[Federal Register Volume 64, Number 159 (Wednesday, August 18, 1999)]
[Proposed Rules]
[Pages 45098-45114]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-21216]
[[Page 45097]]
_______________________________________________________________________
Part VII
Department of Labor
_______________________________________________________________________
Occupational Safety and Health Administration
_______________________________________________________________________
29 CFR Part 1910
Nationally Recognized Testing Laboratories; Fees; Reduction of Public
Comment Period on Recognition Notices; Proposed Rule
Federal Register / Vol. 64, No. 159 / Wednesday, August 18, 1999 /
Proposed Rules
[[Page 45098]]
DEPARTMENT OF LABOR
Occupational Safety and Health Administration
29 CFR Part 1910
[Docket No. NRTL 95-F-1]
Nationally Recognized Testing Laboratories; Fees; Reduction of
Public Comment Period on Recognition Notices
AGENCY: Occupational Safety and Health Administration (OSHA), Labor.
ACTION: Notice of proposed rulemaking (NPRM).
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SUMMARY: Under the requirements for nationally recognized testing
laboratories (NRTLs), the Occupational Safety and Health Administration
(OSHA) recognizes private sector laboratories to test and certify the
safety of certain equipment or products that will be used in the
workplace. Such testing and certification is required by various OSHA
safety standards. These laboratories are referred to as Nationally
Recognized Testing Laboratories, or NRTLs. OSHA proposes to establish
fees for specific services the Agency provides to these NRTLs. Congress
has authorized OSHA to charge fees for these services since 1997 in
bill language in its annual appropriations bills, most recently in
Public Law 105-277.
These services are: Processing applications for the initial
recognition of an organization as an NRTL, or for expansion or renewal
of an existing NRTL's recognition, and performing audits (post-
recognition reviews) of NRTLs to determine whether they continue to
meet the requirements for recognition. Since the inception of the NRTL
Program in 1988, OSHA has provided these services at no charge to the
NRTLs.
In addition, OSHA proposes to amend provisions of the recognition
process to reduce the public comment period on the ``preliminary''
Federal Register notices that OSHA must publish concerning the
recognition of an NRTL from 60 days to 30 days for initial recognition
and to 15 days for expansions and renewals.
DATES: Written comments must be received on or before October 4, 1999.
ADDRESSES: Submit comments on the proposed rule in duplicate or 1
original (hardcopy) and 1 disk (5\1/4\ or 3\1/2\) in WP 5.0, 5.1, 6.0,
6.1, 8.0 or ASCII to: Docket Officer, Docket NRTL-95-F-1, U.S.
Department of Labor, Occupational Safety and Health Administration,
Room N2625, 200 Constitution Avenue, N.W.,Washington, D.C. 20210. The
phone number for the OSHA Docket Office is (202) 693-2350. You may
transmit your written comments of 10 pages or less by facsimile (fax)
to the Docket Office at (202) 693-1648, provided you send an original
and one (1) copy to the Docket Office thereafter. You may also submit
comments electronically using the following web page address: http://
www.osha-slc.gov/e-comments/e-comments-nrtl.html. If your submission
contains attached electronic files, the files must be in WordPerfect
5.0, 5.1, 6.0, 6.1, 8.0 or ASCII. When submitting a comment
electronically, please include your name and address.
Submit, in duplicate, any information not contained on disk or not
provided electronically (e.g., studies, articles). Written submissions
must clearly identify the issues or specific provisions of the proposal
which are addressed and the position taken with respect to each issue
or provision. The data, views, and arguments that you submit will be
available for public inspection and copying at the above address. All
timely submissions received will be made a part of the record of this
proceeding.
FOR FURTHER INFORMATION CONTACT: Ms. Bonnie Friedman, Office of Public
Affairs, Occupational Safety and Health Administration, U.S. Department
of Labor, Room N3647, 200 Constitution Avenue, NW, Washington, D.C.,
20210, Telephone: (202) 693-1999, or Mr. Bernard Pasquet, Office of
Technical Programs and Coordination Activities, Occupational Safety and
Health Administration, U.S. Department of Labor, Room N3653, 200
Constitution Avenue, NW, Washington, D.C., 20210, telephone: (202) 693-
2110. Our web page includes information about the NRTL Program . (See
http://www.osha-slc.gov/dts/otpca/nrtl/index.html or see http://
www.osha.gov and select ``Programs'')
SUPPLEMENTARY INFORMATION:
I. Background
Many of OSHA's safety standards require equipment or products that
are going to be used in the workplace to be tested and certified to
help ensure they can be used safely. Products or equipment that have
been tested and certified must have a certification mark on them. An
employer may rely on the certification mark, which shows the equipment
or product has been tested and certified in accordance with OSHA
requirements. In order to ensure that the testing and certification has
been done appropriately, OSHA has implemented the NRTL Program. The
NRTL Program establishes the criteria that an organization must meet in
order to be recognized as an NRTL.
The NRTL Program requirements are in 29 CFR 1910.7, ``Definition
and requirements for a nationally recognized testing laboratory.'' To
be recognized by OSHA, an organization must: (1) Have the appropriate
capability to test, evaluate, and approve products to assure their safe
use in the workplace; (2) be completely independent of the
manufacturers, vendors, and users of the products for which OSHA
requires certification; (3) have internal programs that ensure proper
control of the testing and certification process; and (4) establish
effective reporting and complaint handling procedures.
OSHA requires NRTL applicants (i.e., organizations seeking initial
recognition as an NRTL) to provide detailed information about their
programs, processes and procedures in writing when they apply for
initial recognition. OSHA reviews the written information and conducts
on-site assessments to determine whether the organization meets the
requirements. OSHA uses a similar process when an NRTL (i.e., an
organization already recognized) applies for expansion or renewal of
its recognition. In addition, the Agency conducts annual audits to
ensure that the recognized laboratories maintain their programs.
The NRTL Program is an effective public and private partnership.
Rather than performing testing and certification itself, OSHA relies on
private sector organizations to accomplish it. This helps to ensure
worker safety, allows existing private sector systems to perform the
work, and avoids the need for the government to maintain facilities.
Currently, there are 16 NRTLs operating 40 sites in the U.S.,
Canada, and the Far East. The NRTL Program has grown significantly in
the past few years, both in terms of numbers of laboratories and sites,
as well as the number of test standards included in their recognition.
OSHA has devoted significant resources in the last two years to
improving the management of the NRTL Program, ensuring its viability,
and enhancing its credibility with the public. This has included a
process improvement project; audits of all the NRTL sites; reduction of
the backlog of applications for recognition, expansion, and renewals;
and development of application guidelines and information about our
procedures to help people understand the process of NRTL recognition. A
web page on the NRTL Program is now available to provide
[[Page 45099]]
information about the recognized labs and the scope of their
recognition, as well as a description of the NRTL Program. (See web
page address in above ``Contact'' information.) We also have prepared a
new training program for our compliance staff to increase awareness
within the Agency of NRTL requirements.
The size of the NRTL Program, and the amount of work involved in
maintaining it, have resulted in large costs for the Agency, both in
terms of human resources and in direct costs such as travel. For
example, OSHA's goal is to audit every site once a year. This involves
about 40 annual visits, given the current number of sites recognized,
not only to locations in the U.S. but also to many foreign locations.
Time and travel costs are obviously much higher for foreign locations.
Because international trade in many of the types of products OSHA
requires to be tested and certified is increasing substantially, the
Agency anticipates there will be more applications for laboratories or
sites in locations outside the U.S. In particular, under the terms of a
recent Mutual Recognition Agreement (MRA) with the European Union, a
number of European laboratories are expected to submit applications for
NRTL recognition.
The number of people who can be assigned to work in a particular
area in OSHA, as well as the travel money that can be used, is
dependent on the overall funding the Agency receives from Congress in a
given year. The potential for reduced funding, leaving OSHA with
inadequate money to properly implement the Program, led to discussions
about the possibility of assessing fees. Having a consistent funding
process related specifically to the time and travel needed to maintain
the Program would help OSHA ensure that the NRTL Program can continue
to function and can be perceived as a viable and credible part of
OSHA's overall approach to workplace safety.
In 1995, OSHA sent a letter to the existing NRTLs regarding its
plan to explore the possibility of assessing fees (Ex. 1), and received
twelve responses. Nine responses were conditionally in favor of
establishing fees (Exs. 2-2, 2-4, 2-5, 2-6, 2-7, 2-8, 2-9, 2-11, 2-12).
The favorable responses generally were conditioned on OSHA utilizing
the funds generated from the fees for the NRTL Program to improve the
services provided to the NRTLs.
At a September 24, 1996, meeting with the NRTLs, OSHA released a
draft Federal Register notice for a proposed revision of 29 CFR 1910.7
allowing the Agency to collect fees. Comments received on the September
1996 draft indicated that most of the NRTLs supported the concept of a
fee schedule, although the specific approach they favored was not
necessarily the one included in the notice (see, e.g., Exs. 2-13, 2-17,
2-21, 2-22, 2-24). OSHA considered all of the comments it received in
developing this proposed rule. We are not going to address the specific
comments received at that time in this preamble because the approach in
the draft rule that was distributed is not the approach that is being
proposed in this notice. However, we believe that those who commented
will find that many of their concerns have been addressed in this
revised approach.
OSHA has reviewed a number of legal precedents concerning the
assessment of fees by Federal agencies. Based on this review, the
Agency believes that it can charge fees for services it provides to
users of the NRTL recognition process, i.e., the NRTLs and NRTL
applicants, and does not propose, at this time, to assess fees to cover
all the costs of the program.
In response to the fee issue, OSHA requested specific authority
from Congress to collect and retain fees. In its Fiscal Year 1997
appropriations for OSHA, Congress authorized the Secretary of Labor to
collect and retain fees for services provided to NRTLs and to use such
fees to administer the NRTL Program. Congress has renewed this
authorization annually.
OSHA decided to implement the improvements in the Program described
above before undertaking rulemaking to establish fees. The process of
implementing these improvements also allowed OSHA to better estimate
the time involved in providing certain services to NRTL applicants or
existing NRTLs, and the travel costs associated with onsite visits.
This information helped to refine the approach being proposed. In
addition, the Agency has examined legal authority issues; the practices
of other Federal agencies that assess fees; and the fees of other
organizations that recognize or accredit laboratories. Our findings in
these areas are described below in the description of the proposed
requirements and the explanation of the approach.
In addition to addressing the issue of fees, OSHA proposes to
reduce the time allowed for public comment on Federal Register notices
required under the Program. OSHA has considered a number of ways to
improve the program's application handling process and believes that a
reduction in the comment period is an appropriate way to help make such
improvements. This proposed reduction is partly in response to the
informal comments from NRTLs regarding the length of time the Agency
takes to process applications. We do not believe this reduction will
reduce the opportunity for public input; however, we solicit comments
on this issue.
II. Discussion of Proposed Fees
A. Statutory Authority
OSHA is basing its proposed fees structure on the Office of
Management and Budget's (OMB's) policies for user fees imposed by
Federal Agencies. These policies are contained in OMB Circular A-25,
``User Fees,'' dated 7/8/93. Some key portions of Circular A-25 are as
follows:
--``General Policy: A user charge. * * * will be assessed against
each identifiable recipient for special benefits derived from
Federal activities beyond those received by the general public.''
