[Federal Register Volume 68, Number 235 (Monday, December 8, 2003)]
[Notices]
[Pages 68476-68479]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-30326]



[[Page 68475]]

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Part III





Department of Labor





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Revisions to the Voluntary Protection Programs To Provide Safe and 
Healthful Working Conditions; Notice

  Federal Register / Vol. 68, No. 235 / Monday, December 8, 2003 / 
Notices  

[[Page 68476]]


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DEPARTMENT OF LABOR

Occupational Safety and Health Administration


Revisions to the Voluntary Protection Programs To Provide Safe 
and Healthful Working Conditions

AGENCY: Occupational Safety and Health Administration (OSHA), Labor.

ACTION: Notice of revisions to the program.

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SUMMARY: The Occupational Safety and Health Administration, wishing to 
revise the benchmark injury and illness rates used within its Voluntary 
Protection Programs (VPP), published proposed changes and requested 
comments from the public (Federal Register notice 68 FR 44181, July 25, 
2003). The Agency now publishes a discussion of those comments and its 
final VPP revisions. The revisions change the way OSHA uses Bureau of 
Labor Statistics industry injury and illness rates to determine whether 
VPP applicants and participants meet the rate requirements for the VPP 
Star Program. The revisions also apply to construction applicants' 
qualification for the Merit Program. No other VPP requirements are 
changed. Participants will continue to undergo rigorous OSHA assessment 
to ensure that only worksites with excellent, effective safety and 
health management systems qualify for VPP Star.

EFFECTIVE DATE: December 8, 2003.

FOR FURTHER INFORMATION CONTACT: Cathy Oliver, Director, Office of 
Partnerships and Recognition, Occupational Safety and Health 
Administration, Room N-3700, 200 Constitution Ave. NW., Washington, DC 
20210, telephone (202) 693-2213.

SUPPLEMENTARY INFORMATION:

I. Introduction

A. Background

    The Voluntary Protection Programs (VPP), adopted by OSHA in Federal 
Register notice 47 FR 29025, July 2, 1982, have established the 
efficacy of cooperative action among government, industry, and labor to 
address worker safety and health issues and expand worker protection. 
VPP participation requirements center on comprehensive management 
systems with active employee involvement to prevent or control the 
safety and health hazards at the worksite. Employers who qualify 
generally view OSHA standards as a minimum level of safety and health 
performance and set their own more stringent standards where necessary 
for effective employee protection.
    One way that OSHA determines the qualification of applicants and 
the continuing qualification of participants in the VPP Star Program, 
the most challenging participation category, is to compare their injury 
and illness rates to industry rates--benchmarks--published annually by 
the Bureau of Labor Statistics (BLS). For Star eligibility, rates must 
be below the benchmark BLS rates. This notice changes the benchmark 
rates that OSHA employs.
    Until now, the benchmarks have been two rates obtained from the 
most recent year's BLS industry averages for nonfatal injuries and 
illnesses. These are the industry average incidence rate for nonfatal 
injuries and illnesses (at the most precise level available), and the 
industry average incidence rate for cases involving days away from work 
and restricted work activity. OSHA has been concerned for some time 
about the effect on some VPP applicants and participants of substantial 
fluctuations from year to year in a limited number of these BLS 
industry rates. These fluctuations, statistical anomalies related to 
BLS sampling, have resulted in the creation of an unpredictable moving 
target. In any particular year, the fluctuating rate may not fairly 
represent the injury and illness situation in an industry. There is no 
easy solution to this problem. Injury and illness rates are useful 
tools in judging how well a worksite is protecting its employees. OSHA 
believes, however, that the goals of VPP are not well served when 
worksites that have established excellent protective systems and that 
are steadily improving their injury and illness rates fail to obtain 
Star approval because of statistical anomalies in national rates.
    In a July 25, 2003 Federal Register notice (68 FR 44181), OSHA 
proposed a change in the VPP Star benchmark rates and requested public 
comment. After careful consideration, including analysis of comments 
received, OSHA has decided to adopt its original proposal. To qualify 
for Star, applicants' and participants' rates will need to be below the 
two BLS industry rates for at least 1 of the 3 most recent years 
published. This change also will apply to construction applicants' 
qualification for the Merit Program.
    No other initial application requirements or ongoing requirements 
for continued participation are changed. Participants will continue to 
undergo rigorous OSHA assessment to ensure that only worksites with 
excellent, effective safety and health management systems qualify for 
VPP Star.

