Curtis-Straus LLC; Application for Renewal of Recognition, 62850-62856 [2011-26067]

Agencies

• DEPARTMENT OF LABOR
• Occupational Safety and Health Administration

[Federal Register Volume 76, Number 196 (Tuesday, October 11, 2011)]
[Notices]
[Pages 62850-62856]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-26067]


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 DEPARTMENT OF LABOR

Occupational Safety and Health Administration

[Docket No. OSHA-2010-0018]


Curtis-Straus LLC; Application for Renewal of Recognition

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

ACTION: Notice.

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SUMMARY: This notice announces the application of Curtis-Straus LLC for 
renewal of its recognition as a Nationally Recognized Testing 
Laboratory (NRTL) and presents the Agency's preliminary finding to deny 
this application for renewal of NRTL recognition.

DATES: Submit information or comments, or a request to extend the 
comment period, on or before November 10, 2011. All submissions must 
bear a postmark or provide other evidence of the submission date.

[[Page 62851]]


ADDRESSES: Submit comments by any of the following methods:
    Electronically: Submit comments electronically at https://www.regulations.gov, which is the Federal eRulemaking Portal. Follow 
the instructions online for making electronic submissions.
    Fax: If submissions, including attachments, are no longer than 10 
pages, commenters may fax submissions to the OSHA Docket Office at 
(202) 693-1648.
    Mail, hand delivery, express mail, or messenger or courier service: 
Submit one copy of the comments to the OSHA Docket Office, Docket No. 
OSHA-2010-0018, U.S. Department of Labor, Room N-2625, 200 Constitution 
Avenue, NW., Washington, DC 20210. The Docket Office accepts deliveries 
(hand, express mail, and messenger and courier service) during the 
Department of Labor's and Docket Office's normal business hours, 8:15 
a.m.--4:45 p.m., E.T.
    Instructions: All submissions must include the Agency name and the 
OSHA docket number (i.e., OSHA-2010-0018). OSHA will place all 
submissions, including any personal information provided, in the public 
docket without revision, and will make these submissions available 
online at https://www.regulations.gov.
    Docket: To read or download submissions or other material in the 
docket (e.g., exhibits listed below), go to https://www.regulations.gov 
or the OSHA Docket Office at the address above. The https://www.regulations.gov index lists all documents in the docket; however, 
some information (e.g., copyrighted material) is not publicly available 
to read or download through the Web site. All submissions, including 
copyrighted material, are available for inspection and copying at the 
OSHA Docket Office.
    Extension of comment period: Submit requests for an extension of 
the comment period on or before November 10, 2011 to the 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 by fax to (202) 693-1644.

FOR FURTHER INFORMATION CONTACT: Bernard Pasquet, Acting 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; 
telephone: (202) 693-2110. For information about the NRTL Program, go 
to https://www.osha.gov, and select ``N'' in the site index.

SUPPLEMENTARY INFORMATION:

I. Notice of Application for Renewal of Recognition

    The Occupational Safety and Health Administration (OSHA) is 
providing notice that Curtis-Straus LLC (CSL) applied for renewal of 
its recognition as a Nationally Recognized Testing Laboratory (NRTL). 
(See Ex. 2--CSL renewal application dated 06/04/2004.) \1\ OSHA 
recognition of an NRTL signifies that the organization meets the legal 
requirements specified in 29 CFR 1910.7. Recognition is an 
acknowledgment by OSHA that the organization can perform independent 
safety testing and certification of the specific products covered 
within its scope of recognition, and is not a delegation or grant of 
government authority. As a result of recognition, employers may use 
products approved by the NRTL to meet OSHA standards that require 
product testing and certification.
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    \1\ A number of documents, or information within documents, 
described in this Federal Register notice are the applicant's 
internal, detailed procedures, or contain other confidential 
business or trade-secret information. These documents and 
information, designated by an ``NA'' at the end of, or within, the 
sentence or paragraph describing them, are not available to the 
public.
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    The Agency processes applications by an NRTL for initial 
recognition, or for an expansion or renewal of this recognition, 
following requirements in Appendix A to 29 CFR 1910.7. This appendix 
requires that the Agency publish two notices in the Federal Register in 
processing an application. In the first notice, OSHA announces the 
application and provides its preliminary finding. In the second notice, 
the Agency provides its final decision on the application. These 
notices set forth the NRTL's scope of recognition or modifications of 
that scope. OSHA maintains an informational Web page for each NRTL that 
details its scope of recognition. Interested parties may access these 
pages from OSHA's Web site at https://www.osha.gov/dts/otpca/nrtl/. Each NRTL's scope of recognition has three elements: (1) 
The type of products the NRTL may test, with each type specified by its 
applicable test standard; (2) the recognized site(s) that has/have the 
technical capability to perform the product testing and certification 
activities for test standards within the NRTL's scope; and (3) the 
supplemental program(s) that the NRTL may use, each of which allows the 
NRTL to rely on other parties to perform activities necessary for 
product testing and certification.

