Hazard Communication Standard

Federal RegisterFeb 16, 2021

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DEPARTMENT OF LABOR

Occupational Safety and Health Administration

29 CFR Part 1910

[Docket No. OSHA-2019-0001]

RIN 1218-AC93

Hazard Communication Standard

AGENCY:

Occupational Safety and Health Administration (OSHA), Labor.

ACTION:

Proposed rule; request for comments.

SUMMARY:

OSHA is proposing through this notice of proposed rulemaking (NPRM) to modify the Hazard Communication Standard (HCS) to conform to the United Nations' Globally Harmonized System of Classification and Labelling of Chemicals (GHS) Revision 7 (GHS, Rev. 7), to address issues that arose during the implementation of the 2012 update to the HCS, and provide better alignment with other U.S. agencies and international trading partners, without lowering overall protections of the standard. OSHA has preliminarily determined that the proposed revisions to the HCS will reduce costs and burdens while also improving the quality and consistency of information provided to employers and employees regarding chemical hazards and associated protective measures. Consistent with the Executive order entitled “Improving Regulation and Regulatory Review” (January 18, 2011) and section 3(a) of the Regulatory Flexibility Act, which call for assessment and, where appropriate, modification and improvement of existing rules to minimize any significant economic impact upon a substantial number of small entities, OSHA has reviewed the existing HCS. The agency has preliminarily determined that the proposed revisions will enhance the effectiveness of the HCS by ensuring employees are appropriately apprised of the chemical hazards to which they may be exposed, thus reducing the incidence of chemical-related occupational illnesses and injuries. The proposed modifications to the standard include revised criteria for classification of certain health and physical hazards, revised provisions for updating labels, new labeling provisions for small containers, technical amendments related to the contents of safety data sheets (SDSs), and related revisions to definitions of terms used in the standard.

DATES:

Comments on this NPRM (including requests for hearing) and other information must be submitted by April 19, 2021.

Informal public hearing:

OSHA will schedule an informal public hearing on the proposed rule if requested during the comment period. If a hearing is requested, the location and date of the hearing, procedures for interested parties to notify the agency of their intention to participate, and procedures for participants to submit their testimony and documentary evidence will be announced in the

Federal Register

ADDRESSES:

Written comments:

You may submit comments and attachments, identified by Docket No. OSHA-2019-0001, electronically at

http://www.regulations.gov

, which is the Federal e-Rulemaking Portal. Follow the instructions online for making electronic submissions. After accessing “all documents and comments” in the docket (Docket No. OSHA-2019-0001), check the “proposed rule” box in the column headed “Document Type,” find the document posted on the date of publication of this document, and click the “Comment Now” link. When uploading multiple attachments to

regulations.gov

, please number all of your attachments because

www.regulations.gov

will not automatically number the attachments. This will be very useful in identifying all attachments in the preamble. For example, Attachment 1—title of your document, Attachment 2—title of your document, Attachment 3—title of your document. For assistance with commenting and uploading documents, please see the Frequently Asked Questions on

regulations.gov

Instructions:

All submissions must include the agency's name and the docket number for this rulemaking (Docket No. OSHA-2019-0001). All comments, including any personal information you provide, are placed in the public docket without change and may be made available online at

http://www.regulations.gov.

Therefore, OSHA cautions commenters about submitting information they do not want made available to the public, or submitting materials that contain personal information (either about themselves or others), such as Social Security Numbers and birthdates.

Docket:

To read or download comments and materials submitted in response to this

Federal Register

document, go to Docket No. OSHA-2019-0001 at

http://www.regulations.gov

. All comments and submissions are listed in the

http://www.regulations.gov

index; however, some information (

e.g.,

copyrighted material) is not publicly available to read or download through that website. All comments and submissions, including copyrighted material, are available for inspection through the OSHA Docket Office.

Documents submitted to the docket by OSHA or stakeholders are assigned document identification numbers (Document ID) for easy identification and retrieval. The full Document ID is the docket number plus a unique four-digit code. OSHA is identifying supporting information in this NPRM by author name, publication year, and the last four digits of the Document ID.

FOR FURTHER INFORMATION CONTACT:

For press inquiries:

Contact Frank Meilinger, Director, Office of Communications, Occupational Safety and Health Administration, U.S. Department of Labor; telephone: (202) 693-1999; email:

meilinger.francis2@dol.gov

For general information and technical inquiries:

Contact Maureen Ruskin, Acting Director, Directorate of Standards and Guidance, Occupational Safety and Health Administration, U.S. Department of Labor; telephone (202) 693-1950 or fax (202) 693-1678; email:

ruskin.maureen@dol.gov

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Executive Summary

II. Introduction

III. Events Leading to the Proposed Modifications to the Hazard Communication Standard

IV. Need and Support for the Proposed Modifications to the Hazard Communication Standard

V. Pertinent Legal Authority

VI. OMB Review Under the Paperwork Reduction Act of 1995

VII. Preliminary Economic Analysis and Initial Regulatory Flexibility Analysis

VIII. Federalism

IX. State-Plan States

X. Unfunded Mandates Reform Act

XI. Protecting Children From Environmental Health and Safety Risks

XII. Environmental Impacts

XIII. Consultation and Coordination With Indian Tribal Governments

XIV. Issues and Options Considered

XV. Summary and Explanation of the Proposed Modifications to the Hazard Communication Standard

XVI. Authority and Signature

I. Executive Summary

The Globally Harmonized System of Classification and Labeling of Chemicals (GHS) has been implemented around the world. In 2012, OSHA updated its Hazard Communication Standard (HCS), 29 CFR 1910.1200, to align with Revision 3 of the GHS (77 FR 17574).

However, the GHS is updated with improvements and clarifications every two years. This proposed rulemaking would amend the HCS to align with Revision 7 of the GHS, published in 2017. OSHA is also proposing updates to address specific issues that have arisen since the 2012 rulemaking and to provide better alignment with international trading partners, without lowering the protections provided by the standard. This action is consistent with Executive Order 13563, “Improving Regulation and Regulatory Review” (January 18, 2011), and the Regulatory Flexibility Act, 5 U.S.C. 610, which requires periodic review of rules that may be out-of-date, ineffective, or excessively burdensome.

OSHA is required by the Occupational Safety and Health Act of 1970 (OSH Act) to assure, as far as possible, safe and healthful working conditions for the Nation's working men and women. As part of this effort, OSHA first promulgated the HCS in 1983 to provide a standardized approach to workplace hazard communications associated with exposure to hazardous chemicals. The HCS requires chemical manufacturers or importers to classify the hazards of chemicals they produce or import. The standard requires all employers to provide information to their employees about the hazardous chemicals to which they are exposed, by means of a hazard communication program, labels and other forms of warning, safety data sheets (SDSs), and information and training. OSHA is not proposing to change the fundamental structure of the HCS.

OSHA has preliminarily determined that the proposed amendments to the HCS would enhance the effectiveness of the standard by ensuring that employees are appropriately apprised of the chemical hazards to which they may be exposed. The proposed modifications to the standard include revised criteria for classification of certain health and physical hazards to better capture and communicate the hazards to downstream users, revised provisions for labels (including proposed provisions addressing the labeling of small containers and the relabeling of chemicals that have been released for shipment), technical amendments related to the contents of SDSs, and new provisions relating to concentrations or concentration ranges being claimed as trade secrets.

Additionally, in accordance with all applicable Executive Orders, the Regulatory Flexibility Act, and the Unfunded Mandates Reform Act, OSHA has prepared a Preliminary Economic Analysis (PEA), including a Preliminary Regulatory Flexibility Analysis Certification, for the proposed modifications to the HCS (see the full PEA in Section VII of this document). Supporting materials prepared by OSHA, such as spreadsheets, are available in the public docket for this rulemaking, Docket ID OSHA-2019-0001, through

www.regulations.gov

. OSHA invites comments on all aspects of the PEA.

In the PEA, OSHA estimates that the proposed rule would result in net cost savings of $26.8 million per year at a 7 percent discount rate, as shown in Table ES-1, below (a summary of annualized costs by affected industry). Annualized at a 3 percent discount rate, OSHA estimates that the proposed rule would result in net cost savings of $27.5 million per year. Under a perpetual time horizon to allow for cost comparisons under Executive Order 13771, OSHA estimates that the net cost savings of the proposed rule at a discount rate of 7 percent would be $19.6 million per year in 2016 dollars.

OSHA also expects that the proposed revisions to the HCS would result in modest improvements in worker health and safety above those already being achieved under the current HCS, but the agency was unable to quantify the magnitude of these health and safety benefits (see Section VII.D. Health and Safety Benefits and Unquantified Positive Economic Effects).

This calculation (a) converts the costs and cost savings of the rule from 2019 dollars to 2016 dollars using the BEA (2020) implicit price deflator for Gross Domestic Product, and (b) discounts the first year costs by five years, to reflect the five years between 2016 and 2021, the scheduled year of publication of this NPRM. For further details, see Document ID 0049, tab “Tables”, E.O. 13771 Summary Table.

BILLING CODE 4510-26-P

EP16FE21.000

BILLING CODE 4510-26-C

II. Introduction

This preamble to the proposal to modify the HCS includes a review of the events leading to the proposal, a discussion of the reasons why OSHA believes these modifications are necessary, the preliminary economic and regulatory flexibility analysis for the proposal, and an explanation of the specific revisions OSHA is proposing to make to the standard.

III. Events Leading to the Proposed Modifications to the Hazard Communication Standard

OSHA first promulgated the HCS in 1983, covering only the chemical manufacturing industry (48 FR 53280). The purpose of the standard was to provide a standardized approach for communicating workplace hazards associated with exposure to hazardous chemicals. OSHA updated the HCS in 1987 to expand coverage to all industries where workers are exposed to hazardous chemicals (52 FR 31852). In 1994, OSHA promulgated an additional update to the HCS with technical changes and amendments designed to ensure better comprehension and greater compliance with the standard (59 FR 6126). In adopting the original HCS in 1983, the agency noted the benefits of an internationally harmonized chemical hazard communication standard (48 FR 53287), and actively participated in efforts to develop one over the subsequent decades. In 2012, the agency officially harmonized the HCS with the third revision of the United Nations' Globally Harmonized System of Classification and Labelling of Chemicals (GHS) (UN GHS, Rev. 3, 2009, Document ID 0085) (77 FR 17574).

OSHA has always envisioned that the HCS would require periodic rulemakings to maintain consistency with the GHS and incorporate the progression of scientific principles and best approaches for classification and communication of workplace hazards related to hazardous chemical exposure (77 FR 17574). This section provides information on the events that have occurred since promulgation of the 2012 HCS, with additional information on the development of the GHS and its relationship to the HCS, and explains the impetus for this proposed rule.

Several international and domestic activities have impacted the direction of the HCS and led to the updates proposed in this NPRM, including negotiations at the UN, OSHA's participation in the U.S.-Canada Regulatory Cooperation Council (RCC) with Health Canada, and information OSHA has received from HCS stakeholders. These are discussed below.

A. International Events Affecting the Standard

The evolution of what was to become the GHS had its early beginnings with the work started in 1956 by the United Nations Economic and Social Council Committee of Experts on the Transport of Dangerous Goods (TDG) and continued in the 1990s through the United Nations Conference on Environment and Economic Development (UNCED), the United Nations International Labour Organization (ILO), and the Organization for Economic Cooperation and Development (OECD) (UN GHS, 2019, Document ID 0053). The overarching goal was to provide an internationally harmonized system to convey information to workers, consumers, and the general public on the physical, health, and environmental effects of hazardous chemicals across the globe, as well as to provide a foundation for the safe management of those chemicals.

Finalized by the UN in 2002, the GHS is intended to harmonize elements of hazard communication, including SDSs and labels, by providing a unified classification system of chemicals based on their physical and health-related hazards. The GHS is updated and revised every two years based on information and experience gained by regulatory agencies, industry, and non-governmental organizations (UN GHS, 2020, Document ID 0052). OSHA largely adopted the third revision to the GHS in 2012.

OSHA leads the U.S. Interagency GHS Coordinating Group, an interagency group that serves as a U.S. delegation to the UN. The Interagency Group works to ensure that modifications to the GHS continue to reflect U.S. agencies' key priorities and do not conflict with U.S. hazard communication and associated requirements. The group meets regularly to discuss issues related to the domestic implementation of the GHS, as well as international work being done at the United Nations Sub-Committee of Experts on the GHS (UNSCEGHS). The Interagency Group consists of representatives from OSHA, the Department of State, the Department of Transportation (DOT), the Environmental Protection Agency (EPA), the U.S. Coast Guard, the Consumer Product Safety Commission (CPSC), the Department of Energy (DOE), the Department of Defense (DOD), and the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF). To date, OSHA is the only U.S. agency to have implemented the GHS, although CPSC regulations contain elements of the GHS (

e.g.

, precautionary statements) (CPSC, 2006, Document ID 0175). The EPA (which initiated the U.S. working group) has proposed changes to its regulations governing significant new uses of chemical substances under the Toxic Substances Control Act that would align with the HCS and the GHS as well as OSHA's respiratory protection standard (29 CFR 1910.134) and National Institute for Occupational Safety and Health (NIOSH) respirator certification requirements (81 FR 49598).

Since OSHA's adoption of Revision 3 in 2012, the GHS has been updated five times; the latest revision, Revision 8, was published in July 2019 (UN GHS, Rev. 8, 2019, Document ID 0065). Updates to the GHS in Revision 4 (2011) included changes to hazard categories for chemically unstable gases and non-flammable aerosols and updates to, and clarification of, precautionary statements (UN GHS, 2011, Document ID 0240). Changes in Revision 5 of the GHS (2013) included a new test method for oxidizing solids; miscellaneous provisions intended to further clarify the criteria for some hazard classes (skin corrosion/irritation, severe eye damage/irritation, and aerosols) and to complement the information to be included in the SDS; revised and simplified classification and labeling summary tables; a new codification system for hazard pictograms; and revised precautionary statements (UN GHS, 2013, Document ID 0241).

Revision 6 of the GHS (2015) included a new hazard class for desensitized explosives and a new hazard category for pyrophoric gases; miscellaneous provisions intended to clarify the criteria for some hazard classes (explosives, specific target organ toxicity following single exposure, aspiration hazard, and hazardous to the aquatic environment); additional information to be included in section 9 of the SDS; revised precautionary statements; and a new example in Annex 7 addressing labelling of small packages (UN GHS, 2015, Document ID 0134). Changes in Revision 7 (2017) included revised criteria for categorization of flammable gases within Category 1; miscellaneous amendments intended to clarify the definitions of some health hazard classes; additional guidance regarding the coverage of section 14 of the SDS (which is non-mandatory under the HCS); and a new example in Annex 7 addressing labelling of small packages

with fold-out labels (UN GHS, 2017, Document ID 0094). Revision 8 (published July 2019) includes a change in classification criteria for aerosols (based on flammable properties, heat of combustion); minor changes to precautionary statements for skin irritation and serious eye damage; new provisions for use of non-animal test methods for the skin irritation/corrosion hazard class; and new precautionary pictograms for “keep out of reach of children” (UN GHS, Rev. 8, 2019, Document ID 0065). OSHA is proposing to revise the HCS to align with the GHS Revision 7; however, the agency has included select provisions from Revision 8 for consideration in this rulemaking. Major U.S. trading partners are also aligning with Revision 7. This is discussed in more detail in the introduction to Issues and Options (see Section XIV) and the introduction to Summary and Explanation (see Section XV).

