feel strongly that since Congress has created this act, it should be more constructive, less regulatory, and standards drawn a little closer to reality in several instances.

I am not going to concentrate at all on our recommendation on small business, because it really has no place with the passage of the amendments to the law last week, except that we do not feel that small business should necessarily be exempt. This may be a rather radical view for a chamber of commerce, but I think the people in our area are so safety conscious through this program and we outline this in the full presentation, I think the companies in at least this one small area of Pennsylvania think the act is a good one and is worthwhile to both the employee and the employer.

We do not feel that safety responsibility should be lifted from small firms for we suspect that a large portion of the negative statistics that show up come from these smaller firms.

With all that we have said and written into our full presentation, we want you to understand that we do not condone obvious offenders and those firms who make no effort to improve the safety in their business house or in their plant, but we feel, as we mention here, that by using the frequency rate as a guideline, that the law can be less punitive as we have said in there, and it would give the inspectors a chance to come in and give a break, if you want to call it that, to those companies who in the past have had good safety and have tried to comply with the code.

Thank you for the opportunity of appearing. I am sorry to have taken it out, and you are probably tired of this, too, because you have had to work harder at this thing that we.

Mr. DANIELS. You disapprove of exemptions of small business. You felt the act should be more constructive? In what way?

Mr. PARKER. I think it goes back to the remark implementing the law, the way the inspector implements a law, like this free visit that they get if they have a good safety record prior to this, a free visit to point out some of the obvious defects that might be cited as violations a second visit around. I think this is one of the most necessary things.

However, going back to what we say in the full text, and I am emasculating this somewhat, we do not feel opportunity should be given to those companies who over time immemorial, or prior to OSHA or since OSHA, have not made any effort to bring their plant or place of business into compliance.

If they have had a good safety record over the years, if they are under the rate for their particular industry, we feel they should be given some consideration on their first visit through to bring up to OSHA standards.

Mr. DANIELS. Thank you very much.

Do you have any questions, Mr. Steiger?

Mr. STEIGER. I have no questions, Mr. Chairman. I want to thank you very much for simply being very patient and for giving us some of the perspective that you developed in your area. This is very helpful.

Mr. DANIELS. Thank you very much, and I regret any inconvenience we may have caused by this late session.

Our next and final witness is Mr. Carl A. Beck, chairman, Legislative Action and Policy Committee, National Small Business Association.

STATEMENT OF CARL A. BECK, CHAIRMAN, LEGISLATIVE ACTION AND POLICY COMMITTEE, NATIONAL SMALL BUSINESS ASSOCIATION

Mr. BECK. I would like permission, having submitted a statement, to have this made a part of the record and be permitted to highlight and summarize.

Mr. DANIELS. Without objection, it is so ordered.

(The statement referred to follows:)

TESTIMONY OF CARL A. BECK, CHAIRMAN, LEGISLATIVE ACTION AND POLICY COMMITTEE, NATIONAL SMALL BUSINESS ASSOCIATION

Mr. Chairman and members of this subcommittee, my name is Carl A. Beck. I am chairman of National Small Business Association's Legislative Action and Policy Committee and president of the Charles Beck Machine Corp. of King of Prussia, Pa. This statement is presented on behalf of National Small Business Association, representing 40,000 firms doing business in over 500 different industry categories. We appreciate the committee's giving us an opportunity to comment on the effect of the Occupational Safety and Health Act of 1970.

Our statement is based on almost five years of exposure through legislative consideration of OSHA, forms review on the Business Advisory Council on Federal Reports, and personal exposure to compliance in my own small machinery manufacturing business.