II. General Background on the Application

A. CSL's Application

    CSL applied to OSHA for its initial recognition in February 1998 
when it was a limited liability company chartered in the Commonwealth 
of Massachusetts. After processing the application, including 
performing the necessary on-site assessments, OSHA announced its 
preliminary finding on the application in a notice published in the 
Federal Register on December 13, 1999 (64 FR 69552). Following the 
requisite comment period, OSHA issued a notice in the Federal Register 
on May 8, 2000, announcing its final decision to recognize CSL as an 
NRTL (65 FR 26637). In May of 2005, Bureau Veritas Consumer Products 
Services, Inc. (BVCPS) acquired CSL; Bureau Veritas Holdings, Inc. owns 
BVCPS; Bureau Veritas SA (BVSA) owns Bureau Veritas Holding, Inc., and 
Wendel Investissement (Wendel) owns BVSA. Through various 
intermediaries, Wendel owns 58% of CSL. As of May 2011, Wendel also 
owns approximately 11% of Legrand (see Ex. 10--CSL letter to OSHA dated 
08/01/2011), a manufacturer of electrical products based in France. 
Legrand has world-wide operations in many other European countries, 
Canada, Mexico, various South American countries, and China, as well as 
other parts of Asia (see Legrand Group ``Facts and Figures,'' https://www.legrandgroup.com/EN/2010-facts-and-figures_12506.html).
    Wendel describes itself as ``one of the most prominent listed 
investment companies in Europe. Its philosophy is to invest for the 
long term, as a majority or principal shareholder, in listed or 
unlisted companies with leadership positions, so as to accelerate their 
own growth and business development'' (https://www.wendel-investissement.com/en/profil-strategie_uk.html). Wendel subsequently 
acquired additional manufacturers, such as Campagnie Deutsche, a 
manufacturer of industrial and automotive electrical connectors, some 
of which may require NRTL certification prior to use in the workplace. 
Wendel has the potential to acquire additional companies that 
manufacture products that require NRTL testing and certification.
    On June 4, 2004, CSL submitted its renewal application. On April 
27, 2007, OSHA informed CSL by letter that CSL appeared not to meet the 
NRTL Program policy on independence under

[[Page 62852]]

