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

SUMMARY: Under the requirements for nationally recognized testing

laboratories (NRTLs), the Occupational Safety and Health Administration

(OSHA) recognizes private sector laboratories to test and certify the

safety of certain equipment or products that will be used in the

workplace. Such testing and certification is required by various OSHA

safety standards. These laboratories are referred to as Nationally

Recognized Testing Laboratories, or NRTLs. OSHA proposes to establish

fees for specific services the Agency provides to these NRTLs. Congress

has authorized OSHA to charge fees for these services since 1997 in

bill language in its annual appropriations bills, most recently in

Public Law 105-277.

These services are: Processing applications for the initial

recognition of an organization as an NRTL, or for expansion or renewal

of an existing NRTL's recognition, and performing audits (post-

recognition reviews) of NRTLs to determine whether they continue to

meet the requirements for recognition. Since the inception of the NRTL

Program in 1988, OSHA has provided these services at no charge to the

NRTLs.

In addition, OSHA proposes to amend provisions of the recognition

process to reduce the public comment period on the ``preliminary''

Federal Register notices that OSHA must publish concerning the

recognition of an NRTL from 60 days to 30 days for initial recognition

and to 15 days for expansions and renewals.

DATES: Written comments must be received on or before October 4, 1999.

ADDRESSES: Submit comments on the proposed rule in duplicate or 1

original (hardcopy) and 1 disk (5\1/4\ or 3\1/2\) in WP 5.0, 5.1, 6.0,

6.1, 8.0 or ASCII to: Docket Officer, Docket NRTL-95-F-1, U.S.

Department of Labor, Occupational Safety and Health Administration,

Room N2625, 200 Constitution Avenue, N.W.,Washington, D.C. 20210. The

phone number for the OSHA Docket Office is (202) 693-2350. You may

transmit your written comments of 10 pages or less by facsimile (fax)

to the Docket Office at (202) 693-1648, provided you send an original

and one (1) copy to the Docket Office thereafter. You may also submit

comments electronically using the following web page address: http://

www.osha-slc.gov/e-comments/e-comments-nrtl.html. If your submission

contains attached electronic files, the files must be in WordPerfect

5.0, 5.1, 6.0, 6.1, 8.0 or ASCII. When submitting a comment

electronically, please include your name and address.

Submit, in duplicate, any information not contained on disk or not

provided electronically (e.g., studies, articles). Written submissions

must clearly identify the issues or specific provisions of the proposal

which are addressed and the position taken with respect to each issue

or provision. The data, views, and arguments that you submit will be

available for public inspection and copying at the above address. All

timely submissions received will be made a part of the record of this

proceeding.

FOR FURTHER INFORMATION CONTACT: Ms. Bonnie Friedman, Office of Public

Affairs, Occupational Safety and Health Administration, U.S. Department

of Labor, Room N3647, 200 Constitution Avenue, NW, Washington, D.C.,

20210, Telephone: (202) 693-1999, or Mr. Bernard Pasquet, Office of

Technical Programs and Coordination Activities, Occupational Safety and

Health Administration, U.S. Department of Labor, Room N3653, 200

Constitution Avenue, NW, Washington, D.C., 20210, telephone: (202) 693-

2110. Our web page includes information about the NRTL Program . (See

http://www.osha-slc.gov/dts/otpca/nrtl/index.html or see http://

www.osha.gov and select ``Programs'')

SUPPLEMENTARY INFORMATION:

I. Background

Many of OSHA's safety standards require equipment or products that

are going to be used in the workplace to be tested and certified to

help ensure they can be used safely. Products or equipment that have

been tested and certified must have a certification mark on them. An

employer may rely on the certification mark, which shows the equipment

or product has been tested and certified in accordance with OSHA

requirements. In order to ensure that the testing and certification has

been done appropriately, OSHA has implemented the NRTL Program. The

NRTL Program establishes the criteria that an organization must meet in

order to be recognized as an NRTL.

The NRTL Program requirements are in 29 CFR 1910.7, ``Definition

and requirements for a nationally recognized testing laboratory.'' To

be recognized by OSHA, an organization must: (1) Have the appropriate

capability to test, evaluate, and approve products to assure their safe

use in the workplace; (2) be completely independent of the

manufacturers, vendors, and users of the products for which OSHA

requires certification; (3) have internal programs that ensure proper

control of the testing and certification process; and (4) establish

effective reporting and complaint handling procedures.

OSHA requires NRTL applicants (i.e., organizations seeking initial

recognition as an NRTL) to provide detailed information about their

programs, processes and procedures in writing when they apply for

initial recognition. OSHA reviews the written information and conducts

on-site assessments to determine whether the organization meets the

requirements. OSHA uses a similar process when an NRTL (i.e., an

organization already recognized) applies for expansion or renewal of

its recognition. In addition, the Agency conducts annual audits to

ensure that the recognized laboratories maintain their programs.

The NRTL Program is an effective public and private partnership.

Rather than performing testing and certification itself, OSHA relies on

private sector organizations to accomplish it. This helps to ensure

worker safety, allows existing private sector systems to perform the

work, and avoids the need for the government to maintain facilities.

Currently, there are 16 NRTLs operating 40 sites in the U.S.,

Canada, and the Far East. The NRTL Program has grown significantly in

the past few years, both in terms of numbers of laboratories and sites,

as well as the number of test standards included in their recognition.

OSHA has devoted significant resources in the last two years to

improving the management of the NRTL Program, ensuring its viability,

and enhancing its credibility with the public. This has included a

process improvement project; audits of all the NRTL sites; reduction of

the backlog of applications for recognition, expansion, and renewals;

and development of application guidelines and information about our

procedures to help people understand the process of NRTL recognition. A

web page on the NRTL Program is now available to provide

[[Page 45099]]

information about the recognized labs and the scope of their

recognition, as well as a description of the NRTL Program. (See web

page address in above ``Contact'' information.) We also have prepared a

new training program for our compliance staff to increase awareness

within the Agency of NRTL requirements.

The size of the NRTL Program, and the amount of work involved in

maintaining it, have resulted in large costs for the Agency, both in

terms of human resources and in direct costs such as travel. For

example, OSHA's goal is to audit every site once a year. This involves

about 40 annual visits, given the current number of sites recognized,

not only to locations in the U.S. but also to many foreign locations.

Time and travel costs are obviously much higher for foreign locations.

Because international trade in many of the types of products OSHA

requires to be tested and certified is increasing substantially, the

Agency anticipates there will be more applications for laboratories or

sites in locations outside the U.S. In particular, under the terms of a

recent Mutual Recognition Agreement (MRA) with the European Union, a

number of European laboratories are expected to submit applications for

NRTL recognition.

The number of people who can be assigned to work in a particular

area in OSHA, as well as the travel money that can be used, is

dependent on the overall funding the Agency receives from Congress in a

given year. The potential for reduced funding, leaving OSHA with

inadequate money to properly implement the Program, led to discussions

about the possibility of assessing fees. Having a consistent funding

process related specifically to the time and travel needed to maintain

the Program would help OSHA ensure that the NRTL Program can continue

to function and can be perceived as a viable and credible part of

OSHA's overall approach to workplace safety.

In 1995, OSHA sent a letter to the existing NRTLs regarding its

plan to explore the possibility of assessing fees (Ex. 1), and received

twelve responses. Nine responses were conditionally in favor of

establishing fees (Exs. 2-2, 2-4, 2-5, 2-6, 2-7, 2-8, 2-9, 2-11, 2-12).

The favorable responses generally were conditioned on OSHA utilizing

the funds generated from the fees for the NRTL Program to improve the

services provided to the NRTLs.

At a September 24, 1996, meeting with the NRTLs, OSHA released a

draft Federal Register notice for a proposed revision of 29 CFR 1910.7

allowing the Agency to collect fees. Comments received on the September

1996 draft indicated that most of the NRTLs supported the concept of a

fee schedule, although the specific approach they favored was not

necessarily the one included in the notice (see, e.g., Exs. 2-13, 2-17,

2-21, 2-22, 2-24). OSHA considered all of the comments it received in

developing this proposed rule. We are not going to address the specific

comments received at that time in this preamble because the approach in

the draft rule that was distributed is not the approach that is being

proposed in this notice. However, we believe that those who commented

will find that many of their concerns have been addressed in this

revised approach.

OSHA has reviewed a number of legal precedents concerning the

assessment of fees by Federal agencies. Based on this review, the

Agency believes that it can charge fees for services it provides to

users of the NRTL recognition process, i.e., the NRTLs and NRTL

applicants, and does not propose, at this time, to assess fees to cover

all the costs of the program.

In response to the fee issue, OSHA requested specific authority

from Congress to collect and retain fees. In its Fiscal Year 1997

appropriations for OSHA, Congress authorized the Secretary of Labor to

collect and retain fees for services provided to NRTLs and to use such

fees to administer the NRTL Program. Congress has renewed this

authorization annually.

OSHA decided to implement the improvements in the Program described

above before undertaking rulemaking to establish fees. The process of

implementing these improvements also allowed OSHA to better estimate

the time involved in providing certain services to NRTL applicants or

existing NRTLs, and the travel costs associated with onsite visits.

This information helped to refine the approach being proposed. In

addition, the Agency has examined legal authority issues; the practices

of other Federal agencies that assess fees; and the fees of other

organizations that recognize or accredit laboratories. Our findings in

these areas are described below in the description of the proposed

requirements and the explanation of the approach.

In addition to addressing the issue of fees, OSHA proposes to

reduce the time allowed for public comment on Federal Register notices

required under the Program. OSHA has considered a number of ways to

improve the program's application handling process and believes that a

reduction in the comment period is an appropriate way to help make such

improvements. This proposed reduction is partly in response to the

informal comments from NRTLs regarding the length of time the Agency

takes to process applications. We do not believe this reduction will

reduce the opportunity for public input; however, we solicit comments

on this issue.

II. Discussion of Proposed Fees

A. Statutory Authority

OSHA is basing its proposed fees structure on the Office of

Management and Budget's (OMB's) policies for user fees imposed by

Federal Agencies. These policies are contained in OMB Circular A-25,

``User Fees,'' dated 7/8/93. Some key portions of Circular A-25 are as

follows:

--``General Policy: A user charge. * * * will be assessed against

each identifiable recipient for special benefits derived from

Federal activities beyond those received by the general public.''

