Nationally Recognized Testing Laboratories Fees, 10500-10516 [2011-3937]

Agencies

• DEPARTMENT OF LABOR
• Occupational Safety and Health Administration

[Federal Register Volume 76, Number 38 (Friday, February 25, 2011)]
[Rules and Regulations]
[Pages 10500-10516]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-3937]


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DEPARTMENT OF LABOR

Occupational Safety and Health Administration

29 CFR Part 1910

[Docket No. OSHA-2007-0031]


Nationally Recognized Testing Laboratories Fees

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

ACTION: Final rule.

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SUMMARY: The Occupational Safety and Health Administration (OSHA) is 
adjusting the approach it uses for calculating the fees the Agency 
charges Nationally Recognized Testing Laboratories (NRTLs), and also is 
requiring prepayment of these fees. This adjustment increases the fees; 
OSHA is phasing in the fee increase over three years for existing NRTLs 
and pending NRTL applicants. OSHA began charging NRTLs fees in 2000, 
and revised the fee schedule only twice since then (in 2002 and 2007).

DATES: This final rule becomes effective on March 28, 2011.

FOR FURTHER INFORMATION CONTACT: MaryAnn Garrahan, Director, Office of 
Technical Programs and Coordination Activities, NRTL Program, 
Occupational Safety and Health Administration, U.S. Department of 
Labor, 200 Constitution Avenue, NW., Room N-3655, Washington, DC 20210, 
or phone (202) 693-2110. OSHA's Web page includes information about the 
NRTL Program (see https://www.osha.gov/dts/otpca/nrtl/ or see 
https://www.osha.gov and select ``N'' in the site index).

SUPPLEMENTARY INFORMATION:

I. Introduction
II. Background
III. Legal Considerations
IV. Explanation of the Revised Approach for Calculating Fees
V. Basis and Derivation of Fee Amounts
VI. Revised Fee Schedules
VII. Description of Fees
VIII. Major Changes to the Fee Schedule
IX. Changes to 29 CFR 1910.7(f)
X. Final Economic Analysis and Regulatory Flexibility Analysis
XI. Unfunded Mandates Reform Act
XII. Paperwork Reduction Act
XIII. Federalism
XIV. State Plan States
XV. Authority and Signature

I. Introduction

    The Occupational Safety and Health Administration (OSHA) is 
adjusting the approach it uses to calculate the fees charged to 
Nationally Recognized Testing Laboratories (NRTLs). This adjustment 
will recoup a larger percentage of the cost of administering the NRTL 
Program than the current approach. This adjustment allows OSHA to 
continue to charge NRTLs for the core application processing and audit 
functions performed under the NRTL Program, while also recouping the 
other costs, such as the cost for ancillary activities that provide 
special benefits to NRTLs, that currently represent a significant 
portion of OSHA's costs of running the NRTL Program.
    Because the revised approach results in a large increase in the 
fees for existing NRTLs and pending NRTL applicants, OSHA is 
instituting a three-year phase-in period for any fee increase that is 
greater than $200. OSHA also is revising language in 29 CFR 1910.7(f) 
(the OSHA rule implementing the NRTL fee structure) to clarify the cost 
basis for the fees. In addition, OSHA will now require advance payment 
of all NRTL fees, which complies with instructions to Federal agencies 
issued by the Office of Management and Budget (OMB).
    In this notice, section II describes the NRTL Program and the prior 
fee structure for charging NRTLs for application processing and audits. 
In section III, OSHA explains the legal authority for recovering costs 
for ancillary activities and leave. The Agency also explains the basis 
for advance collection of the fees. Section IV describes how OSHA will 
recoup the ancillary and leave costs, and section V shows the 
derivation of the fee amounts. Sections VI and VII present the revised 
fee schedule and fee descriptions, respectively, and address the sole 
comment OSHA received in response to the proposal. Finally, in sections 
VIII and IX, respectively, OSHA explains the

[[Page 10501]]

major revisions to the fees and to the regulatory text of 29 CFR 
1910.7(f).

II. Background

    Many of OSHA's safety standards require approval (i.e., tested and 
certified) of equipment or products used in the workplace to help 
ensure that workers can use them safely. See, e.g., 29 CFR part 1910, 
subpart S. In general, an NRTL must approve such equipment and 
products. The NRTL Program administered by OSHA ensures that 
laboratories perform testing and certification appropriately,
    The NRTL Program requirements are set forth in 29 CFR 1910.7, 
``Definition and requirements for a nationally recognized testing 
laboratory,'' which specifies that, to receive and maintain recognition 
as an NRTL, an organization must: (1) Have the appropriate capability 
to test, evaluate, and approve products to assure safe use of the 
products in the workplace; (2) be completely independent of the 
manufacturers, vendors, and major 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) have 
effective reporting and complaint handling procedures. 29 CFR 
1910.7(b).
    OSHA requires that organizations applying for initial recognition 
as an NRTL provide, in writing, detailed and comprehensive information 
about their programs, processes, and procedures. To process an 
application, OSHA reviews the written information for completeness and 
adequacy, and conducts an on-site assessment to determine whether the 
organization meets the requirements of 29 CFR 1910.7. 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 primarily to ensure that each NRTL 
maintains its programs and continues to meet the recognition 
requirements. Currently, there are 15 NRTLs operating 49 recognized 
sites in the U.S., Canada, Europe, and the Far East. Application 
processing and audits are the core functions that OSHA performs for the 
NRTL Program.
    To perform these core functions, OSHA also must perform a number of 
ancillary activities that support these functions. OSHA investigates 
complaints filed against NRTLs to ensure that the laboratories are 
performing their testing and certification functions adequately. In 
addition, OSHA represents the NRTL Program in a variety of forums 
related to conformity assessment \1\ of products used in the workplace. 
OSHA also maintains a detailed Web site that both explains the program 
and, more importantly for the NRTLs, lists all the laboratories 
currently recognized under the NRTL Program, the products each 
laboratory can test, and registered certification marks used by each 
laboratory.
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    \1\ OSHA generally uses the term ``approval'' to describe the 
type of testing or certification activities performed by NRTLs. 
Conformity assessment is a term used internationally to describe 
such activities, and is defined as ``any activity concerned with 
determining directly or indirectly that requirements are 
fulfilled.'' (see item 12.2, ISO Guide 2--Standardization and 
related activities--General vocabulary.)
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    On August 30, 2000, OSHA established a schedule of fees for several 
of the services rendered to NRTLs; specifically, the application 
processing and audit functions. In the Federal Register notice 
announcing the fee schedule (65 FR 46797, July 31, 2000), OSHA found 
that laboratories receive ``special benefits'' from the NRTL Program, 
and that charging these laboratories was appropriate under the 
Independent Offices Appropriations Act of 1952 (IOAA) (31 U.S.C. 9701), 
OMB Circular A-25 ``User Charges,'' and other legal authorities. 65 FR 
46803. At 65 FR 46807, OSHA stated:

