Hazard Communication Standard

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:

Final rule.

SUMMARY:

OSHA is amending the Hazard Communication Standard (HCS) to conform to the United Nations' Globally Harmonized System of Classification and Labelling of Chemicals (GHS), primarily Revision 7 (Rev. 7), 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, while enhancing the effectiveness of the standard. Consistent with Executive Order 13563 and the Regulatory Flexibility Act, which call for assessment and, where appropriate, modification and improvement of existing rules, OSHA has reviewed the existing HCS. The agency has determined that the revisions in this final rule 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 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, new provisions related to trade secrets, technical amendments related to the contents of safety data sheets (SDSs), and related revisions to definitions of terms used in the standard.

DATES:

This final rule is effective July 19, 2024. The incorporation by reference of certain publications listed in this final rule is approved by the Director of the Federal Register as of July 19, 2024. The incorporation by reference of certain other publications listed in the rule was approved by the Director as of July 15, 2019.

ADDRESSES:

In compliance with 28 U.S.C. 2112(a), the agency designates Edmund C. Baird, Associate Solicitor for Occupational Safety and Health, Office of the Solicitor, Room S-4004, U.S. Department of Labor, 200 Constitution Avenue NW, Washington, DC 20210, as the recipient of petitions for review of this final rule.

Docket:

To read or download comments or other material in the docket, go to Docket No. OSHA-2019-0001 at

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. For example, the Document ID number for the 2021 HCS Notice of Proposed Rulemaking (NPRM) is OSHA-2019-0001-0258. Some Document ID numbers also include one or more attachments.

When citing exhibits in the docket, OSHA includes the term “Document ID” followed by the last four digits of the Document ID number. For example, document OSHA-2019-0001-0258 would appear as Document ID 0258. Citations may also include the attachment number (designated “Att.”) or other attachment identifier, if applicable, page numbers (designated “p.”, or “Tr.” for pages from a hearing transcript), and in a limited number of cases a footnote number (designated “Fn.”).

This information can be used to search for a supporting document in the docket at

www.regulations.gov

. Contact the OSHA Docket Office at (202) 693-2350 (TTY number: 877-889-5627) for assistance in locating docket submissions.

FOR FURTHER INFORMATION:

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 Tiffany DeFoe, Director, Office of Chemical Hazards—Metals, Directorate of Standards and Guidance, Occupational Safety and Health Administration, U.S. Department of Labor; telephone: (202) 693-1950; email:

defoe.tiffany@dol.gov

.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Executive Summary

II. Introduction

III. Events Leading to the Revised Hazard Communication Standard

IV. Need and Support for the Revised Hazard Communication Standard

V. Pertinent Legal Authority

VI. Final Economic Analysis and Regulatory Flexibility Analysis

VII. OMB Review Under the Paperwork Reduction Act of 1995

VIII. Federalism

IX. State Plans

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. Summary and Explanation of the Final Rule

XV. Issues and Options Considered

List of Subjects in 29 CFR Part 1910

Authority and Signature

I. Executive Summary

The Globally Harmonized System of Classification and Labelling of Chemicals (GHS) has been implemented around the world. In 2012, OSHA revised its Hazard Communication Standard (HCS), 29 CFR 1910.1200, to align with Revision 3 (Rev. 3) of the GHS (77 FR 17574). However, the GHS is updated with improvements and clarifications every two years. This rulemaking amends the HCS primarily to align with Revision 7 (Rev. 7) of the GHS, published in 2017, where appropriate. OSHA is also finalizing updates to address specific issues that have arisen since the 2012 rulemaking and to provide better alignment with other U.S. agencies and international trading partners, while enhancing the effectiveness of 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. 601

et seq.

) which require retrospective analysis 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) (29 U.S.C. 651

et seq.

) to assure, as far as possible, safe and healthful working conditions for workers. As part of this effort, OSHA first promulgated the HCS in 1983 to provide a standardized approach to workplace hazard communication associated with exposure to hazardous chemicals. The HCS requires chemical manufacturers or importers to classify the hazards of chemicals they produce or import. It also 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. This final rule

does not change the fundamental structure of the HCS.

OSHA has determined that the amendments to the HCS contained in this final rule enhance the effectiveness of the standard by ensuring that employees are appropriately apprised of the chemical hazards to which they may be exposed. The 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 provisions addressing the labeling of small containers and the relabeling of chemicals that have been released for shipment); 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 Executive Orders 12866 and 13563, the Regulatory Flexibility Act, and the Unfunded Mandates Reform Act (2 U.S.C. 1501

et seq.

), OSHA has prepared a Final Economic Analysis (FEA), including a Final Regulatory Flexibility Analysis Certification, for the final modifications to the HCS (see the full FEA in Section VI of this notice). Supporting materials prepared by OSHA, such as cost-estimate spreadsheets, are available in the public docket for this rulemaking, Docket ID OSHA-2019-0001, through

www.regulations.gov.

In the FEA, OSHA estimates that, annualized at a 7 percent discount rate, the final rule would result in net cost savings of $29.8 million per year, 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 final rule would result in net cost savings of $30.7 million per year. OSHA also expects that the final revisions to the HCS will 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 VI.D: Health and Safety Benefits and Unquantified Positive Economic Effects).

BILLING CODE 4510-26-P

ER20MY24.135

BILLING CODE 4510-26-C

II. Introduction

This preamble includes a review of the events leading to the final rule, a discussion of the reasons why OSHA finds these modifications to the HCS necessary, the final economic analysis and regulatory flexibility analysis for the standard, and an explanation of the specific revisions OSHA is making to the standard.

Section XIV: Summary and Explanation of the Final Rule is organized by paragraph of regulatory text affected by this update, followed by the appendices to the regulatory text. Stakeholders can examine the redline strikeout of the regulatory text (changes from 2012 HCS to this final) at OSHA's HCS web page (

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

) to view all of the changes to the 2012 HCS made in this final rule.

III. Events Leading to the Revised 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 GHS (Document ID 0085) (77 FR 17574).

On February 16, 2021, OSHA published a Notice of Proposed Rulemaking (NPRM) to modify the HCS, to bring it into alignment with the seventh revision of the GHS (Document ID 0060) (86 FR 9576), to address specific issues that have arisen since the 2012 rulemaking, and to provide better alignment with other U.S. agencies and international trading partners. On September 21-23, 2021, the agency held an informal public hearing to gather additional input from interested stakeholders. OSHA received more than 170 public submissions (e.g., written comments, exhibits, and briefing materials) during the public comment period. This rulemaking finalizes the amendments proposed in 2021 with modifications based on stakeholder input through the public comment process.

The HCS requires periodic revision 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. Several international and domestic activities have impacted the direction of the HCS and led to the updates of this rule, including international negotiations at the United Nations (UN), coordination with other U.S. agencies, OSHA's participation in the U.S.-Canada Regulatory Cooperation Council (RCC) with Health Canada, and information OSHA has received from HCS stakeholders. Below, the agency 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 rule.

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 UN Economic and Social Council Committee of Experts on the Transport of Dangerous Goods (TDG) and continued in the 1990s through the UN Conference on Environment and Economic Development (UNCED), the UN International Labour Organization (ILO), and the Organization for Economic Cooperation and Development (OECD) (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 (Document ID 0052).

Since OSHA's adoption of Rev. 3 in 2012, the GHS has been updated six times; the latest revision, Rev. 9, was published in July 2021 (

https://unece.org/transport/standards/transport/dangerous-goods/ghs-rev9-2021

). Updates to the GHS in Rev. 4 (2011) included changes to hazard categories for chemically unstable gases and non-flammable aerosols and updates to, and clarification of, precautionary statements (Document ID 0240). Changes in Rev. 5 (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 (Document ID 0241). Rev. 6 (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 (Document ID 0197). Changes in Rev. 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 labeling of small packages with fold-out labels (Document ID 0094). Rev. 8 (2019) added a table for the classification criteria versus only relying on the decision logics for chemicals under pressure; 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” (Document ID 0065). Rev. 9 (2021) included changes to chapter 2.1 to better address explosive hazards when not in transport, revisions to decision logics, revisions to Annex 1—classification and labeling summary tables, revisions to precautionary statements, and updates to OECD test guidelines in Annexes 9 and 10 (

https://unece.org/transport/standards/

transport/dangerous-goods/ghs-rev9-2021

).