The GHS model is comprehensive and forward-looking, embracing concepts defined in the principles of aggregate exposure and cumulative risk, which have been developed and/or adopted by agencies such as the U.S. EPA pesticides program and NIOSH (US EPA, 2017, Document ID 0054; Lentz, 2015, Document ID 0071). In brief, aggregate exposure considers the combined exposures of a single chemical from multiple pathways (

e.g.,

oral, dermal, inhalation), while cumulative risk evaluates the potential adverse effects from multiple chemicals or stressors (such as heat and noise). Because of its comprehensive approach, the GHS takes into consideration multiple aspects of the intrinsic hazards of a chemical (

e.g.,

physical, health, and environmental hazards) and makes this information available in a manner that facilitates the assessment of aggregate exposures from a single chemical and identifies factors that may contribute to cumulative risk from multiple chemical exposures. While the HCS requires employers to provide information on SDSs in sections 1-11 and 16 (12-15 are non-mandatory) for workplace settings (29 CFR 1910.1200(g)(2)), many consumer products have SDSs available to the public through the National Library of Medicine (NLM, 2020,

http://medlineplus.gov/householdproducts.html,

Document ID 0059). Thus, aggregate exposure information is available to the public for many chemicals where occupational, consumer, and environmental exposures are possible, as intended by the GHS.

An additional international activity impacting the HCS is OSHA's participation in the RCC. The RCC was established in 2011 to promote economic growth, job creation, and other benefits through increased regulatory coordination and transparency between the U.S. and Canada (US EOP, 2011, Document ID 0057). In June 2018, U.S.-Canada RCC principles were reaffirmed through a memorandum of understanding between the U.S. Office of Information and Regulatory Affairs (OIRA) within the White House Office of Management and Budget and the Treasury Board of Canada (US-Canada MOU, 2018, Document ID 0199). Since the RCC's inception, OSHA and Health Canada, Canada's corresponding governmental agency, have developed joint guidance products and consulted on respective regulatory activities. In keeping with the RCC's goal of regulatory cooperation, OSHA is proposing several updates to the HCS that will align with Canada's Hazardous Products Regulations (HPR), such as changes to exemptions for labeling small containers and using prescribed concentration ranges when claiming trade secrets (Health Canada, 2015, Document ID 0051).

B. Stakeholder Engagement

Since updating the HCS in 2012, OSHA has engaged stakeholders in various ways in order to keep them apprised of changes to the GHS that may have an impact on future updates to the HCS, as well as to gather information about stakeholders' experience implementing the standard. For example, in November 2016, OSHA convened a meeting (International/Globally Harmonized System (GHS), Docket No. OSHA-2016-0005) to inform the public that OSHA was beginning rulemaking efforts to maintain alignment of the HCS with more recent revisions of the GHS. Meeting attendees discussed topics and issues that OSHA should consider during the rulemaking. In addition, attendees provided suggestions as to the types of publications (such as guidance products) that would be helpful in complying with the standard and the topics they would like OSHA to address in future compliance assistance materials.

OSHA has also engaged stakeholders through Interagency Group public meetings, prior to each UNSCEGHS Session, to discuss the issues and proposals being presented at the UN. During this forum, stakeholders have the opportunity to provide comments or voice concerns regarding the various proposals under discussion. Stakeholders are also able to provide comments on these proposals in writing via OSHA's docket for International/Globally Harmonized System (GHS) (Docket No. OSHA-2016-0005). The Interagency Group considers the comments and information gathered at these public meetings and in the docket when developing the United States' position on issues before the UN.

Additionally, in December 2018, the RCC held a stakeholder forum in Washington, DC. The purpose of the forum was to conduct senior-level discussions to proactively identify and discuss challenges, opportunities, and lessons learned regarding Canada-U.S, regulatory cooperation” (US EOP, 2018, Document ID 0252). OSHA led the session regarding chemicals management and workplace chemicals.

C. OSHA Guidance Products, Letters of Interpretation, and Directives

Since OSHA's publication of the HCS update in 2012, the agency has published guidance documents, issued letters of interpretation (LOI), and implemented an enforcement directive. To see the guidance documents, please go to OSHA's web page at:

https://www.osha.gov/dsg/hazcom/guidance.html.

OSHA will continue to develop guidance documents to assist employers and employees with their understanding of the HCS and is seeking comments in this NPRM on types of guidance documents that the public may find useful to understand the updated HCS. Any guidance provided will accord with the Department's regulation at 29 CFR part 89, with a primary aim of providing helpful, plain language explanations.

OSHA has issued several letters of interpretation (LOI) in response to questions from the regulated community. These LOI provide clarification on provisions in the 2012 update to the HCS, and how they apply in particular circumstances. Some of the major issues covered in the LOI include the labeling of small containers, the labeling of chemicals released for shipment, and the use of concentration ranges for trade secrets. OSHA's LOI on the HCS may be found at

https://www.osha.gov/laws-regs/standardinterpretations/standardnumber/1910/1910.1200%20-%20Index/result.

In addition, the agency has published a directive that provides guidance to enforcement compliance officers intended to ensure uniform enforcement of the standard by the OSHA field offices (CPL 02-02-079, OSHA, 2015, Document ID 0007;

https://www.osha.gov/OshDoc/Directive_pdf/CPL_02-02-079.pdf

). Several of the updates in this proposal would codify specific elements of the enforcement guidance the agency has already

provided in the LOI and the directive (see Section XV: Summary and Explanation for Regulatory Text, Appendix B and Appendix D).

IV. Need and Support for the Proposed Modifications to the Hazard Communication Standard

The HCS is the cornerstone of OSHA's risk mitigation strategy for controlling hazardous chemicals in the workplace. The importance of hazard communication in general and the HCS specifically have been well established over the past few decades, ever since OSHA first established the HCS in 1983 as a worker's “right to know” standard (OSHA Publication 3021—Workers' Rights, 2017). However, even prior to OSHA's promulgation of the HCS, there was recognition that workers needed to know the hazards encountered in the workplace and the importance of communicating, classifying, and training how to address, those hazards. The foundational goal of the HCS is to identify, understand, and communicate the hazards associated with exposure to chemicals before workers experience chronic exposure to those hazards.

OSHA first established the need for the HCS in the 1983 standard (48 FR 53282-53284) and most recently reiterated the need for the standard in 2012, when OSHA adopted the GHS hazard communication framework (77 FR 17584-17600). The 2012 HCS emphasized the need for improved quality, consistency, and comprehensibility of information provided to workers. The improved information mandated by the current HCS enables employers and workers to further reduce risks associated with chemical hazards by enabling them to identify and determine the hazards and by providing a method to indicate the severity of the relevant hazards. The HCS, as updated in 2012, also mandates information on proper storage and handling and other information on risk mitigation and management. Numerous studies examined in the final rulemaking for the 2012 HCS supported the need for a hazard communication standard that was focused on ensuring the comprehensibility of the conveyed information (77 FR 17584-17585).

OSHA is now proposing additional changes to the HCS that will serve three primary purposes: (1) Maintaining alignment with the GHS and ensuring that the standard reflects the current state of science and knowledge on relevant topics; (2) cooperating with international trading partners and other Federal agencies; and (3) responding to stakeholder experiences implementing current HCS requirements. The proposed changes include clarifying the purpose and scope of the standard, adding definitions, codifying enforcement policies currently in OSHA's compliance directive, clarifying requirements related to the transport of hazardous chemicals, adding labeling provisions for small containers, and adopting new requirements related to preparation of SDSs and new provisions related to claiming concentration ranges as trade secrets. The agency believes that the changes proposed in this NPRM will further improve the comprehensibility and utility of the standard and allow the HCS to keep up with advances in relevant science and technology, thereby better protecting worker health and safety.

A. Maintaining Alignment With the GHS and Ensuring That the Standard Reflects the Current State of Science and Knowledge on Relevant Topics

Periodic updates to the HCS are needed to maintain pace with the general advancement of science, technology, and our understanding of the processes involved in effective communication. As stated in the 2008 ILO report, “Continuous improvement of occupational safety and health must be promoted. This is necessary to ensure that national laws, regulations, and technical standards to prevent occupational injuries, disease, and deaths are adapted periodically to social, technical, and scientific progress and other changes in the world of work.” (ILO, 2008, Document ID 0181). While the tools and protective measures in place to reduce or prevent chemical-related occupational injuries and illnesses are effective, such tools and systems become less effective as time goes by and new technologies and workplace hazards emerge. Therefore, there is a need for continual improvement in the systems and processes designed to identify, communicate about, and reduce workplace exposures to chemical hazards. OSHA has always intended for the HCS to be updated periodically to reflect these advancements, as is the GHS (for further discussion see Section XIV, Issues and Options).

The ILO and the World Health Organization (WHO) have also adopted an evergreen approach to workplace hazard communication (

i.e.,

an approach that ensures systems for hazard communication remain relevant and up-to-date). The ILO and WHO produce international chemical safety cards (ICSC) and maintain a database of approximately 500 data sheets designed to provide safety and health information on hazardous chemicals in a format consistent with the GHS. While not exactly like SDSs, ICSCs use GHS precautionary statements to convey safety and health information about workplace chemicals in a consistent, internationally-accessible manner. With participation by experts from government agencies around the world, including the U.S. (CDC/NIOSH), Canada (Health Canada and Environment Canada), and the European Commission (ECHA), ICSCs are prepared and periodically updated to account for the most recent scientific developments. Due to the robust process of preparation and peer-review, the ICSCs are considered authoritative in nature and a significant asset for workers and health professionals across the globe, including in the United States (ILO, 2019, Document ID 0069).

The proposed changes to the HCS will result in better alignment between the standard and the continually-evolving GHS. The first edition of the UN GHS, adopted in December 2002 and published in 2003, implemented the 16-section format for SDSs that is now standard across much of the globe. As information has improved, the GHS has updated the form and content of SDSs

to improve readability, minimize redundancies, and ensure hazards are communicated appropriately (UN GHS, 2017, Document ID 0060; ANS revises standard, 2005, Document ID 0237).

SDSs, as adopted by the HCS, are intended to provide comprehensive information about a substance or mixture for use in the workplace, including identification of the substance or mixture; hazard identification; composition/ingredient information; first aid measures; fire-fighting measures; accidental release measures; handling and storage; exposure controls/personal protective measures; physical and chemical properties; stability and reactivity; toxicological information; ecological information; disposal considerations; transport information; regulatory information; and other information that may be relevant to the workplace (

e.g.,

date the SDS was prepared, key literature references, and sources of data used to prepare the SDS).

Information OSHA has collected since publication of the 2012 updates to the HCS indicates that aligning the HCS with the GHS has had a positive impact. Data from published studies indicate that the hazard communication approach taken in the 2012 HCS has been effective, when implemented appropriately, in enabling workers to understand, avoid, and mitigate exposures to hazardous chemicals in the workplace (Bechtoldt, 2014, Document ID 0061; Elliott, 2016, Document ID 0119). Industry representatives have indicated that workers responded positively to training on pictograms and hazard statements because it provided an opportunity to address distinctions between acute toxicity and chronic health effects (Bechtold, 2014, Document ID 0061). In reference to SDSs, one industry representative stated that “[b]ecause the standardized hazard statements and classifications are so precisely disclosed, it'll be a lot easier for industrial hygienists to identify the more hazardous chemicals, decide where they may need to take action, and compare the hazards of one product versus another.” (Bechtold, 2014,

Document ID 0061; Elliot, 2016, Document ID 0119). Consistent labeling requirements have also enabled employers to identify the most hazardous materials in the workplace, understand more about the health effects of these chemicals, and address which hazardous chemicals they may want to replace with safer alternatives (Bechtold, 2014, Document ID 0061).

Several studies published since the 2012 HCS adopted the 16-section SDS format indicate that the new format improves comprehension in the workplace (Elliott, 2016, Document ID 0119; Boelhouwer, 2013, Document ID 0107). However, other recent studies have shown that the system can still be improved upon. Multiple studies in various industries have demonstrated that while comprehension has improved, many SDSs lack information vital to worker protections. Problems include insufficient information on the identification of substances/mixtures; inadequate hazard identification and classification information (

e.g.,

missing information on carcinogens and sensitizers, incorrect chemical classifications); lack of precautionary statements on safe handling; missing information on exposure controls/personal protective equipment; and missing toxicological information (Jang, 2019, Document ID 0110; Allen, 2017, Document ID 0117; DiMare, 2017, Document ID 0118; Tsai, 2016, Document ID 0116; Friis, 2015, Document ID 0120; Saito, 2015, Document ID 0191; Suleiman, 2014, Document ID 0192; Lee, 2012, Document ID 0070). A 2014 study concluded that the contents of the SDSs evaluated were generic and incomplete, lacking important safety measures and health information (Suleiman, 2014, Document ID 0192). A study on mixtures found that information on individual ingredients within mixtures was sometimes completely missing and that information on hazard characterization and classification was ambiguous and almost entirely incorrect (LeBouf, 2019, Document ID 0183). Furthermore, a 2012 study conducted by NIOSH found that SDSs for certain classes of chemicals lacked sufficient information to communicate the appropriate hazards and remedies related to engineered nanomaterials (Eastlake, 2012, Document ID 0063). A follow-up NIOSH study found some improvement in SDS preparation since implementation of the 2012 HCS; however, the study also found that there are still serious deficiencies in providing adequate information on the inherent health and safety hazards of engineered nanomaterials, including handling and storage (Hodson, 2019, Document ID 0067).

Inadequate information on the chemical hazards and risk management practices required on SDSs can lead to overexposure to chemical hazards and puts workers at risk. The studies described above demonstrate the need for ongoing review and refinement to make certain the standard is addressing comprehensibility issues and staying relevant with current occupational safety and health tools, science, and technology. Using information gained through the experience of global stakeholders, the GHS is updated with revisions and improvements every two years. These changes have been outlined in brief in Section III (Events Leading to the Proposed Modifications to the Hazard Communication Standard) of this NPRM. The proposed updates to appendix D, which are based in part on recent revisions to the GHS, seek, among other things, to remedy the issues that have been identified by clarifying the information needed in the SDS. For example, the change in section 9 (physical characteristics to include particle characteristics) will identify exposure issues that are not addressed by the current format. This should, among other things, improve the hazard information required for nanomaterials.

Furthermore, the GHS has been updated to reflect the development of non-animal test methods for use in hazard determination and classification. The development of these test methods led to updates in Chapter 3.2 on skin corrosion/irritation that incorporated new in vitro test methods, and computational and

in silico

techniques, to classify chemicals for this category of hazard (UN GHS, 2018, Document ID 0242). And techniques and processes developed in the behavioral sciences have led to the development of more effective communication practices for occupational safety and health purposes (NIOSH, 2019, Document ID 0126).

Studies evaluating the effectiveness of precautionary statements and pictograms used in the GHS have led to their evolution and continued revisions (Fagotto, 2003, Document ID 0125; Ta, 2010, Document ID 0115; Ta, 2011, Document ID 0194; Chan, 2017, Document ID 0017).

Holistic programs such as NIOSH's Total Worker Health (TWH) program, where behavioral science is integrated into more traditional risk-management practices, require robust hazard communication practices (Tamers, 2019, Document ID 0076).