    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 
acknowledgement of their capability as an NRTL. The primary special 
benefits of NRTL recognition are the resulting business 
opportunities to test and certify products for manufacturers, the 
NRTL's clients. These opportunities may be in the form of new, 
additional, or continuing revenue and clients. Once the NRTL has 
properly certified a product, a manufacturer may then sell this 
product to employers, enabling them to comply with product approval 
requirements in OSHA standards.

    Through that rulemaking, OSHA promulgated 29 CFR 1910.7(f). 
Paragraph (f) states that each applicant for NRTL recognition and each 
NRTL must pay fees for services provided by OSHA. 29 CFR 1910.7(f)(1). 
Specifically, the Agency assesses fees for the following activities: 
(1) Processing 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 (2) audits. The rule also 
sets forth that OSHA bases the fees, in part, on the staff costs per 
hour of performing application processing and audit activities.
    This final rule adjusts the approach that OSHA uses to calculate 
the fees charged for the services it provides to NRTLs. OSHA makes this 
adjustment because the prior fee schedule only allowed recovery of 
about half of the allowable reimbursable costs of the NRTL Program.\2\ 
For example, the prior approach did not recover the costs of the 
ancillary activities that are necessary to the program's functioning.
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    \2\ In February 2007, OSHA issued a revision of its fee schedule 
to account for increases in program costs (see 72 FR 7468). This 
revision, however, did not alter OSHA's method for calculating fees. 
OSHA based the increase in the February 2007 fees on cost of living 
and time adjustments, but used the same calculation set forth in the 
initial Federal Register notice published in July 2000. OSHA 
previously updated the initial fees in January 2002 (see 67 FR 
5299).
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III. Legal Considerations

    This final rule adjusts the approach that the Agency uses to 
calculate the fees it charges NRTLs for services performed to the 
benefit of the NRTLs by including the costs for benefits shared by all 
NRTLs. As described above, these costs include costs associated with 
ancillary activities and leave. Although OSHA still does not charge 
separate fees for the time spent on ancillary activities and leave, it 
adjusted the rate charged for the fee-generating activities to account 
for the portion of the program costs attributable to ancillary 
activities and leave. This section describes the legal basis for OSHA 
recouping these costs from the NRTLs.

A. Legal Authority for Charging Fees

1. Statutory Authority
    In Title V of the IOAA, Congress set forth the objective of 
collecting fees and charges for services and things of value provided 
by an agency. As noted in this statute, ``It is the sense of Congress 
that each service or thing of value provided by an agency * * * to a 
person * * * is to be self-sustaining to the extent possible.'' 31 
U.S.C. 9701(a). Additionally, the Congressional Committee that drafted 
the measure indicated, ``The Committee is concerned that the Government 
is not receiving full return from many of the services which it renders 
to special beneficiaries.'' Nat'l Cable Television Ass'n v. U.S., 415 
U.S. 336 (1974), quoting H.R. Rep. No. 82-384, at 2-3 (1951). 
Accordingly, Congress enacted the statute to ensure that the specific 
individuals and companies that receive benefits from agency programs, 
not taxpayers at large, fund the programs.

[[Page 10502]]

