costs (associated with all of the proposed revisions to the standard);
(3) the cost of training employees as necessitated by the proposed
changes to the HCS (see existing 29 CFR 1910.1200(h)(1)); (4) the cost
savings due to the new released-for-shipment provision (proposed
revisions to 29 CFR 1910.1200(f)(11)); and (5) the cost savings from
limiting labeling requirements for certain very small containers
(proposed 29 CFR 1910.1200(f)(12)). The first three categories are
considered to be one-time costs and the last two categories are cost
savings that would accrue to employers annually. Although OSHA has
preliminarily determined that these are the only elements of the
proposed revisions to the HCS that are expected to result in more than
de minimis costs or cost savings, OSHA requests comments on whether any
other proposed changes to the standard could cause employers to incur
costs or obtain cost savings.
    The estimated compliance costs do not include any indirect costs or
impacts that may result from the reclassification or relabeling of
chemicals and products already subject to the HCS, such as possible
changes in production or in demand for products. Theoretically, such
impacts, if any, with regard to possible changes in the uses and
applications of affected chemicals, could result in costs or cost
savings. OSHA expects that such effects, if any, will not be
significant, but the agency would welcome input from stakeholders. This
is consistent with the determination OSHA made with regard to
reclassification costs for the 2012 final rule (77 FR 17625).
    In order to present compliance costs and cost savings on a
consistent and comparable basis across various regulatory activities,
they are expressed in annualized terms. Annualized costs and cost
savings represent the most appropriate measure for assessing the
longer-term potential impacts of this proposed rulemaking and for
purposes of comparing net costs across diverse regulations with a
consistent metric. In addition, annualized net costs are often used for
accounting purposes to assess the cumulative net costs of regulations
on the economy or specific parts of the economy across different
regulatory programs or across years.
    As presented in this PEA (unless otherwise specified), a seven
percent discount rate was applied to costs and cost savings arising in
future years to calculate the present value of these costs and cost
savings for the base year in which the standard becomes effective, and
the same discount rate was then applied to the total present value
costs, over a 10-year period, to calculate the annualized cost.\28\ The
economic effects

using a three percent discount rate are also provided in the Excel
spreadsheets that support this PEA, which are contained in the docket
(OSHA, 2020, Document ID 0049).
---------------------------------------------------------------------------

    \28\ OSHA annualized costs for this proposed rule over a 10-year
period in accordance with Executive Order 13563, which directs
agencies ``to use the best available techniques to quantify
anticipated present and future benefits and costs as accurately as
possible.'' In addition, OMB Circular A-4 states that analysis
should include all future costs and benefits using a ``rule of
reason'' to consider for how long it can reasonably predict the
future and limit its analysis to this time period. The 10-year
annualization period is the one OSHA has traditionally used in
rulemakings. Note, however, that OSHA used a 20-year annualization
period for the 2012 HCS final rule (77 FR 17625), but that was
because of the 5-year phase-in of some provisions. This proposed
rule does not have any lengthy phase-in provisions, supporting
OSHA's decision to use a 10-year annualization period for this PEA.
---------------------------------------------------------------------------

    For the purpose of calculating loaded wage rates, OSHA did not
include an overhead labor cost in the FEA in support of the 2012 HCS
final standard. The Department of Labor has since determined that it is
appropriate, in some circumstances, to account for overhead expenses as
part of the methodology used to estimate the costs and economic impacts
of OSHA regulations. For this PEA, in addition to applying fringe
benefits to hourly (``base'') wages, OSHA also applied an overhead rate
when estimating the marginal cost of labor in its primary cost
calculation.
    Overhead costs are indirect expenses that cannot be tied to
producing a specific product or service. Common examples include rent,
utilities, and office equipment; however, there is no general consensus
on the cost elements that fit the definition of overhead in the context
of occupational safety and health. The lack of a common definition has
led to a wide range of overhead estimates. Consequently, the treatment
of overhead costs needs to be case-specific. For this PEA, OSHA has
adopted an overhead rate of 17 percent of base wages, which is
consistent with the overhead rate and methodology used for (1)
sensitivity analyses in the FEA in support of the 2017 final rule
delaying the deadline for submission of OSHA Form 300A data (82 FR
55761, 55765 (Nov. 24, 2017)); and (2) the FEA in support of OSHA's
2016 final standard on Occupational Exposure to Respirable Crystalline
Silica (81 FR 16285, 16488-16492 (March 25, 2016)).\29\
---------------------------------------------------------------------------

    \29\ This methodology was modeled after an approach used by the
Environmental Protection Agency. More information on this approach
can be found at U.S. Environmental Protection Agency, ``Wage Rates
for Economic Analyses of the Toxics Release Inventory Program,''
June 10, 2002 (Ex. 2066) (Document ID 0046). This analysis itself
was based on a survey of several large chemical manufacturing
plants: Heiden Associates, Final Report: A Study of Industry
Compliance Costs under the Final Comprehensive Assessment
Information Rule, prepared for the Chemical Manufacturers
Association, December 14, 1989 (Ex. 2065) (Document ID 0048).
---------------------------------------------------------------------------

    To calculate the total labor cost for an occupational category,
OSHA added together three components: Base wage + fringe benefits
(derived as 45.8 percent of the base wage) \30\ + applicable overhead
costs (derived as 17 percent of the base wage). For example, the median
hourly wage of an Occupational Health and Safety Specialist is $35.63.
Applying a fringe markup of 45.8 percent (applied to the base wage) and
an overhead rate of 17 percent (applied to the base wage) yields a
fully-loaded hourly wage of $ $58.00 ($35.63 x .458 = $16.32; $35.63 x
0.17 = $6.11; $35.63 + $16.32 + $6.11 = $58.00). Note that, for this
labor category, the fringe markup is equal to 28.13 percent of the
fully-loaded hourly wage and that the overhead rate is equal to 10.53
percent of the fully-loaded hourly wage. Using this methodology, OSHA
calculated the fully-loaded labor cost for four occupational
categories: (1) Manager, Standard Occupational Classification (SOC)
code 11-0000, $82.70; (2) Logistics Personnel, SOC code 13-1081,
$58.51; (3) Production Worker, SOC code 51-0000, $28.18; and (4)
Occupational Health and Safety Specialist, SOC code 19-5011, $58.00.
(For further details, see Document ID 0049, tab ``Wages''.)
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    \30\ In June of 2019, BLS reported: ``Employer costs for
employee compensation for civilian workers averaged $36.77 per hour
worked in March 2019 . . . Wages and salaries cost employers $25.22
while benefit costs were $11.55.'' The fringe markup of 31.4 percent
of total compensation ($11.55/$36.77) is equivalent to a benefits
markup of 45.8 percent in relation to the base wage ($11.55/$25.22).
(BLS, 2019, Document ID 0224).
---------------------------------------------------------------------------

    Table VII-12 shows the estimated annualized compliance costs and
cost savings by cost category and by industry sector. All costs and
cost savings are reported in 2019 dollars. As shown in Table VII-12,
the total annualized net cost savings of compliance with the proposed
rulemaking is estimated to be $26.8 million--consisting of about $4.4
million of annualized costs and $31.1 million of annual cost savings.
Note that where tables in this PEA report estimated annualized costs,
as in Table VII-12, cost savings appear as a negative number.
    As shown by the three-digit NAICS Subsectors 325 (for Chemical
Manufacturing) and 424 (for Merchant Wholesalers, Nondurable Goods) in
Table VII-12, most of the estimated compliance costs and cost savings
associated with the proposed rule would be incurred or realized by the
chemical manufacturing industry and its distributors. However, the
table also shows that familiarization costs would be spread across most
manufacturing and wholesale industries in the U.S. economy subject to
OSHA's jurisdiction, reflecting the fact that employee exposures to
hazardous chemicals occur in many industry sectors.
    OSHA expects that all compliance costs would be incurred in the
first year, as the proposed rule would incorporate a one-year
transition period into the compliance schedule for the standard.
Specifically, for purposes of estimating the annualized compliance
costs, OSHA assumed that the compliance costs associated with chemical
reclassification, employee training, and management familiarization
would be incurred in the first year following the effective date of the
proposed revisions to the HCS.
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BILLING CODE 4510-26-C
Estimation of Compliance Costs and Cost Savings
    The remainder of his section explains how OSHA calculated the
estimated compliance costs and cost savings arising from the proposed
rule by describing the data and methodology used.
    The major elements of the proposed revisions to the HCS that
involve compliance costs or cost savings are (1) the cost of revising
SDSs and labels for select hazardous chemicals to reflect chemical
reclassifications (per proposed changes to appendix B) and to conform
to language criteria in precautionary statements and other mandatory
language (per proposed changes to appendices C and D); (2) the cost of
management familiarization and other management-related costs necessary
to ensure compliance with the revised standard (associated with all of
the proposed revisions to the standard); (3) the cost of training
employees as necessitated by the proposed changes to the HCS (see
existing 29 CFR 1910.1200(h)(1)); (4) cost savings from the new
released-for-shipment provision (proposed revisions to 29 CFR
1910.1200(f)(11)); and (5) cost savings from limiting labeling
requirements for certain very small containers (proposed 29 CFR
1910.1200(f)(12)).
    The estimated compliance costs and cost savings presented in this
analysis of the proposed revisions to the HCS are based partly on
analysis conducted in support of the 2012 HCS final rule (77 FR 17605-
17683) and partly on new analysis prepared with the assistance of
OSHA's contractor, ERG.
    The estimated costs of compliance with most provisions of the
proposed rule involve wages paid for the labor hours required to
fulfill the requirements. In some cases, compliance could be achieved
by purchasing services or products in lieu of paying employees
directly. The estimated compliance costs are intended to capture the
resources required for compliance regardless of how individual
establishments may choose to achieve compliance.
    With the exception of the proposed revision to the standard
addressing precautionary statements and other mandatory language, for
this cost analysis OSHA estimated a baseline compliance of zero
percent. The agency's estimate of baseline compliance for the revisions
in appendices C and D addressing precautionary statements and other
mandatory language are discussed below in the section, Revisions to
SDSs and Labels Due to Revised Precautionary Statements.
Costs Associated With Reclassifications and Revisions to Safety Data
Sheets and Labels
    The proposed revisions to the HCS will not change the existing
requirement for firms that sell hazardous chemicals to employers to
provide information about the associated hazards. Information must be
presented in an SDS in the format specified in the standard, and some
information must also be presented on product labels. The proposed rule
would require affected chemical manufacturers to revise SDSs and labels
for select hazardous chemicals to reflect chemical reclassifications
(appendix B) and to conform to language criteria in precautionary
statements and other mandatory language (appendices C and D). Revisions
to SDSs and labels would be required under provisions in the existing
HCS, which require chemical manufacturers and importers to update SDSs
and labels within three months and six months, respectively, of
becoming aware of significant new information regarding the hazards of
the chemicals they produce or import (see 29 CFR 1910.1200(f)(11),
(g)(5)).
    It is OSHA's understanding that chemical manufacturers and
importers periodically review, revise, and update the electronic
templates they use to create SDSs and labels. Changes are made, for
example, as information regarding specific hazards becomes available,
new information about protective measures is ascertained, or revisions
are made to product information and marketing materials. Labels and
SDSs are also produced and modified when products are first introduced
to the market or when products change. Therefore, there is a regular
cycle of change for these documents (see 77 FR 17634-17637 in the FEA
of the 2012 final rule for a discussion of factors that compel
employers to update SDSs and labels voluntarily). The proposed rule
would require limited changes to some SDSs and labels. Given the phase-
in period for the proposed changes to the standard,\31\ OSHA expects
that chemical manufacturers and importers would be able to phase in
revisions to their labels and SDSs in accordance with the normal cycle
of change, and therefore would not need to replace existing labels or
SDSs. OSHA requests comments on this preliminary assumption.
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    \31\ OSHA proposes that the revisions become effective 60 days
after publication (paragraph (j)(1)) and that chemical
manufacturers, importers, and distributors evaluating substances
comply with all modified provisions within one year after the
effective date (paragraph (j)(2)). OSHA also proposes that chemical
manufacturers, importers, and distributors evaluating mixtures
comply with all modified provisions within two years after the
effective date (paragraph (j)(3)).
---------------------------------------------------------------------------