--``For example, a special benefit will be considered to accrue and
a user charge will be imposed when a Government service. * * *
enables the beneficiary to obtain more immediate or substantial
gains or values than those that accrue to the general public,'' * *
* or * * * is performed at the request of or for the convenience of
the recipient, and is beyond the services regularly received by
other members of the same industry or group or by the general
public.''
--``* * * user charges will be sufficient to recover the full cost
to the Federal Government. * * *''
OMB developed Circular A-25 in accordance with Title V of the
Independent Offices Appropriations Act of 1952 (IOAA), codified at
31 U.S.C. Sec. 9701. The criteria established by the IOAA to guide
agency heads in the establishment of fees were that the fees be
``fair'' and be based on:
(A) the costs to the Government;
(B) the value of the service or thing to the recipient;
(C) public policy or interest served; and
(D) other relevant facts.
31 U.S.C. Sec. 9701(b)
As discussed below, the U.S. Supreme Court has decided in two key
cases that the intent of the IOAA was to require fees to be based on
``value to the recipient'' and not upon ``public policy or interest
served [or] other [relevant] * * * facts.''
In a rider to OSHA's Fiscal Year 1999 appropriations, Congress
specifically authorized the Secretary of Labor to collect and retain
the fees proposed under this rule: ``* * * the Secretary of Labor is
authorized, during the fiscal year ending September 30, 1999, to
collect and retain fees for services provided to Nationally Recognized
Testing Laboratories, and may utilize such sums, in accordance with the
provisions of 29 U.S.C. 9a, to administer national and international
laboratory
[[Page 45100]]
recognition programs that ensure the safety of equipment and products
used by workers in the workplace: * * *'' P.L. 105-277 (112 STAT. 2681-
343). Through this rider, OSHA has the necessary authority to retain
the fees, which otherwise would be credited to the general fund of the
Treasury as explained in OMB Circular A-25.
B. Legal Basis for Assessing the Fees
To determine a proper basis for assessing the fees, OSHA has
reviewed a number of legal precedents and analyzed the costs and
activities for the functions undertaken for the NRTL Program. The legal
precedents centered on the application of the IOAA and its
interpretation by federal agencies. The most pertinent precedents are
two decisions by the U.S. Supreme Court, and four cases of the U.S.
Court of Appeals for the D.C. Circuit.
In March 1974, the Supreme Court decided the companion cases of
National Cable Television Ass'n. v. United States and FCC, 415 U.S. 336
(1974) and Federal Power Commission v. New England Power Co., 415 U.S.
345 (1974). In National Cable, the Court expressed the view that an
agency may charge a ``fee'' for services based on ``value to the
recipient.'' The Court essentially ruled out the other bases permitted
in the IOAA, which, in the court's opinion, could change an assessed
``fee'' into the levy of a ``tax.'' In Federal Power Commission, the
Court held that only specific charges for specific services to specific
individuals or companies may be recouped by the fees permitted by the
IOAA.
The first of the Court of Appeals decisions was National Cable
Television Ass'n Inc. v. Federal Communications Commission (FCC), 554
F.2d 1094 (1976). The Court of Appeals upheld the charging (by the FCC,
in this case) of both an application fee and an annual fee, provided
the agency makes clear which activities are covered by each of these
fees to prevent charging twice for the same activity. The court
acknowledged that fees based on reasonable approximations for costs of
services rendered would be acceptable. The court stated the following:
``It is sufficient for the Commission to identify the specific items of
* * * cost incurred in providing each service or benefit * * *, and
then to divide the cost among the * * * [recipients] in such a way as
to assess each a fee which is roughly proportional to the ``value''
which that member has thereby received.'' Id. at 1105-06.
In Electronic Industries Ass'n v. F.C.C., 554 F.2d 1109 (D.C. Cir.
1976), the court indicated that a fee for services may be charged for
private benefits ``although they may also create incidental public
benefits as well.'' Id. at 1115. In the case of NRTLs, the services
that OSHA provides to NRTLs and NRTL applicants result primarily in
private benefits to these parties, as described below. In Capital
Cities Communications, Inc. v. F.C.C., 554 F.2d 1135 (D.C. Cir. 1976),
the court held that a fee for services should bear a reasonable
relationship to the cost to the government to provide the service.
Finally, in Miss. Power and Light v. U.S. Nuclear Regulatory Comm'n
(NRC), 601 F.2d. 223 (5th Cir. 1979), the court upheld a fee for agency
services. The NRC calculated its fees based upon the costs of providing
the services to the private parties. OSHA is using a similar method to
calculate the NRTL application and administration fees in this proposed
rule.
Based in large part on the results of the foregoing six cases and
on the guidelines of OMB Circular A-25, OSHA proposes to charge fees to
NRTLs for specific benefits that they receive as a result of the
specific services that OSHA provides them for initial or continued
recognition. The fees will reflect the costs of providing these
services, and the costs will be reasonably itemized to the smallest
unit practical.
C. Special Benefits and Services Provided, and Fees
OSHA will establish a schedule of fees based on the ``full cost''
to OSHA of the activities it undertakes for NRTLs. ``Full cost'' is
defined in Section 6d of OMB Circular A-25 1. To help
clarify the basis for the fees in this proposed rule, the following
describes how OSHA handles applications and continuing services under
the NRTL Program.
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\1\ OMB Circular A-25, Section 6. General policy: A user charge,
as described below, will be assessed * * *
a. Special benefits
1. * * *
2. Determining the amount of user charges to assess.
(a) Except as provided in Section 6c, user charges will be
sufficient to recover the full cost to the Federal Government (as
defined in Section 6d) of providing the service, resource, or good
when the Government is acting in its capacity as sovereign. * * *
d. Determining full cost and market price
1.``Full cost'' includes all direct and indirect costs to any
part of the Federal Government of providing a good, resource, or
service. These costs include, but are not limited to, an appropriate
share of:
(a) Direct and indirect personnel costs, including salaries and
fringe benefits such as medical insurance and retirement. Retirement
costs should include all (funded or unfunded) accrued costs not
covered by employee contributions as specified in Circular No. A-11.
(b) Physical overhead, consulting, and other indirect costs
including material and supply costs, utilities, insurance, travel,
and rents or imputed rents on land, buildings, and equipment. If
imputed rental costs are applied, they should include:
(i) depreciation of structures and equipment, based on official
Internal Revenue Service depreciation guidelines unless better
estimates are available; and
(ii) an annual rate of return (equal to the average long-term
Treasury bond rate) on land, structures, equipment and other capital
resources used.
(c) The management and supervisory costs.
(d) The costs of enforcement, collection, research,
establishment of standards, and regulation, including any required
environmental impact statements.
(e) Full cost shall be determined or estimated from the best
available records of the agency, and new cost accounting systems
need not be established solely for this purpose.
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When an organization submits its application, the NRTL Program
staff thoroughly review it for completeness and adequacy. Each
organization applies for a specific scope of recognition. This scope
consists of the specific safety test standards, locations or sites, and
programs for which the organization seeks recognition. OSHA has broadly
grouped the activities an NRTL may perform in testing and certifying
products into nine categories of ``programs and procedures,'' or just
``programs.'' (See 60 FR 12980, March 9, 1995)
When the NRTL Program staff determine that the application is
complete and adequate, the staff perform an in-depth on-site review of
the applicant's organization, programs, and facilities. Based upon the
information obtained primarily through the on-site review, the staff
prepare a report and recommendation. The report and the application
provide the main basis for a preliminary finding on the application.
OSHA publishes a notice of this finding in the Federal Register to
allow for public comment. Following a 60-day comment period (which OSHA
is proposing to modify in this notice), OSHA must publish a final
decision and response to comments in the Federal Register. Publication
makes the recognition official for successful applicants and officially
denies the recognition for unsuccessful applicants.
NRTL recognition is valid for five years. During this period, OSHA
program staff audit the NRTL to assure that it continues to meet the
requirements for recognition. NRTLs may also on occasion request to
expand their scope of recognition to include additional test standards,
facilities, or programs. At the end of its initial recognition period,
the NRTL may apply for renewal of its recognition. OSHA processes
requests for expansion and renewal following a process similar to
[[Page 45101]]
that used for initial applications for recognition.
Program staff work closely with attorneys of the Department of
Labor on a regular basis for both initial recognition and continuing
recognition activities. These attorneys review the Federal Register
notices. They also advise the program staff on issues and other matters
that directly relate to the services covered by the fees.
In addition to application processing and audits, NRTL Program
staff also perform a number of activities that are essential to the
normal operation of the NRTL Program. These activities include
administration of program, budgetary, and policy matters; assistance in
training OSHA personnel about the program; inter-agency and
international coordination; response to requests for information
related to the program; and participation in meetings with stakeholders
and outside interest groups. Although necessary to the continued
functioning of the program, these activities are incidental to the
direct services of application processing and the audits of the NRTLs.
Accordingly, costs for these activities are not covered by this
proposed rule.
NRTLs accrue ``special benefits'' from the services that OSHA
renders to them. These ``special benefits'' are the product of OSHA's
initial and continuing evaluation of their qualifications to test and
certify products used in the workplace, e.g., the acknowledgment of
their capability as an NRTL. The primary special benefits of NRTL
recognition are the resulting business opportunities to test and
certify products for manufacturers. A manufacturer then sells these
products to employers, enabling them to comply with product approval
requirements in OSHA standards. The services rendered by OSHA that
confer these ``special benefits'' to NRTLs are: (1) processing of
applications for initial recognition as an NRTL and for expansion and
renewal of an existing NRTL's recognition, and (2) audits (``post
recognition reviews''), which enable the NRTL to maintain the
recognition from OSHA. As a result, OSHA proposes to charge two
categories of fees.
First, the Agency will charge fees to cover the full costs of
application processing. These costs consist mainly of the salary and
benefits of office and field personnel, travel costs, and other direct
and indirect costs necessary to the processing and related support
activities. The fees will equal the estimated cost of staff time and
the actual cost of travel for these activities. These activities mainly
include the following: performing the office review of the application,
preparing for and performing the on-site review of the organization's
testing and administrative facilities, resolving findings of
deficiencies in the application, drafting and finalizing the on-site
review report, and preparing and publishing the Federal Register
documents. OSHA will collect part of this category of fees at the time
the application is submitted and the remainder following publication of
the initial, i.e., preliminary, notice in the Federal Register.
Second, the Agency will charge fees to cover the full costs of
performing the audits of the NRTL that ensure its continued compliance
with the recognition requirements. These costs consist mainly of the
salary and benefits of office and field personnel, travel costs, and
other costs necessary to the audit and related support activities. The
fees will equal the estimated cost of staff time and the actual cost of
travel for those activities. These activities mainly include the
following: preparing for and performing the office or on-site audit of
the NRTL, drafting and finalizing necessary reports or documentation,
resolving findings of deficiencies in the NRTL's operations, and
reviewing and processing audit reports. OSHA will impose these fees
annually or more frequently if OSHA determines it must perform more
than one audit in a given year.
Many other Federal agencies charge fees for services they provide
to specific recipients. The following is a list of some of these
agencies, along with a citation to the regulations pertaining to the
fees they charge:
FEDERAL AGENCIES THAT CHARGE FEES FOR SERVICES
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Agency Regulation
------------------------------------------------------------------------
Federal Communications Commission...... 47 CFR 1.1151.