Appendix C of the NRTL Program Directive (OSHA Instruction CPL 01-00-
003-CPL 1-0.3) due to BVSA's acquisition of CSL (see Ex. 3--OSHA letter 
to CSL, dated 04/27/2007). In that letter, OSHA asked CSL to provide 
clear and convincing evidence (NRTL Program Directive, Appendix C.V, 
OSHA Instruction CPL 01-00-003-CPL 1-0.3) that pressures (i.e., undue 
influences) do not exist as a result of its organizational affiliation 
with Legrand that could compromise CSL's NRTL testing and certification 
processes. CSL responded to OSHA on August 27, 2007, and supplemented 
this response on January 31, 2008, (see Ex. 4--CSL letter to OSHA, 
dated 08/27/2007, and Ex. 5--CSL letter to OSHA, dated 01/31/2008). To 
rebut the presumption of pressures, CSL described the ``longstanding 
integrity'' of BVSA and CSL, and claimed an ``attenuated'' relationship 
existed between CSL and Legrand. It also argued that the Compliance 
Committee implemented by CSL, as well as the objectivity of CSL's 
testing program, would mitigate any undue influence. A follow-up 
response from CSL received by OSHA on January 31, 2008, argued that 
``firewalls'' existed to assure the independence of CSL's testing and 
certification processes (Ex. 5, pp. 1-4). These ``firewalls'' were 
measures or factors that CSL claimed will mitigate or prevent undue 
influence on its NRTL activities. CSL's firewalls included a separation 
of its board of directors from other Legrand companies, use of 
independent auditors, and establishment of the Compliance Committee. 
The letter also asserted that the presence of common executives and 
board members between Legrand, Wendel, and BVSA does not compromise 
CSL's testing and certification because ``there is no reason to believe 
that [the board members] would seek to cause a complex international 
conspiracy to compromise CSL'' (Ex. 5, p. 2).
    OSHA responded to CSL on August 14, 2008 (see Ex. 6--OSHA letter to 
CSL, dated 08/14/2008), and reiterated the following concerns about 
CSL's independence: (1) The substantial relationship \2\ that arises 
from Wendel's common ownership of both Legrand, a manufacturer, and 
CSL, an NRTL; (2) the common executives and board members shared 
between BVSA, CSL, Wendel, and Legrand; (3) how CSL will monitor 
Wendel's future acquisitions; (4) how CSL can warrant to OSHA that it 
would not test or certify either Legrand's or its competitor's 
products; (5) how CSL will comply with the requirements of the 
International Federation of Inspection Agencies (IFIA) \3\ that 
auditors be independent of the testing organization; and (6) how CSL 
will ensure the personnel performing the audits have the necessary 
qualifications.
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    \2\ The definition of ``substantial relationship'' includes when 
a major owner of a supplier of products requiring NRTL certification 
has an ownership interest in excess of two percent in an NRTL (see 
NRTL Program Policies, Procedures, and Guidelines--CPL 01-00-003-CPL 
1-0.3 (NRTL Program Directive), Appendix C.V(C)).
    \3\ The IFIA is a trade association that represents companies 
involved in international testing, inspection, and certification 
services. It requires members to adhere to a compliance code that 
includes independent auditing by IFIA for compliance with IFIA 
standards (see ``About Us'' IFIA, https://www.ifia-federation.org/content/about-us).
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    On February 20, 2009, CSL responded by letter (see Ex. 7--CSL 
letter to OSHA, dated 02/20/2009) describing its efforts to: (1) 
Monitor Wendel's acquisitions; (2) perform enhanced certification 
procedures on products manufactured by subsidiaries and other companies 
organizationally affiliated with Wendel; and (3) use both external and 
internal audits to ensure that CSL maintains its independence. CSL 
asserted that it would accomplish these efforts through extensive 
procedures it has in place to identify public Wendel subsidiaries, its 
conflict management procedures that require additional witnessing and 
review of test data on products produced by Wendel subsidiaries, audits 
by internal compliance officers, and IFIA membership. It also informed 
OSHA that it was changing its executive leadership and augmenting its 
board of directors with additional independent directors to dilute the 
potential for undue influence upon the board. However, the mutual board 
members shared between BVSA, Legrand, and Wendel would remain on the 
board. OSHA fully considered CSL's efforts to rebut the presumption of 
undue influence. However, on January 19, 2010, the Agency responded 
with a negative finding of renewal (see Ex. 8--OSHA negative finding of 
renewal, dated 01/19/2010). OSHA based its decision, in part, on 
concerns that OSHA would not be able to effectively monitor CSL's 
efforts, even if CSL made good-faith efforts, because of the extent and 
complexity of Wendel and Legrand's operations. OSHA does not have the 
resources or expertise to monitor all of Wendel's and Legrand's 
acquisitions, products, and operations.
    In response to the negative finding of renewal, CSL submitted a 
revised application on October 18, 2010 (see Ex. 9--CSL revised renewal 
application, dated 10/18/2010). The revised application reiterated its 
commitment to objective testing, the procedures of the CSL Compliance 
Committee, and requirements of the external audits. CSL also proposed a 
temporary limitation, in which CSL would limit its testing and 
certification to existing customers and products. On August 1, 2011, 
CSL notified OSHA that Wendel reduced its ownership of Legrand from 32% 
to 11.1% (Ex. 10). However, as described below, the revised application 
and reduction in ownership fail to address the fundamental violation of 
the NRTL independence requirement.

B. The NRTL Independence Policy

    OSHA requires NRTLs and applicants to be ``completely independent'' 
of the manufacturers of the equipment the NRTLs are testing (see 29 CFR 
1910.7(b)(3)). This independence requirement is fundamental to the 
third-party testing and certification system. Early in the NRTL 
Program, OSHA extended the practices that two NRTLs--Underwriters 
Laboratories (UL) and Factory Mutual Research Corporation (FMRC)--
instituted in their testing and certification programs. These practices 
included having no affiliations with (i.e., being independent of) the 
manufacturers of the equipment they certified. Therefore, independence 
is the cornerstone of the NRTL Program, the purpose of which is to 
ensure that the organizations testing and certifying specified products 
as safe have no affiliation with the manufacturers of the products or 
with employers that use the products in the workplace.
    The NRTL Program Directive that was in effect when CSL applied for 
NRTL recognition stated that, to meet the independence requirement, 
NRTLs and applicants ``must be free from commercial, financial and 
other pressures that could compromise the results of its testing and 
certification processes'' (see NRTL Program Policies, Procedures, and 
Guidelines--CPL 01-00-003--CPL 1-0.3 (NRTL Program Directive), Appendix 
C.V). The Directive makes it clear that NRTLs and applicants must avoid 
these pressures from manufacturers of equipment.
    Under its independence policy, OSHA presumes that ``pressures'' 
exist if there is a substantial relationship between the NRTL or 
applicant and a manufacturer ``of products that must be certified which 
could compromise the objectivity and impartiality in determining the 
results of its testing and certification processes.'' Substantial, for 
purposes of the policy, ``means of such a nature and extent as to exert 
undue influence on the testing and certification processes.''