    OSHA has, however, estimated costs for the time it will take to
update the electronic files that will be used to generate new SDSs and
labels in accordance with the proposed revisions to the HCS. OSHA
developed cost estimates based on the methodology used in its FEA in
support of the 2012 HCS final rule (77 FR 17634-17637). The estimated
compliance costs represent the incremental costs that would be incurred
to achieve compliance with the proposed rule. These estimated costs,
shown below in Tables VII-13 and VII-14, would be in addition to the
costs that already need to be incurred to comply with applicable
requirements of the existing HCS and represent the time it would take
to identify the changes that need to be made to the relevant computer
files (i.e., the files that are used to generate SDSs and labels) and
then to make those changes.
    Producers of affected chemicals already have an obligation, under
the existing HCS, to ensure that the information provided in their SDSs
and labels is accurate and current (29 CFR 1910.1200(f)(2) and (g)(5)).
They also are generally required to revise SDSs and labels in
accordance with new information regarding hazards that may be
associated with their products (29 CFR 1910.1200(f)(11) and (g)(5)).
For every affected product that is newly created, reformulated, mixed
with new ingredients, modified with new or different types of
additives, or has any changes made in the proportions of the
ingredients used, chemical manufacturers and importers are required,
under the existing HCS, to review the available hazard information (29
CFR 1910.1200(d)(2)), to classify the chemical in accordance with
applicable hazard criteria (29 CFR 1910.1200(d)(1)), and to develop
corresponding SDSs (29 CFR 1910.1200(g)) and labels (29 CFR
1910.1200(f)). OSHA is not estimating costs for activities already
required; rather, the agency is estimating costs for activities that
would be newly conducted in conformance with the proposed revisions to
chemical reclassifications (appendix B) and language criteria in
precautionary statements and other mandatory language (appendices C and
D).

Revisions to SDSs and Labels Due to Chemical Reclassification
    The NAICS industries listed in Columns 1 and 2 of Table VII-13 are
those that OSHA expects would manufacture aerosols, desensitized
explosives, or flammable gases. Of course, not all chemicals covered in
these NAICS industries are aerosols, desensitized explosives, or
flammable gases. Column 3 of Table VII-13 reflects OSHA's judgment that
approximately 50 percent of the SDSs (or more specifically, 50 percent
of the electronic templates (files) that are used to produce SDSs and
labels) in these NAICS industries would be affected by the proposed
requirements for aerosols, desensitized explosives, and flammable
gases. OSHA invites public comments on its preliminary projection that
50 percent of the electronic files for SDSs and labels would be
affected in these industries.
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    OSHA derived the number of directly affected electronic files for
SDSs and labels in Column 4 of Table VII-13 by applying the 50 percent
factor to the overall number of affected SDSs (electronic files) from
Table VII-5. For

example, in NAICS 211130, Table VII-5 shows the overall number of
affected SDSs (technically, the number of electronic files) is 15,810.
Applying a factor of 50 percent, OSHA estimated that 7,905 SDSs
(electronic files) would be directly affected by the reclassification
provision (see Table VII-13, NAICS 211130 within the section ``Total/
Average''). All of the estimates of directly affected SDSs (electronic
files) presented in Table VII-13 are similarly derived from Table VII-
5, but only those NAICS industries with affected SDSs (electronic
files) are reported in Table VII-13.
    The estimated compliance costs associated with the reclassification
of hazards and related changes to SDSs and labels are directly related
to the number of chemicals for which electronic files will need to be
updated in order to prepare updated SDSs and labels. OSHA developed
estimates of the number of potentially affected SDSs for each of the
industries producing the corresponding chemicals and products (based on
estimates of the total number of SDSs (and the supporting electronic
files) by industry as shown in Table VII-5 of this PEA). OSHA expects
downstream users, distributors, and wholesalers would continue to rely
on SDSs and labels provided by manufacturers to fulfill their
obligations under the OSHA standard, and would not incur costs
associated with chemical reclassification under the proposed revisions
to the HCS. It is OSHA's understanding that this has been the practice
for decades.
    Table VII-13 also contains estimates of the amount of time OSHA
expects it will take to update electronic files for SDSs and labels
under the proposed revisions to the standard. OSHA believes that the
estimates provided in Table VII-13 are reasonable because they reflect
only the incremental time needed to identify affected labels and SDSs
(electronic files) and to update electronic files through modification
of the templates that are used to prepare labels and SDSs, without
allocating costs to any time that would be spent updating files in the
absence of any revisions to the HCS.
    OSHA also believes that the estimated time to update SDSs and
labels (electronic files) used in this analysis represents a reasonable
average for most chemicals. In the FEA in support of the 2012 HCS final
rule (77 FR 17635-17637), OSHA estimated that a Health and Safety
Specialist would spend between three and seven hours per SDS requiring
reclassification--with smaller entities, having fewer SDSs, incurring
larger costs per SDS. The revisions to the HCS currently being proposed
are significantly more limited in scope than the 2012 final rule, with
fewer affected hazard categories and more limited changes; however, the
proposed revisions to the standard still present opportunities for
scale efficiencies in reclassification. As a result, OSHA estimates
that a Health and Safety Specialist would spend about 25 percent as
much time to reclassify a chemical as OSHA estimated for the 2012 HCS
rule--depending on establishment size, from 0.75 hours to 1.75 hours
per SDS (electronic file) requiring reclassification (1.75 hours per
SDS for establishments with fewer than 100 employees; 1.25 hours per
SDS for establishments with 100-499 employees; and 0.75 hours per SDS
for establishments with 500 or more employees).\32\ At a loaded hourly
wage (including overhead) of $58.00 for a Health and Safety Specialist,
this would result in unit costs of $101.51, $72.51, and $43.50 per SDS
for small, medium, and large establishments, respectively. Multiplying
these unit costs by the estimated number of affected chemicals (i.e.,
electronic files) and summing the totals yields an undiscounted one-
time estimated cost of $6.4 million for affected employers to comply
with this provision. Annualizing this one-time cost using a 7 percent
discount rate over a 10-year period results in estimated annualized
costs of approximately $915,095 for reclassification in accordance with
the criteria specified in the proposed revisions to the HCS. OSHA
invites interested parties to comment on these cost estimates and the
assumptions underlying them.
---------------------------------------------------------------------------

    \32\ Note that OSHA estimated no baseline compliance for
chemical manufacturers already having revised electronic files to
reflect reclassified chemicals as specified in the proposed rule;
the current HCS does not allow SDSs or labels to display chemical
classifications that are not in conformance with the current rule.
---------------------------------------------------------------------------

Revisions to SDSs and Labels Due to Revised Precautionary Statements,
etc.
    The proposed revisions to the HCS would require establishments to
revise their electronic templates for SDSs and labels to conform to
formatting and language criteria in precautionary statements and other
mandatory language specified in appendices C and D. Under the proposed
changes to the standard, affected establishments would have to update
labels and SDSs for select hazardous chemicals to include updated
signal word(s), hazard statement(s), pictogram(s), and precautionary
statement(s) for each hazard class and associated hazard category (see
existing 29 CFR 1910.1200(f) and (g)). The modification of SDSs and
labels under the revisions proposed in appendices C and D would involve
conforming to formatting and language standards, but would not require
any additional testing, studies, or research. As previously stated,
OSHA believes that chemical manufacturers and importers generally
review, revise, and update their electronic templates for SDSs and
labels periodically, such that there is a regular cycle of change for
these documents.\33\ The proposed changes to the appendices would
require only limited changes to the electronic content of SDSs and
labels, and, as explained previously, OSHA expects that the phase-in
period for the proposed changes to the standard would allow chemical
manufacturers and importers to take advantage of the normal cycle of
change to phase in the revisions to their labels and SDSs, and
therefore that it would not be necessary to replace existing labels or
SDSs.\34\ OSHA requests comments on this preliminary assumption.
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    \33\ See discussion in the 2012 preamble (77 FR 17634).
    \34\ OSHA proposes that the revisions become effective 60 days
after publication (paragraph (j)(1)) and that chemical
manufacturers, importers, and distributors evaluating substances
comply with all modified provisions within one year after the
effective date (paragraph (j)(2)). OSHA also proposes that chemical
manufacturers, importers, and distributors evaluating mixtures
comply with all modified provisions within two years after the
effective date (paragraph (j)(3)).
---------------------------------------------------------------------------

    The estimated compliance costs for revising electronic templates
for SDSs and labels to conform to formatting and language criteria in
precautionary statements and other mandatory language specified in the
proposed revisions to appendices C and D represent the incremental
costs that would be incurred to achieve compliance with the proposed
changes to the appendices. These estimated costs, shown below in Table
VII-14, would be in addition to the costs that are already incurred to
comply with applicable requirements of the existing HCS.

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BILLING CODE 4510-26-C
    Table VII-14 shows the estimated costs associated with
modifications to electronic templates for SDSs and labels to conform to
formatting and language

criteria in precautionary statements and other mandatory language
specified in the proposed revisions to appendices C and D by NAICS
industry and establishment size. The NAICS industries listed in Columns
1 and 2 of Table VII-14 are those that OSHA expects would need to
update SDSs and labels under the proposed revisions to appendices C and
D. The industries included are the ones OSHA identified as incurring
costs for SDSs in the FEA in support of OSHA's 2012 HCS final rule (77
FR 17644-17650). The estimated costs associated with the proposed
revisions to the appendices are directly related to the number of SDSs
(or, in other words, the number of electronic templates) affected.
These numbers were previously derived and presented in Tables VII-5,
VII-6, and VII-7.\35\
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    \35\ As described above in the discussion explaining Table VI-5,
OSHA's estimate of the total number of SDSs per NAICS industry was
developed to support the agency's FEA for the 2012 final standard.
The analysis started with the number of SDSs per establishment by
establishment size, as originally derived in the economic analysis
in support of the 2009 proposed revisions to the HCS using a
sampling of company websites and the SDSs posted there. (ERG, 2012,
Document ID 0029). The analysis then combined the estimated number
of SDSs per establishment by establishment size with the estimated
number of establishments to estimate the weighted average number of
SDSs per establishment in a given NAICS industry. This estimate was
then multiplied by the average number of establishments per firm to
estimate the number of SDSs per firm for each NAICS industry.
Multiplying by the number of firms per NAICS industry yields the
total number of SDSs in each NAICS industry (as shown in Column 5 of
Table VI-5). Although OSHA has preliminarily determined that this
methodology remains sound, the agency invites public comment on the
reasonableness of this methodology for the current analysis.
---------------------------------------------------------------------------

    OSHA estimates that the time needed to revise electronic templates
for labels and SDSs to comply with the proposed revisions to appendices
C and D would vary by establishment size and would be equal to 10
percent of the unit time (from 3 to 7 hours per SDS (electronic
template)) estimated in the 2012 FEA (77 FR 17635-17637), as the
changes the proposed revisions would require are relatively minor in
comparison to the types of changes costed in 2012.\36\ As shown in
Column 4 of Table VII-14, OSHA estimates that Health and Safety
Specialists would spend 0.7 hours per SDS (electronic template) in
small establishments with fewer than 100 employees; 0.5 hours per SDS
in medium establishments with 100 to 499 employees; and 0.3 hours per
SDS in large establishments with 500 or more employees to comply with
the proposed mandatory changes to appendices C and D. Multiplying these
labor burdens by the loaded hourly wage of $58.00 results in unit costs
for Health and Safety Specialists of $40.60, $29.00, and $17.40 per SDS
for small, medium, and large establishments, respectively.
---------------------------------------------------------------------------

