Regulations (Preambles to Final Rules) - Table of Contents|
| Record Type:||Nationally Recognized Testing Laboratories-Fees|
| Title:||Section 4 - IV. Legal Authority and Other Considerations|
IV. Legal Authority and Other Considerations
A. Statutory Authority
OSHA is basing its fees on the Office of Management and Budget's (OMB's) policies for user fees imposed by Federal Agencies. These policies are contained in OMB Circular A-25, "User Fees," dated 7/8/ 93. Some key portions of Circular A-25 are as follows:
-- "General Policy:" A user charge * * * will be assessed against each identifiable recipient for special benefits derived from Federal activities beyond those received by the general public."
-- "For example, a special benefit will be considered to accrue and a user charge will be imposed when a Government service * * * enables the beneficiary to obtain more immediate or substantial gains or values than those that accrue to the general public, * * * or * * * is performed at the request of or for the convenience of the recipient, and is beyond the services regularly received by other members of the same industry or group or by the general public."
-- " * * * user charges will be sufficient to recover the full cost to the Federal Government * * *"
OMB developed Circular A-25 in accordance with Title V of the Independent Offices Appropriations Act of 1952 (IOAA), codified at 31 U.S.C. Sec. 9701. The criteria established by the IOAA to guide agency heads in the establishment of fees were that the fees be "fair" and be based on:
(A) The costs to the Government;
(B) The value of the service or thing to the recipient;
(C) Public policy or interest served; and
(D) Other relevant facts.
31 U.S.C. 9701(b)
As discussed below, the U.S. Supreme Court has decided in two key cases that the intent of the IOAA was to require fees to be based on "value to the recipient" and not upon "public policy or interest served [or] other [relevant] * * * facts."
In a rider to OSHA's Fiscal Year 2000 appropriations, Congress specifically authorized the Secretary of Labor to collect and retain the fees to be collected under this rule: "* * * the Secretary of Labor is authorized, during the fiscal year ending September 30, 2000, to collect and retain fees for services provided to Nationally Recognized Testing Laboratories, and may utilize such sums, in accordance with the provisions of 29 U.S.C. 9a, to administer national and international laboratory recognition programs that ensure the safety of equipment and products used by workers in the workplace: * * *" Public Law 106-113 (113 Stat. 1501A-222). Through this rider, OSHA has the necessary authority to retain the fees, which otherwise would be credited to the general fund of the U.S. Treasury, as explained in OMB Circular A-25.
B. Legal Basis for Assessing the Fees
As noted in the proposal (64 FR 45100), to determine a proper basis for assessing the fees, OSHA reviewed a number of legal precedents and analyzed the costs and activities for the functions undertaken for the NRTL Program. We summarize our legal review below, and provide the details of our costs in section V of this preamble.
The legal precedents center on the application of the IOAA and its interpretation by federal agencies. The most pertinent precedents are two decisions by the U.S. Supreme Court, and four cases of the U.S. Court of Appeals for the D.C. Circuit.
In March 1974, the Supreme Court decided the companion cases of National Cable Television Ass'n. v. United States and FCC, 415 U.S. 336 (1974) and Federal Power Commission v. New England Power Co., 415 U.S. 345 (1974). In National Cable, the Court expressed the view that an agency may charge a "fee" for services based on "value to the recipient." The Court essentially ruled out the other bases permitted in the IOAA, which, in the court's opinion, could change an assessed "fee" into the levy of a "tax." In Federal Power Commission, the Court held that only specific charges for specific services to specific individuals or companies may be recouped by the fees permitted by the IOAA.
The first of the Court of Appeals decisions was National Cable Television Ass'n Inc. v. Federal Communications Commission (FCC), 554 F.2d 1094 (1976). The Court of Appeals upheld the charging (by the FCC, in this case) of both an application fee and an annual fee, provided the agency makes clear which activities are covered by each of these fees to prevent charging twice for the same activity. The court acknowledged that fees based on reasonable approximations for costs of services rendered would be acceptable. The court stated the following: "It is sufficient for the Commission to identify the specific items of * * * cost incurred in providing each service or benefit * * *, and then to divide the cost among the * * * [recipients] in such as way as to assess each a fee which is roughly proportional to the "value" which that member has thereby received." Id. at 1105-06.
In Electronic Industries Ass'n v. F.C.C., 554 F.2d 1109 (DC Cir. 1976), the court indicated that a fee for services may be charged for private benefits "although they may also create incidental public benefits as well." Id. at 1115. In the case of NRTLs, the services that OSHA provides to NRTLs and NRTL applicants result primarily in private benefits to these parties, as described below. In Capital Cities Communications, Inc. v. F.C.C., 554 F.2d 1135 (D.C. Cir. 1976), the court held that a fee for services should bear a reasonable relationship to the cost to the government to provide the service.
