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“Work Practices for Cotton Dust," which will provide protection to employees exposed to cotton dust. This document recommends procedures for determining dust levels, recommends a medical management program, and recommends measures for the protection of exposed employees.
However, OSHA is now embarked upon drafting a new standard for cotton dust exposure. We are told that the new standard will be .2 mg/M®, for all textile processes.
There is a somewhat different problem of technology here than was the case with noise. There are, in existence, technologies which could conceivably reduce cotton dust to virtually any desired level, if cost be disregarded. A nation which can create literally dust free space capsule work areas, can control cotton dust. The problem is that the ultimate cost to the consumer would be great indeed.
OSHA does not have in hand an economic impact study of the effect on the industry of their new proposal. A contractor for such a study has been selected, and hopefully he will be able to produce factual data.
In the meantime, the textile industry itself, with the help of consulting engineers, and with the help of all of the domestic firms which manufacture cotton dust control equipment, has put together a completely documented study dealing with the costs involved. Neither OSHA, nor the selected contractor, has at its disposal the necessary factual data from hundreds of textile plants, to be able to create an economic impact study based upon fact.
When the industry originally put its study together, OSHA had indicated that the most severe standards anticipated would be .2 mg/M* in yarn manufacturing, and .75 mg/MR in subsequent processes such as weaving, knitting, and so on. Differing levels, for different processes, are proper since respirable dust, which is the culprit, is basically removed in the early processes. Consequently, the industry studied the costs of .2 mg/MR in the early processes, and .75 mg/MR in the late processes. Now OSHA comes back indicating that it is considering a .2 mg/Mo level for all processes, regardless of the amount of respirable cotton dust involved in the late processes.
At this point, I can only give you the capital and the operating costs for meeting OSHA's earlier conclusions. It will cost the industry $920 million in capital to meet this standard, with an annual operating cost of $254 million. It is interesting to note that nearly two-thirds of this annual operating cost is for electric power, in an energy hungry nation.
To put these costs into context for you, the capital expenditure is at least equal to one and one-half years of the industry's total annual expenditure for new plants and equipment. And the added operating costs will simply pass on an added quarter of a billion dollars to the consumer.
What does the industry recommend? Simply that the health of all employees exposed to cotton dust be protected, as it can be, by adhering to the ATMI's “Work Practices" document, at least until the basic factors which pertain can be studied and understood, to see if there be any overall better road to protection from cotton dust.
The industry further points out that no useful purpose is served by expending capital on partial solutions. A reduction in cotton dust, from 1.2 to 1.1 mg/M3, at a cost of blank dollars, serves no purpose, since employees must be protected by other means at hand.
The industry strongly supports Senator Nunn's bill to improve the congressional oversight of Federal Agencies, such as OSHA. It is imperative that this headlong rush into further capital spending at least be checked. until the problems, can be understood. This can lie only in the hands of the Congress.
Senator Nunn. Our next witness, Mr. Inman Allen, the Inman Co., Atlanta.
TESTIMONY OF INMAN ALLEN, PRESIDENT, THE INMAN COMPANY,
ATLANTA, GA. Mr. ALLEN. In this day of overrides, it seems to me this morning vou have been suffering through what you might call time overrun. We assure you we will give you a time underrun.
I have a prepared statement that I want to read.
I am sure this hearing has been convened in order that you may receive some specific examples of the impact of Federal regulations and thus become better educated. Let me recall one definition of education; "education is what is left over after you forget all the facts."
With this in mind, I want to address myself realistically to the impact of Federal regulations on a company that I own. It is not the Inman Co., the company with which I am generally associated as president and chief executive officer. If anyone is sufficiently curious about the identity of the company to which the following points refer, the Federal identification number is 58–1135695.
The company I am using as an example sells carbon dioxide gas in a solid form, generally known as dry ice or hot ice. The company's sales in 1975 were $316,701; it generated a pretax profit of $40,004 which produced roughly $27,000 as an after-tax figure, or 8.6 percent of sales. Within many business circles this percentage is perfectly reasonable, and, to me, it represents an adequate return on investment.
