By Matt Gartner, XL Specialty Insurance Company

Few things remain stagnant forever. This is especially true in risk management efforts; new risks and new ways of doing business require continuous changes to loss prevention, safety and insurance programs. These programs should never change just for change’s sake, but as a step toward improving procedures and protocols to keep employees safer and minimize the chance of a financial loss.

That’s the thought behind the U.S. Occupational Safety and Health Administration’s (OSHA) proposed modification to the current Hazard Communication (Hazcom) Standard (29 CFR 1910.1200), sometimes called the “employee right to know” standard. The modifications were proposed in order to more completely align the standard with the internationally accepted Globally Harmonized System of Classification and Labeling of Chemicals (GHS) endorsed by the United Nations in July 2003. The proposed modification is intended to generate better information about hazardous ingredients for a wide range of employers, from dental offices to waste haulers, whose employees come into contact with hazardous materials.

The proposed changes to the Hazcom Standard would mainly impact current product labeling and material safety data sheet (MSDS) requirements. The GHS label elements are symbol-driven and depict health, physical and environmental hazards in universally accepted diagrams, a methodology adopted with an eye toward businesses that operate in a global marketplace and with a diverse workforce. Label verbiage would be simplified, and contain signal words such as “danger” or “warning.”

All symbols, signal words and hazard statements would be standardized and assigned to specific hazard categories and classes. The current MSDS would be converted to the new safety data sheet (SDS), which would contain 16 required sections. A few new subject areas are being added; particularly pertinent to the waste industry are the Ecological, Transport Information, and Disposal Consideration subject areas. These new sections might become optional under OSHA’s final rule, which is expected sometime this summer.

OSHA’s proposal to adopt the GHS will not change the basic framework and scope of the current Hazcom Standard, but rather is intended to improve the quality and consistency in the classification and labeling of chemicals. Harmonizing the formats of the data sheets will not only enable workers to access the information more efficiently but will make that information easily accessible at a businesses’ global locations. The GHS also is being adopted by other U.S. regulatory agencies involved with chemical labeling, such as the Department of Transportation (DOT), the Environmental Protection Agency (EPA), and the Consumer Product Safety Commission (CPSC).

Although the GHS does not specifically address employee training requirements, under the proposed Hazcom Standard, employers would be required to train employees within two years of the publication of the final rule, in order to facilitate recognition and understanding of the new labels and safety data sheets. The other training requirements under the current Hazcom Standard also would remain in effect, such as requiring that employees are trained upon hire, and when job and process changes mandate training for dealing with different classifications of hazardous materials.

Change is not always easy. Many businesses will initially face significant challenges in complying with the new standard, particularly in the relabeling of their products, developing new SDS, and training employees on the new label elements and SDS format. Aside from these transition costs, the ongoing annual compliance costs are anticipated to be more in line with what is currently being spent to comply with the standard. It is hoped that the initial cost and effort required to comply with the GHS will ultimately yield savings through reduced accidents, which is good news in controlling insurance costs.

In terms of anticipated benefits, OSHA estimates that the revised Hazcom Standard would prevent 43 fatalities and 585 injuries and illnesses annually. The annualized monetary benefits associated with these reductions in safety and health risks are estimated to be $266 million a year. OSHA estimates additional annualized benefits of $585 million from cost reductions and productivity improvements attributable to the proposed revisions. In total, OSHA estimates that the proposed revisions will provide net annualized savings of $754 million a year.

Matt Gartner
XL Specialty Insurance Company