B. Statutory Framework

    The Occupational Safety and Health Act of 1970, 29 U.S.C. 651 et 
seq., was enacted ``to assure so far as possible every working man and 
woman in the Nation safe and healthful working conditions and to 
preserve our human resources * * *.''
    Section 2(b) specifies the measures by which the Congress would 
have OSHA carry out these purposes. They include the following 
provisions that establish the legislative framework for the Voluntary 
Protection Programs:
    * * * (1) by encouraging employers and employees in their efforts 
to reduce the number of occupational safety and health hazards at their 
places of employment, and to stimulate employers and employees to 
institute new and to perfect existing programs for providing safe and 
healthful working conditions;
    * * * (4) by building upon advances already made through employer 
and employee initiative for providing safe and healthful working 
conditions;
    * * * (5)* * * by developing innovative methods, techniques, and 
approaches for dealing with occupational safety and health problems;
    * * * (13) by encouraging joint labor-management efforts to reduce 
injuries and disease arising out of employment.

II. Discussion of the Comments

    This section includes a review of the public comments submitted to 
OSHA in response to its July 25, 2003 notice. OSHA received comments 
from 21 respondents. These included seven VPP participating companies, 
three companies attempting to qualify for VPP, one labor organization, 
four trade associations, two private consultants, two other 
occupational safety and health professionals, the Voluntary Protection 
Programs Participants' Association, and one respondent contacting OSHA 
on a matter unrelated to VPP.

Overview of Comments

    Of the 20 relevant responses, 11 fully supported OSHA's proposal. 
These included current VPP Star participants, companies seeking VPP 
approval, and other organizations. A twelfth respondent wrote that the 
proposal was a ``step in the right direction'' (Manuel (Mel) Rosas, 
Safety and Health Consultant, Carolinas Associated General Contractors) 
and suggested OSHA go further by welcoming into VPP any employer that 
applies and then mentoring those who need help to meet program 
requirements. OSHA agrees

[[Page 68477]]

that all companies willing to make the effort to achieve VPP 
recognition deserve the opportunity and the help they may need. OSHA, 
VPP participants, and others offer outreach, mentoring, VPP application 
workshops, and training opportunities to interested employers. OSHA is 
in the process of launching new pilot initiatives designed to assist 
and recognize incremental improvements in the safety and health 
management systems of employers willing to commit to the VPP process.
    A general theme among the nine respondents who opposed the proposed 
change was concern that OSHA maintain the high standards of its premier 
recognition program. Many of the nine interpreted OSHA's proposal as a 
weakening of VPP eligibility requirements that, as one respondent put 
it, ``would allow substandard applicants [to] achieve the most 
prestigious safety designation in the United States, that being a VPP 
Star facility.'' (James J. Mercurio, CSP.) See II.I. below for a 
discussion of this concern.
    Several respondents took this opportunity to make other 
suggestions--not related to the benchmark rate issue--for improving 
VPP. OSHA appreciates this input and intends to consider these 
suggestions in its continuing effort to improve the program.
    What follows is a discussion of alternative proposals put forward 
by respondents.

A. Address Root Cause of the Rate Fluctuations

    One respondent noted that OSHA's proposal did not address the root 
cause of the rate fluctuations. Bureau of Labor Statistics (BLS) yearly 
injury and illness rates fluctuate because of the limited size of the 
sample and the different establishments surveyed each year. Any attempt 
to eliminate the substantial fluctuations encountered in some 
industries would require BLS to survey a much larger sample of 
employers each year. BLS has no plans to change its sampling 
methodology at this time.

