[Federal Register Volume 79, Number 77 (Tuesday, April 22, 2014)][Notices][Pages 22535-22547]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-09072]
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DEPARTMENT OF LABOR
Occupational Safety and Health Administration
[Docket No. OSHA-2009-0026]
Curtis-Straus LLC: Renewal of Recognition
AGENCY: Occupational Safety and Health Administration (OSHA), Labor.
ACTION: Notice.
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SUMMARY: This notice announces the Occupational Safety and Health
Administration's final decision granting the renewal of recognition of
Curtis-Straus, LLC, as a Nationally Recognized Testing Laboratory under
29 CFR 1910.7.
DATES: The renewal of recognition for Curtis-Straus, LLC, becomes
effective on April 22, 2014.
FOR FURTHER INFORMATION CONTACT: David W. Johnson, Director, Office of
Technical Programs and Coordination Activities, Directorate of
Technical Support and Emergency Management, Occupational Safety and
Health Administration, U.S. Department of Labor, 200 Constitution
Avenue NW., Room N-3655, Washington, DC 20210, phone (202) 693-2110, or
email at johnson.david.w@dol.gov.
SUPPLEMENTARY INFORMATION:
I. Notice of Final Decision
The Occupational Safety and Health Administration (OSHA or "the
Agency") is giving notice that it is granting the renewal of
recognition of Curtis-Straus, LLC (CSL), as a Nationally Recognized
Testing Laboratory (NRTL). OSHA is taking this action following the
requirements under its NRTL Program regulations, 29 CFR 1910.7, and
its procedures for NRTL application and renewal, Appendix A to
29 CFR 1910.7 (hereafter "Appendix A").
OSHA recognition of an NRTL signifies that the organization meets
the legal requirements in the NRTL Program regulations. Recognition is
an acknowledgment that the organization can perform independent safety
testing and certification of the specific products covered within its
scope of recognition, and is not a delegation or grant of government
authority. As a result of recognition, employers may use products in
the workplace approved properly by the NRTL to meet OSHA standards that
require testing and certification.
Appendix A.I.B describes the procedures that OSHA must use in
deciding an NRTL's application for renewal of recognition. To approve
such an application, the NRTL must meet all of the requirements for
recognition in 29 CFR 1910.7. Appendix A.I.B lists the steps OSHA must
follow in reviewing each renewal application, and provides the NRTL
opportunities to correct or respond to any perceived failures to meet
the specified requirements.
After following the process set forth in Appendix A.I.B, OSHA
grants renewal of CSL's recognition as an NRTL. OSHA carefully reviewed
CSL's original application for renewal, its revised application for
renewal, and all related documents, including informal communications
between CSL and OSHA, public comments received in response to OSHA's
preliminary finding to deny renewal, and publicly available information
concerning the ownership and organization of CSL. In this regard, OSHA
preliminarily determined that CSL failed to satisfy one of the
regulatory requirements for continued NRTL recognition--i.e., the
requirement that NRTLs be "completely independent of employers subject
to the tested equipment requirements, and of any manufacturers or
vendors of equipment or materials being tested for these purposes" (29
CFR 1910.7(b)(3)).
However, under OSHA's independence policy, found in Appendix C to
the NRTL Program Directive (OSHA Instruction CPL 01-00-003-CPL 1-0.3),
even if an NRTL is not free of commercial, financial, and other
pressures that could compromise the results of the testing and
certification processes, it may still retain its recognition if it
complies with conditions that OSHA may impose. CSL proposed several
conditions, both before, and in response to, OSHA's preliminary
finding, to address its ability to comply with the NRTL independence
requirement. In this notice, OSHA accepts the conditions proposed by
CSL, and also develops additional conditions, to resolve the issues
surrounding CSL's independence. Therefore, OSHA grants renewal of CSL's
NRTL recognition and imposes on CSL conditions with which CSL must
comply to retain its NRTL recognition. OSHA sets forth its findings in
this matter in greater detail below under Section III ("Discussion of
CSL's Independence") and Section IV ("Summary and Analysis of
Additional Comments").