    \36\ 36 By comparison, the 2012 rule changes included completely
revised SDS formats, the addition of pictograms, and various other
revisions for specific SDS sections and chemical designations. Note
that there are no estimated new software costs associated with the
proposed revisions to the standard, as there were for the 2012 final
rule, because OSHA expects that the necessary software is already in
place in those larger firms for which the software is economically
justified.
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    As in the FEA for the 2012 HCS final rule, OSHA anticipates that
some manufacturers, particularly larger ones heavily involved in
international trade, have already adopted the mandatory language
proposed in appendices C and D. For the affected NAICS industries, OSHA
estimates baseline compliance rates of 75 percent for establishments
with 500 or more employees, 25 percent for establishments with 100 to
499 employees, 5 percent for establishments with 20 to 99 employees,
and 1 percent for establishments with fewer than 20 employees.\37\
These baseline compliance rates are the same ones OSHA used in the 2012
FEA (77 FR 17636).
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    \37\ As noted above, because the current HCS does not allow SDSs
or labels to display chemical classifications that are not in
conformance with the current rule, OSHA estimated no baseline
compliance for chemical manufacturers already having revised
electronic files to reflect reclassified chemicals as specified in
the proposed rule. With respect to the mandatory language proposed
in Appendices C and D, however, SDSs and labels could present
standards stricter than seen under previous GHS revisions (for
example, if mandatory language is adopted internationally by
consensus) and still remain in conformance with the current HCS
standard. Therefore, baseline compliance can be non-zero for
industry practices involving use of precautionary statements and
other mandatory language.
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    Multiplying the number of affected SDSs (electronic files) by the
unit cost of Health and Safety Specialists, and accounting for the
relevant non-compliance rates,\38\ results in an estimated total one-
time cost associated with revising SDSs and labels to conform to the
proposed appendix language on precautionary statements and other
mandatory language. As shown in Column 7 of Table VII-14, this total
one-time cost is estimated to be about $18.4 million. Annualizing this
one-time cost using a 7 percent discount rate over a 10-year period
results in estimated annualized costs of approximately $2.6 million for
affected employers to revise SDSs and labels to comply with the
proposed revisions to appendices C and D. OSHA invites interested
parties to provide comments on these cost estimates and the assumptions
underlying them.
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    \38\ That is, mathematically, (1--the relevant baseline
compliance rate). Estimated non-compliance rates are shown in Column
6 of Table VI-14 by employment size for each affected NAICS
industry.
---------------------------------------------------------------------------

    The estimates of total costs in Table VII-14 are included within a
broader cost category shown earlier in the aggregate costs presented in
Table VII-12. Column 5 of Table VII-12 displays, by NAICS code, the
combined annualized cost estimates for reclassifying chemicals (from
Table VII-13) and revising SDSs and labels to be consistent with the
precautionary statements and other language specified in the proposed
revisions to the mandatory appendices (from Table VII-14).
Management Familiarization and Other Management-Related Costs
    In order to implement the proposed new requirements in the HCS, or
determine whether they need to implement any of the revisions to the
standard, all employers currently covered by the standard would need to
become familiar with the updates OSHA is making as part of this
rulemaking. The nature and extent of the familiarization required would
vary depending on the employer's business.
    In the 2012 HCS final rule (77 FR 17637-17638), OSHA estimated that
eight hours of time per manager, or an equivalent cost, would be
associated with the necessary familiarization and implementation of
revisions to hazard communication programs in affected establishments
in the manufacturing sector.\39\ This proposed rule would require some
changes to hazard communication programs in affected establishments,
but those changes would be significantly less extensive than those
required by the 2012 rule. Therefore, OSHA believes that much less time
would be needed for familiarization and implementation under this
proposed rule than was necessary under the 2012 rule.
---------------------------------------------------------------------------

    \39\ Larger employers were estimated to have greater
familiarization costs for the 2012 HCS final rule because they have
more managers.
---------------------------------------------------------------------------

    For the present proposed rule, OSHA estimates that management
familiarization time would vary by establishment size. It would also
vary depending on whether an establishment would simply be
familiarizing itself with the proposed rule or would also need to take
further action because it would be affected by one or more of the
proposed changes to the standard. Above in Section VII.C Profile of
Affected Industries, Establishments, and Employees, Table VII-10
presents, by NAICS industry, the percentage of establishments (and for
training,

entities) expected to be affected by rule familiarization and whether
those establishments or entities would incur additional costs or no
additional costs--that is, whether those establishments or entities
would or would not incur additional costs for revising SDSs/labels or
for training employees as a result of the proposed rule.\40\ In terms
of manufacturing establishments that would have costs in addition to
management familiarization costs resulting from the provisions of the
proposed rule, OSHA estimates that there are 38,018 small
establishments (those with fewer than 20 employees), 11,273 medium
establishments (those with 20 to 499 employees), and 394 large
establishments (those with 500 or more employees). In terms of
establishments that would not have costs other than management
familiarization costs resulting from the provisions of this proposed
rule, OSHA estimates that there are 79,500 small establishments, 22,657
medium establishments, and 467 large establishments; their only costs
associated with this proposal would be as a result of rule
familiarization.\41\
---------------------------------------------------------------------------

    \40\ Wholesalers in NAICS 424910 and NAICS 424950 are not
expected to incur costs for revising SDSs/labels or for training
employees, but OSHA expects that they will be affected by the
provisions of the proposed rule that are anticipated to result in
cost savings.
    \41\ Note that the numbers of small, medium, and large
establishments reported above are derived in the ``Rule Fam'' tab of
the OSHA spreadsheet in support of this proposed rule (see Document
ID 0049).
---------------------------------------------------------------------------

    To estimate unit costs, OSHA first considered establishments that
would incur costs, in addition to rule familiarization costs, because
of the proposed rule. As noted earlier, for the 2012 FEA OSHA applied a
Manager hourly wage to estimate familiarization costs. For this PEA,
because the new requirements found within this proposed standard would
be significantly less extensive than those required by the 2012 rule,
OSHA expects that the employer will delegate to a Health and Safety
Specialist the responsibility for management familiarization of the new
requirements found within this proposed standard. OSHA requests public
comment on the agency's preliminary assumptions for estimating the cost
of management familiarization.
    For small establishments, OSHA estimated management familiarization
costs of 0.5 hours of a Health and Safety Specialist's labor time. For
medium establishments, OSHA estimated 2 hours of a Health and Safety
Specialist's labor time. For large establishments, OSHA estimated 8
hours of a Health and Safety Specialist's labor time. Multiplying these
labor burdens by the loaded hourly wage of $58.00 results in estimated
management familiarization costs per establishment of $29.00, $116.01,
and $464.04 for small, medium, and large establishments, respectively.
    For establishments that would not incur other costs as a result of
the proposed rule, OSHA estimates that rule familiarization will take
half as long; in those cases, management will not need to devote as
much time to considering (or making compliance decisions about) the
provisions in the proposed rule that are expected to result in costs.
Therefore, OSHA adopted estimates of 0.25 hours, 1 hour, and 4 hours of
a Health and Safety Specialist's labor time for small, medium, and
large establishments, respectively. Multiplying these labor burdens by
the loaded hourly wage of $58.00 results in management familiarization
costs per establishment of $14.50 for small establishments, $58.00 for
medium establishments, and $232.02 for large establishments.
    These management familiarization costs per establishment are
multiplied by the relevant number of small, medium, and large
establishments, resulting in an estimated undiscounted one-time
familiarization cost of $5.2 million. Annualizing this one-time cost
using a 7 percent discount rate over a 10-year period results in an
estimate of annualized costs of $735,894. Table VII-15 presents the
detailed unit values factoring into OSHA's estimate of management-
related costs. The distribution of these management-familiarization
costs by NAICS code is displayed in Column 3 of Table VII-12. OSHA
invites interested parties to provide comments on these cost estimates
and the assumptions underlying them.

   Table VII-15--Total Costs Associated With Management Familiarization With the Proposed Revisions to the HCS
                                     [by establishments size, 2019 dollars]
----------------------------------------------------------------------------------------------------------------
                                              Small               Medium               Large
                                          establishments   establishments (20-  establishments (>=
                                         (<20 employees)      499 employees)      500 employees)        Total
                                             affected            affected            affected
----------------------------------------------------------------------------------------------------------------
Directly Affected Establishments
    Total Establishments..............             38,018               11,273                 394        49,685
    Wage..............................             $58.00               $58.00              $58.00  ............
    Hours.............................               0.50                 2.00                8.00  ............
    Unit Cost Per Establishment.......             $29.00              $116.01             $464.04  ............
    Total One-Time Cost...............         $1,102,609           $1,307,771            $182,830    $2,593,210
                                       -------------------------------------------------------------------------
        Total Annualized Cost (7%)....           $156,987             $186,197             $26,031      $369,215
----------------------------------------------------------------------------------------------------------------
Indirectly Affected Establishments
    Total Establishments..............             79,500               22,657                 467       102,624
    Wage..............................             $58.00               $58.00              $58.00  ............
    Hours.............................               0.25                 1.00                4.00  ............
    Unit Cost Per Establishment.......             $14.50               $58.00             $232.02  ............
    Total One-Time Cost...............         $1,152,841           $1,314,209            $108,353    $2,575,403
                                       -------------------------------------------------------------------------
        Total Annualized Cost (7%)....           $164,139             $187,114             $15,427      $366,679
----------------------------------------------------------------------------------------------------------------
Total
    Total Establishments..............            117,518               33,930                 861       152,309
    Total One-Time Cost...............         $2,255,450           $2,621,980            $291,183    $5,168,613
                                       -------------------------------------------------------------------------
        Total Annualized Cost (7%)....           $321,125             $373,311             $41,458      $735,894
----------------------------------------------------------------------------------------------------------------
Source: U.S. DOL, OSHA, Directorate of Standards and Guidance, Office of Regulatory Analysis-Health.

Note: Figures may not add to totals due to rounding.

Costs Associated With Training Employees
    For this preliminary economic analysis, OSHA estimated the
incremental costs to train chemical production employees who are
covered by, and are already trained in accordance with, the existing
standard but would need to receive additional training to become
familiar with the updates to SDSs and labels for impacted aerosols,
desensitized explosives, and flammable gases.\42\ This analysis is
described below. OSHA is not estimating any training costs for users of
aerosols, desensitized explosives, or flammable gases in the workplace.
OSHA does not believe that these users would need to dedicate more than
a trivial amount of time to training associated with the
reclassification of these chemicals. This is because the hazards
associated with these chemicals have not changed. The only thing that
would change under the proposed revisions to the HCS is the way the
hazards are classified. For example, users of pyrophoric gases should
already have received training on the fire and explosive-related
hazards associated with these chemicals. At most, such users might
require notification of a change in the classification of those
chemicals.
---------------------------------------------------------------------------

    \42\ OSHA has preliminarily concluded that these would be the
only training costs associated with the proposed revisions to the
HCS. The agency requests comments on this determination.
---------------------------------------------------------------------------

    Similarly, even though desensitized explosives is a new hazard
classification, the explosion hazards were and are well-known and
should have been included in prior hazard training. For example, should
the water or other wetting solution dry out, an explosion could occur.
In this case, even the hazard pictogram (flames) remains unchanged.
    OSHA considered whether some increase in user training might be
required for non-flammable aerosols not under pressure, since a small
portion of these may not currently be classified as either flammable
aerosols or gas under pressure; as noted in the Summary and Explanation
section for appendix B, such aerosol containers differ from pressurized
gas cylinders in terms of container characteristics and failure
mechanisms. Training for non-flammable aerosols might include their
revised classification and hazard avoidance measures (such as: Keep
away from heat, hot surfaces, sparks, open flames and other ignition
sources; no smoking; do not pierce or burn, even after use). However,
based on observation of the industry over time, OSHA believes that non-
flammable aerosols not under pressure are fairly uncommon and,
therefore, OSHA has preliminarily concluded that the total user
training time required for non-flammable aerosols not under pressure
would also be negligible. The agency requests comments on its
preliminary conclusions regarding training time for users of
reclassified chemicals.
    As discussed above, under the proposed revisions to the HCS, some
chemical production employees who are covered by, and are already
trained in accordance with, the existing standard would need to receive
additional training to become familiar with the updates to SDSs and
labels for impacted aerosols, desensitized explosives, and flammable
gases. OSHA expects that the incremental training costs for these
employees to become familiar with the revisions to the HCS will be
small. In certain cases, affected employers will be able to integrate
the necessary training into existing training programs and related
methods of distributing safety and health information to employees;
those employers would not incur any meaningful additional costs.
    OSHA estimates that each affected chemical manufacturing firm \43\
would need to devote 2.5 hours of a Health and Safety Specialist's time
to preparing new training under the proposed rule, and that each
affected logistics or production worker would spend 12 minutes
receiving the training. Multiplying the labor burden for each labor
category by the loaded hourly wages of $58.00 for a Health and Safety
Specialist, $58.51 for logistics personnel, and $28.18 for production
workers, results in unit costs of $145.01, $11.70, and $5.64,
respectively.
---------------------------------------------------------------------------

    \43\ OSHA anticipates that, in practice, training would be
organized more efficiently at the corporate (firm) level than at the
establishment level.
---------------------------------------------------------------------------

    Multiplying these unit costs by the 2,754 affected firms, 1,179
affected logistics managers, and 76,447 affected production workers
yields an undiscounted estimated one-time cost of $843,940.\44\
Annualizing this one-time cost using a 7 percent discount rate over a
10-year period results in estimated annualized costs of $120,158. The
unit values that factored into OSHA's estimate of training costs are
shown in Table VII-16. The distribution of these training costs by
NAICS code is displayed in Column 4 of Table VII-12. OSHA invites
interested parties to provide comments on these cost estimates and the
assumptions underlying them.
---------------------------------------------------------------------------

    \44\ The estimated number of affected firms, logistics managers
and production workers are derived in Document ID 0049, tab
``Training''. The affected number of firms (2,754) can also be
calculated by matching the NAICS codes with training costs from
Table VI-12 with the number of affected firms in the identical NAICS
codes in Table VI-1 and multiplying by 50 percent (only 50 percent
are estimated to require training).