[[Page 62853]]

    In some limited situations, the policy allows OSHA to prescribe 
``conditions'' on NRTLs or applicants for initial or continued 
recognition, even when the Agency determines that pressures exist. Such 
conditions, however, ``must be consistent with the policy,'' in that 
they must effectively eliminate the pressures stemming from the 
substantial relationship. The Directive also provides examples of 
options OSHA may consider when imposing conditions: (1) Restricting the 
suppliers for whom the NRTL or applicant may test and certify products; 
or (2) restricting the type of products the NRTL or applicant may test 
and certify.
    Whether imposing conditions on an NRTL or applicant is appropriate 
is a judgment made by the Agency on a case-by-case basis. OSHA has 
discretion whether to impose conditions in a particular case. The 
independence policy does not require OSHA to impose conditions; it only 
allows OSHA to impose conditions. When organizations cannot effectively 
eliminate pressures stemming from a substantial relationship, then OSHA 
cannot impose conditions ``consistent with the policy.'' Accordingly, 
OSHA can impose conditions only in those rare instances when the 
substantial relationships cause ``minimal'' pressures.
    In analyzing these situations, OSHA must carefully examine the 
ownership situation; the types of products at issue; the scope and 
magnitude of the NRTL's or applicant's operations; the scope and 
magnitude of the operations of the manufacturers making, and the 
employers using, the products; and other factors. OSHA also must 
consider the degree to which it can monitor the NRTL or applicant's 
compliance with any imposed conditions, which is a particularly 
important factor. OSHA typically audits NRTLs once a year to ensure 
they continue to meet the NRTL requirements, including the independence 
requirement, and to maintain the quality of their testing and 
certification operations. If imposing conditions on an NRTL or 
applicant would be difficult or impossible for OSHA to audit 
effectively, imposing conditions on the NRTL or applicant would not be 
appropriate.
    OSHA believes its policy on NRTL independence is a straightforward 
approach for judging an NRTL's or applicant's compliance with the 
Agency's independence requirement under 29 CFR 1910.7. OSHA cannot 
perform in-depth analyses of an NRTL's or applicant's ownership or 
financial relationship and interests. Therefore, the NRTL or applicant 
has the burden of showing it is independent, and that any relationship 
with a manufacturer or employer involves no, or only minor, pressures.

III. General Finding of Non-Independence

A. CSL Has a ``Substantial Relationship'' With Legrand

    Wendel Investissement (Wendel) owns, at least in part, both CSL and 
Legrand (a manufacturer). Wendel owns 58% of CSL and 11% of Legrand 
through various intermediaries. Legrand is a manufacturer of various 
products, many of which require NRTL certification if used in the 
workplace. Under the NRTL independence policy, this relationship 
constitutes a ``substantial relationship,'' in which a major owner of a 
supplier of products requiring NRTL certification has an ownership 
interest in excess of two percent in CSL, an NRTL. Because of this 
substantial relationship, OSHA presumes that pressures exist on CSL 
that could compromise the results of its testing and certification 
processes and that CSL, therefore, is not independent.