Docket No. OSHA-2009-0026 contains all public materials in the
record concerning OSHA's preliminary decision to deny NRTL recognition
to CSL. The public may obtain or review copies of these documents by
contacting the Docket Office, Occupational Safety and Health
Administration, U.S. Department of Labor, 200 Constitution Avenue NW.,
Room N-2625, Washington, DC 20210. Documents in the record also are
available electronically at www.regulations.gov.
II. Background
A. The NRTL Program and the NRTL Renewal Process
Many of OSHA's safety standards require employers to use products
tested and certified as safe (see, e.g., 29 CFR 1910, subpart S). In
general, testing laboratories, and not employers, perform the required
testing and certification. To ensure that the testing and certification
performed on products is appropriate, OSHA implemented the NRTL
Program. The NRTL Program establishes the criteria that a testing
laboratory must meet to achieve, and retain, NRTL recognition.
OSHA recognition of an NRTL signifies that the organization meets
the legal requirements specified in 29 CFR 1910.7, the regulatory
provision containing the requirements an organization must meet to
become an NRTL and retain NRTL status. Recognition is an acknowledgment
by OSHA that the organization can perform independent safety testing
and certification of the specific products covered within its scope of
recognition, and is not a delegation or grant of government authority.
Recognition under the NRTL Program, therefore, enables employers to use
products approved by NRTLs to meet OSHA standards that require product
testing and certification. OSHA maintains an informational Web site for
each NRTL that details its scope of recognition. These pages are
available on OSHA's Web site at http://www.osha.gov/dts/otpca/nrtl/index.html.
Under OSHA's procedures for NRTL recognition, a prospective NRTL
must submit an application for recognition under the NRTL Program
(Appendix A.I.A). Once granted, OSHA's recognition of an NRTL is valid
for five years unless OSHA terminates the NRTL's recognition before the
end of the five-year period (Appendix A.I.B.7). To renew its
recognition, an NRTL must file a renewal request with OSHA not less
than nine months, or more than one year, before the expiration date of
its current recognition (Appendix A.II.C.1). An NRTL seeking renewal
may file, with its renewal request, any additional information the NRTL
believes will demonstrate its continued compliance with the terms of
its recognition and 29 CFR 1910.7 (Appendix A.II.C.2). Per OSHA
practice, if OSHA did not conduct an on-site assessment of the NRTL
headquarters and any key sites within the past 18 to 24 months, OSHA
will schedule the necessary on-site assessments prior to the expiration
date of the NRTL's recognition.
Appendix A sets forth the procedures for renewal. These procedures
provide NRTLs with several opportunities to present information to the
Agency to justify their continued recognition under the NRTL Program.
Pursuant to Appendix A, after an NRTL applies for renewal, OSHA
staff makes a recommendation to the Assistant Secretary of Labor for
Occupational Safety and Health (Assistant Secretary) as to whether the
NRTL continues to meet the NRTL Program requirements set forth in 29
CFR 1910.7 (Appendix A.I.B.2). If the staff reaches a negative finding,
OSHA notifies the applicant, in writing, of this finding and allows a
reasonable period for a response (Appendix A.I.B.3.a). In providing
this response, the applicant may either: (1) Submit a revised
application for further review by OSHA staff; or (2) request that the
staff forward the original application, along with a statement provided
by the applicant of reasons supporting the application, to the
Assistant Secretary to determine whether the renewal application
warrants approval (Appendix A.I.B.3.b.(i)). An NRTL notified of a
negative finding may submit a revised application for further review by
OSHA staff only once during each recognition process (Appendix
A.I.B.3.b(ii)).
