Eight hours for health and safety managers and logistics
personnel in the manufacturing sector.
     Two hours for each hazard communication program manager
not in the manufacturing sector.
    Employee training:
     One hour per production employee in most industries;
     30 minutes in occupations exposed to few hazardous
chemicals and types of hazards;
     10 minutes per employee in some occupations where GHS-type
pictograms are already in use.
Color Printing
     Category 1 establishments (those currently printing only
in black & white who do not own color printers): Large establishments
$0.02 per label, medium establishments $0.01 per label, small
establishments $0.13 per label, and very small establishments $0.14 per
label.
     Category 2 establishments (those currently printing only
in black & white but who own color printers): large establishments
$0.02 per label, medium establishments $0.01 per label, small
establishments $0.13 per label, and very small establishments $0.14 per
label.
     Category 3 establishments (those currently purchasing pre-
printed label stock): large establishments $0.03 per label, medium
establishments $0.03 per label, small and very small establishments
$0.03 per label.
     Category 4 establishments (those currently producing
labels printed in multiple colors): No additional costs related to this
provision.
Appendix to Section F: Total Non-Annualized Costs of Compliance
    Table VI-8 shows the total non-annualized (non-discounted)
compliance costs by industry and by cost element that are estimated to
be incurred during the four-year phase-in of the revisions. Except for
employee training and color printing, these estimates include no costs
for businesses already in compliance with the revisions.
    As shown in Table VI-8, the total cost of compliance with the
rulemaking over the course of the transition period of four years is
estimated to be about $2.1 billion. Of this amount, the cost of
chemical hazard reclassification and revision of SDSs and labels is an
estimated $281 million, the cost of training employees is an estimated
$1,118 million, the cost of management familiarization and other costs
such as updates to hazard communication programs is an estimated $692
million, and the one-time printer costs for companies needing to
upgrade printing technology to print labels in color is an estimated
$12 million.
    Table VI-9 summarizes OSHA's estimates for printing costs. It shows
annualized per-label costs by category and establishment size ranging
from $0.01 to $0.14 and total annualized costs by category and
establishment size. Total annualized costs include the cost of printers
annualized over five years and the cost of printing supplies incurred
over a 20-year period beginning four years after the rule is published.
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G. Net Benefits, Cost-Effectiveness, and Regulatory Alternatives

    Table VI-1 provides a summary of the costs and benefits of the
revisions to the OSHA HCS, and it shows the net benefits and cost-
effectiveness of the revisions to the standard. Net monetized benefits
are estimated to be $556 million annually, expressed in 2010 dollars
and using a 7 percent discount rate. (Using a 3 percent discount rate
instead would have the effect of lowering the costs to $161 million per
year and increasing the gross benefits to $839 million per year. The
result would be to increase net benefits from $556 million to $678
million per year.) The cost-effectiveness of the standard can be
expressed as more than three dollars of benefits for every dollar of
cost.
    Some qualitative evidence of the cost-effectiveness of the standard
was provided by comments submitted in response to the ANPR published by
OSHA in the Federal Register on September 12, 2006 (71 FR 53617) and
the Proposed Rule published by OSHA in the Federal Register on
September 30, 2009 (74 FR 50280). There was widespread support among
the commenters for the adoption of GHS in the United States (Document
ID 0340, 0344, 0347, 0349, 0351, 0354, 0357, 0359, 0366, 0382,
0390, 0403, 0408, and 0414). Many stakeholders anticipate that the
revisions to the HCS will ``achieve more effective hazard
communication'' (Document ID 0344 and 0351), ``enhance the
consistency and quality of hazard information for workers'' (Document
ID 0347), and ``serve to further enhance worker protection''
(Document ID 0329). These sentiments were echoed in many of
the comments submitted to the record and in much of the testimony
delivered at the public hearings. This voicing of support included
commenters who provided some of the largest estimates of the costs of
the revisions (Document ID 0032, 0050, 0329, 0338, and 0341).
    The available alternatives to the final rule are somewhat limited
since this rule modifies the current HCS in order to align with the
provisions of the UN's GHS. In Section III, the Agency qualitatively
discussed the two major alternatives presented during this rulemaking
process--(1) voluntary adoption of GHS within the existing HCS
framework and (2) a limited adoption of specific GHS components and a
variation on (1) that would require compliance with GHS but allow an
exemption for small businesses to comply with either the current HCS or
with the GHS-compliant HCS. All of these alternatives were soundly
rejected by stakeholders. To allow certain parties to follow an
alternative system or to allow voluntary adoption of the elements of a
uniformity standard does nothing to reduce confusion, improve
efficiency, or simplify processes. In order for those benefits to be
realized, all elements must apply to all affected parties. OSHA has
determined that both of the alternatives presented above would
eliminate significant portions of the benefits of the rule.
    OSHA did not attempt to evaluate the costs and benefits for the
regulatory alternatives that involved partial or voluntary adoption of
the GHS. The Agency did evaluate two alternatives where the effective
dates were altered. For both alternatives, OSHA re-estimated the costs,
benefits, and net benefits simply by adjusting the effective dates in
its formulas. The results are summarized in Table VI-10.
    In the first alternative considered, all elements of the revised
HCS would be required to be implemented within two

years. Under this alternative, all transitional costs would be incurred
in two years and benefits would be realized beginning in the third
year. OSHA estimated that annualized costs under this alternative would
increase by $5 million, from $201 million to $206 million, while
annualized benefits would increase by $166 million, from $757 million
to $923 million. Estimated net benefits would therefore increase by
$161 million, from $556 million to $717 million. However, OSHA believes
that these estimates fail to capture the difficulty many firms would
encounter in meeting these tighter enforcement dates. As a result,
initial compliance rates would probably be lower and less effective,
leading to reduced benefits. In addition, some compliance costs--such
as for labels and signs--were viewed in this final rule as incremental,
reflective of taking place within a normal replacement cycle of 3 to 5
years. With implementation required within two years, these costs could
no longer be treated as incremental to existing HCS requirements, but
would have to be recalculated as total replacement costs.
    The second alternative that OSHA evaluated extended the timeline
for training to be completed. For this alternative, all elements of the
revised HCS (including training) would be required to be implemented by
June 1, 2016. Under this alternative, training costs would not be
realized for four and a half years (as opposed to the two-year
requirement for training in the final version of this rule) while
benefits would not be realized for five years (unchanged from the final
rule). OSHA estimated that annualized costs under this second
alternative would decrease by $12 million, from $201 million to $189
million, while annualized benefits would be unchanged. Estimated net
benefits would therefore increase by $12 million, from $556 million to
$568 million. However, these estimates fail to recognize that workers
will be exposed to (some) GHS-compliant labels and SDS formats well
before the 4\1/2\ year training date. The Agency would therefore expect
an increase in injuries, illnesses, and fatalities as untrained workers
are unable to effectively process and respond to the revised labels and
SDS formats. As a result, benefits and net benefits would actually
decline relative to those estimated for the final rule.
    In summary, although both alternatives show greater net benefits,
the Agency concludes that the timing of the final rule is preferable
because of additional (but unquantified) compliance costs and reduced
(but unquantified) benefits under the first alternative and because of
reduced (but unquantified) worker health and safety benefits under the
second alternative. In addition, OSHA expects that the final rule
offers coordination benefits in that its requirements will fully take
effect at the same time as the EU completes its transition.

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H. Economic Feasibility and Impacts

    This section presents OSHA's analysis of the potential economic
impacts of the final rule and an assessment of economic feasibility. A
separate analysis of the potential economic impacts on small entities
(as defined in accordance with the criteria established by the Small
Business Administration) and on very small entities (those with fewer
than 20 employees) is presented in the following section as part of the
Final Regulatory Flexibility Screening Analysis, conducted in
accordance with the criteria laid out in the Regulatory Flexibility
Act.
    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) All costs are passed through to
customers in the form of higher prices (consistent with a price
elasticity of demand of zero), and (2) all costs are absorbed by the
firm in the form of reduced profits (consistent with an infinite price
elasticity of demand).
    In the former case, the immediate impact of the rule would be
observed in increased industry revenues. While there is no hard and
fast rule, 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, 2011, Chapter
VI). Of course, OSHA recognizes that even when costs are within this
range, there could be unusual circumstances requiring further analysis.
    In the latter case, 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.
Again, while there is no hard and fast rule, 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, 2011, Chapter VI).
    For this final rule, all hazardous chemicals distributed in the
United States have to be in compliance with the SDS and labeling
revisions to the HCS, and chemical producers and users in most advanced
economies will be under comparable GHS requirements (encompassing
training, etc.) specific to their own country or economic union. For
this reason, affected domestic establishments should not be susceptible
to foreign competitors not bound by the requirements of the revisions
to the HCS or similar GHS requirements. As a result, OSHA expects that
the costs of this final rule will be passed on in higher prices rather
than absorbed in lost profits, and therefore the Agency will tend to be
primarily concerned with the ratio of industry costs to industry
revenues rather than with the ratio of industry costs to industry
profits.
    In order to assess the nature and magnitude of the economic impacts
associated with compliance with the final 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 VI.F of this preamble were
compared with industry revenues and profits to provide a measure of
potential economic impacts. Although Section VI.G also contains
estimates of substantial productivity benefits arising from this final
rule that more than offset the estimated costs, these cost savings have
not been included in estimating the economic impacts of the final rule.
    Table VI-11 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.
    As is evident from the data and estimates presented in Table VI-6,
the costs of compliance for the final rule are not large in relation to
the corresponding revenues and profits in each of the industry sectors.
The estimated costs of compliance represent about 0.001 percent of
revenues and about 0.011 percent of profits on average across all
entities; compliance costs represent less than 0.09 percent of revenues
or, with the exception of three chemical manufacturing industries, less
than 0.9 percent of profits in any individual industry sector. These
three chemical manufacturing industries are NAICS 325181 Alkalies &
chlorine manufacturing, NAICS 325191 Gum & wood chemical manufacturing,
and NAICS 325992 Photographic film, paper, plate, & chemical
manufacturing, and their compliance costs as a percentage of profits
are 4.3 percent, 2.1 percent, and 2.4 percent, respectively. The cost
of printing labels in color is the main cost driver for these
industries.
    Based on the Agency's two screening tests to determine if the
economic impacts of the final rule exceed some minimum threshold level
(i.e., costs equal to one percent of revenue or ten percent of
profits), OSHA concludes that the rule is economically feasible for the
affected industries. In general, the courts have held that a standard
is economically feasible if there is a reasonable likelihood that the
estimated costs of compliance ``will not threaten the existence or
competitive structure of an industry, even if it does portend disaster
for some marginal firms'' (United Steelworkers of America v. Marshall,
647 F.2d 1189, 1272 (DC Cir. 1980)). The potential impacts of employer
costs associated with achieving compliance with the final rule fall
well within the bounds of economic feasibility in each industry sector.
OSHA does not expect compliance with the requirements of the final rule
to threaten the viability of employers or the competitive structure of
any of the affected industry sectors.
    The economic impact of the final rule is most likely to consist of
a very small increase in prices for affected hazardous chemicals, of
about 0.001 percent on average. Chemical manufacturing companies, all
of whom must incur the costs of compliance unless they are already
doing so, should be able to pass through costs to customers. The
additional costs of a one-time revision to SDS and labeling criteria
and one-time investments in printing technology are extremely small in
relation to the value of the corresponding products, and there are
generally no economic substitutes, or alternatives, that would not be
subject to the same requirements. It is unlikely that a price increase
of this magnitude would significantly alter the types or amounts of
goods and services demanded by the public or any other affected
customers or intermediaries. If the compliance costs of the final rule
can be substantially recouped with a minimal increase in prices, there
would be little or no effect on profits.
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    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 depend 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.
    In the case of cost increases that may be incurred due to the
requirements of the final rule, 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 standards, the elasticity
of demand for each entity will approach that faced by the industry as a
whole.
    Given the small increases in prices potentially resulting from
compliance with the final rule 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.
    OSHA expects the overall economic impact of the final rule to be
both an increase in the efficiency of production of goods and services
and an improvement in the welfare of society.
    First, as demonstrated by the analysis of costs and benefits
associated with compliance with the requirements of the final rule,
OSHA expects that societal welfare will increase as a result of the
revisions to the HCS, as the benefits far exceed compliance costs. The
final rule is estimated to yield net annualized benefits of over $800
million.
    Second, until now, many of the costs associated with the injuries,
illnesses, and fatalities resulting from the risks addressed by the
final rule have been externalized. For example, the costs incurred by
society to supply certain products and services that are accompanied by
injuries, illnesses, or fatalities from employee exposure to hazardous
chemicals have not been fully reflected in the prices of those products
and services. To the extent that fewer of these costs are externalized
because of improved employer and employee information about hazardous
chemicals in the workplace, the price mechanism will enable the market
to produce a more efficient allocation of resources. However,
reductions in externalities by themselves do not necessarily increase
efficiency or social welfare unless the costs of achieving the
reductions (including indirect and unintended consequences of
regulatory approaches) are outweighed by the associated benefits, as
they are in this instance.
    In addition, based on an analysis of the costs and economic impacts
associated with this rulemaking, OSHA concludes that the effects of the
final rule on employment, wages, and economic growth for the United
States would be negligible. This final rule is expected to result in
increased import and export opportunities with U.S. trading partners
due to the harmonization of the U.S. system with GHS. Hence, the
primary effect on international trade, for businesses of all size, is
likely to be favorable. This determination was supported by comment in
the rulemaking record. For example, the Society of Chemical
Manufacturers and Affiliates reported that companies that do business
globally would see benefits related to the revisions to the OSHA HCS
(Document ID 0402). Other stakeholders anticipate benefits
related to global harmonization (Document ID 0382, 0388, 0393,
and 0405) and mention that the standardization of the HCS will benefit
those who are involved in international trade (Document ID
0410).
Statement of Energy Effects
    As required by Executive Order 13211, and in accordance with the
guidance for implementing Executive Order 13211 and with the
definitions provided therein as prescribed by the Office of Management
and Budget (OMB), OSHA has analyzed the standard with regard to its
potential to have a significant adverse effect on the supply,
distribution, or use of energy.
    As a result of this analysis, OSHA has determined that this action
is not a significant energy action as defined by the relevant OMB
guidance.