I. U.S. Participation at the United Nations and Interagency Coordination

OSHA leads the U.S. Interagency GHS Coordinating Group, an interagency group that serves as a U.S. delegation to the UN (“Interagency Group”). 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 UN Sub-Committee of Experts on the GHS (UNSCEGHS). It 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), the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), and other agencies as appropriate. 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) (Document ID 0175). EPA (which initiated the U.S. working group) finalized changes to its regulations governing significant new uses of chemical substances under the Toxic Substances Control Act (TSCA) that would align with the HCS and the GHS as well as with OSHA's respiratory protection standard (29 CFR 1910.134) and National Institute for Occupational Safety and Health (NIOSH) respirator certification requirements (87 FR 39756).

II. U.S.-Canada Coordination

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 (Document ID 0057; 0199). 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 (OMB) and the Treasury Board of Canada. 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, this final rule contains 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 (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 to inform the public that OSHA was beginning rulemaking efforts to maintain alignment of the HCS with more recent revisions of the GHS (International/Globally Harmonized System (GHS), Docket No. OSHA-2016-0005). 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 held 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 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 U.S. 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 “bring together senior regulatory officials, industry, and other interested members of the public from both sides of the border to discuss recent accomplishments and new opportunities for regulatory cooperation” (Document ID 0057). 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 2012 HCS update, the agency has published guidance documents, issued letters of interpretation (LOIs), and implemented an enforcement directive. These guidance documents are available 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.

OSHA has issued several LOIs in response to questions from the regulated community. These LOIs 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 LOIs include the labeling of small containers, the labeling of chemicals released for shipment, and the use of concentration ranges for trade secrets. OSHA's LOIs on the HCS may be found at

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

Several of the updates in this final rule clarify specific elements of the enforcement guidance the agency has already provided in LOIs and the directive. The agency anticipates publishing an updated directive to provide guidance to OSHA compliance officers; however, the 2015 directive is still in force until rescinded or updated (Document ID 0007).

OSHA requested comments in the NPRM on types of guidance documents that the public may find useful to understand the updated HCS. The American Society of Safety Professionals (ASSP) suggested that OSHA “create training modules focused on the changes to the HCS once the rule is finalized” (Document ID 0284, p. 2). Hugo Hidalgo suggested that the agency “leverage technology to effectively communicate hazards of chemicals to customers and end-users once the information becomes available” (Document ID 0297, p. 4). Other comments received in response to OSHA's request for comments on guidance documents are highlighted in Section XV., Issues and Options Considered. OSHA has considered all requests for guidance and is evaluating the best approaches to implement those requests and suggestions.

IV. Need and Support for the Revised Hazard Communication Standard

Hazardous chemical exposures in workplaces in the United States present

a serious and ongoing danger to workers. Acute and chronic exposures to hazardous chemicals in the workplace can have serious health consequences. As described in the 2012 HCS, chemical exposures are either directly responsible for or contribute to serious adverse health effects including cancer; heart, lung, reproductive, and immunological diseases; hearing loss; and eye and skin damage (77 FR 17584). In addition to health effects, exposure to hazardous chemicals can result in physical hazards, such as fires, explosions, and other dangerous incidents (77 FR 17584). Recognition of the significant risk posed by these workplace hazards was the impetus for OSHA to promulgate the original hazard communication standard in order to promote responsible chemical management practices (48 FR 53282-53283).

Hazard communication is a fundamental element of sound chemical management practices. As stated in the GHS, “[a]vailability of information about chemicals, their hazards, and ways to protect people, will provide the foundation for national programmes for the safe management of chemicals” (Document ID 0060, p. iii). An anonymous comment on the NPRM stated that “[a]rming employers with this information, since the 1980s, has undoubtedly reduced the potential for, and severity of, chemical and toxic substance injuries and illnesses, to include a reduced number of fatalities. Globally harmonizing the system for classification and labeling across a big part of the world was also beneficial as it provided consistency, and more simplicity, especially for foreign products utilized domestically” (Document ID 0300, p. 1). The commenter went on to state that “[p]roviding safety and health information to product users is imperative. Ultimately, this information equals a form of protection” (Document ID 0300, p. 1).

OSHA recognized the importance of a robust hazard communication strategy as early as the 1980s, when the agency first promulgated the HCS (48 FR 53282-53284). The agency also recognized the need for a global strategy and was instrumental in the development of the GHS (48 FR 53287). From its inception, OSHA indicated that the HCS would be updated periodically to keep pace with the advancement of scientific principles underlying the hazard determination process as well as improvements in communication systems (48 FR 53287). In hearing testimony and post-hearing briefs, NIOSH provided documentation supporting the continual updating of occupational safety and health information, stating that the “process should be a never-ending loop of research and translation, allowing for ongoing integration of effective approaches” (Document ID 0456, Att. 15, p. 4).

The “research and translation” described by NIOSH is at the heart of the GHS and HCS process—continually evaluating and updating to improve worker protections and make hazard communication clearer and more effective for both workers and employers. In addition to directly enhancing worker protections through improved hazard communication, updating the HCS to maintain alignment with the GHS also improves the availability of important information to support larger efforts to address workplace hazards. Commenters on the NPRM recognized this principle. For example, Ameren stated that the modifications to the HCS “takes a positive approach in our efforts of eliminating risk events” (Document ID 0309, p. 2). ASSP commented, “[w]e believe that aligning the HCS to international regulations is beneficial overall to the OSH profession and our members will assist in ensuring employers use these enhanced requirements to better protect their workers” (Document ID 0284, p. 1). The following sections provide more detailed information on the need for the updates being finalized in this final rule.

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 a report published by the ILO in 2008, “[c]ontinuous 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).

1

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.

1

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 1,700 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 phrases similar to GHS precautionary statements to convey safety and health information about workplace chemicals in a consistent, internationally accessible manner. ICSCs also display classification information (hazard pictograms, signal words, and hazard statements) in line with GHS classification criteria—this information is added during updates. With participation by experts from government agencies around the world, including the U.S. (Centers for Disease Control and Prevention (CDC)/NIOSH), Canada (Quebec-CNESST), Japan (National Institute of Health Sciences), and several European countries, 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 changes finalized in this update to the HCS will result in better alignment between the standard and the continually evolving GHS. The first edition of the GHS, adopted in December 2002 and published in 2003, implemented the 16-section format for SDSs

2

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 (Document ID 0060; Document ID 0237).

2

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 update to the HCS indicates that aligning the HCS with the GHS has had a positive impact on workplace hazard communication. 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 (Bechtold, 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 explained distinctions between acute toxicity and chronic health effects (Bechtold, 2014, Document ID 0061). 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).

Labels and SDSs are often the first indication to a worker that they are handling a hazardous chemical, so it is imperative that labels and SDSs be as accurate and complete as possible. While the HCS does not require testing of chemicals, it does require that labels and SDSs have accurate information based on all available evidence and that manufacturers, importers, distributors, and employers provide the complete information on the hazards available to them. Without a complete picture of the hazards associated with a particular chemical, workers cannot know how to adequately protect themselves or safely handle these chemicals. North America's Building Trades Unions (NABTU) commented that “[It] is really important to have . . . the labels on the products that are being used because that's the first source of information. The SDS is the backup source . . . . [Labels and SDSs are] where they're going to get information on the hazards of what they're using and the precautions that need to be taken, including . . . any engineering controls or any personal protective equipment” (Document ID 0464, p. 2).

Several studies published since the 2012 HCS adopted the 16-section SDS format indicate that the new format has improved comprehension in the workplace (Elliott, 2016, Document ID 0119; Boelhouver, 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 protection. 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 0016; 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 0167).

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. An anonymous commenter stated that “[i]naccurate information makes it difficult for downstream users who have to rely on inaccurate or incomplete information . . . ” (Document ID 0308, p. 1). 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. This final rule's 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, a change in Section 9 (physical characteristics to include particle characteristics) will identify exposure issues that were not addressed by the previous 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 (which correspond to updates in this final rule to Appendix A.2 of the HCS) on skin corrosion/irritation that incorporated new in vitro test methods, and computational or in silico techniques, to classify chemicals for this category of hazard (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).

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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; ISHN, 2019, Document ID 0068; Ta, 2010, Document ID 0115; Ta, 2011, Document ID 0194; Chan, 2017, Document ID 0017).

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

Regularly updating the HCS to align with international practices also eases compliance for global corporations 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 (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), the Center for Protection of Workers' Rights (CPWR), and the Society for Chemical Hazard Communication (SCHC)) publicly supported OSHA's continued updates to the HCS (see 77 FR 17585, 17603). The Society of Toxicology (SOT) also expressed support for updating the HCS to align with the GHS as this “creates consistent communication about the hazards of chemicals across the globe” (see 77 FR 17585).