After OSHA staff provides its recommendation, the Assistant
Secretary makes a preliminary finding as to whether the applicant meets
the requirements for renewal of recognition (Appendix A.I.B.4.a). OSHA
then notifies the applicant of the preliminary finding, and also publishes
a notice of the preliminary finding in the Federal Register (Appendix
A.I.B.4.b). This notice provides the public an opportunity to comment
on the applicant's ability to meet the recognition requirements
(Appendix A.I.B.5). If OSHA receives a comment objecting to the
preliminary finding, OSHA may, at the discretion of the Assistant
Secretary, initiate a special review of any information provided in the
record that requires resolution. During the special review, OSHA
supplements the record either by seeking additional public comment or
convening an informal hearing (Appendix A.I.B.7). At the conclusion of
the process (either after the public-comment period closes or at the
conclusion of the discretionary special review, if conducted), the
Assistant Secretary renders a final decision, based on a preponderance
of the evidence, as to whether the NRTL seeking renewal continues to
meet the requirements for recognition (Appendix A.I.B.7.c).
If an NRTL files a timely and sufficient renewal request, the
current recognition of an NRTL does not expire until the Assistant
Secretary renders a final decision (Appendix A.I.C.2.c). If the
Assistant Secretary grants the NRTL's application for renewal, the
NRTL's recognition is valid for five years unless terminated before the
expiration of the period (Appendix A.I.B.7).
B. The NRTL Independence Requirement
OSHA requires that NRTLs and applicants be "completely independent
of employers subject to [OSHA's] tested equipment requirements, and of
any manufacturers or vendors of equipment or materials being tested for
these purposes" (see 29 CFR 1910.7(b)(3)). This independence
requirement is fundamental to the third-party testing and certification
system, as the requirement ensures that the organizations testing and
certifying specified products as safe have no affiliation with the
manufacturers or vendors of the products, or with employers that use
the equipment or products in the workplace.
OSHA's NRTL Program Directive specifies the approach for judging an
NRTL's or applicant's compliance with the Agency's independence
requirement under 29 CFR 1910.7. The policy recognizes that certain
relationships between an NRTL and any manufacturer of products that
require NRTL certification can affect the objectivity and impartiality
of an NRTL's testing and certification procedures.
The policy provides that, to meet the independence requirement,
NRTLs and applicants "must be free from commercial, financial and
other pressures that could compromise the results of its testing and
certification processes" (see NRTL Program Policies, Procedures, and
Guidelines--CPL 01-00-003--CPL 1-0.3 (hereafter, "NRTL Program
Directive"), Appendix C.V). Pursuant to this policy, OSHA presumes
that these pressures exist if there is a substantial relationship
between the NRTL or applicant and a manufacturer, vendor, or major user
"of products that must be certified which could compromise objectivity
and impartiality in determining the results of its testing and
certification processes" (id.). The term "substantial" for purposes
of the policy, means that the relationship is "of such a nature and
extent as to exert undue influence on the testing and certification
processes" (id.). The factors that signify that an NRTL or applicant
has an impermissible "substantial relationship" include, but are not
limited to, the following: (1) The NRTL or applicant is
"organizationally affiliated" with a manufacturer, vendor, or major
user "of products that an NRTL must certify"; (2) the NRTL or
applicant "is owned in excess of two percent (2%) by a [manufacturer
or vendor] or major user, or their major owners"; (3) the NRTL or
applicant "receives significant financing from a [manufacturer or
vendor] or major user, or their major owners"; or (4) a "person
holding a substantial position with the NRTL [or applicant] has a
significant financial interest in a [manufacturer, vendor,] or major
user, or is a director or key personnel of either" (id.).
OSHA cannot perform in-depth analyses of an NRTL's or applicant's
ownership or financial relationship and interests. Therefore, pursuant
to the policy, an NRTL or applicant can rebut the presumption that
pressures exist by "present[ing] clear and convincing evidence" that
it is independent, and that any relationship with a manufacturer or
employer involves no, or only minor, pressures (id.).
Finally, pursuant to this policy, OSHA may prescribe "conditions"
on NRTLs or applicants for initial or continued recognition, even when
the Agency determines that pressures exist (id.). Such conditions
"must be consistent with th[e] policy" (id.). The independence policy
provides examples of options OSHA may consider when imposing
conditions: (1) Restricting the suppliers for whom the NRTL or
applicant may test and certify products; or (2) restricting the type of
products the NRTL or applicant may test and certify (id.).