I. Final Regulatory Flexibility Screening Analysis

    The Regulatory Flexibility Act (5 U.S.C. 601-612), as amended in
1996, requires the preparation of a Final Regulatory Flexibility
Analysis (FRFA) for rules where there would be a significant economic
impact on a substantial number of small firms. Under the provisions of
the law, each such analysis shall contain:
    1. A description of the impact of the rule on small entities;
    2. A statement of the need for, and objectives of, the rule;
    3. The response of the agency to any comments filed by the Chief
Counsel for Advocacy of the Small Business Administration in response
to the proposed rule, and a detailed statement of any change made to
the proposed rule in the final rule as a result of the comments;
    4. A statement of the significant issues raised by the public
comments in response to the initial regulatory flexibility analysis, a
statement of the assessment of the agency of such issues, and a
statement of any changes made in the proposed rule as a result of such
comments;
    5. A description of and an estimate of the number of small entities
to which the rule will apply or an explanation of why no such estimate
is available;
    6. A description of the projected reporting, recordkeeping and
other compliance requirements of the rule, including an estimate of the
classes of small entities which will be subject to the requirements and
the type of professional skills necessary for preparation of the report
or record; and
    7. A description of the steps the agency has taken to minimize the
significant economic impact on small entities consistent with the
stated objectives of the applicable statutes, including a statement of
the factual, policy, and legal reasons for selecting the alternative
adopted in the final rule and why each one of the other significant
alternatives to the rule considered by the agency which affect the
impact on small entities was rejected.
    The Regulatory Flexibility Act further states that the required
elements of the FRFA may be performed in conjunction with or as part of
any other agenda or analysis required by any other law if such other
analysis satisfies the relevant provisions (5 U.S.C. 605(a)).
    As explained below, OSHA believes that the final rule will not have
a significant economic impact on a substantial number of small
entities, and therefore a FRFA is not required by the Regulatory
Flexibility Act. Nonetheless, OSHA has prepared this voluntary FRFA to
assure the regulated community that the agency has considered the
impacts of the final rule on small entities. While a full understanding
of OSHA's analysis and conclusions with respect to costs and economic
impacts on small businesses requires a reading of the complete FEA

and its supporting materials, this voluntary FRFA will summarize the
key aspects of OSHA's analysis as they affect small businesses.

1. A Description of the Impact of the Final Rule on Small Entities

    The final regulation requires classification of chemicals,
especially chemical mixtures, somewhat different from current hazard
determination methods; a standardized format for the organization of
MSDSs (now called SDSs); standardized labels and standardized
pictograms; and training for affected employees on these changes. (Some
commenters argued that GHS would also impose more stringent testing
requirements, but as explained in Section III: Need and Support in this
preamble, the HCS does not currently require testing of chemicals, and
will not require testing with adoption of the GHS.\30\)
---------------------------------------------------------------------------

    \30\ OSHA's estimation methodology assumes that firms will
undertake the most cost effective method of complying with an OSHA
requirement. Therefore, if firms choose to perform testing or to
incur other costs not required by an OSHA rule they do so only
because they feel there is some benefit to be gained.
---------------------------------------------------------------------------

    For the purpose of its cost analysis, OSHA estimated four types of
cost:
    (1) Costs to chemical producers of classifying chemicals,
reformatting SDSs, and developing new labels;
    (2) Costs for safety and health managers and logistics personnel to
familiarize themselves with the standard (although not required by the
regulation, this is a necessary step in its implementation);
    (3) Costs of training affected employees on how to find the
information they need on SDSs and to comprehend pictograms and standard
labels; and
    (4) Costs to upgrade printing technology or purchase multi-colored
labels to comply with the requirement that the pictograms be presented
in a red-bordered diamond.
    OSHA believes that, with the exception of the cost of color
printing ink or printing cartridges or the cost of purchasing color
pre-printed labels, these costs are a one-time cost that would be
incurred during the four-year transition period after the final rule is
published. OSHA anticipates that, once the final rule is implemented,
the costs under the revised OSHA HCS will be only marginally higher
than the costs under the existing HCS system and consist solely of the
costs associated with color printing supplies. Once chemical producers,
distributors, and users set up for and shift to the GHS system, OSHA
expects there will be no additional costs arising from the final rule
for classification, SDSs, and labeling.
    OSHA also anticipates that, after the four-year transition period,
the revisions to the HCS--resulting in more consistent chemical
classifications and more uniform SDSs and labels--will yield production
efficiencies for health and safety managers, logistics personnel, and
others who handle hazardous chemicals. These cost savings (in addition
to the health benefits for affected workers arising from this final
rule) are considered in Section VI.D: Benefits in this preamble.
    OSHA's criteria for determining whether there are significant
economic impacts on a substantial number of small firms are that, for
small entities in any given industry, the annualized costs exceed 1
percent of revenues or 5 percent of profits. All of OSHA's calculations
of the economic impacts on small firms totally ignore any offsetting
benefits of any kind, even though OSHA estimates that, for most small
firms, the benefits of this rule will actually exceed the costs.
    OSHA's industry-by-industry analysis, both for small firms (as
defined by SBA) and for very small firms (defined by OSHA as those with
fewer than 20 employees), shows that in no industry size class do the
annualized costs exceed 0.28 percent of revenues or 3.3 percent of
profits, and in almost all cases the annualized costs for small and
very small firms are below 0.01 percent of revenues and 0.1 percent of
profits. For affected small firms as defined by SBA, the average
annualized cost per firm of the final rule would be $52 per year, which
is equal to 0.001 percent of annual revenue and 0.03 percent of annual
profit for the average firm. In terms of chemical-producing industries
only, the average annualized cost per small firm as defined by SBA
would be $544 per year, which is equal to 0.004 percent of annual
revenue and 0.03 percent of annual profit for such a firm. For affected
firms with fewer than 20 employees, the average annualized cost per
firm of the final rule would be $35 per year (or 0.002 percent of
annual revenue and 0.04 percent of annual profit), and the average
annualized cost per firm that produces chemicals would be $255 per year
(or 0.02 percent of annual revenue and 0.2 percent of annual profit).
    Given these results, OSHA concludes that the final rule will not
have a significant economic impact on a substantial number of small
entities. Thus, a FRFA is not required for this rulemaking. However,
recognizing the possible value that such an analysis may provide, OSHA
has voluntarily included the elements of the FRFA as part of this
Regulatory Flexibility Analysis (RFA) and has analyzed the potential
impact of the revisions to OSHA's HCS on small entities. As described
in Section VI.D Benefits in this preamble, the revisions to the HCS, on
the whole, are expected to result in significant net benefits to
employers, as the associated cost savings outweigh the corresponding
compliance costs. This same conclusion generally applies to the small
entities affected by the final rule.
    In order to ensure that any potential significant adverse impact on
a substantial number of small entities would be appropriately
considered, OSHA also specifically evaluated the impact on small
entities of the costs of compliance alone, without regard to the
associated cost savings and health and safety benefits.
    The total annualized cost of compliance with the final rule for
small entities is estimated to be approximately $119 million, as shown
by industry in Table VI-12.
    To assess the potential economic impact of the final rule on small
entities, OSHA calculated the ratios of compliance costs to profits and
to revenues. These ratios are presented for each affected industry in
Table VI-12. OSHA expects that among small entities potentially
affected by the final rule, the average increase in prices necessary to
completely offset the compliance costs would be 0.0013 percent. The
average price increase necessary to completely offset compliance costs
would not exceed 0.18 percent among small entities in any single
affected industry sector.
    In the event that no costs could be passed through, the compliance
costs could be completely absorbed through an average reduction in
profits of less than 0.03 percent for affected small entities. For
small entities in most affected industries, the compliance costs could
be completely absorbed through an average reduction in profits of less
than 0.3 percent; the reduction in profits would be no more than 3.3
percent among small entities in any of the affected industries.
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    To further evaluate the potential for any adverse effects on small
entities resulting from the final rule, OSHA assessed the short-term
impacts that may be associated with the compliance costs during the
transition period.
    The total non-annualized compliance costs for small entities during
the four-year transition period are estimated to be $1,330 million, or
about $333 million per year for four years. Thus, the potential
temporary impact would be about 0.004 percent of revenues or about 0.07
percent of profits, on average, per year for four years for affected
small entities.
    In order to further ensure that potential impacts on small entities
were fully analyzed and considered, OSHA also separately examined the
potential impacts of the final rule on very small entities, defined as
those with fewer than 20 employees. As shown in Table VI-13, the total
annualized costs for entities in this size class would be an estimated
$67 million. The annualized costs represent about 0.002 percent of
revenues and 0.04 percent of profits, on average, for affected very
small entities. The annualized costs did not exceed 0.3 percent of
revenues or 3.3 percent of profits for very small entities in any
affected industry.
    The total non-annualized compliance costs for very small entities
during the four-year transition period are estimated to be $789
million, or about $197 million per year for four years. Thus, the
potential temporary impact on very small entities would be about 0.005
percent of revenues or 0.1 percent of profits, on average, per year for
four years.
    In order to more carefully focus on the industry sectors most
likely to have significant economic impacts, OSHA carefully examined
those industries in the chemical manufacturing and petroleum and coal
products manufacturing sectors (``chemical and petroleum producers'')
that produce chemicals and SDSs. OSHA examined the extent to which
these firms might have significant economic impacts if they produced an
unusually high number of chemical products requiring SDSs.
    To examine this issue, OSHA examined all small chemical and
petroleum producers with respect to their costs as a percentage of
revenues and profits. Using the same cost estimation methods as the
base analysis, OSHA estimated how many separate chemical products a
small firm would have to produce for its annualized costs of compliance
with the final rule to exceed 5 percent of profits. OSHA found that the
firm would have to produce 7,065 distinct chemical products, each
requiring its own SDS. OSHA thinks it very unlikely that there are
substantial numbers of small firms (with an average of 27 employees)
that produce 7,065 or more distinct chemical products. Swedish data
show that less than 0.1 percent of all firms (including large firms) in
Sweden produce more than 500 distinct chemical products. (Swedish
Chemical Agency, http://www.kemi.se/templates/Page____2859.aspx)
    OSHA conducted a similar analysis for very small firms with fewer
than twenty employees. This analysis found that such firms, with an
average of 4.7 employees, would need to produce more than 310 distinct
chemical products for costs to exceed 5 percent of profits. OSHA
estimates that this would be a very rare situation.
    Further, even if small firms could be found that produce more than
7,065 chemical products and very small firms that produce more than 310
chemical products, the costs would probably be much lower than OSHA
estimates. First, firms producing this many distinct products probably
would not produce SDSs and labels without the assistance of specialized
computer software, which OSHA assumes most small firms do not use, but
would instead invest in appropriate software to lower their costs, as
most larger firms do. Second, firms producing large numbers of chemical
products commonly do so because they sell a variety of different
mixtures with similar ingredients. Once appropriate data for the
ingredients of these mixtures had been developed, using the bridging
principles outlined in Appendix A of this preamble, small firms
developing SDSs and labels for each mixture would take far less than
the 7 hours per chemical product that OSHA has estimated for small
firms to convert to the GHS system.
    OSHA therefore concludes that there are not a substantial number of
small entities or very small entities that would have significant
economic impacts from this rule as a result of producing a very large
number of distinct chemical products.
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2. A Statement of the Need for, and Objectives of, the Rule

