[Federal Register Volume 65, Number 147 (Monday, July 31, 2000)]
[Rules and Regulations]
[Pages 46798-46819]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-18922]



[[Page 46797]]

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Part III





Department of Labor





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Occupational Safety and Health Administration



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29 CFR Part 1910



Nationally Recognized Testing Laboratories-Fees; Public Comment Period 
on Recognition Notices; Final Rule

  Federal Register / Vol. 65, No. 147 / Monday, July 31, 2000 / Rules 
and Regulations  

[[Page 46798]]


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DEPARTMENT OF LABOR

Occupational Safety and Health Administration

29 CFR Part 1910

[Docket No. NRTL 95-F-1]
RIN 1218-AB57


Nationally Recognized Testing Laboratories--Fees; Public Comment 
Period on Recognition Notices

AGENCY: Occupational Safety and Health Administration (OSHA), Labor.

ACTION: Final rule.

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SUMMARY: The Occupational Safety and Health Administration (OSHA) is 
amending the requirements for nationally recognized testing 
laboratories (NRTLs) by adding provisions for the establishment of fees 
for services provided by the government. On August 18, 1999, OSHA 
published a Notice of Proposed Rulemaking (NPRM) in the Federal 
Register requesting comments on a proposed fee schedule. The NPRM also 
proposed a reduction of the public comment period on the 
``preliminary'' Federal Register notices that OSHA publishes for its 
NRTL recognition activities. The four comments received have been 
reviewed, and this final rule is based on OSHA's consideration of the 
public record.
    OSHA is amending its requirements to establish fees and to reduce 
the comment periods on Federal Register notices related to recognition.

DATES: This rule is effective on August 30, 2000.

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. You may also send an email to: no.osha.gov">nrtlprogram@osha-no.osha.gov, or 
review our web page on 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: This preamble is divided into seven (7) 
sections: background, summary and analysis of comments, explanation of 
the final rule, legal authority to charge fees, detailed discussion of 
the fees, the first fee schedule, and regulatory matters.

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 (for example, see 29 CFR 
1910.303(a) coupled with definition of ``acceptable'' under 29 CFR 
1910.399). 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 have been done appropriately, OSHA 
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 for 
testing and certification.
    Currently, there are 17 NRTLs operating 42 sites in the U.S., 
Europe, 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 three 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 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 that 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 (EU), a number of European laboratories are expected to 
submit applications for NRTL recognition. For more information on the 
MRA, refer to the U.S. Department of Commerce web site.
    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

[[Page 46799]]

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 draft notice (see, e.g., Exs. 2-13, 
2-17, 2-21, 2-22, 2-24).
    OSHA reviewed a number of legal precedents concerning the 
assessment of fees by Federal agencies in developing its proposal. 
Based on this review, the Agency determined that it has the authority 
to charge fees for services it provides to users of the NRTL 
recognition process, i.e., the NRTLs and NRTL applicants. These fees 
are not intended to cover all the costs of the program.
    In response to the fee issue, OSHA requested specific authority 
from Congress to retain the fees that it collects for the NRTL Program. 
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 since then.
    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 on-site visits. 
This information helped to refine the approach proposed, which the 
Agency is now adopting in this final rule. In addition, the Agency 
examined 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 under 
section IV of this preamble.
    OSHA also is reducing 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.

II. Summary and Analysis of the Comments

    We accepted comments on the Notice of Proposed Rulemaking (NPRM) 
(64 FR 45098, August 18, 1999) for forty-five (45) days after 
publication. The end of the comment period was October 4, 1999. We 
received four (4) comments, and we will discuss each of them 
individually.
    The NPRM addressed two issues: Modification of 29 CFR 1910.7 to 
include a fee schedule, and reduction of the comment period on Federal 
Register notices proposing or granting recognition or a change in the 
scope of recognition. The text proposing a fee schedule included a 
description of the model used to develop the proposed fees (64 FR 
45102, 8/18/99), as well as the initial proposed fee schedule (64 FR 
45105). We also included in the NPRM preamble a short discussion of 
fees charged by other organizations performing similar services for 
laboratories.
    Participation in the NRTL Program is voluntary. OSHA assumes that 
any laboratory that has chosen to complete the application and 
recognition process, as well as submit to the requirements for regular 
audits, has benefitted from its participation. Although the fees that 
OSHA will assess do not relate directly to financial benefits that 
NRTLs receive from OSHA's NRTL services, laboratories do have a clear 
financial incentive to seek and maintain NRTL recognition. Laboratories 
undoubtedly analyze the financial benefits of participation in the NRTL 
Program when determining whether to apply for recognition initially, as 
well as whether to take the time and effort to continue recognition in 
the future.
    None of the four comments received addressed the model used to 
develop the proposed fee schedule, or any of the supporting 
documentation related to the fees proposed. They focused instead on 
whether fees should be assessed, and what services are associated with 
the fees.

Exhibit 8-1; European Commission

    As mentioned in the NPRM (64 FR 45099) and again in this notice, 
the United States and the European Union (EU) have entered into a 
Mutual Recognition Agreement (MRA). The MRA includes an Electrical 
Safety Annex, which permits a European laboratory to apply to the NRTL 
Program without separately establishing that its country of origin has 
``reciprocity'' for U.S. laboratories doing electrical safety work. 
While the MRA has now been in effect for more than a year, OSHA has yet 
to receive and process any complete applications from laboratories in 
the European Union. In part, this is because there are differing 
interpretations of the agreed text of the MRA and how it applies.
    The MRA anticipates that OSHA may charge fees for its activities in 
processing EU applications or monitoring EU NRTLs. Although OSHA had no 
fees at the time the agreement was negotiated, the U.S. has always made 
clear that authority to assess and retain fees is in place and that 
OSHA would be proposing fees in the near future.
    The EC comment states that the activities for which OSHA will 
assess fees under the proposal are similar to activities for which fees 
are already assessed by European Union authorities. Under the 
conditions of the MRA, they argue, some of the activities performed by 
EU authorities duplicate activities that are part of OSHA's NRTL 
recognition process. Based on this argument, the EC contends that OSHA 
should not assess fees for any of these activities that are performed 
by an EU authority, to avoid the possibility that these fees would 
duplicate those already incurred, which would be in violation of the 
MRA.
    OSHA does not intend to charge fees for services the Agency has not 
provided itself. Any comparable services that a European authority 
performs in the context of their own accreditation process are not 
duplicative services since they involve recognition or accreditation by 
two different organizations. Similarly, the process used by European 
authorities to designate a laboratory under the MRA for consideration 
by OSHA does not duplicate any procedures used by OSHA to determine 
whether recognition should be granted under the NRTL Program. 
Therefore, we do not believe there is a legitimate problem in terms of 
duplicative fee assessment, or violation of the MRA, in establishment 
of a fee schedule for the NRTL Program.

[[Page 46800]]

Exhibit 8-2; Underwriters Laboratories Inc.