             Table VII-16--Training Costs Associated With the Proposed Revisions to the HCS Standard
                                                 [2019 Dollars]
----------------------------------------------------------------------------------------------------------------
                                         Health & safety
                                         specialist hours  Logistics personnel   Production worker
                                           per firm to      hours per emp. to    hours per emp. to      Total
                                         prepare training    receive training    receive training
----------------------------------------------------------------------------------------------------------------
Affected Firms........................              2,754  ...................  ..................         2,754
Employees Needing Training............  .................                1,179              76,447        78,489
Wage..................................             $58.00               $58.51              $28.18  ............
Hours.................................                2.5                  0.2                 0.2           2.9
Unit Cost.............................            $145.01               $11.70               $5.64       $162.35
Total One-Time Cost...................           $399,289              $13,796            $430,855      $843,940
                                       -------------------------------------------------------------------------
    Total Annualized Cost (7%)........            $56,850               $1,964             $61,344      $120,158
----------------------------------------------------------------------------------------------------------------
Source: U.S. DOL, OSHA, Directorate of Standards and Guidance, Office of Regulatory Analysis-Health.
Note: Figures may not add to totals due to rounding.

Released for Shipment
    In paragraph (f)(11) of the current HCS, chemical manufacturers,
importers, distributors, or employers who become newly aware of any
significant information regarding the hazards of a chemical must revise
the labels for the chemical within six months of becoming aware of the
new information and ensure that labels on containers of hazardous
chemicals shipped thereafter contain the new information. OSHA proposes
to modify paragraph (f)(11) such that chemicals that have been released
for shipment and are awaiting future distribution need not be
relabeled; however, the manufacturer or importer must provide an
updated label for each individual container with each shipment.
    OSHA anticipates that these proposed modifications to paragraph
(f)(11) would provide cost savings to manufacturers and distributors of
certain products--those with large (and typically infrequent)
production runs and lengthy shelf lives (often five years or longer)
that, during production, are labeled, boxed, palletized, and shipped,
and then go through the distribution chain usually without the chemical
contents, packaging, or label being disturbed. In Columns 1 and 2 of
Table VII-17, OSHA has identified the six industries (four
manufacturing and two wholesale) that it expects would be impacted by
the proposed modifications to paragraph (f)(11).\45\ These are
primarily fertilizer manufacturers, paint manufacturers, and
wholesalers of related farm and paint supplies. OSHA invites comments
on whether other industries are potentially affected by this proposed
modification to paragraph (f)(11) and whether there might be other
health or economic effects of this proposed modification that OSHA has
not considered in this proposal.
---------------------------------------------------------------------------

    \45\ In principle, pesticide manufacturers would also be
affected by the proposed revision to the standard, but pesticide
labeling in the United States is covered by the U.S. Environmental
Protection Agency under the Federal Insecticide, Fungicide, and
Rodenticide Act (FIFRA) (7 U.S.C. 136 et seq.). For that reason, any
cost savings due to OSHA's proposed revisions to paragraph (f)(11)
would not apply to manufacturers in NAICS 325320: Pesticide and
other agricultural chemical manufacturing.
---------------------------------------------------------------------------

    The first factor used to estimate the cost savings resulting from
the proposed changes to paragraph (f)(11) is the avoided economic loss
for affected manufacturers or wholesalers who would otherwise have to
relabel products being held in storage. To estimate the potential
economic loss avoided, OSHA relied on comments submitted to the agency
by the Council of Producers & Distributors of Agrotechnology (CPDA) on
April 21, 2017.\46\ The CPDA comments included a summary of cost
estimates associated with relabeling non-pesticide agricultural
chemical products in distribution. Those estimates were obtained from
an industry survey and were based on the following unit costs: Shipping
costs to move product out of and back into the warehouse (for off-site
package opening and replacement); relabeling space per square foot per
month; safety equipment and training per employee involved in
relabeling; labor and materials to break down pallets and shrink-wrap
and redo product packaging in new plastic bags; and labor and materials
to move liquid to new containers and dispose of old containers (CPDA,
2017, pp. 4-5, Document ID 0006).
---------------------------------------------------------------------------

    \46\ Email to Maureen Ruskin of OSHA Re: Comments Supplementing
a Petition Submitted to OSHA on May 24, 2016 Requesting a Revision
of Paragraph (f)(11) of 29 CFR 1910.1200 (CPDA, 2017, Document ID
0006).
---------------------------------------------------------------------------

    For OSHA's purposes, the critical costing information from CPDA is
the estimate of summary relabeling costs presented as a percentage of
the value of the products requiring relabeling. According to the CPDA
survey results, these summary costs range from 1.5 percent to 204
percent of the value of the product, depending on product type (e.g.,
liquid versus dry), container type (plastic bags, etc.), and the volume
and value of the product (CPDA, 2017, p. 8, Document ID 0006). As a
practical matter, OSHA expects that manufacturers and wholesalers would
simply discard a product rather than incur relabeling costs in excess
of the value of the product. Of course, there may be some disposal
costs for the discarded material, but there may also be some salvage
value for the improperly-labeled product. If one assumes that the
disposal cost and the salvage value are relatively minor and, on net,
offset each other, then the upper limit on the relabeling costs for any
product would be approximately 100 percent of the value of the product.
Furthermore, with an effective range of labeling costs from 1.5 percent
to 100 percent of the value of the product, OSHA estimates, without
further information on the distribution of the costs, that the average
labeling cost would be approximately 50 percent of the value of the
products requiring relabeling. While this cost estimate as a percentage
of the value of the product was developed from data on relabeling non-
pesticide agricultural chemical products in distribution, OSHA has
assumed that this same estimate would also apply to relabeling paints
and related chemical products in distribution. The agency invites
comments on this assumption.
    The 50 percent average cost savings estimate would apply only to
those products requiring relabeling. In order to estimate the expected
cost savings for all products in the NAICS codes affected by the
proposed revisions to paragraph (f)(11), OSHA also needs to estimate
three other factors (in addition to the average cost savings of 50
percent): (1) What percentage of the products in these NAICS industries
would be warehoused for more than six months; (2) what percentage of
products warehoused for more than six months would be relabeled in any
particular year due to a manufacturer-initiated labeling change; \47\
and (3) the percentage of all products in the NAICS industries that are
covered by this proposed rule.
---------------------------------------------------------------------------

    \47\ These labeling changes occur when the manufacturer becomes
newly aware of significant information regarding the hazards of a
chemical. See existing 29 CFR 1910.1200(f)(11).
---------------------------------------------------------------------------

    OSHA was unable to identify data relevant to factors (1) and (2)
above and instead worked with its contractor, ERG, to develop estimates
of both of these factors. For (1) above, OSHA expected that the
percentage of products warehoused for more than six months would be
quite low because it is expensive to hold inventory over long periods
of time. Therefore, OSHA estimated that just five percent of the
products in the six NAICS industries potentially impacted by the
proposed modifications to paragraph (f)(11) would be warehoused for
more than six months. For (2) above, OSHA anticipates that
manufacturer-initiated relabeling would be rare, and estimated that
only one percent of products warehoused for more than six months would
be relabeled in any particular year due to a manufacturer-initiated
labeling change to one or more of its chemical ingredients. See
existing 29 CFR 1910.1200(f)(11). OSHA invites comments on these
estimates.
    For factor (3) above, OSHA assumed that 100 percent of the products
in the four NAICS manufacturing industries are covered by the HCS.\48\
For the two wholesale industries, however, some substantial portion of
the covered products do not qualify as hazardous chemicals covered by
the HCS or are not subject to the HCS labeling requirements. For NAICS
424910: Farm Supplies Merchant Wholesalers, a significant majority of
the wholesale

supplies are non-fertilizers, such as grains (e.g., alfalfa, hay,
livestock feeds) and nursery stock (e.g., plant seeds and plant bulbs).
Based on data from the 2012 Economic Census,\49\ ERG estimated that
41.7 percent of the wholesale supplies in NAICS 424910 would be
fertilizers affected by the proposed released-for-shipment provision
(Document ID 0049, tab ``RF Shipment''). For NAICS 424950: Paint,
Varnish, and Supplies Merchant Wholesalers, some proportion of the
wholesale supply consists of non-paints and non-chemicals, such as
wallpaper and painting supplies such as paintbrushes, rollers, and
spray-painting equipment. Based on data from the 2012 Economic Census,
ERG estimated that 77.6 percent of the wholesale supplies in NAICS
424950 would be paints and related chemicals affected by the proposed
released-for-shipment provision (Document ID 0049, tab ``RF
Shipment''). OSHA used ERG's estimates to develop the expected cost
savings attributable to the proposed revisions to paragraph (f)(11).
The agency invites comments on these estimates.\50\
---------------------------------------------------------------------------

    \48\ A review of the products covered under the manufacturing
NAICS codes reveals they are all, or almost all, chemicals.
    \49\ 2012 Economic Census of the United States, Table
EC1242SLLS1--Wholesale Trade: Subject Series--Product Lines: Product
Lines Statistics by Industry for the U.S. and States: 2012 (Document
ID 0043).
    \50\ Under the proposed revisions to paragraph (f)(11), when
relabeling is not required for chemicals that have been released for
shipment, the chemical manufacturer or importer would still be
required to provide an updated label for each individual container
with each shipment. The agency estimates that any incremental costs
associated with providing updated labels are likely to be
negligible, as OSHA believes this is already standard industry
practice.
---------------------------------------------------------------------------

    Column 3 of Table VII-18 shows the average product value (revenue)
for each of the six NAICS industries that OSHA expects would be
affected by the proposed modification to paragraph (f)(11).\51\ Column
4 of Table VII-18 shows the number of affected firms (entities) for
each of these six NAICS industries.\52\ Column 5 of Table VII-18 shows
the estimated loss avoided due to the proposed released-for-shipment
provision for each of these six NAICS industries as a percentage of
that industry's revenues. That percentage is the product of the four
factors estimated above: (1) The costs of relabeling as a percentage of
the value of the products requiring relabeling; (2) the percentage of
the products in these NAICS industries that would be warehoused for
more than six months; (3) the percentage of products warehoused for
more than six months that would require relabeling in any particular
year due to a manufacturer-initiated labeling change; and (4) the
percentage of all products in the NAICS industries covered by this
proposed rule.
---------------------------------------------------------------------------

    \51\ Derived for each NAICS by dividing Column 3 of Table VII-9
(total industry revenues) by Column 7 of Table VII-1 (number of
affected firms).
    \52\ Obtained from Column 7 of Table VII-1.
---------------------------------------------------------------------------

    Table VII-17 presents, by NAICS industry, these four factors and
the calculated percentage loss in revenue OSHA anticipates would be
avoided under the proposed released-for-shipment provision.