    OSHA's HCS was first adopted in 1983 for manufacturing (48 FR
53280, Nov. 25, 1983). Later the Agency expanded the scope of coverage
to include all industries where employees are potentially exposed to
hazardous chemicals (52 FR 31852, Aug. 24, 1987).
    The HCS requires chemical manufacturers and importers to evaluate
the hazards of the chemicals they produce or import. The current rule
provides definitions of health and physical hazards to use as the
criteria for determining hazards in the evaluation process. Information
about chemical hazards and appropriate protective measures is then
required to be conveyed to downstream employers and employees by
putting labels on containers and preparing and distributing safety data
sheets. All employers with hazardous chemicals in their workplaces are
required to have a hazard communication program, including container
labels, safety data sheets, and employee training.
    Ensuring that this information is available in workplaces helps
employers design and implement appropriate controls for chemical
exposures, provides employees the knowledge of the hazards and
identities of the chemicals, and gives employees the opportunity to
participate actively in the successful control of exposures. Together
employers and employees can use this information to reduce the
potential for adverse effects to occur. The information transmitted
under the HCS requirements provides the foundation upon which a
workplace chemical safety and health program is built. Without this
information, appropriate controls could not be identified and
implemented.
    OSHA's HCS is designed to disseminate information on chemicals,
which will precipitate changes in handling methods and thus protect
those potentially exposed to the chemical from experiencing adverse
effects. To protect employees and members of the public who are
potentially exposed to chemicals during their production,
transportation, use, and disposal, a number of countries have developed
laws that require information about those chemicals to be prepared and
transmitted to affected parties. These laws vary with regard to the
scope of chemicals covered, definitions of hazards, the specificity of
requirements (e.g., specification of a format for safety data sheets),
and the use of symbols and pictograms. The inconsistencies between the
various laws are substantial enough that different labels and safety
data sheets must often be used for the same product when it is marketed
in different nations. For example, Canada has established requirements
for labels under its Workplace Hazardous Materials Information System
(WHMIS). WHMIS requires that labels include specified symbols within a
defined circle. U.S. chemical manufacturers must label their chemicals
accordingly for marketing in Canada.
    Development of multiple sets of labels and safety data sheets for
each product shipped to different countries is a major compliance
burden for chemical manufacturers, distributors, and transporters
involved in international trade. Small businesses may have particular
difficulty in coping with the complexities and costs involved, and it
has been argued that these differing requirements may be a technical
(non-tariff) barrier to trade.
    These concerns led, in June 1992, to a mandate from the United
Nations Conference on Environment and Development (UNCED)(Chapter 19 of
Agenda 21), supported by the U.S., calling for development of a
globally harmonized chemical classification and labeling system. The
negotiations were extensive and spanned a number of years. The product
resulting from this effort, the Globally Harmonized System of
Classification and Labeling of Chemicals, was formally adopted by the
new United Nations Committee of Experts on the Transport of Dangerous
Goods and the Globally Harmonized System of Classification and
Labelling of Chemicals in December 2002.
    The final rule incorporates the GHS's requirements into the HCS.
They require chemical manufacturers to apply new hazard classification
criteria to their chemicals and to prepare and distribute new labels
and safety data sheets. Further, these SDSs and labels will be
standardized in a way that they are not under the existing HCS. OSHA's
current performance-based approach to SDSs and labeling can create
confusion among those who seek to use hazard information effectively.
For example, labels and safety data sheets may include symbols and
hazard statements that are unfamiliar to readers or not well
understood. This lack of standardization and the absence of pictograms
are particularly a problem for U.S. workers not literate in English.
Containers may be labeled with such a large volume of information that
important statements are not easily recognized.
    OSHA believes that adoption of these new requirements will benefit
employers and enhance employee safety. Employers who use chemicals and
employees exposed to those chemicals will benefit from receiving the
revised labels and safety data sheets prepared in a consistent format.
OSHA believes that the information will be easier to comprehend and
access in the new approach, allowing it to be used more effectively for
the protection of employees. The primary effect in workplaces where
chemicals are used but not produced will be to integrate the new
approach into the workplace hazard communication program, including
ensuring that both employers and employees understand the pictograms
and other information provided on the chemicals' labels and SDSs.
    OSHA believes that adoption of the GHS will improve labels and SDS
comprehensibility through implementation of a uniform approach. The
current regulatory system includes a performance-oriented approach to
labels and SDSs, allowing the producers to use whatever language or
format they choose to provide the necessary information. This result in
a lack of consistency makes it difficult for users of chemicals to
properly identify their hazards and recommended protective measures,
particularly when purchasing the same product from multiple suppliers.
Having the information provided in the same words and pictograms on
labels, as well as having a standardized order of information on SDSs,
will help all users, including employers, employees, and emergency
responders, to more easily identify the critical information necessary
to protect employees.
    In addition, OSHA believes that American employees and employers
will receive benefits from the international adoption of GHS.
Development of the GHS system required extensive work by a great number
of people and resources from many countries and organizations. The
reason it received such support is the belief that there are
significant benefits associated with implementation of a globally
harmonized approach to hazard communication. Countries, international
organizations, chemical producers, users of chemicals, and employees
working with chemicals would all benefit. There are at least four
reasons to expect that GHS will be adopted globally.
    First and foremost, the GHS modifications of the HCS will enhance
protection of workers and the environment. Occupationally related
injuries, illnesses, and fatalities remain a serious problem in the
U.S. For example, although likely to contain very

significant underreporting, data from the Bureau of Labor Statistics
indicate that, in 2007, employees suffered an estimated 55,400
illnesses attributable to chemical exposures (BLS, 2008), and that some
17,340 chemical-source injuries and illnesses involved days away from
work (BLS, 2009). As shown in this FEA, the adoption of the revisions
to OSHA's HCS is expected to result in a significant reduction in
injuries, illnesses, and fatalities among U.S. employees exposed to
hazardous chemicals. In addition, while some countries, such as ours,
already have the benefits of protection under existing systems, many do
not have such comprehensive approaches. Thus, implementation of the GHS
would provide these countries with the important protections that
result from dissemination of information about chemical hazards and
protective measures. The U.S. expects to improve and build on worker
protections it already has.
    Second, OSHA believes that the final rule will facilitate
international trade in chemicals. It will reduce the burdens caused by
having to comply with differing requirements for the same product and
facilitate small business participation in international trade.
    Third, one of the initial reasons this system was pursued
internationally involved concerns about animal welfare and the
proliferation of requirements for animal testing and evaluation.
Existing systems with different definitions of hazards often result in
duplicative testing to produce data related to the varying cut-offs in
the different systems. Having one agreed definition will reduce the
need for this duplicative testing. It should be noted, however, that
OSHA's HCS has never had testing requirements. The HCS is based on
collecting and evaluating the best available existing evidence on the
hazards of each chemical.
    Fourth, information transmittal systems provide the underlying
infrastructure for the sound management of chemicals in a country.
Those countries that do not have the resources to develop and maintain
such a system can use the GHS to build their chemical safety and health
programs. Since it has been developed, and will be maintained, through
an international approach, national resources used to achieve chemical
safety and health can be streamlined. Unlike some other issues, a
country's approach to the sound management of chemicals definitely
affects others countries. In some cases, bordering countries may
experience their neighbors' pollution and other effects of uncontrolled
chemical exposures. In all countries, there is a need to acquire
sufficient information to properly handle chemicals when they are
imported from other countries. Thus having a coordinated and harmonized
approach to the development and dissemination of information about
chemicals would be mutually beneficial to importing and exporting
countries.
    In the U.S., there are four primary regulatory agencies that
exercise jurisdiction over chemical hazard communication: OSHA; the
Department of Transportation, which regulates chemicals in transport;
the Consumer Product Safety Commission, which regulates consumer
products; and the Environmental Protection Agency, which regulates
pesticides and has other labeling authority under the Toxic Substances
Control Act. These agencies are not domestically harmonized in terms of
definitions of hazards and other requirements. If all four agencies
adopt the GHS, the U.S. will have the additional benefit of harmonizing
the overall U.S. approach to classification and labeling. Since most
chemicals are produced in a workplace and shipped elsewhere, many
employers deal with at least two sets of federal requirements. Thus
these employers would be likely to obtain some benefits from domestic
harmonization.
    OSHA has made a determination that the revisions to the HCS will
improve the quality and consistency of information provided to
employers and employees regarding chemical hazards and associated
protective measures. The Agency anticipates this improved information
will enhance the effectiveness of the HCS in ensuring that employees
are apprised of the chemical hazards to which they are exposed, and in
reducing the incidence of chemical-related occupational illnesses and
injuries. OSHA estimates that (1) savings in benefits from improved
employee health and safety exceed the costs of the final rule, and (2)
cost savings to chemical users exceed the costs of the final rule.
    An additional and more complete discussion of the reasons why this
standard is being promulgated by the Agency is provided in other
sections of this preamble.
    The primary objective of aligning the HCS with the GHS is to
achieve the benefits of the OSHA HCS in a more comprehensive,
efficient, and effective manner. The revisions are expected to provide
an increased degree of occupational safety and health for employees
potentially exposed to hazardous chemicals in the workplace and to
provide updated, clear, and comprehensive standards regarding the
classification of chemical hazards and the manner in which relevant
information about chemical hazards is disseminated to affected
employees.
    The intent of the HCS is to ensure that all chemical hazards are
properly evaluated and that information concerning chemical hazards and
associated protective measures is transmitted to employers and
employees. The standard achieves this goal by requiring chemical
manufacturers and importers to review available scientific evidence
concerning the physical and health effects of the chemicals they
produce or import to determine if they are hazardous.
    For every chemical found to be hazardous, the chemical manufacturer
or importer must develop a container label and an SDS and provide both
to downstream users of the chemical. All employers with employees
exposed to hazardous chemicals must develop a hazard communication
program and ensure that exposed employees are provided with labels,
access to SDSs, and training on the hazardous chemicals in their
workplace.
    The three information components in this system--labels, SDSs, and
employee training--are all essential to the effective functioning of
the program. Labels provide a brief, conspicuous summary of hazard
information at the site where the chemical is used. SDSs provide
detailed technical information and serve as a reference source for
exposed employees, industrial hygienists, safety professionals,
emergency responders, health care professionals, and other interested
parties. Training is designed to ensure that employees understand the
chemical hazards in their workplace and are aware of recommended
protective measures. Labels, SDSs, and training are complementary parts
of a comprehensive hazard communication program--each element
reinforces the knowledge necessary for effective protection of
employees.
    Information provided in accordance with the HCS serves to reduce
the incidence of chemical-related illnesses and injuries in the
workplace. This is accomplished by modifying the behavior of both
employers and employees. For example, the information contained in the
HCS enables employers to implement protective measures in the
workplace. Employers will also have information to choose less
hazardous alternatives or select appropriate engineering controls, work
practices, and personal protective equipment. Improved understanding of
chemical hazards by supervisory