B. Cooperating With International Trading Partners and Other Federal Agencies

OSHA expects that the updates to the HCS will facilitate cooperation with international trading partners and other federal agencies. The U.S. and Canada participate in the RCC, which has a goal to “enhance regulatory cooperation and economic competitiveness that maintain high standards when it comes to health, safety, and the environment” (Document ID 0127). 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 UNSCEGHS subcommittee. In addition, OSHA and Health Canada share regular updates on regulatory activity. As explained in the Section XIV., Summary and Explanation of the Final Rule, several updates in this final rule will 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 updating the requirements for bulk shipment under paragraph (f)(5) to provide additional clarity for shipments that are also regulated by the DOT. For bulk shipments, the finalized new paragraph should 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. This allows for the full label information to be available to the downstream user upon receipt while recognizing the unique DOT placarding issues for bulk shipments. And in another effort to facilitate inter-agency cooperation, OSHA is finalizing 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 to acknowledge that the DOT regulations allow for the GHS pictogram to be on the shipped container (49 CFR 172.401(c)(5)).

C. Responding to Stakeholder Experiences Implementing the 2012 HCS

Finally, some of the changes in this final rule, including 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). This final rule includes revisions designed to address these issues with small container labeling as well as revisions addressing other issues raised by commenters. Furthermore, OSHA believes that adopting a uniform approach to labeling small containers will enhance worker protections by ensuring that critical information on the hazards posed by the chemicals is included on the label regardless of the size of the container. For a full discussion of this change, see the Summary and Explanation for (f)(12).

Similarly, the finalized 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 the HCS's requirements to update labels when new information becomes available, especially in the case of chemicals that travel through long distribution cycles (Kenyon, 2017, Document ID 0182). This final rule revises paragraph (f)(11) to address these concerns while maintaining worker protections.

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 after 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

v.

Navarro

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

Motor Vehicle Mfrs. Ass'n

v.

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, they 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

v.

Am. Petroleum Inst.

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

Benzene

”). As explained more fully in Section V.D., Significant Risk, OSHA need not make additional findings on risk for this final rule 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

. v.

Brock

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

1988);

United Steelworkers of Am

. v.

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.

v.

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, particularly in the absence of specific permissible exposure limits, 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 issue a rule pursuant to 5 U.S.C. 553 to “make appropriate modifications in the foregoing requirements relating to the use of labels or other forms of warning . . . 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 this final rule.

This final rule, which is an update to the existing HCS, fits well within the authority granted by the last sentence of section 6(b)(7). The changes in the final rule 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 has determined the updates are “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 are a “technological development” that has occurred since the 2012 revisions to the HCS 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;

4

see also Section III.: Events Leading to the Revised Hazard Communication Standard in this preamble.

4

The last sentence of section 6(b)(7) requires consultation with the Secretary of Health and Human Services. OSHA briefed NIOSH on the proposal for this rule during a collaboration meeting held in December 2018, which was attended by the Director of NIOSH, and NIOSH expressed its support. NIOSH continued to express support in its comments on the proposed rule (Document ID 0281) and 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 by section 6(b)(5) of the OSH Act, OSHA originally determined that the HCS would substantially reduce a significant risk of material harm when promulgating the standard in 1983. Many 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 those cases, OSHA measures and assesses the hazards of employee exposures 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. 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. Based on that evidence, 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.

For the changes in this final rule, OSHA has not made a new finding of significant risk but is making 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.

v.

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.

v.

Reich

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

Forging Indus. Ass'n

v.

Sec'y of Labor

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

United Steelworkers of Am., AFL-CIO-CLC

v.

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.

5

See 77 FR 17602.

5

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 analyses 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.” Id. 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. OSHA's determinations regarding feasibility are discussed more fully in Section VI.E., Technological Feasibility, and Section VI.G., Economic Feasibility and Impacts, in this preamble.

VI. Final Economic Analysis and Regulatory Flexibility Analysis

A. Introduction and Summary

Under Executive Order 12866 (E.O.) 12866, OIRA determines whether a regulatory action is significant and, therefore, subject to the requirements of E.O. 12866 and OMB review. Section 3(f) of E.O. 12866, as amended by E.O. 14094, 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 $200 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 significant under Section 3(f)(1)); (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 E.O. 12866. Upon review, OMB has determined that this final rule is a significant regulatory action under E.O. 12866.

6

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).

6

https://www.reginfo.gov/public/do/eAgendaViewRule?pubId=202210&RIN=1218-AC93.

OIRA has made a determination that this action is not a significant regulatory action under section 3(f)(1) of E.O. 12866, as amended by E.O. 14094, because it is not likely to have an annual effect on the economy of $200 million or more. Nor is this final standard a major rule under the Congressional Review Act because this rule will not result in (1) an annual effect on the economy of $100 million or more; (2) a major increase in costs or prices for consumers, individual industries, federal, state, or local government agencies, or geographic regions; nor (3) significant adverse effects on competition, employment, investment, productivity, or innovation, or on the ability of United States-based enterprises to compete with foreign-based enterprises in domestic and export markets. 5 U.S.C. 804(2). Details on the estimated cost-savings of this rule can be found in the economic analysis below.

E.O. 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. E.O. 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.

Because section 6(b)(5) of the OSH Act explicitly imposes the “to the extent feasible” limitation on the setting of health standards, OSHA is not permitted to use cost-benefit analysis to make its standards-setting decisions (see 29 U.S.C. 655(b)(5);

Cotton Dust,

452

U.S. at 509). In addition to determining economic feasibility, OSHA estimates the costs and benefits of its proposed and final rules to ensure compliance with other requirements such as those in E.O. 12866 and E.O. 13563.

In this FEA, OSHA estimates that the proposed amendments to the HCS would result in annualized net cost savings of $29.8 million at a seven percent discount rate. Annualized at a three percent discount rate, OSHA estimates that the proposed amendments to the rule would lead to net cost savings of $30.7 million per year. OSHA expects that the revisions to the HCS will 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.

The remainder of this FEA includes the following sections:

B. Need for Regulation

C. Profile of Affected Industries, Establishments, and Employees

D. Health and Safety Benefits and Unquantified Positive Economic Effects

E. Technological Feasibility

F. Compliance Costs and Cost Savings

G. Economic Feasibility and Impacts

H. Final Regulatory Flexibility Screening Analysis and FRFA Certification

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 HCS contains a set of requirements for chemical products, including mandatory hazard classification, labeling requirements, provisions for communication of detailed information (in SDSs), and label updating requirements. These requirements are based on Rev. 3 of the GHS, which was adopted by the UNSCEGHS in December 2008.

OSHA, in the 2021 Preliminary Economic Analysis (PEA), determined that the revisions to the HCS would make employers' hazard communication programs more worker-protective, efficient, and effective through standardizing practices nationally and internationally (86 FR 9590). In addition, OSHA found that 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 Rev. 7 (86 FR 9590-91).

The revisions to the HCS include the following notable changes:

• Maintaining 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.

• Addressing issues identified in implementing the 2012 HCS:

○ Updating labeling requirements for small containers;

○ Updating labeling requirements for packaged containers that have been released for shipment or that constitute bulk shipping; and

○ Allowing the withholding of concentration ranges of substances for reasons related to trade secrets.

As discussed in Section VI.F., Compliance Costs and Cost Savings, of this FEA, the estimated costs and cost savings resulting from the final 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 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 changes to Appendices C and D); (2) the cost of management familiarization and other management-related costs (associated with all of the revisions to the standard); (3) the cost of training employees as necessitated by the changes to the HCS (see paragraph (h)(1) of the 2012 HCS); (4) the cost savings resulting from the new released-for-shipment provision (revisions to paragraph (f)(11)); and (5) the cost savings from limiting labeling requirements for certain very small containers (proposed paragraph (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 changes to the HCS will maintain the uniformity of hazard information with the GHS and will, 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 (Document ID 0050). And 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.

7

7

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 timely alignment with the GHS as it undergoes revision periodically. Additionally, in some cases (

e.g.,

aerosols, desensitized explosives), Rev. 7 contains different hazard classes or classification criteria than the 2012 HCS, and it would be impermissible for a manufacturer to comply with Rev. 7 rather than the criteria in the existing HCS. 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 Rev. 7 as its adoption expands internationally.

8

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.

9

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.

8

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

9

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) (Document ID 0234). And 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 (Document ID 0235).

The changes to the HCS will involve costs and cost savings mainly for manufacturers, importers, and distributors. Manufacturers and importers of chemicals will also achieve benefits, in part because they themselves benefit as both producers and users, and in part because 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 VI.D., Health and Safety Benefits and Unquantified Positive Economic Effects).