In addition to directly enhancing worker protections through improved hazard communication, updating the HCS (based on the GHS) will also improve the availability of important information to support larger efforts to address workplace hazards. For example, NIOSH is exploring the use of aggregate exposures (exposures to a specific chemical or hazard from several different sources) and cumulative risk models for use in setting occupational exposure limits and assessing impacts on worker health (Lentz, 2015, Document ID 0071; Redingert, 2015, Document ID 0100). A real-world example of the potential effects of aggregate exposure comes from the increased use of nanosilver in consumer products. A recent NIOSH review of nanosilver indicates that the current OSHA PEL for silver is adequate to protect workers from silver's adverse health effects (NIOSH, 2018, Document ID 0188). However, a 2013 study looking at the increased presence of nanosilver in consumer products (

e.g.,

use of nanosilver as an antimicrobial in clothing and materials that come into contact with food), and the increased environmental exposures from the manufacture, use, and disposal of these consumer products, indicates that the OSHA PEL may be inadequate to protect workers if nanosilver continues to be added to new consumer products (Balcher, 2013, Document ID 0097). This example highlights the importance of an effective overarching hazard communication strategy in understanding and managing exposures and risk.

Regularly updating the HCS to align with international practices also eases compliance for regulated entities because it provides greater international consistency (Bechtold, 2014, Document ID 0061). Industry groups, such as the American Petroleum Institute (API), have indicated their support for regular HCS updates as long as there is sufficient input from stakeholders (API, 2009, Document ID 0167). During the 2012 rulemaking, numerous safety organizations (including NIOSH, the American Chemical Society (ACS), the American Industrial Hygiene Association (AIHA), the American Society of Safety Engineers (ASSE), and the Society for Chemical Hazard Communication (SCHC)) have publicly supported OSHA's continued updates to the HCS (see 77 FR 17585, 17603, 17604). The Society of Toxicology has also expressed support for updating the HCS to align with the GHS as this “is ani important step toward creating consistent communication about the hazards of chemicals used around the world.” (see 77 FR 17585).

B. Cooperating With International Trading Partners and Other Federal Agencies

In support of the second goal of this NPRM, OSHA expects that the proposed updates to the HCS will facilitate cooperation with international trading partners and other Federal agencies. With respect to the U.S. and Canada specifically, the two countries participate in the RCC, which has a goal to “reduce, eliminate, or prevent unnecessary regulatory differences between both countries while maintaining high levels of protection for health, safety, and the environment” (US-Canada MOU, 2018, Document ID 0252). OSHA continues to work with Health Canada through the RCC to develop guidance documents pertaining to hazard communication issues the two countries share and to work cooperatively through the UN GHS subcommittee (see Section III, Events Leading to the Proposed Modifications to the Hazard Communication Standard). In addition, OSHA and Health Canada share regular updates on regulatory activity. As explained in the Summary and Explanation (see Section XV), a number of the updates OSHA is proposing in this NPRM would align U.S. and Canadian hazard communication practices, thereby facilitating cooperation between the two countries, easing compliance for employers who participate in both markets, and strengthening worker protections by providing harmonized hazard communication standards across trade borders.

In addition, OSHA is proposing to update the requirements for bulk shipment under paragraph (f)(5),

Transportation

to provide additional clarity for shipments that are also regulated by the U.S. Department of Transportation (DOT). For bulk shipments, the proposed new paragraph would increase flexibility by allowing labels to be placed on the immediate container or transmitted with shipping papers, bills of lading, or by other technological or electronic means so that they are immediately available to workers in printed form on the receiving end of the shipment. And in another effort to facilitate inter-agency cooperation, OSHA is proposing new language for paragraph (f)(5) providing that where a pictogram required by the DOT appears on the label for a shipped container, the HCS pictogram for the same hazard may also be provided, but is not required.

C. Responding to Stakeholder Experiences Implementing the 2012 HCS

Finally, some of the proposed changes in this NPRM, those related to labeling of small containers and relabeling requirements for chemicals that have been released for shipment, were developed in response to feedback and comments received from stakeholders since the promulgation of the 2012 updates to the HCS (Collatz, 2015, Document ID 0174; Ghosh, 2015, Document ID 0180). With respect to the labeling of small containers, issues raised by stakeholders included concerns about insufficient space on the label to highlight the most relevant safety information, problems with the readability of information on small labels, and challenges associated with using fold-out labels for certain small containers that need special handling (Watters, 2013, Document ID 0200; Collaltz, 2015, Document ID 0174; Blankfield, 2017, Document ID 0170). The proposed updates to the HCS related to the labeling of small containers are designed to address these issues. Furthermore, OSHA believes that adopting a uniform standard for the labeling of small containers will enhance worker protections by providing more clarity and certainty about the hazards posed by the chemicals contained in such containers (see Section X Summary and Explanation for (f)(12), Small container labelling).

Similarly, the proposed revisions to paragraph (f)(11), which address the relabeling of chemicals that have been released for shipment, are designed to address stakeholder concerns about the difficulty some manufacturers have in complying with paragraph (f)(11), especially in the case of chemicals that travel through long distribution cycles (Kenyon, 2017, Document ID 0182). Many products have straightforward supply chains and are packaged, labeled, and promptly shipped downstream. Other products, for example in the agrochemical sector, are packaged and labeled when they leave the chemical manufacturer's facility, but may reside at a warehouse or distribution facility for extended periods of time (

e.g.,

several years) before being shipped downstream. There are also instances where products may be returned from the downstream users to the distribution facility and then shipped to other customers (NGFA, 2016, Document ID OSHA-2016-0005-0018; AFIA, 2016, Document ID OSHA-2016-0005-0017). OSHA believes the proposed revisions to paragraph (f)(11) to provide that relabeling is not required for chemicals that have been released for shipment and are awaiting future distribution will accommodate these concerns; the proposal would also maintain worker protections by requiring the chemical manufacturer or importer to provide an updated label for each individual container with each shipment.

V. Pertinent Legal Authority

A. Background

The purpose of the Occupational Safety and Health Act of 1970 (the “OSH Act” or “Act”) (29 U.S.C. 651

et seq.

) is “to assure so far as possible every working man and woman in the Nation safe and healthful working conditions and to preserve our human resources.” 29 U.S.C. 651(b). To achieve this goal, Congress authorized the Secretary of Labor to promulgate occupational safety and health standards pursuant to notice and comment. 29 U.S.C. 655(b). An occupational safety and health standard is a standard “which requires conditions, or the adoption or use of one or more practices, means, methods, operations, or processes, reasonably necessary or appropriate to provide safe or healthful employment and places of employment.” 29 U.S.C. 652(8).

The OSH Act also authorizes the Secretary to “modify” or “revoke” any occupational safety or health standard, 29 U.S.C. 655(b), and under the Administrative Procedure Act, regulatory agencies generally may revise their rules if the changes are supported by a reasoned analysis. See

Encino Motorcars, LLC

Navarro,

U.S., 136 S. Ct. 2117, 2125-26 (2016);

Motor Vehicle Mfrs. Ass'n

State Farm Mut. Auto. Ins. Co.,

463 U.S. 29, 42 (1983). In passing the OSH Act, Congress recognized that OSHA should revise and replace its standards as “new knowledge and techniques are developed.” S. Rep. 91-1282 at 6 (1970). The Supreme Court has observed that administrative agencies “do not establish rules of conduct to last forever, and . . . must be given ample latitude to adapt their rules and policies to the demands of changing circumstances.”

Motor Vehicle Mfrs. Ass'n,

463 U.S. at 42 (internal quotation marks and citations omitted).

Before the Secretary can promulgate any permanent health or safety standard, he must make a threshold finding that significant risk is present and that such risk can be eliminated or lessened by a change in practices.

Indus. Union Dep't

Am. Petroleum Inst.,

448 U.S. 607, 642 (1980) (plurality opinion)

(“

Benzene

”). As explained more fully below, OSHA need not make additional findings on risk for this proposal because OSHA previously determined that the HCS addresses a significant risk. 77 FR 17603-17604.

In promulgating a standard under, and making the determinations required by, the OSH Act, OSHA's determinations will be deemed conclusive if they are “supported by substantial evidence in the record considered as a whole.” 29 U.S.C. 655(f). OSHA must use the “best available evidence,” which includes “the latest available scientific data in the field”; “research, demonstrations, experiments, and such other information as may be appropriate”; and “experience gained under this and other health and safety laws.” 29 U.S.C. 655(b)(5).

B. Authority—Section 6(b)(5)

The HCS is a health standard promulgated under the authority of section 6(b)(5) of the OSH Act. See

Associated Builders & Contractors, Inc.

Brock,

862 F.2d 63, 67-68 (3d Cir. 1988);

United Steelworkers of Am.

Auchter,

763 F.2d 728, 735 (3d Cir. 1985); 77 FR 17601. Section 6(b)(5) of the OSH Act provides that in promulgating health standards dealing with toxic materials or harmful physical agents, the Secretary must “set the standard which most adequately assures, to the extent feasible, on the basis of the best available evidence, that no employee will suffer material impairment of health or functional capacity even if such employee has regular exposure to the hazard dealt with by such standard for the period of his working life.” 29 U.S.C. 655(b)(5). Thus, once OSHA determines that a significant risk due to a health hazard is present and that such risk can be reduced or eliminated by an OSHA standard, section 6(b)(5) requires OSHA to issue the standard, based on the best available evidence, that “most adequately assures” employee protection, subject only to feasibility considerations. As the Supreme Court has explained, in passing section 6(b)(5), Congress “place[d] . . . worker health above all other considerations save those making attainment of this `benefit' unachievable.”

Am. Textile Mfrs. Inst., Inc.

Donovan,

452 U.S. 490, 509 (1981) (“

Cotton Dust

”).

C. Other Authority

The HCS is also promulgated under the authority of section 6(b)(7) of the OSH Act. See

United Steelworkers,

763 F.2d at 730; 77 FR 17601. Section 6(b)(7) of the OSH Act provides in part: “Any standard promulgated under this subsection shall prescribe the use of labels or other appropriate forms of warning as are necessary to insure that employees are apprised of all hazards to which they are exposed, relevant symptoms and appropriate emergency treatment, and proper conditions and precautions of safe use or exposure.” 29 U.S.C. 655(b)(7). Section 6(b)(7)'s labeling and employee warning requirements provide basic protections for employees in the absence of specific permissible exposure limits, particularly by providing employers and employees with information necessary to design work processes that protect employees against exposure to hazardous chemicals in the first instance.

The last sentence of section 6(b)(7) provides that the Secretary, in consultation with the Secretary of Health and Human Services, may by rule promulgated pursuant to section 553 of Title 5, make appropriate modifications in the foregoing requirements relating to the use of labels or other forms of warning, monitoring or measuring, and medical examinations, as may be warranted by experience, information, or medical or technological developments acquired subsequent to the promulgation of the relevant standard. 29 U.S.C. 655(b)(7). OSHA used the authority granted by this paragraph to promulgate the 2012 revisions to the HCS, 77 FR 17602, and this provision provides additional authority for the current proposal.

This proposal to update the HCS fits well within the authority granted by the last sentence of section 6(b)(7). The changes proposed would constitute a “modification” of the HCS regarding “the use of labels or other forms of warning.” As explained more fully elsewhere in this preamble, OSHA believes the proposed updates to be “appropriate” based on “experience, information, or medical or technological developments acquired subsequent to the promulgation of the relevant standard.” The updates found in GHS Rev. 7 may be considered a “technological development” that has occurred since the promulgation of the HCS in 2012 and are also “warranted by experience [and] information.” The GHS was negotiated and drafted through the involvement of labor, industry, and governmental agencies, and thus represents the collective experience and information on hazard communication gathered by the participants in these sectors over the last several decades. See 71 FR 53617, 53618-53619.

See also Section III of this preamble, Events Leading to the Proposed Modifications to the Hazard Communication Standard.

The last sentence of section 6(b)(7) requires consultation with the Secretary of Health and Human Services. OSHA briefed NIOSH on this proposal during a collaboration meeting held in December 2018, which was attended by the Director of NIOSH, and NIOSH expressed its support. NIOSH also supported OSHA's update of the HCS in 2012. See 77 FR 17603.

Authority for the HCS is also found in section 8, paragraphs (c) and (g), of the OSH Act. Section 8(c)(1) of the OSH Act empowers the Secretary to require employers to make, keep, and preserve records regarding activities related to the OSH Act and to make such records available to the Secretary. 29 U.S.C. 657(c)(1). Section 8(g)(2) of the OSH Act empowers the Secretary to “prescribe such rules and regulations as he may deem necessary to carry out [his] responsibilities” under the Act. 29 U.S.C. 657(g)(2).

D. Significant Risk

As required for standards promulgated under section 6(b)(5) of the OSH Act, OSHA determined that the HCS would substantially reduce a significant risk of material harm. Most OSHA health standards protect employees by imposing requirements when employees are exposed to a concentration of a hazardous substance that OSHA has found creates a significant risk of material health impairment. Thus, in making the significant risk determination in these cases, OSHA measures and assesses the hazards of employee exposures in order to determine the level at which a significant risk arises.

OSHA took a different approach to its significant risk determination when first promulgating the HCS in 1983. Rather than attempting to assess the risk associated with exposures to each hazardous chemical in each industry to determine if that chemical posed a significant risk in that industry, OSHA took a more general approach. It relied on NIOSH data showing that about 25 million or about 25 percent of American employees were potentially exposed to one or more of 8,000 NIOSH-identified chemical hazards and that for the years 1977 and 1978 more than 174,000 illnesses were likely caused by exposure to hazardous chemicals. 48 FR 53282. OSHA then noted the consensus evident in the record among labor, industry, health professionals, and government that an “effective [F]ederal standard requiring employers to identify workplace hazards, communicate hazard information to employees, and train employees in recognizing and avoiding those hazards” was necessary to protect employee health. 48 FR

53283. OSHA determined that the HCS addressed a significant risk because “inadequate communication about serious chemical hazards endangers workers,” and that the practices required by the standard were “necessary or appropriate to the elimination or mitigation of these hazards.” 48 FR 53321. The U.S. Court of Appeals for the Third Circuit agreed that “inadequate communication is itself a hazard, which the standard can eliminate or mitigate.”

United Steelworkers,

763 F.2d at 735. That court has upheld OSHA's determination of significant risk as sufficient to justify the HCS. See

Associated Builders & Contractors,

862 F.2d at 67-68 (discussing the history of its review of the issue).

OSHA reaffirmed its finding of significant risk in adopting revisions to the HCS in 1994. See 59 FR 6126-6133. When revising the HCS to adopt the GHS model in 2012, OSHA found that there remained a “significant risk of inadequate communication” of chemical hazards in the workplace and that adopting the standardized requirements of the GHS would substantially reduce that risk by improving chemical hazard communications. 77 FR 17603-17604.

In previous rulemakings, OSHA rejected suggestions that the hazard assessment and communication obligations of the HCS should arise only where the downstream use creates a significant risk because it is difficult, if not impossible, for OSHA or manufacturers and importers to know in advance where these risks might occur. See 48 FR 53295-53296; 59 FR 6132. Further, it is only by the provision of hazard information that downstream employers and employees can determine how to use the chemical so that exposure and risk may be minimized. See 48 FR 53295-53296; 59 FR 6132. Thus, the HCS protects employees from significant risk by requiring communications about all chemicals that may present a hazard to employees, regardless of the exposure or risk levels any particular downstream user might actually experience. See

Durez Div. of Occidental Chem. Corp.

OSHA,

906 F.2d 1, 3-4 (D.C. Cir. 1990);

Gen. Carbon Co.

OSHRC,

860 F.2d 479, 484-85 (D.C. Cir. 1988).

For the changes proposed in this NPRM, OSHA has not made a new preliminary finding of significant risk, but is proposing changes that are reasonably related to the purpose of the HCS as a whole. When, as here, OSHA has previously determined that its standard substantially reduces a significant risk, it is unnecessary for the agency to make additional findings on risk for every provision of that standard. See,

e.g.,

Pub. Citizen Health Research Grp.