Federal Maritime Commission............ 46 CFR 514.21.
Environmental Protection Agency........ 40 CFR 152.400.
National Voluntary Laboratory 15 CFR 285.
Accreditation Program (NVLAP); US
Department of Commerce.
Mine Safety and Health Administration; 30 CFR 5.10.
Department of Labor.
Bureau of Indian Affairs; Department of 25 CFR 143.4.
the Interior.
Food Safety and Health Services; 9 CFR 218.21 and 391.5.
Department of Agriculture.
Federal Aviation Administration; 14 CFR 187.1.
Department of Transportation.
------------------------------------------------------------------------
With the exception of the FCC and NVLAP, the above agencies also
derive their authority for charging the fees from the IOAA.
OSHA has also examined the fee schedules for other organizations
that accredit or recognize testing laboratories or certification
bodies. Although the fees proposed in this notice are specific to the
costs to OSHA, the practices of these other organizations may be of
interest to rulemaking participants.
FEES CHARGED BY VARIOUS ACCREDITATION ORGANIZATIONS
------------------------------------------------------------------------
Organization Activity Fee (as of 3/8/99)
------------------------------------------------------------------------
Standards Council of Canada-- Application fee.. $15,000.
Fees for Certification Fees for Per person on a per
Organizations. assessments and diem basis + travel
audits. expenses.
Annual $9,000 + a business
accreditation volume fee (up to
fee. $36,000).
ANSI Accreditation for Application fee.. $2,000.
Certification Programs. Accreditation $1,200/day per
fees. professional staff
time + travel
expenses.
Continuing $1,200/day for
accreditation. professional staff
time related to
audits + travel
expenses; plus,
Percent of gross
revenues related to
the certification
program, up to
$40,000.
National Voluntary Laboratory Application fee.. $500.
Accreditation Program (NVLAP). Assessment fee per program/field,
(for $1,600 to $3,000 or
accreditation variable.
and every two
years).
[[Page 45102]]
Annual support per program/field,
fee. $3000 to $3,925 less
$2,200 for more than
one field.
Annual per program/field, $0
proficiency to $5,405 or
testing fee. variable.
American Association for Application fee.. $800.
Laboratory Accreditation Assessment fee Deposit of $3,000 +
(A2LA). (for $1,500/extra field/
accreditation lab, actual costs
and every two billed at $750/day +
years). travel expenses (fee
also paid for
surveillance visit
in 2nd year).
Annual fee....... $1,100 for first
field/lab, less for
two or more fields/
labs.
American Industrial Hygiene Application fee.. $250.
Association--Laboratory Site visit fee... $675/day or $2,400
Quality Assurance Programs. outside North
America + expenses.
Annual fee (also $300/program ($150/
due with program with
application). application after
Proficiency June 30)
analytical
testing program program/sample
fee. specific, also based
on # of samples, $86
to $1,800.
------------------------------------------------------------------------
III. Estimated Program Costs
Until now, OSHA has not accounted separately for the costs of the
NRTL Program. The personnel and other costs associated with performing
activities and functions related to the Program involve a number of
different offices throughout the Department of Labor. In preparing the
proposed fee schedule presented in this notice, OSHA has evaluated the
total resources that it has committed to the NRTL Program overall and
has then estimated the costs that are involved solely with the approval
and periodic review functions. It is these costs alone that OSHA seeks
to recover through its proposed fees. Personnel costs are the wages,
salary, and fringe benefit costs of the staff positions involved and
the number of full time equivalent (FTE) personnel devoted to the NRTL
approval and review activities. These estimates also include travel and
other costs of these activities. The Agency believes these estimates
are fair and reasonable.
Based on the total estimated costs and the total estimated FTE,
OSHA has calculated an estimated equivalent cost per hour (excluding
travel). This equivalent cost per hour includes both the direct and
indirect costs per hour for ``direct staff'' members, who are the staff
that perform the application, on-site, and legal reviews and the other
activities involved in application processing and audits. Direct costs
are expenses for direct staff members. Indirect costs are expenses for
support and management staff, equipment, and other costs that are
involved in the operation of the program. Support and management staff
consists of program management and secretarial staff. Equipment and
other costs are intended to cover items such as computers, telephones,
building space, utilities, and supplies, that are necessary or used in
performing the services covered by the proposed fees. Although
essential to the services provided, these indirect costs are not
readily linked to the specific activities involved in application
processing and audits and, as explained later, are therefore allocated
to the activities based on direct staff costs.
Figure 1 is an itemization of the estimated costs and the
equivalent cost per hour calculated. OSHA believes that the costs shown
fairly reflect the full cost of providing the services to NRTLs, but
OSHA mainly uses these costs to illustrate how the fees will be
calculated.
Figure 1.--Current Estimated Annual Costs of NRTL Program
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Aver. cost per FTE
Cost description Est. FTE (including fringe) Total est. costs
----------------------------------------------------------------------------------------------------------------
Direct Staff Costs............................... 4.2 $83,860 $352,200
Travel........................................... na na 40,000
Indirect Staff & Other Costs..................... na na 76,300*
--------------------------------------------------------------
Total Est. Program Costs......................... ........... ....................... 468,500
--------------------------------------------------------------
Avg. direct staff cost/hr ($352,200 4.2 ........... ....................... 40
FTE (2,080) hours)..............................
Equivalent avg. direct staff cost/hr ($428,500 ........... ....................... 49
4.2 FTE hours) (includes direct &
indirect costs).................................
----------------------------------------------------------------------------------------------------------------
* This amount consists of $29,800 of indirect staff costs and $46,500 for equipment and other costs.
The use of an ``equivalent average direct staff cost per hour''
measure is a convenient method of allocating indirect costs to each of
the services for which OSHA will charge fees. The same result is
obtained if direct staff costs are first calculated and then indirect
costs are allocated based on the value, i.e., dollar amount, of the
direct staff costs, which is an approach that is consistent with
Federal accounting standards. To illustrate, assume a direct staff
member spends 10 hours on an activity; the direct staff costs would
then be calculated as follows:
Direct staff costs = 10 hours x $40/hour = $400.
The $40/hour is the direct staff cost/hour amount shown in Figure
1. The indirect costs would be allocated by first calculating the ratio
of indirect costs to direct staff costs, again using the costs shown in
Figure 1. This ratio would be as follows:
Indirect costs/direct staff costs = $76,300/$352,200 = 0.217.
Next, the indirect costs would be calculated based on the $400
estimate of direct staff costs:
Indirect costs = $400 x 0.217 = $87.
[[Page 45103]]
Finally, the total costs of the activity are calculated:
Total costs = direct staff costs + indirect costs = $400 + $87 =
$487.
Taking into account the rounding shown in Figure 1, the actual
amount calculated would be $490.
After estimating program costs, the Agency then estimated the time
it spends on specific activities or functions. These estimates were
performed, in part, for the information collection package for the NRTL
Program submitted to OMB in September 1997 under the Paperwork
Reduction Act. OSHA calculated time estimates for each major service
category. These categories are: initial applications, expansion and
renewal applications, and audits. OSHA further divided each category
into the major activities performed and estimated the staff time and
travel costs for each of these activities. The Agency then calculated
the cost of each major activity using the time estimates, the
equivalent costs per hour, and the estimate of travel costs. These
costs then serve as the basis for the fees later shown in the proposed
fee schedule. Examples of the calculations are shown in Figures 2, 3,
and 4.
Figure 2.--Estimated Costs for Initial Application
------------------------------------------------------------------------
Average Average
Major activity hours costs*
------------------------------------------------------------------------
Initial Application Review
Staff time: (includes review by office and 80 $3,924
field staff).............................
On-Site Assessment--first day
Staff time: (includes 16 hours 28 1,373
preparation, 4 hours travel, 8 hours at
site)....................................
travel:................................... ........... 670
-------------------------
Total (per site, per assessor)............ ........... 2,043
On-Site Assessment--addnl. day
Staff time................................ 8 392
Travel amount: (to cover per diem)........ ........... 70
-------------------------
Total (per site, per assessor)............ ........... 462
Final Report & Federal Register notice
Staff time: (includes work performed by 160 7,848
field staff and office staff)............
------------------------------------------------------------------------
Figure 3.--Estimated Costs for Expansion or Renewal Application
------------------------------------------------------------------------
Average Average
Major Activity Hours Costs*
------------------------------------------------------------------------
Initial Application Review (expansion)
Staff time: (includes review by office and 32 $1,570
field staff).............................
(Note for renewals: 2 hours, i.e. $98, are ........... ...........
allotted for processing the NRTL's
request).................................
On-Site Assessment--first day
Staff time: (includes 8 hours preparation, 20 981
4 hours travel, 8 hours at site).........
Travel:................................... ........... 670
-------------------------
Total (per site, per assessor)............ ........... 1,651
On-Site Assessment--addnl. day
Staff time................................ 8 392
Travel amount: (to cover per diem)........ ........... 70
-------------------------
Total (per site, per assessor)............ ........... 462
Final Report & Federal Register notice
Staff time: (includes work performed by 88 4,316
field staff and office staff)............
------------------------------------------------------------------------
Figure 4.--Estimated Costs for On-Site Audit
------------------------------------------------------------------------
Average Average
Major Activity Hours Costs*
------------------------------------------------------------------------
Pre-site Review
Staff time: (field staff only)............ 8 $392
On-Site Audit--first day
Staff time: (includes 4 hours travel)..... 12 589
Travel:................................... ........... 670
-------------------------
Total (per site, per assessor)............ ........... 1,259
Final Report & Federal Register notice
Staff time: (includes work performed by 16 785
field staff and office staff)............
Total costs............................... ........... **2,436
-------------------------
------------------------------------------------------------------------
* Average costs for staff time equal average hours x equivalent
average direct staff cost/hr ($49)
** Based on a one day audit. The costs for any additional days are the
same as the per-day costs for an assessment.
[[Page 45104]]
In deriving the fee amounts shown in the fee schedule, OSHA has
generally rounded the costs shown in Figures 2, 3, and 4, up or down,
to the nearest $50 or $100 amount.
OSHA believes that its proposed fee schedule, shown in Table A,
accurately reflects costs to the Agency for the staff time and travel
involved in performing and administering the application processing and
auditing activities. The amounts shown in the proposed schedule reflect
the Agency's current reasonable estimation of the costs involved for
the services rendered. As previously mentioned, OSHA is not attempting
to recover the entire costs of the NRTL Program through the proposed
fees but only the costs of providing these services. OSHA will publish
the fee schedule in the Federal Register with the final rule.
IV. Proposed New Paragraph
OSHA proposes a new paragraph ``(f) Fees'' under 29 CFR 1910.7 to
provide for the assessment and payment of fees for certain services
rendered to NRTLs and NRTL applicants. This new paragraph consists of
five parts, which provide the general framework that OSHA will use to
calculate, charge, and collect the fees. OSHA will provide the specific
details for calculating, charging, and collecting the fees through
appropriate OSHA Program Directives, consistent with the framework laid
out in this notice.