personnel results in safer handling of hazardous substances, as well as
proper storage and housekeeping measures.
    Employees provided with information and training on chemical
hazards are able to fully participate in the protective measures
instituted in their workplaces. Knowledgeable employees can take the
steps required to work safely with chemicals in their workplace and are
able to determine what actions are necessary if an emergency occurs.
Information on chronic effects of exposure to hazardous chemicals helps
employees recognize signs and symptoms of chronic disease and seek
early treatment. Information provided under the HCS also enables health
and safety professionals to provide better services to exposed
employees. Medical surveillance, exposure monitoring, and other
services are enhanced by the ready availability of health and safety
information.
    OSHA believes that the comprehensive approach adopted in the HCS,
which includes requiring evaluation of chemicals and the transmittal of
information through labels, SDSs, and training, is sound. This final
rule does not alter that approach. Rather, the final rule is intended
to improve the effectiveness of the HCS by enhancing the quality and
consistency of the information provided to employers and employees.
OSHA believes this can be accomplished by revising the requirements of
the standard to conform to the more specific and detailed provisions of
the GHS for classification, labeling, and SDSs.
    3. The response of the agency to any comments filed by the chief
counsel for advocacy of the small business administration in response
to the proposed rule, and a detailed statement of any change made to
the proposed rule in the final rule as a result of the comments.
    The Office of Advocacy in the SBA did not submit any comments to
OSHA in response to the proposed rule.
    4. A statement of the significant issues raised by the public
comments in response to the initial regulatory flexibility analysis, a
statement of the assessment of the agency of such issues, and a
statement of any changes made in the proposed rule as a result of such
comments.
    OSHA received numerous comments in the record about the impact of
this rulemaking on small entities. There were concerns about OSHA's
preliminary cost estimates and concerns that this rule would have a
substantial impact on small manufacturers. OSHA carefully evaluated
these concerns and has addressed them below as well as in Section VI.F:
Costs of Compliance in this preamble.
    Some stakeholders felt that OSHA should convene a Small Business
Regulatory Enforcement Fairness Act (SBREFA) panel for this rulemaking
(Document ID 0361, 0372, 0397, 0407, and 0411). OSHA evaluated
this rule under the provisions of the Regulatory Flexibility Act, which
requires that OSHA hold a SBREFA (or SBAR--Small Business Advocacy
Review) panel when a rule is expected to have a significant impact on a
substantial number of small entities. The modifications to the hazard
communication standard do affect a substantial number of small
entities, but the costs per firm do not rise to the level where they
would impose a significant economic impact on a substantial number of
small entities. OSHA defines a significant economic impact on small
entities as costs that exceed one percent of revenues or five percent
of profits for small entities in any affected industry. The Regulatory
Flexibility Act does not define the term ``significant economic
impact.'' Instead, as noted in the RFA's legislative history, Congress
suggested that agencies refer to SBA guidelines for measuring the
impact of rules on small businesses. See 126 Cong. Rec. S10,942 (Aug.
6, 1980). In relevant guidance, the SBA's Office of Advocacy states
that the impact of a regulation ``could be significant if the cost of
the proposed regulation (a) eliminates more than 10 percent of the
businesses' profits; (b) exceeds 1 percent of the gross revenues of the
entities in a particular sector or (c) exceeds 5 percent of the labor
costs of the entities in the sector.'' See ``A Guide for Government
Agencies: How to Comply with the Regulatory Flexibility Act'' (http://archive.sba.gov/advo/laws/rfaguide.pdf). Notably, OSHA's threshold of 5
percent of profits is significantly more protective of small businesses
than the Office of Advocacy's suggested threshold of 10 percent.
    OSHA's two thresholds have long been a part of the Agency's
published SBREFA procedures (See http://www.dol.gov/dol/regs/appendix.htm, prepared pursuant to Section 212 of the SBREFA) and were
originally developed in close cooperation with the Office of Advocacy
(See SBA Office of Advocacy, 2003, p. 18).
    Furthermore, in employing a dual threshold, based on either revenue
or profit impacts, OSHA has taken special pains to identify potentially
significant impacts on small entities.\31\
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    \31\ By comparison, many other agencies, such as EPA and the
Department of Homeland Security, rely only on revenue impacts. See
also Aeronautical Repair Station Ass'n, Inc. v. F.A.A., 494 F.3d
161, 175 (D.C. Cir. 2007). (Federal Aviation Administration made
determination that proposed regulation would not have significant
economic impact on substantial number of small entities based on its
calculation of annualized costs of less than 1 percent of annual
median revenue); Washington v. Daley, 173 F.3d 1158, 1171 (9th Cir.
1999) (parties agreed that economic impact of Department of Commerce
regulation would be considered significant if regulation resulted in
more than 5 percent reduction in annual gross revenues). It should
also be noted that, in OSHA's experience, the 5-percent
profitability threshold is much more likely than the 1-percent
revenue threshold to trigger a significant impact on a substantial
number of small entities. This is supported by the fact that, with
profit rates in the United States equal to approximately 6 percent
of revenues (as it is, on average, for all firms affected by this
final rule), for a firm with profits of 6 percent of revenues, 5
percent of profits will be approximately equivalent to 0.3 percent
of revenues.
---------------------------------------------------------------------------

    While this rule will be costly in the aggregate, it is not
aggregate costs but the significance of impacts on small entities that
triggers the need for a SBREFA panel. No panel was or is needed for
this rulemaking because costs per small entity do not meet the
threshold that OSHA uses to define a significant economic impact on a
substantial number of small entities.
    Stakeholders also expressed concerns that costs were underestimated
and that costs to small entities would be considerable. The U.S.
Chamber of Commerce asserted that ``the imposition of a completely new
system of classification of chemicals represents huge burdens on small
employers with significant costs'' (Document ID 0397). OSHA
acknowledges that there will be transitional costs for small businesses
but feels that the additional transition time OSHA has incorporated
into the final rule and discussed in more detail elsewhere in the FEA,
combined with OSHA compliance assistance and the fact that many firms
have already made the transition to GHS, should allow small employers
to adopt the GHS criteria without overwhelming challenges. The U.S.
Chamber of Commerce did not provide additional details, which were
solicited as part of both the ANPR and the NPRM, on what types of costs
small businesses would incur or the possible magnitude of those costs.
Without detailed estimates, OSHA cannot fully evaluate alternative
costs for small businesses; nor can OSHA adopt alternative cost
estimates without persuasive evidence in the record.
    Wacker Chemical Company felt that the changes to the HCS would have
a large impact on small businesses ``result[ing] from the lack of
personnel and financial resources to implement changes of this
magnitude which may involve reclassification of the companies'
products, reauthoring SDSs

and labels, and training personnel'' (Document ID 0335), and
IBM Corporation expressed concern that small businesses ``may not have
the technical resources and skill to generate safety data sheets for [*
* *] mixtures'' (Document ID 0334). The Agency believes that
small firms have the expertise to make the hazard determinations and
meet the other transitional requirements of the revised HCS and, other
than comments on the possibility of technical expertise being an issue
for small firms asserted by a few firms who do not qualify as small,
OSHA did not receive solid evidence that a lack of technical expertise
among small firms would actually be a significant issue. Chemical
manufacturers and users have been able to comply with the current HCS,
and manufacturers have been able to make the classification
determinations and label their products in the appropriate manner. In
addition, some small firms are likely already complying with the
requirements of GHS in order to facilitate international trade. The
revised HCS will not be considerably more technical or require
considerably more expertise in order to comply than the current HCS.
There is also no evidence, from the experiences of firms in the EU or
in Asian markets where the GHS criteria for classification of
chemicals, label elements, and SDS formats have already been adopted
into practice, that small firms are not able to comply due to either
overwhelming costs or to a lack of technical expertise required to make
the changes.
    Many comments expressed general concern that OSHA underestimated
the compliance burden on small businesses (Document ID 0336,
0372, 0397, and 0407), and OSHA has increased some costs (for instance,
doubling the time required for training) in response to these comments.
The comments, while appreciated and insightful, did not contain the
level of detail that OSHA would need in order to make a case for
changing many of the estimates in the PEA. For the most part, comments
received on the issue of costs to and impacts on small businesses
simply stated that (in general) costs to small businesses were
understated in the PEA or asserted that impacts would be significant
without providing data to support alternative estimates. In order to
assess the impacts on the cost effectiveness of this standard of
possible underestimation of cost parameters, the Agency has included a
sensitivity analysis in Section VI.L: Sensitivity Analysis in this
preamble. Additional concerns about costs that are not specific to
small businesses are addressed further in Section VI.F: Costs of
Compliance in this preamble.
    Many commenters, including some who voiced concerns about costs,
did not support a voluntary adoption approach or any other exemption or
modified system for small businesses (Document ID 0324, 0327,
0328, 0329, 0335, 0338, 0351, 0352, 0370, 0376, 0377, 0381, 0382, 0393,
and 0410). DuPont felt that dual systems would ``undermine the goal of
harmonization [* * * and] be very confusing for employees'' (Document
ID 0329). Ferro Corporation expressed the view that ``failure
to implement [the requirements of the rule] across-the-board will cause
confusion; negate main benefits; and potentially be less protective''
(Document ID 0363).
    Many of the commenters who addressed small business issues felt
that the benefits to small businesses would be negligible (Document ID
0372, 0378, 0385, 0396, 0397, 0400, 0402, and 0407).
Commenters who viewed the primary benefits of adopting the GHS as
facilitating international trade were likely to favor an alternative of
less than full compliance with GHS. As has been addressed throughout
the FEA, however, OSHA's estimates of the benefits of this final rule
reflect fewer worker injuries and illnesses, efficiency improvements in
the safe handling of hazardous chemicals, and less costly and more
effective hazard communication training of new workers. While OSHA
recognizes the significant potential trade benefits of this final rule,
the Agency did not quantify or monetize these benefits.
    In response to numerous comments received in the record, OSHA has
extended the phase-in period for this rulemaking and aligned the phase-
in of this rule to correspond to the EU's deadline for classification
of mixtures. Some of these comments asserted that more time would be
especially beneficial to small businesses, reducing the compliance
burden significantly (Document ID 0399, 0405, and 0408). For
example, the National Association of Chemical Distributors suggested a
timeline of 3 years plus 18 months for distributors and downstream
users (Document ID 0341). The effective dates in the final
rule take these (and other suggestions) into account and provide
substantial additional time for implementation. Where the proposal
required all labels and SDSs to be in compliance with the new
requirements in three years after publication (or August 2014), the
final rule requires manufacturers and importers to modify labels and
SDSs by June 1, 2015. The final rule also gives distributors an
additional six months, until December 1, 2015, to sell stock labeled
under the current standard. In addition, employers are given another
six months, until June 1, 2016, to update their training and their
hazard communication program with any new hazard information received
because of the final rule. Finally, the proposal required that exposed
employees receive initial training two years after adoption (or August
2013), whereas the final rule gives employers until December 1, 2013 to
complete this training.
    5. Description of and estimate of the number of small entities to
which the rule will apply.
    OSHA has completed an analysis of the economic impacts associated
with this final rule, including an analysis of the type and number of
small entities to which the final rule applies. In order to determine
the number of small entities potentially affected by this rulemaking,
OSHA used the definitions of small entities developed by the Small
Business Administration (SBA) for each industry.
    The final standard impacts firms that are the primary producers or
distributors of hazardous chemicals, and firms whose employees are
exposed to hazardous chemicals. Based on the definitions of small
entities developed by SBA for each industry, the final rule is
estimated to potentially affect a total of 4,093,543 small entities, as
shown in Table VI-12. The rule has its greatest impacts on the 72,040
small firms that produce chemicals that require SDSs and labels.
    6. Description of the projected reporting, recordkeeping, and other
compliance requirements of the rule.
    The final standard includes revised criteria for classification of
chemical hazards; revised labeling provisions that include requirements
for use of standardized signal words, pictograms, and hazard
statements; a specified format for safety data sheets; and related
revisions to definitions of terms used in the standard, employee
information and training requirements, and other sections of HCS. The
final rule also modifies other OSHA standards that contain hazard
communication requirements to harmonize them with the requirements of
GHS. In addition, certain OSHA standards use HCS terms, and OSHA is
making changes to ensure that the scope of those standards is not
changed by the GHS revisions.
    The preamble to the final standard provides a comprehensive
description of, and further detail regarding, the compliance
requirements of the rulemaking. A description of the types

