OSHA Grants Curtis-Straus Renewal of Recognition
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A Notice by the
Action
Notice.
Summary
This notice announces the
DATES:
The renewal of recognition for
FOR FURTHER INFORMATION CONTACT:
SUPPLEMENTARY INFORMATION:
I. Notice of Final Decision
OSHA recognition of an NRTL signifies that the organization meets the legal requirements in the NRTL Program regulations. Recognition is an acknowledgment 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 in the workplace approved properly by the NRTL to meet OSHA standards that require testing and certification.
Appendix A.I.B describes the procedures that OSHA must use in deciding an NRTL's application for renewal of recognition. To approve such an application, the NRTL must meet all of the requirements for recognition in 29 CFR 1910.7. Appendix A.I.B lists the steps OSHA must follow in reviewing each renewal application, and provides the NRTL opportunities to correct or respond to any perceived failures to meet the specified requirements.
After following the process set forth in Appendix A.I.B, OSHA grants renewal of CSL's recognition as an NRTL. OSHA carefully reviewed CSL's original application for renewal, its revised application for renewal, and all related documents, including informal communications between CSL and OSHA, public comments received in response to OSHA's preliminary finding to deny renewal, and publicly available information concerning the ownership and organization of CSL. In this regard, OSHA preliminarily determined that CSL failed to satisfy one of the regulatory requirements for continued NRTL recognition--i.e., the requirement that NRTLs be "completely independent of employers subject to the tested equipment requirements, and of any manufacturers or vendors of equipment or materials being tested for these purposes" (29 CFR 1910.7(b)(3)).
However, under OSHA's independence policy, found in Appendix C to the NRTL Program Directive (OSHA Instruction CPL 01-00-003-CPL 1-0.3), even if an NRTL is not free of commercial, financial, and other pressures that could compromise the results of the testing and certification processes, it may still retain its recognition if it complies with conditions that OSHA may impose. CSL proposed several conditions, both before, and in response to, OSHA's preliminary finding, to address its ability to comply with the NRTL independence requirement. In this notice, OSHA accepts the conditions proposed by CSL, and also develops additional conditions, to resolve the issues surrounding CSL's independence. Therefore, OSHA grants renewal of CSL's NRTL recognition and imposes on CSL conditions with which CSL must comply to retain its NRTL recognition. OSHA sets forth its findings in this matter in greater detail below under Section III ("Discussion of CSL's Independence") and Section IV ("Summary and Analysis of Additional Comments").
Docket No. OSHA-2009-0026 contains all public materials in the record concerning OSHA's preliminary decision to deny NRTL recognition to CSL. The public may obtain or review copies of these documents by contacting the Docket Office,
II. Background
A. The NRTL Program and the NRTL Renewal Process
Many of OSHA's safety standards require employers to use products tested and certified as safe (see, e.g., 29 CFR 1910, subpart S). In general, testing laboratories, and not employers, perform the required testing and certification. To ensure that the testing and certification performed on products is appropriate, OSHA implemented the NRTL Program. The NRTL Program establishes the criteria that a testing laboratory must meet to achieve, and retain, NRTL recognition.
OSHA recognition of an NRTL signifies that the organization meets the legal requirements specified in 29 CFR 1910.7, the regulatory provision containing the requirements an organization must meet to become an NRTL and retain NRTL status. 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. Recognition under the NRTL Program, therefore, enables employers to use products approved by NRTLs to meet OSHA standards that require product testing and certification. OSHA maintains an informational Web site for each NRTL that details its scope of recognition. These pages are available on OSHA's Web site at http://www.osha.gov/dts/otpca/nrtl/index.html.