B. Alternative Use of BLS Average Rates

    Two respondents favored use of a ``rolling average'' derived from 3 
or 5 years of Bureau of Labor Statistics industry average rates. A 
site's 3-year rates would have to be below this multiple-year industry 
average to qualify for Star. Before issuing its proposal, OSHA 
considered and rejected this approach. A rolling average of, for 
example, 3 years of BLS industry averages would be meaningful only if 
the hours worked were roughly equal for each year. However, hours 
worked in an industry vary from year to year, depending on the economy. 
It is possible, using unpublished BLS data, to calculate legitimate 3-
year averages. Because VPP spans so many industries, however, this 
would be a costly, time-consuming task. Each year new 3-year averages 
would need to be calculated and published. OSHA does not consider this 
a reasonable solution.

C. Alternative To Using National Statistics

    One respondent objected to using national statistics when judging a 
company's qualification for Star. The respondent suggested that OSHA 
``put the pressure on the companies to really keep the employees safe. 
Use a hard gauge as a standard. For example, zero deaths, no lost 
workdays, or no broken bones.'' The agency has no problem supporting a 
goal of zero deaths. It believes, however, that setting the injury and 
illness rate standard for VPP qualification as high as the respondent 
suggests would be counter-productive. Fewer worksites, particularly 
those in traditionally hazardous industries, would be willing to commit 
to the VPP process, a process that has proven its value as a feasible 
and flexible way to reduce injuries, illnesses, and fatalities 
substantially. The number of qualifying worksites would drop 
drastically. Fewer sites would enjoy the benefits of VPP participation, 
not least of which are the prestige and national recognition that 
invigorate a site's efforts to continuously improve worker protection. 
Industries would lose models that currently demonstrate VPP's 
successful, systematic approach to safety and health management and 
generously share their expertise and resources by mentoring other 
companies. As one corporation with sites in the program and a 
corporate-wide commitment to VPP noted, ``The purpose of VPP is to form 
a partnership between employees, OSHA, and company management to ensure 
a safe working environment.'' An unduly restrictive standard for 
qualification ``is not in the best interest of the company and, most 
importantly, the employees.'' (Kerry A. Shaffar, Safety Director, 
Lozier Corporation.)

D. Data From Worker's Compensation System as Alternative Benchmark

    One respondent suggested that VPP adopt as its Star benchmark the 
workers' compensation insurance experience modification rate (EMR), 
asserting that this is a more reliable indicator of an employer's 
safety and health experience. The respondent proposed an EMR of less 
than 1.0 as the rate criterion for Star qualification. OSHA has 
considered using EMRs for various purposes in the past and has 
concluded that, for most purposes, EMRs are not as reliable an 
indicator of industry and worksite conditions as the data the agency 
currently employs. For example, experience modifications differ from 
state to state. Using such data for a national program such as VPP 
poses numerous difficulties. Moreover, workers' compensation system 
data reflect claims made for compensation, a different universe of 
injuries and illnesses than OSHA recordables.
    As OSHA noted when it issued its final rule revising the 
recordkeeping requirements ``* * * the injury and illness information 
compiled pursuant to Part 1904 [which BLS uses to calculate its 
industry rates] is much more reliable, consistent and comprehensive 
than data from any available alternative data source * * * This is the 
case because, although some State workers' compensation programs 
voluntarily provide injury and illness data to OSHA for various 
purposes, others do not. Further, workers' compensation data vary 
widely from state to state. Different state workers' compensation laws 
and administrative systems have resulted in large variations in the 
content, format, accessibility, and computerization of that system's 
data. In addition, workers' compensation databases often do not include 
injury and illness data from employers who elect to self-insure.'' (66 
FR 5923-4, January 19, 2001)

E. Median or Other Distributional Statistic as Alternative Benchmark

    One respondent argued that average rates are appropriate only when 
data follow a normal distribution, with half the sample having values 
above and half below the median or midpoint of the distribution. The 
respondent pointed to BLS published data that show injury and illness 
rates to be skewed, with average rates well above the median. Instead 
of using an average rate, the respondent argued for OSHA to ``designate 
what fraction of worksites would be considered `exemplary,' and then 
set a percentile recorded injury and illness rate based on that * * *. 
The 75th percentile recorded injury illness rate is readily accessible 
and would be a minimal criterion.'' OSHA does not view this approach as 
a solution. So long as OSHA uses a single year BLS rate as its 
benchmark--whether that be an industry average rate or an industry 75th 
percentile rate--the problem of rate fluctuations will remain.