Of more significance to the concerns of the OSH Act, the changes will also provide health benefits from improved hazard classification and communication; although unquantified in this final rule, these benefits include reductions in worker illnesses, injuries, and fatalities (see additional discussion below in VI.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 whom have direct market relationships with each other, OSHA believes maintaining a single, uniform standard will best achieve the full benefits available from a hazard communications system.

C. Profile of Affected Industries, Establishments, and Employees

In this section, OSHA presents a final profile of industries affected by this revision to the HCS. The profile data in this section are based upon the 2012 HCS FEA and the PEA supporting the 2021 HCS NPRM, updated in this FEA with the most recent data available.

As a first step, OSHA identifies the North American Industry Classification System (NAICS) industries affected by the changes to the HCS.

10

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.

11

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)

12

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).

10

For this FEA, OSHA used 2017 NAICS industry categorization and nomenclature. Although the 2017 NAICS categorization was updated in 2022, OSHA notes that all profile data presented in this FEA were published in 2022 or earlier years but are pre-2022 in content, and therefore were assigned 2017 NAICS IDs.

11

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 (Document ID 0047).

12

According to the SBA, “The size standards are for the most part expressed in either millions of dollars (those preceded by “$”) or number of employees (those without the “$”). A size standard is the largest that a concern can be and still qualify as a small business for Federal Government programs. For the most part, size standards are the average annual receipts or the average employment of a firm. How to calculate average annual receipts and average employment of a firm can be found in 13 CFR 121.104 and 13 CFR 121.106, respectively” (SBA, 2019, Table of Small Business Size Standards—Effective Aug 19, 2019, Document ID 0225)). In December 2022, SBA published an update to the table of small business size standards. However, the schedule for this final HCS rulemaking did not allow for a timely adoption of the 2022 table.

The revisions to the HCS affect establishments in a variety of different industries in which employees are exposed to hazardous chemicals or in which hazardous chemicals are produced. The changes to the HCS do not change the overall list of affected industries or establishments. However, some changes specifically affect certain establishment groupings that manufacture aerosols, desensitized explosives, and flammable gases. Other changes 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 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 2012 version of the HCS. Therefore, OSHA believes that the revisions have little or no effect on whether specific establishments fall within the scope of the standard.

OSHA's estimates of the number of employees who will require new training under the revisions to the standard are based on BLS's (2023) Occupational Employment Statistics data for May 2022, 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 are affected by the revised requirements to reclassify aerosols, desensitized explosives, and flammable gases.

13

(See

the analysis and discussion of training costs below in VI.F., Compliance Costs and Cost Savings.)

13

The NAICS industries estimated to be affected by the revised 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, 2023). Occupational Employment Statistics—May 2022 (Released April 25, 2023). Available at

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

(Accessed April 27, 2023) (Document ID 0482).

Table VI-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.

14

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

15

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 PEA in support of the 2021 HCS NPRM (Document ID 0258) and rely on the most recent comprehensive set of data (including revenues) available from the Bureau of Labor Statistics (BLS, 2023) and the U.S. Census Bureau (2022a; 2022b; 2022c).

16

14

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.

15

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 Document ID 0225. In Table VI-2 in the PEA, the numbers shown for Total Employees and Employees in Covered Occupations (columns 5 and 6) erroneously understated the correct estimates. However, because OSHA's underlying calculations utilized the correct estimates, the errors in that table did not affect compliance cost estimates or any other results derived in the PEA.

16

U.S. Census Bureau, Statistics of U.S. Businesses, 2017 (Document ID 0231; 0232).

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The PEA and Initial Regulatory Flexibility Analysis in the NPRM did not include the construction industry (NAICS 23) within its scope and in

written comments the Construction Industry Safety Coalition (CISC) questioned the basis for the exclusion (Document ID 0335, pp. 2-3). In response, OSHA notes that the scope and application of the final standard primarily refers to manufacturers, importers, and distributors. OSHA anticipates that the compliance burden of this rule, and therefore the economic impacts, will primarily be borne by the general industry sectors noted above, and although the construction industry is not exempted from the scope and application of the final standard, any economic impact upon construction employers will likely take the form of downstream effects as consumers of affected chemical products.

To the extent that there are costs for the construction industry associated with training workers on new SDSs, OSHA believes that these costs will be de minimis. As OSHA notes below in the section on training costs, the agency estimated training costs for health and safety personnel, but not users of chemicals with new hazards because OSHA concluded that there would only be a trivial amount of training associated with reclassification for those users. OSHA's understanding of the construction industry is that there are relatively few employees who are affected by the HCS standard who are not users of the chemicals, and therefore has not taken costs for that industry.

The costs and cost savings of some of the revised 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 that appears later in this FEA, Table VI-4 presents OSHA's estimate of the number of labels per container by container size (and type).

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Starting with the fifth row (container type: 250 ml container), Table VI-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 17639-40), 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 introduced in (new) paragraph (f)(12). Also, the term “jug” has been changed to the more generic term “container.” The figures in Table VI-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.

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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. In the PEA, OSHA requested public comment on the label-container specifications presented in Table VI-4. OSHA received no comments addressing the specifications proposed in Table VI-4; therefore, in this FEA Table VI-4 remains unchanged from its preliminary appearance.

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As will be discussed at greater length below in Section VI.F., Compliance Costs and Cost Savings, it has been 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 the PEA, the terms “electronic templates” and “electronic files” were used interchangeably with, and as proxies for, the term “SDS.” All three terms refer to electronic files that are used to generate SDSs and labels. Table VI-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's estimate of the total number of SDSs per NAICS industry, as presented in Table VI-5, was developed by its contractor to support the agency's FEA for the 2012 final standard.

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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.

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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).

18

Technical and analytical support for the PEA and this FEA was provided by Eastern Research Group, Inc. (ERG) under Contract No. DOL-OPS-16-D-0012.

19

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

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OSHA's preliminary estimate of the number of labels per NAICS industry was 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, were summarized in the PEA 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. (86 FR 9610)

The label analysis in the PEA began 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).

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 the PEA, the final 2017 CFS data was not yet available. Therefore, 2012 CFS data was the most recent information available. OSHA requested public comments, and received none, on the estimated percentages for the transported goods identified as hazardous non-consumer products in the preliminary profile. For this FEA, OSHA has revised the preliminary percentages of hazardous non-consumer products to reflect data from the 2017 CFS (U.S. Census Bureau, 2020d, Document ID 0474), which is the most recent available.

The CFS-based percentage estimates are used in conjunction with another CFS dataset (U.S. Census Bureau, 2020e, Document ID 0475) 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 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, and no commenters provided data that contradicted this approach. 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 were 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 VI-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 (2022) 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 VI-5.

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20

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 VI-4, the analysis led to an estimate of the total number of labels (600,645,446) required by all SCTG Code 20 manufacturers (see Document ID 0481, tab “Labels per NAICS”, cell O11). The percentage of receipts (30.7 percent) for NAICS 211130 relative to total receipts for SCTG Code 20 employers (Document ID 0481, tab “Labels per NAICS”, cells N11-P11) was then applied to this total number of labels. The result, shown in Column 3 in Table VI-5, is an estimated 184,330,155 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 are shown in Column 4 of Table VI-5.

Not every SDS and label, and not every label on very small containers, would be affected by the rule. Only SDSs and labels for certain products (aerosols, desensitized explosives, and flammable gases) would be affected by the new classification criteria. And 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 paragraph (f)(12)(iii), only a product identifier would be required on 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, although the immediate outer packaging would need to include the full label. Thus, in addition to the estimated total number of SDSs, labels, and labels on very small containers, Table VI-5 shows the number of each estimated to be affected by the revised standard.

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Note that OSHA's cost estimates for reclassifying affected chemicals and revising the corresponding SDSs and labels to achieve consistency with the reclassification (per 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 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 final rule. They are not based on the number of labels or SDSs produced or used. The number of labels and labels affected by revision in the tables provided represent the total number produced; that number is provided to include all relevant information even though it is not being used in calculating costs.

Although OSHA preliminarily determined that this methodology remains sound, in the NPRM the agency invited public comment on the reasonableness of this methodology for the current analysis and on its understanding about the use of electronic template files to create SDSs and labels. One commenter, Ameren Corporation (Ameren), directly addressed OSHA's nomenclature for SDS electronic files and the ability of stakeholders to understand the agency's preliminary methodology for estimating SDSs and labels, with the comment, “Ameren agrees with OSHA's understanding of electronic template files to create SDSs and labels” (Document ID 0309, p. 5). Another commenter, Michele Sullivan, noted that “every HCS SDS will need to be revised” due to the changes in Appendix D. As shown in Table VI-5, OSHA already estimates that almost every SDS will be revised due to the provisions in the final rule.