Under OSHA's procedures for NRTL recognition, a prospective NRTL must submit an application for recognition under the NRTL Program (Appendix A.I.A). Once granted, OSHA's recognition of an NRTL is valid for five years unless OSHA terminates the NRTL's recognition before the end of the five-year period (Appendix A.I.B.7). To renew its recognition, an NRTL must file a renewal request with OSHA not less than nine months, or more than one year, before the expiration date of its current recognition (Appendix A.II.C.1). An NRTL seeking renewal may file, with its renewal request, any additional information the NRTL believes will demonstrate its continued compliance with the terms of its recognition and 29 CFR 1910.7 (Appendix A.II.C.2). Per OSHA practice, if OSHA did not conduct an on-site assessment of the NRTL headquarters and any key sites within the past 18 to 24 months, OSHA will schedule the necessary on-site assessments prior to the expiration date of the NRTL's recognition.
Appendix A sets forth the procedures for renewal. These procedures provide NRTLs with several opportunities to present information to the Agency to justify their continued recognition under the NRTL Program.
Pursuant to Appendix A, after an NRTL applies for renewal, OSHA staff makes a recommendation to the Assistant Secretary of Labor for Occupational Safety and Health (Assistant Secretary) as to whether the NRTL continues to meet the NRTL Program requirements set forth in 29 CFR 1910.7 (Appendix A.I.B.2). If the staff reaches a negative finding, OSHA notifies the applicant, in writing, of this finding and allows a reasonable period for a response (Appendix A.I.B.3.a). In providing this response, the applicant may either: (1) Submit a revised application for further review by OSHA staff; or (2) request that the staff forward the original application, along with a statement provided by the applicant of reasons supporting the application, to the Assistant Secretary to determine whether the renewal application warrants approval (Appendix A.I.B.3.b.(i)). An NRTL notified of a negative finding may submit a revised application for further review by OSHA staff only once during each recognition process (Appendix A.I.B.3.b(ii)).
After OSHA staff provides its recommendation, the Assistant Secretary makes a preliminary finding as to whether the applicant meets the requirements for renewal of recognition (Appendix A.I.B.4.a). OSHA then notifies the applicant of the preliminary finding, and also publishes a notice of the preliminary finding in the
If an NRTL files a timely and sufficient renewal request, the current recognition of an NRTL does not expire until the Assistant Secretary renders a final decision (Appendix A.I.C.2.c). If the Assistant Secretary grants the NRTL's application for renewal, the NRTL's recognition is valid for five years unless terminated before the expiration of the period (Appendix A.I.B.7).
B. The NRTL Independence Requirement
OSHA requires that NRTLs and applicants be "completely independent of employers subject to [OSHA's] tested equipment requirements, and of any manufacturers or vendors of equipment or materials being tested for these purposes" (see 29 CFR 1910.7(b)(3)). This independence requirement is fundamental to the third-party testing and certification system, as the requirement ensures that the organizations testing and certifying specified products as safe have no affiliation with the manufacturers or vendors of the products, or with employers that use the equipment or products in the workplace.
OSHA's NRTL Program Directive specifies the approach for judging an NRTL's or applicant's compliance with the Agency's independence requirement under 29 CFR 1910.7. The policy recognizes that certain relationships between an NRTL and any manufacturer of products that require NRTL certification can affect the objectivity and impartiality of an NRTL's testing and certification procedures.
The policy provides 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 (hereafter, "NRTL Program Directive"), Appendix C.V). Pursuant to this policy, OSHA presumes that these pressures exist if there is a substantial relationship between the NRTL or applicant and a manufacturer, vendor, or major user "of products that must be certified which could compromise objectivity and impartiality in determining the results of its testing and certification processes" (id.). The term "substantial" for purposes of the policy, means that the relationship is "of such a nature and extent as to exert undue influence on the testing and certification processes" (id.). The factors that signify that an NRTL or applicant has an impermissible "substantial relationship" include, but are not limited to, the following: (1) The NRTL or applicant is "organizationally affiliated" with a manufacturer, vendor, or major user "of products that an NRTL must certify"; (2) the NRTL or applicant "is owned in excess of two percent (2%) by a [manufacturer or vendor] or major user, or their major owners"; (3) the NRTL or applicant "receives significant financing from a [manufacturer or vendor] or major user, or their major owners"; or (4) a "person holding a substantial position with the NRTL [or applicant] has a significant financial interest in a [manufacturer, vendor,] or major user, or is a director or key personnel of either" (id.).