Tyson,

796 F.2d 1479, 1502 n.16 (D.C. Cir. 1986) (rejecting the argument that OSHA must “find that each and every aspect of its standard eliminates a significant risk”). Rather, once OSHA makes a general significant risk finding in support of a standard, the next question is whether a particular requirement is reasonably related to the purpose of the standard as a whole. See

Asbestos Info. Ass'n/N. Am.

Reich,

117 F.3d 891, 894 (5th Cir. 1997);

Forging Indus. Ass'n

Sec'y of Labor,

773 F.2d 1436, 1447 (4th Cir. 1985);

United Steelworkers of Am., AFL-CIO-CLC

Marshall,

647 F.2d 1189, 1237-38 (D.C. Cir. 1980) (“

Lead I

”).

Furthermore, the Supreme Court has recognized that protective measures like those called for by the HCS may be imposed in workplaces where chemical exposure levels are below that for which OSHA has found a significant risk. In

Benzene,

the Court recognized that the “backstop” provisions of section 6(b)(7) allow OSHA to impose information requirements even before the employee is exposed to the significant risk. See

Benzene,

448 U.S. at 657-58 & n.66. Rather than requiring a finding of significant risk, the last sentence of section 6(b)(7) provides other assurances that OSHA is exercising its authority appropriately by requiring the involvement of the Secretary of Health and Human Services, and by limiting the authority only to modifications that are based on “experience, information, or medical or technological developments” acquired since the promulgation of the standard in the limited areas of hazard communication, monitoring, and medical examinations. Therefore, OSHA need not make any new significant risk findings; rather, the final rule is supported by the significant risk findings that OSHA made when it adopted the current HCS.

See 77 FR 17602.

Section 6(b)(7) of the OSH Act also exempts modifications to hazard communication, monitoring, and medical examination requirements from the standard-setting requirements of section 6(b), and so evidences Congress' intent to provide OSHA with an expedited procedure to update these requirements. The last sentence of section 6(b)(7) merely allows these requirements to be updated to reflect the latest knowledge available. The authorization to use Administrative Procedure Act notice and comment procedures rather than the more elaborate framework established by section 6(b) demonstrates congressional intent to treat such modifications differently from rulemakings to adopt standards. Congress envisaged a simple, expedited process that is inconsistent with the idea that OSHA must undertake additional significant risk analyses before exercising this authority. See 77 FR 17602.

E. Feasibility

Because section 6(b)(5) of the OSH Act explicitly requires OSHA to set health standards that eliminate risk “to the extent feasible,” OSHA uses feasibility analysis to make standards-setting decisions dealing with toxic materials or harmful physical agents. 29 U.S.C. 655(b)(5);

Cotton Dust,

452 U.S. at 509. Feasibility in this context means “capable of being done, executed, or effected.”

Cotton Dust,

452 U.S. at 508-09. Feasibility has two aspects, economic and technological.

Lead I,

647 F.2d at 1264. A standard is technologically feasible if the protective measures it requires already exist, can be brought into existence with available technology, or can be created with technology that can reasonably be expected to be developed. See id. at 1272. A standard is economically feasible if industry can absorb or pass on the cost of compliance without threatening its long-term profitability or competitive structure. See

Cotton Dust,

452 U.S. at 530 n.55;

Lead I,

647 F.2d at 1265. As discussed more fully in Section VII.E of this preamble, Technological Feasibility, OSHA has preliminarily determined that compliance with the proposed revisions to the HCS is technologically feasible for all affected industries because compliance can be achieved with readily and widely available technologies. As discussed more fully in Section VII.G, Economic Feasibility and Impacts, OSHA has preliminarily determined that the proposed changes to the HCS are economically feasible because employers can comply without threatening the long-term profitability or competitive structure of any affected industries.

VI. OMB Review Under the Paperwork Reduction Act of 1995

A. Overview

OSHA is proposing to revise the Hazard Communication Standard (HCS), 29 CFR 1910.1200, which contains collection of information that are subject to review by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (PRA), 44 U.S.C. 3501

et seq.,

and OMB regulations at 5 CFR part 1320. The agency is planning to revise and update the existing previously-approved paperwork package under OMB control number 1218-0072.

The PRA defines “collection of information” to mean “the obtaining, causing to be obtained, soliciting, or requiring the disclosure to third parties or the public, of facts or opinions by or for an agency, regardless of form or

format.” 44 U.S.C. 3502(3)(A). Under the PRA, a Federal agency cannot conduct or sponsor a collection of information unless OMB approves it and the agency displays a currently valid OMB control number. 44 U.S.C. 3507. Also, notwithstanding any other provision of law, no employer shall be subject to penalty for failing to comply with a collection of information if the collection of information does not display a currently valid OMB control number. 44 U.S.C. 3512.

B. Solicitation of Comments

OSHA prepared and submitted an Information Collection Request (ICR) to OMB proposing to revise certain collection of information currently contained in that paperwork package in accordance with 44 U.S.C. 3507(d). The agency solicits comments on the revision of the collection of information requirements and reduction in estimated burden hours associated with these requirements, including comments on the following items:

• Whether the collection of information are necessary for the proper performance of the agency's functions, including whether the information is useful;

• The accuracy of OSHA's estimate of the burden (time and cost) of the collection of information, including the validity of the methodology and assumptions used;

• The quality, utility, and clarity of the information collected; and

• Ways to minimize the compliance burden on employers, for example, by using automated or other technological techniques for collecting and transmitting information.

C. Proposed Information Collection Requirements

As required by 5 CFR 1320.5(a)(1)(iv) and 1320.8(d)(2), the following paragraphs provide information about the ICR.

Title:

Hazard Communication Standard.

Description of the ICR:

The proposal would revise the currently approved Hazard Communication ICR and change the existing collection of information requirements currently approved by OMB.

Brief Summary of the Information Collection Requirements:

This proposal would revise and clarify the collection of information contained in the existing ICR. Specifically, OSHA is proposing to (1) add to paragraph (d)(1) that the chemical manufacturer or importer shall determine for each chemical the hazard classes, and where appropriate, the category of each class that apply to the chemical being classified under normal conditions of use and foreseeable emergencies; (2) add language to paragraph (f)(1) requiring that the chemical manufacturer, importer, or distributor ensure labels on shipped containers bear the date the chemical is released for shipment; (3) revise paragraph (f)(5) by adding two new provisions related to bulk shipments of chemicals; (4) revise paragraph (f)(11) by adding a provision related to release for shipment that requires updated labels accompany each shipment; and (5) add new labeling requirements for small containers at paragraph (f)(12). See Table 1.

BILLING CODE 4510-26-P

EP16FE21.001

EP16FE21.002

EP16FE21.003

EP16FE21.004

BILLING CODE 4510-26-C

OMB Control Number:

1218-0072.

Affected Public:

Business or other for-profit.

Number of Respondents:

2,206,700.

Frequency of Responses:

Varies.

Number of Reponses:

74,019,955.

Average Time per Response:

Varies.

10.

Estimated Annual Total Burden Hours:

7,023,513.

11.

Estimated Annual Total Cost (Operation and maintenance):

$45,676,443.

D. Submitting Comments

Members of the public who wish to comment on the revisions to the paperwork requirements in this proposal must send their written comments to the Office of Information and Regulatory Affairs, Attn: OMB Desk Officer for the Department of Labor, OSHA (RIN-1218-AC93), Office of Management and Budget, Room 10235, Washington, DC 20503, email:

OIRA_submission@omb.eop.gov.

The agency encourages commenters also to submit their comments on the paperwork requirements to the rulemaking docket (Docket Number OSHA-2019-0001) along with comments on other parts of the proposed rule. For instructions on submitting these comments to the rulemaking docket, see the sections of this

Federal Register

document titled

DATES

and

ADDRESSES

. Comments submitted in response to this document are public records; therefore, OSHA cautions commenters about submitting personal information such as Social Security numbers and dates of birth.

E. Docket and Inquiries

To access the docket to read or download comments and other materials related to this paperwork determination, including the complete ICR (containing the Supporting Statement with attachments describing the paperwork determinations in detail) use the procedures described under the section of this document titled

ADDRESSES

You also may obtain an electronic copy of the complete ICR by visiting the web page at:

http://www.reginfo.gov/public/do/PRAMain,

scroll under “Currently Under Review” to “Department of Labor (DOL)” to view all of the DOL's ICRs, including those ICRs submitted for proposed rulemakings. To make inquiries, or to request other information, contact Ms. Seleda Perryman, Directorate of Standards and Guidance, telephone (202) 693-2222.

VII. Preliminary Economic Analysis and Initial Regulatory Flexibility Analysis

A. Introduction and Summary

Under Executive Order 12866, OMB's Office of Information and Regulatory Affairs (OIRA) determines whether a regulatory action is significant and, therefore, subject to the requirements of Executive Order 12866 and OMB review. Section 3(f) of Executive Order 12866 defines a “significant regulatory action” as an action that is likely to result in a rule that (1) has an annual effect on the economy of $100 million or more, or adversely affects in a material way a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or state, local or tribal governments or communities (also referred to as economically significant); (2) creates serious inconsistency or otherwise interferes with an action taken or planned by another agency; (3) materially alters the budgetary impacts of entitlements, grants, user fees, or loan programs, or the rights and obligations of recipients thereof; or (4) raises novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in Executive Order 12866. Upon review, OMB has determined that this proposed rule is a significant regulatory action (“Other Significant”) under Executive Order 12866. Pursuant to the Congressional Review Act (5 U.S.C. 801

et seq.

), OIRA designated that this rule is not a “major rule,” as defined by 5 U.S.C. 804(2).

OSHA has made a preliminary determination that this action is not an economically significant regulatory action under section 3(f)(1) of Executive Order 12866 because it is not likely to have an annual effect on the economy of $100 million or more. This proposed rule is expected to be an Executive Order 13771 deregulatory action. Details on the estimated cost-savings of this rule can be found in the economic analysis below. Executive Order 13563 directs agencies to adopt a regulation only upon a reasoned determination that its benefits justify its costs; tailor the regulation to impose the least burden on society, consistent with obtaining the regulatory objectives; and in choosing among alternative regulatory approaches, select those approaches that maximize net benefits. Executive Order 13563 recognizes that some benefits are difficult to quantify and provides that, where appropriate and permitted by law, agencies may consider and discuss qualitatively values that are difficult or impossible to quantify, including equity, human dignity, fairness, and distributive impacts.

OSHA has prepared this Preliminary Economic Analysis (PEA), including a Preliminary Regulatory Flexibility Analysis Certification, for the proposed modifications to the HCS. Supporting materials prepared by OSHA (including spreadsheets) are available in the public docket for this rulemaking, Docket ID OSHA-2019-0001, through

www.regulations.gov.

OSHA invites comment on any aspects of this PEA.

In this PEA, OSHA estimates that the proposed amendments to the HCS would result in annualized net cost savings of $26.8 million at a 7 percent discount rate. Annualized at a 3 percent discount rate, OSHA estimates that the proposed amendments to the rule would lead to net cost savings of $27.5 million per year. Under a perpetual time horizon to allow for cost comparisons under Executive Order 13771, OSHA estimates that at a discount rate of 7 percent the net cost savings of the proposed amendments to the HCS would be $19.6 million per year in 2016 dollars.

OSHA expects that the proposed revisions to the HCS would also result in modest improvements in worker health and safety above those already being achieved under the current HCS, but the agency is unable to quantify the magnitude of these benefits.

B. Need for Regulation

Employees in work environments covered by OSHA's HCS are exposed to a variety of significant hazards associated with chemicals used in the workplace that can and do cause serious injury, illness, and death. The HCS serves to ensure that both employers and employees are provided the information they need about these chemical hazards. The current HCS contains a set of requirements for chemical products, including mandatory hazard classification, labeling requirements, provisions for providing detailed information (in SDSs), and label updating requirements. These requirements are based on Revision 3 of the GHS, which was adopted by the UN Committee and Sub-Committee of Experts on the GHS in December 2008.

OSHA has preliminarily determined that the proposed revisions to the HCS would make employers' hazard communication programs more worker-protective, efficient, and effective through standardizing practices nationally and internationally. In addition, aligning with the GHS Rev. 7 would continue to facilitate

international trade, as a number of U.S. trading partners are also preparing to align with the GHS Rev. 7.

The proposed revisions to the HCS include the following notable changes to improve the U.S. hazard communication system:

• Maintain alignment with the GHS

○ Adding classification categories for aerosols, desensitized explosives, and flammable gases; and

○ Updating select hazard and precautionary statements for clearer and more precise hazard information.

• Address issues identified in implementing the HCS 2012

○ Updating labeling requirements for small containers; and

○ Updating labeling requirements for packaged containers that have been released for shipment.

As discussed in Section F of this PEA, the estimated costs and cost savings resulting from the proposed revisions to the HCS consist of five main categories: (1) The cost of reclassifying affected chemicals and revising the corresponding SDSs and labels to achieve consistency with the reclassification (per proposed changes to appendix B), and the cost of revising SDSs and labels to conform with new precautionary statements and other new mandatory language in the appendices to the HCS (per proposed changes to appendices C and D); (2) the cost of management familiarization and other management-related costs (associated with all of the proposed revisions to the standard); (3) the cost of training employees as necessitated by the proposed changes to the HCS (see existing 29 CFR 1910.1200(h)(1)); (4) the cost savings resulting from the new released-for-shipment provision (proposed revisions to 29 CFR 1910.1200(f)(11)); and (5) the cost savings from limiting labeling requirements for certain very small containers (proposed 29 CFR 1910.1200(f)(12)). The first three categories are considered to be one-time costs and the last two categories are cost savings that would accrue to employers annually.

The proposed changes to the HCS would maintain the uniformity of hazard information with the GHS and would, accordingly, serve to improve the efficiency and effectiveness of the existing hazard communication system in the U.S., ensure that updated and advanced HCS methods are recognized, and reduce unnecessary barriers to trade. In short, the GHS is a “uniformity standard” for the presentation of hazard information (Hemenway, 1975, Document ID 0050). Much like other uniformity standards, such as driving on the right side of the road (in the U.S.), screw threads for fire hose connectors, “handshake” protocols for communication between computers, and, for that matter, language, the GHS provides significant efficiencies and economies.

A specification standard, such as an engineering standard, would spell out, in detail, the equipment or technology that must be used to achieve compliance. The usual rationale for a specification standard is that compliance would be difficult to verify under a performance standard; hence, a specification standard would better protect employees against the risk in question. A specification standard would generally not provide the efficiencies or economies (such as easier, less expensive training on uniform pictograms and a uniform SDS format made possible by the GHS) to the regulated community that a uniformity standard would. On the contrary, a specification standard could impose additional costs on some firms that may be able to effectively protect workers using a cheaper alternative approach if such flexibility were permitted.

It is also worth noting that, for uniformity standards with technological implications, the benefits of reduced information costs, economies of uniformity, and facilitation of exchange may need to be weighed against possible losses of flexibility, experimentation, and innovation. However, because the GHS is limited to the presentation of hazard information and does not involve other than incidental technological or strategic considerations, the possible costs of uniformity here would be minuscule.

Since publication of the update to the HCS in 2012, there continues to be movement by U.S. trading partners toward maintaining standardization, consistent with the revisions in the GHS. However, OSHA does not believe that full and comprehensive standardization in accordance with the GHS, or the goal of harmonizing the U.S. system with the international one, can be achieved voluntarily in the absence of regulation.