B. CSL Failed To Rebut the Presumption of Pressures

    CSL attempted to rebut the presumption of pressures. In various 
letters to the Agency, CSL explained why it believes it is not subject 
to pressures from Wendel or Legrand that could compromise the results 
of its testing and certification processes. CSL stated that its 
relationship to Legrand is highly attenuated and that its decision 
making is independent of both Wendel and Legrand (Ex. 9, p. 3). To 
rebut the presumption of pressures, CSL also proposed that it renew 
temporarily only product certifications for existing customers not 
associated with Wendel (Ex. 9 pp. 1, 10). Finally, CSL claimed that it 
took a variety of steps to ensure that it will not test or certify any 
products made by Legrand (Ex. 9, pp. 10-12). The Agency carefully 
considered this information, and finds that CSL did not adequately 
rebut the presumption of pressures, as discussed below.
1. CSL's Independence From Legrand and Wendel
    To rebut the presumption of pressure, CSL contended that ``the 
relationship of Legrand or other Wendel holdings is highly attenuated'' 
(Ex. 9, p. 3) and, as such, does not result in undue pressure on CSL. 
CSL argues that Wendel is a long-term investor that does not manage 
CSL's day-to-day operations. CSL also noted that Wendel does not exert 
control over CSL, therefore assuring CSL's independence from Wendel and 
Legrand.
    CSL's assertion that Wendel does not manage, or exert control over, 
CSL does not address the fundamental issue regarding the control that a 
parent company has over a subsidiary (e.g., a majority-owned 
subsidiary). According to the Securities and Exchange Commission, the 
term ``control'' in this context means the ``possession, direct or 
indirect, of the power to direct or cause the direction of the 
management and policies of a person, whether through the ownership of 
voting securities, by contract, or otherwise'' (see 17 CFR 230.405). 
The parent company of a majority-owned subsidiary, in this case CSL, 
has ultimate control over the subsidiary, even though the parent 
company may delegate some of that control to the subsidiary. A parent 
company can exert control by changing a subsidiary's policies and 
leadership, and even by selling the subsidiary. Therefore, because 
Wendel has the power to dictate and influence CSL's actions, CSL does 
not have decision-making independence.
    Although CSL claims an ``attenuated'' connection to Wendel, CSL did 
not provide any assurances that Wendel will refrain from exerting 
control over CSL, or pressuring CSL through Bureau Veritas. To the 
contrary, Wendel has a corporate policy that encourages exerting 
control over Bureau Veritas and CSL. Wendel's Web site states that its 
``policy is to be the key or controlling shareholder in its listed or 
unlisted investments on a long-term and hands-on basis. It expresses 
this commitment by actively participating in these companies' strategic 
decisions, based on the principle of direct, constructive and 
transparent give-and-take with their managers'' (https://www.wendel-investissement.com/en/charte-de-lactionnaire_83.html). Furthermore, 
although CSL notified OSHA that Wendel reduced its percentage ownership 
of Legrand from 32% to 11% in 2011 (Ex. 10), CSL did not provide any 
assurance that this reduction in ownership eliminated Wendel's control 
over CSL. Furthermore, Wendel can increase its ownership interest in 
CSL at any time. Although OSHA could impose a condition to limit such 
an increase in ownership, the fundamental issue of Wendel's control 
over CSL would remain.
2. CSL's Organizational Relationship to Wendel and Legrand
    CSL also claims that, because no member of its Board of Managers 
has ``significant ties'' to any of BVSA's parent companies, there is 
little

[[Page 62854]]