                      Table VII-17--Calculation of the Percentage Loss Avoided Due to the Proposed Released-for-Shipment Provision
                                                                     [2019 Dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                Percentage of
                                                                                Percentage of       products       Percentage of
                                                                        Percentage      products      warehoused >=   products covered     Product of
               NAICS                          NAICS industry               cost      warehoused >=    six months and   by the proposed     percentages
                                                                         savings       six months        require            rule
                                                                                relabeling
                                                                               (A)              (B)              (C)               (D)    (A), (B), (C),
                                                                                and (D)
--------------------------------------------------------------------------------------------------------------------------------------------------------
325311............................  Nitrogenous Fertilizer                      50                5                1               100              0.03
                                     Manufacturing.
325312............................  Phosphatic Fertilizer                       50                5                1               100              0.03
                                     Manufacturing.
325314............................  Fertilizer (Mixing Only)                    50                5                1               100              0.03
                                     Manufacturing.
325510............................  Paint and Coating Manufacturing..           50                5                1               100              0.03
424910............................  Farm Supplies Merchant                      50                5                1             41.70              0.01
                                     Wholesalers.
424950............................  Paint, Varnish, and Supplies                50                5                1             77.60              0.02
                                     Merchant Wholesalers.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: U.S. DOL, OSHA, Directorate of Standards and Guidance, Office of Regulatory Analysis-Health.

    The estimated cost savings for each of the six affected industries
arising from the proposed modifications to paragraph (f)(11) then is
simply the product of Columns 3, 4, and 5 in Table VII-18. Summing the
cost savings for each of the six industries yields an estimated annual
cost savings of $29.8 million. OSHA requests comments on the
reasonableness of this estimate and the assumptions underlying it
(including the various factor percentage estimates listed in Table VII-
17).

             Table VII-18--Cost Savings Associated With the Proposed Released-for-Shipment Provision
                                                 [2019 Dollars]
----------------------------------------------------------------------------------------------------------------
                                                      Average                      Loss avoided
          NAICS               NAICS industry       product value  Affected firms     as a % of     Loss avoided
                                                     (revenue)                        revenue
----------------------------------------------------------------------------------------------------------------
325311..................  Nitrogenous Fertilizer     $37,902,969             163            0.03      $1,544,546
                           Manufacturing.
325312..................  Phosphatic Fertilizer      127,231,784              45            0.03       1,431,358
                           Manufacturing.
325314..................  Fertilizer (Mixing          13,737,854             359            0.03       1,232,972
                           Only) Manufacturing.
325510..................  Paint and Coating           28,813,229             998            0.03       7,188,901
                           Manufacturing.
424910..................  Farm Supplies Merchant      28,809,209           4,965            0.01      14,911,683
                           Wholesalers.
424950..................  Paint, Varnish, and         18,022,834           1,012            0.02       3,538,387
                           Supplies Merchant
                           Wholesalers.
                                                 ---------------------------------------------------------------

    Total...............  ......................  ..............           7,542  ..............      29,847,846
----------------------------------------------------------------------------------------------------------------
Source: U.S. DOL, OSHA, Directorate of Standards and Guidance, Office of Regulatory Analysis-Health.
Note: Figures may not add to totals due to rounding.

Labels on Very Small Containers
    Proposed paragraph (f)(12), which addresses the labeling of small
containers, would limit labeling requirements for chemical
manufacturers, importers, or distributors where they can demonstrate
that it is not feasible to use pull-out labels, fold-back labels, or
tags to provide the full label information as required by paragraph
(f)(1). As proposed in paragraph (f)(12)(ii), manufacturers, importers,
and distributors would be able to use an abbreviated label (requiring
only the product identifier, pictogram(s), signal word, chemical
manufacturer's name and phone number, and a statement that the full
label information is provided on the immediate outer package) on
containers with a volume capacity of 100 ml or less--referred to as
``small containers'' in this PEA. As proposed in paragraph
(f)(12)(iii), manufacturers, importers, and distributors would need to
put only the product identifier on containers with a volume capacity of
3 ml or less--referred to as ``very small containers'' in this PEA--if
they can demonstrate that any label would interfere with the normal use
of the container.
    Following publication of the 2012 updates to the HCS, stakeholders
requested that OSHA clarify its enforcement policy on labels for small
containers. In response, through letters of interpretation, OSHA
adopted practical accommodations that specified: (1) The minimum
information required for a label on the immediate container of the
shipped chemical; and (2) the minimum information required for the
outer packaging of shipped small containers (see, e.g., Collatz, 2015,
Document ID 0174; Watters, 2013, Document ID 0200; Blankfield, 2017,
Document ID 0170). Proposed paragraph (f)(12)(ii) would incorporate
into the HCS the accommodations for small containers described in these
letters of interpretation; however, the letters did not contain any
guidance unique to very small containers, which would be covered by
proposed paragraph (f)(12)(iii).
    For costing purposes, OSHA estimates that no cost savings will
arise from proposed paragraph (f)(12)(ii) (small containers); OSHA
expects that employers are already benefitting from the practical
accommodations on the labeling of small packages described in the
aforementioned letters of interpretation. OSHA invites public comments
on this preliminary determination and the magnitude of any cost savings
that should be attributed to proposed paragraph (f)(12)(ii).
    OSHA has estimated cost savings under proposed paragraph
(f)(12)(iii) for manufacturers, importers, and distributors of very
small containers (volume capacity of 3 ml or less) where the use of any
label (even an abbreviated label as specified in proposed paragraph
(f)(12)(ii)) would interfere with the normal use of the container and
only the product identifier would be required. OSHA has preliminarily
determined that affected manufacturers would fall in only a few NAICS
industries: Other Basic Chemical Manufacturing, Inorganic and Organic
(NAICS 325180 and 325199, respectively) and Pharmaceutical and Medical
Manufacturing (NAICS 3254--encompassing 6-digit NAICS 325411, 325412,
325413, and 325414). As shown in Column 3 of Table VII-19, OSHA
estimates that there are approximately 63.5 million labels on very
small containers in these six 6-digit NAICS manufacturing industries
that OSHA anticipates could be affected by this part of the proposed
rule.\53\
---------------------------------------------------------------------------

    \53\ The number of very small containers in Column 3 of Table
VII-19 for each of these six NAICS industries was obtained from
Column 4 of Table VII-5.
---------------------------------------------------------------------------

    Even in these six NAICS industries, however, manufacturers would
not be able to take advantage of proposed paragraph (f)(12)(iii) in all
cases because that provision applies only when the manufacturer,
importer, or distributor can demonstrate that it is not feasible to use
pull-out labels, fold-back labels, or tags containing the full label
information and that even an abbreviated label would interfere with the
normal use of the container. Of the 63.5 million potentially affected
labels on very small containers, OSHA estimates that for only 40
percent of them, or for an estimated total of 25.4 million very small
containers, would manufacturers fall under proposed paragraph
(f)(12)(iii) (see Column 5 of Table VII-19 and, equivalently, Column 7
of Table VII-5).
    Manufacturers with containers falling under proposed paragraph
(f)(12)(iii) could expect to obtain cost savings from avoided labeling
costs on very small containers (with only the product identifier
required) versus the labeling costs of abbreviated labels (requiring
the product identifier, pictogram(s), signal word, manufacturer's name
and phone number, and a statement that the full label information is
provided on the immediate outer packaging). OSHA estimates an
incremental unit cost savings of $0.051 per label for very small
containers.\54\ That unit cost savings is expected to be net of the
cost of providing a full label on the immediate outer package
(containing a set of very small containers) per proposed paragraph
(f)(12)(iv)(A). As shown in Table VII-19, multiplying the number of
affected labels by the unit cost savings of $0.051 per label for very

small containers yields estimated annual cost savings of $1.3 million.
OSHA invites interested parties to provide comments on these cost
estimates and the assumptions underlying them.
---------------------------------------------------------------------------

    \54\ The Flavor and Extract Manufacturers Association of the
United States (FEMA) provided OSHA (in a letter to Robert Stone of
OSHA, dated April 27, 2018) (Document ID 0257) a summary of survey
results obtained from member companies concerning how they might
benefit from relaxed OSHA labeling requirements on small containers.
Those results included an estimate of $0.85 per label for small
capacity containers compliant with the 2012 HCS. However, this
estimate applies to expensive labels--such as pull-out labels, fold-
back labels, and full-information tags--and therefore is not
applicable to the cost savings associated with using only the
product identifier in lieu of the abbreviated labeling specified in
proposed paragraph (f)(12)(ii). OSHA believes it is likely that most
of the cost savings reported from the FEMA survey would be
attributable to the expensive types of labels.
    Based on the unit cost data provided by FEMA, OSHA estimated a
unit cost savings of $0.05 in 2018 dollars for the use of labels
with the minimum information--the product identifier--required for
very small containers (versus abbreviated labels). Updating the 2018
estimate to 2019 dollars using the BEA (2020) implicit price
deflator for Gross Domestic Product, OSHA derived an estimate of
$0.05087 in cost savings per label (with the unrounded estimate used
in the analysis).

   Table VII-19--Estimated Cost Savings Associated With Abbreviated Labels on Very Small Containers Under the
                                              Proposed HCS Standard
                                                 [2019 Dollars]
----------------------------------------------------------------------------------------------------------------
                                                   Labels-- very   Percentage of
          NAICS               NAICS industry           small        labels with    Labels w/cost    Annual cost
                                                    containers     cost savings       savings         savings
----------------------------------------------------------------------------------------------------------------
325180..................  Other Basic Inorganic       14,768,423              40       5,907,369        $300,518
                           Chemical
                           Manufacturing.
325199..................  All Other Basic             35,524,371              40      14,209,748         722,874
                           Organic Chemical
                           Manufacturing.
325411..................  Medicinal and                5,106,176              40       2,042,471         103,904
                           Botanical
                           Manufacturing.
325412..................  Pharmaceutical               6,471,452              40       2,588,581         131,685
                           Preparation
                           Manufacturing.
325413..................  In-Vitro Diagnostic            501,664              40         200,665          10,208
                           Substance
                           Manufacturing.
325414..................  Biological Product           1,113,080              40         445,232          22,650
                           (except Diagnostic)
                           Manufacturing.
                                                 ---------------------------------------------------------------
    Total...............  ......................      63,485,165              40      25,394,066       1,291,839
----------------------------------------------------------------------------------------------------------------
Source: U.S. DOL, OSHA, Directorate of Standards and Guidance, Office of Regulatory Analysis-Health.
Note: Figures may not add to totals due to rounding.

