher-cost materials for asbestos. This would have the secondary effect of diminishing sales of asbestos insulation, now $41 million, or about 4% of the 1971 gross sales of asbestos products. Some unemployment could result, but quantitative estimates are difficult to make. A 2-fiber standard would Increase this impact. E. Implications for Other Standards In assessing the impact of the asbestos standard, one must determine its effect on compliance with other future OSHA standards and with regulations put forth by other Federal agencies such as EPA and by state agencies. Through our industrial panel, we inquired about capacitlas for resource allocations to meet asbestos and other standards. The results of this analysis are presented in Table 7 for industry, paralleling Table 5 shown earlier for private shipyards. We note that the manufacturing sector, excluding textiles, sstimates that it can allocate 1.0% of gross sales to meet standards of all types within the next two years. Of this allocation, 60% or 0.6% of gross 145 38 Arthur D Little Inc TABLE 7 ASBESTOS IBDPSTRT; MEDIAN PANEL ESTIMATES OF POSSIBLE RESOURCE ALLOCATION FOR COMPLIANCE Each Tear for: (Delphi Process, Phase I) Percent of 1971 Gross Asbestos Standards Other Standards Total Two Tears Median 0.60 Range 1.8-0.00 0.40 1.4-0.00 1.00 3.2-0.00 Five Tears Median 0.48 Range 1.25-0.00 0.28 1.10-0.00 0.75 2.10-0.00 . . 146 39 Arthur D Little Inc CRMC-M&S-002723 fifties, Is available for the asbestos standard. Yet, u Table 6 has shown, to meet the 5-fiber level within that period will require a capital investment estimated at 52. Thus, the industry is in a bind because of time constraints for capital expenditures. If the individ ual companies were allowed to invest over longer time periods, then this constraint would not hold. In principle, the problem of private shipyards is similar, as shown by Table 5 and the accompanying discussion; an allocation of 0.01X of annual gross is available toward meeting a capital requirement of 0.2X, and the difference would have to be made up from the allocation for standards other than asbestos. It must be noted that early standards will bear the brunt of costs for changes that will facilitate compliance with some future standards. The cost of cleanup for asbestos, for example, will improve the ebility of the asbestos industry to comply with silica standards. Initial standards will also set a pattern with respect to compliance. To the extent that initial standards prove unenforceable, compliance with future standards will be jeopardized. 147 40 Arthur D Little Inc 71. CONCLUSIONS (1) Reduction of the exposure of workers to asbestos dust from present levels to 5-fibers/cc will significantly reduce asbestos-related diseases and achieve more than 99% of the benefits attainable from the control of dust levels. (2) Capital and operating costs for meeting a 5-fiber/cc standard represent Important added costs to an industry that has a low rate of return on investment. Although the ability to absorb or pass on these costs is marginal, it seems likely that only the textile industry will find it difficult to continue operations. On-board ship repair will be severely curtailed if the 5-fiber level is enforced in this working environment. (3) A 2-fiber standard, if uniformly enforced, would require capital Investment on the part of industry that is at least twice that required to meet the 5-fiber standard. Capital requirements are very probably more than the industry can meet within a two-year period. Increased operating costs reflected in higher unit prices will intensify foreign competition. The textile industry will be forced to shut down, workers in manufacturing along with those in application activities will be affected adversely by increased costs and some operational shut-downs. Shipbuilding costs will increase but the major Impact will fall on repair operations. It will not be possible to achieve a 2-fiber level in on-board repair in private yards at any cost within the next two years. Strict 148 41 a ___r\ i ..i. r CRMC-M&S-002725 enforcement here will certainly lead to Intensified foreign competition and possibly to the reduction of an important capa bility. Navy yards face equally difficult problems and costly solutions in attempting to meet this level. The major impact of the standard will occur in the following states: New Jersey; Pennsylvania, North Carolina, South Carolina, California, Illinois, Ohio, Connecticut, and Massachusetts. (4) In view of the strong expectation that a 2-fiber level will have an economic impact at least twice that of a 5-fiber standard while yielding minute additional benefits, a 5-fiber standard appears to be cost-effective at this time. (5) Adopting a 5-fiber standard now will result in major bcucflta atd produce the experience that may reveal if reviewed within 30 months, that a 2-fiber standard can be achieved with an impact considerably less than is now believed and more precisely known than is possible at present. On the other hand, serious economic consequences can be expected throughout all segments of this industry unless the cost of compliance with recommended asbestos dust exposure levels can be spread over a longer time period, particularly the textile and ship repair/conversion operations. (1) To develop work practice guidelines. (2) To establish a confidence level for monitoring and analyzing dust samples. (3) To assess respirator usage as it affects the productivity of workers. (4) To Interpret standards in tern of allowable exposure on a daily basis for the level finally determined. (5) To develop a record-keeping program for determining the cumulative effect of permanent standards. r.. 150 43 Arthur D Little Inc