Mr. Chairman, and Members of the Committee:

Good afternoon. My name is Francis J. Frodyma, and I am OSHA's Deputy Director of Policy. Thank you for this opportunity to appear today and to describe the Occupational Safety and Health Administration's (OSHA) efforts to protect workers in the chemical industry. You have specifically asked me to discuss the impact of the Year 2000 Technology Problem (Y2K) on the chemical industry and initiatives that could help minimize risks associated with potential computer-related problems. First, I would like to provide some background for the Committee on who we are and what we do.

OSHA'S MISSION AND RESOURCES

OSHA's core mission is to provide a safe and healthful workplace for every working man and woman in the Nation. The Occupational Safety and Health Act of 1970 (OSH Act) is very broad; it covers over 100 million workers in more than six million workplaces. The OSH Act covers employers and employees in all industrial sectors including manufacturing, construction, longshoring, chemicals, heath care, retail and wholesale trade, and the service sector. The OSH Act also allows States to operate their own OSHA-approved safety and health programs, as long as they are at least as effective as the Federal program. Twenty-five States and Territories have elected to do so. In the remainder of the States, the Federal program is in effect. Counting inspectors who work in the 25 States and Territories which operate their own OSHA programs, we have available about 2,000 inspectors to accomplish our mission.

The tools available to OSHA are inspections, standards, education, information and compliance assistance. OSHA conducts several types of inspections (listed in descending order of priority): inspectors respond to reports of imminent danger, investigate fatalities and catastrophes, and conduct workplace visits after complaints about workplace conditions from employees. OSHA also conducts inspections in response to referrals from other Federal agencies, or state and local authorities. Finally, OSHA conducts programmed inspections in workplaces with the highest injury and illness rates.

In addition to enforcing its standards, OSHA forms partnerships with workers, employers, insurance companies, safety and health professional groups, trade associations and anyone else interested in improving workplace conditions. Partnerships may be local or nationwide. For example, with the assistance of the Small Business Administration (SBA), OSHA held a Small Business Forum in March in Washington, D.C. The forum showcased information and services available to help small businesses improve safety and health. OSHA plans to follow-up on this conference by holding a series of similar conferences throughout the Nation during National Small Business Week in May.

OSHA also provides compliance assistance, in many forms, to employers and employees. We publish compliance guides, fact sheets, a quarterly magazine, and directives that allow enforcement techniques to adapt to new technologies and ways of thinking. We make available interactive software advisors, and we maintain a web site with copies of our standards and interpretations. Training is available at our Institute in Des Plaines, Illinois. A grants program funds additional training and education programs. Also, OSHA plans to place a compliance assistance specialist in each Federal area office, to provide advice and assistance to businesses, particularly small business employers. These staff will be devoted exclusively to providing general advice on regulations and programs in response to requests by employers, employees, and others in their community.

By using each of these tools in a results-oriented manner, OSHA has seen the rate of on-the-job injuries and illnesses decline for five consecutive years. In fact the rate for 1997, the last year of available data, was the lowest since the Labor Department began reporting this information in the early 1970's. However, many challenges remain. Even with the decline in rates there were more than six million workplace injuries and illnesses in our Nation in 1997. More than 6,000 workers died from on-the-job injuries in 1997 and many thousands more die each year as a result of chronic diseases related to occupational exposures to toxic substances.

OSHA AND THE CHEMICAL INDUSTRY

OSHA has been particularly concerned about the chemical industry since the mid-1980's, when, starting with the Bhopal, India, catastrophe, a series of deadly fires and explosions occurred in the chemical industry. In response, OSHA implemented the "PETROSEP", a special emphasis program, to conduct focused inspections in the petro-chemical industry. In the early 1990's, OSHA sponsored a conference of industry, labor, and government to discuss lessons learned from some of the catastrophic accidents of the 1980's. And in 1995, the tragic fire and explosion at the Napp Technologies, Inc., facility in Lodi, New Jersey, once again drew attention to the potential for devastating accidents in the chemical industry, and the need to better understand the causes of these types of incidents in order to prevent similar tragedies in the future.

Yet despite the impression -- created by catastrophic accidental releases and other high-publicity events -- that this is a dangerous industry, the overall injury/illness rate for the chemical production sector (4.8 per 100 workers) is substantially below the national average (7.1 per 100). Therefore, the chemical industry has not been targeted for OSHA programmed inspections. To illustrate, in Fiscal Year 1998, Federal OSHA conducted about 950 inspections in the chemical industry (Standard Industrial Classification (SIC) Codes 28 and 29), out of about 32,000 total inspections.