A. Obligation to Pay and Fee Assessment
OSHA proposes that the first part of paragraph (f) would read as
follows:
(1) Each applicant for NRTL recognition and each existing NRTL
must pay fees for services provided by OSHA. OSHA will assess fees
for the following activities:
(i) Processing of applications for initial recognition,
expansion of recognition, or renewal of recognition, including on-
site reviews; review and evaluation of the applications; and
preparation of reports, evaluations and Federal Register notices;
and
(ii) Audits of sites.
The Agency proposes that applicants seeking OSHA recognition (i.e.,
NRTL applicants) and organizations that OSHA has recognized as NRTLs
must pay fees required for the specific services that OSHA provides to
them. As previously described, the services for which the Agency would
charge fees are: (1) processing of applications for initial
recognition, expansion of recognition, or renewal of recognition, and
(2) audits, i.e, post-recognition on-site or office reviews. The
activities involved in providing these services have already been
described in general, and are described in more detail later in this
notice.
NRTL applicants would pay fees related only to initial application
processing. NRTLs would pay fees for applications for expansions and
renewal of recognition and for audits of the sites they use for their
NRTL operations. Typically, OSHA audits only the sites it has
recognized for an NRTL and contemplates assessing fees mainly for on-
site audits of these sites. However, the Agency allows NRTLs that have
appropriate controls to use non-recognized sites, such as testing sites
of other laboratories or even manufacturers, to conduct testing or
other activities necessary in certifying products. OSHA may need, for
good cause, to audit such sites to determine whether the NRTL or the
site properly controls the NRTL-related activities. For example, OSHA
may need to audit a manufacturer to determine how well it controls the
NRTL's certification mark or maintains production or quality controls.
NRTLs would pay for these ``special'' audits and would be billed
accordingly.
B. Fee Calculation
OSHA proposes that the second part of paragraph (f) would read as
follows:
(2) The fee schedule established by OSHA reflects the estimated
cost of performing the tasks and functions for each activity. OSHA
calculates the fees based on the average time required to perform
the work necessary; the staff costs per hour (which include wages,
fringe benefits, and expenses other than travel for personnel that
perform or administer the activities covered by the fees); and an
estimate of the average costs for travel when on-site reviews are
involved. The formula for the fee calculation is as follows:
Activity Fee = Average Hours to Complete the Activity x Staff
Costs per Hour + Travel Costs.
Each activity represents tasks and functions that OSHA performs to
accomplish a particular phase of the service the Agency provides to the
recipients (i.e., NRTLs or NRTL applicants). OSHA would compute the
fees on the basis of the average time spent on each task or function.
This will simplify the accounting for the NRTL and for OSHA.
The tasks and functions for which OSHA currently plans to charge a
fee are: initial, expansion, and renewal applications; on-site
assessment (per person, per site--first day) and on-site assessment
(per person, per site--each additional day); review and evaluation (per
standard)--initial and expansion applications; final report/Federal
Register notice--initial and expansion or renewal applications; on-site
audit (per site) and office audit (per site); and miscellaneous. The
fee for each task or function--which equals the estimated cost of the
work involved--would equal the average estimated staff time to perform
the work multiplied by an equivalent staff cost per hour, plus an
estimate of average travel costs for on-site assessment or audit
activities. Figure 1 describes how the equivalent staff cost per hour
is derived.
OSHA would include as direct and indirect costs the estimated
expenses described in Section III above.
C. Annual Review of Fee Schedule and Issuance
OSHA proposes that the third part of paragraph (f) would read as
follows:
(3) OSHA will review costs and estimates annually and will
propose a revised fee schedule, if warranted. In its review, OSHA
will apply the formula established in paragraph (f)(2) of this
section to the current estimated costs for the NRTL Program. If a
change is warranted, OSHA will follow the schedule in paragraph
(f)(4) of this section. OSHA will issue all fee schedules in the
Federal Register. Once issued, a fee schedule remains in effect
until it is superseded. Any member of the public may request a
change to the fees included in the current fee schedule. Such a
request must include appropriate documentation in support of the
suggested change.
The first proposed fee schedule is set forth in Table A. Once
issued, the fee schedule would remain in effect until it is superseded
by another schedule. OSHA would annually review the costs and estimates
of the program to determine whether any changes to the fees are
warranted. In addition, OSHA would consider requests for changes to the
fee schedule that it receives from the public. In performing any
review, OSHA will apply the formula established in this regulation to
the current estimated costs for the program to determine whether any
changes to the fee schedule are warranted. If change is warranted, OSHA
would publish a notice to provide the NRTLs and other members of the
public an opportunity to comment on such changes. The Agency would
follow the implementation schedule shown in paragraph (f)(4) of this
proposed rule. OSHA would issue the initial and all subsequent fee
schedules in the Federal Register. In addition, OSHA would provide more
specific details regarding implementation of the fees proposed in this
rule through appropriate program directives.
D. Fee Implementation
OSHA proposes that the fourth part of paragraph (f) would read as
follows:
[[Page 45105]]
(4) OSHA will implement fee assessment, collection, and payment as
follows:
------------------------------------------------------------------------
Approximate dates Action required
------------------------------------------------------------------------
Application Fees
------------------------------------------------------------------------
Time of application.................... Applicant must pay the
applicable fees shown in the
Fee Schedule when submitting
the application; OSHA will not
begin processing until fees
are received.
Publication of preliminary notice...... Applicant must pay remainder of
fees; OSHA cancels application
if fees are not paid when
due.s0
------------------------------------------------------------------------
Audit Fees
------------------------------------------------------------------------
November 1............................. OSHA will publish proposed new
Fee Schedule in the Federal
Register, if OSHA determines
changes in the schedule are
warranted.
November 16............................ Comments due on the proposed
new Fee Schedule.
December 15............................ OSHA will publish the final Fee
Schedule in the Federal
Register.
January 1.............................. OSHA will bill each existing
NRTL for the audit fees shown
in the Fee Schedule, including
estimated travel costs.
February 1............................. NRTLs must pay audit fees; OSHA
will assess late fee if audit
fees are not paid.
February 15............................ OSHA will send a letter to the
NRTL requesting immediate
payment of the audit fees and
late fee.
March 1................................ OSHA will publish a notice in
the Federal Register to revoke
recognition for NRTLs that
have not paid audit fees for
the year.
------------------------------------------------------------------------
We discuss application fees under paragraph E below and under Fee
Schedule and Description of Fees, Section V of this notice. OSHA would
assess an applicant the fees in effect on the submission date of the
application.
Regarding the remainder of the schedule, OSHA needs approximately
30 days after the close of the government fiscal year (GFY), September
30, to obtain the estimates and costs for its annual review of the fee
schedule. Therefore, approximately on November 1 of each year, when
warranted, OSHA would publish a proposed new Fee Schedule, including a
report on the estimated costs that are the basis of the fees. The
period for comments would be no less than 15 calendar days.
Approximately 30 days thereafter, OSHA would officially issue the Fee
Schedule in the Federal Register.
In January of each year, OSHA would bill each NRTL for the
appropriate audit fee shown in the Fee Schedule in effect at the time
the bill is mailed. OSHA anticipates that most of the bills would be
for on-site audits. The Agency would include the appropriate
supplemental amounts for travel outside the 48 contiguous states, if
applicable. The NRTL would be automatically assessed the late fee,
shown in the Fee Schedule, if OSHA does not fully receive the amount
billed within 30 days. Fifteen days thereafter, OSHA would also issue a
letter notifying the NRTL of the failure to pay the fees for the audit
and requesting immediate payment, including a late fee. If the NRTL
fails to fully pay those fees within 15 days of the issuance of the
letter, OSHA would publish a notice in the Federal Register announcing
its intent to revoke the NRTL's recognition. OSHA would then proceed
with permanent revocation of the NRTL's recognition. In revoking
recognition due to non-payment of fees, OSHA would follow the
procedures described in this paragraph and not those under II.E of
Appendix A to 29 CFR 1910.7.
OSHA would bill the NRTL separately for additional audits of a site
or for any ``special'' audits. OSHA would bill the NRTL for these fees
prior to the commencement of such an audit and would follow the same
collection process here as described above for a regular audit. OSHA
would refund the audit fee for any audit, whether or not annual, that
it does not perform. OSHA would follow similar collection procedures
for any additional or special assessment that it must perform in
connection with an application.
E. Details for Payment
OSHA proposes that the fifth and last part of paragraph (f) would
read as follows:
(5) OSHA will provide the details regarding how to pay the fees
through appropriate OSHA Program Directives.
For application processing, OSHA anticipates that it will bill the
NRTL applicant or NRTL for balance of fees due, including actual travel
expenses, at the time the preliminary notice is published; the Agency
will also refund any balances due at that time. Also, for expansions
and renewals, applicants would not pay the assessment fee at time of
application, but OSHA would bill an applicant for these fees if it
determines an assessment is necessary. In such cases, OSHA will not
begin the assessment until fees are received. For audits, additional
days of audit time will be billed after an audit. Also, any difference
between actual travel expenses and the travel amounts in the fee
schedule will be billed or refunded to the NRTL. For applications and
audits, any fees that are not paid when due would result in
cancellation of application or revocation of recognition, as
appropriate. OSHA also anticipates that all fees must be paid in U.S.
dollars by certified check or money order drawn on a U.S.-based
institution or organization. The fee schedule would include appropriate
details about fee payments.
Additionally, the Agency plans to implement the fees 30 calendar
days after the effective date of this rule. Any application received by
OSHA on or after that date will be subject to the fees. Also, any
pending application (i.e., an application that OSHA has not yet
completed processing) on this effective date will be subject to the
fees for the activities that OSHA has not yet commenced. OSHA would
bill applicants, accordingly.
V. Fee Schedule and Description of Fees
OSHA proposes the following fee schedule:
Table A.--Fee Schedule; Nationally Recognized Testing Laboratory Program
(NRTLP)
Fee Schedule (Effective ______*)
------------------------------------------------------------------------
Fee Category (per
Type of Service application unless Fee Amount
noted otherwise)
------------------------------------------------------------------------
Application Processing............. Initial Application 3,900
Fee 1.
Expansion Application 1,550
Fee 2.
Renewal Application 100
Fee 2.
Assessment Fee-- 2,050
Initial Application
(per person, per
site--first day) 3,
4, 8.
[[Page 45106]]
Assessment Fee-- 1,650
Expansion or Renewal
Application (per
person, per site--
first day) 3, 4, 8.
Assessment Fee (per 450
person, per site--
each addnl. day) 3,
4, 8.
Review & Evaluation 50
Fee (per standard) 5
(for initial or
expansion
applications).
Final Report/Register 7,850
Notice Fee--Initial
Application 5.
Final Report/Register 4,300
Notice Fee--Expansion
or Renewal
Application 5.
Audits............................. On-site Audit Fee (per 2,450
person, per site--one
day) 6, 8 (each
additional day is
billed at $450 per
day).
Office Audit Fee 6.... 400
Miscellaneous...................... Staff Costs Fee (per 400
day) 7.
Late Payment Fee...... 50
------------------------------------------------------------------------
Notes:
\1\ Only NRTL applicants must pay the Initial Application Fee. These
fees must be included with the application.
\2\ An NRTL must pay the Expansion Application Fee for each request to
expand its recognition. An NRTL must pay the Renewal Application Fee
for its initial renewal request or for any notification to certify its
continuing compliance. These fees must be included with the
application.