of entities which would be subject to the new and revised requirements,
and the types of professional skills necessary for compliance with the
requirements, is presented in the relevant sections of this economic
analysis and the corresponding supporting research, and is summarized
below with a summary of unit costs. Except for employee training and
color printing, these costs would apply only to those small businesses
not already in compliance with the revisions.
    Reclassifying chemicals and modifying SDSs and labels:
     Medium establishments (100-499 employees): An average of 5
hours per SDS; in addition, for 25 percent of establishments, an
average of $208 per SDS for software modifications.
     Small establishments (1-99 employees): An average of 7
hours per SDS. Management familiarization and other costs:
     Eight hours for health and safety managers and logistics
personnel in the manufacturing sector;
     Two hours for each hazard communication program manager
not in the manufacturing sector.
    Employee training:
     One hour per production employee in most industries;
     Thirty minutes in occupations exposed to few hazardous
chemicals and types of hazards;
     Ten minutes per employee in some occupations where GHS-
type pictograms are already in use.
    Color Printing
     Category 1 establishments (those currently printing only
in black & white who do not own color printers): Medium establishments
$0.01 per label, small establishments $0.13 per label, and very small
establishments $0.14 per label.
     Category 2 establishments (those currently printing only
in black & white but who own color printers): Medium establishments
$0.01 per label, small establishments $0.13 per label, and very small
establishments $0.14 per label.
     Category 3 establishments (those currently purchasing pre-
printed label stock): Medium establishments $0.03 per label, small and
very small establishments $0.03 per label.
     Category 4 establishments (those currently producing
labels printed in multiple colors): No additional costs related to this
provision.
    7. A description of the steps the Agency has taken to minimize the
significant economic impact on small entities.
    OSHA has extended the phase-in period for this rulemaking in
response to stakeholder concern. The Agency believes that the
additional time granted to manufacturers, distributors, and users of
chemicals will serve to reduce the transitional costs associated with
this rule. Chemical manufacturers currently revise SDSs and labels
periodically to include new or updated hazard information, and the
extended time frame will allow firms to adopt the GHS criteria into
their hazard communication program and to modify SDSs, warning labels,
and workplace signs within the normal flow of their operations.
    OSHA will be offering guidance materials such as quick cards and
fact sheets to aid firms in developing and implementing the training
requirements of this rule. OSHA will also be releasing a small business
compliance guide to provide additional guidance to small businesses,
which will ease the economic impact and compliance burden. The Agency
solicited comment from stakeholders as part of the ANPR and NPRM on
what compliance assistance tools would be most helpful and has
incorporated the suggestions received in the record in the development
of guidance materials.

J. Environmental Impacts

    OSHA has reviewed the provisions of this final rule in accordance
with the requirements of the National Environmental Policy Act (NEPA)
of 1969 (42 U.S.C. 4321 et seq.), the Council on Environmental Quality
(CEQ) NEPA regulations (40 CFR Parts 1500-1508), and the Department of
Labor's NEPA Procedures (29 CFR Part 11). As a result of this review,
OSHA has determined that the final rule will have no significant
adverse effect on air, water, or soil quality, plant or animal life,
use of land, or other aspects of the environment. OSHA anticipates that
the more complete and easier-to-understand SDSs resulting from this
rule will, in addition to increasing employee health and safety, have
positive effects on the environment.

K. Unfunded Mandates Reform Act Analysis

    Section 3 of the Occupational Safety and Health Act makes clear
that OSHA cannot enforce compliance with its regulations or standards
on the U.S. government ``or any State or political subdivision of a
State.'' Under voluntary agreement with OSHA, some States enforce
compliance with their State standards on public sector entities, and
these agreements specify that these State standards must be equivalent
to OSHA standards. Thus, although OSHA may include compliance costs for
affected public sector entities in its analysis of the expected impacts
associated with the final HCS rule, the rule does not involve any
unfunded mandates being imposed on any State or local government
entity.
    Based on the analysis presented in this economic analysis, OSHA
concludes that the final rule would impose a Federal mandate on the
private sector in excess of $100 million in expenditures in any one
year. Accordingly, this economic analysis of the final rule, concerning
revisions to the HCS, constitutes the written statement containing a
qualitative and quantitative assessment of the anticipated costs and
benefits of the Federal mandate, as required under Section 202(a) of
the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1532(a)).

L. Sensitivity Analysis

    In this section, OSHA provides a sensitivity analysis of the major
assumptions underlying the Agency's estimates of the annualized costs
and annualized benefits of the final rule. The purpose is to determine
whether OSHA's conclusion that the final rule yields net benefits is
vulnerable to a reasonable change in any one of these assumptions.
OSHA's choice of how much to increase unit cost parameters in the
sensitivity analysis was intended to reflect an upper bounds (or more)
of reasonableness, based on comments, as well as on professional
experience and common sense. (As a result, there are almost no
estimates provided by commenters of higher unit costs than we used in
the sensitivity analysis, and we rejected those few outliers as being
unrealistically large and certainly not representative of the average
establishment covered by this rule.) OSHA's choice of how much to
decrease unit benefit parameters was more subjective and reflected the
fact that few commenters provided alternative quantitative estimates.
Broadly, the Agency cut unit benefit parameters by at least half in all
cases for the sensitivity analysis, which OSHA believes is consistent
with the spirit of comments that either supported OSHA's estimates of
benefits or thought benefits were somewhat overestimated--the exception
being those few commenters who disputed the existence of health and
safety benefits or productivity benefits arising from the proposed
rule. However, it should be carefully noted that any given benefit
category could be reduced to zero and the net benefits would still be
positive. This can be seen in Table VI-1, which shows that the
estimated net positive annualized benefits of the final rule ($556
million)

significantly exceed the estimated annualized benefits for any
individual category of benefits--Reduction in Safety and Health Risks
($250 million); Productivity Improvements for Health and Safety
Managers and Logistics Personnel ($475 million); and Savings during
Periodic Updating of SDSs and Labels ($32 million).
    The sensitivity analysis below shows that OSHA's conclusion that
the final rule produces net benefits is not dependent on any particular
assumption. In fact, the estimated annualized health and safety
benefits of the rule alone, independent of any productivity benefits,
exceed the estimated annualized cost of the rule. Further, the broad
support from industry for this rule, even from those commenters
critical of some of OSHA's estimates of costs and benefits, suggests
that industry believes the productivity benefits of the rule exceed the
costs.
    The methodology and calculations underlying the estimation of the
compliance costs, benefits, and economic impacts 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 variations in the relevant input
parameters.
    For example, if the estimated time that companies need to
reclassify chemical hazards and revise SDSs and labels were doubled,
the corresponding labor costs (but not software costs) of
reclassification and revision of SDSs and labels 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 economic
analysis held up. On the whole, OSHA found that the conclusions of the
analysis are reasonably robust, as changes in any of the input
parameters tend not to produce disproportionately large changes in the
results. The results also show significant net annualized benefits for
the rule regardless of the individual revisions to costs, benefits, or
discount rate. The results of the individual sensitivity tests are
summarized in Table VI-14 and are described in more detail below.
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    In the sensitivity test on costs where OSHA doubled the estimated
time that companies need to reclassify chemical hazards and revise SDSs
and labels, and estimates of other input parameters remained unchanged,
as shown in Table VI-14, the estimated total costs of compliance would
increase by $18 million annually, or by about 9 percent, while net
benefits would also decline by $18 million, from $556 million to $538
million annually.
    In a second sensitivity test, OSHA doubled the estimated total
number of affected SDSs addressed by this rulemaking, which increased
the estimated total cost of reclassification and revision of SDSs and
labels. As shown in Table VI-14, if OSHA's estimates of other input
parameters remained unchanged, the total estimated costs of compliance
would increase by $23 million annually, or by about 11 percent, while
net benefits would also decline by $23 million annually, from $556
million to $533 million annually.\32\
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    \32\ For this sensitivity analysis, OSHA calculated only the
impact on costs of an increase in the number of SDSs. However, in
principle, each additional SDS would yield future benefits due to
improved efficiencies in creating and revising SDSs under GHS.
Although not shown in Table VI-8, this effect would increase
benefits by $32 million annually, more than offsetting the $23
million annual cost increase.
---------------------------------------------------------------------------