The company employs six people; of these six, one is the general manager, one fulfills a secretarial and bookkeeping function, three are routepersons, and one is a warehouseperson. The company is a stock corporation and was organized under the laws of the State of Georgia in June 1972. In many respects, it is very similar to a significant number of small proprietorships, partnerships, and corporations which, I believe, constitute part of the economic stability of this country. A specific reason for this belief is that the company's sales, gross margins, and profits increased in 1974 over 1973 and did so again, significantly, I might add, in 1975 over 1974. These results do not seem to parallel the economic trends of the recession we have been going through during the past 2 years.
At this point, I trust you have sufficient background for me to make two points that I think are tremendously relevant to your subcommittee's investigations.
The first point is that we are not a visable company. That is, we are small, not large: we don't advertise; we hire only by reference; we go about our jobs competently and quietly, selling a product to a small, specialized market. As a result, neither are we subjected to EEOC complaints such as Southern Bell, certainly a more visable company, has been, nor are we subjected to OSHA investigations such as Georgia Power Co. has been. Of relevance here is that there may be specific Federal regulations of which we are in violation; however, we have never been caught.
Let me give you an illustration. I suspect that the way our warehouse is ventilated is a violation of the law. As mentioned previously, we handle dry ice which is carbon dioxide gas in a solid form. When the ice sublimates, or evaporates, it does so in the form of carbon dioxide gas. This gas makes certain warehouse processes impossible to sustain for more than short periods of time. The way we ventilate the building is, simply, by opening the warehouse doors. The emplovees accent this condition, work within the limits that it dictates, and get the job done. An inquiry as to what occupational or safety hazards being caused has not been made due to a lack of time, resources, and expertise to seek out, understand, and finance any improvements.
Emphasis is placed primarily on meeting the payroll and receiving a fair return on investment. And, as I mentioned earlier, I suspect that we have not been caught because we are not big and visible.
My second point is suggested above. Specifically, it is that in a small business there is general knowledge about myriads of rules and regulations but to which there is no particular inclination to comply. I understand and accept the principle that ignorance of the law is not a valid defense; but since this is a small, tightly staffed company instead of an interpretative, information-gathering agency, there are a number of rules and regulations to which we do not even address ourselves. And, let me make clear, we will not until we are caught. This posture is not one of disregard for the law; rather it might be described as “catch-as-catch-can,” or, “the squeaky wheel gets the oil.”
I hope the above points are informative and are of some value to you. I have enjoyed having the opportunity to make these comments, and I will try to answer any questions you may have.
Senator NUNN. We will now hear from Mr. Cadenhead.
TESTIMONY OF CURTIS H. CADENHEAD, JR., PARTNER OF
HASKINS & SELLS
Mr. CADENHEAD. My remarks are directed toward the problems of a small business in dealing with the various State and Federal Government regulations and the related reports required thereby and do not cover regulated industries such as public utilities, transportation, banking, and insurance.
The small businessman frequently finds himself in the position of being confronted with numerous regulations and reports of which he may or may not have adequate knowledge. For such a businessman, lack of knowledge of such regulations may place him at an advantageous competitive economic position compared with the businessman who has the proper knowledge. I say this from the standpoint that the small businessman knowing of these regulations will be faced with retaining either legal counsel, outside accountants, or other consultants to advise him on the required reports and possibly to assist him in their preparation. This, of course, would be at no small cost to the business. Alternatively, the small businessman may attempt to research the regulations and prepare the reports himself, thereby taking the time which he would otherwise spend attempting to make additional sales or obtain additional revenue. In any event, the small businessman for the most part will resent the requirement to prepare reports or to comply with regulations of which he does not understand the purpose or see the benefit to himself and other small businesses.
In those instances, where there has been a proliferation of unnecessary regulations and reports, both State and Federal Governments as well as the businessman pay the cost of compliance inasmuch as these costs are deductible from taxable income thereby reducing taxes otherwise paid to the applicable government.
In many instances, there is duplication because of lack of coordination of reporting requirements among Federal and State agencies and governments where it appears to be entirely unnecessary. Many of the duplicated reporting requirements relate to taxes. An example of this might be the quarterly payroll reports of earnings and withheld taxes of employees containing the same information for the State as well as the Internal Revenue Service. While it might be a mammoth task, the obvious question is why a common report or bank of information might not be used by both.