Responsible Industry for a Sound Environment (RISE) and CropLife America (CropLife) noted that the labeling requirements of the HCS do not apply to pesticides that are regulated under the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA), but Table VI-5 lists over 23 million labels affected by this revision for the Pesticide and Other Agricultural Manufacturing industry. RISE and CropLife requested clarification on this apparent conflict (Document ID 0343, pp. 3-4).

In response to the concerns expressed by the two trade associations about the number of pesticide labels affected by the revised HCS, OSHA notes that the agency lacks data indicating what proportion of chemicals produced by the Pesticide and Other Agricultural Manufacturing industry fall within FIFRA's definition of pesticide, which is the category of chemicals exempt from the HCS. The agency has chosen to err on the side of caution and to the extent that the preliminary estimate overstates the actual number of labels affected, any such differential would only over-estimate the costs of the rule. This assumption has no bearing on the scope of the HCS and the HCS is clear that pesticides that meet FIFRA's definition are exempt.

Several commenters described the common practices found within their industry for updating SDSs and labels, which support OSHA's understanding of the use of electronic templates for SDSs and labels. The Independent Lubricant Manufacturers Association (ILMA) surveyed their membership on several of the technical and economic issues raised in the NPRM. Based on 16 responses to the ILMA survey, all from the association's manufacturing members, ILMA stated that “[t]he majority of ILMA members responding to the survey indicated that they rely on third-party services to generate SDS and labels, whether it be software or contracted work” (Document ID 0460, Att. 1, p. 5).

On the topic of the outsourcing of SDS software development, the National Association of Chemical Distributors (NACD) polled a few of their member companies on how employers process SDSs. At least one member company noted that they outsourced the creation of their SDSs to a firm that specializes in that work because “like many NACD members, most of whom are small businesses,” their staff do not have time to do that work (Document ID 0446, p. 2).

The Hach Company (Hach), a manufacturer of chemical reagents and instruments for water quality analysis, indicated during testimony at the public hearing and in a post-hearing comment that it used software it purchased from an outside vendor to create its SDSs (Document ID 0427, pp. 1-2). Tables VI-6 and VI-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 Internal Revenue Service (IRS) (2016)

SOI Tax Stats—

Corporation Source Book

profit data for each of the 14 years 2000-2013. OSHA's final estimate of average profit rates by six-digit NAICS industry replicate the agency's preliminary estimate of profit rates

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(Document ID 0004).

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In the PEA, OSHA requested public comment on the estimated profit rates presented in Table VI-8. OSHA received no comments addressing the estimates proposed in Table VI-8; therefore, in this FEA Table VI-8 remains unchanged from its preliminary appearance.

Table VI-9 presents OSHA's final estimates of total revenues and total profits by NAICS industry code for all entities, small entities, and very small entities affected by the revised standard rule. For this FEA, OSHA extrapolated the receipts reported in the 2017 Statistics of U.S. Businesses (SUSB) by NAICS industry to 2022 dollars using the Bureau of Economic Advisors (BEA) GDP deflator. To assign revenue for 2022 at the six-digit NAICS level, OSHA benchmarked per-establishment revenue to per-establishment payroll based on 2017 SUSB revenue-payroll ratios and projected to 2022 dollars using the BEA GDP deflator.

OSHA calculated total profits per NAICS industry by multiplying the average profit rate (NAICS industry) (Document ID 0004) by total revenues (NAICS industry) (U.S. Census Bureau, 2022a, Document ID 0476; U.S. Census Bureau, 2022b, Document ID 0477).

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

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Note that the provisions that are projected to result in cost savings are not included in Table VI-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 VI-11 summarizes key estimates for the combined covered industries, labels, and SDSs affected by the final rule. The data in this table are drawn from profile tables presented earlier in this FEA and summarize both the magnitude of the global profile metrics (within the scope of OSHA jurisdiction) and the magnitude of affected inputs critical to the agency's analysis of the final economic impacts.

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D. Health and Safety Benefits and Unquantified Positive Economic Effects

As part of the rulemakings that resulted in the 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 estimates from the 1983 rulemaking with those from the 1987 update, 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 annually (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 1 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, the revisions to the HCS finalized in this current rulemaking are incremental and minor. Accordingly, OSHA expects that the 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 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 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 revised 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, or packaged containers to replace labels when new hazards were identified.

Although OSHA expects that the revisions to the HCS will reduce injuries, illnesses, and fatalities, the limited scope and nature of the changes being finalized have led OSHA to a determination that it cannot reasonably quantify an estimate of how many injuries, illnesses, and fatalities will 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, broadens the range of uncertainty associated with the original estimates (77 FR 17621).

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

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As described above, OSHA estimated that the 2012 revisions to the HCS would result in benefits equal to 1 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).

NABTU commented that the organization “strongly supports OSHA's proposal to improve elements of the standard, as it is imperative to have accurate information available to workers on the hazards of the chemicals to which they are exposed” (Document ID 0334, p. 1). NIOSH commended OSHA for proposing to update the HCS to reflect revisions to the GHS and for applying “sound reasoning” as the basis for using Rev. 7 as the primary guidance (Document ID 0281, Att. 2, p. 2). Also voicing broad approval of the proposed standard was the Ameren, who stated, “whenever worker knowledge is increased on the hazards of working with chemicals, such as is done in the proposed revision to the HCS, worker safety will be increased” (Document ID 0309, p. 5). Furthermore, Ameren concurred with OSHA's preliminary assessment of the benefits of the proposed standard, noting that it agreed with OSHA that the proposed changes would enhance the clarity and accessibility of hazard information and workers would receive better training (Document ID 0309, p. 2).

OSHA received many other comments supporting the positive impact of specific provisions on worker safety. Several commenters argued that the proposed changes would reduce worker safety and referred to specific proposed changes (see,

e.g.,

Document ID 0322, Att. 1, p. 1; 0354, p. 1). OSHA has addressed both kinds of comments and explained why it disagrees with commenters suggesting that the rule will negatively impact worker safety throughout the relevant parts of Section XIV., Summary and Explanation of the Final Rule.

In addition to health and safety benefits, OSHA expects that the revisions to the HCS will result in other positive economic effects. For example, being better aligned with the GHS will 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 will 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.

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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 (SAICM, 2006, Document ID 0039).

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The European Union (EU), Canada, Australia, and New Zealand have also indicated that they are proposing updates to align with Rev. 7 (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). For the history of U.S. government support for adoption and implementation of the GHS, see the 2012 Final HCS Rule, Document ID OSHA-H022K-2006-0062-0656, Section II. Events Leading to the Revised Hazard Communication Standard (77 FR 17577).

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 will be imposed by the final rule and determined that compliance with the final rule is technologically feasible for all affected industries.

The revisions to OSHA's HCS will 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 will mainly involve revisions to the presentation of information and is not expected to involve any technological obstacles.

On the question of the technological feasibility of compliance with the proposed provisions for reclassification criteria and the subsequent revisions to SDSs and labels, ILMA expressed concern about “whether software will even be capable of adopting the proposed rule changes. Currently, the technology aims to make it easy to select applicable fields for inclusion in the final SDS, but under the proposed rule, the software would likely need narrative fields for explanation, something that is not included in the widely-used authoring programs” (Document ID 0460, Att. 1, p. 5). The agency believes ILMA's membership misunderstands the extent of what was intended by the addition of clarifying language in paragraph (d), as discussed elsewhere. Many commenters indicated a belief that the information required on the SDS would be much more extensive and comprehensive than OSHA intends. Because these revisions will not in fact require a fundamental change to how SDSs and labels are prepared, the agency does not believe that the available software is incapable of generating compliant SDSs and labels. Additionally, even if ILMA's understanding of the impact of these revisions was correct, sample product data sheets and SDSs submitted into the record by NABTU (see, for example, Document ID 0450, Atts. 2, 3, 4, 6, and 7) indicate that narrative text is routinely provided in succinct form for sections on hazard identification and safety warning, and thus there should be existing software capable of including narrative content, contrary to ILMA's statement. Further, as an industry partner with a large number of chemical producers, importers, and distributors, ILMA seemingly would have access to a wide range of SDSs for chemicals handled by ILMA members and would therefore encounter multiple examples of the use of narrative fields in SDS

production. Regardless, even if some programs do not currently have this feature, a requirement is not technologically infeasible simply because existing software programs are not tailored to that requirement. See

Lead I,

647 F.2d at 1272. ILMA has not demonstrated that technological barriers prevent the development of compliant software or otherwise hinder compliance with the revised requirements for reclassification criteria on SDSs.