Sensitivity Analysis
    In this section, OSHA presents the results of a sensitivity
analysis to demonstrate how robust the estimates of net cost savings
are to changes in various cost parameters. In this analysis, OSHA made
a series of isolated changes to individual cost input parameters in
order to determine their effects on the agency's estimates of
annualized net cost savings, with a seven-percent discount rate as the
reference point. The agency has conducted these calculations for
informational purposes only.
    The methodology and calculations underlying the cost estimates
associated with this rulemaking are generally linear and additive in
nature. Thus, the sensitivity of the results and conclusions of the
analysis will generally be proportional to isolated variations in a
particular input parameter. For example, if the estimated time that
employees will need to devote to attending new training doubles, the
corresponding labor costs would double as well.
    OSHA evaluated a series of such changes in input parameters to test
whether and to what extent the general conclusions of the preliminary
economic analysis held up. OSHA considered changes to input parameters
that affected only costs and cost savings and determined that each of
the sensitivity tests on cost parameters had only a very minor effect
on total costs or net costs. On the whole, OSHA found that the
conclusions of the analysis are robust, as changes in any of the cost
input parameters still show significant net cost savings for the final
rule. The results of the individual sensitivity tests are summarized
and are described in more detail in Table VII-20.
    In the first of these sensitivity tests, OSHA reduced from 1
percent to 0.5 percent its estimate of the percentage of products
warehoused for more than six months that require relabeling in any
particular year. The effect of this change would be to reduce by 50
percent the estimated cost savings associated with the proposed
released-for-shipment provision. Table VII-20 shows that the estimated
net cost savings from the proposed rule would decline by $14.9 million
annually, from $26.8 million to $11.8 million annually, or by about 56
percent.
    In a second sensitivity test, OSHA reversed the first sensitivity
test, that is, the agency increased from 1 percent to 2 percent the
percentage of products warehoused for more than six months that require
relabeling in any particular year. The effect of this change would be
to increase by 100 percent the estimated cost savings associated with
the proposed released-for-shipment provision. Table VII-20 shows that
the estimated net cost savings from the proposed rule would increase by
$29.8 million annually, from $26.8 million to $56.6 million annually,
or by about 112 percent.
    In a third sensitivity test, OSHA reduced from 40 percent to 20
percent the percentage of very small containers that would be affected
by proposed paragraph (f)(12). As shown in Table VII-20, if OSHA's
estimates of other input parameters remained unchanged, the estimated
net cost savings from the proposed rule would decline by $0.6 million
annually, from $26.8 million to $26.1 million annually, or by about 2
percent.
    In a fourth sensitivity test, OSHA applied the same rule
familiarization costs to all firms regardless of whether they are
affected by other provisions of this proposal, i.e., OSHA did not
reduce estimated familiarization time for firms that are not affected
by other parts of the proposal. The effect of this change would be to
raise compliance costs for 102,624 establishments in manufacturing and
wholesale trade; the estimated net cost savings from the proposed rule
would be reduced by $0.4 million annually, from $26.8 million to $26.4
million annually, or by about 1 percent.
    In a fifth sensitivity test, OSHA doubled the estimated labor hours
assigned to revising SDSs and labels due to the reclassification of
chemicals and revised mandatory language in the appendices of the HCS
(from Tables VII-13 and VII-14). The effect of this change would be to
double labor costs for the affected six-digit NAICS industries;
estimated net cost savings would be reduced by $3.5 million annually,
from $26.8 million to $23.2 million, or by 13.2 percent.
    In a sixth sensitivity test, OSHA excluded overhead costs from the
fully loaded hourly wage rates used throughout the PEA. Overhead costs
were not applied in the 2012 FEA and this sensitivity test provides
consistency with the treatment of overhead in the 2012 analysis. The
effect of this change would be to remove the factor of 17 percent of
base wages from the hourly costs for the four job categories used in
the cost analysis. Applying this change, the estimated net cost savings
from the proposed rule would increase by $0.5 million annually, or by
1.7 percent, resulting in a total estimate of annualized net cost
savings of $27.2 million.

            Table VII-20--Sensitivity Tests and Regulatory Alternatives--Impacts on Net Cost Savings
                                     [7 Percent discount rate, 2019 dollars]
----------------------------------------------------------------------------------------------------------------
                                                                                Percentage
     Uncertainty (cost) scenarios      Change from OSHA's best   Difference from   impact on net     Net cost
                                               estimate           proposed rule    cost savings       savings
----------------------------------------------------------------------------------------------------------------
Proposed Rule--OSHA's midpoint         N/A....................                $0             0.0     $26,753,711
 estimate.
Reduce from 1 percent to 0.5 percent   Halves cost savings          -$14,923,923           -55.8      11,829,788
 the percentage of products             associated with
 warehoused for more than six months    proposed released-for-
 that would require relabeling in any   shipment provision.
 particular year.
Increase from 1 percent to 2 percent   Doubles cost savings           29,847,846           111.6      56,601,557
 the percentage of products             associated with
 warehoused for more than six months    proposed released-for-
 that would require relabeling in any   shipment provision.
 particular year.
Reduce from 40% to 20% the percentage  Halves cost savings for          -645,919            -2.4      26,107,792
 of very small containers that would    affected firms.
 be affected by proposed paragraph
 (f)(12).
Rule familiarization time would not    Raises costs for the             -366,679            -1.4      26,387,032
 be reduced for firms that are not      31,577 establishments
 affected by any other cost             in NAICS 31-33--
 provisions; it would be identical to   Manufacturing, and the
 rule familiarization time for those    71,047 establishments
 that are affected by other             in NAICS 42--Wholesale
 provisions.                            Trade not affected by
                                        other provisions.
Doubles labor hours for the            Doubles labor costs for        -3,529,921           -13.2      23,223,790
 reclassification of chemicals and      the approximately 13
 compliance with the new mandatory      six-digit NAICS
 language in the appendices to the      industries affected by
 proposed standard.                     proposed changes to
                                        paragraph (d) and
                                        appendices B, C, and D.
Excludes overhead costs from fully     For the four job                  458,003             1.7      27,211,714
 loaded hourly wage rates.              categories in the cost
                                        model, overhead costs
                                        (17 percent of base
                                        wages) are not applied
                                        and estimated wage
                                        rates are
                                        correspondingly lower.
Remove the proposed provisions that    Eliminates cost savings        -1,291,839            -4.8      25,461,873
 result in cost savings for very        for affected employers.
 small labels.
Eliminate the proposed released-for-   Eliminates cost savings       -29,847,846          -111.6      -3,094,135
 shipment provisions and associated     for affected employers.
 cost savings.
----------------------------------------------------------------------------------------------------------------
Source: U.S. DOL, OSHA, Directorate of Standards and Guidance, Office of Regulatory Analysis-Health (Document ID
  0049, tab ``Tables'').

    Not part of this table, but discussed in A. Introduction and
Summary, the agency examined the effect of lowering the discount rate
for annualizing costs from 7 percent to 3 percent. Lowering the
discount rate to 3 percent would yield annualized net cost savings of
$27.5 million, approximately $700,000 more in annual cost savings than
the net cost savings at a 7 percent discount rate.
Regulatory Alternatives
    This section discusses two regulatory alternatives to the changes
OSHA is proposing in this NPRM: (1) Removing the proposed changes to
paragraph (f)(12) regarding labeling of very small containers, which
would eliminate cost savings for manufacturers, importers, and
distributors that label such containers; and (2) removing the proposed
changes to paragraph (f)(11) regarding labeling of containers that have
been released-for-shipment, which would eliminate cost savings for
manufacturers, importers, and distributors that have such containers.
In Table VII-20, each regulatory alternative is described and analyzed
relative to the proposed revisions to the HCS. Midpoint estimates are
presented in all cases. Under Regulatory Alternative (1) (elimination
of changes related to labeling of very small containers), cost impacts
total $1.3 million (4.8 percent of baseline cost savings), resulting in
a reduction of estimated annualized net cost savings to a total of
$25.5 million. Under Regulatory Alternative (2) (elimination of changes
related to labels on packages that have been released for shipment),
cost impacts on employers total $29.8 million (112 percent of baseline
cost savings), resulting in an overall estimate of annualized net costs
of $3.1 million.
    In summary, these regulatory alternatives would result in a
reduction of cost savings--a significant reduction in the case of the
second alternative (resulting in positive, but modest, overall net
costs). The elimination of neither alternative, however, would alter
the agency's determination of economic feasibility for the proposed
revisions to the HCS as a whole. Nor would the elimination of these
alternatives result in a significant impact on a substantial number of
small entities (see Section VII. G. Economic Feasibility and Impacts).

G. Economic Feasibility and Impacts

    This section presents OSHA's analysis of the potential economic
impacts of the proposed rule and an assessment of economic feasibility.
A separate analysis of the potential economic impacts on small entities
(as defined in accordance with SBA criteria) and on very small entities
(those with fewer than 20 employees) is presented in the following
section as part of the Initial Regulatory Flexibility Screening
Analysis, conducted in accordance with the criteria laid out in the
Regulatory Flexibility Act.
    A standard is economically feasible ``if it does not threaten
massive dislocation to, or imperil the existence of, [an] industry.''
Lead I, 647 F.2d at 1265 (internal citations and quotation marks
omitted). To determine whether a rule is economically feasible, OSHA
begins with two screening tests to consider minimum threshold effects
of the rule under two extreme cases: (1) A scenario in which all costs
are passed through to customers in the form of higher prices
(consistent with a price elasticity of demand of zero); and (2) a
scenario in which all costs are absorbed by the firm in the form of
reduced profits (consistent with an infinite price elasticity of
demand).
    In profit-earning entities, compliance costs can generally be
expected to be absorbed through a combination of increases in prices
and reductions in profits. The extent to which the impacts of cost
increases affect prices or profits depends on the price elasticity of
demand for the products or services produced and sold by the entity.
    The price elasticity of demand refers to the relationship between
changes in the price charged for a product and the resulting changes in
the demand for that product. A larger price elasticity of demand
implies that an entity or industry is less able to pass increases in
costs through to its customers in the form of a price increase and must
absorb more of the cost increase through a reduction in profits.

    If the price elasticity of demand is zero, and all costs can be
passed to customers in the form of higher prices, the immediate impact
of the rule would be observed in the form of increased industry
revenues. In the absence of evidence to the contrary, OSHA generally
considers a standard to be economically feasible for an industry when
the annualized costs of compliance are less than a threshold level of
one percent of annual revenues. Common-sense considerations indicate
that potential impacts of such a small magnitude are unlikely to
eliminate an industry or significantly alter its competitive structure,
particularly since most industries have at least some ability to raise
prices to reflect increased costs and normal price variations for
products typically exceed three percent a year (OSHA, 2016, Chapter VI,
pp. VI-20/VI-23 and Table VI-3). \55\ Of course, OSHA recognizes that
even when costs are within this range, there could be unusual
circumstances requiring further analysis.
---------------------------------------------------------------------------

    \55\ Document ID OSHA-2010-0034-4247, Attachment ``Silica FEA
Chapter VI: Economic Feasibility Analysis and Regulatory Flexibility
Determination'' (Document ID 0045).
---------------------------------------------------------------------------

    If, however, there is infinite price elasticity of demand, and all
costs are absorbed by affected firms, the immediate impact of the rule
would be observed in reduced industry profits. OSHA uses the ratio of
annualized costs to annual profits as a second check on economic
feasibility. In the absence of evidence to the contrary, OSHA generally
considers a standard to be economically feasible for an industry when
the annualized costs of compliance are less than a threshold level of
ten percent of annual profits. This is a fairly modest threshold level,
given that normal year-to-year variations in profit rates in an
industry can exceed 40 percent or more (OSHA, 2016, Chapter VI, pp. VI-
20/VI-23 and Table VI-5).\56\
---------------------------------------------------------------------------

    \56\ Document ID OSHA-2010-0034-4247, Attachment ``Silica FEA
Chapter VI: Economic Feasibility Analysis and Regulatory Flexibility
Determination'' (Document ID 0045).
---------------------------------------------------------------------------

    In order to assess the nature and magnitude of the economic impacts
associated with compliance with the proposed rule, OSHA developed
quantitative estimates of the potential economic impact of the
requirements on each of the affected industry sectors. The estimated
costs of compliance presented in Section VII.F of this preamble were
compared with industry revenues and profits to provide a measure of
potential economic impacts. Table VII-21 presents data on revenues and
profits for each affected industry sector at the six-digit NAICS
industry level, along with the corresponding estimated annualized costs
of compliance in each sector. Potential impacts in the table are
represented by the ratios of compliance costs to revenues and
compliance costs to profits.
    The nature of the proposed revisions to the HCS is such that all
affected firms would incur some costs, but only a small subset would
derive the cost savings that are monetized in this PEA (although most
or all would enjoy non-monetized benefits, e.g., in foreign trade). To
examine the economic impacts of the proposed revisions to the standard
for those affected establishments that obtain no monetized cost savings
from any of the proposed revisions to the HCS, OSHA estimated the ratio
of compliance costs to revenues and the ratio of compliance costs to
profits using only gross positive costs (i.e., costs exclusive of cost
savings) as the numerator in the ratio. Table VII-22 presents this part
of the agency's screening analysis.
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    In the case of costs that may be incurred due to the requirements
of the proposed revisions to the HCS, all businesses within each of the
covered industry sectors would be subject to the same requirements.
Thus, to the extent

potential price increases correspond to costs associated with achieving
compliance with the revised standard, the elasticity of demand for each
entity will approach that faced by the industry as a whole.
    Furthermore, if OSHA adopts the proposed revisions to the HCS,
hazardous chemicals distributed in the United States will have to be in
compliance with the updated provisions, and chemical producers and
users in most advanced economies will be operating under comparable
requirements based on the GHS specific to their own country or economic
union. For this reason, affected domestic establishments should not be
susceptible to a loss of domestic market share resulting from the
competition of foreign commercial entities not bound by the
requirements of the HCS or similar GHS requirements.
    Given the small increases in prices potentially resulting from
compliance with the proposed revisions to the HCS in any particular
industry, and the lack of readily available substitutes for the
products and services provided by the covered industry sectors, demand
is expected to be sufficiently inelastic in each affected industry to
enable entities to substantially offset compliance costs through minor
price increases without experiencing any significant reduction in
revenues or profits. For example, for NAICS 324191: Petroleum
Lubricating Oil and Grease Manufacturing, even if zero cost savings are
obtained and gross positive costs reach OSHA's estimated total
($1,221,994; see Table VII-22), revenue impacts (0.0074 percent,
rounded to 0.01 percent) and profit impacts (0.108 percent, rounded to
0.11 percent) fall well below OSHA's screening criteria associated with
economic feasibility concerns. OSHA therefore preliminarily concludes
that the proposed rule, if implemented, would be economically feasible.
The agency invites comments on this preliminary conclusion.