OSHA cannot perform in-depth analyses of an NRTL's or applicant's ownership or financial relationship and interests. Therefore, pursuant to the policy, an NRTL or applicant can rebut the presumption that pressures exist by "present[ing] clear and convincing evidence" that it is independent, and that any relationship with a manufacturer or employer involves no, or only minor, pressures (id.).
Finally, pursuant to this policy, OSHA may prescribe "conditions" on NRTLs or applicants for initial or continued recognition, even when the Agency determines that pressures exist (id.). Such conditions "must be consistent with th[e] policy" (id.). The independence policy 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 (id.).
Whether imposing conditions on an NRTL or applicant is appropriate is a judgment made by the Agency on a case-by-case basis. As OSHA stated in an earlier
OSHA audits NRTLs regularly 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, then imposing such conditions on the NRTL or applicant would not be appropriate.
In May of 2005,
As of
D. CSL's Application for Renewal and OSHA's Preliminary Finding
CSL applied to OSHA for its initial recognition in
CSL filed a timely application for renewal of its recognition as an NRTL, on
On
In submissions to OSHA dated
OSHA responded to CSL's assertions on
On
OSHA fully considered CSL's efforts to rebut the presumption of undue influence. On
In response to the negative finding of renewal, CSL submitted a revised application for renewal on
After considering CSL's submissions, on
OSHA received eight comments in response to its preliminary determination on CSL's application for renewal. OSHA addresses those comments below under Section III ("Discussion of CSL's Independence") and Section IV ("Summary and Analysis of Additional Comments").
III. Discussion of CSL's Independence
A. Introduction
In this
B. Pressures on CSL
In its preliminary finding, OSHA found that CSL has a "substantial relationship" with
In various letters submitted to OSHA prior to the Agency's preliminary finding, and in its comments to the preliminary finding, CSL explained why it believed it was not subject to pressures from Wendel or
In trying to rebut the presumption of pressures, CSL contended, prior to OSHA issuing the preliminary finding, that the "relationship of
As OSHA found in the preliminary finding, CSL's assertion that Wendel does not manage or exert control over CSL's day-to-day operations does not address the fundamental issue regarding the control that a parent company has over a majority-owned subsidiary. According to the
Further, although CSL claimed, prior to OSHA issuing the preliminary finding, an "attenuated" connection to Wendel, CSL did not provide any assurances that Wendel would refrain from exerting control over CSL, or from pressuring CSL through
CSL also claimed prior to OSHA issuing the preliminary findings that, because no member of its
Furthermore, CSL asserted, prior to OSHA issuing the preliminary finding, that individuals affiliated with Wendel and
In response to the preliminary finding, CSL notified OSHA that Wendel further reduced its ownership of
This divestment does not rebut the presumption of pressures associated with the substantial relationship between Wendel and CSL. First, it appears that the actual and potential control Wendel maintains of CSL still exists. As of
Second, as OSHA stated in the preliminary finding, Wendel also had an ownership interest in Campagnie Deutsche, a "manufacturer of industrial and automotive electrical connectors, some of which may require NRTL certification prior to use in the workplace" (OSHA-2009-0026-0002). While Wendel also sold its interest in Campagnie Deutsche (OSHA-2009-0026-0038; OSHA-2009-0026-0044) as of
In addition, in
Moreover, CSL does not control Wendel, and OSHA would have no authority to impose a condition that would override Wendel's authority to become a major owner of other companies that are manufacturers, vendors, or major users of products that an NRTL must test and certify. That Wendel could become a major owner of other companies that are manufacturers, vendors, or major users of products that an NRTL must test and certify is a distinct and realistic possibility. Wendel is an investment company with the stated purpose to "invest for the long term as the majority or leading shareholder in listed or unlisted companies, taking the lead in order to accelerate their growth and development" (OSHA-2009-0026-0028). Therefore, Wendel's divestment of ownership in
Finally, OSHA notes that, in response to the preliminary finding, a member of the BVCPS board of directors claimed an "absence of pressures by or through [the BVCPS] Board upon