[[Page 68478]]

F. Greater Use of Merit Program

    One respondent interpreted the proposed change as a way to increase 
the number of sites participating in VPP and suggested that, rather 
than change Star requirements, OSHA should admit a company to the VPP 
Merit program when the applicant's rates do not qualify it for Star. In 
fact, OSHA currently offers Merit participation to applicants with good 
safety and health management systems but lower-than-Star-standard 
rates. The Agency also is piloting a program designed to offer VPP 
participation to sites not ready for Merit. OSHA desires and expects to 
expand program participation. However, when a substantial BLS rate 
fluctuation--a fluctuation that does not appear to reflect a genuine 
industry trend--is the only reason a site fails to qualify in a 
particular year for Star and its attendant prestige, OSHA does not view 
this as a fair and consistent way to operate VPP. It is not unusual for 
applicants, once they make the commitment to seek Star recognition, to 
spend years developing and improving their safety and health management 
systems. The majority of new VPP approvals are to the Star program 
precisely because most applicants wait until they are operating 
excellent programs with rates well below their industry average. For a 
fluctuating industry rate to stymie employees' and managers' efforts to 
gain Star approval can be frustrating and demoralizing, as attested by 
numerous applicants, including respondents to this proposal who have 
gone through this experience.
    An applicant, nonetheless, can temporarily enter the Merit program 
and look forward to gaining Star approval. No such solution exists for 
the worksite that gains Star approval and continues to provide its 
employees with exemplary protection, only to have its participation 
jeopardized by a subsequent substantial one-year drop in the BLS rate. 
See G. below.

G. Two-Year Rate Reduction Plan

    One respondent wrote that OSHA already has a model for addressing 
the fluctuation in rates: the 2-year rate reduction plan that a 
Regional Administrator may provide, on a case-by-case basis, to a Star 
participant whose rate fails to stay below the latest BLS national 
average. The agency does not view this existing mechanism as a solution 
to the problem of fluctuating rates. If the site is operating a 
comprehensive safety and health management system, if there is no 
indication of problems with the system or the site's performance, if 
the site's rates are stable or decreasing, and if the site is 
demonstrating continuous improvement as required, then it is OSHA's 
position that the site deserves continued, unconditional Star 
participation.

H. Impact of NAICS on Benchmark Rates

    Two respondents suggested postponing any change until more is known 
about the impact of the changeover from SIC codes to NAICS. OSHA's 
Office of Statistics and economists we consulted in BLS do not expect 
the transition to NAICS to produce a different situation with respect 
to rate fluctuations and benchmarking. No purpose would be served by 
postponing a solution to this problem.