    Underwriters Laboratories Inc. (UL) is an NRTL. They are opposing 
the imposition of fees for the NRTL Program. The following four points 
are the major arguments in their comment:
    1. UL opposes the imposition of fees for OSHA's NRTL process.
    2. The OSHA NRTL process has not enhanced workplace safety.
    3. Funding for the OSHA NRTL process should come from Federal 
funds, if at all, because the NRTL process does not provide any 
``special benefits''.
    4. A complete economic impact analysis will not support a proposal 
for fees.
    In order to understand the context of the UL comments, we need to 
review the history of the NRTL Program requirements and UL's role in 
NRTL testing and certification. When OSHA initially promulgated its 
safety standards requiring third party testing and certification for a 
number of products used in the workplace, it specified and, in some 
cases, implied that this testing and certification was to be done by 
one of two laboratories: UL or Factory Mutual Research Corporation 
(FMRC). Thus UL and Factory Mutual had the ``special benefits'' of 
being the source for all mandatory testing and certification of 
products to be used in the workplace. This was a significant benefit 
that lasted for many years. It was challenged in court by other testing 
laboratories on the basis that it gave an unfair business advantage to 
these two laboratories when others were equally qualified to perform 
such testing and certification. The litigation was settled when OSHA 
agreed to establish a system to recognize other qualified laboratories. 
The NRTL Program, established in 1988 (53 FR 12102, 4/12/88), is the 
result of that litigation.
    The 1988 NRTL regulation allowed UL and FMRC to continue to operate 
as NRTLs for five years without applying for OSHA recognition. At the 
end of the five-year temporary recognition period, they were to be 
treated like other testing laboratories, i.e., they had to apply to 
OSHA and be evaluated to keep their NRTL status. However, the temporary 
recognition did not end automatically at the end of the five-year 
period. As long as they filed timely applications, their temporary NRTL 
status continued until OSHA acted on their application. Both companies 
did file timely applications for permanent recognition. In 1994, while 
OSHA was evaluating those applications, other NRTLs sued OSHA in 
Federal district court seeking an immediate end to UL's and FMRC's 
temporary recognition status. In a 1995 decision\1\, the court held 
that OSHA had violated the earlier settlement agreement by continuing 
to give preferential treatment to UL and FMRC after the end of the 
five-year temporary recognition period and ordered OSHA to act on their 
applications as expeditiously as possible so that they would be treated 
the same as all other NRTLs. Later in 1995, OSHA completed its 
evaluations and recognized UL and FMRC as NRTLs.
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    \1\ MET Laboratories v. Reich, 875 F. Supp. 304 (D. Md., 1995)
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    UL argues that the NRTL Program has not increased workplace safety. 
In fact, the NRTL Program itself is an administrative mechanism to 
ensure that laboratories performing third party testing and 
certification have the competency and qualifications to do so. As UL 
notes in its comments, it is a ``strong supporter of the benefits to 
the safety of the American public at large, as well as those in the 
workplace, provided by competent third party product safety 
certifications.'' OSHA has agreed with UL and others that third party 
certification is the best way to ensure workplace safety. The safety 
standards promulgated by OSHA that require third party testing and 
certification of products used in the workplace have, we believe, 
enhanced workplace safety. The NRTL Program is the means we use to 
ensure that enhancement continues by reviewing and monitoring the 
laboratories in the program as they implement an appropriate program to 
conduct testing and certification.
    UL also argues that such testing and certification would take place 
regardless of OSHA requirements. Certainly it is true that voluntary 
testing and certification is undertaken by a number of manufacturers. 
In addition, there are other types of requirements that may encourage 
such manufacturers to do the testing and certification to protect 
themselves from liability, to comply with insurance company 
requirements, or to follow state or local requirements. However, a 
mandatory requirement for such testing and certification is most 
certainly a stronger incentive than most of those that result in 
voluntary testing and certification.
    UL and Factory Mutual are unique among the current NRTLs in that 
their benefits changed as a result of the 1988 rule and the court's 
1995 ruling that they should no longer receive preferential treatment. 
However, they continue to enjoy the benefits of NRTL status, even 
though they now share those benefits with other laboratories. Had OSHA 
not recognized them as NRTLs under the 1988 rule, they would no longer 
be able to test and certify products for workplace use. Thus, the 
argument that they do not receive benefits from the NRTL Program is not 
valid.
    UL's continued participation in the NRTL Program is perhaps the 
most telling argument regarding the special benefits it receives. Since 
participation is completely voluntary, UL must have accrued benefits 
from its participation and regular expansion of UL's scope of 
recognition. Most recently, UL was the first NRTL to obtain recognition 
for sites in the European Union in order to do NRTL testing in Denmark, 
Italy, and the United Kingdom. UL also has sites in Taiwan and Hong 
Kong. These business decisions are undoubtedly based on the recognition 
of the special benefits of being able to test products for use in 
American workplaces, and give them an NRTL certification, in the 
countries where they are produced before they are shipped to the U.S. 
The costs to OSHA to deal with expansions into other countries are 
significant, particularly with regard to travel. These are the types of 
direct expenses that the fees are designed to address, so that 
resources are available as laboratories expand their NRTL business 
opportunities into other countries.
    While UL makes no specific comment on the economic analysis 
included in the NPRM (64 FR 45107), it argues that more analysis is 
needed. In its arguments, however, UL tacitly acknowledges that the 
fees are not unreasonable: ``The fees may be minimal now, but this may 
only be the initial assessment with the potential for substantial 
uncontrolled increases to follow.''
    As described in the NPRM (64 FR 45101), the fee structure is based 
essentially on the time that OSHA spends to perform activities related 
to a laboratory's application for recognition, expansion, renewal, or 
annual audits. The fees for these activities were calculated based on 
current experiences, and are related to the salaries of the individuals 
assigned to the Program, to the time needed to complete the required 
actions, as well as to the travel costs associated with on-site 
assessments and audits.
    Under the requirements for Federal agencies that assess fees, a 
``substantial uncontrolled'' increase in fees is not permitted. First, 
as proposed in the NPRM (64 FR 45104), OSHA will publish any proposed 
changes to the fee structure in the Federal Register for comment. In 
doing so, the Agency must

[[Page 46801]]

explain any changes and the necessity for any increase in fees. 
Secondly, based on our review of the items that contribute to the fees, 
we believe that none of them are subject to great fluctuation or 
uncontrolled increases. We must emphasize that since the fees must be 
used only for the NRTL Program, we will only collect fees that are 
specifically related to that program.
    Salaries of Federal employees, which are one of the two main bases 
for the fee structure, increase in relation to comparable salary 
increases in the private sector. These increases are modest, and would 
be unlikely to have a major impact on the fee structure. Similarly, 
while travel costs do increase periodically, these increases are also 
not expected to rise dramatically. If they increase, it will be 
commensurate with travel expenses in the private sector. Laboratories 
will benefit from the fact that travel expenses will be assessed based 
on rates paid by the government for items such as air travel and hotel 
bills, since these rates are generally lower than those paid by private 
sector business travelers.
    We believe that the current economic analysis is adequate, and that 
it supports our determinations that the proposed fees are reasonable 
and that the manner of determining the fee schedule is fair, equitable, 
and unlikely to result in ``substantial uncontrolled increases.'' The 
fees that OSHA will impose on laboratories for the NRTL Program are 
small, particularly when compared to the other costs of testing and 
certification that are already borne by manufacturers. The small 
additional cost to the laboratories will likely have little impact on 
the ultimate cost of the product itself.
    UL mentions trade issues as a reason for more economic analysis. In 
fact, as noted in the NPRM (64 FR 45099), the opportunity for foreign 
laboratories to participate in the NRTL Program is expected to increase 
the costs to the Agency, particularly in the area of travel expenses. 
Assessment of fees for reimbursement of these direct costs will ensure 
that the costs are borne by those laboratories acquiring the benefits 
of participation in the NRTL Program rather than the American taxpayer.

Exhibit 8-3; ACIL

    ACIL is a trade association of independent laboratories, including 
12 of the 16 current NRTLs. It has a committee of NRTL laboratories 
that meets on a regular basis to discuss issues of common interest.
    ACIL states that it supports the assessment of fees as follows:

    ACIL supports OSHA's intent to obtain fees for services as 
necessary to maintain the NRTL Program and to insure greater 
workplace safety involving electrical products. We believe the 
method described for establishing fee schedules is fair and 
equitable. Every country or entity that offers laboratory 
accreditation charges a fee for services. Establishing this fee is 
reasonable and should be accepted by laboratories that desire NRTL 
accreditation and recognition.

