Impact of Regulatory Compliance Costs on Small Airports (2013)

Below is the uncorrected machine-read text of this chapter, intended to provide our own search engines and external engines with highly rich, chapter-representative searchable text of each book. Because it is UNCORRECTED material, please consider the following text as a useful but insufficient proxy for the authoritative book pages.

59 As discussed in detail in Technical Appendix 5, airport operators generally are not subject to direct regulation by OSHA. Nevertheless, airports may be subject to many OSHA requirements through mandatory or voluntary state pro- grams, or through local regulations. For ease of reference, occupational safety and health requirements will be referred to as “OSHA requirements,” even though OSHA does not have direct jurisdiction over most airport operators. Moreover, most requirements adopted during the study period would not have a significant cost impact on small air- ports. For example, new requirements for welding on stainless steel or other hexavalent chromium-containing products are potentially costly. They require an initial exposure assessment, and possibly engineering controls, training, and medical sur- veillance. The actual impact on airports is unclear. On the one hand, 98 percent of responding airports relied on contrac- tors to perform construction and renovation work, as will be discussed later in the chapter. On the other hand, 59 percent reported being responsible for welding in the environmental portion of the survey, as discussed in Chapter 4. Six of the listed OSHA standards primarily affect the construction industry. As noted, 98 percent of responding airports contract out construction. In these cases, the con- struction company—not the airport—bears the cost of complying with the construction regulations, such as those governing high visibility, cranes, signs, barricades, and steel erection. To the extent that airports use contractors for construction, airports would not be directly responsible for OSHA compliance. Rather compliance costs would fall on airport contractors, who would allocate the costs among all of their contracts. The questions on this subject focused on two areas. First, the survey focused on whether the respondents had imple- mented various policies or programs that could generate additional compliance costs for occupational safety and health. Second, the survey focused on the types of work or activities airport employees perform. Many of the OSHA requirements adopted during the study period involve con- struction or construction-related activities. 6.1 Airport Population Affected by Requirements As shown in Figure 33, only 9 percent of responding air- ports reported adding staff to comply with occupational safety and health requirements. Four percent are pursuing OSHA’s Voluntary Protective Program certification, and 13 percent use OSHA’s On-Site Consultation Program. Thirty-nine per- cent reported paying their workers compensation carrier for occupational safety and health services. In addition, 43 percent of responding airports reported they track staff hours spent in health and safety training, and 9 percent reported they tracked expenditures for employee protective equipment. Costs reported by airports in these groups are discussed in the next section. The survey included four questions on the use of airport employees and the use of contractors. As shown in Figure 34, 98 percent of responding airports reported using contrac- tors for construction and renovation. However, 26 percent reported also using airport employees for new construction and 22 percent reported using airport employees for building renovation. Forty percent of responding airports reported their maintenance staff entered confined spaces. This situa- tion could trigger the requirement to provide personal pro- tective equipment to the maintenance staff. 6.2 Published Cost Projections Thirteen of the 21 regulatory and compliance require- ments listed in Table A-5 have OSHA estimates of compliance costs. For 11 of the items, OSHA published an estimate of annual cost per affected firm. For these 11 items, the highest cost per affected firm was $557. This figure suggests a modest impact. One item (Table A-5, Item 11) rescinded a require- ment, representing total projected savings of $29.5 million. C H A P T E R 6 Occupational Safety and Health Requirements

60 6.3 Unit Cost Estimates from Phase 2 Survey Results Table 11 summarizes costs reported by airports related to general programs that may generate OSHA costs. Table 12 summarizes the OSHA compliance costs associated with construction and with the use of employees in confined spaces. Because of the disparate nature of the requirements and number of airports reporting costs, the costs of the indi- vidual items were not totaled. Costs are presented on a per- airport basis, because there did not appear to be a relationship between compliance costs and activity levels. The costs reported in the survey are total compliance costs, not the incremental costs of complying with new requirements Ai rp or ts 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 22% 26% 40% 98% Airport staff for major renovations Airport staff for construction Airport staff enter confined spaces Contractors for construction, renovation Figure 34. Use of airport staff and contractors for OSHA-regulated programs. Estimated Cost of Compliance Requirement(s) 25th Percentile 75th Percentile Interquartile Mean Cost of additional staff to administer OSHA requirements1 $25,000 $25,000 $25,000 Cost of using insurance carrier for OSHA functions1 $125,000 $125,000 $125,000 Cost of staff training for OSHA $4,900 $11,438 $9,138 Cost of personal protective equipment for employees $1,000 $12,000 $6,267 1 Only one airport provided cost data for this requirement. Table 11. Summary of per-airport costs of OSHA-related programs. Figure 33. Airports reporting programs generating OSHA costs. 4% 9% 9% 13% 39% 43% Pursuing OSHA VPP certification Added staff for OSHA activities Track cost of personal protective equipment Use OSHA On- site Consultation Program Pay workers compensation carrier for OSHA services Track staff time for safety training Ai rp or ts 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