Whether imposing conditions on an NRTL or applicant is appropriate
is a judgment made by the Agency on a case-by-case basis. As OSHA
stated in an earlier Federal Register notice, in analyzing these
situations, OSHA must examine carefully: The ownership situation; the
types of products at issue; the scope and magnitude of the NRTL's or
applicant's operations; the scope and magnitude of the operations of
the manufacturers that are making, and the employers that are using,
the products; and other factors (see 72 FR 24619, May 3, 2007). OSHA
also must consider the degree to which it can monitor the NRTL or
applicant's compliance with any imposed conditions, which is a
particularly important factor (id.).
OSHA audits NRTLs regularly to ensure they continue to meet the
NRTL requirements, including the independence requirement, and to
maintain the quality of their testing and certification operations. If
imposing conditions on an NRTL or applicant would be difficult or
impossible for OSHA to audit effectively, then imposing such conditions
on the NRTL or applicant would not be appropriate.
C. Wendel's Pressures on CSL
In May of 2005, Bureau Veritas Consumer Products Services, Inc.
(BVCPS), acquired CSL (OSHA-2009-0026-0014).\1\ At the time, Bureau
Veritas Holdings, Inc. (BVH), owned BVCPS; Bureau Veritas SA (BVSA)
owned BVH; and Wendel Investissement (Wendel) owned BVSA (id.) Wendel
describes itself as a "hands-on investor" that "invest[s] for the
long term as the majority or leading shareholder in listed or unlisted
companies, taking the lead in order to accelerate their growth and
development" (OSHA-2009-0026-0028).
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\1\ Citations to the record take the following format: "(OSHA-
2009-0026-00XX)."
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As of September 2012, Wendel continued to be the largest
shareholder of BVSA, owning approximately 51 percent (OSHA-2009-0026-
0038), and BVSA's 2011 annual report showed that it wholly owns CSL
(OSHA-2009-0026-0037).\2\ Wendel also owned approximately six percent
of Legrand, a manufacturer of electrical products based in France
(OSHA-2009-0026-0038). Legrand has world-wide operations in the U.S.,
many European countries, Canada, Mexico, various South American countries,
and China, as well as other parts of Asia (OSHA-2009-0026-0027). Wendel also
owns additional manufacturers, vendors, or users of products, some of which
require NRTL certification prior to use in the workplace (OSHA-2009-0026-0038).
As Wendel is an investment company, it may acquire additional companies that
manufacture, sell, or use products that require NRTL testing and
certification.
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\2\ OSHA understands that BVSA's ownership of CSL occurs through
several intermediate, wholly owned, subsidiaries of BVSA.
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D. CSL's Application for Renewal and OSHA's Preliminary Finding
CSL applied to OSHA for its initial recognition in February 1998,
when it was a limited liability company chartered in the Commonwealth
of Massachusetts. After processing the application, including
performing the necessary on-site assessments, OSHA announced its
preliminary finding on the application in a notice published in the
Federal Register on December 13, 1999 (64 FR 69552). Following the
requisite comment period, OSHA issued a notice in the Federal Register
on May 8, 2000, announcing its final decision to recognize CSL as an
NRTL for a five-year period ending on May 9, 2005 (65 FR 26637).
CSL filed a timely application for renewal of its recognition as an
NRTL, on June 4, 2004 (OSHA-2009-0026-0012). The address of the testing
facility (site) that OSHA recognizes for CSL, and the address submitted
by CSL for renewal, is: Curtis-Straus LLC., One Distribution Center
Circle, Suite 1, Littleton, Massachusetts 01460.
On April 27, 2007, OSHA informed CSL by letter that CSL appeared
not to meet the policy on independence specified in the NRTL Program
Directive due to BVSA's acquisition of CSL (OSHA-2009-0026-0013). OSHA
asked CSL to provide clear and convincing evidence that pressures did
not exist as a result of its organizational affiliation with Legrand
(id.).