However, ACIL then indicates that its support is contingent upon 
``improved services,'' and it enumerates what it would consider to be 
such services. The services ACIL describes are discussed below.
    In response, OSHA notes that assessment of fees is based on the 
services currently provided, and expected to continue to be provided, 
on the processing of applications and on the maintenance of 
recognition. The fees are assessed on an individual laboratory basis 
and are related to specific actions involving that laboratory. These do 
not include any unrelated overhead or management activities of the 
program as a whole. The rules for assessment of such fees by a Federal 
Agency are very narrowly drawn and are not related to any of the items 
mentioned by ACIL. In other words, the items listed by ACIL are not 
``services'' in the sense of the requirements for assessment of fees by 
a Federal agency, and the fees themselves are in no way related to 
those items. ACIL's list of items generally relates to the overall 
management of the Program and internal OSHA decisions regarding 
priorities and activities. However, we believe it is useful to list 
those items and specifically respond to them.
1. NRTL Program Training for Compliance Officers
    OSHA has prepared a training program for compliance officers during 
the past year, and copies of the presentation have been made available 
to the NRTLs electronically. Furthermore, the training program has been 
made available to the public through OSHA's web site for the NRTL 
Program. The training presentation was a joint effort between the NRTL 
Program staff and OSHA's professional curriculum development staff in 
its Office of Training and Education. We consulted about the best and 
most useful format, as well as manner of presentation, given the 
competing training needs of OSHA's compliance staff. Ultimately, it was 
decided that the most useful way to get information about the Program 
out to our staff would be through the development and distribution of a 
training presentation that can be used at the Area and Regional Office 
level in staff meetings or as a module in other training courses. The 
program has been broadly distributed and well-received. Development of 
such a program was funded by the Agency, and would have been even if 
the fee schedule was in place, since it is not the type of activity 
that is specific to a laboratory and thus could be subject to fees. The 
training is an internal OSHA activity and is not a ``service'' to the 
laboratories.
2. OSHA Employing Outside Auditors To Assist and Support OSHA Staff, 
Whether They Be OSHA Trained Contract Auditors or Permanent OSHA 
Auditors
    OSHA does not have a shortage of trained auditors to perform on-
site visits under the NRTL Program, nor do we expect to be unable to 
meet the requirements of the Program any time in the foreseeable 
future. This is actually financially advantageous to the laboratories 
since we would be unlikely to be able to contract for the services 
performed for any less money than we currently spend using our own 
staff. If we were to have a shortage of staff, we would consider using 
this approach. At this point, it is not necessary. This again is not a 
``service'' to the laboratories. It is related to the management of the 
program, and if we did have to use such an approach, we would have to 
adjust the fee schedule accordingly.
3. Increased Enforcement Efforts by Compliance Officers, OSHA 
Inspectors, and Program Auditors
    In no way are OSHA enforcement activities a ``service'' to the 
NRTLs. OSHA determines its enforcement activities based on 
consideration of a number of factors, including targeting, complaints, 
and accidents. The safety standards that require NRTL testing and 
certification are among many other requirements that are reviewed by 
compliance staff as they conduct inspections. The fees to be collected 
for the NRTL Program are not and cannot be related to enforcement.
4. Development of a Program To Support the Significance of the NRTL 
Program
    It is not clear what this means specifically, but we believe it is 
related to the efforts of some NRTLs to promote the use of the NRTL 
Program for purposes beyond workplace safety and health. For example, 
some NRTLs have encouraged State and local authorities to rely on NRTL 
product testing and certification in their public safety program 
activities outside the

[[Page 46802]]

workplace. This is outside the scope of OSHA's authority. While it is 
certainly the prerogative of these authorities to use testing 
laboratories, including NRTLs, for that purpose, OSHA does not endorse, 
promote, or engage in such activity since our mandate is limited to 
workplace safety and health. Again, this is unrelated to the services 
addressed by the fee schedule.
5. Promoting Employer Awareness of the NRTL Program
    Promotion of employer awareness of any OSHA requirements is related 
to improving workplace safety and health. It is not a ``service'' to 
the NRTLs, and would not be an item subject to the fee schedule.
    It appears from these suggestions that there is a basic 
misunderstanding about the fact that fees are specific to a laboratory, 
and to the activities related to recognition that are performed for 
that laboratory. There is a further issue underlying these items that 
should be addressed. Based on discussions OSHA has had with ACIL and 
the NRTLs they represent, we know that ACIL's suggestions are intended 
to promote the NRTL Program for marketing purposes. In other words, 
increased training, enforcement, and program promotion all increase the 
visibility of the NRTLs as business concerns. When OSHA promotes the 
NRTL Program, it does so to increase workplace safety and health. We 
continue to promote the Program in this way through various means 
funded directly by OSHA. Besides the training presentation already 
described, we have developed a web page on the NRTL Program that 
includes extensive information, as well as listing the NRTLs, showing 
their marks, and addressing their scope of recognition. We believe this 
is the most effective way to reach our own compliance staff, as well as 
the public, with substantive information about the NRTL Program and the 
recognized laboratories. This is done to enhance workplace safety and 
health, and is not a ``service'' to the NRTLs.
    We have also completed a directive that details the policies and 
procedures of the NRTL Program for the first time in its history. This 
directive ensures that OSHA staff, as well as the NRTLs and the public, 
has access to information about the Program and its operation.
    OSHA will continue to undertake such activities as resources permit 
and as found appropriate by the Agency. However, the fees to be 
collected will not be used for these purposes. We will be happy to 
continue to work with ACIL or any NRTL or other interested party, to 
define appropriate activities to increase workplace safety and health 
through enhancement of the NRTL Program and the testing and 
certification requirements.
    ACIL also indicated that it did not believe that fees should be 
retroactively assessed. OSHA has no plans to assess fees on a 
retroactive basis for services already provided without cost to the 
laboratory. ACIL also suggested that OSHA bill for its services ``at 
the time services are rendered,'' rather than at the beginning of the 
year, as proposed in the notice (64 FR 45105).
    We find merit in ACIL's suggestion. This approach would reduce the 
collection activity of the Agency, since only one bill would have to be 
sent to the NRTL for an audit, rather than the two contemplated under 
the NPRM. There would be minimal financial burden to the Agency by 
delaying collection. We proposed ``up-front'' billing in the NPRM to 
ensure the Agency would receive payment regardless of the outcome of 
the audit process. Since an NRTL's recognition can be revoked for non-
payment, we believe this is enough incentive to pay after the audit is 
performed. For similar reasons, we plan to bill the NRTLs for any 
assessment that we perform for a renewal or expansion after we have 
performed it. However, we will still require applicants seeking initial 
recognition to submit the assessment fee with their application to 
ensure the Agency is reimbursed for its costs should an applicant 
decide to withdraw its application after OSHA performs its assessment.
    On the issue of reducing the comment period, ACIL indicated this 
would provide some benefit to the laboratories. Because the longest 
time period in the process precedes this formal comment period, ACIL 
suggests that OSHA should include a set time period for processing.
    Based on OSHA's experience, this is not possible. The biggest 
delays in the process are generally associated with incomplete 
information provided in an application, or the time a laboratory spends 
to correct deficiencies found in on-site assessments. In addition, new 
applicants frequently have testing experience, but they may not have 
experience in the certification process. Considerable work may be 
required to ensure they have internal procedures to meet the 
requirements of OSHA's NRTL Program.
    We have prepared application guidelines to help address the first 
issue, and have made them available on our web site. If an applicant 
provides all of the information and supporting documentation indicated 
in the guidelines, we should not need to go back to the laboratory on 
one or more occasions to gather additional information. The application 
guidelines also follow what is normally reviewed in an on-site 
assessment. If laboratories provide the information specified and are 
ready to show assessors what they do in these areas, they may have to 
correct fewer deficiencies before we grant recognition. These 
guidelines are just beginning to be used, and we will be monitoring 
their use to determine how well they are working.
    We process applications in the order they arrive, and the time to 
wait for processing depends on the number that have already been 
submitted by other laboratories. There is no way to predict when 
applications will be submitted, and there is no advance indication 
about the numbers of laboratories that may choose to apply at any given 
time. We continue to encourage laboratories to cover as many test 
standards as possible in any one application to help reduce the overall 
number of applications to be processed.
    ACIL also attached a paper regarding some issues on surveillance 
audits, which were not addressed by the NRPM. The paper contains 
certain suggestions that ACIL wants the Agency to consider, and OSHA 
will consider them for future action.

Exhibit 8-4; National Electrical Manufacturers Association

    The National Electrical Manufacturers Association (NEMA) represents 
a number of manufacturers of products that are subject to requirements 
for third party testing and certification under OSHA's safety 
standards. NEMA objects to the assessment of fees, and questions 
whether OSHA has the authority to require fees. In particular, NEMA 
states that because the testing activities are mandatory, they ``do not 
support the conclusion that the fee is incident to a voluntary act.''
    While testing and certification of equipment is mandatory, 
participation in the NRTL Program by a laboratory is completely 
voluntary. As noted in the NPRM (64 FR 45100), OSHA has the authority 
to collect fees under the OMB Circular, and Congress has given OSHA 
specific authority to collect and retain those fees for the specific 
use of the NRTL Program.
    NEMA also notes that the fees will be passed on to manufacturers 
such as those they represent. While this is true, the fees themselves 
are quite small compared to the overall costs of testing and 
certification, and will be spread among the customers for whom the 
laboratories are testing and certifying

[[Page 46803]]

products for. In addition, the manufacturers will most likely 
distribute these costs to their customers through the pricing of their 
products. The costs are so small that the price increase for any 
particular product is also unlikely to be significant.
    NEMA further argues that if fees are assessed, foreign laboratories 
should not be given any special treatment or privilege. OSHA will be 
applying any fee schedule in the same manner to all NRTL Program 
participants, both foreign and domestic.