OSHA rejects the commenter's claim primarily for the reasons stated in OSHA's preliminary finding. For the most part, the commenter restates arguments that OSHA rejected in its preliminary finding, but does not provide substantive evidence to rebut the presumption of pressures. OSHA addressed Wendel's divestment in
C. Imposing Conditions on CSL Is Consistent With OSHA's Independence Policy
In its preliminary finding, OSHA determined that it cannot impose conditions on CSL that would assure its independence because, in large part, OSHA cannot reliably monitor the various CSL and Wendel ownership arrangements, and the affiliations Wendel has with its numerous subsidiaries. The Agency's policy on independence provides an approach to determining whether an organization meets the requirement for independence (76 FR 62855,
In response to this finding, CSL proposed hiring an outside contractor, at CSL's expense, to monitor all mergers and acquisitions of CSL's clients and ensure that none of these transactions involve a Wendel subsidiary or a Wendel-affiliated product. CSL determined that this condition, in concert with "extensive safeguards" proposed by CSL before OSHA issued its preliminary finding, would cure the "matter of `infeasibility' of monitoring [those] mergers and acquisitions" (OSHA-2009-0026-0005).
OSHA finds this recent condition proposed by CSL, in concert with other conditions proposed by CSL and the additional conditions developed by OSHA, to be consistent with OSHA's independence policy. OSHA believes, with certain qualifications discussed below, that the use of a third party to examine the mergers and acquisitions associated with CSL's clients will allow OSHA to monitor Wendel's vast operations and ensure that none of CSL's transactions involve a Wendel subsidiary or a product manufactured by a Wendel subsidiary. [7]
In this respect, OSHA notes that Wendel could exert pressure on CSL to certify products containing components manufactured or sold by a Wendel subsidiary. While CSL stated, prior to OSHA issuing the preliminary finding, that "[w]e are willing to not test or certify [such] products" (OSHA-2009-0026-0017), OSHA believes the use of a third party to examine components used in CSL-certified products also will allow OSHA to ensure that none of CSL's transactions involve components or products manufactured by Wendel subsidiaries.
Moreover, OSHA had concerns that Wendel could exert undue influence on CSL to reject products made, sold, or used by the competitors of a Wendel subsidiary that makes, sells, or uses NRTL approved products. OSHA believes that the use of a third party to examine whether CSL's transactions involve products manufactured, sold, or distributed by the competitor of a Wendel subsidiary would alleviate this concern. OSHA notes that it will carefully monitor the effectiveness of this condition, and will reconsider this condition if it appears to be ineffective. OSHA also is imposing the following additional conditions on CSL:
Ethical constraints and firewalls. Prior to the preliminary finding made by OSHA, CSL informed OSHA of several self-imposed ethical constraints and firewalls that ensure that it does not succumb to any pressures resulting from the control Wendel could exert over CSL. For example, CSL asserted that, because it is an affiliate of BVSA, it is required to "adhere to a compliance program that meets the standards of, and has been approved by," the
OSHA believes that the ethical constraints and firewalls CSL imposes on itself are vital to CSL maintaining complete independence as required by OSHA's NRTL Program regulations. Therefore, OSHA imposes on CSL, as a condition of its renewal, that CSL maintain the ethical constraints and firewalls described here, and all other ethical constraints and firewalls described by CSL in its submissions to OSHA in conjunction with its application for renewal. These submissions include the following exhibits in the docket: comment from
Composition of boards. As stated above, a member of the BVCPS board of directors asserted that "while CSL and BVCPS share board members, there is no common board membership between either BVCPS or CSL and either BVSA, Wendel, or
OSHA believes that the proposed conditions, in combination with the additional conditions developed by OSHA, are consistent with OSHA's independence policy. The additional conditions provide for a third-party monitor to evaluate CSL and Wendel transactions and submit to OSHA reports of any findings that result from the monitor's activities, thereby ensuring that OSHA has adequate oversight of these transactions. Therefore, OSHA finds that, even though CSL is still not free of the commercial, financial, and other pressures that could compromise the results of its NRTL testing and certification processes, CSL may still retain its recognition if it complies with the conditions specified herein.