H. Preliminary Regulatory Flexibility Act Certification

    To determine whether the proposed revisions to the HCS will have a
significant economic impact on a substantial number of small entities,
OSHA evaluated the impact of compliance costs on the revenues and
profits of small entities in affected industries. As discussed
previously, the proposed rule would impose costs on impacted industries
for training; for reclassification of aerosols, desensitized
explosives, and flammable gases; and for becoming familiar with the
proposed changes to the standard. The proposed rule would also result
in cost savings to the extent it would limit employers' duties with
respect to the labeling of some very small containers and provide more
flexible relabeling requirements for packaged chemicals released for
shipment.
    OSHA believes that the estimated costs are one-time costs that
would be incurred during the first-year transition period after the
rule is promulgated. In addition, as mentioned above, there will be
annual cost savings due to the flexibilities introduced in the proposed
provision related to the labeling of very small containers and in the
proposed released-for-shipment provision.
    Tables VII-23 and VII-24 present OSHA's screening analysis of the
impact of compliance costs and cost savings on revenues and profits of
small and very small entities. Tables VII-25 and VII-26 present OSHA's
screening analysis of impacts on revenues and profits for small and
very small entities under the scenario that zero-cost savings are
realized, i.e., only positive costs are incurred by affected employers.
OSHA's screening criteria for determining whether there are significant
economic impacts on small firms assesses whether, for small entities in
any given industry, the annualized costs exceed one percent of revenues
or five percent of profits.\57\
---------------------------------------------------------------------------

    \57\ OSHA's screening criteria underlying the determination of
significant economic impacts were developed in accordance with
published guidelines for implementation of the Small Business
Regulatory Enforcement Fairness Act amendment to the Regulatory
Flexibility Act; Executive Orders 12866, 13563, and 13771; and the
Unfunded Mandates Reform Act. For a recent example of the
application of these screening criteria, see the Final Economic
Analysis and Final Regulatory Flexibility Analysis for the Final
Rule for Occupational Exposure to Respirable Crystalline Silica,
Chapter VI: Economic Feasibility Analysis and Regulatory Flexibility
Determination, Document ID 0045.
---------------------------------------------------------------------------

    The total annualized cost savings resulting from the proposed
revisions to the HCS for small entities and very small entities are
estimated to be approximately $17.1 million and $1.7 million,
respectively (see Tables VII-23 and VII-24). To assess the potential
economic impact of the proposed rule on small entities and very small
entities, OSHA calculated the ratios of compliance costs to profits and
to revenues. These ratios are presented for each affected industry in
Tables VII-23 (small entities) and VII-24 (very small entities). Those
tables show that in no industries do the annualized costs of the
proposed revisions to the standard exceed one percent of annual
revenues or five percent of annual profits, either for small entities
or for very small entities. Similarly, under a cost scenario exclusive
of cost savings (shown in Tables VII-25 and VII-26), in no industries
do the annualized costs of the proposed rule exceed one percent of
annual revenues or five percent of annual profits. Because no adverse
revenue and profit impacts are expected to result from this proposed
revision to the HCS, OSHA preliminarily certifies that the proposed
changes to the standard will not have a significant economic impact on
a substantial number of small entities. The agency invites comments on
this preliminary certification.

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VIII. Federalism

    OSHA reviewed the proposed updates to the HCS according to the most
recent Executive order on federalism (E.O. 13132, 64 FR 43255), which
requires that Federal agencies, to the extent possible, refrain from
limiting State policy options, consult with States before taking
actions that would restrict States' policy options and take such
actions only when clear constitutional and statutory authority exists
and the problem is of national scope. The Executive order generally
allows Federal agencies to preempt State law only with the expressed
consent of Congress. Federal agencies must limit preemption of State
law to the extent possible.
    Under section 18 of the OSH Act, 29 U.S.C. 667, Congress expressly
provides that States and U.S. territories may adopt, with Federal
approval, a plan for the development and enforcement of occupational
safety and health standards. OSHA refers to such States and territories
as State Plan States. Occupational safety and health standards
developed by State Plan States must be at least as effective in
providing safe and healthful employment and places of employment as the
Federal standards and, when applicable to products that are distributed
or used in interstate commerce, must be required by compelling local
conditions and not unduly burden interstate commerce. 29 U.S.C.
667(c)(2). Subject to these requirements, State Plan States are free to
develop and enforce their own requirements for safety and health
standards.
    In States without OSHA-approved State plans, Congress expressly
provides for OSHA standards to preempt State occupational safety and
health standards in areas addressed by the Federal standards. In these
States, the proposed revisions to the HCS would limit State policy
options in the same manner as every standard or amendment to a standard
promulgated by OSHA. In States with OSHA-approved State plans, the
proposed revisions to the HCS would not significantly limit State
policy options to adopt stricter standards.
    OSHA previously concluded that promulgation of the HCS complies
with E.O. 13132 (77 FR 17687), and reaffirms that finding with respect
to the proposed revisions to that standard.

VIX. State Plan States

    When Federal OSHA promulgates a new standard or more stringent
amendment to an existing standard, the 28 States and U.S. territories
with their own OSHA-approved occupational safety and health plans
(``State Plan States'') must amend their standards to reflect the new
standard or amendment or show why such action is unnecessary, e.g.,
because an existing State standard covering this area is ``at least as
effective'' as the new Federal standard or amendment. 29 CFR 1953.5(a).
The State standard must be at least as effective as the final Federal
rule, and, when applicable to products that are distributed or used in
interstate commerce, must be required by compelling local conditions
and not unduly burden interstate commerce. 29 U.S.C. 667(c)(2). State
Plans must adopt the Federal standard or complete their own standard
within six months of the promulgation date of the final Federal rule.
When OSHA promulgates a new rule or amendment that does not impose
additional or more stringent requirements than existing standards,
State Plan States are not required to amend their standards, although
OSHA may encourage them to do so.
    The 22 States and territories with OSHA-approved occupational
safety and health plans that cover public and private-sector employees
are Alaska, Arizona, California, Hawaii, Indiana, Iowa, Kentucky,
Maryland, Michigan, Minnesota, Nevada, New Mexico, North Carolina,
Oregon, Puerto Rico, South Carolina, Tennessee, Utah, Vermont,
Virginia, Washington, and Wyoming. Another six states and territories
have OSHA-approved occupational safety and health plans that cover
State and local government employees only: Connecticut, Illinois,
Maine, New Jersey, New York, and the Virgin Islands.

X. Unfunded Mandates Reform Act

    OSHA reviewed this proposal according to the Unfunded Mandates
Reform Act of 1995 (UMRA), U.S.C. 1501 et seq., and Executive Order
13132 (64 FR 43255). As discussed in the Preliminary Economic Analysis,
OSHA has preliminarily concluded that the proposed revisions to the HCS
will not impose a Federal mandate on the private sector in excess of
$100 million (adjusted annually for inflation) in expenditures in any
one year.
    As noted previously, OSHA's standards do not apply to State and
local governments except in States that have elected voluntarily to
adopt a State Plan approved by the agency. Consequently, this proposal
does not meet the definition of a ``Federal intergovernmental
mandate.'' See 2 U.S.C. 658(5).
    The OSH Act does not cover tribal governments in the performance of
traditional governmental functions, though it generally does cover
tribal governments when they engage in commercial activity. The
proposed changes to the HCS would not require tribal governments to
expend, in the aggregate, $100 million or more in any one year for
their commercial activities.
    For these reasons, for the purposes of the UMRA, OSHA certifies
that this proposal would not mandate that State, local, or tribal
governments adopt new, unfunded regulatory obligations of, or increase
expenditures by the private sector by, more than $100 million in any
year. In any event, the Preliminary Economic Analysis constitutes a
written statement containing a qualitative and quantitative assessment
of the anticipated costs and benefits. See 2 U.S.C. 1532.

XI. Protecting Children From Environmental Health and Safety Risks

    Executive Order 13045 (62 FR 19885), requires that Federal agencies
submitting covered regulatory actions to OMB's Office of Information
and Regulatory Affairs (OIRA) for review pursuant to E.O. 12866 provide
OIRA with (1) an evaluation of the environmental health or safety
effects that the planned regulation may have on children, and (2) an
explanation of why the planned regulation is preferable to other
potentially effective and reasonably feasible alternatives considered
by the agency. E.O. 13045 defines ``covered regulatory actions'' as
rules that are likely to (1) be economically significant under E.O.
12866 (i.e., a rulemaking that has an annual effect on the economy of
$100 million or more, or would adversely affect in a material way the
economy, a sector of the economy, productivity, competition, jobs, the
environment, public health or safety, or State, local, or tribal
governments or communities), and (2) concern an environmental health
risk or safety risk that an agency has reason to believe may
disproportionately affect children. In this context, the term
``environmental health risks and safety risks'' means risks to health
or safety that are attributable to products or substances that children
are likely to come in contact with or ingest (e.g., through air, food,
water, soil, or product use).
    OSHA has preliminarily determined that the proposed revisions to
the HCS are not economically significant under E.O. 12866 (see Section
VII of this preamble) and that the standard would not pose
environmental health or safety

risks to children as set forth in E.O. 13045.

XII. Environmental Impacts

    OSHA has reviewed the proposed revisions to the HCS according to
the National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321 et
seq.), the regulations of the Council on Environmental Quality (40 CFR
part 1500), and the Department of Labor's NEPA procedures (29 CFR part
11). As a result of that review, OSHA has made a preliminary
determination that the proposed regulatory changes will have no impact
on air, water, or soil quality; plant or animal life; or the use of
land or aspects of the external environment. Therefore, OSHA
preliminarily concludes that the proposed revisions to the HCS would
have no significant environmental impacts.

XIII. Consultation and Coordination With Indian Tribal Governments

    OSHA reviewed the proposed revisions to the HCS in accordance with
E.O. 13175 on ``Consultation and Coordination with Indian Tribal
Governments'' (65 FR 67249), and determined that it does not have
``tribal implications'' as defined in that order. The amendments, if
promulgated, would not have substantial direct effects on one or more
Indian tribes, on the relationship between the Federal Government and
Indian tribes, or on the distribution of power and responsibilities
between the Federal Government and Indian tribes.

XIV. Issues and Options Considered

    OSHA is providing this issues and options section to solicit
stakeholder input on various regulatory issues and to allow for some
potential regulatory flexibility with respect to the content of any
final rule resulting from this rulemaking. While OSHA invites
stakeholders to comment on all aspects of this proposal, this section
identifies specific areas of interest to the agency. OSHA is including
certain issues and questions in this section to assist stakeholders as
they review the proposal and consider the comments they plan to submit.
However, to fully understand the questions, and to provide substantive
input and feedback in response to them, the agency suggests commenters
review the other sections of the preamble that address these issues in
detail. Some issues and options that have cost implications are
discussed more thoroughly in the Preliminary Economic Analysis (see
Section VII. Preliminary Economic Analysis and Initial Regulatory
Flexibility Analysis).