\3\ An NRTL applicant must pay the first day and the additional day
Assessment Fees. These fees must be included with the application. For
expansion and renewal applications, OSHA will bill the NRTL for the
appropriate Assessment Fees if an assessment is necessary. The NRTL
must pay the fee before OSHA commences any assessment activities.
\4\ The appropriate supplemental fee must be included for sites located
outside the 48 contiguous U.S. states (see Supplemental Travel Costs
table). OSHA will assess actual travel costs and actual number of
assessment days in the bill mentioned in note 5. See note 8 for
possible refund of Assessment Fees.
\5\ OSHA will bill NRTL applicants and NRTLs for the Review and
Evaluation and the appropriate Final Report/Register Notice Fees at
the time it publishes the preliminary Federal Register notice. OSHA
will cancel applications if payment is not received when due.
\6\ OSHA will bill the NRTL annually for the audit fee (on-site or
office, as deemed necessary) and will include the appropriate
supplemental fee for sites located outside the 48 contiguous U.S.
states (see Supplemental Travel Costs table). OSHA will revoke the
NRTL's recognition for failure to pay an audit fee. OSHA will assess
actual travel costs after any on-site audit.
\7\ Current estimated equivalent staff costs per hour = $49.
\8\ Refund of Fees: Except for the Assessment and On-site Audit Fees,
OSHA will not refund any fees after it receives payment. Assessment
and On-site Audit Fees will be refunded as follows:
Refund = 100% of Assessment Fee paid, for withdrawn applications, if
preparation for on-site not started, or OSHA does not perform
assessment.
Refund = 100% of Assessment Fee paid less Staff Costs Fee, for withdrawn
applications if only preparation for on-site started.
Refund = 0% of Assessment Fee paid, if travel for on-site visit
commences
Refund = 100% of On-site Audit Fee paid, if OSHA does not perform audit
(even if preparation for on-site started).
Refund = 0% of On-site Audit Fee paid, if travel for on-site visit
commences.
* Applicants must pay the application fees in effect on the date it
submits the application. NRTLs must pay the audit fee in effect on the
date OSHA sends the bill for the audit. [Note: for the initial fee
schedule, any pending application (i.e., an application that OSHA has
not yet completed processing) on this effective date will be subject
to the fees for the activities that OSHA has not yet commenced.]
The fee schedule shows the current activities for which OSHA plans
to charge fees. However, the Agency may find, after it has gained
experience charging the fees or based upon suggestions it receives,
that it may be better to further break down or even combine some fee
categories. OSHA would give the public an opportunity to comment on any
such changes. However, these changes would merely reapportion costs or
further detail the fees; they would not apply to different services
than those described in this proposed rule. In evaluating any changes
to a fee schedule, OSHA would also consider the following in
determining the fees it needs to charge for its services: (1) actual
expenditures (direct and indirect) of the most recently completed
government fiscal year for rendering the services for which fees will
be charged, and (2) estimated costs (direct and indirect) of the
upcoming government fiscal year for rendering the services for which
fees will be charged.
OSHA proposes that an organization applying for either an initial
NRTL recognition or a renewal must include the application fee and on-
site review (``assessment'') fee with the application. Applications
received solely for an expansion of NRTL recognition would include only
the application fee. OSHA would bill the NRTL for the assessment fee if
it must perform an on-site review for the expansion request. The Agency
would not perform the review until it receives the assessment fee. This
would ensure that OSHA's costs will be reimbursed, regardless of how
the application process turns out. If an applicant withdraws its
application prior to commencement of on-site assessment activities, the
Agency would refund any on-site assessment fee it has collected.
However, if OSHA has commenced preparation for the on-site visits, it
would refund only a portion of the assessment fee. The amount refunded
would equal the assessment fee collected less the daily assessor rate
(currently, 8 hours x $49/hr, rounded to $400 in the fee schedule).
The Agency would not refund the assessment fee if the on-site visit had
commenced. Also, OSHA would bill the organization for the balance of
the fees at the time of publication of the initial Federal Register
notice.
The following is a description of the tasks and functions currently
covered by each type of fee category, e.g., application fees, and the
basis used to charge each fee.
Application Fees: This fee would reflect the technical work
performed by office and field staff in reviewing application documents
to determine whether an applicant submitted complete and adequate
information. The application review does not include a review of the
test standards requested, which is reflected in the review and
evaluation fee. Application fees would be based on average costs per
type of application. OSHA plans to use average costs since the amount
of time spent on the application review does not vary greatly by type
of application. This is
[[Page 45107]]
based on the premise that the number and type of documents submitted
will generally be the same for a given type of application. Experience
has shown that most applicants follow the application guide that OSHA
provides to them.
Assessment Fees: This fee would be different for initial and for
expansion or renewal applications. It is based on the number of days
for staff preparatory and on-site work and related travel. Three types
of fees are shown, and each one would be charged per site and per
person. The two fees for the first day reflect time for office
preparation, time at the applicant's facility, and an amount to cover
travel in the 48 contiguous states. A supplemental travel amount (to be
included with the fee schedule) would be assessed for travel outside
this area. These travel amounts are only estimates for purposes of
submitting the initial fees. The applicant or NRTL would be billed
actual expenses, based on government per diem and travel fares. Any
difference between actual travel expenses and the travel amounts in the
fee schedule will be reflected in the final bill or refund sent to the
applicant or NRTL.
Similar to the application fee, the office preparation time
generally involves the same types of activities. Actual time at the
facility may vary, but the staff devote at least a full day for
traveling and for performing the on-site work. The fee for the
additional day reflects time spent at the facility and an amount for
one day's room and board.
Review and Evaluation Fee: This fee would be charged per test
standard (which is part of an applicant's proposed scope of
recognition). The fee reflects the fact that staff time spent in the
office review of an application varies mainly in accordance with the
number of test standards requested by the applicant. The fee would be
based on the estimated time necessary to review each standard to
determine whether it is ``appropriate,'' as defined in 29 CFR 1910.7,
and whether it covers equipment for which OSHA mandates certification
by an NRTL. The fee also covers time to determine the current
designation and status (i.e., active or withdrawn) of a test standard
by reviewing current directories of the applicable test standard
organization. Furthermore, it includes time spent discussing the
results of the application review with the applicant. The actual time
spent will vary depending on whether an applicant requests test
standards that have previously been approved for other NRTLs. The
current estimated average review time per standard is one hour.
Final Report/Register Notice Fees: Each of these fees would be
charged per application. The fee would reflect the staff time to
prepare the report of the on-site review (i.e., assessment) of an
applicant's or an NRTL's facility. The fee also reflects the time spent
making the final evaluation of an application, preparing the required
Federal Register notices, and responding to comments received due to
the preliminary finding notice. These fees are based on average costs
per type of application, since the type and content of documents
prepared are generally the same for each type of applicant.
Audit (Post-Recognition Review) Fees: These fees would reflect the
time for office preparation, time at the facility and travel, and time
to prepare the audit report of the on-site audit. A separate fee is
shown for an office audit conducted in lieu of an actual visit. Each
fee is per site and does not generally vary for the same reasons
described for the assessment fee and because the audit is generally
limited to one day. As previously described, the audit fee would
include amounts for travel, and, similar to assessments, OSHA will bill
the NRTL for actual travel expenses.
Miscellaneous Fees: The sample fee schedule only shows the average
cost for one full day of staff time. OSHA would use this fee primarily
in cases of refunding the assessment fee. OSHA will also charge a fee
for late payment of the annual audit fee.
The amount for the late fee is based on 1 hour of staff time.
VI. Reduction of Public Comment Period
OSHA proposes to amend provisions in Appendix A to 29 CFR 1910.7 to
reduce the 60-day comment period currently required for the
``preliminary'' Federal Register notices. ``Preliminary'' refers to the
first of the two notices that OSHA must publish to initially recognize
an organization as an NRTL, or to expand or renew an NRTL's
recognition. The notice is termed preliminary since it announces OSHA's
``preliminary finding'' on an initial, expansion, or renewal
application. In recent years, OSHA has received few or no comments on
the preliminary notices. The few comments received, even when
substantive, could have been prepared and submitted in much less than
60 days.
Regarding expansions, NRTLs must routinely adopt new test standards
for the products that are within their testing and certification
capability. Many of the new test standards include new or additional
tests to meet new or revised national or international safety criteria
or requirements, and supersede those for which OSHA has already
recognized the NRTL. As a result, the NRTL must often apply to OSHA to
``expand'' its recognition as an NRTL to enable it to use those new
test standards. While the NRTL may ``expand'' its recognition primarily
to attain or maintain an economic benefit, timely recognition of those
new test standards for the NRTL could also affect safety in the
workplace. The shorter periods would speed up approval of those
expansions.
Also in support of the shorter periods, Federal Register notices
are currently accessible to the public through the Office of the
Federal Register web site on the day they are published. Given the
rapid telecommunication (e.g., Internet, electronic mail, fax)
capabilities that now exist throughout the world, comments or requests
for an extension of the comment period can be filed in much less time
than 60 days. Therefore, OSHA proposes to amend the provisions in
Appendix A to provide a 30-day comment period for applications for
initial recognitions as an NRTL. This period is consistent with that
provided for the Agency's rulemaking notices.
OSHA also proposes to amend Appendix A to provide a 15-day comment
period for requests by an NRTL for expansion or renewal of its
recognition. The shorter period reflects the nature and scope of the
Agency's evaluation of these requests and the anticipated issues that
such requests will present to anyone who believes that the NRTL's
request affects them. OSHA does not view either of the shorter periods
as a way to limit comments, since reviewers of the notice can always
request an extension of the comment period if they need more time for
presenting any comments. OSHA will include a statement regarding such
extensions in the preliminary notices.
VII. Preliminary Economic Analysis
Executive Order 12866 and the Regulatory Flexibility Act require
Federal agencies to analyze the cost, and other consequences and
impacts, of proposed and final rules. Consistent with these
requirements, OSHA has prepared this preliminary economic analysis to
accompany a proposal by OSHA that would allow the Department of Labor
to charge and retain fees for services provided to Nationally
Recognized Testing Laboratories (NRTLs). The analysis includes a
description of the industry, an estimation of the costs of compliance,
and an evaluation of the economic and
[[Page 45108]]
other impacts of the proposed rule on firms in this sector. The
analysis also examines the costs and impacts of the proposal on
affected small entities, as defined by the Small Business
Administration.
Affected Industry
The standards adopted and mandated in OSHA regulations stipulate
that certain equipment and materials used in the workplace meet minimum
criteria for performance or safety. In 29 CFR Parts 1910 (governing
hazards in general industry) and 1926 (governing hazards in the
construction industry), there are more than 160 paragraphs that require
certain equipment to be either safety tested, listed, or approved in
order for that equipment to be used in the workplace. Table 1 provides
a listing of the types of equipment that require testing, listing or
approval by NRTLs. The requirements to test, list or approve equipment
are necessary to ensure that employees use appropriate safe equipment
2. Although it is ultimately the employer's responsibility
to provide safe equipment, few, if any, have the technical capabilities
to test items such as electrical conductors and equipment, the fire
resistance properties of materials, the lifting capacity of scaffold
hoists, etc., for safety.