In fact, a number of chemical companies are enrolled in OSHA's Voluntary Protection Program (VPP), which has existed since July 1982. The VPP recognizes exemplary companies that go beyond the minimum requirements prescribed by OSHA's standards. There are specific criteria for joining the VPP, including a requirement that companies establish workplace safety and health programs. VPP participants are exempt from routine inspections, but are monitored by OSHA to ensure that employees are involved in the program and that worksite hazards are eliminated. There are now 414 participating sites in the Federal VPP, of which 115 are chemical industry sites.

However, OSHA recognizes the continuing need to address the risk of catastrophic accidents in this industry, including those that might be caused by equipment failure due to the Y2K problem. As I mentioned, OSHA has in the past used such techniques as a special emphasis program, in which the agency scheduled inspections in a limited number of plants using the most dangerous and reactive chemicals. OSHA's inspectors reviewed the design of the physical plants and safety systems, including recordkeeping protocols and practices. They checked each plant's safety management systems to be sure that there were clear and effective emergency response procedures and that employers and employees knew their responsibilities in an emergency and had received proper training. OSHA's inspections in the chemical industry today are drawn from the techniques used in the special emphasis program a decade ago.

OSHA enforces numerous safety and health standards applicable to the chemical processing industry. These rules include a standard on lockout/tagout which requires energy source equipment to be turned off before any maintenance is begun. This regulation helps to prevent accidental chemical releases. Other applicable regulations include standards for handling and storage of flammable and combustible liquids, design and use of storage tanks, fire protection, permissible exposure limits for 600 air contaminants, and use of respiratory protection and other personal protective equipment. Two of the most important regulations for this industry are OSHA's Hazard Communication Standard, which requires manufacturers and employers to warn workers about the chemicals to which they are exposed, and the Standard on Process Safety Management of Highly Hazardous Chemicals (PSM).

PSM AND THE Y2K PROBLEM

PSM in part requires employers who possess a threshold quantity or greater of any of the substances on OSHA's list of highly hazardous chemicals to assess the risks posed to workers and develop a plan for mitigating those risks. The employer must, as a part of this process hazard analysis, evaluate any equipment and controls which can affect the integrity of a process which contains a threshold quantity or greater of a covered highly hazardous substance. Therefore, under the rule, employers have a responsibility to assure that the effects of the Y2K problem on any such equipment or controls are appropriately managed.

However, for OSHA to rely solely on enforcement of OSHA regulations through PSM inspections to ensure Y2K readiness in the chemical industry is not practical, in part, for the following reasons:

*    Coverage

- Whether a facility is covered by OSHA's PSM standard depends on the quantities of highly hazardous chemicals on site. Coverage is not determined by industry or SIC Code. Thus, there are many facilities outside the chemical industry which are covered by the PSM rule, and some facilities within the chemical industry which are not covered. Coverage status can change over time if the quantities of hazardous substances at the worksite change. So, many chemical facilities potentially facing Y2K compliance issues are, strictly speaking, not covered by the PSM rule, and many covered facilities do not engage in the type of processing activities considered most at risk of Y2K complications.

*    Resources

- PSM inspections are complex and time-consuming. The average PSM inspection takes over four weeks. In addition, OSHA has few inspectors with the necessary training and experience to conduct a PSM inspection targeted at Y2K concerns.

- Moreover, OSHA's inspection force of 2,000 is responsible for over six million establishments. Therefore OSHA must target its resources at the most dangerous workplaces, as indicated partly by higher-than-average injury and illness rates. As I mentioned earlier, the chemical industry has a substantially lower-than-average injury and illness rate. OSHA could not conduct a program of Y2K inspections at PSM-covered workplaces in the chemical industry without diverting limited enforcement resources from industries where workers face a much higher probability of death or injury.