    In addition to establishing a source of funding, Congress also 
provided general guidance to agency heads on the establishment of fees. 
The fees are to be ``fair'' and based on the costs to the Government, 
the value of the service or thing to the recipient, public policy or 
interest served, and other relevant facts. See 31 U.S.C. 9701(b). The 
1993 OMB Circular A-25 (discussed in greater detail below) embodies the 
authority of the IOAA, and reflects interpretations from the related 
case law decisions.
    Since 1997, in OSHA's yearly appropriations, Congress specifically 
authorized the Secretary of Labor to collect and retain fees charged to 
sustain the NRTL Program, stating, ``[T]he Secretary of Labor is 
authorized * * * to collect and retain fees for services provided to 
Nationally Recognized Testing Laboratories, and may utilize such sums * 
* * to administer national and international laboratory recognition 
programs that ensure the safety of equipment and products used by 
workers in the workplace.'' See, e.g., Consolidated Appropriations Act 
for FY 2000, Pub. L. 106-113 (113 Stat. 1501A-222) and Consolidated 
Appropriations Act, 2009, Pub. L. 111-117 (123 Stat. 3034).
2. Case Law
    The Supreme Court and the Courts of Appeals issued decisions 
addressing the application of the IOAA and its interpretation by 
Federal agencies. These cases provide guidance that provides specific 
information regarding the fee schedules, and the methods of assessing 
fees, that agencies may use. These decisions make clear that agencies 
may recoup all of the Governmental costs associated with providing 
private entities with specific benefits.
    In 1974, the Supreme Court decided the companion cases of Nat'l 
Cable Television Ass'n, 415 U.S. 336, and Fed. Power Comm'n v. New 
England Power Co., 415 U.S. 345 (1974). In Nat'l Cable, the Court found 
that an agency may charge a fee for services, but the agency should 
base the fee on ``value to the recipient.'' Nat'l Cable, 415 U.S. at 
342-43. In New England Power Co., the Court held that, pursuant to the 
IOAA and OMB Circular A-25, agencies can only recoup specific charges 
for specific services to specific individuals or companies. Fed. Power 
Comm'n, 415 U.S. at 349.
    In Nat'l Cable Television Ass'n, Inc. v. FCC, 554 F.2d 1094 (DC 
Cir. 1976), the Court of Appeals also made clear that the fees must be 
for specific services. The court upheld charging both an application 
fee and an annual fee provided that the agency, to prevent charging 
twice for the same service, makes clear the activities covered by each 
fee. Nat'l Cable Television Ass'n, 554 F.2d at 1105. Furthermore, the 
court agreed that fees based on reasonable approximations of costs for 
the services are acceptable: ``It is sufficient for the Commission to 
identify the specific items of direct or indirect cost incurred in 
providing each service or benefit for which it seeks to assess a fee, 
and then to divide that cost among the members of the recipient class * 
* * in such a way as to assess each a fee which is roughly proportional 
to the `value' which that member has thereby received.'' Nat'l Cable 
Television Ass'n, 554 F.2d at 1105-1106.
    In Elec. Indus. Ass'n v. FCC, 554 F.2d 1109 (DC Cir. 1976), the 
Court of Appeals indicated that ``expenses incurred to serve some 
independent public interest cannot * * * be included in the cost basis 
for a fee, although the Commission is not prohibited from charging an 
applicant or grantee the full cost of services rendered * * * which 
also result in some incidental public benefits.'' Elec. Indus. Ass'n, 
554 F.2d at 1115. Moreover, the court held that the agency can only 
include, in the cost basis of the fees, expenses incurred to confer 
value upon the recipient. Id. Along similar lines, the same Court of 
Appeals clarified in a companion case that ``the proper standard is not 
value derived by the recipient but rather value conferred on the 
recipient. In our view, this standard requires the fee assessed to bear 
a reasonable relationship to the cost of the services rendered to 
identifiable recipients.'' Capital Cities Communications, Inc. v. FCC, 
554 F.2d 1135, 1138 (DC Cir. 1976).
    Lastly, in Miss. Power and Light v. U.S. Nuclear Regulatory Comm'n, 
601 F.2d 223 (5th Cir. 1979), the 5th Circuit Court of Appeals upheld 
the Nuclear Regulatory Commission's (NRC) fee schedule methodology 
because the NRC did not seek to recover the entire cost of regulating. 
The NRC charged a fee based only on the costs of providing a specific 
benefit to identifiable private parties. Miss. Power and Light, 601 
F.2d at 230.
3. OMB Circular No. A-25
    OMB issued Circular No. A-25, pursuant to the IOAA, to establish 
``Federal policy regarding fees assessed for Government services and 
for sale or use of Government goods or resources. * * * [I]t provides 
guidance for agency implementation of charges and the disposition of 
collections.'' User Charges, Circular No. A-25, OMB (July 8, 1993). In 
section 6 of the Circular, OMB directs agencies to assess user charges 
``against each identifiable recipient for special benefits derived from 
Federal activities beyond those received by the general public.'' 
Furthermore, user charges ``will be sufficient to recover the full cost 
to the Federal Government * * * of providing the service, resource, or 
good when the Government is acting in its capacity as sovereign.'' 
Finally, the Circular defines full cost to include ``all direct and 
indirect costs to any part of the Federal Government of providing a 
good, resource, or service.'' Examples of such costs include personnel 
costs (including salaries and fringe benefits), physical overhead, 
management and supervisory costs, and costs of enforcement and 
research. Circular No. A-25, OMB 6(d)(1)(a)-(e).
    The legal authorities described above establish several 
considerations for determining how an agency can assess fees for 
services rendered: (1) The agency must base the fees on special 
benefits derived from Federal activities beyond those benefits received 
by the general public; (2) the agency must confer the benefits on 
identifiable recipients; and (3) the fees must bear a reasonable 
relationship to the cost of the services rendered. In addition, the OMB 
circular makes clear that agencies can recoup indirect costs of 
services rendered to special beneficiaries, and that agencies should 
endeavor to make agency programs self-sustaining to the extent that the 
programs provide special benefits to identifiable recipients. Assessing 
NRTL fees that recover the cost of ancillary activities and leave 
satisfies these considerations, which we further discuss below.

B. Explanation for Charging Fees for Ancillary Activities

1. The Agency Must Base Fees on the Costs To Confer Special Benefits 
Derived From Federal Activities Beyond Those Benefits Received by the 
General Public
    OSHA based the implemented fee structure on the costs of providing 
services that confer special benefits. As noted earlier, NRTLs and NRTL 
applicants accrue special benefits from the services that OSHA renders 
for the fees. These special benefits are the product of OSHA's initial 
and continuing evaluation of an organization's qualifications to test 
and certify products used in the workplace. Primarily, these special 
benefits are the business opportunities that result from OSHA 
recognition of these organizations as NRTLs, which allows

[[Page 10503]]