Conclusion

    OSHA has decided to establish a fee schedule for the NRTL Program 
in this final rule. The comments received did not address the specific 
fees proposed or the method of developing the proposed fee schedule. 
While two of the commenters objected to the assessment of fees (Exs. 8-
2 and 8-4), their arguments were not compelling. ACIL, the trade 
association that includes 12 of the 16 organizations from whom fees 
would be collected, stated that the fees are fair and equitable and 
simply reflect what is common practice for other organizations doing 
similar work. OSHA has the authority to assess fees to laboratories for 
the direct expenses the Agency incurs as a result of providing services 
to them. The laboratories receive ``special benefits'' as a result of 
the requirements established by OSHA for testing and certification of 
products to be used in the workplace. In addition, Congress has given 
OSHA the authority to collect and retain these fees for the 
administration of the NRTL Program.
    On the issue of reducing the comment period for Federal Register 
notices concerning recognition, only ACIL commented, and it agreed that 
this would lead to a useful reduction in the total time for processing 
applications. The reduction of the time for public comment is also 
being addressed in this final rule.

III. Explanation of Final Rule

A. Establishment of Fees

    OSHA is modifying 29 CFR 1910.7 to add a new paragraph ``(f) Fees'' 
related to the assessment and payment of fees for certain services 
rendered to NRTLs and NRTL applicants. This new paragraph provides 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, which will be published on the OSHA web site, consistent 
with the framework laid out in this final rule.
1. Obligation To Pay and Fee Assessment
    The first part of paragraph (f) reads as follows:

    (1) Each applicant for NRTL recognition and each NRTL must pay 
fees for services provided by OSHA. OSHA will assess fees for the 
following services:
    (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.

    Organizations seeking OSHA recognition (i.e., NRTL applicants) and 
organizations that OSHA has recognized as NRTLs must pay fees for the 
specific services that OSHA provides to them. The services for which 
the Agency will charge fees are: (1) processing of applications for 
initial recognition, expansion of recognition, or renewal of 
recognition, and (2) audits, which are post-recognition on-site or 
office reviews. The activities involved in providing these services are 
described in more detail later.
    Typically, OSHA annually audits the testing sites it has recognized 
for an NRTL. However, if an NRTL has appropriate controls in place, 
OSHA allows it to use non-recognized sites, such as testing sites of 
other laboratories or even manufacturers, to conduct testing or other 
activities necessary for certifying products. OSHA may also need to 
audit such non-recognized sites to determine whether the NRTL or the 
site is properly controlling the NRTL-related activities. For example, 
OSHA may audit a manufacturer to determine how well it controls the 
NRTL's certification mark or maintains production or quality controls. 
NRTLs must also pay for these ``special'' audits when required and will 
be billed accordingly.
2. Fee Calculation
    The second part of paragraph (f) reads as follows:

    (2) The fee schedule established by OSHA reflects the cost of 
performing the activities for each service listed in paragraph 
(f)(1) of this section. OSHA calculates the fees based on either the 
average or actual 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 the average or actual costs 
for travel when on-site reviews are involved. The formula for the 
fee calculation is as follows:

Activity Fee = [Average (or Actual) Hours to Complete the Activity 
x  Staff Costs per Hour] + Average (or Actual) Travel Costs

    Each activity performed by OSHA accomplishes a particular phase of 
the service the Agency provides to the recipients (i.e., NRTLs or NRTL 
applicants). Currently, these activities are as follows:

--Review of initial, expansion, and renewal applications;
--On-site assessment per person, per site--first day , and 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; and
--On-site audit (per person, per site) and office audit (per site).
    The fees that the Agency is initially establishing are shown in the 
Fee Schedule (Table A in section VI of this preamble). This schedule is 
somewhat different from the one we published in the NPRM. We have made 
changes as a result of our decision, as explained in section II of this 
preamble, to bill NRTLs for audits and for certain assessments after we 
perform them. We had proposed in the NPRM (64 FR 45105) to pre-bill the 
NRTLs for these activities. We further explained that we would bill or 
refund to NRTLs the difference between any pre-paid fee amounts and the 
``actual costs'' for an assessment and or audit. Since we have decided 
not to pre-bill for these activities, we have changed the fee schedule 
to clearly reflect this approach. The fee schedule now contains two 
types of fees: flat fees and variable fees.
    The ``flat fees'' are calculated by multiplying the average 
estimated time to perform the work by the equivalent staff cost per 
hour, and adding the average travel costs for any assessment we must 
perform for an application for initial recognition. Use of the average 
time spent on each activity simplifies the accounting for the NRTL and 
for OSHA since the recordkeeping time and associated costs are reduced. 
The variable fees are based on the ``actual costs,'', i.e., actual 
staff time and travel costs to the government. These are calculated by 
multiplying the equivalent staff cost by the actual number of days or 
fractional days that staff spend in performing the on-site activity, 
and adding actual staff travel costs, using government rates where 
possible. In section V of this preamble, we show how we derived the 
equivalent staff cost per hour (Figure 1) and provide details on the 
costs and calculation for the fees.

[[Page 46804]]

    As indicated above, we will bill applicants or NRTLs for the 
``actual costs'' of an assessment and audit after we perform these 
activities. However, as we proposed in the NPRM (64 FR 45106) and now 
adopt in this final rule, applicants seeking initial recognition must 
still pay for an assessment in advance, i.e., at time of application, 
using the amount in the fee schedule. After we perform the assessment, 
OSHA will send them a bill or refund (i.e, credit their account) for 
the difference that reflects the ``actual costs''. We have added 
appropriate information to the fee schedule to clearly show the nature 
of the assessment fee for a new applicant.
3. Annual Review of Fee Schedule and Issuance
    The third part of paragraph (f) reads as follows:

    (3)(i) OSHA will review costs 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 implementation table in paragraph 
(f)(4) of this section. (ii) OSHA will publish all fee schedules in 
the Federal Register. Once published, a fee schedule remains in 
effect until it is superseded by a new fee schedule. 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. OSHA will consider such requests 
during its annual review of the fee schedule.

    The first Fee Schedule, set forth in section VI of this preamble, 
will remain in effect until it is superseded by a revised schedule. 
OSHA will annually review the costs to the Government of providing the 
services to determine whether any changes to the fees are needed. In 
addition, as part of this annual review, OSHA will consider requests 
for changes to the fee schedule that it receives from the public. If 
OSHA believes that changes may be needed, we will publish a notice to 
provide the NRTLs and other members of the public an opportunity to 
comment on such changes. The Agency will follow the implementation 
table shown in paragraph (f)(4) of this rule. We will publish all 
subsequent fee schedules in the Federal Register and post them on the 
OSHA web site.
4. Fee Implementation
    The fourth part of paragraph (f) reads as follows:
    (4) OSHA will implement fee assessment, collection, and payment as 
follows:

------------------------------------------------------------------------
         Approximate dates                     Action required
------------------------------------------------------------------------
                    I. Annual Review of Fee Schedule
------------------------------------------------------------------------
November 1........................  OSHA will publish any 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,
                                     making it effective.
------------------------------------------------------------------------
                    II. Application Processing 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.
------------------------------------------------------------------------
                             III. Audit Fees
------------------------------------------------------------------------
After audit performed.............  OSHA will bill each existing NRTL
                                     for the audit fees in effect at the
                                     time of audit, but will reflect
                                     actual travel costs and staff time
                                     in the bill.
30 days after bill date...........  NRTLs must pay audit fees; OSHA will
                                     assess late fee if audit fees are
                                     not paid.
45 days after bill date...........  OSHA will send a letter to the NRTL
                                     requesting immediate payment of the
                                     audit fees and late fee.
60 days after bill date...........  OSHA will publish a notice in the
                                     Federal Register announcing its
                                     intent to revoke recognition for
                                     NRTLs that have not paid these
                                     audit fees.
------------------------------------------------------------------------

    One significant change has been made to the table as a result of 
comments from ACIL (Ex. 8-3). Rather than billing each NRTL at the 
beginning of the year as proposed (64 FR 45105), we will bill them 
after an audit is conducted. Failure to pay the bill in a timely 
fashion may lead to revocation of recognition.
    With regard to the other items in the schedule, OSHA needs 
approximately 30 days after the close of the government fiscal year 
(GFY) on September 30th, to obtain and review data for its annual 
review of the fee schedule. If a change in the schedule is necessary, 
OSHA will publish a proposed revision around November 1st, including an 
analysis of the changes. The period for comments will be no less than 
15 calendar days. Approximately 30 days thereafter, OSHA will 
officially issue the new fee schedule in the Federal Register.
    After we have audited an NRTL, we will bill that NRTL for the 
appropriate audit fee shown in the fee schedule in effect at the time 
the audit is performed. This bill will reflect actual travel costs and 
staff time for the audit. OSHA anticipates that most of the bills will 
be for on-site audits, rather than office audits. OSHA will 
automatically assess the NRTL the late fee, shown in the fee schedule, 
if the Agency does not fully receive the amount billed within 30 days. 
Fifteen days thereafter, if payment has not been received, OSHA will 
send 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 will publish a notice in the Federal Register 
announcing its intent to revoke the NRTL's recognition. OSHA will then 
proceed with permanent revocation of the NRTL's recognition, which 
includes publication of a second notice formally revoking recognition.
    In revoking recognition due to non-payment of fees, OSHA will 
follow the procedures described in this paragraph and not those under 
II.E of Appendix A to 29 CFR 1910.7. The Agency may consider 
reinstating an organization's recognition if it provides an explanation 
for non-payment that is acceptable to OSHA and it pays all fees that 
are due. We will address such a reinstatement option in the directive 
mentioned in paragraph (f)(5) below.
    OSHA will bill the NRTL separately for additional audits of a site 
or for any ``special'' audits, and will bill

[[Page 46805]]

applicants separately for any additional or special assessment that it 
must perform in connection with an application. OSHA will bill the NRTL 
or applicant for these fees after these audits or assessments and will 
follow the same collection process as described above.
5. Details for Payment
    The fifth and last part of paragraph (f) reads as follows:

    (5) OSHA will provide details about how to pay the fees through 
appropriate OSHA Program Directives, which will be available on the 
OSHA web site.