opportunity for these companies to exert pressures on CSL (Ex. 9, p. 
18). OSHA finds that the current organizational relationship between 
CSL and Wendel via BVSA does not rebut the presumption of pressures. 
When Wendel first purchased CSL, BVSA and CSL shared two key executives 
(Mr. Piedelievre, who was a member of BVSA's management board, as well 
as CSL's chairman, and Mr. Tardan, who also was on BVSA's management 
board and is CSL's treasurer). To date, Wendel and BVSA share one board 
member. According to the Web site of Wendel and BVSA, Ernest-Antoine 
Seilli[egrave]re is the Chairman of Wendel's Supervisory Board, as well 
as a member of BVSA's Board of Directors (see https://www.bureauveritas.com/wps/wcm/connect/bv_com/Group/Home/Investors/Corporate_governance and https://www.wendel-investissement.com/en/members_32.html).
    Furthermore, CSL asserted that individuals affiliated with Wendel 
and Legrand are no longer members of its Board of Managers (see Ex. 7). 
However, based on the information CSL provided, several BVSA-affiliated 
members remain on CSL's board: John Beisheim is Vice President of 
Acquisitions and Risk Management at BVCPS and Oliver Butler is a Senior 
Vice President of BVCPS (Ex. 7, p. 2). BVCPS is a subsidiary of BVSA, 
which is a subsidiary of Wendel. This arrangement perpetuates a direct 
line of communication and influence between Wendel and CSL by way of 
BVSA and senior officers at BVCPS. CSL provided no information to OSHA 
regarding the removal of members of its board who also were members of 
Legrand's, Wendel's, and BVSA's boards. These associations make Wendel 
privy to the BVSA's Board of Director's deliberations on behalf of CSL. 
Because of the close linkages, the potential remains for Wendel to 
influence CSL's testing and certification operations. Furthermore, 
since Wendel benefits from Legrand's success as a manufacturer of NRTL-
certified products, the presumption is that pressures from Wendel could 
compromise CSL's testing and certification processes with regard to 
these Legrand products. In summary, the modifications CSL made to its 
Board of Managers provided little organizational separation between CSL 
and Wendel and, therefore, do not adequately rebut the presumption of 
pressures.
3. Missing Information Regarding Ownership and Subsidiaries
    OSHA has concerns regarding entities that own intermediary 
companies between Legrand and Wendel, the companies these 
intermediaries own, and the business lines of these companies. The 
organizational chart provided by CSL on January 31, 2008 (Ex. 5; Ex. 
1), fails to show the part owners of a number of these intermediaries. 
CSL also provided no information on the new intermediate owner of BVSA. 
Also missing is the name of intermediate companies owned by Wendel's 
subsidiaries. OSHA requested this information on August 14, 2008, but 
CSL repeatedly failed to provide the information required to address 
OSHA's concerns.
4. Temporary Limitation to Certifications
    In its revised application, submitted October 18, 2010 (see Ex. 9), 
CSL requested that OSHA renew CSL's recognition by imposing a 
limitation that would restrict CSL to ``only renew existing NRTL 
product certifications for existing customers * * * until the matter of 
ownership of [CSL] is resolved to OSHA's satisfaction.'' CSL argued 
that this limitation would eliminate the presumption of pressure or 
other concerns regarding Wendel's ownership of CSL or the content of 
Wendel's holdings. CSL claimed that this approach would address OSHA's 
concerns regarding undue pressure because none of its existing 
customers had affiliations with Wendel. This limitation does not 
address OSHA's concerns adequately. The Agency must examine carefully 
the ownership situation; the types of products at issue; the scope and 
magnitude of the NRTL's and applicant's operations; the scope and 
magnitude of the operations of manufacturers making, and the employers 
using, the products; and other factors. OSHA also must consider the 
degree to which it can monitor NRTL compliance with such a condition.
    As proposed by CSL, the limitation would be temporary and, 
therefore, would not resolve the ultimate independence issue. CSL would 
remain organizationally affiliated with Wendel, a situation in which 
Wendel could exert undue pressure on CSL. For instance, CSL's current 
NRTL certifications include testing for the standard UL 60950, which 
covers products made by Legrand. Under CSL's proposal, Wendel could 
still exert pressure on CSL to reject similar products made by 
Legrand's competitors.
    Furthermore, CSL claimed that the proposed condition is a ``self 
regulating'' limitation that OSHA could audit easily. However, Wendel's 
operations are so vast that OSHA seriously doubts that CSL could 
effectively enforce the proposed condition. In this regard, Legrand is 
a world-wide enterprise with operations and affiliates in the U.S., 
Europe, Canada, Mexico, South America, China, and other Asian 
countries. One of these affiliates, Bticino, has operations in 60 
countries. Wendel's 2007 annual report states that Legrand acquired 15 
suppliers or manufacturers during the preceding three years, and the 
2008 annual report describes Legrand as having a 19% market share of 
products and systems for electrical installations, and offering nearly 
170,000 products. Moreover, CSL reports that it currently has 203 
outstanding certifications distributed among 78 customers. Accordingly, 
it is infeasible for either OSHA or CSL to monitor every merger and 
acquisition of CSL's customers to ensure that none of these 
transactions involve a Wendel subsidiary. This infeasibility, along 
with the temporary status of this proposed condition, makes it an 
unacceptable option to resolve CSL's independence issue.
5. Corporate-Compliance Program
    CSL established a compliance program that includes participation in 
various ethics programs, as well as formation of a Compliance Committee 
of CSL's Board consisting of independent managers to ``assure that 
there are no pressures to distort its NRTL testing and certifications'' 
(Ex. 9, p. 10). CSL also noted that Bureau Veritas is a member of the 
IFIA, which CSL claimed ``assure[s] independence with respect to * * * 
certifications'' as a part of the IFIA's ethical requirements (Ex. 9, 
p. 12). The ethical programs include both internal and external audits. 
Furthermore, CSL claimed that its conflict-management procedures 
require that it test and certify all products ``independently of all of 
its clients. It does not design or manufacture products that it tests 
or certifies'' (Ex. 9, p. 10). However, implementation of this 
compliance program does not rebut the presumption of pressures.
    First, OSHA does not allow an NRTL to ``self certify'' its 
independence. Second, CSL's policy does not address the fundamental 
ownership conflict (i.e., that Wendel still can assert control over 
CSL's operations). Regardless of the ethical and auditing programs in 
place, Wendel can revise CSL's policies and operations, including its 
corporate-compliance program. A corporate-compliance program will not 
mitigate this relationship and the control that Wendel can assert on 
CSL. Furthermore, as noted above, Wendel's operations are so vast that 
OSHA believes that CSL

[[Page 62855]]

cannot self regulate its independence effectively through a corporate-
compliance program. Moreover, OSHA does not have the resources to audit 
the effectiveness of such a program because the vast scope of Wendel's 
and Legrand's operations, including intermediary owners of Wendel and 
Legrand and the subsidiary companies of these intermediary owners.