    In a third sensitivity test, when OSHA increased by 50 percent the
estimated number of employees required to be covered by hazard
communication programs and to be trained on GHS, the corresponding
estimate of the total costs associated with training employees
increased by 50 percent. As shown in Table VI-14, if OSHA's estimates
of other input parameters remained unchanged, the total estimated costs
of compliance would increase by $48 million annually, or by about 24
percent, while net benefits would also decline by $48 million annually,
from $556 million to $508 million annually.
    In a fourth sensitivity test, when OSHA doubled the estimated
incremental amount of time necessary for training employees on GHS, the
corresponding estimate of the total costs associated with training
employees also doubled. As shown in Table VI-14, if OSHA's estimates of
other input parameters remained unchanged, the total estimated costs of
compliance would increase by $96 million annually, or by about 48
percent, while net benefits would also decline by $96 million annually,
from $556 million to $460 million annually.
    OSHA performed a fifth sensitivity test where the estimated
incremental per-label cost of printing labels in color was doubled. As
shown in Table VI-14, if OSHA's estimates of other input parameters
remained unchanged, the total estimated costs of compliance would
increase by $24 million annually, or by about 12 percent, while net
benefits would also decline by $24 million annually, from $556 million
to $532 million annually
    OSHA also performed sensitivity tests on several input parameters
used to estimate the benefits of the final rule. In one sensitivity
test on benefits, OSHA reduced its estimate of health and safety
benefits of the final rule from 1 percent to 0.5 percent of the
benefits estimated for the existing HCS. As shown in Table VI-14, if
OSHA's estimates of other input parameters remained unchanged, the
total estimated benefits of the final rule would decline by $125
million annually, or by about 17 percent, while net benefits would also
decline by $125 million annually, from $556 million to $431 million
annually.
    In a second, parallel sensitivity test on benefits, OSHA increased
its estimate of health and safety benefits of the final rule from 1
percent to 5 percent of the benefits estimated for the existing HCS. As
shown in Table VI-14, if OSHA's estimates of other input parameters
remained unchanged, the total estimated benefits of the final rule
would increase by $1,000 million annually, or by about 132 percent,
while net benefits would also increase by $1,000 million annually, from
$556 million to $1,556 million annually.
    In a third sensitivity test on benefits, OSHA reduced its estimate
of savings due to the improved efficiency in creating and revising SDSs
under GHS by 50 percent. As shown in Table VI-14, if OSHA's estimates
of other input parameters remained unchanged, the total estimated
benefits of the final rule would decline by $17 million annually, or by
about 2 percent, while net benefits would also decrease by $17 million
annually, from $556 million to $539 million annually.
    In a fourth sensitivity test on benefits, OSHA reduced its estimate
of savings due to the improved efficiency of safety and health managers
and logistics personnel by 67 percent. As shown in Table VI-14, if
OSHA's estimates of other input parameters remained unchanged, the
total estimated benefits of the final rule would decline by $315
million annually, or by about 42 percent, while net benefits would also
decrease by $315 million annually, from $556 million to $241 million
annually.
    And finally, in the fifth sensitivity test on benefits, OSHA tested
the effect of including cost savings from simplified hazard
communication training in future periods made possible by the final
rule.\33\ For this sensitivity test, OSHA added a cost savings of a
half hour, on average, in training time per new employee once the
transition period ends and the final rule is fully implemented. OSHA
chose a half-hour time savings based on the testimony of the one
commenter who provided an estimate of the time savings from simplified
hazard communication training.\34\ As shown in Table VI-14, as a result
of adding the half-hour savings in training time, assuming OSHA's
estimates of other parameters remain unchanged, the total benefits of
the final rule would increase by $285 million annually,\35\ or by about
38 percent, while net benefits would also increase by $285 million
annually, from $556 million to $841 million annually.
---------------------------------------------------------------------------

    \33\ As noted in the earlier discussion on benefit, in Section
VI.D of this preamble, comments on the proposed rule contained
extensive qualitative support for the proposition that the revisions
to the HCS rule will make training easier and therefore less time-
consuming and less costly.
    \34\ Printing Industries of America testified at the OSHA public
hearing held in Pittsburgh that training for an employee who would
be responsible for working with hazardous materials is
``approximately an hour to an hour and a half'' and that training
would be less time-consuming under the revised HCS and might be
reduced ``possibly by a third simply because [the revised HCS will]
be removing a number of types [of MSDS and labeling systems]''
(Document ID 0499, Tr. 96-7). This estimate would be
consistent with a saving in training time of one-third to one-half
of an hour relative to current training time of one to one and a
half hours. OSHA chose the one-half-hour estimate because a
representative training time for all the commenters would be at
least an hour and a half (and arguably more like 3 hours).
Furthermore, in its final economic analysis for the original hazard
communication rule, OSHA estimated that the rule would require an
average of 3 hours of training per employee (48 FR 53280, Nov. 25,
1983).
    \35\ This estimate uses the BLS turnover rate to arrive at the
number of new employees per year per establishment and assumes from
one to ten employees per training session, depending on
establishment size. The cost savings due to simplified training take
into account one half hour of managerial time to deliver the
training plus one half hour of time for each of 17.5 million new
employees a year to receive the training. The annualized cost
savings of $285 million is equal to annual cost savings of $465.5
million multiplied by an annualization factor of 0.6130 to reflect
the fact that these cost savings would not begin to be realized
until five years after the effective date of the final rule.
---------------------------------------------------------------------------

    OSHA also examined the effect of a change in the discount rate on
the annualized costs and benefits. Changing the discount rate from 7
percent, used in the base case, to 3 percent would have the effect of
lowering the costs to $161 million per year and increasing the gross
benefits to $839 million per year. The result, as shown in Table VI-14,
would be to increase net benefits by

$122 million per year, from $556 million to $678 million per year.
    OSHA also considered the sensitivity of its findings that the final
rule is economically feasible and does not have a significant economic
impact on a substantial number of small entities. For example, even if
all of the estimated annualized costs of compliance were to increase by
50 percent, these costs would still represent less than 0.005 percent
of annual revenues and less than 0.1 percent of annual profit for the
average establishment, small entity, or very small entity, and no small
entity or very small entity would have costs in excess of 1 percent of
revenues or 5 percent of profits.
    In conclusion, the sensitivity analysis demonstrates that even with
relatively large variations in the input parameters, there would not be
any disproportionately large changes in the estimates of compliance
cost or benefits. Further, even if there were a 50 percent increase in
all of the compliance cost estimates, there would still be a relatively
high confidence in OSHA's finding concerning economic feasibility, the
certification that the standard will not have significant economic
impacts on a substantial number of small entities, and the conclusion
that the benefits of the final rule exceed the costs.

VII. OMB Review Under the Paperwork Reduction Act of 1995

    The final rule revises existing Hazard Communication collection of
information (paperwork) requirements that are currently approved by the
Office of Management and Budget (OMB) under the Paperwork Reduction Act
of 1995 (PRA-95), 44 U.S.C. 3501 et seq., and OMB's regulations at 5
CFR part 1320. On October 30, 2009, the Department of Labor submitted
Hazard Communication collection of information requirements identified
in the NPRM to OMB for review in accordance with 44 U.S.C. 3507(d). In
accordance with 44 U.S.C. 3506(c)(2), the proposed regulation solicited
public comments on the revision of the Hazard Communication Standard's
(HCS) Information Collection Request (ICR) (paperwork burden hour and
cost analysis) for the proposal. OSHA received no public comments on
the Hazard Communication Standard's ICR. On November 18, 2009, OMB
filed a comment on the Hazard Communication Standard NPRM ICR in
accordance with 44 U.S.C. 3507(d). OMB stated, ``This OMB action is not
an approval to conduct or sponsor an information collection request
under the Paperwork Reduction Act of 1995.'' The final Standard
modifies existing information collection requirements that are
currently approved under OMB Control Number 1218-0072. This ICR has
been revised and submitted to OMB. OSHA will publish a separate notice
in the Federal Register that will announce the result of OMB's reviews.
The Department of Labor notes that a Federal agency cannot conduct or
sponsor a collection of information unless OMB approves it under the
PRA- 95, and the agency displays a currently valid OMB control number.
Also, notwithstanding any other provision of law, no employer shall be
subject to penalty for failing to comply with a collection of
information if the collection of information does not display a
currently valid OMB control number.
    The final rule standardizes the hazard communication requirements
for hazardous chemical products used in U.S. workplaces, and thus
provides employees with consistent hazard communication information.
Hazard communication is currently addressed by many different
international, national, and State authorities. These existing
requirements are not always consistent and often contain different
definitions of hazards and varying provisions for what information is
required on labels and safety data sheets (SDSs). The final standard
harmonizes the U.S. system with international norms and as a result
would enhance worker safety and facilitate international trade. The
final rule's modifications to the Hazard Communication Standard's
collection of information requirements include: (1) Revised criteria
for classification of chemical hazards; (2) revised labeling provisions
that include requirements for use of standardized signal words,
pictograms, hazard statements, and precautionary statements; (3) a
specified format for SDSs; and (4) related revisions to definitions of
terms used in the Standard and to requirements for employee training on
labels and SDSs.
    Paragraph (d), ``hazard classification,'' requires chemical
manufacturers and importers to evaluate chemicals produced in their
workplaces or imported by them to classify the chemicals' health and
physical hazards in accordance with the Standard. For each chemical,
the chemical manufacturer or importer must determine the hazard
classes, and the category of each hazard class, that apply to the
chemical being classified. Employers are not required to classify
chemicals unless they choose not to rely on the classification
performed by the chemical manufacturer or importer for the chemical.
Chemical manufacturers, importers or employers classifying chemicals
must identify and consider the full range of available scientific
literature and other evidence concerning the potential hazards. There
is no requirement to test the chemical to determine how to classify its
hazards. Mandatory Appendix A to Sec.  1910.1200 shall be consulted for
classification of health hazards, and Mandatory Appendix B to Sec.
1910.1200 shall be consulted for the classification of physical
hazards.
    For mixtures, chemical manufacturers, importers, or employers
evaluating chemicals also must follow the procedures described in
Appendixes A and B to Sec.  1910.1200 to classify the hazards of the
chemicals, including determinations regarding when mixtures of the
classified chemicals are covered by the Standard. When classifying
mixtures they produce or import, chemical manufacturers and importers
of mixtures may rely on the information provided on current SDSs of the
individual ingredients except where the chemical manufacturer or
importer knows, or in the exercise of reasonable diligence should know,
that the SDS misstates or omits information required by the provisions
in the final HCS.
    Pursuant to paragraph (e), employers are required to develop,
implement, and maintain at each workplace a written hazard
communication program which at least describes how the criteria
specified in paragraphs (f), (g), and (h) of the standard on labels and
other forms of warning, SDSs, and employee information and training
will be met, and which also includes the following: (i) a list of the
hazardous chemicals known to be present using a product identifier that
is referenced on the appropriate SDS (the list may be compiled for the
workplace as a whole or for individual work areas); and (ii) the
methods the employer will use to inform employees of the hazards of
non-routine tasks (for example, the cleaning of reactor vessels) and
the hazards associated with chemicals contained in unlabeled pipes in
their work areas. The final rule makes no changes to this requirement.
    Paragraph (f) modifies existing label requirements by requiring
more specific information. Paragraph (f)(1) requires chemical
manufacturers, importers, or distributors to ensure that each shipped
container of classified hazardous chemicals leaving the workplace is
labeled, tagged, or marked with the following information:

    (i) Product identifier;

    (ii) Signal word;
    (iii) Hazard statement(s);
    (iv) Pictogram(s);
    (v) Precautionary statement(s); and
    (vi) Name, address, and telephone number of the chemical
manufacturer,
    importer, or other responsible party.