--``For example, a special benefit will be considered to accrue and

a user charge will be imposed when a Government service. * * *

enables the beneficiary to obtain more immediate or substantial

gains or values than those that accrue to the general public,'' * *

* or * * * is performed at the request of or for the convenience of

the recipient, and is beyond the services regularly received by

other members of the same industry or group or by the general

public.''

--``* * * user charges will be sufficient to recover the full cost

to the Federal Government. * * *''

OMB developed Circular A-25 in accordance with Title V of the

Independent Offices Appropriations Act of 1952 (IOAA), codified at

31 U.S.C. Sec. 9701. The criteria established by the IOAA to guide

agency heads in the establishment of fees were that the fees be

``fair'' and be based on:

(A) the costs to the Government;

(B) the value of the service or thing to the recipient;

(C) public policy or interest served; and

(D) other relevant facts.

31 U.S.C. Sec. 9701(b)

As discussed below, the U.S. Supreme Court has decided in two key

cases that the intent of the IOAA was to require fees to be based on

``value to the recipient'' and not upon ``public policy or interest

served [or] other [relevant] * * * facts.''

In a rider to OSHA's Fiscal Year 1999 appropriations, Congress

specifically authorized the Secretary of Labor to collect and retain

the fees proposed under this rule: ``* * * the Secretary of Labor is

authorized, during the fiscal year ending September 30, 1999, to

collect and retain fees for services provided to Nationally Recognized

Testing Laboratories, and may utilize such sums, in accordance with the

provisions of 29 U.S.C. 9a, to administer national and international

laboratory

[[Page 45100]]

recognition programs that ensure the safety of equipment and products

used by workers in the workplace: * * *'' P.L. 105-277 (112 STAT. 2681-

343). Through this rider, OSHA has the necessary authority to retain

the fees, which otherwise would be credited to the general fund of the

Treasury as explained in OMB Circular A-25.

B. Legal Basis for Assessing the Fees

To determine a proper basis for assessing the fees, OSHA has

reviewed a number of legal precedents and analyzed the costs and

activities for the functions undertaken for the NRTL Program. The legal

precedents centered on the application of the IOAA and its

interpretation by federal agencies. The most pertinent precedents are

two decisions by the U.S. Supreme Court, and four cases of the U.S.

Court of Appeals for the D.C. Circuit.

In March 1974, the Supreme Court decided the companion cases of

National Cable Television Ass'n. v. United States and FCC, 415 U.S. 336

(1974) and Federal Power Commission v. New England Power Co., 415 U.S.

345 (1974). In National Cable, the Court expressed the view that an

agency may charge a ``fee'' for services based on ``value to the

recipient.'' The Court essentially ruled out the other bases permitted

in the IOAA, which, in the court's opinion, could change an assessed

``fee'' into the levy of a ``tax.'' In Federal Power Commission, the

Court held that only specific charges for specific services to specific

individuals or companies may be recouped by the fees permitted by the

IOAA.

The first of the Court of Appeals decisions was National Cable

Television Ass'n Inc. v. Federal Communications Commission (FCC), 554

F.2d 1094 (1976). The Court of Appeals upheld the charging (by the FCC,

in this case) of both an application fee and an annual fee, provided

the agency makes clear which activities are covered by each of these

fees to prevent charging twice for the same activity. The court

acknowledged that fees based on reasonable approximations for costs of

services rendered would be acceptable. The court stated the following:

``It is sufficient for the Commission to identify the specific items of

* * * cost incurred in providing each service or benefit * * *, and

then to divide the cost among the * * * [recipients] in such a way as

to assess each a fee which is roughly proportional to the ``value''

which that member has thereby received.'' Id. at 1105-06.

In Electronic Industries Ass'n v. F.C.C., 554 F.2d 1109 (D.C. Cir.

1976), the court indicated that a fee for services may be charged for

private benefits ``although they may also create incidental public

benefits as well.'' Id. at 1115. In the case of NRTLs, the services

that OSHA provides to NRTLs and NRTL applicants result primarily in

private benefits to these parties, as described below. In Capital

Cities Communications, Inc. v. F.C.C., 554 F.2d 1135 (D.C. Cir. 1976),

the court held that a fee for services should bear a reasonable

relationship to the cost to the government to provide the service.

Finally, in Miss. Power and Light v. U.S. Nuclear Regulatory Comm'n

(NRC), 601 F.2d. 223 (5th Cir. 1979), the court upheld a fee for agency

services. The NRC calculated its fees based upon the costs of providing

the services to the private parties. OSHA is using a similar method to

calculate the NRTL application and administration fees in this proposed

rule.

Based in large part on the results of the foregoing six cases and

on the guidelines of OMB Circular A-25, OSHA proposes to charge fees to

NRTLs for specific benefits that they receive as a result of the

specific services that OSHA provides them for initial or continued

recognition. The fees will reflect the costs of providing these

services, and the costs will be reasonably itemized to the smallest

unit practical.

C. Special Benefits and Services Provided, and Fees

OSHA will establish a schedule of fees based on the ``full cost''

to OSHA of the activities it undertakes for NRTLs. ``Full cost'' is

defined in Section 6d of OMB Circular A-25 1. To help

clarify the basis for the fees in this proposed rule, the following

describes how OSHA handles applications and continuing services under

the NRTL Program.

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

\1\ OMB Circular A-25, Section 6. General policy: A user charge,

as described below, will be assessed * * *

a. Special benefits

1. * * *

2. Determining the amount of user charges to assess.

(a) Except as provided in Section 6c, user charges will be

sufficient to recover the full cost to the Federal Government (as

defined in Section 6d) of providing the service, resource, or good

when the Government is acting in its capacity as sovereign. * * *

d. Determining full cost and market price

1.``Full cost'' includes all direct and indirect costs to any

part of the Federal Government of providing a good, resource, or

service. These costs include, but are not limited to, an appropriate

share of:

(a) Direct and indirect personnel costs, including salaries and

fringe benefits such as medical insurance and retirement. Retirement

costs should include all (funded or unfunded) accrued costs not

covered by employee contributions as specified in Circular No. A-11.

(b) Physical overhead, consulting, and other indirect costs

including material and supply costs, utilities, insurance, travel,

and rents or imputed rents on land, buildings, and equipment. If

imputed rental costs are applied, they should include:

(i) depreciation of structures and equipment, based on official

Internal Revenue Service depreciation guidelines unless better

estimates are available; and

(ii) an annual rate of return (equal to the average long-term

Treasury bond rate) on land, structures, equipment and other capital

resources used.

(c) The management and supervisory costs.

(d) The costs of enforcement, collection, research,

establishment of standards, and regulation, including any required

environmental impact statements.

(e) Full cost shall be determined or estimated from the best

available records of the agency, and new cost accounting systems

need not be established solely for this purpose.

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When an organization submits its application, the NRTL Program

staff thoroughly review it for completeness and adequacy. Each

organization applies for a specific scope of recognition. This scope

consists of the specific safety test standards, locations or sites, and

programs for which the organization seeks recognition. OSHA has broadly

grouped the activities an NRTL may perform in testing and certifying

products into nine categories of ``programs and procedures,'' or just

``programs.'' (See 60 FR 12980, March 9, 1995)

When the NRTL Program staff determine that the application is

complete and adequate, the staff perform an in-depth on-site review of

the applicant's organization, programs, and facilities. Based upon the

information obtained primarily through the on-site review, the staff

prepare a report and recommendation. The report and the application

provide the main basis for a preliminary finding on the application.

OSHA publishes a notice of this finding in the Federal Register to

allow for public comment. Following a 60-day comment period (which OSHA

is proposing to modify in this notice), OSHA must publish a final

decision and response to comments in the Federal Register. Publication

makes the recognition official for successful applicants and officially

denies the recognition for unsuccessful applicants.

NRTL recognition is valid for five years. During this period, OSHA

program staff audit the NRTL to assure that it continues to meet the

requirements for recognition. NRTLs may also on occasion request to

expand their scope of recognition to include additional test standards,

facilities, or programs. At the end of its initial recognition period,

the NRTL may apply for renewal of its recognition. OSHA processes

requests for expansion and renewal following a process similar to

[[Page 45101]]

that used for initial applications for recognition.

Program staff work closely with attorneys of the Department of

Labor on a regular basis for both initial recognition and continuing

recognition activities. These attorneys review the Federal Register

notices. They also advise the program staff on issues and other matters

that directly relate to the services covered by the fees.

In addition to application processing and audits, NRTL Program

staff also perform a number of activities that are essential to the

normal operation of the NRTL Program. These activities include

administration of program, budgetary, and policy matters; assistance in

training OSHA personnel about the program; inter-agency and

international coordination; response to requests for information

related to the program; and participation in meetings with stakeholders

and outside interest groups. Although necessary to the continued

functioning of the program, these activities are incidental to the

direct services of application processing and the audits of the NRTLs.

Accordingly, costs for these activities are not covered by this

proposed rule.

NRTLs accrue ``special benefits'' from the services that OSHA

renders to them. These ``special benefits'' are the product of OSHA's

initial and continuing evaluation of their qualifications to test and

certify products used in the workplace, e.g., the acknowledgment of

their capability as an NRTL. The primary special benefits of NRTL

recognition are the resulting business opportunities to test and

certify products for manufacturers. A manufacturer then sells these

products to employers, enabling them to comply with product approval

requirements in OSHA standards. The services rendered by OSHA that

confer these ``special benefits'' to NRTLs are: (1) processing of

applications for initial recognition as an NRTL and for expansion and

renewal of an existing NRTL's recognition, and (2) audits (``post

recognition reviews''), which enable the NRTL to maintain the

recognition from OSHA. As a result, OSHA proposes to charge two

categories of fees.

First, the Agency will charge fees to cover the full costs of

application processing. These costs consist mainly of the salary and

benefits of office and field personnel, travel costs, and other direct

and indirect costs necessary to the processing and related support

activities. The fees will equal the estimated cost of staff time and

the actual cost of travel for these activities. These activities mainly

include the following: performing the office review of the application,

preparing for and performing the on-site review of the organization's

testing and administrative facilities, resolving findings of

deficiencies in the application, drafting and finalizing the on-site

review report, and preparing and publishing the Federal Register

documents. OSHA will collect part of this category of fees at the time

the application is submitted and the remainder following publication of

the initial, i.e., preliminary, notice in the Federal Register.