    For application processing, OSHA will bill the NRTL applicant or 
NRTL for the balance of fees due, including the ``actual costs'' for 
any assessment, at the time we publish the preliminary notice to 
announce the application. As previously explained, publication of this 
notice occurs after we have completed any assessment for processing an 
application. For new applicants, the bill will reflect a refund (i.e., 
a credit) if the amount pre-paid exceeds the ``actual costs'' for the 
assessment. For expansion and renewal applications, the bill to the 
NRTL will include the fees for any assessment that we performed. For 
audits, we will also bill the NRTL after completion of the audit. For 
application processing and audits, any fees that are not paid when due 
will result in cancellation of application or revocation of 
recognition, as appropriate. OSHA will follow the same collection 
process for applications as that described for audits in paragraph 
(f)(4).
    The instructions that accompany a fee schedule will include 
appropriate details about fee payments. OSHA will require payment of 
all fees in U.S. dollars by certified check or money order drawn on a 
U.S.-based institution or organization, but may include additional 
payment terms in these instructions. The Agency may consider other 
modes or methods for payment in these instructions.
    The fees established by this final rule go into effect on October 
1, 2000. Fees must be submitted for any application (whether for 
initial recognition, or expansion or renewal of recognition) postmarked 
on or after the effective date of the Fee Schedule shown in section VI 
of this preamble. Also, any application pending on October 1, 2000, 
will be subject to the fees for activities that OSHA has not yet begun 
as of that date. OSHA will bill applicants accordingly. However, since 
delays in processing may have occurred through no fault of an 
applicant, OSHA will review the circumstances surrounding all 
applications that are pending on October 1, 2000, to determine whether 
some fees should be waived.

B. Reduction of Public Comment Period

    OSHA is amending 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 announces OSHA's ``preliminary finding'' on an 
initial, expansion, or renewal application. The amended provisions of 
Appendix A will now provide a 30-day comment period for notices on 
applications for initial recognitions, and a 15-day comment period for 
notices on applications for expansion or renewal of recognition. The 
30-day period for initial applications is consistent with that provided 
for some other notices published by the Agency. The shorter 15-day 
period reflects the nature and scope of OSHA's evaluation of expansion 
and renewal requests. Based on our experience, OSHA believes that such 
requests will present few issues. However, anyone who believes that the 
NRTL's request affects them but needs more time may request an 
extension of time to comment.
    As pointed out in the proposal (64 FR 45107), in recent years, OSHA 
has received few or no comments on the preliminary notices. The comment 
periods add significantly to the amount of time required to process an 
application. Thus OSHA proposed to reduce the time periods required. 
ACIL (Ex. 8-3) recognized that this would reduce overall processing 
time. No comments were received objecting to this change.
    NRTLs routinely adopt new test standards for the products that are 
within their testing and certification capability. Many of the new test 
standards are simply new revisions that supersede those for which OSHA 
has already recognized the NRTL. As a result, the NRTL must often apply 
to OSHA to ``expand'' its recognition to enable it to use the new test 
standards. While the NRTL may ``expand'' its recognition primarily to 
attain or maintain an economic benefit, timely recognition of the new 
test standards for the NRTL could also enhance safety in the workplace. 
The shorter periods will speed up approval of those expansions.
    Federal Register notices are currently accessible to the public 
through the Office of the Federal Register web site on the day they are 
published. 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. 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. OSHA will generally grant an 
extension but will limit it to 15 days, unless the requester justifies 
a longer period. We may deny a request for extension if it is frivolous 
or otherwise unwarranted.

IV. Legal Authority and Other Considerations

A. Statutory Authority

    OSHA is basing its fees 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. 9701(b)


[[Page 46806]]


    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 2000 appropriations, Congress 
specifically authorized the Secretary of Labor to collect and retain 
the fees to be collected under this rule: ``* * * the Secretary of 
Labor is authorized, during the fiscal year ending September 30, 2000, 
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 recognition programs that ensure the 
safety of equipment and products used by workers in the workplace: * * 
*'' Public Law 106-113 (113 Stat. 1501A-222). Through this rider, OSHA 
has the necessary authority to retain the fees, which otherwise would 
be credited to the general fund of the U.S. Treasury, as explained in 
OMB Circular A-25.

B. Legal Basis for Assessing the Fees

    As noted in the proposal (64 FR 45100), to determine a proper basis 
for assessing the fees, OSHA reviewed a number of legal precedents and 
analyzed the costs and activities for the functions undertaken for the 
NRTL Program. We summarize our legal review below, and provide the 
details of our costs in section V of this preamble.
    The legal precedents center 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 as 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 (DC 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 application processing and audit fees in this final rule.
    Based in large part on the results of the foregoing six cases and 
on the guidelines of OMB Circular A-25, OSHA is establishing fees for 
specific benefits that organizations receive as a result of the 
specific services that OSHA provides to them for their initial and 
continued recognition as an NRTL. 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

    To help clarify the basis for the fees in this final rule, the 
following describes how OSHA generally handles applications and 
continuing services under the NRTL Program.
    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 performs 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 
prepares 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 comment period (now established 
as 30 days or 15 days in this final rule, but formerly 60 days), 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 
expansion of 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 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

[[Page 46807]]

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 final 
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, the NRTL's clients. These 
opportunities may be in the form of new, additional, or continuing 
revenue and clients. Once the NRTL has properly certified a product, a 
manufacturer may then sell this product 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.

D. Fees of Other Agencies

    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 that cover 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    25 CFR 143.4
 of the Interior.
Food Safety and Health Service;         9 CFR 318.21 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 non-governmental 
organizations that accredit or recognize testing laboratories or 
certification bodies. Although the fees established in this final rule 
are specific to the costs to OSHA, the practices of these other 
organizations may be of interest to reviewers of this rule.

           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
 Organizations.
                              Fees for assessments  Per person on a per
                               and audits.           diem basis + travel
                                                     expenses
                              Annual accreditation  $9,000 + a business
                               fee.                  volume fee (up to
                                                     $36,000)
ANSI Accreditation for        Application fee.....  $2,000
 Certification Programs.
                              Accreditation fees..  $1,200/day per
                                                     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            Application fee.....  $500
 Laboratory Accreditation
 Program (NVLAP).
                              Assessment fee (for   per program/field,
                               accreditation and     $1,600 to $3,000 or
                               every two years).     variable
                              Annual support fee..  per program/field,
                                                     $3000 to $3,925
                                                     less $2,200 for
                                                     more than one field
                              Annual proficiency    per program/field,
                               testing fee.          $0 to $5,405 or
                                                     variable
American Association for      Application fee.....  $800
 Laboratory Accreditation
 (A2LA).
                              Assessment fee (for   Deposit of $3,000 +
                               accreditation and     $1,500/extra field/
                               every two years).     lab, actual costs
                                                     billed at $750/day
                                                     + 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
 Quality Assurance Programs.