    The chemical manufacturer, importer, or distributor must ensure
that the information provided under (i) through (v) above must be in
accordance with the mandatory Appendix C, Allocation of Label Elements,
for each hazard class and associated hazard category for the hazardous
chemical; prominently displayed; and in English (other languages may
also be included if appropriate). In addition, the information in (ii)
through (iv) must be located together on the label, tag, or mark.
    For labels in the workplace, except as provided in paragraphs
(f)(7) and (f)(8) of the Standard, employers must ensure that each
container of hazardous chemicals in the workplace is labeled, tagged,
or marked with either (i) the information specified under (f)(1)(i)
through (v) for labels on shipped containers; or (ii) product
identifier and words, pictures, symbols, or combination thereof, which
provide at least general information regarding the hazards of the
chemicals, and which, in conjunction with the other information
immediately available to employees under the hazard communication
program, will provide employees with the specific information regarding
the physical and health hazards of the hazardous chemical.
    OSHA has also updated the language for workplace signs and labels
to incorporate the GHS hazard statement and the applicable
precautionary statement(s), where required. Most OSHA substance-
specific heath standards require hazard warning signs, usually for
regulated areas, and the language required on the signs varies. With
the GHS revision, these standards retain the requirements for specific
warning language for specific signs; however, OSHA has modified the
language to be compatible with GHS and consistent throughout the OSHA
standards. The GHS classification process for a specific substance
dictates the hazard warnings and the precautionary statements that will
be required on the new GHS-compliant product labels. OSHA believes that
having signs and labels in the same formats and containing identical
warnings for the same health effects will make it far easier for
employers and employees to quickly recognize the hazard and the degree
of danger of a hazard, thus enhancing communication.
    The final rule modifies the language requirements for signs and
labels found in the Agency's health standards listed below in Table
VII-1. Since the final rule provides specific language for signs and
for labels on containers of contaminated clothing, waste and debris,
the Agency is exempted from taking burden hours and costs for these
provisions. (See 5 CFR 1320.2(c)(2) (``Controlling paperwork burden on
the public'')). The Agency is taking burden hours and costs for
employers to label, tag, or mark each container of hazardous chemicals
with either (i) the information specified under (f)(1)(i) through (v)
for labels on shipped containers; or (ii) the product identifier and
words, pictures, symbols, or combination thereof, which provide at
least general information regarding the hazards of the chemicals.
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                               Table VII-1

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BILLING CODE 4510-26-C
    Pursuant to paragraph (f)(11), chemical manufacturers, importers,
distributors, or employers who become newly aware of any significant
information regarding the hazards of a chemical shall revise the labels
for the chemical within six months of becoming aware of the new
information, and shall ensure that labels on containers of hazardous
chemicals shipped after that time contain the new information. If the
chemical is not currently produced or imported, the chemical
manufacturer, importer, distributor, or employer shall add the
information to the label before the chemical is shipped or introduced
into the workplace again.
    Paragraph (g)(2) requires the chemical manufacturer or importer
preparing the SDS to ensure that it is in English (although the
employer may maintain copies in other languages as well), and include
the following section numbers and headings, and associated information
under each heading, in the order listed (See Appendix D to Sec.
1910.1200--Safety Data Sheets, for the specific content of each section
of the safety data sheet).

    Section 1, Identification;
    Section 2, Hazard(s) identification;
    Section 3, Composition/information on ingredients;
    Section 4, First-aid measures;
    Section 5, Fire-fighting measures;
    Section 6, Accidental release measures;
    Section 7, Handling and storage;
    Section 8, Exposure controls/personal protection;
    Section 9, Physical and chemical properties;
    Section 10, Stability and reactivity;
    Section 11, Toxicological information; and
    Section 16, Other information, including date of preparation or
last revision.

    Although not required by the final rule, an employer may include
the following sections to be consistent with the GHS:

    Section 12, Ecological information;
    Section 13, Disposal considerations;
    Section 14, Transport information; and
    Section 15, Regulatory information.

    Paragraph (g)(5) requires the chemical manufacturer, importer or
employer preparing the SDS to ensure that the information provided
accurately reflects the scientific evidence used in making the hazard
classification. If the chemical manufacturer, importer or employer
preparing the SDS becomes newly aware of any significant information
regarding the hazards of a chemical, or ways to protect against the
hazards, this new information must be added to the SDS within three
months. If the chemical is not currently being produced or imported,
the chemical manufacturer or importer must add the information to the
SDS before the chemical is introduced into the workplace again.
    Paragraph (g)(11) requires that employers ensure the SDSs are
readily available, upon request, to designated representatives, the
Assistant Secretary, and the Director, in accordance with the
requirements of 29 CFR 1910.1020(e).
    OMB Control Number: 1218-0072.
    Affected Public: Business or other for-profit.
    Number of Respondents: 5,514,697.
    Frequency: On Occasion.
    Average Time per Response: The average time per response ranges
from twelve seconds for employers to label portable in-plant containers
to seven hours for employers to reclassify chemicals and revise SDSs
and labels.
    Estimated Total Burden Hours: 11.3 million hours.
    Estimated Cost: $34.7 million.

VIII. Federalism and Consultation and Coordination With Indian Tribal
Governments

    The Agency reviewed this final rule according to the most recent
Executive Order (``E.O.'') on Federalism (E.O. 13132, 64 FR 43255,
August 10, 1999). This E.O. requires that Federal agencies, to the
extent possible, refrain from limiting State policy or local

policymaking discretion, consult with States and local officials prior
to taking any actions that restrict their policy options, and take such
actions only where there is constitutional and statutory authority to
do so and the problem is of national significance. The E.O. generally
allows Federal agencies to preempt State law only where there is clear
evidence of Congressional intent to allow it, or where the exercise of
State authority would conflict with the exercise of Federal authority
under a statute; in such cases, Federal agencies must limit preemption
of State law to the extent possible.
    In Section 18 of the Occupational Safety and Health Act (the OSH
Act), Congress expressly provides that States may adopt, with Federal
OSHA approval, a plan for the development and enforcement of
occupational safety and health standards. States that obtain Federal
approval for such plans are referred to as ``State Plan States'' (29
U.S.C. 667). Occupational safety and health standards developed by such
State Plan States, among other things, must be at least as effective in
providing safe and healthful employment and places of employment as
Federal OSHA standards.
    OSHA intends to closely scrutinize amendments to previously
approved State hazard communication standards submitted under current
or future State plans to ensure equal or greater effectiveness,
including assurance that any additional requirements do not conflict
with, or adversely affect, the effectiveness of the national
application of OSHA's standard. OSHA must also determine in its review
whether any State plan standard provisions that differ from the Federal
provisions, when applicable to products distributed or used in
interstate commerce, are ``required by compelling local conditions and
do not unduly burden interstate commerce.'' OSH Act section 18(c), 29
U.S.C. 667(c).
    This final rule complies with E.O. 13132. In States that do not
have OSHA-approved State Plans, this rule limits State policy options
in the same manner as all OSHA standards.
    OSHA also reviewed this final rule in accordance with E.O. 13,175
on Consultation and Coordination with Indian Tribal Governments (65 FR
67,249 (Nov. 9, 2000)), and determined that it does not have ``tribal
implications'' as defined in that order. The final rule does 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.

IX. State Plans

    When federal OSHA promulgates a new standard or more stringent
amendment to an existing standard, the 27 States or U.S. territories
with their own OSHA-approved occupational safety and health plans must
revise their standards to reflect the new standard or amendment, or
show OSHA why there is no need for action, e.g., because an existing
state standard covering this area is already ``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, must
be applicable to both the private and public (state and local
government employees) sectors, and must be completed within six months
of the publication date of the final federal rule. When OSHA
promulgates a new standard or a standards amendment which does not
impose additional or more stringent requirements than an existing
standard, states are not required to revise their standards, although
OSHA may encourage them to do so.
    The 27 States and U.S. territories with OSHA-approved occupational
safety and health plans 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. Connecticut,
Illinois, New Jersey, New York and the Virgin Islands have OSHA
approved State Plans that apply to public-sector employees only.
    This final rule modifies OSHA's hazard communication standard to
conform to the United Nations' Globally Harmonized System of
Classification and Labelling of Chemicals (GHS). It requires chemical
manufacturers to use revised criteria for classification of chemical
hazards, revised labeling provisions, and a specified format for safety
data sheets. There are also revised requirements for employers to train
their employees regarding labels and safety data sheets for hazardous
chemicals. This GHS rule will also increase worker protection by
improving the quality and consistency of information provided to
employers and employees regarding chemical hazards and protective
measures. Therefore, State Plan States must adopt comparable provisions
within six months of publication of the final rule. Each State's
existing requirements will continue to be in effect until it adopts the
required revisions.

X. Unfunded Mandates

    OSHA reviewed this final rule according to the Unfunded Mandates
Reform Act of 1995 (``UMRA''; 2 U.S.C. 1501 et seq.) and Executive
Order (``E.O.'') 12875 (58 FR 58093, Oct. 28, 1993).
    Under Section 202 of the UMRA, an agency must prepare a written
``qualitative and quantitative assessment'' of the anticipated costs
and benefits of any Federal regulation creating a mandate that ``may
result in the expenditure by State, local, and tribal governments, in
the aggregate, or by the private sector, of $100,000,000 or more'' in
any one year. 2 U.S.C. 1532(a). As discussed in section VI of this
preamble (``Final Economic and Voluntary Regulatory Flexibility
Analysis''), the Agency estimates that this final rule will require
private sector employers annualized expenditures of $201 million per
year. However, OSHA's final rule does not place a mandate on State or
local governments, for purposes of the UMRA, because OSHA cannot
enforce its regulations or standards on State or local governments.
(See 29 U.S.C. 652(5).) Under voluntary agreement with OSHA, some
States enforce compliance with their State standards on public sector
entities, and these agreements specify that these State standards must
be equivalent to OSHA standards. The OSH Act also does not cover tribal
governments in the performance of traditional governmental functions,
though it does when tribal governments engage in commercial activity.
However, this final rule does not require tribal governments to expend,
in the aggregate, $100,000,000 or more in any one year for their
commercial activities. Thus, although OSHA may include compliance costs
for affected governmental entities in its analysis, this rulemaking did
not trigger the requirements of UMRA based on its impact on State,
local, or tribal governments.
    Based on the analysis presented in the Final Economic Analysis
(section VI above), OSHA has determined that this final rule will
impose a Federal mandate on the private sector in excess of $100
million in expenditures in any one year, and is thus subject to the
requirements under UMRA for review of private sector costs. The Final
Economic Analysis in section VI, satisfies these requirements, and
provides a written statement containing the qualitative and
quantitative assessment of costs and benefits as is required under
Section 202(a) of UMRA (2 U.S.C. 1532).

XI. Protecting Children From Environmental Health and Safety Risks

    E.O.13045 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 must 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 may (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 effect 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, product use). This
final rule is economically significant under E.O.12866 (See section VI
of this preamble). However, after reviewing this final rule, OSHA has
determined that the standard would not impose environmental health or
safety risks to children as set forth in E.O.13045.

XII. Environmental Impacts

    The Agency reviewed this final rule according to the National
Environmental Policy Act (NEPA) of 1969 (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 this review, OSHA has determined that this final
rule 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 concludes that this final rule will have no significant
environmental impacts.