Second, the Agency will charge fees to cover the full costs of

performing the audits of the NRTL that ensure its continued compliance

with the recognition requirements. These costs consist mainly of the

salary and benefits of office and field personnel, travel costs, and

other costs necessary to the audit and related support activities. The

fees will equal the estimated cost of staff time and the actual cost of

travel for those activities. These activities mainly include the

following: preparing for and performing the office or on-site audit of

the NRTL, drafting and finalizing necessary reports or documentation,

resolving findings of deficiencies in the NRTL's operations, and

reviewing and processing audit reports. OSHA will impose these fees

annually or more frequently if OSHA determines it must perform more

than one audit in a given year.

Many other Federal agencies charge fees for services they provide

to specific recipients. The following is a list of some of these

agencies, along with a citation to the regulations pertaining to the

fees they charge:

FEDERAL AGENCIES THAT CHARGE FEES FOR SERVICES

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

Agency Regulation

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

Federal Communications Commission...... 47 CFR 1.1151.

Federal Maritime Commission............ 46 CFR 514.21.

Environmental Protection Agency........ 40 CFR 152.400.

National Voluntary Laboratory 15 CFR 285.

Accreditation Program (NVLAP); US

Department of Commerce.

Mine Safety and Health Administration; 30 CFR 5.10.

Department of Labor.

Bureau of Indian Affairs; Department of 25 CFR 143.4.

the Interior.

Food Safety and Health Services; 9 CFR 218.21 and 391.5.

Department of Agriculture.

Federal Aviation Administration; 14 CFR 187.1.

Department of Transportation.

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With the exception of the FCC and NVLAP, the above agencies also

derive their authority for charging the fees from the IOAA.

OSHA has also examined the fee schedules for other organizations

that accredit or recognize testing laboratories or certification

bodies. Although the fees proposed in this notice are specific to the

costs to OSHA, the practices of these other organizations may be of

interest to rulemaking participants.

FEES CHARGED BY VARIOUS ACCREDITATION ORGANIZATIONS

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

Organization Activity Fee (as of 3/8/99)

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

Standards Council of Canada-- Application fee.. $15,000.

Fees for Certification Fees for Per person on a per

Organizations. assessments and diem basis + travel

audits. expenses.

Annual $9,000 + a business

accreditation volume fee (up to

fee. $36,000).

ANSI Accreditation for Application fee.. $2,000.

Certification Programs. Accreditation $1,200/day per

fees. professional staff

time + travel

expenses.

Continuing $1,200/day for

accreditation. professional staff

time related to

audits + travel

expenses; plus,

Percent of gross

revenues related to

the certification

program, up to

$40,000.

National Voluntary Laboratory Application fee.. $500.

Accreditation Program (NVLAP). Assessment fee per program/field,

(for $1,600 to $3,000 or

accreditation variable.

and every two

years).

[[Page 45102]]

Annual support per program/field,

fee. $3000 to $3,925 less

$2,200 for more than

one field.

Annual per program/field, $0

proficiency to $5,405 or

testing fee. variable.

American Association for Application fee.. $800.

Laboratory Accreditation Assessment fee Deposit of $3,000 +

(A2LA). (for $1,500/extra field/

accreditation lab, actual costs

and every two billed at $750/day +

years). travel expenses (fee

also paid for

surveillance visit

in 2nd year).

Annual fee....... $1,100 for first

field/lab, less for

two or more fields/

labs.

American Industrial Hygiene Application fee.. $250.

Association--Laboratory Site visit fee... $675/day or $2,400

Quality Assurance Programs. outside North

America + expenses.

Annual fee (also $300/program ($150/

due with program with

application). application after

Proficiency June 30)

analytical

testing program program/sample

fee. specific, also based

on # of samples, $86

to $1,800.

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III. Estimated Program Costs

Until now, OSHA has not accounted separately for the costs of the

NRTL Program. The personnel and other costs associated with performing

activities and functions related to the Program involve a number of

different offices throughout the Department of Labor. In preparing the

proposed fee schedule presented in this notice, OSHA has evaluated the

total resources that it has committed to the NRTL Program overall and

has then estimated the costs that are involved solely with the approval

and periodic review functions. It is these costs alone that OSHA seeks

to recover through its proposed fees. Personnel costs are the wages,

salary, and fringe benefit costs of the staff positions involved and

the number of full time equivalent (FTE) personnel devoted to the NRTL

approval and review activities. These estimates also include travel and

other costs of these activities. The Agency believes these estimates

are fair and reasonable.

Based on the total estimated costs and the total estimated FTE,

OSHA has calculated an estimated equivalent cost per hour (excluding

travel). This equivalent cost per hour includes both the direct and

indirect costs per hour for ``direct staff'' members, who are the staff

that perform the application, on-site, and legal reviews and the other

activities involved in application processing and audits. Direct costs

are expenses for direct staff members. Indirect costs are expenses for

support and management staff, equipment, and other costs that are

involved in the operation of the program. Support and management staff

consists of program management and secretarial staff. Equipment and

other costs are intended to cover items such as computers, telephones,

building space, utilities, and supplies, that are necessary or used in

performing the services covered by the proposed fees. Although

essential to the services provided, these indirect costs are not

readily linked to the specific activities involved in application

processing and audits and, as explained later, are therefore allocated

to the activities based on direct staff costs.

Figure 1 is an itemization of the estimated costs and the

equivalent cost per hour calculated. OSHA believes that the costs shown

fairly reflect the full cost of providing the services to NRTLs, but

OSHA mainly uses these costs to illustrate how the fees will be

calculated.

Figure 1.--Current Estimated Annual Costs of NRTL Program

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

Aver. cost per FTE

Cost description Est. FTE (including fringe) Total est. costs

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

Direct Staff Costs............................... 4.2 $83,860 $352,200

Travel........................................... na na 40,000

Indirect Staff & Other Costs..................... na na 76,300*

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Total Est. Program Costs......................... ........... ....................... 468,500

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

Avg. direct staff cost/hr ($352,200 4.2 ........... ....................... 40

FTE (2,080) hours)..............................

Equivalent avg. direct staff cost/hr ($428,500 ........... ....................... 49

4.2 FTE hours) (includes direct &

indirect costs).................................

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

* This amount consists of $29,800 of indirect staff costs and $46,500 for equipment and other costs.

The use of an ``equivalent average direct staff cost per hour''

measure is a convenient method of allocating indirect costs to each of

the services for which OSHA will charge fees. The same result is

obtained if direct staff costs are first calculated and then indirect

costs are allocated based on the value, i.e., dollar amount, of the

direct staff costs, which is an approach that is consistent with

Federal accounting standards. To illustrate, assume a direct staff

member spends 10 hours on an activity; the direct staff costs would

then be calculated as follows:

Direct staff costs = 10 hours x $40/hour = $400.

The $40/hour is the direct staff cost/hour amount shown in Figure

1. The indirect costs would be allocated by first calculating the ratio

of indirect costs to direct staff costs, again using the costs shown in

Figure 1. This ratio would be as follows:

Indirect costs/direct staff costs = $76,300/$352,200 = 0.217.

Next, the indirect costs would be calculated based on the $400

estimate of direct staff costs:

Indirect costs = $400 x 0.217 = $87.

[[Page 45103]]

Finally, the total costs of the activity are calculated:

Total costs = direct staff costs + indirect costs = $400 + $87 =

$487.

Taking into account the rounding shown in Figure 1, the actual

amount calculated would be $490.

After estimating program costs, the Agency then estimated the time

it spends on specific activities or functions. These estimates were

performed, in part, for the information collection package for the NRTL

Program submitted to OMB in September 1997 under the Paperwork

Reduction Act. OSHA calculated time estimates for each major service

category. These categories are: initial applications, expansion and

renewal applications, and audits. OSHA further divided each category

into the major activities performed and estimated the staff time and

travel costs for each of these activities. The Agency then calculated

the cost of each major activity using the time estimates, the

equivalent costs per hour, and the estimate of travel costs. These

costs then serve as the basis for the fees later shown in the proposed

fee schedule. Examples of the calculations are shown in Figures 2, 3,

and 4.

Figure 2.--Estimated Costs for Initial Application

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

Average Average

Major activity hours costs*

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

Initial Application Review

Staff time: (includes review by office and 80 $3,924

field staff).............................

On-Site Assessment--first day

Staff time: (includes 16 hours 28 1,373

preparation, 4 hours travel, 8 hours at

site)....................................

travel:................................... ........... 670

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

Total (per site, per assessor)............ ........... 2,043

On-Site Assessment--addnl. day

Staff time................................ 8 392

Travel amount: (to cover per diem)........ ........... 70

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

Total (per site, per assessor)............ ........... 462

Final Report & Federal Register notice

Staff time: (includes work performed by 160 7,848

field staff and office staff)............

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

Figure 3.--Estimated Costs for Expansion or Renewal Application

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

Average Average

Major Activity Hours Costs*

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

Initial Application Review (expansion)

Staff time: (includes review by office and 32 $1,570

field staff).............................

(Note for renewals: 2 hours, i.e. $98, are ........... ...........

allotted for processing the NRTL's

request).................................

On-Site Assessment--first day

Staff time: (includes 8 hours preparation, 20 981

4 hours travel, 8 hours at site).........

Travel:................................... ........... 670

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

Total (per site, per assessor)............ ........... 1,651

On-Site Assessment--addnl. day

Staff time................................ 8 392

Travel amount: (to cover per diem)........ ........... 70

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

Total (per site, per assessor)............ ........... 462

Final Report & Federal Register notice

Staff time: (includes work performed by 88 4,316

field staff and office staff)............

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

Figure 4.--Estimated Costs for On-Site Audit

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

Average Average

Major Activity Hours Costs*

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

Pre-site Review

Staff time: (field staff only)............ 8 $392

On-Site Audit--first day

Staff time: (includes 4 hours travel)..... 12 589

Travel:................................... ........... 670

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

Total (per site, per assessor)............ ........... 1,259

Final Report & Federal Register notice

Staff time: (includes work performed by 16 785

field staff and office staff)............

Total costs............................... ........... **2,436

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

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

* Average costs for staff time equal average hours x equivalent

average direct staff cost/hr ($49)

** Based on a one day audit. The costs for any additional days are the

same as the per-day costs for an assessment.

[[Page 45104]]

In deriving the fee amounts shown in the fee schedule, OSHA has

generally rounded the costs shown in Figures 2, 3, and 4, up or down,

to the nearest $50 or $100 amount.

OSHA believes that its proposed fee schedule, shown in Table A,

accurately reflects costs to the Agency for the staff time and travel

involved in performing and administering the application processing and

auditing activities. The amounts shown in the proposed schedule reflect

the Agency's current reasonable estimation of the costs involved for

the services rendered. As previously mentioned, OSHA is not attempting

to recover the entire costs of the NRTL Program through the proposed

fees but only the costs of providing these services. OSHA will publish

the fee schedule in the Federal Register with the final rule.