The revised requirements for the labeling of very small containers, which would eliminate full labeling requirements for some containers with a volume capacity of three ml or less, are expected to address current feasibility issues related to labeling these 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 rule will permit the container to bear only the product identifier, which could be etched onto the container itself. Similarly, the revised released-for-shipment provisions will 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 requested public comment on any employer concerns about technological feasibility associated with the provisions for labeling very small containers or addressing the relabeling of containers that have been released for shipment. No commenter challenged the feasibility of the revised provisions. For comments affirming the benefits of adopting this new labeling flexibility, see the section on paragraph (f) in Section XIV, Summary and Explanation of the Final Rule.

OSHA has determined that compliance with all of the requirements of the final rule can be achieved with widely available technologies. No new technologies are required for compliance with the modifications to the HCS. Therefore, OSHA finds that there are no technological constraints associated with compliance with any of the provisions in this final rule.

F. Compliance Costs and Cost Savings

I. Introduction

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

The estimated costs and cost savings resulting from the 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 changes to Appendix B) and to conform to language criteria in precautionary statements and other mandatory language (per changes to Appendices C and D); (2) the cost of management familiarization and other management-related costs (associated with all of the revisions to the standard); (3) the cost of training employees as necessitated by the revisions to the HCS (see paragraph (h)(1)); (4) the cost savings due to the new released-for-shipment provision (revisions to paragraph (f)(11)); and (5) the cost savings from limiting labeling requirements for certain very small containers (paragraph (f)(12)). The first three categories are considered to be one-time costs and the last two categories are cost savings that will accrue to employers annually. Although OSHA in the PEA preliminarily determined that these were the only elements of the revisions to the HCS that were expected to result in more than

de minimis

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

The discussion following this introduction addresses public comments on OSHA's preliminary analysis of compliance costs for each of the five main cost categories listed above, as well as a section on costs of the proposed changes regarding trade secrets, which OSHA received several comments about.

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. In the PEA, OSHA requested input from stakeholders on such changes but received none. Therefore, no costs or other impacts resulting from significant changes in the use or application of affected chemicals are assessed in this FEA. This is consistent with the determination OSHA made with regard to reclassification costs for the 2012 final rule (77 FR 17625).

This FEA presents compliance costs and cost savings on a consistent and comparable basis across various regulatory activities and expresses all costs in annualized terms in the final summation. Annualized costs and cost savings represent the most appropriate measure for assessing the longer-term potential impacts of this 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 FEA (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.

26

The economic effects using a three-percent discount rate are also provided in the Excel spreadsheets that support this FEA, which can be found in the docket (Document ID 0481).

26

OSHA annualized costs for this final rule over a 10-year period in accordance with E.O. 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 regulatory 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 HCS final rule does not have any phase-in provisions longer than 42 months, supporting OSHA's decision to use a 10-year annualization period for this FEA. ).

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 (DOL) 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 FEA, 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 FEA, OSHA has adopted an overhead rate of 17 percent of base wages, which is consistent with the overhead rate and methodology used for, among others: (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); and (2) the FEA in support of OSHA's 2016 final standard on Occupational Exposure to Respirable Crystalline Silica (81 FR 16285, 16488-16492).

27

27

This methodology was modeled after an approach used by the EPA. 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 (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 (Document ID 0048).

To calculate the total labor cost for an occupational category, OSHA added together three components: base wage + fringe benefits (45 percent of the base wage)

28

+ applicable overhead costs (17 percent of the base wage). For example, the median hourly wage of an Occupational Health and Safety Specialist is $37.77. Applying a fringe markup of 45 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 $61.18 ($37.77 × .450 = $17.00; $37.77 × 0.17 = $6.42; $37.77 + $17.00 + $6.42 = $61.18 (unrounded)). Using this methodology, OSHA calculated the fully-loaded labor cost for four occupational categories: (1) Manager, Standard Occupational Classification (SOC) code 11-0000, $83.62; (2) Logistics Personnel, SOC code 13-1081, $60.37; (3) Production Worker, SOC code 51-0000, $31.09; and (4) Occupational Health and Safety Specialist, SOC code 19-5011, $61.18. (For further details, see Document ID 0481, tab “Wages”.)

28

In March 2023, the Bureau of Labor Statistics (BLS) reported: “Total employer compensation costs for civilian workers averaged $42.48 per hour worked in December 2022 . . . Wages and salaries cost employers $29.32 while benefits cost $13.17. . .” The fringe markup of 31 percent of total compensation ($13.17/$42.48) is equivalent to a benefits markup of 45.0 percent (technically 0.449, or 0.45 after rounding) in relation to the base wage ($13.17/$29.32). (BLS, 2022b, Document ID 0471).

Table VI-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 2022 dollars. As shown in Table VI-12, the total annualized net cost savings of compliance with the final rule is estimated to be $29.8 million—consisting of about $5.1 million of annualized costs and $35.0 million of annual cost savings. Note that where tables in this FEA report estimated annualized costs, as in Table VI-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 VI-12, most of the estimated compliance costs and cost savings associated with the final rule will be incurred or realized by the chemical manufacturing industry and its distributors. However, the table also shows that familiarization costs will 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.

For purposes of annualizing costs for this FEA, OSHA estimated that all compliance costs will be incurred in the first year. This simplifying methodological assumption may upwardly bias the compliance costs for chemical reclassification, revised precautionary statements, management familiarization, and training, insofar as the final rule schedules compliance dates in phases of 18 months, 24 months, 36 months, and 42 months after the effective date. Nonetheless, despite the simplifying assumption of an immediate implementation of all provisions in the final rule, OSHA believes that its final determination of economic feasibility and regulatory flexibility certification is supported by the rulemaking evidence.

BILLING CODE 4510-26-P

ER20MY24.170

ER20MY24.171

ER20MY24.172

ER20MY24.173

BILLING CODE 4510-26-C

II. Estimation of Compliance Costs and Cost Savings

The remainder of this section explains how OSHA calculated the estimated compliance costs and cost savings arising from the final rule by describing the data and methodology used and addresses relevant comments from stakeholders.

As explained above, the major elements of the 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 changes to Appendix B) and to conform to language criteria in precautionary statements and other mandatory language (per 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 revisions to the standard); (3) the cost of training employees as necessitated by the changes to the HCS (see HCS 2012 paragraph (h)(1)); (4) cost savings from the new released-for-shipment provision (revisions to paragraph (f)(11)); and (5) cost savings from limiting labeling requirements for certain very small containers (new paragraph (f)(12)).

The estimated compliance costs and cost savings presented in this analysis of the 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 final 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 provisions 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 titled Revisions to SDSs and Labels Due to Revised Precautionary Statements.

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

The 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 final rule will 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).

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 the FEA of the 2012 final rule (77 FR 17634-17637) for a discussion of factors that compel employers to update SDSs and labels voluntarily). OSHA received comments from the American Cleaning Institute (ACI) indicating that a longer compliance window would facilitate companies only needing to make one round of revisions to their labels because if a company knows they already need to make one revision to an SDS or label within a certain window of time they will make all changes at the same time, thereby reducing costs (Document ID 0424, Tr. 53-54). As explained in the paragraph (j) discussion in Section XIV., Summary and Explanation of the Final Rule), OSHA is extending the phase-in period beyond what the agency proposed in the NPRM.

Also similar to the rule in 2012, OSHA anticipates that many firms have implemented or are beginning to implement hazard reclassifications, SDS revisions, software modifications, and other changes associated with this proposed rule, because these provisions are generally anticipated to be adopted as part of the implementation of the GHS in countries and regions around the world and Canada has already amended the HPR to align with Rev. 7. Since some other countries are already implementing the GHS, companies in the U.S. that ship to those countries are already having to comply with the GHS for products being exported (77 FR 17636).

The final rule requires limited changes to some SDSs and labels. Given the phase-in period for the changes to the standard,

29

which OSHA has extended from what was proposed in the NPRM, the agency expects that chemical manufacturers and importers will be able to phase in revisions to their labels and SDSs in accordance with the normal cycle of change, and therefore will not need to replace existing labels or SDSs.

29

The final standard requires that the revisions become effective 60 days after publication (paragraph (j)(1)); chemical manufacturers, importers, and distributors evaluating substances comply with all modified provisions within eighteen months after the effective date (paragraph (j)(2)(i)); employers updating alternative labeling, hazard communication programs, and training for substances comply with all modified provisions within two years after the effective date (paragraph (j)(2)(ii)); chemical manufacturers, importers, and distributors evaluating mixtures comply with all modified provisions within three years after the effective date (paragraph (j)(3)(i)); and employers updating alternative labeling, hazard communication programs, and training for mixtures comply with all modified provisions within three and a half years (paragraph (j)(3)(ii)).