them to offer their testing and certification services to manufacturers 
of products that require NRTL testing and certification when used in 
the workplace. These opportunities are ``special benefits derived from 
Federal activities beyond those received by the general public,'' as 
described in OMB Circular A-25.
    Ancillary activities performed by OSHA under the NRTL Program 
result in identifiable costs from the provision of those specific 
services and benefits to NRTLs. Examples of ancillary activities 
include administration of the program, budgetary, and policy matters; 
training OSHA personnel to perform program activities; interagency and 
international coordination; responses to requests for information 
related to the program; handling complaints; Web site development and 
maintenance; and participation in meetings with stakeholders and 
outside interest groups.
    OSHA must recover the costs of these activities because it incurs 
such costs solely for the administration of the NRTL Program, from 
which NRTLs derive special benefits. The absence of these necessary 
activities would severely reduce, if not eliminate, many of the 
benefits that NRTLs derive from OSHA recognition. Two examples 
illustrate this point. First, through application processing and 
audits, OSHA determines which organizations qualify as NRTLs and which 
products each NRTL can approve under the NRTL Program. By maintaining a 
Web site, OSHA shares this information with the public. This activity 
benefits NRTLs by making current and potential clients, as well as 
employers, aware that OSHA qualified the NRTLs to approve those 
products.
    Second, complaint handling is a valuable activity that OSHA relies 
upon, especially between audits, to learn of inappropriate or 
questionable activities by an NRTL. If, for example, OSHA receives a 
complaint that an NRTL is testing equipment made for use in extremely 
hazardous environments, but OSHA does not recognize the NRTL to perform 
this testing, OSHA would investigate the complaint to determine whether 
the testing jeopardizes the safety of the equipment. If so, OSHA could 
take steps to prevent accidents from occurring as a result of using 
this equipment. Through complaint handling, OSHA reinforces the NRTL 
Program's effectiveness, which maintains confidence in the program, 
and, thus, assures the benefits derived by NRTLs from participation in 
the program.
2. Benefits Are Conferred on Identifiable Recipients
    As with the prior schedules, OSHA is assessing fees to identifiable 
recipients of the NRTL Program benefits. The ancillary activities 
result in benefits shared among all NRTLs, in contrast to the benefits 
of the core application and auditing services, which are more easily 
attributed to individual NRTLs than ancillary activities. To share the 
costs of these benefits equitably, while still ensuring that the fees 
charged are specific with regard to the services provided to individual 
NRTLs, OSHA is apportioning the costs of the shared benefits in 
accordance with the time OSHA spends on core services rendered to each 
NRTL. This approach recognizes that an individual NRTL's portion of the 
shared benefits relates directly to the core benefits it receives. OSHA 
is, therefore, retaining its fee structure of charging the NRTLs fees 
involving core actions directed at, or initiated by, an NRTL, while 
adjusting the rate used to compute the fee to recoup a greater portion 
of the actual program costs than is the case currently.
    OSHA will charge an NRTL a fee when the NRTL applies, for example, 
for an expansion of its recognition by OSHA. In this situation, the 
NRTL is asking OSHA to review its application for expansion so that the 
NRTL can increase its scope of recognition. The fee that OSHA would 
charge in this instance is related directly to the NRTL seeking the 
expansion. The converse is also true: If in any year an NRTL does not 
apply to expand its recognition, OSHA will not charge the NRTL an 
expansion-application fee. Thus, the new fee schedule would reimburse 
OSHA for ancillary activities, but would do so by charging specific 
NRTLs only when these NRTLs receive the core services of the program.
3. The Fees Charged Bear a Reasonable Relationship to the Costs of the 
Program
    OSHA is basing much of the fee schedule on the average documented 
cost of specific activities performed to benefit the NRTLs. Through the 
revised fee schedule issued by this rule, OSHA will recover a large 
percentage of the costs of the NRTL Program. To ensure that it does not 
overcharge, OSHA structured this revised fee schedule to capture 
approximately 95% of the costs of the NRTL Program.
4. OSHA Is Fully Complying With the IOAA and OMB Circular A-25
    Finally, by including the costs of ancillary activities in the 
fees, OSHA now is fully compliant with the IOAA and OMB Circular A-25, 
both of which require agency programs to be self-sustaining to the 
extent that the programs confer special benefits on identifiable 
recipients. In fact, until implementation of a revised fee schedule in 
February 2007, that allowed recovery of approximately 50% of program 
costs, OSHA was recovering only about 30% of the costs of the NRTL 
Program; taxpayers were funding the remaining 70% through OSHA's annual 
appropriations. This arrangement does not comport with the IOAA and OMB 
Circular A-25, and OSHA is correcting this deficiency through this 
final rule.
    In summary, including the cost of ancillary activities in the fees 
comports with the legal framework described in the preceding section. 
That is, OSHA based the fees on special benefits to NRTLs, assessed to 
identifiable beneficiaries of the NRTL Program, and reasonably related 
to OSHA's costs of providing the services to the NRTLs.
    OSHA recognizes that its new approach differs from the position it 
took in the 2000 rulemaking implementing the initial fee structure. In 
that rulemaking, OSHA stated that it would not seek to recover costs 
for some ancillary activities such as Web site development and training 
compliance officers on the NRTL Program. See, e.g., 65 FR 46802. At the 
time of that rulemaking, however, OSHA believed those activities would 
use only a small portion of the NRTL Program's resources. Recent 
workload reviews show that these activities have become a large part of 
the program, and now are critical in supporting the NRTL Program's core 
functions. It is, therefore, appropriate for OSHA to include these 
costs in the revised fees.
    Because work on ancillary activities grew so much faster than 
program resources over the last several years, OSHA has less time 
available for application processing and audits than was the case in 
2000. Moreover, because existing fees only recoup the cost of time 
spent on core services, OSHA is recovering a dwindling percentage of 
the NRTL Program costs. For OSHA to meet, on a timely basis, the needs 
of the NRTLs in application processing and auditing, while recovering 
its costs for providing those services, is a significant challenge. 
Through this final rule, OSHA will fund the resources to improve its 
effectiveness in rendering these core services.

C. Explanation for Assessing Costs for Leave

    Although the prior fee structure accounted for some personnel costs 
for core NRTL activities, it did not account

[[Page 10504]]

for all personnel costs; therefore, it did not account for the total 
time spent on core activities. As Federal employees, Department of 
Labor employees, including OSHA employees, earn leave as part of their 
regular compensation. However, the prior fee structure failed to 
account for leave earned by OSHA employees, even though that leave is 
part of the personnel costs of rendering NRTL services.\3\ In this 
respect, the prior fee structure was not compliant with OMB Circular A-
25 and the other legal authorities described above. Thus, in this 
revised fee structure, OSHA is adjusting the personnel costs to include 
leave earned by all Federal employees performing services in support of 
the NRTL Program.
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    \3\ A small portion of NRTL fees covers the costs of legal 
services performed by attorneys in the Office of the Solicitor of 
Labor. OSHA included leave costs in that portion of the fees.
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D. Explanation for Advance Collection of the Fees