I. Is This Change a Weakening of VPP Standards?

    Among the comments opposing the benchmarking change, one theme 
stood out: This change will weaken VPP eligibility standards. This is 
neither OSHA's intent nor its expectation. Central to VPP's eligibility 
standards is the complex requirement that a site demonstrate it has a 
safety and health management system that effectively protects 
employees. Injury and illness rates have always been one of many 
performance criteria that OSHA uses when assessing a worksite's 
qualification for VPP Star.
    The benchmark change will have the greatest impact on those 
industries that show significant injury and illness rate variation year 
to year. Most industries show small trend changes on a year-to-year 
basis and will be impacted in a small way. Other criteria, including 
the expectation of continuous improvement, remain unchanged.
    One respondent predicted that, under the proposal, a site could 
potentially have 3 consecutive years of significantly declining 
performance as measured by rates and still meet the qualification 
criteria. OSHA cannot imagine a situation where an applicant or 
participant with such experience would meet the criteria of continuous 
improvement. Applicants to VPP undergo a lengthy, rigorous review of 
their safety and health management system and their performance. Once 
approved, participants continue to undergo OSHA scrutiny. Each year 
they must submit to OSHA a detailed evaluation of their performance, 
progress, and plans for improvement that the OSHA Regional VPP Manager 
then reviews. In addition, OSHA periodically sends a team of safety and 
health specialists onsite to perform a critical assessment, issue a 
report, and make a recommendation about continued participation. None 
of this will change.
    In its response to the proposal, the Voluntary Protection Programs 
Participants' Association (VPPPA), a long-time and vocal advocate for 
maintaining VPP's high standards, wrote, ``The VPPPA believes OSHA's 
proposal would have the desired effect of normalizing in a fair and 
equitable manner the benchmarking rates by adjusting for unreasonably 
divergent rates that may occur in any one particular year.'' The 
respondent acknowledged that a ``sudden inexplicably large increase in 
a particular industry rate may make it easier for a worksite to meet 
the VPP Star requirements.'' It nonetheless gave its support to the 
benchmarking change, concluding, ``The Association is certain the many 
other stringent requirements and numerous elements of the VPP certainly 
continue to ensure that only the worksites with excellent safety and 
health management systems will gain VPP Star approval, thus maintaining 
the quality and integrity of the VPP.''
    OSHA has carefully considered the comments submitted. All clearly 
were offered in the spirit of protecting and improving a remarkable 
program that has had a strongly positive impact on worker safety and 
health. The agency's analysis of the varied alternatives offered, with 
their potential advantages and disadvantages, has strengthened OSHA's 
confidence in its original proposal.
    Therefore, OSHA is making the following changes to the Voluntary 
Protection Programs. These changes apply to the latest full version of 
VPP, published as Federal Register notice 65 FR 45650, July 24, 2000.

II. Changes to the VPP

A. The Star Rate Requirement

    The following language is substituted for the first sentence of 
III.F.4.a.(1): For site employees--Two rates reflecting the experience 
of the most recent 3 calendar years must be below at least 1 of the 3 
most recent years of specific industry national averages for nonfatal 
injuries and illnesses at the most precise level published by the 
Bureau of Labor Statistics (BLS). OSHA will compare the two site rates 
against the single year that is most advantageous to the site out of 
the last 3 published years.'' The two site rates referenced here are 
the 3-year total recordable case incidence rate (a single rate that 
reflects 3 years of total recordable injuries and illnesses), and the 
3-year incidence rate for cases

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involving days away from work and restricted work activity.

B. The Alternative Rate Calculation for Qualifying Small Businesses

    The following language is substituted for III.F.4.a.(2)(a):
    ``To determine whether the employer qualifies for the alternative 
calculation method, do the following:
    [sbull] Using the most recent employment statistics (hours worked 
in the most recent calendar year), calculate a hypothetical total 
recordable case incidence rate for the employer assuming that the 
employer had two cases during the year;
    [sbull] Compare that hypothetical rate to the 3 most recently 
published years of BLS combined injury/illness total recordable case 
incidence rates for the industry; and
    [sbull] If the hypothetical rate (based on two cases) is equal to 
or higher than the national average for the firm's industry in at least 
1 of the 3 years, the employer qualifies for the alternative 
calculation method.''

C. Construction Applicants' Qualification for Merit

    The following language is substituted for the first sentence of 
III.H.2.b.(2):
    ``For construction, if the incidence rates for the applicant site 
are not below the industry averages as required for Star, the applicant 
company must demonstrate that the company-wide 3-year rates are below 
at least 1 of the 3 most recently published years of BLS rates for the 
industry, at the most precise published level. OSHA will compare the 
two company-wide rates against the single year that is most 
advantageous to the applicant out of the last 3 published years.''

    Signed at Washington, DC, this 2nd day of December 2003.
John L. Henshaw,
Assistant Secretary of Labor for Occupational Safety and Health.
[FR Doc. 03-30326 Filed 12-5-03; 8:45 am]
BILLING CODE 4510-26-P