Finally, in Miss. Power and Light v. U.S. Nuclear Regulatory Comm'n (NRC), 601 F.2d. 223 (5th Cir. 1979), the court upheld a fee for agency services. The NRC calculated its fees based upon the costs of providing the services to the private parties. OSHA is using a similar method to calculate the application processing and audit fees in this final rule.
Based in large part on the results of the foregoing six cases and on the guidelines of OMB Circular A-25, OSHA is establishing fees for specific benefits that organizations receive as a result of the specific services that OSHA provides to them for their initial and continued recognition as an NRTL. The fees will reflect the costs of providing these services, and the costs will be reasonably itemized to the smallest unit practical.
C. Special Benefits and Services Provided
To help clarify the basis for the fees in this final rule, the following describes how OSHA generally handles applications and continuing services under the NRTL Program.
When an organization submits its application, the NRTL Program staff thoroughly review it for completeness and adequacy. Each organization applies for a specific scope of recognition. This scope consists of the specific safety test standards, locations or sites, and programs for which the organization seeks recognition. OSHA has broadly grouped the activities an NRTL may perform in testing and certifying products into nine categories of "programs and procedures," or just "programs." (See 60 FR 12980, March 9, 1995)
When the NRTL Program staff determine that the application is complete and adequate, the staff performs an in-depth on-site review of the applicant's organization, programs, and facilities. Based upon the information obtained primarily through the on-site review, the staff prepares a report and recommendation. The report and the application provide the main basis for a preliminary finding on the application. OSHA publishes a notice of this finding in the Federal Register to allow for public comment. Following a comment period (now established as 30 days or 15 days in this final rule, but formerly 60 days), OSHA must publish a final decision and response to comments in the Federal Register. Publication makes the recognition official for successful applicants and officially denies the recognition for unsuccessful applicants.
NRTL recognition is valid for five years. During this period, OSHA program staff audit the NRTL to assure that it continues to meet the requirements for recognition. NRTLs may also on occasion request expansion of their scope of recognition to include additional test standards, facilities, or programs. At the end of its initial recognition period, the NRTL may apply for renewal of its recognition. OSHA processes requests for expansion and renewal following a process similar to that used for initial applications for recognition.
Program staff work closely with attorneys of the Department of Labor on a regular basis for both initial recognition and continuing recognition activities. These attorneys review the Federal Register notices. They also advise the program staff on issues and other matters that directly relate to the services covered by the fees.
In addition to application processing and audits, NRTL Program staff also perform a number of activities that are essential to the normal operation of the NRTL Program. These activities include administration of program, budgetary, and policy matters; assistance in training OSHA personnel about the program; inter-agency and international coordination; response to requests for information related to the program; and participation in meetings with stakeholders and outside interest groups. Although necessary to the continued functioning of the program, these activities are incidental to the direct services of application processing and the audits of the NRTLs. Accordingly, costs for these activities are not covered by this final rule.
NRTLs accrue "special benefits" from the services that OSHA renders to them. These "special benefits" are the product of OSHA's initial and continuing evaluation of their qualifications to test and certify products used in the workplace, e.g., the acknowledgment of their capability as an NRTL. The primary special benefits of NRTL recognition are the resulting business opportunities to test and certify products for manufacturers, the NRTL's clients. These opportunities may be in the form of new, additional, or continuing revenue and clients. Once the NRTL has properly certified a product, a manufacturer may then sell this product to employers, enabling them to comply with product approval requirements in OSHA standards.
The services rendered by OSHA that confer these "special benefits" to NRTLs are: (1) Processing of applications for initial recognition as an NRTL and for expansion and renewal of an existing NRTL's recognition, and (2) audits ("post recognition reviews"), which enable the NRTL to maintain the recognition from OSHA.
D. Fees of Other Agencies
Many other Federal agencies charge fees for services they provide to specific recipients. The following is a list of some of these agencies, along with a citation to the regulations that cover the fees they charge:
FEDERAL AGENCIES THAT CHARGE FEES FOR SERVICES
With the exception of the FCC and NVLAP, the above agencies also derive their authority for charging the fees from the IOAA.
OSHA has also examined the fee schedules for other non-governmental organizations that accredit or recognize testing laboratories or certification bodies. Although the fees established in this final rule are specific to the costs to OSHA, the practices of these other organizations may be of interest to reviewers of this rule.
FEES CHARGED BY VARIOUS ACCREDITATION ORGANIZATIONS
[65 FR 46805, July 31, 2000]
Regulations (Preambles to Final Rules) - Table of Contents|