In submissions to OSHA dated August 27, 2007, and January 31, 2008,
CSL asserted that it would rebut the presumption of pressures (OSHA-
2009-0026-0014; OSHA-2009-0026-0015). First, CSL described the
"longstanding integrity" of BVSA and CSL. Second, CSL claimed an
attenuated relationship existed between CSL and Legrand. Third, CSL
argued that a Compliance Committee implemented by CSL, as well as the
objectivity of CSL's testing program, would mitigate any undue
influence. Fourth, CSL argued that "firewalls" existed to assure the
independence of CSL's testing and certification processes.\3\ Fifth,
CSL asserted that the presence of common executives and board members
between Legrand, Wendel, and BVSA did not compromise the integrity of
CSL's testing and certification because there was "no reason to
believe that [the board members] would seek to cause a complex
international conspiracy to compromise CSL."
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\3\ These "firewalls" were measures or factors that CSL
claimed mitigate or prevent undue influence on its NRTL activities.
CSL's firewalls included a separation of its board of directors from
some of the other entities in the corporate organizational chart,
use of independent auditors, and establishment of the Compliance
Committee.
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OSHA responded to CSL's assertions on August 14, 2008, and
reiterated the following concerns it had about CSL's independence: (1)
The substantial relationship that arose from Wendel's common ownership
of both Legrand, a manufacturer, and CSL, an NRTL; (2) the common
executives and board members shared between BVSA, CSL, Wendel, and
Legrand; (3) how CSL would monitor Wendel's future acquisitions; (4)
how CSL would warrant to OSHA that it would not test or certify either
Legrand's or its competitor's products; (5) how CSL would comply with
the requirements of the International Federation of Inspection Agencies
(IFIA) \4\ specifying that auditors be independent of the testing
organization; and (6) how CSL would ensure the personnel performing the
audits have the necessary qualifications (see OSHA-2009-0026-0016).
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\4\ The IFIA is a trade association that represents companies
involved in international testing, inspection, and certification
services. It requires members to adhere to a compliance code that
includes independent auditing by IFIA for compliance with IFIA
standards (see "About Us" IFIA,
http://www.ifia-federation.org/content/about-us, accessed 5/11/2012).
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On February 20, 2009, CSL described its efforts to: (1) Monitor
Wendel's acquisitions; (2) perform enhanced certification procedures on
products manufactured by subsidiaries and other companies
organizationally affiliated with Wendel; and (3) use both external and
internal audits to ensure that CSL maintains its independence (OSHA-
2009-0026-0017). CSL asserted that it would accomplish these efforts
through: (1) Extensive procedures it has in place to identify public
Wendel subsidiaries; (2) its conflict-management procedures that
require additional witnessing and review of test data on products
produced by Wendel subsidiaries; (3) audits by internal compliance
officers; (4) and IFIA membership. CSL also informed OSHA that it was
changing its executive leadership and augmenting its board of directors
with additional independent directors to dilute the potential for undue
influence on the board. However, the mutual board members shared
between BVSA, Legrand, and Wendel would remain on their respective
boards.
OSHA fully considered CSL's efforts to rebut the presumption of
undue influence. On January 19, 2010, the Agency made a negative
finding of renewal (OSHA-2009-0026-0018). OSHA based its decision, in
part, on concerns that OSHA would not be able to effectively monitor
CSL's monitoring, certification, and auditing efforts because of the
extent and complexity of Wendel and Legrand's operations. OSHA stated
that it does not have the resources or expertise to monitor all of
Wendel's and Legrand's current or future acquisitions, products, and
operations.
In response to the negative finding of renewal, CSL submitted a
revised application for renewal on October 18, 2010 (OSHA-2009-0026-
0019). The revised application reiterated CSL's commitment to objective
testing, the procedures of the CSL Compliance Committee, and
requirements of the external audits. CSL also proposed a temporary
limitation in which CSL would limit its testing and certification to
existing clients and products. Moreover, on August 1, 2011, CSL
notified OSHA that Wendel reduced its ownership of Legrand from 32 to
11.1 percent (OSHA-2009-0026-0020).