[[Page 46808]]

 
                              Site visit fee......  $675/day or $2,400
                                                     outside North
                                                     America + expenses
                              Annual fee (also due  $300/program ($150/
                               with application).    program with
                                                     application after
                                                     June 30)
                              Proficiency           program/sample
                               analytical testing    specific, also
                               program fee.          based on # of
                                                     samples, $86 to
                                                     $1,800
------------------------------------------------------------------------

V. Detailed Discussion of Fees

A. Cost Basis for the Fees

    OSHA's first Fee Schedule (set forth in section VI of this 
preamble) is 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.\2\
---------------------------------------------------------------------------

    \2\ 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 6(d) 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.
---------------------------------------------------------------------------

    For application processing, full 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 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.
    For audits, full 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 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.
    Prior to developing the proposed rule on the fees, OSHA had not 
accounted separately for the costs of the NRTL Program. The personnel 
and other costs associated with performing activities related to the 
Program involve a number of different offices throughout the Department 
of Labor. In preparing the fee schedule presented in this final rule, 
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 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, and we include 
$29,800 in our estimate in Figure 1 to cover these costs. 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 fees. We include $46,500 in our 
estimate in Figure 1 to cover these costs. 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 total 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 and 
NRTL applicants. Figure 1 shows the costs used to calculate the fees.

[[Page 46809]]



        Figure 1.--Current Estimated Annual Costs of NRTL Program
------------------------------------------------------------------------
                                                 Avg. cost
                                                  per FTE     Total est.
         Cost description            Est. FTE    (including     costs
                                                  fringe)
------------------------------------------------------------------------
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 FTE (2,080) hours)
 $40
Equivalent avg. direct staff cost/hr ($428,500  4.2 FTE hours)
 $49
  (includes direct & indirect costs)
------------------------------------------------------------------------
a 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

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.
    Figures 2, 3, and 4 show the estimated time the Agency spends on 
each major service category. These estimates were developed, in part, 
for the information collection package for the NRTL Program submitted 
to OMB in September 1997 under the Paperwork Reduction Act. The major 
service categories are initial applications, expansion and renewal 
applications, and audits; and each figure shows the major activities 
performed and the estimated staff time and travel costs for each of 
these activities. The Agency calculates 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 shown in the first Fee Schedule (refer to section VI of this 
preamble).

           Figure 2.--Estimated Costs for Initial Application
------------------------------------------------------------------------
             Major activity                Average hours   Average costs
-----------------------------------------------------------------a------
Initial Application Review:
    Staff time: (includes review by                   80          $3,924
     office and 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)..........
------------------------------------------------------------------------
a Average costs for staff time equal average hours  x  equivalent
  average direct staff cost/hr ($49).


     Figure 3.--Estimated Costs for Expansion or Renewal Application
------------------------------------------------------------------------
             Major activity                Average hours   Average costs
-----------------------------------------------------------------a------
Initial Application Review (expansion):
    Staff time: (includes review by                   32          $1,570
     office and field staff)............
 
(Note for renewals: 2 hours, i.e. $98,
 are allotted for processing the NRTL's
 request)
$1,570On-Site Assessment--first day:

[[Page 46810]]

 
    Staff time: (includes 8 hours                     20             981
     preparation, 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              88          4,316
     by field staff and office staff)...
------------------------------------------------------------------------
a Average costs for staff time equal average hours  x  equivalent
  average direct staff cost/hr ($49).


              Figure 4.--Estimated Costs for On-Site Audit
------------------------------------------------------------------------
             Major activity                Average hours   Average costs
-----------------------------------------------------------------a------
Pre-Site Review:
    Staff time: (field staff only)......               8            $392
On-Site Audit--first day:
    Staff time: (includes 4 hours                     12             589
     travel)............................
    Travel..............................  ..............             670
                                         -------------------------------
        Total (per site, per assessor)..  ..............           1,259
                                         ===============================
Final Report:
    Staff time: (includes work performed              16             785
     by field staff and office staff)...
                                         -------------------------------
        Total costs.....................  ..............       $2,436 b
------------------------------------------------------------------------
a Average costs for staff time equal average hours  x  equivalent
  average direct staff cost/hr ($49).
b Based on a one day audit. The costs for any additional days are the
  same as the additional day costs for an assessment.

    In deriving the fee amounts shown in the Fee Schedule shown in 
section VI of this preamble, 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 the Fee Schedule 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 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 fees but only the costs of 
providing the specific services already described.

B. Description of the Fees

    The following is a description of the fees and work involved for 
the activities currently covered under each type of fee service 
category, e.g., application processing fees, and the basis used to 
charge each fee. The amount of each fee is shown in the Fee Schedule 
set forth in section VI of this preamble.
    Application Review Fees: This fee reflects the technical work 
performed by office and field staff in reviewing application documents 
to determine whether an applicant submitted complete and adequate 
information. This fee does not cover the work involved in reviewing the 
test standards requested, which is reflected in the review and 
evaluation fee. Application fees are based on average costs per type of 
application. OSHA uses average costs since the amount of time spent on 
the application review does not vary greatly by type of application. 
This is 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: There are three assessment fees: a fee for the 
first day for initial applications, a fee for the first day for 
expansion or renewal applications, and a fee for each additional day 
for any type of application. The assessment fee for an initial 
application covers the estimated time for staff preparatory and on-site 
work for the first day and an amount to cover travel in the 48 
contiguous states (including the District of Columbia). As in the case 
of application review fee, the office preparation time generally 
involves the same types of tasks. Actual time assessing the facility 
may vary, but our staff devote at least a full day for traveling and 
for performing the on-site work. The fee for each additional day 
reflects time spent at the facility and an amount for one day's room 
and board. Generally, an applicant for initial recognition must pay for 
two additional days, submitting these fees with its application. Both 
the first day and the additional day fees are calculated per person per 
site. As previously explained, all applicants pay ``actual costs'' for 
an assessment (defined in section III of this preamble). Any difference 
between actual costs and the amounts submitted with an application will 
be reflected in the final bill that we provide to the applicant.
    The assessment fee for expansion and renewal applications, 
submitted only by NRTLs, covers the estimated time for staff 
preparatory and the actual on-site work with travel expenses. Upon

[[Page 46811]]

completion of these activities, OSHA will bill the NRTL for ``actual 
costs'' of the assessment.
    For initial applications, a supplemental travel amount is assessed 
for travel outside the 48 contiguous states (including the District of 
Columbia). The supplemental amount is 1,000 US dollars and is shown in 
footnote 4 of Table A. FEE SCHEDULE. This amount reflects an estimate 
of the additional cost of staff and travel. All travel amounts are only 
estimates for purposes of submitting the initial payment of the fees. 
As already noted, an applicant will be billed for actual travel 
expenses, based on government per diem and travel fares in effect at 
the time of the travel.
    A supplemental travel cost table reflecting a specific dollar 
amount was not developed for applicants from each potential country 
that could apply for recognition. Even though such a table was proposed 
in the NPRM, it was not developed since the supplemental fee is only an 
estimate for prepayment of assessment fees, and is not the final billed 
cost to the applicant. The supplemental travel fee will be updated 
along with the fee schedule to reflect changes in the government travel 
rates. OSHA may develop supplemental travel fees based upon specific 
countries or regions as costs dictate. Specific instructions on 
submitting the fees will be made available to the public along with the 
current fee schedule.
    Review and Evaluation Fee: This fee is 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 with the number of test standards requested 
by the applicant. The fee is 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 requires 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. In addition, 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 test 
standard is one hour.
    Final Report/Register Notice Fees: Each of these fees is charged 
per application. The fee reflects 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: The on-site audit fee 
reflects the time for office preparation, time at the facility and 
travel, and time to prepare the audit report of the on-site audit. OSHA 
will bill the NRTL for the on-site audit fee after we have performed 
the audit, and the bill will reflect the actual staff time and travel 
costs for the audit. We have based the audit fee on the premise that we 
spend a full day at a site. In some cases, due to the proximity of two 
sites, we may actually audit two sites in one day. In such cases, we 
would apportion our audit fee between the two sites based on the 
percent of time we spent at each site.
    Miscellaneous Fees: 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. Fee Schedule

    The first Fee Schedule, included in this section VI of the 
preamble, is effective on October 1, 2000. The fees apply to any 
organization seeking recognition or already recognized as an NRTL on or 
after October 1, 2000. Fees must be submitted for any application 
(whether for initial recognition, or expansion or renewal of 
recognition) postmarked on or after October 1, 2000. The fees apply 
also to any pending application (i.e., an application that OSHA has not 
yet completed processing) only for those activities that the Agency 
begins on or after the effective date of this first Fee Schedule.
    OSHA establishes the following fee schedule:

             Table A. Fee Schedule--Nationally Recognized Testing Laboratory Program (NRTL Program)
                                 [Fee schedule (effective October 1, 2000)] \10\
----------------------------------------------------------------------------------------------------------------
                                          Activity or category (fee charged per
            Type of service                application unless noted otherwise)              Fee amount
----------------------------------------------------------------------------------------------------------------
Application Processing................  Initial Application Review \1\..........  $3,900.
                                        Expansion Application Review \1\........  $1,550.
                                        Renewal Application Review \1\..........  $100.
                                        Assessment--Initial Application (per      $5,900.
                                         site--SUBMIT WITH APPLICATION) \2, 4\.
                                        Assessment--Initial Application (per      $1,350 + travel expenses.
                                         person, per site--first day--BILLED
                                         AFTER ASSESSMENT) \2, 7, 8\.
                                        Assessment--Expansion or Renewal          $1,000 + travel expenses.
                                         Application (per person, per site--
                                         first day) \3, 8\.
                                        Assessment--each addnl. day (per person,  $400 + travel expenses.
                                         per site) \2, 3, 8\.
                                        Review & Evaluation (per standard) \5\    $50.
                                         (for initial or expansion applications).
                                        Final Report/Register Notice--Initial     $7,850.
                                         Application \5\.
                                        Final Report/Register Notice--Expansion   $4,300.
                                         or Renewal Application \5\.
Audits................................  On-site Audit (per person, per site-      $1,750 + travel expenses.
                                         first day) \6\.
                                        On-site Audit (per person, per site-each  $400 + travel expenses.
                                         addnl. day) \6\.
                                        Office Audit (per site) \6\.............  $400.
Miscellaneous.........................  Supplemental Travel (per site--for sites  $1,000.
                                         located outside the 48 contiguous
                                         States, including the District of
                                         Columbia) \4\.
                                        Late Payment \9\........................  $50.
----------------------------------------------------------------------------------------------------------------


[[Page 46812]]

Notes to OSHA Fee Schedule for NRTLs:

    1. Who must pay the Application Review fees, and when must they be 
paid?
    If you are applying for initial recognition as an NRTL, you must 
pay the Initial Application Review fee and include this fee with your 
initial application. If you are an NRTL and applying for an expansion 
or renewal of recognition, you must pay the Expansion Application 
Review fee or Renewal Application Review fee, as appropriate, and 
include the fee with your expansion or renewal application.
    2. What assessment fees do you submit for an initial application, 
and when must they be paid?
    If you are applying for initial recognition as an NRTL, you must 
pay $5,900 for each site for which you wish to obtain recognition, and 
you must include this amount with your initial application. We base 
this amount on two assessors performing a three day assessment at each 
site. After we have completed the assessment work, we will calculate 
our assessment fee based on the actual staff time and travel costs 
incurred in performing the assessment. We will calculate this fee at 
the rate of $1,350 for the first day and $400 for each additional day, 
plus actual travel expenses, for each assessor. Actual travel expenses 
are based on government per diem and travel fares. We will bill or 
refund the difference between the amount you pre-paid, $5,900/site, and 
this fee. We will reflect this difference in the final bill that we 
will send to you at the time we publish the preliminary Federal 
Register notice announcing the application.
    3. What assessment fees do you submit for an expansion or renewal 
application, and when must they be paid?
    If you are an NRTL and applying solely for an expansion or renewal 
of recognition, you do not submit any assessment fee with your 
application. If we need to perform an assessment for the expansion or 
renewal request, we will bill you for the fee after we perform the 
assessment for the actual staff time and travel costs we incurred in 
performing the assessment. We will assess this fee at the rate of 
$1,000 for the first day and $400 for each additional day, plus actual 
travel expenses, for each assessor. Actual travel expenses are based on 
government per diem and travel fares.
    4. When do I pay the Supplemental Travel fee? 
    You must include this fee when you submit an initial application 
for recognition and the site you wish to recognized is located outside 
the 48 contiguous U.S. states (including the District of Columbia). The 
current supplemental travel fee is $1,000. We will factor in this 
prepayment when we bill for the actual costs of the assessment, as 
described in our note #2 above. See note 7 for possible refund of 
Assessment fees.
    5. When do I pay the Review and Evaluation and the appropriate 
Final Report/Register Notice fees?
    We will bill an applicant or an NRTL for the appropriate fees at 
the time we publish the preliminary Federal Register notice to announce 
the application.
    6. When do I pay the Audit fee?
    We will bill the NRTL for this fee (on-site or office, as deemed 
necessary) after completion of the audit. We will calculate our fee 
based on actual staff time and travel costs incurred in performing the 
audit. We will calculate this fee at the rate of $1,750 for the first 
day and $400 for each additional day, plus actual travel expenses for 
each auditor. Actual travel expenses are based on government per diem 
and travel fares.
    7. When and how can I obtain a refund for the fees that I paid?
    If you are applying for initial recognition as an NRTL, we will 
refund the assessment fees that we have collected if you withdraw your 
application before we have traveled to your site to perform the on-site 
assessment. We will also credit your account for any amount we owe you 
if the assessment fees we have collected are greater than the actual 
costs of the assessment. Other than these two cases, we will not refund 
or grant credit for any other fees that are due or that we have 
collected.
    8. What rate does OSHA use to charge for staff time?
    OSHA has estimated an equivalent staff cost per hour that it uses 
for determining the fees that are shown in the Fee Schedule. This 
hourly rate takes into account the costs for salary, fringe benefits, 
equipment, supervision and support for each ``direct staff'' member, 
that is, the staff that perform the main activities identified in the 
Fee Schedule. The rate is an average of these amounts for each of these 
direct staff members. The current estimated equivalent staff costs per 
hour = $49.
    9. What happens if I do not pay the fees that I am billed?
    As explained above, if you are an applicant, we will send you a 
final bill for the fees at the time we publish the preliminary Federal 
Register notice. If you do not pay the bill by the due date, we will 
assess the Late Payment fee shown in the Fee Schedule. This late 
payment fee represents one hour of staff time at the equivalent staff 
cost per hour (see note 8). If we do not receive payment within 60 days 
of the bill date, we will cancel your application. As also explained 
above, if you are an NRTL, we will send you a bill for the audit fee 
after completion of the audit. If you do not pay the fee by the due 
date, we will assess the Late Payment Fee shown in the Fee Schedule. If 
we do not receive payment within 60 days of the bill date, we will 
publish a Federal Register notice stating our intent to revoke 
recognition.
    10. How do I know whether this is the most Current Fee Schedule?
    You should contact OSHA's NRTL Program (202-693-2110) or visit the 
program's web site to determine the effective date of the most current 
Fee Schedule. Access the site by selecting ``Subject Index'' or 
``Programs'' at www.osha.gov. Any application processing fees are those 
in effect on the date you submit your application. Audit fees are those 
in effect on the date we begin our audit. Any pending application 
(i.e., an application that OSHA has not yet completed processing) will 
be subject only to the fees for the activities that OSHA begins on or 
after the effective date of the initial fee schedule.
    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 final rule. In evaluating any changes to a 
fee schedule, OSHA will 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.
    An organization applying for its initial recognition as an NRTL 
must include both the application fee and on-site review 
(``assessment'') fee with the application. An existing NRTL that is 
applying solely for an expansion or renewal of NRTL recognition need

[[Page 46813]]

include only the application fee. If we need to perform an on-site 
review for the expansion or renewal request, we will bill the NRTL for 
the fee after we perform the assessment. If a renewal applicant does 
not pay all fees that are due, OSHA will not renew the NRTL's 
recognition.
    If an applicant withdraws its initial application before we have 
traveled to their site to perform an on-site assessment, we will refund 
any on-site assessment fee that we have collected. However, if we have 
begun our travel for the on-site visit, we will not refund any portion 
of the assessment fee. When we publish a preliminary Federal Register 
notice to announce an application for initial recognition, expansion, 
or renewal, we will bill the applicant for the balance of the 
application processing fees and will include actual travel costs and 
staff time for the assessment. For applications and audits, if an NRTL 
or applicant does not pay its fees, we will cancel the application or 
revoke its recognition, as appropriate.

VII. Regulatory Matters

A. Final Economic Analysis and Final Regulatory Flexibility 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. In accordance with these 
requirements, OSHA prepared this final economic analysis to accompany 
this final rule by OSHA to allow the Department of Labor to charge and 
retain fees for services provided to Nationally Recognized Testing 
Laboratories (NRTLs). The analysis included a description of the 
industry, an estimation of the costs of compliance, and an evaluation 
of the economic and other impacts of the proposed rule on firms in this 
sector. The analysis also examined the costs and impacts of the 
proposal on affected small entities, as defined by the Small Business 
Administration. Because the fee structure has remained largely 
unchanged, and because there were no comments on the substance of this 
analysis, it is the same as that for the proposed rule.