First, the market alone will not ensure alignment with the GHS Rev. 7. In some cases (

e.g.,

aerosols, desensitized explosives), the GHS Rev. 7 contains different hazard classes or classification criteria than the current HCS, and it would be impermissible for a manufacturer to comply with the GHS Rev. 7 rather than the criteria in the existing HCS. Moreover, making compliance with the latest revision of the GHS optional undermines the goal of harmonizing classification criteria and label elements. Second, while the costs of creating SDSs and labels are borne directly by the chemical producers, maintaining alignment with the GHS benefits the users of hazardous chemicals. These users include employers who are direct customers of chemical manufacturers, employees who use or are exposed to workplace chemicals, and emergency responders who typically have no market relationship with the chemical producers. Even if market forces could ensure the socially optimal approach to SDSs between chemical manufacturers and their customers, there are limited market forces at work between the chemical manufacturer and two key sets of users—the employees and the emergency response community. Therefore, the benefits achieved by maintaining alignment with the GHS are unlikely to be obtained in the private market without regulation.

OSHA recognizes that there will be

some

market pressure to align with the GHS Rev. 7 as its adoption expands internationally.

Some firms in the U.S. may think that they have no need to follow the GHS because they do not ship their products internationally. These firms may not realize the extent to which they are involved in international trade. There are probably few companies that have products that are never involved in international trade or that never import chemical products requiring hazard information.

Nonetheless, even the small percentage of U.S. companies that only conduct business domestically are required to identify and communicate hazards to workers under the HCS. Many chemical producers ship their products to distributors and are unaware of where their products are ultimately used. These distributors might well put pressure on their suppliers to maintain compliance with the GHS. Further, small companies sell chemicals to larger companies. The larger companies may use those chemicals to make other products that are exported. These larger companies might also pressure their small-firm suppliers to align with the GHS. Nevertheless, relying solely on market pressures would surely involve a long transition period, with attendant

losses in worker protection and production efficiencies, and it is unlikely that the market alone will ensure full alignment with the GHS for reasons described above.

See

https://www.unece.org/fileadmin/DAM/trans/doc/2018/dgac10c4/ST-SG-AC10-C4-70e.pdf,

pp. 12-13 (UN GHS, 2018, Document ID 0040).

According to the U.S. International Trade Commission, U.S. imports of chemicals and related products increased 23 percent from 2015 ($260.4 billion) to 2019 ($320.1 billion); and U.S. exports of chemicals and related products increased 7 percent from 2015 ($227.7 billion) to 2019 ($243.7 billion). See

https://usitc.gov/research_and_analysis/trade_shifts_2019/chemicals.htm,

accessed October 2, 2020 (Document ID 0234). The International Trade Administration reported that the U.S. chemical industry accounted for 18 percent of global chemical shipments. See

https://www.selectusa.gov/chemical-industry-united-states,

accessed October 2, 2020 (Document ID 0236). The American Chemistry Council reported that in 2019, total U.S. chemical exports accounted for 10 percent of all U.S. goods exports and 10 percent of all global chemical exports. See

https://www.americanchemistry.com/Policy/Trade/US-Chemicals-Trade-by-the-Numbers.pdf,

accessed October 2, 2020 (Document ID 0235).

The proposed changes to the HCS would involve costs and cost savings mainly for manufacturers and importers. Manufacturers and importers of chemicals would also achieve benefits—in part because they themselves benefit as both producers and users, and in part as a result of foreign trade benefits. Some manufacturers may not obtain trade benefits unless they engage in chemical export. International harmonization of hazard communication requirements may also make it easier for small companies to engage in international trade if they so desire (see additional discussion below in VII.D. Health and Safety Benefits and Unquantified Positive Economic Effects).

Of more significance to the concerns of the OSH Act, the proposed changes would also provide health benefits from improved hazard classification and communication; although unquantified in this proposal, these benefits would include reductions in worker illnesses, injuries, and fatalities (see additional discussion below in VII.D. Health and Safety Benefits and Unquantified Positive Economic Effects).

Because many of the health and safety benefits and cost savings described in this analysis require uniformity and are dispersed among a network of producers and users, only some of which have direct market relationships with each other, OSHA believes maintaining a single, uniform standard can best achieve the full benefits available from a hazard communications system.

C. Profile of Affected Industries, Establishments, and Employees

The proposed modifications to the standard include revised criteria for classification of certain health and physical hazards; revised labeling provisions for small containers and packages that have been released for shipment; revised trade secret disclosure requirements; updates to certain aspects of SDSs and precautionary statements; and related revisions to definitions of terms used in the standard.

In this section, OSHA presents a preliminary profile of industries affected by this proposal to revise the HCS. The profile data in this section are based upon the 2012 HCS final economic analysis (FEA), updated in this PEA with the most recent data available.

As a first step, OSHA identifies the North American Industry Classification System (NAICS) industries affected by the proposed changes to the HCS. Next, OSHA provides statistical information on the affected industries, including the number of affected entities and establishments; the number of workers whose exposure to the chemicals subject to the HCS could result in injury, illness, or death (“affected relevant employees”); and the average revenues and profits for affected entities and establishments by six-digit NAICS industry.

This information is provided for each affected industry as a whole, as well as for small entities, as defined by the Small Business Administration (SBA), and for “very small” entities, defined by OSHA as those with fewer than 20 employees, in each affected industry (U.S. Census Bureau, 2020a, Document ID 0231; U.S. Census Bureau, 2020b, Document ID 0232).

The Census Bureau defines an establishment as a single physical location at which business is conducted or services or industrial operations are performed. The Census Bureau defines a business firm or entity as a business organization consisting of one or more domestic establishments in the same state and industry that are specified under common ownership or control. The firm and the establishment are the same for single-establishment firms. For each multi-establishment firm, establishments in the same industry within a state will be counted as one firm; the firm employment and annual payroll are summed from the associated establishments. (U.S. Census Bureau, Document ID 0047).

The revisions to the HCS would affect establishments in a variety of different industries in which employees are exposed to hazardous chemicals or in which hazardous chemicals are produced. The proposed changes to the HCS are not expected to change the overall list of affected industries or establishments. However, the changes are expected to affect certain establishment groupings that manufacture aerosols, desensitized explosives, and flammable gases. These proposed changes are also expected to affect certain manufacturers of hazardous chemicals that are packaged in small containers and manufacturers of chemicals that are not immediately distributed after being released for shipment.

The proposed revisions define and revise specific classifications and categories of hazards, but the scope of the requirements under which a chemical (whether a substance or mixture of substances) becomes subject to the standard is not substantially different from the current version of the HCS. Therefore, OSHA believes that the revisions would have little or no effect on whether specific establishments fall within the scope of the standard. OSHA requests comments on its preliminary determinations about the scope of the proposed revisions to the HCS and the details within the industrial profile presented in this section.

OSHA's estimates of the number of employees who will require new training under the proposed revisions to the standard are based on BLS' (2020) Occupational Employment Statistics data for May 2019, specifically the estimates of the number of employees in SOC 51-0000 Production Occupations and SOC 13-1081 Logisticians working in firms in the NAICS industries that would be affected by the proposed requirements to reclassify aerosols, desensitized explosives, and flammable gases.

(See the analysis and discussion of training costs below in VII.F. Compliance Costs and Cost Savings.)

The NAICS industries estimated to be affected by the proposed requirement to reclassify aerosols, desensitized explosives, and flammable gases are the following: 211130 Natural Gas Extraction, 324110 Petroleum Refineries, 325110 Petrochemical Manufacturing, 325120 Industrial Gas Manufacturing, 325320 Pesticide and Other Agricultural Chemical Manufacturing, 325412 Pharmaceutical Preparation Manufacturing, 325510 Paint and Coating Manufacturing, 325520 Adhesive Manufacturing, 325611 Soap and Other Detergent Manufacturing, 325612 Polish and Other Sanitation Good Manufacturing, 325613 Surface Active Agent Manufacturing, 325620 Toilet Preparation Manufacturing, and 325920 Explosives Manufacturing. Bureau of Labor Statistics (BLS, 2020). Occupational Employment Statistics—May 2019 (Released March 3, 2020). Available at

https://www.bls.gov/oes/#data

(Accessed April 3, 2020) (Document ID 0223).

Table VII-1 provides an overview of the estimated numbers of firms, establishments, and employees in each covered NAICS industry; the estimated number of employees in covered occupations (

e.g.,

logistics personnel); and the estimated numbers of affected firms, affected establishments, and affected employees in covered occupations.

Tables VII-2 and VII-3, respectively, provide parallel information for all affected business entities defined as small by the SBA

and all affected very small business entities, defined by OSHA as those with fewer than 20 employees. The data in

these tables update the estimates provided in the FEA in support of the 2012 HCS final rule (Document ID 0005, Section VI) and rely on the most recent comprehensive set of data (including revenues) available from the U.S. Census Bureau (2020a; 2020b).

The overall percentage of firms, establishments, or employees affected is based on the largest percentage affected for any single cost item—as shown in Table VI-10 later in this section. To estimate the overall number of affected firms, establishments, and employees, OSHA multiplied the total number of firms, establishments, and employees by the maximum percentage of firms, establishments, and/or employees affected by any single provision. Because most of the NAICS industries shown in the table would be affected by rule familiarization, this percentage is 100 percent for most of the NAICS industries shown.

For the 2019 SBA U.S. Small Business Administration Table of Small Business Size Standards matched to North American Industry Classification System Codes (Effective August 19, 2019),(see SBA, 2019, Document ID 0225).

U.S. Census Bureau, Statistics of U.S. Businesses, 2017

https://www.census.gov/data/tables/2017/econ/susb/2017-susb-annual.html

(Document ID 0231) and

https://www.census.gov/data/datasets/2017/econ/susb/2017-susb.html

(Document ID 0232) (accessed August 14, 2020).

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The costs and cost savings of some of the proposed provisions (new classification criteria for select hazards and labels on very small containers) are

driven by the number of SDSs (and labels) that manufacturers must redesign as a result of the new criteria and the number of labels on very small containers. In support of the cost analysis to follow later in this PEA, Table VII-4 presents OSHA's preliminary estimate of the number of labels per container by container size (and type).

Starting with the fifth row (container type: 250 ml container), Table VII-4 is drawn from data in a table (Table VI-5) presented in the FEA in support of the 2012 HCS final rule (77 FR 17640), but OSHA has updated the data to include smaller containers to permit evaluation of the impacts of the small container and very small container labeling provisions proposed in paragraph (f)(12). Also, the term “jug” has been changed to the more generic term “container.” The figures in Table VII-4 are slightly different than some of the figures in Table VI-5 of the 2012 FEA due to a change in OSHA's approach to rounding and the reporting of more significant digits.

As reflected in Table VI-4, OSHA assumes one outer packaging with an additional label for every two 2.5-gallon containers; one outer packaging with an additional label for every four 1-liter, 2-liter, and 1-gallon containers; and one outer packaging with an additional label for every eight containers smaller than 1 liter.

Table VII-4—Chemical Container Estimated Typical Shipment Weights

Container type

Estimated shipment weight (lbs.)

Minimum

Typical

Maximum

Number of

labels per

container

3 ml container

0.01

1.13

30 ml container

0.06

0.08

0.13

1.13

60 ml container

0.12

0.16

0.26

1.13

125 ml container

0.25

0.33

0.54

1.13

250 ml container

0.50

0.67

1.08

1.13

500 ml container

0.92

1.26

2.08

1.13

1 liter container

1.84

2.51

4.16

1.25

2 liter container

3.57

4.92

8.22

1.25

1 gallon container

6.83

9.38

15.63

1.25

2.5 gallon container

18.00

24.38

40.00

1.50

5 gallon drum

34.95

47.71

78.95

1.00

30 gallon drum

202.00

278.56

466.00

1.00

55 gallon drum

371.00

511.37

855.00

1.00

275 gallon tote

1,830.00

2,531.84

4,250.00

1.00

330 gallon tote

2,196.00

3,038.21

5,100.00

1.00

Tank Truck—5.5k g

34,100.00

48,136.79

82,500.00

0.00

Tank Truck—7.0k g

43,400.00

61,265.00

105,000.00

0.00

Rail Car—20k g

128,805.00

181,825.77

311,625.00

0.00

Rail Car—30k g

186,000.00

262,564.29

450,000.00

0.00

Barge

2,670,774.00

3,770,160.58

6,461,550.00

0.00

Assumes 8 units per package for containers smaller than 1 liter, 4 units per package for containers from 1 liter to 1 gallon in volume, and 2 units per package for 2.5-gallon containers.

Source: U.S. DOL, OSHA, Directorate of Standards and Guidance, Office of Regulatory Analysis-Health.

As will be discussed at greater length below in Section VII.F. Compliance Costs and Cost Savings, it is OSHA's understanding that chemical manufacturers and importers periodically review, revise, and update the electronic templates they use to create SDSs and labels. Changes are made, for example, as information regarding specific hazards becomes available, new information about protective measures is ascertained, or revisions are made to product information and marketing materials. Labels and SDSs are also produced and modified when products are first introduced to the market or when products change. In this PEA, the terms “electronic templates” and “electronic files” are used interchangeably with, and as proxies for, the term “SDS.” All three terms refer to the electronic files that are used to generate SDSs and labels. Table VII-5 provides, by covered NAICS industry, estimates of the total number of labels, the number of labels on very small containers (containers of 3 ml capacity or less), the total number of SDSs, and the number of labels and SDSs affected by the proposed revisions to the HCS classification criteria. The term “SDS” in the column headers and in the discussion below represents the estimated number of electronic templates (files) that are used to create SDSs and labels. The derivation of these estimates is discussed below. OSHA invites public comment on its understanding about the use of electronic template files to create SDSs and labels.

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OSHA's estimate of the total number of SDSs per NAICS industry, as presented in Table VII-5, was developed by its contractor to support

the agency's FEA for the 2012 final standard.

The analysis started with the number of SDSs per establishment by establishment size, as originally derived in the economic analysis in support of the 2009 proposed HCS rule (Document ID 0029) using a sampling of company websites and the SDSs posted there.

The analysis then combined the estimated number of SDSs per establishment by establishment size with the estimated number of establishments to estimate the weighted average number of SDSs per establishment in a given NAICS industry. This estimate was then multiplied by the average number of establishments per firm to estimate the number of SDSs per firm for each NAICS industry. Multiplying by the number of firms per NAICS industry yields the total number of SDSs in each NAICS industry (as shown in Column 5 of Table VII-5). Although OSHA has preliminarily determined that this methodology remains sound, the agency invites public comment on the reasonableness of this methodology for the current analysis.

Technical and analytical support for this preliminary economic analysis was provided by Eastern Research Group, Inc. under Contract No. DOL-OPS-16-D-0012.

This methodology was not challenged by commenters during the rulemaking that resulted in the 2012 final rule.

OSHA's estimate of the number of labels per NAICS industry is constructed using the same methodology developed in the 2012 HCS final rule (Document ID 0005, pp. 17634-17643), but with more recent data. The steps in the analysis, elaborated on below, can be summarized as follows:

• Begin with data on shipment weight by commodity code and shipment weight class.

• Estimate the average weight per container for containers of various sizes.

• Allocate the tons shipped in each shipment weight class for certain sizes of containers.

• Divide the tons shipped by the average container weight to estimate total containers.

• Multiply the containers by the average number of labels per container to estimate total labels.

• Allot the labels among NAICS codes using receipts data.

The label analysis begins with the U.S. Census Bureau and the U.S. Department of Transportation's jointly-produced Commodity Flow Survey (CFS) (U.S. Census Bureau, 2014a, Document ID 0024) data on shipment characteristics by commodity and shipment weight. This dataset includes the number of tons shipped for a range of shipment weight classes by Standard Classification of Transported Goods (SCTG) code. The number of tons is converted to pounds, and limited to hazardous non-consumer products (

i.e.,

those that would have the HCS labeling).