61 adopted during the study period. Thus, comparison with OSHA’s published cost estimates cannot be made. As shown in Table 11, the most costly single item reported was payment to the airport’s insurance carrier for OSHA functions—at $125,000. However, only a single airport reported costs in this area. The least costly requirement was providing personal protective equipment to employees— at $6,267. Of the compliance costs summarized in Table 12, the high- est reported costs were for compliance with requirements for employees entering confined spaces ($3,875). However, only two airports provided cost data. 6.4 Relationship of Costs and Activity Levels Analyses were performed to determine any relationship between the costs of OSHA requirements and two measures of activity—passenger enplanements and commercial oper- ations, as described in Chapter 3. After excluding the highest and lowest costs, none of the OSHA compliance require- ments that were analyzed appear to be related to costs and either passenger enplanements or commercial operations. 6.5 Industry Cost Estimates Industry cost impacts were determined using the same methodology as described in Section 3.3. Because there did not appear to be a relationship between costs and activity lev- els, industry costs were estimated using average (interquar- tile mean) cost per airport. Table 13 summarizes the industry costs of the OSHA requirements for each of the two broad categories of costs summarized in Tables 11 and 12. Because industry cost estimates account for the number of airports affected by individual requirements, Table 13 includes esti- mates of the total compliance costs. As shown in Table 13, the most costly single OSHA-related item for the airport industry was for the use of airports’ insur- ance carriers for OSHA compliance at around $8.8 million. Estimated Cost of Compliance Requirement(s) 25th Percentile 75th Percentile Interquartile Mean Compliance costs for employees entering confined spaces1 $3,813 $3,938 $3,875 Compliance costs for employees performing new construction1 $1,250 $1,750 $1,500 Compliance costs for employees performing major building renovations $750 $1,500 $1,000 1 Interquartile mean value cannot be determined for items with two responses. Mean value is used as a proxy. Table 12. Summary of per-airport health and safety costs associated with construction and maintenance. Requirement(s) Estimated Cost per Airport (Interquartile Mean) Estimated Industry OSHA Cost Airports Subject to Requirement Airports Affected by Requirement1 Industry OSHA Cost OSHA-Related Programs Cost of additional staff to administer OSHA requirements $25,000 310 9% $698,000 Cost of using insurance carrier for OSHA functions $125,000 310 23% $8,765,000 Cost of staff training for OSHA2 $9,138 310 43% $1,218,000 Cost of personal protective equipment for employees2 $6,267 310 50% $971,000 Total Costs $11,652,000 Health and Safety Costs Associated with Construction Compliance costs for employees entering confined spaces $3,875 310 40% $481,000 Compliance costs for employees performing new construction $1,500 310 26% $121,000 Compliance costs for employees performing major building renovations $1,000 310 22% $68,000 Total Costs $670,000 Grand Total Costs $12,322,000 1 Unless otherwise indicated, percentage is based on number of airports reporting an impact in Phase 1 survey. 2 Percentage is based on number of airports that reported tracking costs of this requirement. Table 13. Summary of industry cost impacts of OSHA requirements.

62 The industry cost estimate should be used with caution, because it is based on a single airport response, as shown in Technical Appendix 5. Also, many airports report that the cost of their OSHA compliance services is included in annual insurance premiums. Total OSHA compliance costs were $12.3 million, with about $11.7 million attributable to the category of OSHA-related programs. 6.6 Funding Sources 6.6.1 Potential Funding Sources No sources of financial assistance to airports specifically linked to OSHA compliance were identified. A few states have grant programs administered through their state-run workers compensation programs. These programs provide funding for implementation of controls to reduce injuries resulting in work- ers’ compensation claims, not necessarily OSHA compliance. If OSHA compliance increases the costs of construction projects funded with AIP grants or PFCs, these funds could be used to pay for the incremental costs. 6.6.2 Reported Use of Funds Because significant outside funding sources were not iden- tified for OSHA compliance, the Phase 2 survey question- naire did not include questions on funding sources.