IV. Proposed New Paragraph

OSHA proposes a new paragraph ``(f) Fees'' under 29 CFR 1910.7 to

provide for the assessment and payment of fees for certain services

rendered to NRTLs and NRTL applicants. This new paragraph consists of

five parts, which provide the general framework that OSHA will use to

calculate, charge, and collect the fees. OSHA will provide the specific

details for calculating, charging, and collecting the fees through

appropriate OSHA Program Directives, consistent with the framework laid

out in this notice.

A. Obligation to Pay and Fee Assessment

OSHA proposes that the first part of paragraph (f) would read as

follows:

(1) Each applicant for NRTL recognition and each existing NRTL

must pay fees for services provided by OSHA. OSHA will assess fees

for the following activities:

(i) Processing of applications for initial recognition,

expansion of recognition, or renewal of recognition, including on-

site reviews; review and evaluation of the applications; and

preparation of reports, evaluations and Federal Register notices;

and

(ii) Audits of sites.

The Agency proposes that applicants seeking OSHA recognition (i.e.,

NRTL applicants) and organizations that OSHA has recognized as NRTLs

must pay fees required for the specific services that OSHA provides to

them. As previously described, the services for which the Agency would

charge fees are: (1) processing of applications for initial

recognition, expansion of recognition, or renewal of recognition, and

(2) audits, i.e, post-recognition on-site or office reviews. The

activities involved in providing these services have already been

described in general, and are described in more detail later in this

notice.

NRTL applicants would pay fees related only to initial application

processing. NRTLs would pay fees for applications for expansions and

renewal of recognition and for audits of the sites they use for their

NRTL operations. Typically, OSHA audits only the sites it has

recognized for an NRTL and contemplates assessing fees mainly for on-

site audits of these sites. However, the Agency allows NRTLs that have

appropriate controls to use non-recognized sites, such as testing sites

of other laboratories or even manufacturers, to conduct testing or

other activities necessary in certifying products. OSHA may need, for

good cause, to audit such sites to determine whether the NRTL or the

site properly controls the NRTL-related activities. For example, OSHA

may need to audit a manufacturer to determine how well it controls the

NRTL's certification mark or maintains production or quality controls.

NRTLs would pay for these ``special'' audits and would be billed

accordingly.

B. Fee Calculation

OSHA proposes that the second part of paragraph (f) would read as

follows:

(2) The fee schedule established by OSHA reflects the estimated

cost of performing the tasks and functions for each activity. OSHA

calculates the fees based on the average time required to perform

the work necessary; the staff costs per hour (which include wages,

fringe benefits, and expenses other than travel for personnel that

perform or administer the activities covered by the fees); and an

estimate of the average costs for travel when on-site reviews are

involved. The formula for the fee calculation is as follows:

Activity Fee = Average Hours to Complete the Activity x Staff

Costs per Hour + Travel Costs.

Each activity represents tasks and functions that OSHA performs to

accomplish a particular phase of the service the Agency provides to the

recipients (i.e., NRTLs or NRTL applicants). OSHA would compute the

fees on the basis of the average time spent on each task or function.

This will simplify the accounting for the NRTL and for OSHA.

The tasks and functions for which OSHA currently plans to charge a

fee are: initial, expansion, and renewal applications; on-site

assessment (per person, per site--first day) and on-site assessment

(per person, per site--each additional day); review and evaluation (per

standard)--initial and expansion applications; final report/Federal

Register notice--initial and expansion or renewal applications; on-site

audit (per site) and office audit (per site); and miscellaneous. The

fee for each task or function--which equals the estimated cost of the

work involved--would equal the average estimated staff time to perform

the work multiplied by an equivalent staff cost per hour, plus an

estimate of average travel costs for on-site assessment or audit

activities. Figure 1 describes how the equivalent staff cost per hour

is derived.

OSHA would include as direct and indirect costs the estimated

expenses described in Section III above.

C. Annual Review of Fee Schedule and Issuance

OSHA proposes that the third part of paragraph (f) would read as

follows:

(3) OSHA will review costs and estimates annually and will

propose a revised fee schedule, if warranted. In its review, OSHA

will apply the formula established in paragraph (f)(2) of this

section to the current estimated costs for the NRTL Program. If a

change is warranted, OSHA will follow the schedule in paragraph

(f)(4) of this section. OSHA will issue all fee schedules in the

Federal Register. Once issued, a fee schedule remains in effect

until it is superseded. Any member of the public may request a

change to the fees included in the current fee schedule. Such a

request must include appropriate documentation in support of the

suggested change.

The first proposed fee schedule is set forth in Table A. Once

issued, the fee schedule would remain in effect until it is superseded

by another schedule. OSHA would annually review the costs and estimates

of the program to determine whether any changes to the fees are

warranted. In addition, OSHA would consider requests for changes to the

fee schedule that it receives from the public. In performing any

review, OSHA will apply the formula established in this regulation to

the current estimated costs for the program to determine whether any

changes to the fee schedule are warranted. If change is warranted, OSHA

would publish a notice to provide the NRTLs and other members of the

public an opportunity to comment on such changes. The Agency would

follow the implementation schedule shown in paragraph (f)(4) of this

proposed rule. OSHA would issue the initial and all subsequent fee

schedules in the Federal Register. In addition, OSHA would provide more

specific details regarding implementation of the fees proposed in this

rule through appropriate program directives.

D. Fee Implementation

OSHA proposes that the fourth part of paragraph (f) would read as

follows:

[[Page 45105]]

(4) OSHA will implement fee assessment, collection, and payment as

follows:

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

Approximate dates Action required

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

Application Fees

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

Time of application.................... Applicant must pay the

applicable fees shown in the

Fee Schedule when submitting

the application; OSHA will not

begin processing until fees

are received.

Publication of preliminary notice...... Applicant must pay remainder of

fees; OSHA cancels application

if fees are not paid when

due.s0

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

Audit Fees

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

November 1............................. OSHA will publish proposed new

Fee Schedule in the Federal

Register, if OSHA determines

changes in the schedule are

warranted.

November 16............................ Comments due on the proposed

new Fee Schedule.

December 15............................ OSHA will publish the final Fee

Schedule in the Federal

Register.

January 1.............................. OSHA will bill each existing

NRTL for the audit fees shown

in the Fee Schedule, including

estimated travel costs.

February 1............................. NRTLs must pay audit fees; OSHA

will assess late fee if audit

fees are not paid.

February 15............................ OSHA will send a letter to the

NRTL requesting immediate

payment of the audit fees and

late fee.

March 1................................ OSHA will publish a notice in

the Federal Register to revoke

recognition for NRTLs that

have not paid audit fees for

the year.

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

We discuss application fees under paragraph E below and under Fee

Schedule and Description of Fees, Section V of this notice. OSHA would

assess an applicant the fees in effect on the submission date of the

application.

Regarding the remainder of the schedule, OSHA needs approximately

30 days after the close of the government fiscal year (GFY), September

30, to obtain the estimates and costs for its annual review of the fee

schedule. Therefore, approximately on November 1 of each year, when

warranted, OSHA would publish a proposed new Fee Schedule, including a

report on the estimated costs that are the basis of the fees. The

period for comments would be no less than 15 calendar days.

Approximately 30 days thereafter, OSHA would officially issue the Fee

Schedule in the Federal Register.

In January of each year, OSHA would bill each NRTL for the

appropriate audit fee shown in the Fee Schedule in effect at the time

the bill is mailed. OSHA anticipates that most of the bills would be

for on-site audits. The Agency would include the appropriate

supplemental amounts for travel outside the 48 contiguous states, if

applicable. The NRTL would be automatically assessed the late fee,

shown in the Fee Schedule, if OSHA does not fully receive the amount

billed within 30 days. Fifteen days thereafter, OSHA would also issue a

letter notifying the NRTL of the failure to pay the fees for the audit

and requesting immediate payment, including a late fee. If the NRTL

fails to fully pay those fees within 15 days of the issuance of the

letter, OSHA would publish a notice in the Federal Register announcing

its intent to revoke the NRTL's recognition. OSHA would then proceed

with permanent revocation of the NRTL's recognition. In revoking

recognition due to non-payment of fees, OSHA would follow the

procedures described in this paragraph and not those under II.E of

Appendix A to 29 CFR 1910.7.

OSHA would bill the NRTL separately for additional audits of a site

or for any ``special'' audits. OSHA would bill the NRTL for these fees

prior to the commencement of such an audit and would follow the same

collection process here as described above for a regular audit. OSHA

would refund the audit fee for any audit, whether or not annual, that

it does not perform. OSHA would follow similar collection procedures

for any additional or special assessment that it must perform in

connection with an application.

E. Details for Payment

OSHA proposes that the fifth and last part of paragraph (f) would

read as follows:

(5) OSHA will provide the details regarding how to pay the fees

through appropriate OSHA Program Directives.

For application processing, OSHA anticipates that it will bill the

NRTL applicant or NRTL for balance of fees due, including actual travel

expenses, at the time the preliminary notice is published; the Agency

will also refund any balances due at that time. Also, for expansions

and renewals, applicants would not pay the assessment fee at time of

application, but OSHA would bill an applicant for these fees if it

determines an assessment is necessary. In such cases, OSHA will not

begin the assessment until fees are received. For audits, additional

days of audit time will be billed after an audit. Also, any difference

between actual travel expenses and the travel amounts in the fee

schedule will be billed or refunded to the NRTL. For applications and

audits, any fees that are not paid when due would result in

cancellation of application or revocation of recognition, as

appropriate. OSHA also anticipates that all fees must be paid in U.S.

dollars by certified check or money order drawn on a U.S.-based

institution or organization. The fee schedule would include appropriate

details about fee payments.

Additionally, the Agency plans to implement the fees 30 calendar

days after the effective date of this rule. Any application received by

OSHA on or after that date will be subject to the fees. Also, any

pending application (i.e., an application that OSHA has not yet

completed processing) on this effective date will be subject to the

fees for the activities that OSHA has not yet commenced. OSHA would

bill applicants, accordingly.

V. Fee Schedule and Description of Fees

OSHA proposes the following fee schedule:

Table A.--Fee Schedule; Nationally Recognized Testing Laboratory Program

(NRTLP)

Fee Schedule (Effective ______*)

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

Fee Category (per

Type of Service application unless Fee Amount

noted otherwise)

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

Application Processing............. Initial Application 3,900

Fee 1.