Affected Industry

    OSHA standards require 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 \3\. 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.
---------------------------------------------------------------------------

    \3\ A substantial amount of the 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.
sbull; 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, 2000.

    A product testing lab tests equipment in accordance with test 
standards, such as those 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 materials 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 can be 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,

[[Page 46814]]

trade association, or equipment vendor. They typically test a variety 
of products 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 \4\ 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 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.
---------------------------------------------------------------------------

    \4\ Biological and chemical testing labs perform such tests as 
chemical composition of substances, blood tests, etc., and would not 
be affected by the final rule.

                                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          70,762          $4,764        94.47
Non-Taxable Establishments..........        135 a               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 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 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 rule and will, therefore, incur 
no costs of compliance.
    Currently, there are 17 testing laboratories that have NRTL status 
and that operate over 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 rule. 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. Applied Reserch Laboratories, Inc. (ARL)................            1
 2. Canadian Standards Association (CSA)...................            6
 3. Communication Certification Laboratory, Inc. (CCL).....            1
4. Curtis-Straus LLC. (CSL)................................            1
 5. Detroit Testing Laboratory, Inc. (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, Inc. (MET)...........................            1
11. National Technical Systems, Inc. (NTS).................            1
12. NSF International (NSF)................................            1
13. SGS U.S. Testing Co., Inc. (SGSUS).....................            2
14. Southwest Research Institute (SwRI)....................            1
 15. TUV Rheinland of North America, Inc. (TUV)............            1
 16. Underwriters Laboratories Inc. (UL)...................           10
 17. Wyle Laboratories, Inc. (WL)..........................            1
                                                            ------------
    Total..................................................          42
------------------------------------------------------------------------
 Source: U.S. Department of Labor, OSHA, Office of Regulatory Analysis,
  2000.

Costs

    This section presents estimates of the costs that will be incurred 
by firms to come into compliance with the final 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 rule will transfer the payment of these costs to 
the NRTLs themselves and NRTL applicants.
    Testing laboratories participating in the OSHA program will be 
subject to

[[Page 46815]]

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, in Part VI 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 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 being adopted 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 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 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. number    Estimated fee
                            Category                              application or     per year       collection
                                                                       audit
----------------------------------------------------------------------------------------------------------------
Initial Recognition Applications................................         $20,423               3         $61,269
Expansion of Recognition Applications...........................           7,820               7          54,739
Renewal of Recognition Applications.............................           8,641               3          25,924
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 economic impacts of the costs of compliance with 
the regulation for NRTL fees and has determined that the regulation is 
economically feasible for firms in this industry. The rule 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 rule would transfer the payment 
of some of these costs to firms receiving the service from OSHA.
    To determine whether the rule's projected costs of compliance would 
raise issues of economic feasibility for the affected industry or would 
adversely alter the competitive structure of the industry, OSHA 
developed quantitative estimates of the economic impact of the 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 
associated with the NRTL fees could lead to significant impacts on the 
affected firms. The actual impact of the rule on the profits and sales 
of firms will depend on the price elasticity of demand for the services 
provided by the affected firms.

[[Page 46816]]



           Table 5.--Screening Analysis To Identify Possible Economic Impacts of the Proposed NRTL Fees
----------------------------------------------------------------------------------------------------------------
                                                                                          Annualized costs of
                                                                                       compliance as a  percent
                                   Annual costs of      Revenues         Pre-tax                  of
                                      compliance        ($1000)          profits     ---------------------------
                                                                         ($1000)                       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.
\a\ 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 completely 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 
completely elastic, firms cannot absorb the costs simply by passing the 
cost increase through in the form of a price increase; instead, they 
must absorb the cost 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 revenue 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 imposed by the 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 rule is determined to 
be economically feasible for affected laboratories.
    As previously noted, OSHA 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 demand 
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 
fees have been implemented.

Potential Economic Impacts of the Regulation on Small Entities

    This section measures the potential economic impacts of the 
regulation on small entities in the affected testing laboratory 
industry to determine whether the regulation 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-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.
    The number of establishments operated by small firms and the number

[[Page 46817]]

of affected workers employed in small firms are based on Bureau of the 
Census data\5\. 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.
---------------------------------------------------------------------------

    \5\ The Bureau of the Census defines a ``firm'' as ``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 the 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-profit entity are currently NRTLs and 
thus certain to be affected. However, the rule could 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 rule will not have a significant impact on small 
entities (as defined by the SBA), OSHA certifies that this final rule 
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 cost of
                                                                                                                                 compliance as a percent
                                   Definition of small    Employment   Number of    Annualized      Average         Pre-tax                of
                                          entity             size     small firms    cost per    revenues per     profits per  -------------------------
                                                                                       firm       small firm      small firm                   Pre-tax
                                                                                                                                   Sales        profit
--------------------------------------------------------------------------------------------------------------------------------------------------------
Testing Laboratories (SIC 8734).  $5 million...........          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 Labor, OSHA, Office of Regulatory Analysis, 2000; Office of Technical Programs and Coordination Activities, 1999.
  US Small Business Administration, Office of Advocacy. Table 3: US Establishments, Employments, 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.

B. 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 final rule will not have a significant impact on 
the external environment.

C. Federalism

    This final rule has been reviewed in accordance with Executive 
Order 13132,

[[Page 46818]]

regarding Federalism. This final rule would only set fees for services 
provided by the Federal Government to private entities and has no 
impact on Federalism. The rule does not limit or restrict State policy 
options.

D. 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.

E. Unfunded Mandates

    For the purposes of the Unfunded Mandates Reform Act of 1995, as 
well as Executive Order 13084 (Consultation and Coordination with 
Indian Tribal Governments), 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.

F. State Plan States

    The 25 States and territories with their own OSHA approved 
occupational safety and health plans are not affected by this final 
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.

VIII. 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, D.C. 20210. The final 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 final sections are also issued under authority of OMB 
Circular A-25 (dated 7/8/93); Public Law 106-113 (113 Stat. 1501A-222); 
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 20th day of July, 2000.
Charles N. Jeffress,
Assistant Secretary.

    For the reasons discussed in the preamble, OSHA amends 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, 29 U.S.C. 9a, 5 
U.S.C. 553; Pub. L. 106-113 (113 Stat. 1501A-222); and OMB Circular 
A-25 (dated July 8, 1993) (58 FR 38142, July 15, 1993).


    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 NRTL 
must pay fees for services provided by OSHA. OSHA will assess fees for 
the following services:
    (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 cost of 
performing the activities for each service listed in paragraph (f)(1) 
of this section. OSHA calculates the fees based on either the average 
or actual 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 the average or actual costs for travel when on-site 
reviews are involved. The formula for the fee calculation is as 
follows:


Activity Fee = [Average (or Actual) Hours to Complete the Activity  x  
Staff Costs per Hour] + Average (or Actual) Travel Costs

    (3) (i) OSHA will review costs 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 implementation table in paragraph (f)(4) of this 
section.
    (ii) OSHA will publish all fee schedules in the Federal Register. 
Once published, a fee schedule remains in effect until it is superseded 
by a new fee schedule. 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. 
OSHA will consider such requests during its annual review of the fee 
schedule.
    (4) OSHA will implement fee assessment, collection, and payment as 
follows:

------------------------------------------------------------------------
         Approximate dates                     Action required
------------------------------------------------------------------------
                    I. Annual Review of Fee Schedule
------------------------------------------------------------------------
November 1........................  OSHA will publish any 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,
                                     making it effective.
------------------------------------------------------------------------
                     II. Application Processing 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.

[[Page 46819]]

 
Publication of preliminary notice.  Applicant must pay remainder of
                                     fees; OSHA cancels application if
                                     fees are not paid when due.
------------------------------------------------------------------------
                            III. Audit Fees
After audit performed.............  OSHA will bill each existing NRTL
                                     for the audit fees in effect at the
                                     time of audit, but will reflect
                                     actual travel costs and staff time
                                     in the bill.
30 days after bill date...........  NRTLs must pay audit fees; OSHA will
                                     assess late fee if audit fees are
                                     not paid.
45 days after bill date...........  OSHA will send a letter to the NRTL
                                     requesting immediate payment of the
                                     audit fees and late fee
60 days after bill date...........  OSHA will publish a notice in the
                                     Federal Register announcing its
                                     intent to revoke recognition for
                                     NRTLs that have not paid these
                                     audit fees.
------------------------------------------------------------------------

    (5) OSHA will provide details about how to pay the fees through 
appropriate OSHA Program Directives, which will be available on the 
OSHA web site.

    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 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. 00-18922 Filed 7-28-00; 8:45 am]
BILLING CODE 4510-26-P