    Previously, OSHA required that NRTLs and applicants pay an 
application review fee when submitting an application, and, for initial 
applications, prepay the fee for an on-site assessment. OSHA generally 
billed the remainder of the fees to the NRTLs or applicants after it 
rendered the services. When OSHA adopted this billing system in the 
2000 final rule, it expected the system to ``reduce collection activity 
of the Agency, since only one bill would need to be sent to the NRTL 
for an audit, rather than the two contemplated under the NPRM.'' 65 FR 
46802 (July 31, 2000). It, therefore, predicted a ``minimal financial 
burden'' to the Agency by delaying collection. Id.
    However, in recent years this post-collection system resulted in 
problems, including the loss of some funds. For example, to ensure that 
the Agency retained all fees that were due for audits conducted during 
a fiscal year, OSHA requested that NRTLs pay fees in advance for any 
audits that it conducted in the last two months of the Federal 
Government fiscal year. OSHA requested advance payment because, to 
comply with Federal mandates, it could not retain any fees received 
after the end of a fiscal year, but would have to forfeit them to a 
general Federal Government fund. The current fee-collection system also 
made it difficult to ensure that the Agency complied with OMB Circular 
A-25. In addition to providing guidance regarding the collection and 
retention of user fees, OMB Circular A-25 generally requires agencies 
to collect user fees in advance. See OMB Circular A-25, Section 
6.a.2.(c) (``User charges will be collected in advance of, or 
simultaneously with, the rendering of services unless appropriations 
and authority are provided in advance to allow reimbursable 
services.''); see also OMB Circular A-11, ``Preparation, Submission, 
And Execution Of The Budget'' (June 2008), section 20.13.\4\
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    \4\ Section 20.13(a) is a description of revolving funds that 
requires that, in the absence of a revolving fund, ``advance 
payments must accompany orders.'' Section 20.13(b) specifies that 
agencies may use one of two methods to cover obligations by 
expenditure accounts, either using ``advances collected up to the 
amount of accompanying orders'' or ``[w]orking capital that is 
available for this purpose.''
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    Therefore, while the current program directly benefits NRTLs, OSHA 
must advance funds to cover the program costs until the NRTLs or 
applicants reimburse OSHA for its program activities. Given the 
competing demands on the appropriations from which OSHA draws these 
funds, continued use of these general operating funds to pre-fund the 
NRTL Program could adversely impact OSHA's ability to perform other 
operational functions.
    In summary, OSHA will now bill in advance for audits and other fees 
to ensure compliance with OMB guidance, and to reduce any financial 
impact on OSHA's other functions caused by advancing funds to the NRTL 
Program. OSHA will estimate and collect travel costs and other expenses 
in advance, and will adjust any difference between actual costs and 
estimated costs after completion of the audit or other activity.

IV. Explanation of the Revised Approach for Calculating Fees

    Through this final rule, OSHA will continue to calculate the fee 
for each of the service activities listed in the fee schedule by 
multiplying an equivalent average cost per hour rate (ECR) by the time 
it takes to perform that activity: Fee for Activity = ECR x Time for 
Activity.
    In the July 31, 2000, Federal Register notice, OSHA explained that 
it derived the initial fee schedule's ECR by dividing the total 
estimated direct and indirect costs of the program, excluding travel, 
(TPC),\5\ by the total available annual work hours of the NRTL Program 
and legal staff that perform the services (TAW).\6\ Although OSHA did 
not illustrate the derivation of the ECR as an equation in the 2000 
notice, it does so here for clarification, and refers to it as ECR2000 
(to contrast it with the equation for ECR2009, which we explain later 
in this notice); accordingly, ECR2000 = TPC2000/TAW2000.\7\ As 
discussed above, the approach used in 2000 resulted in fees that 
recouped the costs only of the time spent actually performing 
individualized audits and application processing, which is only a 
portion of TAW, and did not recoup the costs of the time associated 
with running the program and providing other benefits shared among all 
NRTLs.
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    \5\ The TPC includes personnel costs for the NRTL Program and 
legal staff (including support and management staff), equipment, 
contract, and other costs necessary for the operation of the 
program. The ECR does not include travel expenses because OSHA 
charges for the actual staff travel expenses for an on-site visit 
after the auditor completes the visit.
    \6\ In discussing total hours in this notice, we often refer to 
``FTEs,'' which stands for ``full-time equivalents.'' For purposes 
of this notice, FTEs equals total work hours divided by 2,080, the 
total available annual work hours (TAW) for one full-time Federal 
employee (i.e., 1 FTE = 2,080 work hours).
    \7\ We use the TPC abbreviation in discussing our calculations 
in this final rule, but the total amount shown in the July 2000 
notice (i.e., TPC2000) will differ from the total shown in this 
final rule (i.e., TPC2009) because of changes in the total costs of 
the program.
---------------------------------------------------------------------------

    To account properly for the costs associated with these shared 
benefits, OSHA proposed and requested comment on the following 
calculation for the new ECR (ECR2009): Dividing the new estimated total 
cost of the NRTL Program (TPC2009) by the total annual service hours 
(TAS2009). This latter term is a new figure that equals the total 
estimated work hours that the NRTL Program staff spend on the core 
service activities for which OSHA will bill NRTLs; accordingly, ECR2009 
= TPC2009/TAS2009. By way of comparison with the prior fee schedules, 
TAS equals TAW minus estimated hours spent on ancillary activities (AH) 
and leave (LH) (i.e., TAS = TAW-AH-LH). By continuing to include the 
full program costs in the numerator (TPC2009), but including in the 
denominator (TAS2009) only the amount of time spent on providing 
``billable'' core services, the revised ECR more accurately represents 
the total work hours spent on those core activities than the current 
2000 equation; OSHA bills these hours to the NRTLs. The Agency did not 
receive any comments on this new calculation methodology, and is 
including it in the final rule as proposed.
    OSHA could achieve the same result by charging each NRTL separately 
for its share of the program resources used to produce the shared 
benefits. OSHA did not use this method primarily because it would be 
impractical to calculate and track these shared costs separately for 
each NRTL, and to attribute the costs appropriately to individual NRTLs 
through separate fees. As explained above, the new fee approach adopted 
in this final rule, in which OSHA charges NRTLs only for core services, 
provides

[[Page 10505]]

a more straightforward and manageable method, in comparison to the 
previous approach, of ensuring that OSHA recoups only ``specific 
charges for specific services to specific individuals or companies.'' 
Fed. Power Comm'n, 415 U.S. at 349. In addition to this methodological 
change, the revised fee schedule presented in this notice also includes 
updated calculations of the total resources committed to the NRTL 
Program (TPC2009), and of the average time spent on some of the service 
activities for which OSHA charges fees.
    OSHA estimated that TAS2009 = 3.5075 FTEs (7295.6 work hours), 
which is 50.11% of total available annual work hours (TAW2009), 7.0 
FTE.\8\ Using the TPC2009 of $1,079,090, shown in Table 1 below, the 
new rate is: ECR2009 = $1,079,090/7295.6 hours = $147.90.
---------------------------------------------------------------------------

    \8\ TAW2009 equals 7.0 FTE (i.e., 7.0 FTE currently working on 
OSHA's NRTL Program); AH2009 equals 2.6675 FTE; and LH2009 equals 
0.825 FTE. As a result, TAS2009 equals 7.0 minus 2.6675 minus 0.825, 
which is equal to 3.5075 FTE. Note: We also can derive the ECR2009 
from the ECR2007 ($63.80) using a factor that takes into account the 
effects due to leave and ancillary activities, and the use of TAS 
instead of TAW. We do not illustrate this derivation here since the 
calculation is more involved than, and gives the same result as, the 
simple equation above.
---------------------------------------------------------------------------

    Table 1 below shows a summary of program costs and value of revised 
ECR2009, which OSHA uses later to generate the revised fee schedule in 
section VI below.