Expansion Application 1,550

Fee 2.

Renewal Application 100

Fee 2.

Assessment Fee-- 2,050

Initial Application

(per person, per

site--first day) 3,

4, 8.

[[Page 45106]]

Assessment Fee-- 1,650

Expansion or Renewal

Application (per

person, per site--

first day) 3, 4, 8.

Assessment Fee (per 450

person, per site--

each addnl. day) 3,

4, 8.

Review & Evaluation 50

Fee (per standard) 5

(for initial or

expansion

applications).

Final Report/Register 7,850

Notice Fee--Initial

Application 5.

Final Report/Register 4,300

Notice Fee--Expansion

or Renewal

Application 5.

Audits............................. On-site Audit Fee (per 2,450

person, per site--one

day) 6, 8 (each

additional day is

billed at $450 per

day).

Office Audit Fee 6.... 400

Miscellaneous...................... Staff Costs Fee (per 400

day) 7.

Late Payment Fee...... 50

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

Notes:

\1\ Only NRTL applicants must pay the Initial Application Fee. These

fees must be included with the application.

\2\ An NRTL must pay the Expansion Application Fee for each request to

expand its recognition. An NRTL must pay the Renewal Application Fee

for its initial renewal request or for any notification to certify its

continuing compliance. These fees must be included with the

application.

\3\ An NRTL applicant must pay the first day and the additional day

Assessment Fees. These fees must be included with the application. For

expansion and renewal applications, OSHA will bill the NRTL for the

appropriate Assessment Fees if an assessment is necessary. The NRTL

must pay the fee before OSHA commences any assessment activities.

\4\ The appropriate supplemental fee must be included for sites located

outside the 48 contiguous U.S. states (see Supplemental Travel Costs

table). OSHA will assess actual travel costs and actual number of

assessment days in the bill mentioned in note 5. See note 8 for

possible refund of Assessment Fees.

\5\ OSHA will bill NRTL applicants and NRTLs for the Review and

Evaluation and the appropriate Final Report/Register Notice Fees at

the time it publishes the preliminary Federal Register notice. OSHA

will cancel applications if payment is not received when due.

\6\ OSHA will bill the NRTL annually for the audit fee (on-site or

office, as deemed necessary) and will include the appropriate

supplemental fee for sites located outside the 48 contiguous U.S.

states (see Supplemental Travel Costs table). OSHA will revoke the

NRTL's recognition for failure to pay an audit fee. OSHA will assess

actual travel costs after any on-site audit.

\7\ Current estimated equivalent staff costs per hour = $49.

\8\ Refund of Fees: Except for the Assessment and On-site Audit Fees,

OSHA will not refund any fees after it receives payment. Assessment

and On-site Audit Fees will be refunded as follows:

Refund = 100% of Assessment Fee paid, for withdrawn applications, if

preparation for on-site not started, or OSHA does not perform

assessment.

Refund = 100% of Assessment Fee paid less Staff Costs Fee, for withdrawn

applications if only preparation for on-site started.

Refund = 0% of Assessment Fee paid, if travel for on-site visit

commences

Refund = 100% of On-site Audit Fee paid, if OSHA does not perform audit

(even if preparation for on-site started).

Refund = 0% of On-site Audit Fee paid, if travel for on-site visit

commences.

* Applicants must pay the application fees in effect on the date it

submits the application. NRTLs must pay the audit fee in effect on the

date OSHA sends the bill for the audit. [Note: for the initial fee

schedule, any pending application (i.e., an application that OSHA has

not yet completed processing) on this effective date will be subject

to the fees for the activities that OSHA has not yet commenced.]

The fee schedule shows the current activities for which OSHA plans

to charge fees. However, the Agency may find, after it has gained

experience charging the fees or based upon suggestions it receives,

that it may be better to further break down or even combine some fee

categories. OSHA would give the public an opportunity to comment on any

such changes. However, these changes would merely reapportion costs or

further detail the fees; they would not apply to different services

than those described in this proposed rule. In evaluating any changes

to a fee schedule, OSHA would also consider the following in

determining the fees it needs to charge for its services: (1) actual

expenditures (direct and indirect) of the most recently completed

government fiscal year for rendering the services for which fees will

be charged, and (2) estimated costs (direct and indirect) of the

upcoming government fiscal year for rendering the services for which

fees will be charged.

OSHA proposes that an organization applying for either an initial

NRTL recognition or a renewal must include the application fee and on-

site review (``assessment'') fee with the application. Applications

received solely for an expansion of NRTL recognition would include only

the application fee. OSHA would bill the NRTL for the assessment fee if

it must perform an on-site review for the expansion request. The Agency

would not perform the review until it receives the assessment fee. This

would ensure that OSHA's costs will be reimbursed, regardless of how

the application process turns out. If an applicant withdraws its

application prior to commencement of on-site assessment activities, the

Agency would refund any on-site assessment fee it has collected.

However, if OSHA has commenced preparation for the on-site visits, it

would refund only a portion of the assessment fee. The amount refunded

would equal the assessment fee collected less the daily assessor rate

(currently, 8 hours x $49/hr, rounded to $400 in the fee schedule).

The Agency would not refund the assessment fee if the on-site visit had

commenced. Also, OSHA would bill the organization for the balance of

the fees at the time of publication of the initial Federal Register

notice.

The following is a description of the tasks and functions currently

covered by each type of fee category, e.g., application fees, and the

basis used to charge each fee.

Application Fees: This fee would reflect the technical work

performed by office and field staff in reviewing application documents

to determine whether an applicant submitted complete and adequate

information. The application review does not include a review of the

test standards requested, which is reflected in the review and

evaluation fee. Application fees would be based on average costs per

type of application. OSHA plans to use average costs since the amount

of time spent on the application review does not vary greatly by type

of application. This is

[[Page 45107]]

based on the premise that the number and type of documents submitted

will generally be the same for a given type of application. Experience

has shown that most applicants follow the application guide that OSHA

provides to them.

Assessment Fees: This fee would be different for initial and for

expansion or renewal applications. It is based on the number of days

for staff preparatory and on-site work and related travel. Three types

of fees are shown, and each one would be charged per site and per

person. The two fees for the first day reflect time for office

preparation, time at the applicant's facility, and an amount to cover

travel in the 48 contiguous states. A supplemental travel amount (to be

included with the fee schedule) would be assessed for travel outside

this area. These travel amounts are only estimates for purposes of

submitting the initial fees. The applicant or NRTL would be billed

actual expenses, based on government per diem and travel fares. Any

difference between actual travel expenses and the travel amounts in the

fee schedule will be reflected in the final bill or refund sent to the

applicant or NRTL.

Similar to the application fee, the office preparation time

generally involves the same types of activities. Actual time at the

facility may vary, but the staff devote at least a full day for

traveling and for performing the on-site work. The fee for the

additional day reflects time spent at the facility and an amount for

one day's room and board.

Review and Evaluation Fee: This fee would be charged per test

standard (which is part of an applicant's proposed scope of

recognition). The fee reflects the fact that staff time spent in the

office review of an application varies mainly in accordance with the

number of test standards requested by the applicant. The fee would be

based on the estimated time necessary to review each standard to

determine whether it is ``appropriate,'' as defined in 29 CFR 1910.7,

and whether it covers equipment for which OSHA mandates certification

by an NRTL. The fee also covers time to determine the current

designation and status (i.e., active or withdrawn) of a test standard

by reviewing current directories of the applicable test standard

organization. Furthermore, it includes time spent discussing the

results of the application review with the applicant. The actual time

spent will vary depending on whether an applicant requests test

standards that have previously been approved for other NRTLs. The

current estimated average review time per standard is one hour.

Final Report/Register Notice Fees: Each of these fees would be

charged per application. The fee would reflect the staff time to

prepare the report of the on-site review (i.e., assessment) of an

applicant's or an NRTL's facility. The fee also reflects the time spent

making the final evaluation of an application, preparing the required

Federal Register notices, and responding to comments received due to

the preliminary finding notice. These fees are based on average costs

per type of application, since the type and content of documents

prepared are generally the same for each type of applicant.

Audit (Post-Recognition Review) Fees: These fees would reflect the

time for office preparation, time at the facility and travel, and time

to prepare the audit report of the on-site audit. A separate fee is

shown for an office audit conducted in lieu of an actual visit. Each

fee is per site and does not generally vary for the same reasons

described for the assessment fee and because the audit is generally

limited to one day. As previously described, the audit fee would

include amounts for travel, and, similar to assessments, OSHA will bill

the NRTL for actual travel expenses.

Miscellaneous Fees: The sample fee schedule only shows the average

cost for one full day of staff time. OSHA would use this fee primarily

in cases of refunding the assessment fee. OSHA will also charge a fee

for late payment of the annual audit fee.

The amount for the late fee is based on 1 hour of staff time.

VI. Reduction of Public Comment Period

OSHA proposes to amend provisions in Appendix A to 29 CFR 1910.7 to

reduce the 60-day comment period currently required for the

``preliminary'' Federal Register notices. ``Preliminary'' refers to the

first of the two notices that OSHA must publish to initially recognize

an organization as an NRTL, or to expand or renew an NRTL's

recognition. The notice is termed preliminary since it announces OSHA's

``preliminary finding'' on an initial, expansion, or renewal

application. In recent years, OSHA has received few or no comments on

the preliminary notices. The few comments received, even when

substantive, could have been prepared and submitted in much less than

60 days.

Regarding expansions, NRTLs must routinely adopt new test standards

for the products that are within their testing and certification

capability. Many of the new test standards include new or additional

tests to meet new or revised national or international safety criteria

or requirements, and supersede those for which OSHA has already

recognized the NRTL. As a result, the NRTL must often apply to OSHA to

``expand'' its recognition as an NRTL to enable it to use those new

test standards. While the NRTL may ``expand'' its recognition primarily

to attain or maintain an economic benefit, timely recognition of those

new test standards for the NRTL could also affect safety in the

workplace. The shorter periods would speed up approval of those

expansions.

Also in support of the shorter periods, Federal Register notices

are currently accessible to the public through the Office of the

Federal Register web site on the day they are published. Given the

rapid telecommunication (e.g., Internet, electronic mail, fax)

capabilities that now exist throughout the world, comments or requests

for an extension of the comment period can be filed in much less time

than 60 days. Therefore, OSHA proposes to amend the provisions in

Appendix A to provide a 30-day comment period for applications for

initial recognitions as an NRTL. This period is consistent with that

provided for the Agency's rulemaking notices.