The implementation of the OSHA regulations was unique in that it placed under coverage many times the number of employers than any other piece of new legislation ever passed by Congress. In other areas, such as minimum wage and social security, coverage was extended on a piecemeal basis; experience taught the Administrators the value of going in one direction rather than another. This period of experimentation was not possible in OSHA. Major problems were caused by the application of a law to millions of individuals who never before had been held accountable for specifics of accident and health regulations. This had been a problem for the insurance company, and the businessman paid premiums for this service. The basic regulations printed in the Federal Register were not readily accessible to the 12 million employers in the small business community. The blanketing of many previously established consensus standards did not aid to simplify the problem. The language was technical and generally too complex for an average businessman to follow. In the latter part of our statement we will make several recommendations which we hope will aid in overcoming present communication problems between the Department of Labor and the smaller firms.

NSB agrees with the majority of responsible small business men, that the basic concept of the Williams-Steiger Act is commendable and should be supported. Most small businesses have long recognized the economic value of safe working conditions and also have a sense of "social responsibility", notwithstanding the charges impugned by the "consumer advocates"-so called. The responsible small business man wants to do the right thing, but resents the growing bureaucratic application of the law which mitigates against him being cooperative. Our state occupational health organization has for years had as its objective the "abatement of the problem", but the OSHA system of application of the law puts emphasis on the "avoidance of detection".

Recently I attended a meeting where an OSHA representative emphasized the simplicity of compliance and requirements for filling out the forms. His honeyed encouragement held little water when some members of the small audience illustrated from personal experience the terrible burden it can become. The OSHA man also made much of the fact that electric typewriters do not have to be grounded (just recently decided, by the way) but neglected the fact that there are millions of "portable hand tools" such as hand drills and saber saws

which were manufactured long before the electrical industry started supplying grounding plugs and sockets!

Although "compliance" is the most frequently discussed aspect of OSHA, the other side of the coin has received scant attention. Our orders for new machinery these days (few as they are in this "post-recession" time) are demanding "compliance with applicable OSHA standards". The regulations relative to guarding have been a problem for many decades in England, where we never know whether the guarding we supply is proper or adequate until the machine is installed and the English inspector advises what he feels should be added (even sometimes to the point of making it difficult and hazardous to operate the machine properly). Our OSHA regulations, on the other hand, state: “... guarding shall be provided to protect the operator . . . from hazards such as ... ingoing nip points". The best advice we can secure in this regard is for us to build the machine, ship it to our customer, and "if and when we inspect his plant we decide there is a hazard, he will either have to redesign your machine or return it to you for redesign". So we are telling our customers we "will do the best we can". In these last three decades of our century of history, I personally know we have been most conscious of safety in the design of our machines, and don't know what further we can do, but are told that the present design of our feed roll guarding is "probably unsatisfactory". This is more stringent than even the capricious inspection system of Great Britain.

Our current estimates are that to measure and adequately identify the sources of noise in our machines will require the purchase of sound measuring equipment approximating $3,500.00. Since our product line is one where a combination of attachments or options result in each machine being different from others in production, we should in reality analyze the sound generating sources of the machine before we built it, an obvous impossibility, or build it first, then analyze it, take it apart and re-build it to a new design, and hope we have solved the problems. We have consulted with two insurance company representatives, university science department specialists in this field, and sound engineers, in addition to our own small engineering staff. All are unanimously agreed on one thing: there are no "experts" (including OSHA personnel).

To sound proof (or sound reduce) a purchased electric-hydraulic drive for our machines, our supplier of the device has no suggestions except to enclose it in a "sound proof" enclosure. Aside from the fact that the drive pulley and V-belt portion must "exit" from this enclosure, the unit needs air circulation (normally provided by natural convention) to insure adequate cooling. The enclosure must therefore, our supplier advises, be fan-cooled. The fan would have to be of such a size, our own engineering department advises, that in order to not be a noise generator itself or "convey noise" from inside, the fan itself would have to be baffled, which in turn demands an increase in the size of the fan. Our preliminary estimates are that such an approach to noise reduction (on the noisiest part of the machine, approaching 90 dbA itself) would cost about $4,000 to $5,000. The machine itself ranges in cost from $10,000 to $22,000. The engineering and testing time would approximate $15,000 in man-hours and about $5,000 in cost of testing equipment and other expenses, and would probably have to be modified somewhat for similar machines produced subsequently. This is just one item of "noise reduction". The machine itself makes noise in its cutting action (a revolving knife against a fixed blade) and the amount of noise is dependent on the material being cut and the knife adjustment by the customer. This is like saying that a hammer is too noisy and must be redesigned to make it less noisy when it hits the nail.