\2\ A substantial amount of equipment tested is used in
situations other than those in which OSHA has sole interest. As one
example, electrical conductors and equipment installed in buildings
must conform with the state and local building code, the National
Electrical Code, and any requirements established by the property
insurer. In addition, manufacturers have products examined by
testing laboratories in order to meet the demands of their product
liability insurers as well as to improve the product. Thus, OSHA is
not the only organization concerned about the safety of many of
these products.
---------------------------------------------------------------------------
Table 1. Categories of Equipment/Materials Required by Various
Provisions in OSHA's Standards to Be Certified by an NRTL.
Electrical Conductors or Equipment
Automatic Sprinkler Systems
Fixed Extinguishing Systems (Dry chemical, water spray,
foam or gaseous agents)
Fixed Extinguishing Systems Components and Agents
Portable Fire Extinguishers
Automatic Fire Detection Devices and Equipment
Employee Alarm Systems
Self-Closing Fire Doors
Fire (B) Doors
Windows (Frames)
Heat Actuated (Closing) Devices (Dip Tanks)
Exit Components
Spray Booth Overspray Filters
Flame Arresters, Check Valves, Hoses (Transfer Stations),
Portable Tanks, and Safety Cans--Flammable Combustible Liquids)
Pumps and Self-Closing Faucets (for Dispensing Class I
Liquids)
Flexible Connectors (Piping, Valves, Fittings)
Service Station Dispensing Units (Automotive, Marine)
Mechanical or Gravity Ventilation Systems (Automotive
Service Station Dispensing Area)
Automotive Service Station Latch--Open Devices for
Dispensing Units
New Commercial and Industrial LPG Consuming Appliances
Flexible Connectors (Piping, Valves, Fittings)--LPG
Powered Industrial Truck LPG Conversion Equipment
LPG Storage and Handling Systems (DOT Containers,
Cylinders)
Automatic Shut-off Devices (Portable LPG Heaters Including
Salamanders)
LPG container assemblies (non-DOT) for interchangeable
installation above or under ground.
Fixed electrostatic apparatus and devices (coating
operations).
Electrostatic hand spray apparatus and devices.
Electrostatic fluidized beds and associated equipment.
Each appurtenance (e.g., pumps, compressors, safety relief
devices, liquid-level gauging devices, valves and pressure gauges)
in storage and handling of anhydrous ammonia.
Gasoline, LPG, diesel, or electrically powered industrial
trucks used in hazardous atmospheres.
Acetylene apparatus (torches, regulators or pressure-
reducing valves, generators [stationary and portable], manifolds).
Acetylene generator compressors or booster systems.
Acetylene piping protective devices.
Manifolds (fuel gas or oxygen)--separately for each
component part or as assembled units.
Scaffolding and power or manually operated units of single-
point adjustable suspension scaffolds.
Hoisting machine and supports (Stone setters' adjustable
multiple-point suspension scaffold).
Hoisting machines (Two-point suspension; Masons' adjustable
multiple-point suspension scaffold).
Source: U.S. Department of Labor, OSHA, Office of Regulatory
Analysis, 1997.
A product testing lab tests equipment in accordance with test
criteria, such as those standards established by Underwriters
Laboratories (UL), Factory Mutual Research Corporation (FMRC), the
American National Standards Institute (ANSI), or the American Society
for Testing and Materials (ASTM). These standards typically contain
requirements concerning the design specifications of the equipment, the
specific physical tests to be performed, the criteria for passing these
tests, etc. The development of a product test standard for a particular
type of product is a deliberate, lengthy, and expensive process that
involves a team of engineers and scientists. In addition, test standard
development is a dynamic process in which test standards are constantly
revised. For example, UL generally reviews each of its test standards
at least once every 3 years. Further, at any point in time, between 10
and 20 percent of the UL test standards have been changed during the
preceding 6 months. In light of this effort and expense, very few
organizations develop their own product test standards.
Independent testing labs are entities that are separate from any
manufacturer, trade association, or equipment vendor. They typically
test a variety of products or substances within one or more general
testing disciplines (e.g., electrical, thermal, mechanical) for many
clients, such as manufacturers, trade associations, physicians, and
state agencies. Most of the smaller labs specialize in testing specific
types of products within one or two general testing disciplines. Even
the larger testing labs tend to specialize within one or two general
testing disciplines and do not test every type of product within a
general testing discipline.
According to the 1992 Census, there are approximately 4,704
independent testing labs in the United States, of which 4,540 are
profit making and 164 are not-for-profit (see Table 2). Of the 4,704
testing labs, 1,776 perform chemical or biological testing 3
and about 2,928 concentrate on product testing [1]. The second category
of testing labs performs such types of tests as electrical resistance
or capacity, fire resistance of materials, materials strength, acoustic
and vibration testing, etc. Some of these testing labs will be affected
by the proposed rule. Total combined receipts for taxable and non-
taxable establishments were $5.13 billion in 1992. Not-for-profit
establishments represent 3.4 percent of the total number of testing
establishments and 7.2 percent of total revenues.
---------------------------------------------------------------------------
\3\ Biological and chemical testing labs perform such tests as
chemical composition of substances, blood tests, etc., and would not
be affected by the proposed rule.
[[Page 45109]]
Table 2.--Characteristics of Testing Laboratories
----------------------------------------------------------------------------------------------------------------
Percent
Number of Number of Number of Total receipts b
firms establishments employees receipts ($ from
million) testing
----------------------------------------------------------------------------------------------------------------
Taxable Establishments...................... 3,513 4,540 70,462 $4,764 94.47
Non-Taxable Establishments.................. a 135 164 6,256 371 90.13
----------------------------------------------------------------------------------------------------------------
Source: US Department of Commerce. 1992 Census of Service Industries. SC92-S-1. February 1995.
(a) Calculated based on the ratio of non-taxable firms to establishments in SIC 873.
(b) Other sources of receipts for taxable and non-taxable labs include physical or biological research and
development, engineering consulting and design, and contributions (tax-exempt labs only).
By 1992, the testing industry increased by 40 percent, from a total
of 3,458 testing labs in 1987; there are several reasons for this
growth. First, as technology grows more complex, fewer personnel within
the equipment manufacturing organization have the technical expertise
to certify the quality of the finished product, i.e., fewer people in a
given organization have the ability to perform the overall product
certification function. Product testing laboratories can help to
provide this quality assurance function. Second, the increase in
product liability suits has encouraged manufacturers to take additional
steps to verify the safety characteristics of their products. Third,
more information is now being sought on product toxicity [2].
The testing industry employs 76,718 workers. Small establishments
with one to nine employees represent 3,002 establishments (64 percent
of all establishments), but collectively employ only 11,095 employees
(14 percent of all employees).
The proposed rule contains requirements for the payment of fees for
services provided by OSHA to the NRTLs. The two distinct groups of
testing labs that will be affected by the proposed rule are: (1)
testing labs that will seek acceptance by OSHA as ``nationally
recognized testing labs'' for particular types of equipment testing,
listing, and approval required under Part 1910.7, and (2) existing
NRTLs wishing to retain their eligibility for testing and certification
of workplace equipment and/or to expand their NRTL program. Testing
labs that do not seek OSHA acceptance will not be affected by the
proposed rule and will, therefore, incur no costs of compliance.
In 1998, there were 17 testing laboratories that had NRTL status
and that operated 40 testing facilities (sites). Table 3 lists the
laboratories and the number of sites for these labs. Both domestic and
foreign testing laboratories may be affected by this proposal. The
Canadian Standards Association (CSA) is a product testing lab that is
Canadian-owned and operated and is the only foreign testing lab that
has, to any significant degree, entered the American product safety
testing market. CSA certification is accepted by some state and local
building code authorities.
Table 3.--Nationally Recognized Testing Laboratories (NRTLS)
------------------------------------------------------------------------
Number of
Testing laboratory sites
------------------------------------------------------------------------
1. American Gas Association Laboratories (AGA)............ 2
2. Applied Research Laboratories (ARL).................... 1
3. Canadian Standards Assocaition (CSA)................... 6
4. Communication Certification Laboratory (CCL)........... 1
5. Detroit Testing Laboratory (DTL)....................... 1
6. Electro-Test, Inc. (ETI)............................... 2
7. Entela, Inc. (ENT)..................................... 2
8. Factory Mutual Research Corporation (FM)............... 2
9. Intertek Testing Services NA, Inc. (ITS)............... 8
10. MET Laboratories (MET)................................. 1
11. National Technical Systems............................. 1
12. NSF International...................................... 1
13. SGS U.S. Testing Co., Inc. (SGS)....................... 2
14. Southwest Research Institute (SwRI).................... 1
15. TUV Rheinland of North America, Inc. (TUV)............. 1
16. Underwriters Laboratories (UL)......................... 7
17. Wyle Laboratories, Inc. (WL)........................... 1
TOTAL.................................................. 40
------------------------------------------------------------------------
Source: US Department of Labor, OSHA, Office of Regulatory Analysis,
1998.
Costs
This section presents preliminary estimates of the costs that will
be incurred by firms to come into compliance with the proposed rule for
NRTL fees. These costs do not represent new costs to the economy;
instead, they represent a new method of paying for the costs of the
NRTL certification program. Today, these costs are paid by taxpayers as
part of OSHA's budget. This proposal would transfer the payment of
these costs to the NRTLs themselves and NRTL applicants. OSHA welcomes
comments on the preliminary costs presented and assumptions used in
this Preliminary Economic Analysis.
Testing laboratories participating in the OSHA program will be
subject to costs for two types of services: (1) application processing
for the initial recognition of an organization, and for expansion and
renewal of an existing NRTL's recognition; and (2) audits (post-
recognition reviews), which enable the NRTL to maintain its recognition
from OSHA. The fees for these services are based on the actual cost of
the service rendered and will thus vary by circumstances. Table A,
previously shown in Part III of this notice, shows the elements of the
fee structure and a sample fee schedule. The activities covered by each
category of fees are explained in detail in that part.
OSHA relied on a review of the NRTL application information from
1988 to 1996 to develop estimates on the annual number of new
applicants, and expansion and renewal requests. On average, OSHA
receives about 3 initial applications for NRTLs and 3 applications for
renewal, and 7 applications for expansions on an annual basis.
OSHA expects to receive several NRTL application requests from
foreign-based testing laboratories as a result of a Mutual Recognition
Agreement (MRA) between the United States and the European Union (EU).
Through the MRA, foreign labs located in the EU that apply for and are
recognized as NRTLs can perform the same activities as US based NRTLs.
The fees proposed by OSHA will ensure that US taxpayers are not
subsidizing foreign businesses. At this time, there is insufficient
information to quantify the number of foreign labs that may apply for
NRTL status and their future costs of compliance for these labs.
OSHA estimates that labs will require approximately 0.5 hours of an
accountant's time to estimate OSHA-related activities and to process
payment. Employee wages are based on the Bureau of Labor Statistics
estimate of total employee compensation for the professional specialty
of $30.17 per
[[Page 45110]]
hour [3]. These costs and the estimated fee costs are shown combined in
Table 5.
Estimates of the total cost of full compliance with the
requirements of the proposed NRTL fee rule are presented in Table 4.
This table also shows OSHA's estimates of the average fee for each type
of service costs, as well as a current estimate of total annual fee
collections. Total estimated costs for the testing laboratory industry
would amount to about $240,000 annually. OSHA estimates that initial
recognitions will cost an average of $20,423 per establishment,
expansions of recognition application will cost an average of $7,820
per establishment, renewals of recognition will cost an average of
$8,641 per establishment, and annual audits will cost an average of
$2,436 per establishment.