After considering CSL's submissions, on October 11, 2011, OSHA
issued a preliminary finding denying CSL's application for renewal (see
OSHA-2009-0026-0002 (76 FR 62850)). Comments were due by November 10,
2011, which OSHA later extended to December 14, 2011 (see OSHA-2009-
0026-0004 (76 FR 73686, Nov. 29, 2011)). OSHA's preliminary finding
explained in detail the Agency's reasons why CSL did not meet the
requirements for continued recognition.
OSHA received eight comments in response to its preliminary
determination on CSL's application for renewal. OSHA addresses those
comments below under Section III ("Discussion of CSL's Independence")
and Section IV ("Summary and Analysis of Additional Comments").
III. Discussion of CSL's Independence
A. Introduction
In this Federal Register notice, OSHA finds that CSL meets the
regulatory requirement that it be "completely independent of employers
subject to [OSHA's] tested equipment requirements, and of any manufacturers
or vendors of equipment or materials being tested for these purposes"
(see 29 CFR 1910.7(b)(3)). CSL is not "free from commercial, financial and
other pressures that could compromise the results of its testing and
certification processes," nor did it rebut successfully the presumption that
pressures exist by "present[ing] clear and convincing evidence" that
it is independent, and that any relationship with a manufacturer or
employer involves no, or only minor, pressures ((NRTL Program
Directive, Appendix C.V). However, OSHA can prescribe conditions on CSL
that are consistent with its independence policy (id.). CSL proposed
several conditions, both before, and in response to, OSHA's preliminary
finding, to address its ability to comply with the NRTL independence
requirement. In this notice, OSHA accepts most of the conditions
proposed by CSL, and also develops additional conditions, to resolve
the issues surrounding CSL's independence. Therefore, OSHA is granting
the renewal of CSL's NRTL recognition, and imposes on CSL conditions
with which CSL must abide to retain its recognition.
B. Pressures on CSL
In its preliminary finding, OSHA found that CSL has a "substantial
relationship" with Legrand because Wendel owned, at least in part,
both CSL and Legrand. At the time OSHA made its preliminary finding,
Wendel, through various intermediaries, owned approximately 58 percent
of CSL and approximately 11 percent of Legrand. Legrand is a
manufacturer of various products, many of which require NRTL testing
and certification if used in the workplace. OSHA found that, under its
NRTL independence policy, this relationship constitutes a "substantial
relationship," in which a major owner of a supplier of products
requiring NRTL testing and certification has an ownership interest in
excess of two percent in CSL, an NRTL. Because of this substantial
relationship, OSHA presumed that pressures exist on CSL that could
compromise the results of its testing and certification processes, and
that CSL, therefore, is not independent.
In various letters submitted to OSHA prior to the Agency's
preliminary finding, and in its comments to the preliminary finding,
CSL explained why it believed it was not subject to pressures from
Wendel or Legrand that could compromise the results of its testing and
certification processes. The Agency carefully considered this
information, and found that CSL did not adequately rebut the
presumption of pressures.
In trying to rebut the presumption of pressures, CSL contended,
prior to OSHA issuing the preliminary finding, that the "relationship
of Legrand or other Wendel holdings is highly attenuated" (OSHA-2009-
0026-0019) and, as such, this relationship does not result in undue
influence on CSL. CSL argued that Wendel is a long-term investor that
does not manage CSL's day-to-day operations. CSL also noted that Wendel
does not exert control over CSL, therefore assuring CSL's independence
from Wendel and Legrand.