OSHA also proposes to amend Appendix A to provide a 15-day comment

period for requests by an NRTL for expansion or renewal of its

recognition. The shorter period reflects the nature and scope of the

Agency's evaluation of these requests and the anticipated issues that

such requests will present to anyone who believes that the NRTL's

request affects them. OSHA does not view either of the shorter periods

as a way to limit comments, since reviewers of the notice can always

request an extension of the comment period if they need more time for

presenting any comments. OSHA will include a statement regarding such

extensions in the preliminary notices.

VII. Preliminary Economic Analysis

Executive Order 12866 and the Regulatory Flexibility Act require

Federal agencies to analyze the cost, and other consequences and

impacts, of proposed and final rules. Consistent with these

requirements, OSHA has prepared this preliminary economic analysis to

accompany a proposal by OSHA that would allow the Department of Labor

to charge and retain fees for services provided to Nationally

Recognized Testing Laboratories (NRTLs). The analysis includes a

description of the industry, an estimation of the costs of compliance,

and an evaluation of the economic and

[[Page 45108]]

other impacts of the proposed rule on firms in this sector. The

analysis also examines the costs and impacts of the proposal on

affected small entities, as defined by the Small Business

Administration.

Affected Industry

The standards adopted and mandated in OSHA regulations stipulate

that certain equipment and materials used in the workplace meet minimum

criteria for performance or safety. In 29 CFR Parts 1910 (governing

hazards in general industry) and 1926 (governing hazards in the

construction industry), there are more than 160 paragraphs that require

certain equipment to be either safety tested, listed, or approved in

order for that equipment to be used in the workplace. Table 1 provides

a listing of the types of equipment that require testing, listing or

approval by NRTLs. The requirements to test, list or approve equipment

are necessary to ensure that employees use appropriate safe equipment

2. Although it is ultimately the employer's responsibility

to provide safe equipment, few, if any, have the technical capabilities

to test items such as electrical conductors and equipment, the fire

resistance properties of materials, the lifting capacity of scaffold

hoists, etc., for safety.

\2\ A substantial amount of equipment tested is used in

situations other than those in which OSHA has sole interest. As one

example, electrical conductors and equipment installed in buildings

must conform with the state and local building code, the National

Electrical Code, and any requirements established by the property

insurer. In addition, manufacturers have products examined by

testing laboratories in order to meet the demands of their product

liability insurers as well as to improve the product. Thus, OSHA is

not the only organization concerned about the safety of many of

these products.

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

Table 1. Categories of Equipment/Materials Required by Various

Provisions in OSHA's Standards to Be Certified by an NRTL.

Electrical Conductors or Equipment

Automatic Sprinkler Systems

Fixed Extinguishing Systems (Dry chemical, water spray,

foam or gaseous agents)

Fixed Extinguishing Systems Components and Agents

Portable Fire Extinguishers

Automatic Fire Detection Devices and Equipment

Employee Alarm Systems

Self-Closing Fire Doors

Fire (B) Doors

Windows (Frames)

Heat Actuated (Closing) Devices (Dip Tanks)

Exit Components

Spray Booth Overspray Filters

Flame Arresters, Check Valves, Hoses (Transfer Stations),

Portable Tanks, and Safety Cans--Flammable Combustible Liquids)

Pumps and Self-Closing Faucets (for Dispensing Class I

Liquids)

Flexible Connectors (Piping, Valves, Fittings)

Service Station Dispensing Units (Automotive, Marine)

Mechanical or Gravity Ventilation Systems (Automotive

Service Station Dispensing Area)

Automotive Service Station Latch--Open Devices for

Dispensing Units

New Commercial and Industrial LPG Consuming Appliances

Flexible Connectors (Piping, Valves, Fittings)--LPG

Powered Industrial Truck LPG Conversion Equipment

LPG Storage and Handling Systems (DOT Containers,

Cylinders)

Automatic Shut-off Devices (Portable LPG Heaters Including

Salamanders)

LPG container assemblies (non-DOT) for interchangeable

installation above or under ground.

Fixed electrostatic apparatus and devices (coating

operations).

Electrostatic hand spray apparatus and devices.

Electrostatic fluidized beds and associated equipment.

Each appurtenance (e.g., pumps, compressors, safety relief

devices, liquid-level gauging devices, valves and pressure gauges)

in storage and handling of anhydrous ammonia.

Gasoline, LPG, diesel, or electrically powered industrial

trucks used in hazardous atmospheres.

Acetylene apparatus (torches, regulators or pressure-

reducing valves, generators [stationary and portable], manifolds).

Acetylene generator compressors or booster systems.

Acetylene piping protective devices.

Manifolds (fuel gas or oxygen)--separately for each

component part or as assembled units.

Scaffolding and power or manually operated units of single-

point adjustable suspension scaffolds.

Hoisting machine and supports (Stone setters' adjustable

multiple-point suspension scaffold).

Hoisting machines (Two-point suspension; Masons' adjustable

multiple-point suspension scaffold).

Source: U.S. Department of Labor, OSHA, Office of Regulatory

Analysis, 1997.

A product testing lab tests equipment in accordance with test

criteria, such as those standards established by Underwriters

Laboratories (UL), Factory Mutual Research Corporation (FMRC), the

American National Standards Institute (ANSI), or the American Society

for Testing and Materials (ASTM). These standards typically contain

requirements concerning the design specifications of the equipment, the

specific physical tests to be performed, the criteria for passing these

tests, etc. The development of a product test standard for a particular

type of product is a deliberate, lengthy, and expensive process that

involves a team of engineers and scientists. In addition, test standard

development is a dynamic process in which test standards are constantly

revised. For example, UL generally reviews each of its test standards

at least once every 3 years. Further, at any point in time, between 10

and 20 percent of the UL test standards have been changed during the

preceding 6 months. In light of this effort and expense, very few

organizations develop their own product test standards.

Independent testing labs are entities that are separate from any

manufacturer, trade association, or equipment vendor. They typically

test a variety of products or substances within one or more general

testing disciplines (e.g., electrical, thermal, mechanical) for many

clients, such as manufacturers, trade associations, physicians, and

state agencies. Most of the smaller labs specialize in testing specific

types of products within one or two general testing disciplines. Even

the larger testing labs tend to specialize within one or two general

testing disciplines and do not test every type of product within a

general testing discipline.

According to the 1992 Census, there are approximately 4,704

independent testing labs in the United States, of which 4,540 are

profit making and 164 are not-for-profit (see Table 2). Of the 4,704

testing labs, 1,776 perform chemical or biological testing 3

and about 2,928 concentrate on product testing [1]. The second category

of testing labs performs such types of tests as electrical resistance

or capacity, fire resistance of materials, materials strength, acoustic

and vibration testing, etc. Some of these testing labs will be affected

by the proposed rule. Total combined receipts for taxable and non-

taxable establishments were $5.13 billion in 1992. Not-for-profit

establishments represent 3.4 percent of the total number of testing

establishments and 7.2 percent of total revenues.

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

\3\ Biological and chemical testing labs perform such tests as

chemical composition of substances, blood tests, etc., and would not

be affected by the proposed rule.

[[Page 45109]]

Table 2.--Characteristics of Testing Laboratories

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

Percent

Number of Number of Number of Total receipts b

firms establishments employees receipts ($ from

million) testing

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

Taxable Establishments...................... 3,513 4,540 70,462 $4,764 94.47

Non-Taxable Establishments.................. a 135 164 6,256 371 90.13

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

Source: US Department of Commerce. 1992 Census of Service Industries. SC92-S-1. February 1995.

(a) Calculated based on the ratio of non-taxable firms to establishments in SIC 873.

(b) Other sources of receipts for taxable and non-taxable labs include physical or biological research and

development, engineering consulting and design, and contributions (tax-exempt labs only).

By 1992, the testing industry increased by 40 percent, from a total

of 3,458 testing labs in 1987; there are several reasons for this

growth. First, as technology grows more complex, fewer personnel within

the equipment manufacturing organization have the technical expertise

to certify the quality of the finished product, i.e., fewer people in a

given organization have the ability to perform the overall product

certification function. Product testing laboratories can help to

provide this quality assurance function. Second, the increase in

product liability suits has encouraged manufacturers to take additional

steps to verify the safety characteristics of their products. Third,

more information is now being sought on product toxicity [2].

The testing industry employs 76,718 workers. Small establishments

with one to nine employees represent 3,002 establishments (64 percent

of all establishments), but collectively employ only 11,095 employees

(14 percent of all employees).

The proposed rule contains requirements for the payment of fees for

services provided by OSHA to the NRTLs. The two distinct groups of

testing labs that will be affected by the proposed rule are: (1)

testing labs that will seek acceptance by OSHA as ``nationally

recognized testing labs'' for particular types of equipment testing,

listing, and approval required under Part 1910.7, and (2) existing

NRTLs wishing to retain their eligibility for testing and certification

of workplace equipment and/or to expand their NRTL program. Testing

labs that do not seek OSHA acceptance will not be affected by the

proposed rule and will, therefore, incur no costs of compliance.

In 1998, there were 17 testing laboratories that had NRTL status

and that operated 40 testing facilities (sites). Table 3 lists the

laboratories and the number of sites for these labs. Both domestic and

foreign testing laboratories may be affected by this proposal. The

Canadian Standards Association (CSA) is a product testing lab that is

Canadian-owned and operated and is the only foreign testing lab that

has, to any significant degree, entered the American product safety

testing market. CSA certification is accepted by some state and local

building code authorities.

Table 3.--Nationally Recognized Testing Laboratories (NRTLS)

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

Number of

Testing laboratory sites

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

1. American Gas Association Laboratories (AGA)............ 2

2. Applied Research Laboratories (ARL).................... 1

3. Canadian Standards Assocaition (CSA)................... 6

4. Communication Certification Laboratory (CCL)........... 1

5. Detroit Testing Laboratory (DTL)....................... 1

6. Electro-Test, Inc. (ETI)............................... 2

7. Entela, Inc. (ENT)..................................... 2

8. Factory Mutual Research Corporation (FM)............... 2

9. Intertek Testing Services NA, Inc. (ITS)............... 8

10. MET Laboratories (MET)................................. 1

11. National Technical Systems............................. 1

12. NSF International...................................... 1

13. SGS U.S. Testing Co., Inc. (SGS)....................... 2

14. Southwest Research Institute (SwRI).................... 1

15. TUV Rheinland of North America, Inc. (TUV)............. 1

16. Underwriters Laboratories (UL)......................... 7

17. Wyle Laboratories, Inc. (WL)........................... 1

TOTAL.................................................. 40

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

Source: US Department of Labor, OSHA, Office of Regulatory Analysis,

1998.