  Table 1--NRTL Program Annual Cost Estimates--New ECR2009 Calculation
------------------------------------------------------------------------
                       Description                             Costs
------------------------------------------------------------------------
Direct expenses.........................................        $512,342
Indirect expenses *.....................................         566,748
Total program costs (excluding travel) (aka ``TPC2009          1,079,090
 '')....................................................
Travel expenses.........................................          72,600
Overall program costs (includes travel) **..............       1,151,690
TAS2009 (3.5075 FTE x 2,080 work hours per FTE).........         7,295.6
ECR2009 = TPC2009/TAS2009...............................          147.90
------------------------------------------------------------------------
* This amount consists of $441,408 for management, ancillary, and
  support costs; and $125,340 for equipment and other costs. Note: OSHA
  incurs most of these costs, but the costs also include applicable
  costs of a division of the Department of Labor's Office of the
  Solicitor.
** OSHA estimates the amount of fee collections to be approximately
  95.2% of this total, or $1,096,000.

Finally, as mentioned above, the total cost of administering the NRTL 
Program increased since the last revision to the fee schedule published 
on February 15, 2007. This cost increase is due to two main reasons: an 
increase to account for additional program-staff resources, and the 
annual salary adjustments for Federal employees. Because of the 
increase to the TPC, and the revised approach for calculating ECR2009 
described in this notice, OSHA's base rate (ECR) is increasing almost 
132%, from $63.80 (in effect since February 15, 2007) to $147.90 shown 
above. OSHA estimates that this rate would result in total annual 
collections of $1,096,000 beginning three years after this rule's 
effective date, provided OSHA's NRTL Program costs remain unchanged. In 
fact, due to the three-year phase-in period, the rate and estimated 
total annual collections will increase the first year to about $91.80 
and $690,000, respectively. Without a change in the fee schedule, but 
with the increase in staffing requirements for the NRTL Program, the 
first year's rate and estimated total annual collections would increase 
to $73.72 and $583,000, respectively. If the program's costs remain 
unchanged in the second year of the phase-in period, the rate and total 
annual collections resulting from to the new approach would be about 
$119.90 and $880,000, respectively.
    For existing NRTLs and applicants that submit applications prior to 
the effective date of this final rule, OSHA will phase in, over three 
years, any fee increase that is greater than $200: a 33% increase for 
the first year's fees; a similar increase for the second year's fees; 
and the remaining increase in the third year. OSHA uses this $200 
threshold because it limits the number of fees that would otherwise 
increase 100% for the first year; OSHA will phase in the increase for 
the remaining fees, thus reducing the financial impact the increase may 
have on any existing NRTL or applicant. As evident from the comparison 
of fees shown in VIII of this notice, this approach affects only three 
fees, which will increase by a combined total of $510. The $200 
threshold and the three-year phase-in period will balance the need for 
a period of adjustment for some existing NRTLs against OSHA's 
responsibility to recoup the full costs of the NRTL Program as soon as 
possible. Although OSHA requested comments on these approaches and 
suggested alternatives, it received no comments.
    The entire increase is effective immediately for any organization 
that submits an application to become a new NRTL if OSHA receives the 
application on or after the effective date of this final rule. OSHA is 
taking this approach because, unlike currently recognized NRTLs and 
pending applicants, new applicants are free to choose whether or not to 
participate in the NRTL Program.

V. Basis and Derivation of Fee Amounts

    Tables 2, 3, 4, and 5, below, present the costs of the major 
activities for the various fee categories. In general, OSHA calculated 
the cost of these activities by multiplying the staff \9\ activity time 
by ECR, and adding any applicable average travel costs. However, 
because OSHA charges for actual travel, only non-travel costs serve as 
the basis for the fees shown later in Tables A and B. In deriving the 
fee amounts shown in the fee schedule (Table A or B), OSHA generally 
rounded the costs shown in Tables 2, 3, 4, and 5, up or down, to the 
nearest $5 or $10 amount.
---------------------------------------------------------------------------

    \9\ The term ``staff'' encompasses Federal employees, as well as 
any contract employees retained by OSHA for work on the NRTL 
Program.

               Table 2--Initial Application Cost Estimates
------------------------------------------------------------------------
                                                     Average    Average
        Major activity             Type of cost       hours      cost *
------------------------------------------------------------------------
Initial application review....  Office and field          120    $17,749
                                 staff time.
Additional review time........  Office staff......         16      2,367
Limited review time...........  Office staff......         24      3,550
On-site assessment--first day   Field staff time           30      4,437
 (per site, per assessor).       (16 hours
                                 preparation, 6
                                 hours to process
                                 travel documents,
                                 and 8 hours at
                                 site).
                                Field staff travel         NA        800
                                 expense ($700
                                 airfare/other +
                                 $100 per diem).
                               -----------------------------------------

[[Page 10506]]

 
                                Total for on-site assessment--     5,237
                                           first day
------------------------------------------------------------------------
On-site assessment--each        Field staff time            8      1,183
 additional day ** (per site,    (at site).
 per assessor).
                                Field staff travel         NA        100
                                 expense (per diem
                                 only).
                               -----------------------------------------
                                Total for on-site assessment--     1,283
                                      each additional day
------------------------------------------------------------------------
On-site assessment travel       Field staff.......          8      1,183
 time--per day (per site, per
 assessor).
Review and evaluation (10 test  Office staff time.          2        296
 standards).
Final report and Federal        Field and office          132     19,524
 Register notice.                staff time.
Fees invoice processing.......  Office staff time.          2        296
------------------------------------------------------------------------

    *Average cost for staff time = average hours x equivalent average 
direct staff cost/hr. ($147.90).
    **Note: 2 additional days estimated for 2 assessors, and 4 
additional days estimated for 1 assessor.
    See notes to Table A below for more information concerning the 
activities listed in this table.