Prior to the preliminary finding made by OSHA, CSL argued that OSHA imposed conditions in the cases of
In the
OSHA also imposed a condition on
Lastly, OSHA imposed conditions on NTS (63 FR 68306,
As stated above, OSHA now imposes on CSL, as a condition of its renewal, that CSL hire an outside contractor, at its expense, to (1) monitor all mergers and acquisitions of CSL's clients; (2) ensure that none of CSL's transactions involve Wendel, a Wendel subsidiary, or a product or component made by such a subsidiary; and (3) ensure that products that fail to attain NRTL certification from CSL, or components of such products, are not made, sold, or used by competitors of Wendel or Wendel subsidiaries. The combination of CSL's proposed conditions renders CSL's case similar to that of
In its comments to the preliminary finding made by OSHA, CSL also asserted that OSHA should apply the same conditions to CSL as OSHA applied to
Nevertheless, OSHA believed it was appropriate to impose conditions on TUVPTL's recognition "[t]o address future business ventures by AzTE" and to "avoid any situation that could conflict with OSHA's NRTL independence requirement" (76 FR at 16454,
While TUVPTL's situation differs from that of CSL, OSHA finds that it can impose conditions on CSL for reasons similar to the reasons that it used to justify imposing conditions on TUVPTL. Specifically, the conditions OSHA imposes on CSL (described more fully below in Section V, "Final Decision," below) will help identify and prevent transactions that may involve a current or future product of one of Wendel's subsidiaries.
Finally, OSHA finds CSL's situation to be different than that of
OSHA took these considerations into account in analyzing CSL's application for renewal, thereby assuring consistent application of conditions. However, in performing this analysis, OSHA found CSL's situation to be different than that of ETI because CSL proposed a condition, which OSHA accepted, that enables OSHA, with existing resources and auditing capabilities, to monitor Wendel and its subsidiaries.
Accordingly, OSHA's determination regarding the imposition of conditions on CSL's NRTL recognition is consistent with the Agency's previous actions. Although, CSL is not entirely free of the commercial, financial, and other pressures that could compromise the results of the NRTL testing and certification processes, OSHA finds that it is able to impose conditions that are consistent with the NRTL Program's independence policy and that will enable it to monitor and audit those conditions effectively.
V. Final Decision
Pursuant to the authority granted to it under 29 CFR 1910.7, OSHA hereby gives notice of the renewal of recognition of CSL as an NRTL. In making this determination, OSHA thoroughly reviewed CSL's request for renewal of recognition and all other pertinent information provided by CSL and other commenters. CSL made an acceptable proposal that satisfies the NRTL Program policies regarding independence found in Appendix C to the NRTL Program Policies, Procedures, and Guidelines Directive (OSHA Instruction CPL 01-00-003-CPL 1-0.3). OSHA accepted the conditions proposed by CSL and developed additional conditions to address issues surrounding CSL's independence. Based on OSHA's examination of comments made in response to the preliminary notice, it finds that CSL meets the requirements of 29 CFR 1910.7 for renewal of its recognition. This renewal is subject to the original terms of CSL's recognition (65 FR 26637,
VI. Authority and Signature
Signed at
Assistant Secretary of Labor for Occupational Safety and Health.
[FR Doc. 2014-09072 Filed 4-21-14;
BILLING CODE 4510-26-P
[*Federal RegisterRK 2014-04-22]
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