Costs

This section presents preliminary estimates of the costs that will

be incurred by firms to come into compliance with the proposed rule for

NRTL fees. These costs do not represent new costs to the economy;

instead, they represent a new method of paying for the costs of the

NRTL certification program. Today, these costs are paid by taxpayers as

part of OSHA's budget. This proposal would transfer the payment of

these costs to the NRTLs themselves and NRTL applicants. OSHA welcomes

comments on the preliminary costs presented and assumptions used in

this Preliminary Economic Analysis.

Testing laboratories participating in the OSHA program will be

subject to costs for two types of services: (1) application processing

for the initial recognition of an organization, and for expansion and

renewal of an existing NRTL's recognition; and (2) audits (post-

recognition reviews), which enable the NRTL to maintain its recognition

from OSHA. The fees for these services are based on the actual cost of

the service rendered and will thus vary by circumstances. Table A,

previously shown in Part III of this notice, shows the elements of the

fee structure and a sample fee schedule. The activities covered by each

category of fees are explained in detail in that part.

OSHA relied on a review of the NRTL application information from

1988 to 1996 to develop estimates on the annual number of new

applicants, and expansion and renewal requests. On average, OSHA

receives about 3 initial applications for NRTLs and 3 applications for

renewal, and 7 applications for expansions on an annual basis.

OSHA expects to receive several NRTL application requests from

foreign-based testing laboratories as a result of a Mutual Recognition

Agreement (MRA) between the United States and the European Union (EU).

Through the MRA, foreign labs located in the EU that apply for and are

recognized as NRTLs can perform the same activities as US based NRTLs.

The fees proposed by OSHA will ensure that US taxpayers are not

subsidizing foreign businesses. At this time, there is insufficient

information to quantify the number of foreign labs that may apply for

NRTL status and their future costs of compliance for these labs.

OSHA estimates that labs will require approximately 0.5 hours of an

accountant's time to estimate OSHA-related activities and to process

payment. Employee wages are based on the Bureau of Labor Statistics

estimate of total employee compensation for the professional specialty

of $30.17 per

[[Page 45110]]

hour [3]. These costs and the estimated fee costs are shown combined in

Table 5.

Estimates of the total cost of full compliance with the

requirements of the proposed NRTL fee rule are presented in Table 4.

This table also shows OSHA's estimates of the average fee for each type

of service costs, as well as a current estimate of total annual fee

collections. Total estimated costs for the testing laboratory industry

would amount to about $240,000 annually. OSHA estimates that initial

recognitions will cost an average of $20,423 per establishment,

expansions of recognition application will cost an average of $7,820

per establishment, renewals of recognition will cost an average of

$8,641 per establishment, and annual audits will cost an average of

$2,436 per establishment.

Table 4.--Summary of Total Estimated Fee Collection by Category

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

Average

cost per Est No. per Estimated

Category application year fee

or audit collection

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

Initial Recognition Applications. $20,423 3 $61,269

Expansion of Recognition 7,820 7 54,739

Applications....................

Renewal of Recognition 8,641 3 25,924

Applications....................

Annual Site Visits (Audits)...... 2,436 40 97,432

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

Total............................ ........... ........... 239,364

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

Source: Office of Technical Programs and Coordination Activities, 1999.

Economic Impacts

OSHA assessed the potential economic impacts of the costs of

compliance with the proposed standard for NRTL fees and has

preliminarily determined that the standard is economically feasible for

firms in this industry. The proposal would have the advantage of

encouraging economic efficiency by pricing the service of the NRTL

program rather than providing the service for free. As mentioned above,

the cost of the NRTL program is currently borne by taxpayers through

OSHA's budget. This proposal would transfer the payment of some of

these costs to firms receiving the service from OSHA.

To determine whether the proposed rule's projected costs of

compliance would raise issues of economic feasibility for the affected

industry, i.e., would adversely alter the competitive structure of the

industry, OSHA developed quantitative estimates of the economic impact

of the proposed rule on establishments in the affected industry, and

thus on the 17 firms already recognized as NRTLs. In this analysis,

compliance costs are compared with industry revenues and profits.

Estimates of compliance costs are compared with estimates of annual

revenues based on data from the U.S. Department of Commerce, Bureau of

the Census, ``Table 3: United States--The Number and Percent of Firms,

Establishments, Employment, Annual Payroll, and Estimated Receipts by

Industry and Employment Size for 1993,'' while estimates of pre-tax

profits for most industries are based on data from Robert Morris

Associates [3].

OSHA compared the baseline financial data with total annual

compliance costs by computing compliance costs as a percentage of

revenues. Table 5 shows compliance costs as a percentage of sales and

pre-tax profits. This table is titled a screening analysis because it

simply measures costs as a percentage of pre-tax profits and sales and

does not predict impacts on these sales and pre-tax profits. The

screening analysis is used to determine whether the compliance costs

potentially associated with the proposed NRTL fee could lead to

significant impacts on the affected firms. The actual impact of the

proposal on the profits and sales of firms will depend on the price

elasticity of demand for the services provided by the affected firms.

Table 5.--Screening Analysis to Identify Possible Economic Impacts of the Proposed NRTL Fe

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

Annualized costs of

compliance as a percent

Annual costs Revenues Pre-tax of

of compliance ($1000) profits -------------------------

($1000) \1\ Pre-Tax

Sales Profit

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

Testing Laboratories (SIC 8734)....... $239,825 $5,547,796 $316,224 0.004 0.08

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

Sources: US Department of Labor, OSHA, Office of Regulatory Analysis, 1998; Office of Technical Programs and

Coordination Activities, 1999. US Small Business Administration, Office of Advocacy. Table 3: US

Establishments, Employment, and Payroll by Industry and Firm Size, 1993.

\1\ Revenues do not include foreign laboratories sales.

Price elasticity refers to the relationship between the price

charged for a product and demand for that product; that is, the more

elastic the relationship, the less able a firm is to pass the costs of

compliance through to its customers in the form of a price increase and

the more it will have to absorb the costs of compliance from its

profit. When demand is inelastic, firms can absorb all the costs of

compliance simply by raising the prices they charge for the service;

under this scenario, profits are untouched. Where demand is inelastic,

the impact of compliance costs that amount to 1 percent of revenues

would be a 1 percent increase in the price of the product, with no

decline either in demand or in profits. Such a situation would be most

likely when there are few, if any, substitutes for the service offered

by the affected establishments and where such services account only for

a small portion of the income of its consumers. When demand is elastic,

firms cannot absorb all of the costs simply by passing the cost

[[Page 45111]]

increase through in the form of a price increase; instead, they must

absorb some of the increase from their profits. In this case, no

increase in price is possible, and before-tax profits would be reduced

by an amount equal to the costs of compliance. Under this scenario, if

the costs of compliance are a large percentage of the establishment's

profits, some establishments might be forced to close. This scenario is

highly unlikely to occur, however, because it can only arise when there

are other services that are, in the eyes of consumers, perfect

substitutes for the services the affected establishments provide. A

common intermediate case would be a price elasticity of one. In this

situation, if the costs of compliance amount to 1 percent of revenues,

then production would decline by 1 percent and prices would rise by 1

percent. In this case, establishments remain in business and maintain

the same profit as before but would produce 1 percent less product or

service. Consumers would effectively absorb the costs through a

combination of increased prices and reduced consumption; this, as the

court described in ADA v. Secretary of Labor, is the more typical case.

As shown in Table 5, the impacts potentially imposed by the

proposed rule are not sizeable on the industry. On average, annualized

compliance costs would amount to only 0.004 percent of estimated

industry revenues and 0.08 percent of estimated profits. Even if no

price increase were possible, a 0.08 percent decline in profits would

not threaten the viability of the industry. These impacts are

overestimated since the revenues do not include foreign organization

revenues. Thus, the proposed rule is preliminarily determined to be

economically feasible for affected laboratories.

As previously noted, OSHA has received a comment from a

``stakeholder'' that stated the proposed fees would have a significant

impact on the manufacturers who are customers of NRTL services [Ex. 2-

19]. However, they did not present any information or evidence of such

impacts. Testing fees are minor costs compared with the product's

development and manufacturing costs. The price of testing entails not

only the charges for the direct testing service, but also the length of

time taken by the testing process. In other words, the time spent by

the manufacturer waiting for the product to be tested is time during

which the product is not being sold and the manufacturer is not

receiving the income necessary to offset the expenses of designing the

product, establishing a production line, etc. In addition to the time

component, the market for testing services is highly competitive and

the price inelastic because, in general, the price for testing services

is a very small component of the overall costs of the product. OSHA

estimated in its Final Regulatory Impact Analysis of the Final Rule for

29 CFR Part 1910, Safety Testing of Certification of Certain Workplace

Equipment and Materials and Programs, that the actual testing, listing

and approval expenditures for tested equipment would be between 0.23

percent and 0.50 percent of the value of these products [2]. Thus, on

average, product testing fees are a minor component of the cost of

manufacturing equipment and will continue to remain so even after the

proposed fees have been implemented. OSHA seeks more information on the

impacts of the proposed rule on manufacturers. OSHA also seeks

information on the impact of the proposed fee schedule on foreign

testing laboratories.

Potential Economic Impacts of the Proposed Standard on Small Entities

This section measures the potential economic impacts of the

proposed standard on small entities in the affected testing laboratory

industry to determine whether the proposed standard has a significant

impact on a substantial number of small firms, as required by the

Regulatory Flexibility Act (as amended in 1996). For the purposes of

this analysis, OSHA defines small entities using the Small Business

Administration's (SBA) Table of Size Standards. The SBA size standards

for for-profit firms identify firms with less than $5 million in

revenues as small in the testing laboratory service sector.

The Regulatory Flexibility Act addresses impacts on ``small

businesses,'' and ``small not-for-profit organizations,'' both of which

are referred to in this analysis as ``small entities.'' What

constitutes a small entity is defined by the SBA in terms of the number

of employees or annual receipts (unless otherwise stated) constituting

the largest size that a for-profit enterprise (together with its

affiliates) may be and still remain eligible as a small business for

various SBA and other Federal Government programs. A ``small

organization'' is defined as any ``not-for-profit enterprise which is

independently owned and operated and is not dominant in its field.''