     Table 3--Expansion Application (Additional Site) Cost Estimates
------------------------------------------------------------------------
                                                     Average    Average
        Major activity             Type of cost       hours      cost *
------------------------------------------------------------------------
Application review (expansion   Office and field           56     $8,283
 for site).                      staff time.
Additional review time........  Office staff......          8      1,183
On-site assessment--first day   Field staff time           40      5,916
 (per site, per assessor).       (12 hours
                                 preparation, 4
                                 hours to process
                                 travel documents,
                                 and 8 hours at
                                 site).
                                Field staff travel         NA        800
                                 time expense
                                 ($700 airfare/
                                 other + $100 per
                                 diem).
                               -----------------------------------------
                                Total for on-site assessment--     6,716
                                           first day
------------------------------------------------------------------------
On-site assessment--additional  Field staff time            8      1,183
 day ** (per site, per           (at site).
 assessor).
                                Field staff travel         NA        100
                                 expense (per diem
                                 only).
                               -----------------------------------------
                                Total for on-site assessment--     1,283
                                      each additional day
------------------------------------------------------------------------
On-site assessment travel       Field staff.......          8      1,183
 time--per day (per site, per
 assessor).
Review and evaluation fee (10   Office staff time.          2        296
 test standards).
Final report and Federal        Field and office           50      7,396
 Register notice.                staff time.
Fees invoice processing.......  Office staff time.          2        296
------------------------------------------------------------------------

    *Average cost for staff time = average hours x equivalent average 
direct staff cost/hr. ($147.90).
    **Note: 2 additional days estimated for 1 assessor.
    See notes to Table A below for more information concerning the 
activities listed in this table.

 Table 4--Renewal or Expansion (Other Than Additional Site) Application
                             Cost Estimates
------------------------------------------------------------------------
                                                     Average    Average
        Major activity             Type of cost       hours      cost *
------------------------------------------------------------------------
Application review (renewal or  Office and field            2        296
 expansion other than            staff time.
 additional site).
Additional review time........  Office staff......          8      1,183
Renewal application--           Office staff......         40      5,916
 information review.
On-site assessment--first day   Field staff time           20      2,958
 (expansion) (per site, per      (8 hours
 assessor).                      preparation, 4
                                 hours to process
                                 travel documents,
                                 and 8 hours at
                                 site).
                                Field staff travel         NA        800
                                 expense ($700
                                 airfare/other +
                                 $100 per diem).
                               -----------------------------------------
                                Total for on-site assessment--     3,758
                                     first day (expansion)
------------------------------------------------------------------------
On-site assessment--first day   Field staff time           28      4,141
 (renewal) (per site, per        (16 hours
 assessor).                      preparation, 4
                                 hours to process
                                 travel documents,
                                 and 8 hours at
                                 site).
                                Field staff travel         NA        800
                                 expense ($700
                                 airfare/other +
                                 $100 per diem).
                               -----------------------------------------
                                Total for on-site assessment--     4,941
                                      first day (renewal)
------------------------------------------------------------------------
On-site assessment--additional  Field staff time            8      1,183
 day ** (per site, per           (at site).
 assessor).

[[Page 10507]]

 
                                Field staff travel         NA        100
                                 expense (covers
                                 per diem only).
                               -----------------------------------------
                                Total for on-site assessment--     1,283
                                      each additional day
------------------------------------------------------------------------
On-site assessment travel       Field staff.......          8      1,183
 time--per day (per site, per
 assessor).
Review and evaluation fee (10   Office staff time.          2        296
 test standards) (expansion).
Final report and Federal        Office and field           50      7,396
 Register notice (with on-site   staff time.
 assessment).
Final report and Federal        Office and field           30      4,437
 Register notice (no on-site     staff time.
 assessment).
Supplemental program review...  Office and field            4        592
                                 staff time (per
                                 program
                                 requested,
                                 including
                                 consultation and
                                 assessor's memo).
Fees invoice processing.......  Office staff time.          2        296
------------------------------------------------------------------------

    *Average cost for staff time = average hours x equivalent average 
direct staff cost/hr. ($147.90).
    **Note: 2 additional days estimated for renewal assessment; no 
additional days for expansion assessment.
    See notes to Table A below for more information concerning the 
activities listed in this table.

             Table 5--On-Site or Office Audit Cost Estimates
------------------------------------------------------------------------
                                                  Average      Average
       Major activity           Type of cost       hours       cost\*\
------------------------------------------------------------------------
On-site audit--first day      Field staff time           24       $3,550
 (per site, per auditor) **.   (12 hours pre-
                               site review
                               preparation, 4
                               hours to
                               process travel
                               documents, and
                               8 hours at
                               site).
                              Prepare report/            26        3,846
                               contact NRTL
                               plus office
                               review staff
                               time (3 days
                               for field staff
                               and 2 hours for
                               office staff).
                             -------------------------------------------
                               Subtotal (first day--regular        7,396
                                          audit)
------------------------------------------------------------------------
                              Field staff                NA          800
                               travel expense
                               (700 airfare/
                               other + 100 per
                               diem).
                             -------------------------------------------
                                Total for on-site audit--          8,196
                                 first day (regular audit)
------------------------------------------------------------------------
On-site audit--first day      Prepare report              6          887
 (per site, per auditor)\**\   plus office
 (no non con form ances or     review staff
 observations requiring a      time (4 hours
 response).                    for field staff
                               and 2 hours for
                               office staff).
                             -------------------------------------------
                                 Total for on-site audit           5,237
                                 (first day--audit with no
                                  nonconformances)\****\
------------------------------------------------------------------------
On-site audit--additional     Field staff time            8        1,183
 day\***\ (per site, per       (at site).
 auditor).
                              Travel expense             NA          100
                               (covers per
                               diem only).
                             -------------------------------------------
                              Total for on-site audit--each        1,283
                                      additional day
------------------------------------------------------------------------
On-site audit travel time--   Field staff.....            8        1,183
 per day (per site, per
 auditor); also review of
 revised audit response--per
 on-site or office audit.
Office audit--per day (per    Field staff.....            8        1,183
 site, per auditor); no
 nonconformances or
 observations requiring a
 response.
Office audit--per day (per    Field staff.....           16        2,367
 site, per auditor); with
 nonconformances.
Fees invoice processing.....  Office staff                2          296
                               time.
------------------------------------------------------------------------
* Average cost for staff time = average hours x equivalent average
  direct staff cost/hr. ($147.90).
** OSHA charges this first-day fee only once if it audits multiple sites
  of the NRTL during one trip.
*** Note: One additional day is estimated for one auditor.
**** The 3,550 Field staff time and $800 Field staff travel expense are
  identical to those for the regular audit.
See notes to Table A below for more information concerning the
  activities listed in this table.