Furthermore, if due to the placement of the machine in our customer's plant, and its location near other equipment or in a poor accoustical location, the noise produced is such that the customer is cited for a violation, what is our liability, and how can we protect ourselves? Present regulations are concerned with noise levels of machinery "in situ", not as manufactured. So, "we will do what we can", but it certainly doesn't reduce our selling costs when our customers are demanding 90 dbA (one current order asks for 70 dbA!).

We want help, not punishment! We want to do everything feasible to promote "improved safety and health" of our customers' employees, our own employees, and help our customers do so also. We also want to stay in business. There is a limit to the amount of cost (if any) that we can "just pass on to the customer". Small firms have many competitors-domestic and foreign. Their machinery and equipment is not generally as modern as the larger companies therefore costs to convert machinery to new standards may be considerably higher for the smaller firm.

Our foreign competitors are not subject to this law and the costs relative to compliance. It is only realistic to be aware of the difficulty of recovering costs when hemmed in by competitors' prices.

We must also recognize that many of the health and safety consensus standards being "referenced in" directly relate to job performance. In effect some standards have been set that would deliberately reduce productivity in certain industries and are not necessarily related to safety although health and safety provisions in contracts or codes were utilized to adjust these production standards.

The Labor Department appropriations bill just passed by the House for the second time, temporarily excluding small employers, is welcomed as a "stopgap," but it doesn't answer the customer relations problem for us. And in addition, we feel that it is not a satisfactory long-range solution, because this measure will prohibit or prevent the smaller employer from providing a safer work place, because now he is ignored rather than helped! You are thus encouraging us to live "outside the pale of the arena," just while we want to be entering the arena and participating. Setting one part of a group aside for compliance, yet forcing involvement to compete, makes us neither fish nor fowl.

It would be much more logical to exclude small retailers and small farmers, for example, and during the exclusion period undertake an educational campaign, through SBA and the Department of Agriculture County Agents, with simple, easily understood pamphlets of applicable standards explaining what needs to be done, and provide a non-punitive method for answering the small business man's questions. During this period OSHA personnel could concentrate on helping the industries and companies, even though small, with poor safety records and hazardous health exposure, to correct and overcome these problems. In addition, consultation with the small business community will preclude setting arbitrary standards and regulations, designed solely, as heretofore, by big business, organized labor, and federal technicians.

The editorial pages, the Congressional Record, and Congressional Committee transcripts are being filled with "horror stories" of the crunch on small businesses by bureaucratic zealots.

In order that our statement today not be circumscribed by only personal experience and judgment, we have broadened our investigation into the business impact of OSHA by studying a representative sample of actual Inspection Reports. In addition to the usual "horror stories" we have all heard, we have also heard many complaints from our members, and from the business community in general. about OSHA, that factories are being shut down, small firms are being fined into bankruptcy, etc.

In order to check the validity of these fears and reports, we went to the Philadelphia area and regional offices of OSHA and conducted our own investigation into how the OSHA laws were being administered. This study focussed only on correspondence files and inspection reports of Region 3, which are kept at the Philadelphia offices. (There is no centralization of information from the 50 OSHA offices.)

We talked with OSHA inspectors and administrators, reviewed a random selection of cases handled by the Philadelphia office during the last six months. and examined various procedures employed by OSHA. Throughout our investigation, Department of Labor employees were informative and co-operative, giving us whatever information we requested, except that prohibited by regulations. It appears that the results of this study generally reflect the situation across the country.

We believe our study shows that the business community has fallen victim to a great many rumors and scare-stories which appear to have little foundation in fact. A businessman is probably unduly terrorized by the prospect of an OSHA inspection because he does not understand the OSHA laws, and is being preyed upon by hordes of people who hope to profit from his lack of information.