C. OSHA Cannot Impose Conditions on CSL

    As described above, OSHA's independence policy permits OSHA to 
impose conditions only when minimal pressures exist, and the conditions 
are consistent with the NRTL independence requirement. The extent to 
which OSHA may impose conditions on a manufacturer-owned NRTL depends 
in part on the ownership arrangement, the scope of the NRTL's 
recognition, and the scope of the products manufactured.
    In this case, Wendel owns a substantial share of CSL and a 
manufacturer, rather than a small minority interest in either 
organization, which would severely limit the pressure it could exert on 
the NRTL. Furthermore, Wendel owns and operates an enormous variety of 
companies. Wendel could own companies that produce numerous types of 
products that require NRTL certification. In such cases, OSHA cannot 
impose conditions on CSL that are consistent with the fundamental 
requirement that NRTLs be independent of ``any manufacturers or vendors 
of equipment or material being tested for [equipment requirements]'' 
(see 29 CFR 1910.7(b)(3)). In this regard, OSHA must consider whether 
it can reasonably monitor an NRTL's compliance with the conditions. 
OSHA cannot monitor reliably the various CSL and Wendel ownership 
relationships and affiliations with the numerous subsidiaries of 
Wendel. As noted earlier, the Agency's policy on independence must 
provide a straightforward, practical approach to determining whether an 
organization meets the requirement for independence. Accordingly, OSHA 
is not requiring its staff to analyze actual or potential business 
activities that could cause actual or potential conflicts and 
pressures. When these activities are extensive, which is the case for 
the world-wide operations of Legrand, this information is far beyond 
OSHA's auditing capabilities under the NRTL Program. In summary, OSHA 
cannot reasonably determine with its existing resources the extent to 
which Wendel-affiliated companies contribute to the sale and 
manufacture of products submitted to CSL for NRTL testing and 
certification.

D. OSHA Has a Consistent Position on Conditions

    CSL contended that OSHA permitted other NRTLs in positions similar 
to CSL's to adopt conditions that rebut the presumption of pressures 
(Ex. 9, p. 6). In particular, CSL argued that OSHA permitted such 
conditions in the cases of Intertek Testing Services NA, Inc. 
(Intertek), National Technical Systems, Inc. (NTS), and Wyle 
Laboratories, Inc. (Wyle), and that those cases indicate that OSHA also 
should apply conditions in CSL's case (Ex. 9, pp. 7-9). OSHA disagrees 
with this argument because CSL's case differs from these other cases. 
As mentioned above, OSHA applies conditions only in circumstances in 
which minimal pressures exist, and OSHA can reasonably determine and 
monitor the effectiveness of the conditions, and the conditions are 
consistent with OSHA's independence requirement.
    In the Intertek case, Intertek's parent acquired, and merged into 
Intertek's overall laboratory operations, a small manufacturer of 
laboratory test equipment, Compliance Design. Consequently, Intertek 
lost its independence because its parent company owned a manufacturer 
of equipment that needed NRTL approval. OSHA, however, imposed a 
condition on Intertek's recognition that effectively eliminated the 
pressures stemming from Intertek's relationship with Compliance Design 
(66 FR 29178). This condition included a no-testing policy for 
Compliance Design and for any other manufacturer affiliated with 
Intertek. Although OSHA received no information showing that Intertek 
or its parent owned any other manufacturing interest, the Agency 
imposed the broader condition as a precaution. OSHA could impose this 
condition because, unlike CSL's situation, Compliance Design was a 
small company that produced just one type of product; therefore, 
Intertek could enforce the no-testing policy. Because of Compliance 
Design's limited operations, OSHA could monitor effectively Intertek's 
compliance with the independence policy. As noted earlier, CSL's 
situation is much different than Intertek's because Wendel's and 
Legrand's operations involve multiple products manufactured and sold by 
numerous and various subsidiaries, making it impossible for OSHA to 
impose conditions on CSL's recognition that would mitigate all of the 
pressures and that OSHA could monitor reasonably and effectively.
    OSHA also imposed a condition on Wyle (59 FR 37509). When OSHA 
granted Wyle NRTL recognition, Wyle was part of an organization with a 
division that manufactured and distributed electronic enclosure 
cabinets. As with Intertek, the condition imposed on Wyle required that 
Wyle not test or certify any equipment that used electronic enclosures 
manufactured by the affiliated division. Unlike CSL's situation, this 
condition was easy for Wyle and OSHA to monitor because the only 
product at issue was electrical enclosure cabinets.
    Lastly, OSHA imposed conditions on NTS (63 FR 68306). NTS was a 
public company that ``could conceivably perform the design and 
engineering services * * * for manufacturers or vendors of the products 
covered within the scope of the test standards for which OSHA has 
recognized NTS'' (63 FR 68306). Because NTS is a public company, OSHA 
had a concern that manufacturers or vendors could acquire ownership of 
NTS. Accordingly, OSHA imposed a condition on NTS that restricted it 
from testing and certifying products for a client to which it sells 
design or similar services. OSHA also required NTS to provide OSHA an 
opportunity to review NTS's NRTL Quality Manual, Quality Assurance 
Procedures, and other procedures within 30 days of certifying its first 
products under the NRTL Program (63 FR 68306, 68309). OSHA imposed 
these conditions only as a preemptive measure because there was no 
evidence in the record that any manufacturers or vendors owned NTS, or 
that NTS was providing design and engineering services to manufacturers 
or vendors. However, this is not the case for CSL, in which a 
manufacturer's direct ownership interest and the potential for indirect 
affiliation with numerous other manufacturers and vendors, results in a 
presumption of pressure that violates the NRTL independence policy.
    Thus, OSHA's determination regarding the imposition of conditions 
on CSL's NRTL recognition is consistent with the Agency's previous 
actions on this issue. Although OSHA provided CSL with several 
opportunities to rebut the presumption of pressures, CSL did not meet 
its burden of demonstrating by clear and convincing evidence that 
pressures do not, and will not, exist that could compromise the results 
of its testing and certification process.