OSHA'S GENERAL DUTY CLAUSE

In addition to the Process Safety Management regulation, we have considered using Section 5(a)(1) of the OSH Act to enforce Y2K readiness measures in firms where a potential for accidental release exists because of Y2K-related equipment failure. However, it is important for the Committee to understand that OSHA must be judicious in its use of the General Duty clause, as it requires application of strict legal tests. These legal requirements include documentation that workers are actually exposed to a hazard, that the hazard presents a serious risk to workers, that the employer or its industry recognizes the hazard, and that there are feasible and useful methods available to control or abate the hazard. Because it is often difficult to establish all these elements, the General Duty clause would be a cumbersome tool with which to address Y2K-related equipment failures.

CERTIFICATION OF Y2K READINESS

Some have urged that chemical companies be required to submit a certification of Y2K readiness to OSHA. In order to compel such a certification, absent a Congressional mandate that directs reporting, OSHA would have to initiate rulemaking action, which could be a lengthy process. And presuming the regulatory and procedural requirements could somehow be waived, it is unclear what decisive action OSHA could take upon receipt of certification documents from tens of thousands of companies, given the limited number of trained staff exist to review the submissions and the available time frame. In summary, it does not appear that any regulatory or certification approaches are viable options for OSHA to address Y2K issues.

OUTREACH AND AWARENESS

For all these reasons, OSHA has concluded that the existing regulatory framework will not effectively deal with the Y2K problem in the chemical industry. Instead, OSHA feels it can be most effective through a compliance assistance approach that involves outreach and the dissemination of educational materials. This approach was also suggested by the U.S. Chemical Safety and Hazard Investigation Board in its March 1999 Report to this Committee. As part of its efforts, OSHA has taken the following steps:

*    Internet and Website Materials

- In September, 1998, OSHA published a Fact Sheet, entitled "How the Millennium Bug Can Affect Workplace Safety and Health." The sheet lists possible failure conditions and identifies specific hardware and electronic devices that should be evaluated for possible errors. The fact sheet has been available through the OSHA Home Page since December, 1998.

- In February, 1999, OSHA alerted its Area Directors, Regional Administrators, State Designees, and Consultation Project managers of two additional web sites which contain valuable Y2K information, to better equip OSHA field personnel to educate the businesses we inspect. The first is the President's Council on Y2K Conversion Website, which provides information on the extent of the problem in related industries that might affect chemical processors, such as utilities and transportation. The second site is the SBA's Y2K Webpage, which describes checklists, self assessment guides, and other materials that small and medium-sized enterprises can use to assess their potential for problems associated with Y2K.

*    Dissemination of Information to High Hazard Employers

- In April, 1999, OSHA mailed letters to 12,500 employers with the highest injury rates in the nation, alerting them that they needed to take action to improve their safety record. OSHA included the Y2K Fact Sheet in that mailing, which was sent to over 1,200 companies who use chemicals in high volume, such as those in the chemical, printing, rubber and paper industries.

*    Y2K Information Dissemination during OSHA Inspections

- Federal OSHA conducts about 32,000 inspections annually. Each compliance officer now distributes Y2K fact sheets to all employers after every inspection, regardless of industry inspected, as Y2K problems can occur not just in chemical facilities, but in any environment where microprocessors are installed. Also, the fact sheets have been made available to State OSHA inspectors, who conduct an additional 60,000 inspections annually.

*    Y2K Information during Consultation Visits

- OSHA consultation programs, which provide free consultative services to employers in all 50 states, also distribute the Y2K fact sheet. Consultants visit over 20,000 workplaces annually, and give priority to small and medium-sized firms.

*    Y2K Information Distribution through the Voluntary Protection Programs Participants' Association (VPPPA)

- We are asking the VPPPA to distribute Y2K information to its member companies. In addition to informing their member companies, the VPPPA will urge their members to pass on Y2K information to suppliers, distributors, customers, and others with whom they interact on a regular basis.

In addition to OSHA's efforts, we understand that a variety of chemical industry organizations have been conducting Y2K readiness surveys and raising Y2K awareness among chemical companies nationwide. Each of these efforts is important to minimize the risk to the chemical industry from Y2K-related equipment failures.

CONCLUSION

OSHA can most effectively address Y2K through aggressive outreach and education efforts, not through enforcement or certification programs. We agree with the Chemical Safety and Hazard Investigation Board's recommendations to pursue this avenue in addressing the Y2K problem. We will continue to distribute information and seek new ways to spread the word about the need for every employer to seriously and thoroughly consider how Y2K might affect the health and safety of its employees.

Mr. Chairman, this concludes my prepared statement. I would be pleased to answer any questions the Committee may have at this time.