As OSHA found in the preliminary finding, CSL's assertion that
Wendel does not manage or exert control over CSL's day-to-day
operations does not address the fundamental issue regarding the control
that a parent company has over a majority-owned subsidiary. According
to the United States Securities and Exchange Commission, the term
"control" in this context means the "possession, direct or indirect,
of the power to direct or cause the direction of the management and
policies of a person, whether through the ownership of voting
securities, by contract, or otherwise" (see 17 CFR 230.405). The
parent company of a majority-owned subsidiary, in this case CSL, has
ultimate control over the subsidiary, even though the parent company
may delegate some of that control to the subsidiary. A parent company
can exert control by changing a subsidiary's policies and leadership,
and even by selling the subsidiary. Therefore, OSHA found in the
preliminary finding, that, because Wendel has the power to dictate and
pressure CSL's actions, CSL does not have decisionmaking independence.
Further, although CSL claimed, prior to OSHA issuing the
preliminary finding, an "attenuated" connection to Wendel, CSL did
not provide any assurances that Wendel would refrain from exerting
control over CSL, or from pressuring CSL through Bureau Veritas. To the
contrary, OSHA found that Wendel has a corporate policy that encourages
exerting control over Bureau Veritas and CSL. Wendel's Web site,
accessed near the time OSHA issued its preliminary finding, stated that
Wendel's "policy is to be the key or controlling shareholder in its
listed or unlisted investments on a long-term and hands-on basis. It
expresses this commitment by actively participating in these companies'
strategic decisions, based on the principle of direct, constructive and
transparent give-and-take with their managers" (http://www.wendel-
investissement.com/en/charte-de-lactionnaire_83.html).\5\ Furthermore,
although CSL notified OSHA that Wendel reduced its percentage ownership
of Legrand from 32 to 11.1 percent in 2011 (OSHA-2009-0026-0020), CSL
did not provide any assurance that this reduction in ownership
eliminated Wendel's control over CSL. Furthermore, Wendel could
increase its ownership interest at any time. Therefore, OSHA found in
the preliminary finding that, although it could impose a condition to
limit such an increase in ownership, the fundamental issue of Wendel's
control over CSL would remain.
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\5\ Web page no longer accessible. OSHA accessed this Web page
prior to issuing its preliminary finding, and the Agency relied on
it only for that purpose.
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CSL also claimed prior to OSHA issuing the preliminary findings
that, because no member of its Board of Managers has "significant
ties" to any of BVSA's parent companies, there is little opportunity
for these companies to exert pressures on CSL (OSHA-2009-0026-0019).
OSHA found, in the preliminary findings, that the current
organizational relationship between CSL and Wendel via BVSA does not
rebut the presumption of pressures. When Wendel first purchased CSL,
BVSA and CSL shared two key executives (Mr. Frank Piedelievre, who was
a member of BVSA's management board, as well as CSL's chairman, and Mr.
Francois Tardan, who also was on BVSA's management board and is CSL's
treasurer). At the time OSHA issued the preliminary finding, Wendel and
BVSA shared one board member. According to the Web sites of Wendel and
BVSA, accessed near the time OSHA issued its preliminary finding, Mr.
Ernest-Antoine Seilli[egrave]re was the Chairman of Wendel's
Supervisory Board, as well as a member of BVSA's Board of Directors
(http://www.bureauveritas.com/wps/wcm/connect/bv-com/Group/Home/
Investors/Corporate--governance and
http://www.wendel-investissement.com/en/members-32.html).\6\
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\6\ The Web pages containing this information are no longer
accessible. OSHA accessed these pages prior to issuing its
preliminary finding, and the Agency relied on it only for that
purpose.
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Furthermore, CSL asserted, prior to OSHA issuing the preliminary
finding, that individuals affiliated with Wendel and Legrand are no
longer members of its Board of Managers (OSHA-2009-0026-0017). However,
OSHA found that, based on the information provided by CSL, several
BVSA-affiliated members remained on CSL's board: Mr. John Beisheim was
Vice President of Acquisitions and Risk Management at
BVCPS, and Mr. Oliver Butler was a Senior Vice President at BVCPS
(OSHA-2009-0026-0017). BVCPS is a subsidiary of BVSA, which is a
subsidiary of Wendel. OSHA found that this arrangement perpetuates a
direct line of communication and pressure between Wendel and CSL by way
of BVSA because BVSA controls BVCPS and senior officers at BVCPS
control CSL. In summary, OSHA concluded that the modifications CSL made
to its Board of Managers provided little organizational separation
between CSL and Wendel and, therefore, did not adequately rebut the
presumption of pressures.