This estimate is used in conjunction with another CFS dataset (U.S. Census Bureau, 2014b, Document ID 0030) that has shipment data by NAICS industry (but not by shipment weight) to divide the detailed shipment weight data into shipments coming from manufacturers and distributors.

The estimated percentages for the transported goods identified as hazardous non-consumer products were presented in the 2012 HCS FEA cost model. See ERG/OSHA, 2012, Document ID 0029). At the time OSHA developed this PEA, the final 2017 CFS data was not yet available. Therefore, 2012 CFS data was the most recent information available. OSHA requests public comments on the estimated percentages for the transported goods identified as hazardous non-consumer products in this preliminary profile.

The next step in the methodology estimated the representative weight per container for a variety of types of containers (ranging in size from a 3-milliliter vial to a rail car) and substances (such as antifreeze, diesel fuel, paint). Using representative substances, OSHA estimated the shipment weight for one container of each size as

Shipment Weight = (Product Weight per gallon × Container Capacity) + Container Weight

. Because of a lack of available data establishing the percentage of products shipped by container type (

i.e.,

the breakdown of the types of products shipped by each container type), the calculation for each product and container type relied on professional judgment (by OSHA and its economic contractor, ERG) to select a “typical” product weight per gallon and container weight for each container type. Next, the analysis estimated shipment weight per container by multiplying the average product weight per gallon times the number of gallons per container, plus the container weight.

To convert the CFS data on tons (or pounds) shipped by container size into a number of containers, the analysis estimated the percentage of each shipment class likely to be shipped in certain sizes of containers. Shipments of lower weights are generally estimated to be shipped in smaller containers, and vice versa. Then the total non-consumer hazardous pounds shipped (from the CFS data) was multiplied by the estimated percentage shipped in each container type to yield the number of non-consumer hazardous pounds in each container type. Finally, the non-consumer hazardous pounds in each container type was divided by the average weight per container type to yield an estimate of the total number of containers.

To estimate the number of labels that would be used on these containers, the analysis first estimated the average number of labels on a single container for each container size (from Table VII-4 above). As previously noted, these estimates account for the fact that some containers have outer packaging that would require an additional label under this proposed rule (

e.g.,

kits containing containers less than 100 ml where tags and fold out labels are infeasible) or are shipped with several containers grouped into a single outer container with a label. This average number of labels per container for each shipment size class was then multiplied by the number of containers to estimate the total number of labels.

The final step in the analysis was to allocate the number of labels shipped from SCTG codes to NAICS codes. The NAICS-to-SCTG mapping was adapted from the mapping used in the FEA in support of the 2012 HCS final rule analysis, but with NAICS categories updated from 2007 to 2017 categories. U.S. Census (2020a; 2020b) Statistics of U.S. Businesses data was used to estimate each NAICS industry's share of total receipts for the SCTG code with which it corresponds, and then the number of labels in each SCTG was allocated proportionally. (This calculation was performed separately for shipments from manufacturers and from distributors for purposes of estimating cost savings due to the proposed released-for-shipment provision in paragraph (f)(11)). This resulted in the estimated number of labels shown in Column 3 of Table VII-5.

For example, NAICS 211130—Natural Gas Extraction is categorized as a basic chemicals manufacturer, or Code 20 in the SCTG commodity coding system. Across the range of container types and container weights shown in Table VII-4, the analysis led to an estimate of the total number of labels (474,629,165) required by all SCTG Code 20 manufacturers (see Document ID 0049, tab “Labels per NAICS”, cell O11). The percentage of receipts (22.3 percent) for NAICS 211130 relative to total receipts for SCTG Code 20 employers (Document ID 0049, tab “Labels per NAICS”, cells N11-P11) was then applied to this total number of labels. The result, shown in Column 3 in Table VII-5, is an estimated 105,723,103 labels for NAICS 2111130. Note that multiplying factors may yield a slightly different total due to rounding of the factors in the table (but not in the spreadsheet).

To estimate the number of labels on very small containers (those on containers with a volume capacity of 3 ml or less), the same analysis was performed, but it was limited to containers in that size range. The resulting estimates of the number of

labels on very small containers is shown in Column 4 of Table VII-5.

Not every SDS and label, and not every label on very small containers, would be affected by the proposed rule. Only SDSs and labels for certain products (aerosols, desensitized explosives, and flammable gases) would be affected by the new classification criteria. Only certain very small containers would be covered by proposed paragraph (f)(12)(iii), which would eliminate some labeling requirements in certain circumstances. In particular, under proposed paragraph (f)(12)(iii), only a product identifier would be required on the immediate outer package of very small containers (3 ml or less) where the manufacturer, importer, or distributor can demonstrate that a label would interfere with the normal use of the container and that it is not feasible to use pull-out labels, fold-back labels, or tags containing the full label information. Thus, in addition to the estimated total number of SDSs, labels, and labels on very small containers, Table VII-5 shows the number of each estimated to be affected by this proposed rule.

Note that OSHA's cost estimates for reclassifying affected chemicals and revising the corresponding SDSs and labels to achieve consistency with the reclassification (per proposed changes to Appendix B), and for revising SDSs and labels to conform with new precautionary statements and other new mandatory language in the appendices to the HCS (per proposed changes to Appendices C and D), are based on the costs associated with chemical manufacturers editing their electronic files (which are used to produce labels and SDSs) for each product for which reclassification would be required as a result of the proposed rule. They are not based on the number of labels or SDSs actually produced or used.

Tables VII-6 and VII-7, respectively, provide information on total numbers of SDSs, labels, and labels on very small containers, and on the numbers of SDSs and labels (including labels on very small containers) affected by reclassification and the provisions for labels on very small containers, for all covered small entities and very small entities.

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Table VI-8 shows average estimated profit rates for affected NAICS industries based on IRS (2016)

SOI Tax Stats—Corporation Source Book

profit data for each of the 14 years 2000-

2013.

Table VII-9 presents estimates of total revenues and total profits by NAICS industry code for all entities, small entities, and very small entities affected by this proposed rule. OSHA calculated total profits per NAICS industry by multiplying the average profit rate (NAICS industry) (IRS, 2016, Document ID 0004) by total revenues (NAICS industry) (U.S. Census Bureau, 2020a, Document ID 0231; U.S. Census Bureau, 2020b, Document ID 0232).

IRS, 2016, Document ID 0004.

Table VII-10 shows, by NAICS industry code, OSHA's best estimates of the percentage of establishments or entities estimated to be affected for each element of the proposed revisions to the HCS that is projected to result in costs (see Section VII.F. Compliance Costs and Cost Savings in this PEA for an explanation of the cost categories presented in this table).

Note that the provisions that are projected to result in cost savings are not included in Table VII-10 because, for those provisions, OSHA estimates a percentage of product, rather than a percentage of entities or establishments, that would be affected.

Finally, Table VII-11 summarizes key estimates for the combined covered industries, labels, and SDSs affected by this proposed rule. The data in this table are drawn from profile tables presented earlier in this PEA and summarize both the magnitude of the global profile metrics (within the scope of Federal OSHA jurisdiction) and the magnitude of affected inputs critical to the agency's analysis of preliminary economic impacts.

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Table VII-11—Characteristics of Industries and Labels/SDSs Affected by OSHA's Proposed Revisions to the HCS

Total

Percentage

affected

Affected

Firms

6,077,430

1.91

115,758

Establishments

7,780,863

1.96

152,427

Relevant Employees

148,004,068

2.82

4,178,738

Labels Being Revised Due to Chemical Reclassification and Labels Revisions

1,512,219,200

63.55

961,053,993

Labels for Very Small Containers

147,599,473

17.21

25,394,066

Firms w/Warehoused Labels that Change

230

1.00

2.30

SDSs

1,519,506

94.40

1,434,377

Sources: U.S. Census Bureau, 2020a (Document ID 0231); U.S. Census Bureau, 2020b (Document ID 0232); U.S. Census Bureau, 2019a (Document ID 0227); BLS, 2020 (Document ID 0223); U.S. DOL, OSHA, Directorate of Standards and Guidance, Office of Regulatory Analysis-Health.

Note:

Due to rounding, data derived by applying the percentages shown in the table to the figures shown in the “Total” column may not be identical to the figures shown in the “Affected” column.

The data in this table are drawn from tables presented earlier in this PEA (for firms, establishments and employees, see Table VII-1; for labels and SDSs, see Table VII-5).

D. Health and Safety Benefits and Unquantified Positive Economic Effects

As part of the rulemakings that resulted in promulgation of the original HCS in 1983, and the 1987 updates, OSHA conducted research to identify and estimate expected health and safety benefits, as described in the preambles to those final rules (48 FR 53327-53329; 52 FR 31868-31869). Combining the 1983 and 1987 rulemakings, OSHA estimated that the HCS would prevent 31,841 non-lost-workday injuries and illnesses, 20,263 lost-workday injuries and illnesses, 6,410 chronic illnesses, and 4,260 fatalities (77 FR 17621). In the 2012 final rule to modify the HCS to conform with the GHS, OSHA estimated that compliance with those revisions to the HCS would result in additional health and safety benefits equal to one percent of the previously-estimated health and safety benefits—that is, they would result in the prevention of an additional 318 non-lost-workday injuries and illnesses, 203 lost-workday injuries and illnesses, 64 chronic illnesses, and 43 fatalities annually (77 FR 17620-17624).

Relative to the HCS rulemakings that resulted in the promulgation of final rules in 1983, 1987, and 2012, these proposed revisions to the HCS are incremental and minor. Accordingly, OSHA expects that the proposed revisions to the standard will result in more modest improvements in employee health and safety than the estimated benefits OSHA attributed to the earlier rulemakings. But OSHA expects that the promulgation of the proposed revisions to the HCS

will

result in an increased degree of health and safety for affected employees and a corresponding reduction in the annual numbers of injuries, illnesses, and fatalities associated with workplace exposures to hazardous chemicals. Aligning with the GHS Rev. 7 will improve worker health and safety by ensuring the provision of more and better hazard information to employers and workers. For example, OSHA anticipates that the improved criteria for aerosols and flammable gases and the new hazard class for desensitized explosives, along with updated precautionary statements, will better differentiate the hazards associated with those chemicals. In addition, the proposed released-for-shipment provisions will remove the risk of injury and chemical exposures for employees who previously would have confronted the possibility of, for example, having to break down pallets of sealed, shrink-wrapped, packaged containers to replace labels when new hazards were identified.

Although OSHA expects that the proposed revisions to the HCS would reduce injuries, illnesses, and fatalities, the limited scope and nature of the changes being proposed have led OSHA to a preliminary determination that it cannot reasonably quantify an estimate of how many injuries, illnesses, and fatalities would be prevented. As the agency noted in the 2012 FEA, any assessment of benefits that are incremental to the original estimated benefits,

e.g.,

benefits associated with minor improvements to an existing standard, broaden the range of uncertainty associated with the original estimates (77 FR 17621).

OSHA invites interested parties to provide comments and evidence on how the proposed revisions to the HCS are likely to affect worker safety and health.

As described above, OSHA estimated that the 2012 revisions to the HCS would result in benefits equal to one percent of the health and safety benefits previously estimated for the standard (77 FR 17620-17624). In the 2012 rulemaking, OSHA and stakeholders collectively noted the considerable uncertainty inherent in estimating benefits that are additional (incremental) to the set of benefits associated with the original rule (see 77 FR 17620-17624). The agency stated: “OSHA believes that a reasonable range for the magnitude of the health and safety benefits resulting from the proposed revisions would be between 0.5 percent and 5 percent of the benefits associated with the current HCS.” (77 FR 17621 (n 14)). In addition, OSHA stated in the 2012 FEA that “[i]t is conceivable that actual benefits might be somewhat lower, but because the GHS is expected to result, in some situations, in more timely and appropriate treatment of exposed workers, OSHA expects that actual benefits may be larger, perhaps several times larger.” (77 FR 17621)

In addition to the aforementioned health and safety benefits, OSHA expects that the proposed revisions to the HCS would result in other positive economic effects. For example, being better aligned with the GHS would help facilitate international trade, thereby enhancing competition, increasing export opportunities for U.S. businesses, reducing costs for imported products, and generally expanding the selection of chemicals and products available to U.S. businesses and consumers. As a result of the direct savings expected to result from better harmonization and the associated increase in international competition, prices for the affected chemicals and products, and the corresponding goods and services that use them, should decline, even if only to a limited extent.

Similarly, better alignment between the HCS and the GHS would have the additional benefit of meeting the international goals for adoption and implementation of the GHS that have been supported by the U.S. government.

Maintaining alignment with the GHS in U.S. laws and policies through appropriate legislative and

regulatory action was anticipated by the U.S. when it supported international mandates regarding the GHS in the Intergovernmental Forum on Chemical Safety, the World Summit on Sustainable Development, and the United Nations. It is also consistent with the established goals of the Strategic Approach to International Chemical Management that the U.S. helped to craft.

The EU, Canada, Australia, and New Zealand have also indicated that they are proposing updates to align with the 7th revision to the GHS (Report of the Sub-Committee of Experts on the Globally Harmonized System of Classification and Labelling of Chemicals on its thirty-fifth session ST/SG/AC.10/C.4/7, Document ID 0040).

https://2009-2017.state.gov/e/oes/eqt/chemicalpollution/83012.htm

(SAICM, 2006, Document ID 0039).

E. Technological Feasibility

In accordance with the OSH Act, OSHA is required to demonstrate that occupational safety and health standards promulgated by the agency are technologically feasible. A standard is technologically feasible if the protective measures it requires already exist, can be brought into existence with available technology, or can be created with technology that can reasonably be expected to be developed. See Lead I, 647 F.2d at 1272.

OSHA has reviewed the requirements that would be imposed by the proposed rule and has assessed their technological feasibility. As a result of this review, OSHA has preliminarily determined that compliance with the requirements of the rule is technologically feasible for all affected industries.

The proposed revisions to OSHA's HCS would require manufacturers and importers to reclassify aerosols, desensitized explosives, and flammable gases in accordance with the new classification criteria and make corresponding revisions to SDSs and labels. Compliance with these requirements would mainly involve revisions to the presentation of information and is not expected to involve any technological obstacles.

The proposed changes to the requirements for the labeling of very small containers, which would eliminate full labeling requirements for some containers with a volume capacity of 3 ml or less, is expected to address current feasibility issues related to labeling these small containers. When a label would interfere with the normal use of the container, and it is not feasible to use pullout labels, fold-back labels, or tags containing full label information, the proposal would require the container to bear only the product identifier, which could be etched onto the container itself. Similarly, the proposed released-for-shipment provisions would alleviate employer concerns regarding the practicability of breaking down pallets of sealed, shrink-wrapped packaged containers to replace labels when new hazards are identified. OSHA requests public comment on any employer concerns associated with the proposed provision for labeling very small containers or with the proposed provision addressing the relabeling of containers that have been released for shipment.

OSHA has preliminarily determined that compliance with all of the requirements of the proposed revisions to the HCS can be achieved with readily and widely available technologies. No new technologies are required for compliance with the proposed modifications to the HCS. Therefore, OSHA believes that there are no technological constraints associated with compliance with any of the proposed revisions to the HCS. OSHA invites comment on these preliminary findings of technological feasibility.

F. Compliance Costs and Cost Savings

Introduction

This section presents OSHA's estimates of the costs and cost savings expected to result from the proposed revisions to the HCS. The estimated costs and cost savings are based on employers achieving full compliance with the new requirements of the proposed rule. They do not include prior costs and cost savings associated with firms whose current practices are already in compliance with the proposed requirements (where prior compliance is possible).