Table 4.--Summary of Total Estimated Fee Collection by Category
------------------------------------------------------------------------
Average
cost per Est No. per Estimated
Category application year fee
or audit collection
------------------------------------------------------------------------
Initial Recognition Applications. $20,423 3 $61,269
Expansion of Recognition 7,820 7 54,739
Applications....................
Renewal of Recognition 8,641 3 25,924
Applications....................
Annual Site Visits (Audits)...... 2,436 40 97,432
--------------------------------------
Total............................ ........... ........... 239,364
------------------------------------------------------------------------
Source: Office of Technical Programs and Coordination Activities, 1999.
Economic Impacts
OSHA assessed the potential economic impacts of the costs of
compliance with the proposed standard for NRTL fees and has
preliminarily determined that the standard is economically feasible for
firms in this industry. The proposal would have the advantage of
encouraging economic efficiency by pricing the service of the NRTL
program rather than providing the service for free. As mentioned above,
the cost of the NRTL program is currently borne by taxpayers through
OSHA's budget. This proposal would transfer the payment of some of
these costs to firms receiving the service from OSHA.
To determine whether the proposed rule's projected costs of
compliance would raise issues of economic feasibility for the affected
industry, i.e., would adversely alter the competitive structure of the
industry, OSHA developed quantitative estimates of the economic impact
of the proposed rule on establishments in the affected industry, and
thus on the 17 firms already recognized as NRTLs. In this analysis,
compliance costs are compared with industry revenues and profits.
Estimates of compliance costs are compared with estimates of annual
revenues based on data from the U.S. Department of Commerce, Bureau of
the Census, ``Table 3: United States--The Number and Percent of Firms,
Establishments, Employment, Annual Payroll, and Estimated Receipts by
Industry and Employment Size for 1993,'' while estimates of pre-tax
profits for most industries are based on data from Robert Morris
Associates [3].
OSHA compared the baseline financial data with total annual
compliance costs by computing compliance costs as a percentage of
revenues. Table 5 shows compliance costs as a percentage of sales and
pre-tax profits. This table is titled a screening analysis because it
simply measures costs as a percentage of pre-tax profits and sales and
does not predict impacts on these sales and pre-tax profits. The
screening analysis is used to determine whether the compliance costs
potentially associated with the proposed NRTL fee could lead to
significant impacts on the affected firms. The actual impact of the
proposal on the profits and sales of firms will depend on the price
elasticity of demand for the services provided by the affected firms.
Table 5.--Screening Analysis to Identify Possible Economic Impacts of the Proposed NRTL Fe
----------------------------------------------------------------------------------------------------------------
Annualized costs of
compliance as a percent
Annual costs Revenues Pre-tax of
of compliance ($1000) profits -------------------------
($1000) \1\ Pre-Tax
Sales Profit
----------------------------------------------------------------------------------------------------------------
Testing Laboratories (SIC 8734)....... $239,825 $5,547,796 $316,224 0.004 0.08
----------------------------------------------------------------------------------------------------------------
Sources: US Department of Labor, OSHA, Office of Regulatory Analysis, 1998; Office of Technical Programs and
Coordination Activities, 1999. US Small Business Administration, Office of Advocacy. Table 3: US
Establishments, Employment, and Payroll by Industry and Firm Size, 1993.
\1\ Revenues do not include foreign laboratories sales.
Price elasticity refers to the relationship between the price
charged for a product and demand for that product; that is, the more
elastic the relationship, the less able a firm is to pass the costs of
compliance through to its customers in the form of a price increase and
the more it will have to absorb the costs of compliance from its
profit. When demand is inelastic, firms can absorb all the costs of
compliance simply by raising the prices they charge for the service;
under this scenario, profits are untouched. Where demand is inelastic,
the impact of compliance costs that amount to 1 percent of revenues
would be a 1 percent increase in the price of the product, with no
decline either in demand or in profits. Such a situation would be most
likely when there are few, if any, substitutes for the service offered
by the affected establishments and where such services account only for
a small portion of the income of its consumers. When demand is elastic,
firms cannot absorb all of the costs simply by passing the cost
[[Page 45111]]
increase through in the form of a price increase; instead, they must
absorb some of the increase from their profits. In this case, no
increase in price is possible, and before-tax profits would be reduced
by an amount equal to the costs of compliance. Under this scenario, if
the costs of compliance are a large percentage of the establishment's
profits, some establishments might be forced to close. This scenario is
highly unlikely to occur, however, because it can only arise when there
are other services that are, in the eyes of consumers, perfect
substitutes for the services the affected establishments provide. A
common intermediate case would be a price elasticity of one. In this
situation, if the costs of compliance amount to 1 percent of revenues,
then production would decline by 1 percent and prices would rise by 1
percent. In this case, establishments remain in business and maintain
the same profit as before but would produce 1 percent less product or
service. Consumers would effectively absorb the costs through a
combination of increased prices and reduced consumption; this, as the
court described in ADA v. Secretary of Labor, is the more typical case.
As shown in Table 5, the impacts potentially imposed by the
proposed rule are not sizeable on the industry. On average, annualized
compliance costs would amount to only 0.004 percent of estimated
industry revenues and 0.08 percent of estimated profits. Even if no
price increase were possible, a 0.08 percent decline in profits would
not threaten the viability of the industry. These impacts are
overestimated since the revenues do not include foreign organization
revenues. Thus, the proposed rule is preliminarily determined to be
economically feasible for affected laboratories.
As previously noted, OSHA has received a comment from a
``stakeholder'' that stated the proposed fees would have a significant
impact on the manufacturers who are customers of NRTL services [Ex. 2-
19]. However, they did not present any information or evidence of such
impacts. Testing fees are minor costs compared with the product's
development and manufacturing costs. The price of testing entails not
only the charges for the direct testing service, but also the length of
time taken by the testing process. In other words, the time spent by
the manufacturer waiting for the product to be tested is time during
which the product is not being sold and the manufacturer is not
receiving the income necessary to offset the expenses of designing the
product, establishing a production line, etc. In addition to the time
component, the market for testing services is highly competitive and
the price inelastic because, in general, the price for testing services
is a very small component of the overall costs of the product. OSHA
estimated in its Final Regulatory Impact Analysis of the Final Rule for
29 CFR Part 1910, Safety Testing of Certification of Certain Workplace
Equipment and Materials and Programs, that the actual testing, listing
and approval expenditures for tested equipment would be between 0.23
percent and 0.50 percent of the value of these products [2]. Thus, on
average, product testing fees are a minor component of the cost of
manufacturing equipment and will continue to remain so even after the
proposed fees have been implemented. OSHA seeks more information on the
impacts of the proposed rule on manufacturers. OSHA also seeks
information on the impact of the proposed fee schedule on foreign
testing laboratories.
Potential Economic Impacts of the Proposed Standard on Small Entities
This section measures the potential economic impacts of the
proposed standard on small entities in the affected testing laboratory
industry to determine whether the proposed standard has a significant
impact on a substantial number of small firms, as required by the
Regulatory Flexibility Act (as amended in 1996). For the purposes of
this analysis, OSHA defines small entities using the Small Business
Administration's (SBA) Table of Size Standards. The SBA size standards
for for-profit firms identify firms with less than $5 million in
revenues as small in the testing laboratory service sector.
The Regulatory Flexibility Act addresses impacts on ``small
businesses,'' and ``small not-for-profit organizations,'' both of which
are referred to in this analysis as ``small entities.'' What
constitutes a small entity is defined by the SBA in terms of the number
of employees or annual receipts (unless otherwise stated) constituting
the largest size that a for-profit enterprise (together with its
affiliates) may be and still remain eligible as a small business for
various SBA and other Federal Government programs. A ``small
organization'' is defined as any ``not-for-profit enterprise which is
independently owned and operated and is not dominant in its field.''
Since this definition would include all of the not-for-profit entities,
no separate analysis of small organizations is necessary. OSHA seeks
comment on the appropriate definition of a small not-for-profit entity
for the purpose of this regulatory flexibility analysis.
The number of establishments operated by small firms and the number
of affected workers employed in small firms are based on Bureau of the
Census data.4 The Bureau of the Census data classify firms
according to the number of workers employed by the enterprise. The
following employment size classifications were used: 1-4, 5-9, 10-19,
20-99, 100-499, 500+. For each firm size classification, data were
provided on the total number of firms, establishments, employees and
estimated annual receipts.
---------------------------------------------------------------------------
\4\ The Bureau of the Census defines a ``firm'' as a ``a
business organization consisting of one or more domestic
establishments in the same state and industry that were specified
under common ownership or control,'' and an ``enterprise'' as ``a
business organization consisting of one or more domestic
establishments that were specified under common ownership or
control.'' In other words, if, for example, an enterprise with 100
employees operates nursing homes in four states, the Bureau of
Census would count this as four firms in the nursing home industry
in the 100 to 499 employment size classification.
---------------------------------------------------------------------------
Based on the SBA size category and the Census data, OSHA has
determined that most of the testing labs with NRTL status are of
substantial size in terms of both gross revenues and number of
employees. The average revenue of these firms, based on the employment
size categories provided by the Census data, is estimated to range from
$6.9 million to $18.9 million per firm.
The purpose of this analysis is to assess the impacts on business
organizations consisting of one or more domestic establishments under
common ownership or control, without regard to the number of states in
which a business organization may be operating establishments. However,
the data provided by the Census do not include the number of
enterprises, but rather the number of firms, which, by the Census'
definition, is essentially the number of states in which an enterprise
operates establishments in a specific industry. Thus, to the extent
that enterprises operate establishments in the same industry in
multiple states, estimates of the number of entities may be
overestimated.
To estimate the number of small entities, average revenues per firm
were calculated in each enterprise size category using Census data, and
size categories where average revenues per firm were less than the
standards set by SBA (i.e., less than $5 million for all other firms),
firms in those size categories were assumed to be small entities. Table
6 shows the estimated number of small entities in the industry. Only 9
small businesses and 1 not-for-
[[Page 45112]]
profit entity are currently NRTLs and thus certain to be affected.
However, the proposed rule could potentially affect any of the 3,170
small independent testing laboratories if such entities wish to become
NRTLs. About 87 percent of all independent testing laboratories are
estimated to be operated by small entities.
Table 6 presents the results of the regulatory flexibility
screening analysis. It shows the estimated annual compliance costs and
economic impacts relative to revenues and pre-tax profit for affected
small entities. For testing laboratories seeking NRTL status for the
first time, the annual compliance cost amounts to only 0.22 percent of
revenues and 3.90 percent of profits for small entities. The analysis
also shows that for-profit testing labs with current NRTL status have
compliance costs that are 0.25 percent of revenues and 4.36 percent of
profits. For not-for-profit NRTLs, compliance costs represent 0.10
percent of revenues. Impacts of these magnitudes do not exceed the
thresholds OSHA has established for significant impacts.
Thus, because this proposal will not have a significant impact on
small entities (as defined by the SBA), OSHA certifies that this
proposal will not have a significant impact on a substantial number of
small entities.