We could not find any substantiation for any of the many stories circulating about firms being forced out of business as a result of OSHA inspections. What we did find was that the small businessman is confronted with an unmanageable mass of regulations with which he is told he must comply, or suffer being fined. After taking a look at all the rules, standards, guidelines, etc., it is no wonder that he will believe almost anything.

Out of the roughly 3,000 cases that were indexed in the Philadelphia files, we found only two firms that had received fines totalling over $1,000 ($1,070 and $1,200), and in both cases there had been an employee fatality. Similarly, the

largest fine for a single violation was $600, and in every case this fine was levied it was related to a fatality. Fines for all violations cited against a company generally ranged in the $150-$250 bracket, with fines totalling over $350 being rather uncommon. An examination of the 18 small firms in our random sampling shows that these firms averaged total fines of roughly $100, with $210 being the highest, excluding one firm that was inspected and fined because of a fatal accident.

The real expense to these small firms, as expected, comes not from fines but from the cost of modifying or replacing equipment in order to comply with OSHA regulations. An additional expense is incurred when the small businessman must bring in consultants to advise him on compliance.

Every businessman we spoke to told us that he was able to understand the basic language as set forth in the Federal Register. However, they all noted that most points didn't apply to them anyway, and that the complexity of working their way through the entire body of referenced standards was a Herculean task.

The biggest problem, we found, is with the "referenced in" standards that are included as part of the OSHA law. To procure all these would cost over $300. They must be obtained from a number of different sources, and combine to form a stack of paper several feet high. Both investigators and legal personnel in the Philadelphia office readily conceded that some of these standards were written for professionals in specialized fields, and are not readily intelligible to the layman.

The basic document itself, the Federal Register, went out of stock several times during the past year because of demand. When this basic document is not available from OSHA field offices, it must be ordered from the Government Printing Office, and we all know how long that can take. The various referenced standards also are frequently sold out when ordered. We know of delays of up to three months in obtaining some of these.

The Philadelphia office of OSHA seemed to be very co-operative in replying to questions received. In January of this year, however, a businessman faced a month's delay before his question was answered, and today the average reply period is six to eight weeks.

After a delay in receiving the Federal Register, a small businessman wades through it and finds some referenced standards that he suspects may apply to his firm. After another delay of some months these standards arrive, at different times from different sources. He writes to OSHA with a question about a technical aspect of one of the standards, and waits two months for a reply. As much as six months may have elapsed from the time he first sought information to the time his specific question was answered. And during this time that he is diligently trying to effect compliance with the law, an inspector may show up and fine him for non-compliance.

A major problem, however, is the fact that an OSHA inspector cannot enter a businessman's property except to conduct an official inspection. A common problem is illustrated by the case of the small construction firm owner in Pennsylvania who wrote to OSHA, asking if an inspector could come look over his site "and tell me what must be done to insure that I comply with all facets of this law." In accordance with the law, the regional administrator had to reply: "I must inform you that you may receive a monetary penalty for any or all of the violations noted on such an inspection."

SMALL BUSINESS LOANS

The original intent of the small business provision of OSHA was to aid smaller firms required to comply with new mandatory standards. To a great extent this provision has been circumvented by the methods in which an employer must become certified. Only 17 loans have been made since the inception of the Act-all have been of a voluntary nature. Some were situations where an employer had been inspected by the state or his insurance company and had a letter certifying to the need for change in plant or equipment. The SBA would then turn this information over to the Labor Department who normally issue proper certification for the SBA loan to be made. To the credit of both SBA and the Labor Department it is our understanding that all effort has been made to protect the identity of the loan applicant in order that the application did not trigger an inspection by the Labor Department.

Under today's regulations a small employer who knows he needs to have a change in plant or equipment feels he must call in the Labor Department in order to receive certification. Obviously, he feels he is faced with a possible