The estimated costs and cost savings resulting from the proposed revisions to the HCS consist of five main categories: (1) The cost of revising SDSs and labels for select hazardous chemicals to reflect chemical reclassifications (per proposed changes to appendix B) and to conform to language criteria in precautionary statements and other mandatory language (per proposed changes to appendices C and D); (2) the cost of management familiarization and other management-related costs (associated with all of the proposed revisions to the standard); (3) the cost of training employees as necessitated by the proposed changes to the HCS (see existing 29 CFR 1910.1200(h)(1)); (4) the cost savings due to the new released-for-shipment provision (proposed revisions to 29 CFR 1910.1200(f)(11)); and (5) the cost savings from limiting labeling requirements for certain very small containers (proposed 29 CFR 1910.1200(f)(12)). The first three categories are considered to be one-time costs and the last two categories are cost savings that would accrue to employers annually. Although OSHA has preliminarily determined that these are the only elements of the proposed revisions to the HCS that are expected to result in more than

de minimis

costs or cost savings, OSHA requests comments on whether any other proposed changes to the standard could cause employers to incur costs or obtain cost savings.

The estimated compliance costs do not include any indirect costs or impacts that may result from the reclassification or relabeling of chemicals and products already subject to the HCS, such as possible changes in production or in demand for products. Theoretically, such impacts, if any, with regard to possible changes in the uses and applications of affected chemicals, could result in costs or cost savings. OSHA expects that such effects, if any, will not be significant, but the agency would welcome input from stakeholders. This is consistent with the determination OSHA made with regard to reclassification costs for the 2012 final rule (77 FR 17625).

In order to present compliance costs and cost savings on a consistent and comparable basis across various regulatory activities, they are expressed in annualized terms. Annualized costs and cost savings represent the most appropriate measure for assessing the longer-term potential impacts of this proposed rulemaking and for purposes of comparing net costs across diverse regulations with a consistent metric. In addition, annualized net costs are often used for accounting purposes to assess the cumulative net costs of regulations on the economy or specific parts of the economy across different regulatory programs or across years.

As presented in this PEA (unless otherwise specified), a seven percent discount rate was applied to costs and cost savings arising in future years to calculate the present value of these costs and cost savings for the base year in which the standard becomes effective, and the same discount rate was then applied to the total present value costs, over a 10-year period, to calculate the annualized cost.

The economic effects

using a three percent discount rate are also provided in the Excel spreadsheets that support this PEA, which are contained in the docket (OSHA, 2020, Document ID 0049).

OSHA annualized costs for this proposed rule over a 10-year period in accordance with Executive Order 13563, which directs agencies “to use the best available techniques to quantify anticipated present and future benefits and costs as accurately as possible.” In addition, OMB Circular A-4 states that analysis should include all future costs and benefits using a “rule of reason” to consider for how long it can reasonably predict the future and limit its analysis to this time period. The 10-year annualization period is the one OSHA has traditionally used in rulemakings. Note, however, that OSHA used a 20-year annualization period for the 2012 HCS final rule (77 FR 17625), but that was

because of the 5-year phase-in of some provisions. This proposed rule does not have any lengthy phase-in provisions, supporting OSHA's decision to use a 10-year annualization period for this PEA.

For the purpose of calculating loaded wage rates, OSHA did not include an overhead labor cost in the FEA in support of the 2012 HCS final standard. The Department of Labor has since determined that it is appropriate, in some circumstances, to account for overhead expenses as part of the methodology used to estimate the costs and economic impacts of OSHA regulations. For this PEA, in addition to applying fringe benefits to hourly (“base”) wages, OSHA also applied an overhead rate when estimating the marginal cost of labor in its primary cost calculation.

Overhead costs are indirect expenses that cannot be tied to producing a specific product or service. Common examples include rent, utilities, and office equipment; however, there is no general consensus on the cost elements that fit the definition of overhead in the context of occupational safety and health. The lack of a common definition has led to a wide range of overhead estimates. Consequently, the treatment of overhead costs needs to be case-specific. For this PEA, OSHA has adopted an overhead rate of 17 percent of base wages, which is consistent with the overhead rate and methodology used for (1) sensitivity analyses in the FEA in support of the 2017 final rule delaying the deadline for submission of OSHA Form 300A data (82 FR 55761, 55765 (Nov. 24, 2017)); and (2) the FEA in support of OSHA's 2016 final standard on Occupational Exposure to Respirable Crystalline Silica (81 FR 16285, 16488-16492 (March 25, 2016)).

This methodology was modeled after an approach used by the Environmental Protection Agency. More information on this approach can be found at U.S. Environmental Protection Agency, “Wage Rates for Economic Analyses of the Toxics Release Inventory Program,” June 10, 2002 (Ex. 2066) (Document ID 0046). This analysis itself was based on a survey of several large chemical manufacturing plants: Heiden Associates,

Final Report: A Study of Industry Compliance Costs under the Final Comprehensive Assessment Information Rule,

prepared for the Chemical Manufacturers Association, December 14, 1989 (Ex. 2065) (Document ID 0048).

To calculate the total labor cost for an occupational category, OSHA added together three components: Base wage + fringe benefits (derived as 45.8 percent of the base wage)

+ applicable overhead costs (derived as 17 percent of the base wage). For example, the median hourly wage of an Occupational Health and Safety Specialist is $35.63. Applying a fringe markup of 45.8 percent (applied to the base wage) and an overhead rate of 17 percent (applied to the base wage) yields a fully-loaded hourly wage of $ $58.00 ($35.63 × .458 = $16.32; $35.63 × 0.17 = $6.11; $35.63 + $16.32 + $6.11 = $58.00). Note that, for this labor category, the fringe markup is equal to 28.13 percent of the fully-loaded hourly wage and that the overhead rate is equal to 10.53 percent of the fully-loaded hourly wage. Using this methodology, OSHA calculated the fully-loaded labor cost for four occupational categories: (1) Manager, Standard Occupational Classification (SOC) code 11-0000, $82.70; (2) Logistics Personnel, SOC code 13-1081, $58.51; (3) Production Worker, SOC code 51-0000, $28.18; and (4) Occupational Health and Safety Specialist, SOC code 19-5011, $58.00. (For further details, see Document ID 0049, tab “Wages”.)

In June of 2019, BLS reported: “Employer costs for employee compensation for civilian workers averaged $36.77 per hour worked in March 2019 . . . Wages and salaries cost employers $25.22 while benefit costs were $11.55.” The fringe markup of 31.4 percent of total compensation ($11.55/$36.77) is equivalent to a benefits markup of 45.8 percent in relation to the base wage ($11.55/$25.22). (BLS, 2019, Document ID 0224).

Table VII-12 shows the estimated annualized compliance costs and cost savings by cost category and by industry sector. All costs and cost savings are reported in 2019 dollars. As shown in Table VII-12, the total annualized net cost savings of compliance with the proposed rulemaking is estimated to be $26.8 million—consisting of about $4.4 million of annualized costs and $31.1 million of annual cost savings. Note that where tables in this PEA report estimated annualized costs, as in Table VII-12, cost savings appear as a negative number.

As shown by the three-digit NAICS Subsectors 325 (for Chemical Manufacturing) and 424 (for Merchant Wholesalers, Nondurable Goods) in Table VII-12, most of the estimated compliance costs and cost savings associated with the proposed rule would be incurred or realized by the chemical manufacturing industry and its distributors. However, the table also shows that familiarization costs would be spread across most manufacturing and wholesale industries in the U.S. economy subject to OSHA's jurisdiction, reflecting the fact that employee exposures to hazardous chemicals occur in many industry sectors.

OSHA expects that all compliance costs would be incurred in the first year, as the proposed rule would incorporate a one-year transition period into the compliance schedule for the standard. Specifically, for purposes of estimating the annualized compliance costs, OSHA assumed that the compliance costs associated with chemical reclassification, employee training, and management familiarization would be incurred in the first year following the effective date of the proposed revisions to the HCS.

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Estimation of Compliance Costs and Cost Savings

The remainder of his section explains how OSHA calculated the estimated compliance costs and cost savings arising from the proposed rule by describing the data and methodology used.

The major elements of the proposed revisions to the HCS that involve compliance costs or cost savings are (1) the cost of revising SDSs and labels for select hazardous chemicals to reflect chemical reclassifications (per proposed changes to appendix B) and to conform to language criteria in precautionary statements and other mandatory language (per proposed changes to appendices C and D); (2) the cost of management familiarization and other management-related costs necessary to ensure compliance with the revised standard (associated with all of the proposed revisions to the standard); (3) the cost of training employees as necessitated by the proposed changes to the HCS (see existing 29 CFR 1910.1200(h)(1)); (4) cost savings from the new released-for-shipment provision (proposed revisions to 29 CFR 1910.1200(f)(11)); and (5) cost savings from limiting labeling requirements for certain very small containers (proposed 29 CFR 1910.1200(f)(12)).

The estimated compliance costs and cost savings presented in this analysis of the proposed revisions to the HCS are based partly on analysis conducted in support of the 2012 HCS final rule (77 FR 17605-17683) and partly on new analysis prepared with the assistance of OSHA's contractor, ERG.

The estimated costs of compliance with most provisions of the proposed rule involve wages paid for the labor hours required to fulfill the requirements. In some cases, compliance could be achieved by purchasing services or products in lieu of paying employees directly. The estimated compliance costs are intended to capture the resources required for compliance regardless of how individual establishments may choose to achieve compliance.

With the exception of the proposed revision to the standard addressing precautionary statements and other mandatory language, for this cost analysis OSHA estimated a baseline compliance of zero percent. The agency's estimate of baseline compliance for the revisions in appendices C and D addressing precautionary statements and other mandatory language are discussed below in the section, Revisions to SDSs and Labels Due to Revised Precautionary Statements.

Costs Associated With Reclassifications and Revisions to Safety Data Sheets and Labels

The proposed revisions to the HCS will not change the existing requirement for firms that sell hazardous chemicals to employers to provide information about the associated hazards. Information must be presented in an SDS in the format specified in the standard, and some information must also be presented on product labels. The proposed rule would require affected chemical manufacturers to revise SDSs and labels for select hazardous chemicals to reflect chemical reclassifications (appendix B) and to conform to language criteria in precautionary statements and other mandatory language (appendices C and D). Revisions to SDSs and labels would be required under provisions in the existing HCS, which require chemical manufacturers and importers to update SDSs and labels within three months and six months, respectively, of becoming aware of significant new information regarding the hazards of the chemicals they produce or import (see 29 CFR 1910.1200(f)(11), (g)(5)).

It is OSHA's understanding that chemical manufacturers and importers periodically review, revise, and update the electronic templates they use to create SDSs and labels. Changes are made, for example, as information regarding specific hazards becomes available, new information about protective measures is ascertained, or revisions are made to product information and marketing materials. Labels and SDSs are also produced and modified when products are first introduced to the market or when products change. Therefore, there is a regular cycle of change for these documents (see 77 FR 17634-17637 in the FEA of the 2012 final rule for a discussion of factors that compel employers to update SDSs and labels voluntarily). The proposed rule would require limited changes to some SDSs and labels. Given the phase-in period for the proposed changes to the standard,

OSHA expects that chemical manufacturers and importers would be able to phase in revisions to their labels and SDSs in accordance with the normal cycle of change, and therefore would not need to replace existing labels or SDSs. OSHA requests comments on this preliminary assumption.

OSHA proposes that the revisions become effective 60 days after publication (paragraph (j)(1)) and that chemical manufacturers, importers, and distributors evaluating substances comply with all modified provisions within one year after the effective date (paragraph (j)(2)). OSHA also proposes that chemical manufacturers, importers, and distributors evaluating mixtures comply with all modified provisions within two years after the effective date (paragraph (j)(3)).

OSHA has, however, estimated costs for the time it will take to update the electronic files that will be used to generate new SDSs and labels in accordance with the proposed revisions to the HCS. OSHA developed cost estimates based on the methodology used in its FEA in support of the 2012 HCS final rule (77 FR 17634-17637). The estimated compliance costs represent the incremental costs that would be incurred to achieve compliance with the proposed rule. These estimated costs, shown below in Tables VII-13 and VII-14, would be in addition to the costs that already need to be incurred to comply with applicable requirements of the existing HCS and represent the time it would take to identify the changes that need to be made to the relevant computer files (

i.e.,

the files that are used to generate SDSs and labels) and then to make those changes.

Producers of affected chemicals already have an obligation, under the existing HCS, to ensure that the information provided in their SDSs and labels is accurate and current (29 CFR 1910.1200(f)(2) and (g)(5)). They also are generally required to revise SDSs and labels in accordance with new information regarding hazards that may be associated with their products (29 CFR 1910.1200(f)(11) and (g)(5)). For every affected product that is newly created, reformulated, mixed with new ingredients, modified with new or different types of additives, or has any changes made in the proportions of the ingredients used, chemical manufacturers and importers are required, under the existing HCS, to review the available hazard information (29 CFR 1910.1200(d)(2)), to classify the chemical in accordance with applicable hazard criteria (29 CFR 1910.1200(d)(1)), and to develop corresponding SDSs (29 CFR 1910.1200(g)) and labels (29 CFR 1910.1200(f)). OSHA is not estimating costs for activities already required; rather, the agency is estimating costs for activities that would be newly conducted in conformance with the proposed revisions to chemical reclassifications (appendix B) and language criteria in precautionary statements and other mandatory language (appendices C and D).

Revisions to SDSs and Labels Due to Chemical Reclassification

The NAICS industries listed in Columns 1 and 2 of Table VII-13 are those that OSHA expects would manufacture aerosols, desensitized explosives, or flammable gases. Of course, not all chemicals covered in these NAICS industries are aerosols, desensitized explosives, or flammable gases. Column 3 of Table VII-13 reflects OSHA's judgment that approximately 50 percent of the SDSs (or more specifically, 50 percent of the electronic templates (files) that are used to produce SDSs and labels) in these NAICS industries would be affected by the proposed requirements for aerosols, desensitized explosives, and flammable gases. OSHA invites public comments on its preliminary projection that 50 percent of the electronic files for SDSs and labels would be affected in these industries.

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OSHA derived the number of directly affected electronic files for SDSs and labels in Column 4 of Table VII-13 by applying the 50 percent factor to the overall number of affected SDSs (electronic files) from Table VII-5. For

example, in NAICS 211130, Table VII-5 shows the overall number of affected SDSs (technically, the number of electronic files) is 15,810. Applying a factor of 50 percent, OSHA estimated that 7,905 SDSs (electronic files) would be directly affected by the reclassification provision (see Table VII-13, NAICS 211130 within the section “Total/Average”). All of the estimates of directly affected SDSs (electronic files) presented in Table VII-13 are similarly derived from Table VII-5, but only those NAICS industries with affected SDSs (electronic files) are reported in Table VII-13.

The estimated compliance costs associated with the reclassification of hazards and related changes to SDSs and labels are directly related to the number of chemicals for which electronic files will need to be updated in order to prepare updated SDSs and labels. OSHA developed estimates of the number of potentially affected SDSs for each of the industries producing the corresponding chemicals and products (based on estimates of the total number of SDSs (and the supporting electronic files) by industry as shown in Table VII-5 of this PEA). OSHA expects downstream users, distributors, and wholesalers would continue to rely on SDSs and labels provided by manufacturers to fulfill their obligations under the OSHA standard, and would not incur costs associated with chemical reclassification under the proposed revisions to the HCS. It is OSHA's understanding that this has been the practice for decades.

Table VII-13 also contains estimates of the amount of time OSHA expects it will take to update electronic files for SDSs and labels under the proposed revisions to the standard. OSHA believes that the estimates provided in Table VII-13 are reasonable because they reflect only the incremental time needed to identify affected labels and SDSs (electronic files) and to update electronic files through modification of the templates that are used to prepare labels and SDSs, without allocating costs to any time that would be spent updating files in the absence of any revisions to the HCS.