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 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 will be incurred to achieve compliance with the final rule. These estimated costs will be in addition to the costs that already need to be incurred to comply with applicable requirements of the 2012 HCS that remain in place and represent the time it will 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 had an obligation under the 2012 HCS, which continues unchanged in this final rule, to ensure that the information provided in their SDSs and labels is accurate and current (paragraphs (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

(paragraphs (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 2012 HCS and this final rule, to review the available hazard information (paragraph (d)(2)), to classify the chemical in accordance with applicable hazard criteria (paragraph (d)(1)), and to develop corresponding SDSs (paragraph (g)) and labels (paragraph (f)). OSHA is not estimating costs for activities already required; rather, the agency is estimating costs for activities that will 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).

IV. Revisions to SDSs and Labels Due to Chemical Reclassification

In the PEA, OSHA identified the NAICS industries involved in the manufacture of aerosols, desensitized explosives, or flammable gases and affected by the proposed requirements for chemical reclassification. Of course, not all chemicals covered in these NAICS industries are aerosols, desensitized explosives, or flammable gases. In the PEA, OSHA estimated 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)

30

in these NAICS industries would be affected by the proposed requirements for aerosols, desensitized explosives, and flammable gases.

30

In this section OSHA uses the terms “SDSs” and “SDSs and labels” interchangeably because the agency's understanding is that one electronic file is used, from which both SDSs and labels can be generated, and therefore there is not a separate calculation of the number of electronic files for labels.

OSHA in the PEA derived the number of directly affected electronic files for SDSs and labels by applying the 50 percent factor to the overall number of affected SDSs (electronic files). For example, in NAICS 211130, the overall number of affected SDSs (technically, the number of electronic files) was 15,810 (Table VI-5 in the PEA). Applying a factor of 50 percent, OSHA estimated the number of SDSs (electronic files) that would be directly affected by the reclassification provision as 7,905. All of the preliminary estimates of directly affected SDSs (electronic files) were similarly derived from Table VI-5 (in the PEA), but only those NAICS industries with affected SDSs (electronic files) were reported in the PEA.

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 VI-5). In the PEA, OSHA expected that 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 was OSHA's understanding that this has been the practice for decades, and no comments in the record challenged that understanding.

In the PEA, OSHA presented preliminary estimates of the amount of time the agency expected it will take to update electronic files for SDSs and labels under the proposed revisions to the standard. OSHA believed that the estimates provided in the PEA were reasonable because they reflected 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 believed that the estimated time to update SDSs and labels (electronic files) used in this analysis represented 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 in this final rule are significantly more limited in scope than the 2012 final rule, with fewer affected hazard categories and more limited changes; however, they still present opportunities for scale efficiencies in reclassification. As a result, OSHA estimated 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).

31

At a loaded hourly wage (including overhead) of $58.00 for a Health and Safety Specialist, this resulted in unit costs in the PEA 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 yielded 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 seven percent discount rate over a ten-year period results in estimated annualized costs of approximately $915,095. OSHA invited public comments on its preliminary projection that 50 percent of the electronic files for SDSs and labels would be affected in these industries and the other preliminary assumptions and unit estimates presented in the PEA and described above.

31

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.

OSHA received some comments on its general analysis in this section. NACD characterized the updates to SDSs as “a major undertaking for chemical manufacturers and distributors” and further noted, “[t]aking into account not only the actual updates to these documents by vendors or company personnel, but also company staff review time, supply chain communications, and training, NACD members estimate that the cost of updating a single SDS ranges from $400 to nearly $1600” (Document ID 0465, p. 2).

As noted earlier in this FEA, ILMA surveyed its members on impacts of the proposed standard. On the question of the incremental costs of updating SDSs, ILMA submitted the following summary of survey responses. They noted that, of 16 respondents, 12 indicated they authored 400 or more SDSs (one company reported between 7,000 and 8,000), and that they estimated the cost

of updating each SDS as $400-600. They also stated that “Some respondents to the survey noted that, while updates to labels and SDS occur on a regular basis, these updates usually involve editorial changes made to incorporate information such as name changes. Therefore . . . the $400-$600 cost estimate to review

each

and

every

SDS needs to be included as incremental costs, as those costs would not be part of the companies' `routine' compliance costs” (Document ID 0444, Att. 1, pp. 1-2).

In their comments, the North American Insulation Manufacturers Association (NAIMA) described the contractual arrangements and operational practices typically conducted by their members when there arises the need for updating SDSs and labels. In particular, they noted that every time a change is made to a label, the manufacturer must redesign the entire label to make sure it all fits on the packaging, which is expensive, and some label printers still use printing plates which need to be replaced. They also noted that they spent time reviewing materials received from contractors and getting labels translated into other languages, and that there were often costly delays in receiving packaging materials. They argued that OSHA needed to account for these costs (Document ID 0461, pp. 3-4). Several commenters discussed costs of labels specifically. The American Coatings Association (ACA) testified that member employers would incur substantial additional expense to update labels if the proposed revisions were published as the final rule and stated that members had indicated costs between $300,000 and $800,000 to update their labels alone. They also noted that disposal of existing labels can be two to three percent of labeling costs and that small businesses cannot absorb these costs as operating expenses (Document ID 0425, Tr. 109-110). Similarly, Ameren stated “Ameren would incur an additional cost for having to re-print and replace current labels based on the new OSHA changes. The cost is estimated at $5 [m]illion and would take over two years to complete” (Document ID 0309, p. 5). OSHA notes that ACA and Ameren did not provide details underlying their estimates so the magnitude and severity of the cost increase cannot be evaluated by OSHA without further information on baseline costs and company revenue that factor into these estimates. Moreover, the final standard does not include the proposed requirement that a released-for-shipment date appear on the label, which will lower the labeling costs for manufacturers, importers, and distributors compared to what they anticipated at the time comments were submitted.

The Sporting Arms and Ammunition Manufacturers' Institute (SAAMI) voiced concerns similar to those of ACA with regard to labeling costs and noted the costs of new printing plates and disposal of existing labels, particularly for manufacturers who may have as many as 4,000 products that need to go through this process (Document ID 0423, Att. 1, Tr. 84). Hach also noted skepticism regarding the idea that these costs could be absorbed under the normal costs of business, partly due to the limited space on their labels (Document ID 0425, Tr. 102). Hach further commented on the costs of the proposed rule by providing information on its cost data for SDS templates provided by a software service vendor. They provided data on two different vendors, one of which cost $230,000 to purchase, $120,000 in annual maintenance costs for global regulatory updates and another $1,100 for annual maintenance specific to SDSs for the United States. The other vendor cost $60,215 for the initial implementation of the templates and $100,825 for an annual license (Document ID 0427, p. 2).

OSHA does not agree with these commenters' arguments that the preliminary cost analysis did not account for the costs for new or updated printing plates, the disposal of existing labels, and other operational changes associated with the proposed revisions to the reclassification requirements in HCS. As noted earlier, OSHA's understanding is that in many cases responsible parties would have needed to update their SDSs and labels within the extended compliance time frame even if there were no updates to the HCS, and therefore some of these costs (such as label disposal and new printing plates) would already be incurred. The agency expects that responsible parties will fold the HCS updates into those standard updating cycles so that they only need to incur these costs once and this means the HCS updates are not creating those costs. Therefore, OSHA is not persuaded that the compliance burden described by the stakeholders discussed above will exceed the customary and usual business practices or the business practices expected during the implementation timeline prescribed in final paragraph (j) for chemical employers affected by the final rule and is thus not taking additional costs for those issues. OSHA is, however, adjusting the time it expects it to take responsible parties to update the electronic SDS and label files, partly based on the content of these comments (see discussion below).

OSHA also received several comments expressing concerns regarding the economic costs of the proposed language in paragraph (d)(1). The United States Beet Sugar Association, the National Grain and Feed Association, the North American Millers Association, Corn Refiners Association, the National Oilseed Processors Association, and the United States Chamber of Commerce (USBSA

et al.

) stated that the proposed language in (d)(1) would “greatly increase the cost of chemical classification” (Document ID 0325, p. 9). The American Chemistry Council (ACC) surveyed their membership to identify and characterize current practices on communicating hazards within their industry. Based on that information, ACC stated that OSHA had failed to account for hazard classification costs associated with the proposed revisions to paragraph (d)(1), including the large number of SDSs that would need to be changed, the amount of time required to produce the SDSs, and the software costs associated with needing new or updated technology to comply. They argued that this could cost manufacturers and importers millions of dollars (Document ID 0468, pp. 3-5). The ACC survey results included statements from their membership with estimates about the time and costs associated with the proposed paragraph (d)(1), including an estimate that it would take about 16 hours to update each SDS and about 50 percent of products would require communication with customers to ascertain downstream uses, which would result in an additional 17,500-70,000 hours of work. Concern was also expressed that this would cover as many as 5,000-7,000 products that were not previously within the scope of the HCS (Document ID 0468, p. 10).