Since this definition would include all of the not-for-profit entities,

no separate analysis of small organizations is necessary. OSHA seeks

comment on the appropriate definition of a small not-for-profit entity

for the purpose of this regulatory flexibility analysis.

The number of establishments operated by small firms and the number

of affected workers employed in small firms are based on Bureau of the

Census data.4 The Bureau of the Census data classify firms

according to the number of workers employed by the enterprise. The

following employment size classifications were used: 1-4, 5-9, 10-19,

20-99, 100-499, 500+. For each firm size classification, data were

provided on the total number of firms, establishments, employees and

estimated annual receipts.

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

\4\ The Bureau of the Census defines a ``firm'' as a ``a

business organization consisting of one or more domestic

establishments in the same state and industry that were specified

under common ownership or control,'' and an ``enterprise'' as ``a

business organization consisting of one or more domestic

establishments that were specified under common ownership or

control.'' In other words, if, for example, an enterprise with 100

employees operates nursing homes in four states, the Bureau of

Census would count this as four firms in the nursing home industry

in the 100 to 499 employment size classification.

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

Based on the SBA size category and the Census data, OSHA has

determined that most of the testing labs with NRTL status are of

substantial size in terms of both gross revenues and number of

employees. The average revenue of these firms, based on the employment

size categories provided by the Census data, is estimated to range from

$6.9 million to $18.9 million per firm.

The purpose of this analysis is to assess the impacts on business

organizations consisting of one or more domestic establishments under

common ownership or control, without regard to the number of states in

which a business organization may be operating establishments. However,

the data provided by the Census do not include the number of

enterprises, but rather the number of firms, which, by the Census'

definition, is essentially the number of states in which an enterprise

operates establishments in a specific industry. Thus, to the extent

that enterprises operate establishments in the same industry in

multiple states, estimates of the number of entities may be

overestimated.

To estimate the number of small entities, average revenues per firm

were calculated in each enterprise size category using Census data, and

size categories where average revenues per firm were less than the

standards set by SBA (i.e., less than $5 million for all other firms),

firms in those size categories were assumed to be small entities. Table

6 shows the estimated number of small entities in the industry. Only 9

small businesses and 1 not-for-

[[Page 45112]]

profit entity are currently NRTLs and thus certain to be affected.

However, the proposed rule could potentially affect any of the 3,170

small independent testing laboratories if such entities wish to become

NRTLs. About 87 percent of all independent testing laboratories are

estimated to be operated by small entities.

Table 6 presents the results of the regulatory flexibility

screening analysis. It shows the estimated annual compliance costs and

economic impacts relative to revenues and pre-tax profit for affected

small entities. For testing laboratories seeking NRTL status for the

first time, the annual compliance cost amounts to only 0.22 percent of

revenues and 3.90 percent of profits for small entities. The analysis

also shows that for-profit testing labs with current NRTL status have

compliance costs that are 0.25 percent of revenues and 4.36 percent of

profits. For not-for-profit NRTLs, compliance costs represent 0.10

percent of revenues. Impacts of these magnitudes do not exceed the

thresholds OSHA has established for significant impacts.

Thus, because this proposal will not have a significant impact on

small entities (as defined by the SBA), OSHA certifies that this

proposal will not have a significant impact on a substantial number of

small entities.

TABLE 6.--SCREENING ANALYSIS TO IDENTIFY POSSIBLE ECONOMIC IMPACTS OF THE PROPOSED NRTL FEES RULE ON SMALL ENTITIES

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

Annualized costs of

compliance as a

Number of Annualized Average Pre-tax percent of

Definition of small entity Employment small cost per revenues profits -----------------------

size firms firm per small per small Pre-tax

firm firm Sales profit

(percent) (percent)

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

Testing Laboratories (SIC 8734)......... http://www.osha-slc.gov/e-comments/e-

comments-nrtl.html. If your submission contains attached

[[Page 45113]]

electronic files, the files must be in WordPerfect 5.0, 5.1, 6.0, 6.1,

8.0 or ASCII. When submitting a comment electronically, please include

your name and address.

Submit, in duplicate, any information not contained on disk or not

provided electronically (e.g., studies, articles). Written submissions

must clearly identify the issues or specific provisions of the proposal

which are addressed and the position taken with respect to each issue

or provision. The data, views, and arguments that you submit will be

available for public inspection and copying at the above address. All

timely submissions received will be made a part of the record of this

proceeding. The preliminary economic analysis and the exhibits cited in

this document will be available for public inspection and copying at

the above address. OSHA invites comments concerning the preliminary

conclusions reached in the economic analysis included in this notice.

X. Authority

This document was prepared under the direction of Charles N.

Jeffress, Assistant Secretary of Labor for Occupational Safety and

Health, U.S. Department of Labor, 200 Constitution Avenue, NW,

Washington, DC 20210. The proposed sections are issued under the

authority of section 8 of the Occupational Safety and Health Act of

1970 (29 U.S.C. 657); and Secretary of Labor's Order No 6-96 (62 FR

111). The proposed sections are also issued under authority of OMB

Circular A-25 (dated 7/8/93); Public Law 105-277; 29 U.S.C. 9a; the

Administrative Procedure Act (5 U.S.C. 553); and the Independent

Offices Appropriations Act (31 U.S.C. 9701)

List of Subjects in 29 CFR Part 1910

Fees, Laboratories, Occupational safety and health.

Signed at Washington, D.C. this 6 day of August, 1999.

Charles N. Jeffress,

Assistant Secretary.

For the reasons discussed in the preamble, OSHA proposes to amend

29 CFR Part 1910 as follows:

PART 1910--OCCUPATIONAL SAFETY AND HEALTH STANDARDS

1. The authority citation for subpart A of 29 CFR part 1910 is

revised to read as follows:

Authority: Secs. 4, 6, 8, Occupational Safety and Health Act of

1970 (29 U.S.C. 653, 655, 657); Secretary of Labor's Order Numbers

12-71 (36 FR 8754), 8-76 (41 FR 25059), 9-83 (48 FR 35736), 1-90 (55

FR 9033), or 6-96 (62 FR 111), as applicable.

Sections 1910.7 and 1910.8 also issued under 29 CFR part 1911.

Section 1910.7(f) also issued under 31 U.S.C. 9701.

2. Add new paragraph (f) to Sec. 1910.7 to read as follows:

Sec. 1910.7 Definition and requirements for a nationally recognized

testing laboratory.

* * * * *

(f) Fees. (1) Each applicant for NRTL recognition and each existing

NRTL must pay fees for services provided by OSHA. OSHA will assess fees

for the following activities:

(i) Processing of applications for initial recognition, expansion

of recognition, or renewal of recognition, including on-site reviews;

review and evaluation of the applications; and preparation of reports,

evaluations and Federal Register notices; and

(ii) Audits of sites.

(2) The fee schedule established by OSHA reflects the estimated

cost of performing the tasks and functions for each activity. OSHA

calculates the fees based on the average time required to perform the

work necessary; the staff costs per hour (which include wages, fringe

benefits, and expenses other than travel for personnel that perform or

administer the activities covered by the fees); and an estimate of the

average costs for travel when on-site reviews are involved. The formula

for the fee calculation is as follows:

Activity Fee = Average Hours to Complete the Activity x Staff

Costs per Hour + Travel Costs

(3) OSHA will review costs and estimates annually and will propose

a revised fee schedule, if warranted. In its review, OSHA will apply

the formula established in paragraph (f)(2) of this section to the

current estimated costs for the NRTL Program. If a change is warranted,

OSHA will follow the schedule in paragraph (f)(4) of this section. OSHA

will issue all fee schedules in the Federal Register. Once issued, a

fee schedule remains in effect until it is superseded. Any member of

the public may request a change to the fees included in the current fee

schedule. Such a request must include appropriate documentation in

support of the suggested change.

(4) OSHA will implement fee assessment, collection, and payment as

follows:

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

Approximate dates Action required

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

I. Application Fees:

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

Time of application.................... Applicant must pay the

applicable fees shown in the

Fee Schedule when submitting

the application; OSHA will not

begin processing until fees

are received.

Publication of preliminary notice...... Applicant must pay remainder of

fees; OSHA cancels application

if fees are not paid when due.

II. Audit Fees:

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

November 1............................. OSHA will publish proposed new

Fee Schedule in the Federal

Register, if OSHA determines

changes in the schedule are

warranted.

November 16............................ Comments due on the proposed

new Fee Schedule

December 15............................ OSHA will publish the final Fee

Schedule in the Federal

Register.

January 1.............................. OSHA will bill each existing

NRTL for the audit fees shown

in the Fee Schedule, including

estimated travel costs.

February 1............................. NRTLs must pay audit fees; OSHA

will assess late fee if audit

fees are not paid.

February 15............................ OSHA will send a letter to the

NRTL requesting immediate

payment of the audit fees and

late fee.

March 1................................ OSHA will publish a notice in

the Federal Register to revoke

recognition for NRTLs that

have not paid audit fees for

the year.

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

(5) OSHA will provide the details regarding how to pay the fees

through appropriate OSHA Program Directives.

3. Revise paragraphs I.B.5.a, II.B.2.a, and II.C.2.a of Appendix A

to Sec. 1910.7, to read as follows:

Appendix A to Sec. 1910.7--OSHA Recognition Process for Nationally

Recognized Testing Laboratories

* * * * *

I. Procedures for Initial OSHA Recognition

* * * * *

B. Review and Decision Process; Issuance or Renewal

* * * * *

5. Public review and comment period.--a. The Federal Register

notice of preliminary finding will provide a period of not less than

30 calendar days for written comments on the applicant's fulfillment

of the requirements for recognition. The application, supporting

documents, staff recommendation, statement of applicant's reasons,

and any comments received, will be

[[Page 45114]]

available for public inspection in the OSHA Docket Office.

* * * * *

II. Supplementary Procedures

* * * * *

B. Expansion of Current Recognition

* * * * *

2. Procedure.--a. OSHA will act upon and process the application

for expansion in accordance with subsection I.B. of this appendix,

except that the period for written comments, specified in paragraph

5.a of subsection I.B. of this appendix, will be not less than 15

calendar days.

* * * * *

C. Renewal of OSHA Recognition

* * * * *

2. Procedure.--a. OSHA will process the renewal request in

accordance with subsection I.B. of this appendix, except that the

period for written comments, specified in paragraph 5.a of

subsection I.B. of this appendix, will be not less than 15 calendar

days.

* * * * *

[FR Doc. 99-21216 Filed 8-17-99; 8:45 am]

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