A. Issues

    In this section, OSHA solicits public feedback on specific issues
associated with the proposed revisions to the HCS. It should be noted
that the proposed regulatory text provided at the end of this document
only includes those paragraphs that OSHA is proposing to change.
Therefore, the agency is putting a marked-up version (redline strike
out) of the text of the current rule on its web page and in the docket
to help readers identify and understand the proposed changes in context
(OSHA HCS Redline, 2020, Document ID 0222). The marked-up text will be
found on www.osha.gov under Hazard Communication in the subject index.
    OSHA has organized this issues section to follow the order of the
preamble and requests that feedback be organized, to the extent
possible, in similar order. Comments and feedback on particular
provisions should contain the heading of the section (e.g., Regulatory
Text, Appendix A), the associated issue number, and, where appropriate,
the paragraph in the standard that the comment is addressing. Comments
addressing more than one section or paragraph should include all
relevant references. Submitting comments in an organized manner with
clear reference to the issue(s) raised will enable all participants to
better understand the issues the commenter addressed and how they
addressed them. Some commenters may confine their interest (and
comments) to the issues that specifically affect them; correspondingly
they will benefit from being able to quickly identify comments on these
issues in others' submissions. While the agency welcomes relevant
comments on any aspect of this proposal, OSHA is especially interested
in responses, supported by evidence and explanations, to the following
issues and questions:
Timeframe for Updates to the HCS
    Since aligning the HCS with the GHS Rev. 3 in 2012, OSHA has
intended for the HCS to stay current with more recent revisions of the
GHS. The GHS is updated biennially through published revisions; most
recently, revision 8 was published in July 2019 (UN GHS, Rev. 8,
Document ID 0065). Regulatory authorities around the world have
implemented the GHS at stages ranging from revision 1 through revision
5. Few regulatory authorities have put programs in place to update
their regulations on a routine schedule. The European Union (EU) has
made the most regular updates, and has most recently implemented the
GHS Rev. 5 in August, 2016 (ECHA, 2016, Document ID 0177). In March
2019, the European Commission (EC) published the adaptation of
technical progress (ATP) to EC regulation 1272/2008 (the
Classification, Labelling, and Packaging (CLP) regulation) to align
with both the sixth and seventh revised editions of the GHS (EC, 2019,
Document ID 0176). These changes to the EC regulation become effective
October 17, 2020. Other regulatory authorities, such as those in
Canada, Australia, and New Zealand, have indicated that they will
continue to update their regulations to align with the GHS and are in
the process of aligning with Rev. 7; however, none of these countries
have a mandate on how often they should do so (Canada, 2019, Document
ID 0172; Australia, 2020, Document ID 0168; New Zealand, 2018, Document
ID 0187). Similarly, to date, OSHA has not adopted a specific timeframe
for regularly updating the HCS to implement GHS updates.
    As stated previously, OSHA is proposing to align the HCS with the
GHS Rev. 7, consistent with the actions of most of the countries listed
above (EC, 2019, Document ID 0176; Canada, 2019, Document ID 0172;
Australia, 2020, Document ID 0168; New Zealand, 2018, Document ID
0187). A more thorough explanation of OSHA's preliminary decision to
align the HCS with the GHS Rev. 7 is detailed in the introduction to
Section XV.
    OSHA requests public comment on whether the agency should adopt a
schedule for updates to the HCS standard (e.g., every four years or
every two revisions of the GHS) or wait until there are significant
changes to the GHS before initiating rulemaking. More frequently
updating the HCS to align with the GHS may provide greater protection
for workers and reduce uncertainty for manufacturers, distributors, and
employers. For example, in the GHS Rev. 7, several hazard classes have
been updated to include additional hazard sub-categories and improved
hazard information that will increase clarity and, therefore,
protections for workers.
    OSHA is interested in receiving public comment about the utility,
costs, or other issues that might be associated with regular updates
and about specific timeframes or criteria that OSHA should consider
when determining when and whether to update the HCS. Specifically,
would longer time periods between updates and realignment with the GHS
and other standards be more or less burdensome for employers,
especially those that operate

internationally? Would regular, shorter time periods provide more
stability? How would longer or shorter periods between realignment
affect worker protection?
Regulatory Text
    (1) Under paragraph (f), Labels and other forms of warning, OSHA is
proposing changes to paragraphs (f)(5) (bulk shipments) and (f)(11)
(released-for-shipment) and is also proposing to add a new paragraph
(f)(12) containing provisions specific to labelling on small
containers.
    (a) OSHA is requesting comments on the proposed additions to
paragraph (f)(5), which would be newly titled Transportation. Proposed
paragraph (f)(5)(ii) would provide that labels for bulk shipments may
be placed on the immediate container or may be transmitted with the
shipping papers or bills of lading or by other technological or
electronic means as long as the label is immediately available to
workers in printed form at the receiving end of the shipment. OSHA
requests comments on the usefulness and effectiveness of allowing these
alternate approaches for labeling bulk shipments.
    (b) OSHA is proposing to update paragraph (f)(11) to provide that
chemicals that have been released for shipment and are awaiting future
distribution need not be relabeled to incorporate new significant
information about hazards; however, the chemical manufacturer or
importer would still have to provide the updated label for each
individual container with each shipment. The purpose of this proposal
is to account for the long distribution cycles of some products and the
potential hazards workers could face in relabeling the immediate
containers of hazardous chemicals (e.g., chemical exposures, ergonomic
issues). OSHA requests comments on whether it is appropriate to use
``released for shipment'' as the cutoff point for relabeling
requirements, as opposed to, for example, the time of shipment. Would
the proposed provision reduce worker protections, considering OSHA is
also proposing to require that the updated label be sent with the
shipment? Would the proposed change result in any cost savings?
    (c) OSHA is proposing a new paragraph (f)(12) addressing labeling
requirements for small containers. All of the provisions in this
proposed paragraph would apply only where the chemical manufacturer,
importer, or distributor can demonstrate that it is not feasible to use
pull-out labels, fold-back labels, or tags containing the full label
information required by paragraph (f)(1). Paragraph (f)(12)(ii), as
proposed, would provide that labels for small containers less than or
equal to 100 ml capacity must include just the product identifier,
pictogram(s), signal word, chemical manufacturer's name and phone
number, and a statement that the full label information for the
hazardous chemical is provided on the immediate outer package. In
addition, proposed (f)(12)(iii) would eliminate labeling requirements
for small containers less than or equal to 3 ml capacity where the
manufacturer, importer, or distributor can demonstrate that any label
would interfere with the normal use of the container; in such cases,
however, the proposed revisions to the standard would require the
container to bear, at a minimum, the product identifier. For example,
the product identifier could be etched on a small glass vial. This
would ensure that each small container can be identified and linked
with the full label information on the immediate outer package. OSHA is
also proposing a provision at paragraph (f)(12)(iv), applicable to all
small containers covered by paragraph (f)(12)(ii) or (iii), providing
that the immediate outer package must include (1) the full label
information for each hazardous chemical in the immediate outer package;
and (2) a statement indicating that the small container(s) inside must
be stored in the immediate outer package (bearing the complete label)
when not in use. OSHA requests comments on the feasibility of, and any
cost savings associated with, these proposed provisions for the
labeling of small containers (both 100 ml and less and 3 ml and less).
The agency also requests information on whether the proposed labeling
requirements would be adequate to provide for safe handling and storage
of chemicals in small containers. In addition, OSHA is interested in
receiving comments on two specific alternatives to proposed paragraph
(f)(12). First, instead of adopting proposed paragraph (f)(12), should
OSHA simply allow for case-by-case exemptions if full labeling is not
feasible? Second, should the agency require a showing that a full label
would interfere with the normal use of the container before permitting
the use of abbreviated labels on containers with a capacity of 100 ml
and less (similar to the condition OSHA is proposing in paragraph
(f)(12)(iii) for containers with a capacity of 3 ml and less)? Please
provide reasons for your answers.
    (2) Under paragraph (g) Safety data sheets, OSHA is proposing a
change to paragraph (g)(10), which addresses the form and storage of
safety data sheets, to allow SDSs to be stored, rather than designed,
in a way that covers groups of hazardous chemicals in a work area. The
original term ``design'' was used when OSHA did not require a specific
format for material safety data sheets (MSDSs), but now that OSHA
requires SDSs to be in a standard 16-section format, the agency is
proposing to clarify that this paragraph refers to storage only. OSHA
requests comments regarding whether this proposed revision would
require significant changes to current practices.
    (3) Under paragraph (i), Trade secrets, OSHA is proposing two
significant changes.
    (a) First, OSHA is proposing to allow manufacturers, importers, and
employers to withhold a chemical's concentration range as a trade
secret.
    (b) Second, in proposed paragraphs (i)(1)(iv)(A) through (M), OSHA
is proposing the use of prescriptive concentration ranges in lieu of
the actual concentration or concentration range whenever the actual
concentration or concentration range is claimed as a trade secret; the
proposed ranges are the same as those required by Canada, a major
trading partner of the United States (Canada, 2019, Document ID 0172).
    OSHA currently does not permit manufacturers to claim concentration
ranges as trade secrets (Colau, 2017, Document ID 0098; Nelson, 2017,
Document ID 0099), and is requesting comments on its proposal to do so.
Specifically, the agency is interested in any experience stakeholders
have had with developing SDSs using the prescribed concentration ranges
and any concerns stakeholders have about using concentration ranges on
the SDS. The agency is also requesting comments addressing the adequacy
of hazard information provided by these ranges. Do these ranges provide
sufficient information for downstream manufacturers to conduct hazard
classifications? Are the ranges prescribed too wide to provide
sufficient information to protect workers (i.e., should they be
narrowed)? Notably, proposed paragraph (i)(1)(v) provides that the
prescribed concentration range used must be the narrowest range
possible. If the exact concentration range falls between 0.1% and 30%
(proposed paragraphs (i)(1)(iv)(A) through (G)) and does not fit
entirely into one of the prescribed concentration ranges, a single
range created by the combination of two applicable consecutive ranges
could be disclosed instead, provided that the combined concentration
range does not include any range that falls entirely outside the

exact concentration range in which the ingredient is present. OSHA
invites comments on whether it should allow combinations among all
ranges (i.e., all of the ranges (up to 100% concentration) listed in
proposed paragraphs (i)(1)(iv)(A) through (M)) or whether the rule
applicable to combining ranges should be even more restrictive (e.g.,
only for the ranges (up to 10% concentration) listed in proposed
paragraphs (i)(1)(iv)(A) through (E)). OSHA is also interested in
receiving comments on whether there are any economic implications
associated with including the prescribed concentration ranges.
Appendix B
    OSHA is proposing several substantive updates to appendix B (as
outlined in Section XV, Summary and Explanation). These include the
addition of a new hazard class (desensitized explosives) and several
new hazard categories (unstable gases and pyrophoric gases in the
Flammable Gases class and nonflammable aerosols in the Aerosols class).
OSHA has preliminarily determined that the addition of these specific
hazard classes and categories would better differentiate between the
hazards and better communicate hazards on labels for downstream users.
OSHA is requesting comments on whether these changes provide improved
safety through more targeted hazard statements, precautionary
statements and pictograms.
Appendix C
    OSHA has proposed numerous changes to appendix C, many of which are
editorial, clarifying, or organizational in nature and are designed to
clarify requirements for preparing labels. The agency is also proposing
some substantive changes to correspond to proposed changes to appendix
B or the regulatory text. In paragraph C.2.4.10, OSHA is proposing to
require prioritization of certain precautionary statements related to
medical response (see Section XV, Summary and Explanation, Appendix C,
Proposed Revisions to Table C.2.4.). The agency requests comments on
the particular system of prioritization specified in proposed C.2.4.10
and on whether the proposed prioritization provisions would improve
clarity on labels.
Appendix D
    Many of the issues related to changes proposed for appendix D are
discussed in the summary and explanation of the regulatory text (see
Section XV, Summary and Explanation, Regulatory Text), specifically in
the discussion of OSHA's proposed changes to paragraphs (c), (g), and
(i). OSHA requests comments on the following additional issues:
    OSHA is proposing changes to section 2 of the SDS to emphasize that