Additional confusion is created by States' having different forms and timing considerations. For example, some States require monthly filing and payment of sales taxes, some require quarterly, and some both. Again, it would be a mammoth task, but forms could be made basically similar and filing and payment requirements could be standardized with the frequency of filing minimized.
Compounding the problem for the small businessman is the continual change of forms used for reporting. New reporting requirements are frequently faced by the small businessman which appear to him to be no more than some government agency's or employee's attempt to justify continuation.
One small businessman with whom I discussed these problems recently received for the first time an OSHA form to be filed, although the act has existed for some time, reports have been required annually, and he has been in business during the entire life of the act.
Many of the regulations and reporting requirements of course, relate to employees, employment, and personnel. As examples of these, the Georgia Department of Labor requires a quarterly report identifying new employees during the quarter; Bureau of Labor Statistics, Occupational Safety and Health Act requires an annual report identifying injuries on the job, and another annual report calls for statistics on number of employées, et cetera; and the Economic Employment Opportunity Commission requires through the affirmative action program that statistics be maintained to record appropriate information about each applicant or candidate for a position, or resume received, regardless of whether or not the application or resume were solicited by the prospective employer. This documentation alone requires about 5 minutes per candidate.
Another recently enacted law requiring action by businessmen is the Employee Retirement Income Security Act with its numerous reporting forms and deadlines. It is impossible for the small businessman to attempt compliance with this act without assistance from a myriad of consultants.
One small business which I interviewed, having net worth of $100,000 and monthly sales of $40,000 estimated that its president spends about 2 days a month complying with regulations and their reporting requirements.
In discussing regulation with businessmen, it becomes apparent that the cost of compliance and reporting progressively increases with the size of the business. This is due to some extent to such businesses? gaining more knowledge about the regulations applicable to them as well as the economic reality that agencies supervising compliance with regulation tend to spend more time with those where the benefits to the agency will be the greatest.
Senator NUNN. Thank you very much, Mr. Allen and Mr. Cadenhead. I read your statements, even though I was not here the whole time and I found them very helpful. I wish we had time for a lot of questions but I am afraid we better do our best to get back on schedule. We appreciate your time underrun. That is very unusual in any kind of governmental hearing.
Mr. LEVITAS. Thank you very much.
Senator Nunn. The next witnesses are Mr. Glenn Dewberry and James W. Howard.
TESTIMONY OF L. GLENN DEWBERRY, JR., PRESIDENT, ATLANTIC
STEEL CO., ATLANTA, GA. Mr. DEWBERRY. With your permission, I will excerpt from my statement.
Senator Nunn. I appreciate very much your giving it to us.
Mr. DEWBERRY. We are one of the larger employers in Georgia. We have about 1,700 employees and about 1,800 stockholders and we are an independent company, not associated with other companies in the manufacture of steel. I want to say to you that some of the information you have covered is contained in my statement and I will skip over it to conserve time. I will get down to specific examples that can be used by your committee.
Our company has just recently undergone an expansion and relocation, and our first phase which is costing about $30 million, began operation in December. We have installed new environmental control equipment for a cost of over $212 million. We have taken steps to prevent rainwater which comes in contact with the roof of the buildings from running back into the creek as well as all process water from entering the creeks on the property. All runoff and process water is recirculated and if need be is pumped into a dry lake for evaporation. We have done everything that we know to do to meet the environmental control regulations.
We believe we have met all requirements for the new location as well as all requirements at the Atlanta location since we now have a permit to operate in both locations. We think that we have done an outstanding job at each location.
The pollution control equipment we have installed at the new location will cost us at least $400,000 a year to operate. This cost includes the electrical charge as well as other operating and routine repair costs. One of our estimates indicates this figure may run as high as $900,000 per year. None of these dollars add to our productivity; only our cost.
I have a couple of examples under OSHA I would like to talk about. One of those was just commented on by Mr. Fitzgerald and that is the noise standard, that section 1910.95 states when an employee is subjected to sound exceeding those listed in tables G-16, feasible administrative or engineering controls will be utilized. If such controls fail to reduce sound levels within the level of table G-16, personal protective equipment will be provided and used to reduce sound levels to within the levels of the table.
The word feasible is the problem word that industry is concerned with. We have our opinion and the OSHA people have another. We do not know what feasible means and they certainly don't. We think.