The law and economics of the feasibility criterion as used in section 6(b)(5) of the occupational safety and health act in the occupational noise standard

Abstract

Economics has much to say about the meaning of feasible as used in the OSHA Act and as used in the occupational noise standard. The OSHA Act requires as a condition for the setting of standards that the standard be feasible. The occupational noise standard places a priority to the use of engineering controls over personal protective equipment for the reduction of noise exposure, but conditioned upon the engineering controls being feasible. Neither the Act nor the noise standard define feasible. The courts have had to interpret the meaning of feasible in the Act and the meaning of feasible in the noise standard. The critical court decisions affecting the meaning of feasible are discussed. Feasible has come to include technological feasibility and one of either of two notions of economic feasibility: (1) benefits must exceed costs and (2) economic achievability. Economic achievability involves whether the cost of the proposed standard would make the standard economically unachievable in the marketplace. A standard is deemed economically unachievable if tis imposition would threaten the economic viability of the affected economic entity. The courts have held that feasible in the OSHA Act means economic achievability and in the noise standard benefits must exceed costs. Two key principles underlie an analysis of economic feasibility under the achievable interpretation: (1) the choice of the relevant economic entity for which to evaluate continued economic viability, and (2) the fact that the marketplace effectively constrains the set of viable options open to a firm or industry. OSHA standards affect the marketplace at different levels: the affected economic entity may be several industries, a single firm, a plant or a subset of a plant. The evaluation of the economic achievability of a proposed standard depends crucially upon determining the relevant economic entity for which to evaluate economic viability. The courts have not addressed the issue of the relevant economic entity. This dissertation shows that determination of the relevant economic entity is predicated upon the economic notion of separability in production and the fact that the marketplace will force firms to evaluate the profitability of each separable component of the firm...