TABLE 6.--SCREENING ANALYSIS TO IDENTIFY POSSIBLE ECONOMIC IMPACTS OF THE PROPOSED NRTL FEES RULE ON SMALL ENTITIES
--------------------------------------------------------------------------------------------------------------------------------------------------------
Annualized costs of
compliance as a
Number of Annualized Average Pre-tax percent of
Definition of small entity Employment small cost per revenues profits -----------------------
size firms firm per small per small Pre-tax
firm firm Sales profit
(percent) (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Testing Laboratories (SIC 8734)......... <$5 milion................ <100 NA $5,359 $2,413,243 $137,555 0.22 3.90
Testing Laboratories with NRTL Status
For-Profit Firms.................... <$5 million............... <100 9 6,000 2,413,243 137,555 0.25 4.36
Not-For-Profit Firms................ Not-for-Profit............ 500+ 1 18,180 18,913,183 .......... 0.10 ..........
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: US Department of labaor, OSHA, Office of Regulatory Analysis, 1998; Office of Technical Programs and Coordination Activities, 1999.
US Small Business Administration, Office of advocacy. Table 3: US Establishments, Employment, and Payroll by Industry and Firm Size, 1993.
Note: As defined by the Small Business Administration's Table of Size Standards.
References
1. US Department of Commerce, Bureau of the Census. 1992 Census
of Service Industries: Industry Series: SC92-S-1,-4,-5. Washington,
D.C., February 1995.
2. US Department of Labor, OSHA. Final Regulatory Impact
Analysis of the Final Rule 29 CFR PART 1910 for Safety Testing of
Certification of Certain Workplace Equipment and Materials and
Programs. March 1988
3. Robert Morris Associates. Annual Statement Studies. September
1995.
VIII. Other Regulatory Matters
A. Environmental Impact Assessment
In accordance with the requirements of the National Environmental
Policy Act (NEPA) (42 U.S.C. 4321 et seq.), Council on Environmental
Quality NEPA regulations (40 CFR Part 1500), and the Department of
Labor's NEPA regulations (29 CFR Part 11), the Assistant Secretary has
determined that this proposed rule will not have a significant impact
on the external environment.
B. Federalism
This proposed rule has been reviewed in accordance with Executive
Order12612, regarding Federalism. This proposed rule would only set
fees for services provided by the Federal Government to private
entities and has no impact on Federalism.
C. Paperwork Reduction Act of 1995
OSHA does not plan to develop or implement a form for NRTLs and
NRTL applicants to use to pay the fees but will provide instructions on
how to calculate the fees, as previously stated. The Agency does not
believe a form is needed since the fee calculations are relatively
simple. In addition, OSHA has no reporting requirements related to the
fees. As a result, there are no additional burden hours associated with
the fees.
D. Unfunded Mandates
For the purposes of the Unfunded Mandates Reform Act of 1995, as
well as Executive Orders 12875 and 13084, this rule does not include
any Federal mandate that may result in increased expenditures by State,
local, and tribal governments, or increased expenditures by the private
sector of more than $100 million in any year.
E. State Plan States
The 25 States and territories with their own OSHA approved
occupational safety and health plans are not affected by this proposed
rule. These 25 states and territories are: Alaska, Arizona, California,
Connecticut (for state and local government employees only), Hawaii,
Indiana, Iowa, Kentucky, Maryland, Michigan, Minnesota, Nevada, New
Mexico, New York (for state and local government employees only), North
Carolina, Oregon, Puerto Rico, South Carolina, Tennessee, Utah,
Vermont, Virginia, Virgin Islands, Washington, and Wyoming.
IX. Public Participation
Comments
OSHA invites interested persons to submit written data, views, and
arguments with respect to this proposal. OSHA must receive your
comments, whether mailed or e-mailed, by October 4, 1999. Submit your
comments in duplicate or 1 original (hardcopy) and 1 disk (5\1/4\ or
3\1/2\) in WP 5.0, 5.1, 6.0, 6.1, 8.0 or ASCII to the: Docket Officer,
Docket NRTL-95-F-1, U.S. Department of Labor, Occupational Safety and
Health Administration, Room N2625, 200 Constitution Avenue,
N.W.,Washington, D.C. 20210. The phone number for the OSHA Docket
Office is (202) 693-2350. You may transmit your written comments of 10
pages or less by facsimile (fax) to the Docket Office at (202) 693-
1648, provided you send an original and one (1) copy to the Docket
Office thereafter. You may also submit comments electronically using
the following web page address: http://www.osha-slc.gov/e-comments/e-
comments-nrtl.html. If your submission contains attached
[[Page 45113]]
electronic files, the files must be in WordPerfect 5.0, 5.1, 6.0, 6.1,
8.0 or ASCII. When submitting a comment electronically, please include
your name and address.
Submit, in duplicate, any information not contained on disk or not
provided electronically (e.g., studies, articles). Written submissions
must clearly identify the issues or specific provisions of the proposal
which are addressed and the position taken with respect to each issue
or provision. The data, views, and arguments that you submit will be
available for public inspection and copying at the above address. All
timely submissions received will be made a part of the record of this
proceeding. The preliminary economic analysis and the exhibits cited in
this document will be available for public inspection and copying at
the above address. OSHA invites comments concerning the preliminary
conclusions reached in the economic analysis included in this notice.
X. Authority
This document was prepared under the direction of Charles N.
Jeffress, Assistant Secretary of Labor for Occupational Safety and
Health, U.S. Department of Labor, 200 Constitution Avenue, NW,
Washington, DC 20210. The proposed sections are issued under the
authority of section 8 of the Occupational Safety and Health Act of
1970 (29 U.S.C. 657); and Secretary of Labor's Order No 6-96 (62 FR
111). The proposed sections are also issued under authority of OMB
Circular A-25 (dated 7/8/93); Public Law 105-277; 29 U.S.C. 9a; the
Administrative Procedure Act (5 U.S.C. 553); and the Independent
Offices Appropriations Act (31 U.S.C. 9701)
List of Subjects in 29 CFR Part 1910
Fees, Laboratories, Occupational safety and health.
Signed at Washington, D.C. this 6 day of August, 1999.
Charles N. Jeffress,
Assistant Secretary.
For the reasons discussed in the preamble, OSHA proposes to amend
29 CFR Part 1910 as follows:
PART 1910--OCCUPATIONAL SAFETY AND HEALTH STANDARDS
1. The authority citation for subpart A of 29 CFR part 1910 is
revised to read as follows:
Authority: Secs. 4, 6, 8, Occupational Safety and Health Act of
1970 (29 U.S.C. 653, 655, 657); Secretary of Labor's Order Numbers
12-71 (36 FR 8754), 8-76 (41 FR 25059), 9-83 (48 FR 35736), 1-90 (55
FR 9033), or 6-96 (62 FR 111), as applicable.
Sections 1910.7 and 1910.8 also issued under 29 CFR part 1911.
Section 1910.7(f) also issued under 31 U.S.C. 9701.
2. Add new paragraph (f) to Sec. 1910.7 to read as follows:
Sec. 1910.7 Definition and requirements for a nationally recognized
testing laboratory.
* * * * *
(f) Fees. (1) Each applicant for NRTL recognition and each existing
NRTL must pay fees for services provided by OSHA. OSHA will assess fees
for the following activities:
(i) Processing of applications for initial recognition, expansion
of recognition, or renewal of recognition, including on-site reviews;
review and evaluation of the applications; and preparation of reports,
evaluations and Federal Register notices; and
(ii) Audits of sites.
(2) The fee schedule established by OSHA reflects the estimated
cost of performing the tasks and functions for each activity. OSHA
calculates the fees based on the average time required to perform the
work necessary; the staff costs per hour (which include wages, fringe
benefits, and expenses other than travel for personnel that perform or
administer the activities covered by the fees); and an estimate of the
average costs for travel when on-site reviews are involved. The formula
for the fee calculation is as follows:
Activity Fee = Average Hours to Complete the Activity x Staff
Costs per Hour + Travel Costs
(3) OSHA will review costs and estimates annually and will propose
a revised fee schedule, if warranted. In its review, OSHA will apply
the formula established in paragraph (f)(2) of this section to the
current estimated costs for the NRTL Program. If a change is warranted,
OSHA will follow the schedule in paragraph (f)(4) of this section. OSHA
will issue all fee schedules in the Federal Register. Once issued, a
fee schedule remains in effect until it is superseded. Any member of
the public may request a change to the fees included in the current fee
schedule. Such a request must include appropriate documentation in
support of the suggested change.
(4) OSHA will implement fee assessment, collection, and payment as
follows:
------------------------------------------------------------------------
Approximate dates Action required
------------------------------------------------------------------------
I. Application Fees:
------------------------------------------------------------------------
Time of application.................... Applicant must pay the
applicable fees shown in the
Fee Schedule when submitting
the application; OSHA will not
begin processing until fees
are received.
Publication of preliminary notice...... Applicant must pay remainder of
fees; OSHA cancels application
if fees are not paid when due.
II. Audit Fees:
------------------------------------------------------------------------
November 1............................. OSHA will publish proposed new
Fee Schedule in the Federal
Register, if OSHA determines
changes in the schedule are
warranted.
November 16............................ Comments due on the proposed
new Fee Schedule
December 15............................ OSHA will publish the final Fee
Schedule in the Federal
Register.
January 1.............................. OSHA will bill each existing
NRTL for the audit fees shown
in the Fee Schedule, including
estimated travel costs.
February 1............................. NRTLs must pay audit fees; OSHA
will assess late fee if audit
fees are not paid.
February 15............................ OSHA will send a letter to the
NRTL requesting immediate
payment of the audit fees and
late fee.
March 1................................ OSHA will publish a notice in
the Federal Register to revoke
recognition for NRTLs that
have not paid audit fees for
the year.
------------------------------------------------------------------------
(5) OSHA will provide the details regarding how to pay the fees
through appropriate OSHA Program Directives.
3. Revise paragraphs I.B.5.a, II.B.2.a, and II.C.2.a of Appendix A
to Sec. 1910.7, to read as follows:
Appendix A to Sec. 1910.7--OSHA Recognition Process for Nationally
Recognized Testing Laboratories
* * * * *
I. Procedures for Initial OSHA Recognition
* * * * *
B. Review and Decision Process; Issuance or Renewal
* * * * *
5. Public review and comment period.--a. The Federal Register
notice of preliminary finding will provide a period of not less than
30 calendar days for written comments on the applicant's fulfillment
of the requirements for recognition. The application, supporting
documents, staff recommendation, statement of applicant's reasons,
and any comments received, will be
[[Page 45114]]
available for public inspection in the OSHA Docket Office.
* * * * *
II. Supplementary Procedures
* * * * *
B. Expansion of Current Recognition
* * * * *
2. Procedure.--a. OSHA will act upon and process the application
for expansion in accordance with subsection I.B. of this appendix,
except that the period for written comments, specified in paragraph
5.a of subsection I.B. of this appendix, will be not less than 15
calendar days.
* * * * *
C. Renewal of OSHA Recognition
* * * * *
2. Procedure.--a. OSHA will process the renewal request in
accordance with subsection I.B. of this appendix, except that the
period for written comments, specified in paragraph 5.a of
subsection I.B. of this appendix, will be not less than 15 calendar
days.
* * * * *
[FR Doc. 99-21216 Filed 8-17-99; 8:45 am]
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