XIII. Summary and Explanation of the Final Rule

    This final rule is based on the public record developed during the
rulemaking. As described in Section II, an advance notice of proposed
rulemaking (ANPR) was published by OSHA on September 12, 2006 (71 FR
53617). The ANPR included a series of questions to solicit information
on a number of specific topics. The responses from more than 100
commenters were used by the Agency to help prepare the required
analyses for the proposed rulemaking, as well as to make determinations
regarding the proposed text. The notice of proposed rulemaking (NPRM)
was published by OSHA on September 29, 2009 (74 FR 50280). Public
comments were received during a 90-day comment period that ended on
December 29, 2009. Subsequently, public hearings were convened in March
2010 in Washington, DC, and Pittsburgh, PA, for the Agency to receive
oral testimony from interested parties. Following completion of the
hearings, participants were given an opportunity to provide additional
information to OSHA during a post-hearing comment period, as well as
submit briefs summarizing their views for the record. The public record
upon which OSHA is basing the final standard includes all of the
comments, testimony, and supporting information submitted by rulemaking
participants, as well as by OSHA.
    Support for the rulemaking. Many of those who responded to the ANPR
expressed their support for adoption and implementation of the GHS. The
supporters far outnumbered those who opposed or questioned adoption
(See, e.g., Document ID 0003, 0007, 0011, 0033, 0038, 0047,
0050, 0052, 0062, 0106, 0123, 0130, 0151, 0163, and 0171). The reasons
presented for this support varied, but included the belief that
adoption of the GHS will bring consistency and clarity to hazard
communication (e.g., Document ID 0038, 0046, 0059, and 0081);
will help to ensure that employees have reliable, consistent,
comprehensive, and comprehensible information (e.g., Document ID
0030, 0037, and 0124); will help to enhance human health and
the environment (improved worker safety) (e.g., Document ID
0032, 0064, 0081, and 0128); and will reduce burdens
associated with preparing multiple classifications and labels for the
same product (e.g., Document ID 0030, 0048, 0080, and 0123).
    Support for implementation of the GHS by OSHA was expressed by both
users and producers of chemicals who responded to the ANPR (See, e.g.,
Document ID 0038, 0054, 0064, and 0124). While support for
implementation of the GHS was widespread in the ANPR comments, these
supporters also recognized the challenges associated with
implementation. For example, it was noted by a number of commenters
that there will be short-term costs associated with implementation, and
they urged OSHA to take steps to minimize them by providing a
reasonable time period for phase-in, coordinating with other agencies,
and providing extensive outreach (See, e.g., Document ID 0032,
0111, 0155, 0157, and 0162). Others were concerned that the GHS is not
completely harmonized because it allows countries, and agencies within
countries, to select from among a collection of building blocks when
determining the scope of their requirements (e.g., Document ID
0076).
    In addition to those who supported implementation, but raised areas
of concern regarding the way in which it is pursued, there were others
who did not support implementation (Document ID 0004, 0065,
0068, and 0108). These commenters argued that it would be too
burdensome (Document ID 0004); delegates power to an
international body, which can only be accomplished through a treaty, if
at all (Document ID 0065); would change the current hazard
communication scheme and thus potentially impair safety (Document ID
0065); and should not be applied to pesticides because they
are already heavily regulated (Document ID 0108).
    In the NPRM, OSHA addressed each of these concerns and concluded
that evidence, arguments, and accompanying analyses supported pursuing
the modifications to the HCS. OSHA preliminarily determined that these
modifications would enhance employee protection and facilitate
compliance for all workplaces that produce or use hazardous chemicals.
    While OSHA did not include questions regarding the support of
stakeholders for adoption of the GHS, it was clear that a majority of
those responding to the ANPR supported moving forward with the
rulemaking. The arguments presented by those few who actively objected
to adoption were addressed in the NPRM and the analyses for the rule,
and were not found by OSHA to be persuasive. Other issues raised by
supporters as concerns, or suggestions for addressing concerns, were
also addressed in the proposed rule.
    OSHA indicated in the NPRM (74 FR 50281, Sept. 30, 2009) that the
Agency had made a ``preliminary determination that the proposed
modifications to the HCS would increase the quality and consistency of
information provided to employers and employees.'' OSHA also indicated
that the ``standardized label elements would be more effective in
communicating hazard information;

standardized headings and a consistent order of information would
improve the utility of SDSs; and training would support and enhance the
effectiveness of the new label and SDS requirements.'' Participants
were asked if they agreed with this assessment, and also to provide
information that reflected on the effectiveness of the proposed
modifications in protecting employees from chemical hazards in the
workplace.
    Many participants responded, and the vast majority agreed with
OSHA's preliminary determination that the proposed modifications would
be effective in protecting employees, as well as the conclusions as to
the reasons why it would be effective, and thus supported the
rulemaking (See, e.g., Document ID 0336, 0338, 0339, 0376,
0377, 0382, 0402, 0403, 0404, and 0412). These commenters reflected on
a number of different aspects regarding effectiveness when indicating
their support. For example, in comments provided on behalf of the
American Iron and Steel Institute (AISI) and the American Coke and Coal
Chemicals Institute (ACCCI), it was stated (Document ID 0360):

    AISI and ACCCI support OSHA's assessment that modifications to
the Hazard Communication Standard (HCS) would increase the quality
and consistency of information provided to employers and employees.
Two improvements are expected with the changes OSHA has proposed:
    a. Standardized criteria to evaluate chemicals and communicate
the hazards via Safety Data Sheets (SDSs) and labeling should assure
consistent communication and lower the likelihood of
miscommunication and misinterpretation.
    b. Standardized criteria to evaluate chemicals should facilitate
training. With a single teaching format for SDSs and Labels,
understanding, regardless of an employee's educational background,
should be improved.

Comments of the Society of Chemical Manufacturers and Affiliates
(SOCMA) express support, while highlighting some of the potential
implementation challenges that will have to be addressed (Document ID
0402). SOCMA's comments are illustrative of those provided by
other commenters who qualified their support by expressing issues that
would have to be addressed in order for the benefits to occur (See
also, e.g., Document ID 0369):

    SOCMA members are generally very supportive of the
implementation of GHS for workplace hazard communication in the
United States, and for over the past forty years, we have spent
millions of dollars and dedicated an insurmountable amount of time
towards evaluating potential chemical hazards, communicating hazard
information and protecting workers. The proposed rule may have a
disproportionate economic impact on small business chemical
manufacturers, particularly companies that are already struggling in
these unstable economic times. A majority of these burdens can be
mitigated, though, if the most affected entities are given adequate
time to transition and proper compliance assistance is provided.
    * * * Once overcome though, the potential benefits of
implementing GHS in the United States are highly anticipated by
SOCMA members, some of which include: The harmonization of
incompatibilities and inconsistencies in labeling and
classification, more uniformity in both substance and format, the
elimination of language and reading barriers through pictograms, and
the facilitation of control banding.

OSHA addresses the suggestions of SOCMA and other commenters on ways to
mitigate implementation issues in discussions of specific provisions
below. The Agency believes it has taken the legitimate concerns of
stakeholders into consideration when determining the final provisions
of this rule.
    The National Institute for Occupational Safety and Health (NIOSH)
has extensive experience in another international effort to harmonize
information on chemicals--development of International Chemical Safety
Cards under the auspices of the World Health Organization (WHO) and the
International Program on Chemical Safety (IPCS). In their comments,
they highlighted the advantages of internationally-harmonized
classification criteria (Document ID 0412):

    NIOSH recognizes OSHA's Hazard Communication Standard (HCS) as
one of the most important U.S. regulations in occupational safety
and health and concurs with OSHA on the need for a revised HCS. A
significant advantage of the proposed standard is the detailed
criteria for classification will improve accuracy and consistency in
the information provided to employers and employees on chemical
hazards and protective measures. Those criteria will reduce the
likelihood of differing interpretations of the same data. In
addition, the specified hazard categories will convey the severity
of the effect, unlike the hazard classes in the current HCS.

    Worker representatives also supported the proposed rulemaking. For
example, comments on behalf of the United Steel, Paper and Forestry,
Rubber, Manufacturing, Energy, Allied Industrial and Service Workers
International Union (AFL/CIO.CLC), stated (Document ID
0403.2):

    The committees which designed the GHS agreed on an important
principle early in the work: The final harmonized system should not
weaken the protection afforded by any existing system. That in
itself was a significant accomplishment. However, in the United
States, adopting the GHS will go a step further--the revised, GHS-
compliant Hazard Communication rule will greatly improve the
comprehensibility of labels and safety data sheets, giving workers
and employers--especially employers in small business--information
they can more easily understand and use.

    While stakeholder support for the rule was extensive, there were
some stakeholders who did not support pursuing a final rule to modify
the HCS, sought to exempt their constituents from its provisions, or
supported a different approach. For example, the American Composite
Manufacturers Association (ACMA) argued that the protections of the
current rule are sufficient, and implementation of the revisions would
be too burdensome for their industry (Document ID 0407). No
data were provided to support these contentions. The North American
Insulation Manufacturers Association (NAIMA) indicated they support
harmonization, but argued that the proposed standard will not achieve
global harmonization for a number of reasons, including conflicting
domestic requirements (See discussion below), administrative hurdles to
regularly revising the GHS to remain current with the international
version, and obstacles to keeping the GHS current (Document ID
0411). And the National Propane Gas Association (NPGA) stated
that only those who operate in an international market will benefit,
and that does not include the propane industry (Document ID
0400). Similarly, the Intercontinental Chemical Corporation
(ICC) argued that companies not involved in international trade should
be allowed to continue complying with the existing standard, and that
those who are involved can comply with the revised provisions (Document
ID 0502).
    OSHA does not find any of these arguments persuasive. With regard
to NAIMA, OSHA indicated in the NPRM how it plans to maintain the
necessary consistency with the GHS through the various rulemaking
options available to the Agency, and that it continues to participate
in the international GHS activities in order to be involved in
maintenance of the system itself. We do not agree that these are
insurmountable concerns that argue against adopting the provisions, or
changing the approach in a significant way.
    OSHA agrees with ACMA and ICC that the existing standard provides
extensive protections to exposed employees. However, the analyses
presented in support of the proposed and final rules demonstrate that
these

protections could be improved by adopting the revised provisions. See
Sections IV and VI of this document. In addition, the argument of NPGA
that benefits only accrue to companies involved in international trade
is not accurate. The improved protections of the rule due to
standardization of classification criteria and harmonization of
communication on labels and safety data sheets apply equally to
employees of companies involved in international trade, and to those in
companies that are not involved in such trade. Workers who use
hazardous chemicals produced for the domestic market are entitled to
the same level of protection as those who use chemicals produced for
the international market, and any standard that treated them
differently might well be inconsistent with the OSH Act. As indicated
in the regulatory analyses for the proposed and final rules, the
revisions are economically and technologically feasible for all
businesses, including small businesses. See Section VI of this
document.
    Other general issues. Commenters also raised a number of other
issues related to the rulemaking that were not directed to specific
paragraphs of the HCS in responses to both the ANPR and the NPRM. Some
respondents indicated that OSHA should limit changes to the HCS to
those required to align with the GHS, thus keeping the framework of the
existing HCS (See, e.g., Document ID 0047, 0080, 0104, 0123,
0145, 0163, 0167, and 0170). For example, ORC Worldwide (Document ID
0123) stated in ANPR comments:

    * * * OSHA can help minimize the cost to businesses by only
modifying those sections of the OSHA Hazard Communication Standard
(HCS) that must be changed to be consistent with GHS. Therefore, we
strongly support OSHA's stated intent to maintain the current scope,
application, and interpretations of the HCS, and only modify those
sections of the standard necessary for consistency with the GHS. Not
only will this help minimize the implementation burden on industry,
it should also serve to minimize confusion among employers and
employees during the implementation period.

    OSHA agreed with these commenters, and made every effort in the
NPRM to maintain the framework of the current HCS in the proposed
revisions. The modifications proposed were believed by OSHA to be those
that were required to align the current HCS with the GHS, but did not
address provisions of the current standard that are not addressed in
the GHS. Thus, for example, the scope and application paragraph
remained largely unchanged, as did the paragraph addressing trade
secret protection. The primary modifications proposed in those
paragraphs were changes in terminology required to ensure consistency.
    A number of commenters addressed this issue in their NPRM comments
and testimony as well. For example, Dow Chemical Corporation indicated
(Document ID 0353) that OSHA should follow two overarching
principles as it revises the HCS. The first is to ``implement the GHS
with as little US customization as possible,'' and the second is to
``make only those changes to the HCS that are necessary to facilitate
GHS implementation.'' (See also, e.g., Document ID 0370.) Both
of these principles were, in fact, followed by OSHA when preparing the
NPRM.
    Others commenters recognized this was OSHA's approach, and
supported it. For example, the Defoamer Industry Trade Association
(DITA) noted (Document ID 0367):

    DITA applauds the fact that OSHA did not modify the GHS
definitions to a great degree. These definitions reflect a consensus
scientific process for the review of the hazards that chemicals can
present and the toxicology data that predicts the likelihood of
hazard occurring. Accordingly, this should lead to a high level of