OSHA also believes that the estimated time to update SDSs and labels (electronic files) used in this analysis represents a reasonable average for most chemicals. In the FEA in support of the 2012 HCS final rule (77 FR 17635-17637), OSHA estimated that a Health and Safety Specialist would spend between three and seven hours per SDS requiring reclassification—with smaller entities, having fewer SDSs, incurring larger costs per SDS. The revisions to the HCS currently being proposed are significantly more limited in scope than the 2012 final rule, with fewer affected hazard categories and more limited changes; however, the proposed revisions to the standard still present opportunities for scale efficiencies in reclassification. As a result, OSHA estimates that a Health and Safety Specialist would spend about 25 percent as much time to reclassify a chemical as OSHA estimated for the 2012 HCS rule—depending on establishment size, from 0.75 hours to 1.75 hours per SDS (electronic file) requiring reclassification (1.75 hours per SDS for establishments with fewer than 100 employees; 1.25 hours per SDS for establishments with 100-499 employees; and 0.75 hours per SDS for establishments with 500 or more employees).

At a loaded hourly wage (including overhead) of $58.00 for a Health and Safety Specialist, this would result in unit costs of $101.51, $72.51, and $43.50 per SDS for small, medium, and large establishments, respectively. Multiplying these unit costs by the estimated number of affected chemicals (

i.e.,

electronic files) and summing the totals yields an undiscounted one-time estimated cost of $6.4 million for affected employers to comply with this provision. Annualizing this one-time cost using a 7 percent discount rate over a 10-year period results in estimated annualized costs of approximately $915,095 for reclassification in accordance with the criteria specified in the proposed revisions to the HCS. OSHA invites interested parties to comment on these cost estimates and the assumptions underlying them.

Note that OSHA estimated no baseline compliance for chemical manufacturers already having revised electronic files to reflect reclassified chemicals as specified in the proposed rule; the current HCS does not allow SDSs or labels to display chemical classifications that are not in conformance with the current rule.

Revisions to SDSs and Labels Due to Revised Precautionary Statements, etc.

The proposed revisions to the HCS would require establishments to revise their electronic templates for SDSs and labels to conform to formatting and language criteria in precautionary statements and other mandatory language specified in appendices C and D. Under the proposed changes to the standard, affected establishments would have to update labels and SDSs for select hazardous chemicals to include updated signal word(s), hazard statement(s), pictogram(s), and precautionary statement(s) for each hazard class and associated hazard category (see existing 29 CFR 1910.1200(f) and (g)). The modification of SDSs and labels under the revisions proposed in appendices C and D would involve conforming to formatting and language standards, but would not require any additional testing, studies, or research. As previously stated, OSHA believes that chemical manufacturers and importers generally review, revise, and update their electronic templates for SDSs and labels periodically, such that there is a regular cycle of change for these documents.

The proposed changes to the appendices would require only limited changes to the electronic content of SDSs and labels, and, as explained previously, OSHA expects that the phase-in period for the proposed changes to the standard would allow chemical manufacturers and importers to take advantage of the normal cycle of change to phase in the revisions to their labels and SDSs, and therefore that it would not be necessary to replace existing labels or SDSs.

OSHA requests comments on this preliminary assumption.

See discussion in the 2012 preamble (77 FR 17634).

The estimated compliance costs for revising electronic templates for SDSs and labels to conform to formatting and language criteria in precautionary statements and other mandatory language specified in the proposed revisions to appendices C and D represent the incremental costs that would be incurred to achieve compliance with the proposed changes to the appendices. These estimated costs, shown below in Table VII-14, would be in addition to the costs that are already incurred to comply with applicable requirements of the existing HCS.

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Table VII-14 shows the estimated costs associated with modifications to electronic templates for SDSs and labels to conform to formatting and language

criteria in precautionary statements and other mandatory language specified in the proposed revisions to appendices C and D by NAICS industry and establishment size. The NAICS industries listed in Columns 1 and 2 of Table VII-14 are those that OSHA expects would need to update SDSs and labels under the proposed revisions to appendices C and D. The industries included are the ones OSHA identified as incurring costs for SDSs in the FEA in support of OSHA's 2012 HCS final rule (77 FR 17644-17650). The estimated costs associated with the proposed revisions to the appendices are directly related to the number of SDSs (or, in other words, the number of electronic templates) affected. These numbers were previously derived and presented in Tables VII-5, VII-6, and VII-7.

As described above in the discussion explaining Table VI-5, OSHA's estimate of the total number of SDSs per NAICS industry was developed to support the agency's FEA for the 2012 final standard. The analysis started with the number of SDSs per establishment by establishment size, as originally derived in the economic analysis in support of the 2009 proposed revisions to the HCS using a sampling of company websites and the SDSs posted there. (ERG, 2012, Document ID 0029). The analysis then combined the estimated number of SDSs per establishment by establishment size with the estimated number of establishments to estimate the weighted average number of SDSs per establishment in a given NAICS industry. This estimate was then multiplied by the average number of establishments per firm to estimate the number of SDSs per firm for each NAICS industry. Multiplying by the number of firms per NAICS industry yields the total number of SDSs in each NAICS industry (as shown in Column 5 of Table VI-5). Although OSHA has preliminarily determined that this methodology remains sound, the agency invites public comment on the reasonableness of this methodology for the current analysis.

OSHA estimates that the time needed to revise electronic templates for labels and SDSs to comply with the proposed revisions to appendices C and D would vary by establishment size and would be equal to 10 percent of the unit time (from 3 to 7 hours per SDS (electronic template)) estimated in the 2012 FEA (77 FR 17635-17637), as the changes the proposed revisions would require are relatively minor in comparison to the types of changes costed in 2012.

As shown in Column 4 of Table VII-14, OSHA estimates that Health and Safety Specialists would spend 0.7 hours per SDS (electronic template) in small establishments with fewer than 100 employees; 0.5 hours per SDS in medium establishments with 100 to 499 employees; and 0.3 hours per SDS in large establishments with 500 or more employees to comply with the proposed mandatory changes to appendices C and D. Multiplying these labor burdens by the loaded hourly wage of $58.00 results in unit costs for Health and Safety Specialists of $40.60, $29.00, and $17.40 per SDS for small, medium, and large establishments, respectively.

36 By comparison, the 2012 rule changes included completely revised SDS formats, the addition of pictograms, and various other revisions for specific SDS sections and chemical designations. Note that there are no estimated new software costs associated with the proposed revisions to the standard, as there were for the 2012 final rule, because OSHA expects that the necessary software is already in place in those larger firms for which the software is economically justified.

As in the FEA for the 2012 HCS final rule, OSHA anticipates that some manufacturers, particularly larger ones heavily involved in international trade, have already adopted the mandatory language proposed in appendices C and D. For the affected NAICS industries, OSHA estimates baseline compliance rates of 75 percent for establishments with 500 or more employees, 25 percent for establishments with 100 to 499 employees, 5 percent for establishments with 20 to 99 employees, and 1 percent for establishments with fewer than 20 employees.

These baseline compliance rates are the same ones OSHA used in the 2012 FEA (77 FR 17636).

As noted above, because the current HCS does not allow SDSs or labels to display chemical classifications that are not in conformance with the current rule, OSHA estimated no baseline compliance for chemical manufacturers already having revised electronic files to reflect reclassified chemicals as specified in the proposed rule. With respect to the mandatory language proposed in Appendices C and D, however, SDSs and labels could present standards stricter than seen under previous GHS revisions (for example, if mandatory language is adopted internationally by consensus) and still remain in conformance with the current HCS standard. Therefore, baseline compliance can be non-zero for industry practices involving use of precautionary statements and other mandatory language.

Multiplying the number of affected SDSs (electronic files) by the unit cost of Health and Safety Specialists, and accounting for the relevant non-compliance rates,

results in an estimated total one-time cost associated with revising SDSs and labels to conform to the proposed appendix language on precautionary statements and other mandatory language. As shown in Column 7 of Table VII-14, this total one-time cost is estimated to be about $18.4 million. Annualizing this one-time cost using a 7 percent discount rate over a 10-year period results in estimated annualized costs of approximately $2.6 million for affected employers to revise SDSs and labels to comply with the proposed revisions to appendices C and D. OSHA invites interested parties to provide comments on these cost estimates and the assumptions underlying them.

That is, mathematically, (1—the relevant baseline compliance rate). Estimated non-compliance rates are shown in Column 6 of Table VI-14 by employment size for each affected NAICS industry.

The estimates of total costs in Table VII-14 are included within a broader cost category shown earlier in the aggregate costs presented in Table VII-12. Column 5 of Table VII-12 displays, by NAICS code, the combined annualized cost estimates for reclassifying chemicals (from Table VII-13) and revising SDSs and labels to be consistent with the precautionary statements and other language specified in the proposed revisions to the mandatory appendices (from Table VII-14).

Management Familiarization and Other Management-Related Costs

In order to implement the proposed new requirements in the HCS, or determine whether they need to implement any of the revisions to the standard, all employers currently covered by the standard would need to become familiar with the updates OSHA is making as part of this rulemaking. The nature and extent of the familiarization required would vary depending on the employer's business.

In the 2012 HCS final rule (77 FR 17637-17638), OSHA estimated that eight hours of time per manager, or an equivalent cost, would be associated with the necessary familiarization and implementation of revisions to hazard communication programs in affected establishments in the manufacturing sector.

This proposed rule would require some changes to hazard communication programs in affected establishments, but those changes would be significantly less extensive than those required by the 2012 rule. Therefore, OSHA believes that much less time would be needed for familiarization and implementation under this proposed rule than was necessary under the 2012 rule.

Larger employers were estimated to have greater familiarization costs for the 2012 HCS final rule because they have more managers.

For the present proposed rule, OSHA estimates that management familiarization time would vary by establishment size. It would also vary depending on whether an establishment would simply be familiarizing itself with the proposed rule or would also need to take further action because it would be affected by one or more of the proposed changes to the standard. Above in Section VII.C Profile of Affected Industries, Establishments, and Employees, Table VII-10 presents, by NAICS industry, the percentage of establishments (and for training,

entities) expected to be affected by rule familiarization and whether those establishments or entities would incur additional costs or no additional costs—that is, whether those establishments or entities would or would not incur additional costs for revising SDSs/labels or for training employees as a result of the proposed rule.

In terms of manufacturing establishments that would have costs in addition to management familiarization costs resulting from the provisions of the proposed rule, OSHA estimates that there are 38,018 small establishments (those with fewer than 20 employees), 11,273 medium establishments (those with 20 to 499 employees), and 394 large establishments (those with 500 or more employees). In terms of establishments that would not have costs other than management familiarization costs resulting from the provisions of this proposed rule, OSHA estimates that there are 79,500 small establishments, 22,657 medium establishments, and 467 large establishments; their only costs associated with this proposal would be as a result of rule familiarization.

Wholesalers in NAICS 424910 and NAICS 424950 are not expected to incur costs for revising SDSs/labels or for training employees, but OSHA expects that they will be affected by the provisions of the proposed rule that are anticipated to result in cost savings.

Note that the numbers of small, medium, and large establishments reported above are derived in the “Rule Fam” tab of the OSHA spreadsheet in support of this proposed rule (see Document ID 0049).

To estimate unit costs, OSHA first considered establishments that would incur costs, in addition to rule familiarization costs, because of the proposed rule. As noted earlier, for the 2012 FEA OSHA applied a Manager hourly wage to estimate familiarization costs. For this PEA, because the new requirements found within this proposed standard would be significantly less extensive than those required by the 2012 rule, OSHA expects that the employer will delegate to a Health and Safety Specialist the responsibility for management familiarization of the new requirements found within this proposed standard. OSHA requests public comment on the agency's preliminary assumptions for estimating the cost of management familiarization.

For small establishments, OSHA estimated management familiarization costs of 0.5 hours of a Health and Safety Specialist's labor time. For medium establishments, OSHA estimated 2 hours of a Health and Safety Specialist's labor time. For large establishments, OSHA estimated 8 hours of a Health and Safety Specialist's labor time. Multiplying these labor burdens by the loaded hourly wage of $58.00 results in estimated management familiarization costs per establishment of $29.00, $116.01, and $464.04 for small, medium, and large establishments, respectively.

For establishments that would not incur other costs as a result of the proposed rule, OSHA estimates that rule familiarization will take half as long; in those cases, management will not need to devote as much time to considering (or making compliance decisions about) the provisions in the proposed rule that are expected to result in costs. Therefore, OSHA adopted estimates of 0.25 hours, 1 hour, and 4 hours of a Health and Safety Specialist's labor time for small, medium, and large establishments, respectively. Multiplying these labor burdens by the loaded hourly wage of $58.00 results in management familiarization costs per establishment of $14.50 for small establishments, $58.00 for medium establishments, and $232.02 for large establishments.

These management familiarization costs per establishment are multiplied by the relevant number of small, medium, and large establishments, resulting in an estimated undiscounted one-time familiarization cost of $5.2 million. Annualizing this one-time cost using a 7 percent discount rate over a 10-year period results in an estimate of annualized costs of $735,894. Table VII-15 presents the detailed unit values factoring into OSHA's estimate of management-related costs. The distribution of these management-familiarization costs by NAICS code is displayed in Column 3 of Table VII-12. OSHA invites interested parties to provide comments on these cost estimates and the assumptions underlying them.

Table VII-15—Total Costs Associated With Management Familiarization With the Proposed Revisions to the HCS

[by establishments size, 2019 dollars]

Small

establishments

(<20 employees)

affected

Medium

establishments

(20-499 employees)

affected

Large

establishments

(≥ 500 employees)

affected

Total

Directly Affected Establishments

Total Establishments

38,018

11,273

394

49,685

Wage

$58.00

Hours

0.50

2.00

8.00

Unit Cost Per Establishment

$29.00

$116.01

$464.04

Total One-Time Cost

$1,102,609

$1,307,771

$182,830

$2,593,210

Total Annualized Cost (7%)

$156,987

$186,197

$26,031

$369,215

Indirectly Affected Establishments

Total Establishments

79,500

22,657

467

102,624

Wage

$58.00

Hours

0.25

1.00

4.00

Unit Cost Per Establishment

$14.50

$58.00

$232.02

Total One-Time Cost

$1,152,841

$1,314,209

$108,353

$2,575,403

Total Annualized Cost (7%)

$164,139

$187,114

$15,427

$366,679

Total

Total Establishments

117,518

33,930

861

152,309

Total One-Time Cost

$2,255,450

$2,621,980

$291,183

$5,168,613

Total Annualized Cost (7%)

$321,125

$373,311

$41,458

$735,894

Source: U.S. DOL, OSHA, Directorate of Standards and Guidance, Office of Regulatory Analysis-Health.

Note:

Figures may not add to totals due to rounding.

Costs Associated With Training Employees

For this preliminary economic analysis, OSHA estimated the incremental costs to train chemical production employees who are covered by, and are already trained in accordance with, the existing standard but would need to receive additional training to become familiar with the updates to SDSs and labels for impacted aerosols, desensitized explosives, and flammable gases.

This analysis is described below. OSHA is not estimating any training costs for users of aerosols, desensitized explosives, or flammable gases in the workplace. OSHA does not believe that these users would need to dedicate more than a trivial amount of time to training associated with the reclassification of these chemicals. This is because the hazards associated with these chemicals have not changed. The only thing that would change under the proposed revisions to the HCS is the way the hazards are classified. For example, users of pyrophoric gases should already have rec

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