[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).

-----------------------------------------------------------------------

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
------------------------------------------------------------------------
                 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
----------------------------------------------------------------------------------------------------------------
                                                                   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]
BILLING CODE 4510-26-P