IV. Request for Renewal of Recognition

    CSL seeks renewal of its recognition for the one site that OSHA 
previously recognized. CSL also is requesting that OSHA renew its 
recognition to use the

[[Page 62856]]

following five test standards for testing and certification of 
products: UL 544 Electric Medical and Dental Equipment; UL 60601-1 
Medical Electrical Equipment, Part 1: General Requirements for Safety; 
UL 60950 Information Technology Equipment; UL 61010A-1 Electrical 
Equipment for Laboratory Use, Part 1: General Requirements; and UL 
61010B-1 Electrical Measuring and Test Equipment, Part 1: General 
Requirements.\4\
---------------------------------------------------------------------------

    \4\ Each of these standards is an ``appropriate test standard'' 
within the meaning of 29 CFR 1910.7(c). The designations and titles 
of these test standards were current when OSHA prepared this notice.
---------------------------------------------------------------------------

V. Preliminary Finding

    Following a thorough review of the application file and other 
pertinent information, and for the reasons stated above, OSHA 
determined that CSL does not meet all of the requirements for renewal 
of its NRTL recognition. The NRTL Program staff, therefore, recommends 
preliminarily that the Assistant Secretary deny CSL's application for 
renewal of its NRTL recognition.
    OSHA welcomes public comment as to whether CSL meets the 
requirements of 29 CFR 1910.7 for renewal of its recognition as an 
NRTL. Comments should consist of pertinent written documents and 
exhibits. Commenters needing more time to comment must submit a request 
in writing, stating the reasons for the request. OSHA must receive the 
written request for an extension by the due date for comments (see 
DATES above). OSHA will limit any extension to 30 days unless the 
requester justifies a longer period. OSHA may deny a request for an 
extension if the requester does not adequately justify it. To obtain or 
review copies of the publicly available information in CSL's 
application and other pertinent documents (including exhibits), and all 
submitted comments, contact the Docket Office, Room N-2625, 
Occupational Safety and Health Administration, U.S. Department of 
Labor, at the address listed above under ADDRESSES; these materials 
also are available online at https://www.regulations.gov under Docket 
No. OSHA-2010-0018.
    The NRTL Program staff will review all comments submitted to the 
docket in a timely manner, and, after addressing the issues raised by 
the comments, will recommend whether to grant the renewal of NRTL 
recognition to CSL. The Assistant Secretary will make the final 
decision on granting NRTL recognition, and, in making this decision, 
may undertake other proceedings prescribed in Appendix A to 29 CFR 
1910.7. OSHA will publish a public notice of this final decision in the 
Federal Register.

Authority and Signature

    David Michaels, PhD, MPH, Assistant Secretary of Labor for 
Occupational Safety and Health, 200 Constitution Avenue, NW., 
Washington, DC 20210, authorized the preparation of this notice. 
Accordingly, the Agency is issuing this notice pursuant to Sections 
6(b) and 8(g) of the Occupational Safety and Health Act of 1970 (29 
U.S.C. 655 and 657), Secretary of Labor's Order No. 4-2010 (75 FR 
55355), and 29 CFR 1911.

    Signed at Washington, DC on October 4, 2011.
David Michaels,
Assistant Secretary of Labor for Occupational Safety and Health.
[FR Doc. 2011-26067 Filed 10-7-11; 8:45 am]
BILLING CODE 4510-26-P