VI. Revised Fee Schedules

A. First Phase Fee Schedule for Existing NRTLs and Pending Applicants

    OSHA is implementing the revised fee schedules shown below in 
Tables A and B. All existing NRTLs and any initial applicant (i.e., an 
entity not presently approved by OSHA as an NRTL) having a pending 
application (i.e., received by OSHA before the effective date of this 
rule), must pay the fees set forth in Table A during the first year of 
the three-year phase-in period. OSHA will publish the revised fee 
schedule for the second year at a later date, as explained below. In 
this final rule, OSHA revised the audit fees as explained above, and 
modified the fee schedule in Table A of the proposal slightly to 
clarify that initial NRTL applicants having

[[Page 10508]]

applications received by OSHA on or after the effective date of this 
rule must pay the fees in Table B, not Table A. The Agency eliminated 
the initial-application review fee in Table A, and added a reference to 
footnote 7 of the table to explain the fee amount that OSHA charges to 
pending applicants (i.e., those applicants having applications received 
before the effective date of this rule) that substantially modify their 
applications after the effective date of the rule.
    The fees in Table A are the fees for the first phase of OSHA's fee 
increase, which are applicable to existing NRTLs and pending 
applicants. As explained above, for existing NRTLs and pending 
applicants, OSHA is phasing in over a period of three years any fee 
increase that is greater than 200: 33% of the increased fees specified 
in this final rule on the effective date of the rule; another 33% 
increase in the second year; and the final 34% increase in the third 
year. OSHA will adjust the percentage increase when it performs its 
periodic review of the fees during the next two years; it will base the 
adjustment on any increase or decrease in fees calculated for each of 
those years. During this review, OSHA will determine the amount of time 
it actually charged for application processing and audits, and the 
actual indirect travel OSHA performed, and adjust the amount in the fee 
schedule by the amount over- or underestimated. OSHA then will publish 
the second-year fee schedule in the Federal Register.

  Table A--Nationally Recognized Testing Laboratory Program Fee Schedule for Existing NRTLS and Applicants When
                               OSHA Receives the Application Before March 28, 2011
----------------------------------------------------------------------------------------------------------------
                                         Activity or category  (fee
           Type of service                charged per application                     Fee amount
                                          unless noted otherwise)
----------------------------------------------------------------------------------------------------------------
APPLICATION PROCESSING...............  Initial application review 1   See note 7.
                                        8 (this fee is applicable
                                        only as described in note 7
                                        to this table).
                                       Expansion-application review   $3,420.
                                        (per additional site) 1 8.
                                       Renewal or expansion (other)   $300.
                                        application review \1\.
                                       Renewal information review     $1,470.
                                        fee \7\.
                                       Additional review--initial     $2,370.
                                        application (if the
                                        application requires
                                        substantial revision, submit
                                        one-half of initial-
                                        application review fee) \7\.
                                       Additional review--renewal or  $730.
                                        expansion application \7\.
                                       Limited review--initial        $1,170.
                                        application \7\.
                                       Assessment--initial            $2,740 + travel expenses.
                                        application (per person, per
                                        site--first day) 2 10.
                                       Assessment--renewal            $2,570 + travel expenses.
                                        application (per person, per
                                        site--first day) 3 10.
                                       Assessment--expansion          $2,200 + travel expenses.
                                        application (additional
                                        site) (per person, per site--
                                        first day) \3\.
                                       Assessment--expansion          $1,830 + travel expenses.
                                        application (other) (per
                                        person, per site--first day)
                                        \3\.
                                       Assessment--each additional    $730 + travel expenses.
                                        day or each day on travel
                                        (per person, per site) 2 3.
                                       Review and evaluation \5\      $30 per standard OR $296 per standard.
                                        ($30 per standard if already
                                        recognized for NRTLs and
                                        requires minimal review;
                                        otherwise, $296 per
                                        standard).
                                       Final report and Federal       $12,080.
                                        Register notice--initial
                                        application 5 9.
                                       Final report and Federal       $4,580.
                                        Register notice--renewal or
                                        expansion application (if
                                        OSHA performs on-site
                                        assessment) 5 9.
                                       Final report and Federal       $2,740.
                                        Register notice--renewal or
                                        expansion application (if
                                        OSHA performs no on-site
                                        assessment) 5 9.
AUDITS...............................  On-site audit (per person,     $4,240 + travel expenses.
                                        per site, first day) \6\
                                        ($3,260--no nonconformances).
                                       On-site audit--each            $730 + travel expenses.
                                        additional day (on-site or
                                        on travel).
                                       (per person, per site); or
                                        review of revised audit
                                        response--per on-site or
                                        office audit \6\.
                                       Office audit (per person, per  $730 or $1,120.
                                        site, per day) \6\--$730 if
                                        no nonconformances, $1,120
                                        if nonconformances found.
MISCELLANEOUS........................  Supplemental travel (per       $1,000.
                                        site--for sites located
                                        outside the 48 contiguous
                                        U.S. states or the District
                                        of Columbia) \4\.
                                       Supplemental program review    $270.
                                        (per program requested) \4\.
                                       Fees invoice processing (per   $300.
                                        application or audit) \4\.
                                       Travel document processing (4  $270.
                                        hours, per application or