The NAIMA expressed concerns about the proposed implementation schedule and the costs of compliance moving forward under the proposed language in paragraph (d)(1). Specifically, they noted “it appears that every newly discovered hazard of the substance identified by a chemical manufacturer's ongoing investigation of downstream hazards would trigger the three- and six-month updating provisions of the HCS for SDSs and labels, which could lead to a continuous series of reclassifications triggering those updating requirements” and argued that “[e]ach SDS revision cascading down would incur costs which do not seem to have been adequately accounted in OSHA's cost-

benefit analysis” (Document ID 0461, p. 2).

The American Composite Manufacturers Association (ACMA) stated that the proposed changes to paragraph (d)(1) would result in upstream chemical suppliers needing to perform a hazard analysis similar to what is required under OSHA's Process Safety Management of Highly Hazardous Chemicals (PSM) standard and that “[t]he [process hazard analyses (PHAs)] that would be required by OSHA's proposed change to 1910.1200(d)(1) would extend to every hazardous chemical in the U.S. and would cover every use of a flammable liquid or gas as a fuel.” They also noted that “[a]ccording to EPA, the TSCA chemical inventory contains 86,557 chemicals of which 41,864 are active. Any reasonably chosen ratio of the number of active hazardous chemicals in the EPA inventory to the 110 HHCs covered by the PSM standard suggests the costs of compliance with OSHA's proposed change to 1910.1200(d)(1) would be enormous” (Document ID 0318, p. 8). OSHA notes that ACMA also asserted in their comment that the proposed language in paragraph (d)(1) is economically infeasible but did not provide financial data to corroborate the assertion. As explained in Section G of this FEA, OSHA has determined based on the record evidence that the requirements of this final rule are economically feasible.

The Plastics Industry Association (PLASTICS) also likened the proposed language in paragraph (d)(1) to PHAs and discussed the associated burden of collecting the process safety information for “nearly one million hazardous chemical products . . . previously estimated . . . to be in U.S. workplaces” as well as the need to determine foreseeable emergencies, “some of which may produce new chemicals” (Document ID 0314, Att. 1, p. 12) (footnote omitted). They indicated that such a requirement would require upstream suppliers to hire personnel to collect the necessary information as well. They argued that OSHA needed to incorporate the costs of this provision and stated that OSHA had not done so (Document ID 0314, Att. 1, pp. 10-12). They stated that “[f]or a chemical with broad applications, classifying it to include all of the classified hazards of every downstream reaction, and then creating an SDS to cover all of these issues would be a monumental, infeasible and counterproductive task.” (Document ID 0467, p. 21). ACC's survey of its members also discussed the role of PHAs in company operations and the rigorous procedures necessary to develop and communicate such analyses (Document ID 0468, pp. 6-7).

In the Summary and Explanation for paragraph (d), OSHA responds to the concerns voiced by stakeholders about the scope of paragraph (d) and the comparisons to PHAs. In its response, OSHA states that it did not intend for an upstream supplier or manufacturer to identify and classify every single hazard associated with the downstream use of chemicals, only those where the manufacturer knows or can reasonably anticipate the chemical's uses. OSHA has changed the language in paragraph (d)(1) from the proposed language in the NPRM to clarify this scope and concludes that many of the comments discussing the economic ramifications of this proposed language were based on this misunderstanding of what OSHA intended SDS and label preparers to do.

In response to the comments on OSHA's preliminary unit cost estimates for chemical reclassification on SDSs and labels in relation to paragraph (d)(1), the agency has reviewed the preliminary number of affected SDSs and labels and the preliminary time estimates for updating and expanding the use of SDSs and labels.

As noted earlier, OSHA in the PEA derived the number of directly affected electronic files for SDSs and labels by applying the 50 percent factor to the overall number of affected SDSs (electronic files) from Table VI-5. None of the public criticisms quoted above specifically referenced the 50 percent factor. Many of the commenters indicated that they believed the HCS updates to paragraph (d)(1) would impact many more SDSs than OSHA accounted for in its PEA but, as OSHA states in the Summary and Explanation for paragraph (d), this requirement already existed under the 2012 HCS and the language in paragraph (d) is merely a clarification of the existing requirements. Because many commenters misinterpreted the scope of what OSHA was proposing, the agency does not believe these comments are representative of the number of SDSs that will need to be updated and the agency does not take costs associated with clarifications that do not change the underlying requirements of the standard. Therefore, for this FEA OSHA has maintained the percentage factor of affected SDSs and labels estimated in the PEA at 50 percent and the industries it expects will be impacted by reclassification requirements.

As discussed earlier in this section, OSHA presented in the PEA estimates of the amount of time it will take to update electronic files for SDSs and labels under the proposed revisions to the standard. OSHA's estimates in the PEA reflected the agency's initial assessment of 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.

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 in this final rulemaking are significantly more limited in scope than the 2012 final rule, with fewer affected hazard categories and more limited changes; nonetheless, based on public comments, OSHA recognizes that affected employers may face adjustments to their schedule for updating SDSs and labels due to chemical reclassification. OSHA also recognizes based on comments that it may have underestimated in the 2012 HCS FEA and the 2021 PEA the time and costs associated with identifying hazards from downstream uses. While those costs have already been incurred for all existing products because this is an existing requirement, OSHA recognizes that for the products undergoing reclassification (aerosols, flammable gases, and desensitized explosives), these costs will be incurred again and is therefore adjusting upwards its time estimates. As a result, OSHA in this FEA estimates that a Health and Safety Specialist would spend about 30 percent (increased from 25 percent in the PEA) as much time to reclassify a chemical as OSHA estimated for the 2012 HCS rule—depending on establishment size, from 0.90 hours to 2.10 hours per SDS (electronic file) requiring reclassification (2.10 hours per SDS for establishments with fewer than 100 employees; 1.50 hours per SDS for establishments with 100-499 employees; and 0.90 hours per SDS for establishments with 500 or more employees).

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At a loaded hourly wage (including overhead) of $61.18 for a Health and Safety Specialist, this would result in unit costs of $128.48, $91.77, and $55.06 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 $8.2 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 $1,168,932 for reclassification in accordance with the criteria specified in the revisions to the HCS.

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

OSHA does not agree, however, with commenters who argued that the proposed language in paragraph (d)(1) would create burdens that are cost prohibitive. First, as discussed, the requirement to classify based on downstream hazards already existed and OSHA is simply clarifying that requirement by adding this language to paragraph (d)(1). Additionally, OSHA received comments and testimony from several entities regarding existing SDSs that include information about downstream hazards and companies that maintain product stewardship programs to address these issues. NABTU cited field observation of companies who routinely include on SDSs and labels information on reasonably anticipated downstream use of products: “[i]t is . . . worth noting that there are companies producing building materials that are responsibly anticipating the downstream uses of their products and creating product stewardship programs aimed at improving recognition and control of hazards during the life cycle of their products. Where it is reasonable to assume that manufacturers can anticipate their products' `normal conditions of use,' it is equally reasonable—and critically important—to require those manufacturers to include the attendant chemical reaction hazard information on their SDSs and labels, and to do so in a consistent manner” (Document ID 0464, p. 5).

NIOSH stated that they are aware of more manufacturers developing this type of product stewardship to inform downstream users (Document ID 0423, Tr. 39; 0456, Att. 2, p. 2). ACC also submitted information on several product stewardship programs their organization undertakes to inform downstream users of potential hazards that may result upon use of their chemicals (Document ID 0468, p. 5). ACC product stewardship resources include technical and regulatory data sheets, literature, product handling guidelines, site visits, and special instructions for safe handling of materials of more concern (Document ID 0468, p. 5).

These comments highlight the significant and ongoing stewardship initiatives among chemical producers, importers, and distributors and substantiate OSHA's preliminary judgment of the economic feasibility of the revised HCS standard. Therefore, in OSHA's view, the modest adjustment to the preliminary unit cost estimate in this FEA reflects, in approximate terms, current industry practices in the reclassification of chemical hazards on SDSs and labels.

BILLING CODE 4510-26-P

ER20MY24.174

ER20MY24.175

ER20MY24.176

BILLING CODE 4510-26-C

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

The revisions to the HCS 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 changes to the

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