In response to the preliminary finding, CSL notified OSHA that
Wendel further reduced its ownership of Legrand from 11.1 to 5.8
percent (OSHA-2009-0026-0006). CSL also reiterated earlier assertions
that the degree of Wendel's ownership of Legrand attenuated the
relationship between Legrand, Wendel, and CSL (id.). Moreover, in June
2013, Wendel divested itself of Legrand (see Ex. OSHA-2009-0026-0053).
This divestment does not rebut the presumption of pressures
associated with the substantial relationship between Wendel and CSL.
First, it appears that the actual and potential control Wendel
maintains of CSL still exists. As of September 2012, Mr. Ernest-Antoine
Seilli[egrave]re, Chairman of Wendel's Supervisory Board, and Mr.
Fr[eacute]d[eacute]ric Lemoine, Chairman of Wendel's Executive Board,
as well as two key Wendel executives (Mr. Stephane Bacquaert, Wendel
Managing Director for Investment, and Mr. Jean-Michel Ropert, Wendel
Chief Financial Officer), sat on the Board of BVSA (OSHA-2009-0026-
0030; OSHA-2009-0026-0041; OSHA-2009-0026-0042; OSHA-2009-0026-0043).
In addition, Mr. Lemoine was Vice Chairman of BVSA's Board (OSHA-2009-
0026-0030; OSHA-2009-0026-0043). As OSHA stated in the preliminary
finding, this arrangement perpetuates a direct line of communication
and pressure between Wendel and CSL by way of BVSA (76 FR 62854,
October 11, 2011).
Second, as OSHA stated in the preliminary finding, Wendel also had
an ownership interest in Campagnie Deutsche, a "manufacturer of
industrial and automotive electrical connectors, some of which may
require NRTL certification prior to use in the workplace" (OSHA-2009-
0026-0002). While Wendel also sold its interest in Campagnie Deutsche
(OSHA-2009-0026-0038; OSHA-2009-0026-0044) as of September 2012, Wendel
had a 17.1 percent ownership interest in Saint-Gobain, which
manufactures, sells, or distributes products that would require NRTL
approval if used in U.S. workplaces. In this regard, the company stated
that it "play[s] a significant role in renewable energy development,
focusing on solar power solutions with a presence across the value
chain--from component supply and photovoltaic module manufacturing to
distribution--and in several markets, including photovoltaic panels and
solar heating systems" (OSHA-2009-0026-0045).
In addition, in July 2011, Wendel, through its subsidiary Oranje-
Nassau Development (an international private-equity firm), acquired at
least two other companies that manufacture and sell electrical
equipment that likely require NRTL approval--Mecatherm and exceet Group
SE (OSHA-2009-0026-0031; OSHA-2009-0026-0038). As of September 2012,
Wendel had a 98.1 percent ownership interest in Mecatherm, a "[l]eader
in industrial bakery equipment" that "designs, assembles and installs
automated production lines for bakery products throughout the world"
(OSHA-2009-0026-0047). Wendel had a 28.4 percent ownership interest in
exceet Group SE as of December 31, 2012; exceet Group SE is a
"European market leader in embedded intelligent electronic systems"
that "designs, develops and produces customized and essential
components for blue chip clients, particularly in the fields of medical
and healthcare, industrial automation, financial services, security,
avionics and transportation," and has a "portfolio rang[ing] from
complex electronic modules and systems that are generally integrated in
costly devices, smart-cards and chips, which are produced in small and
medium quantities." (OSHA-2009-0026-0046). Mecatherm manufactures and
sells electric ovens, coolers, and freezers for bakery-production
lines, and exceet Group SE manufacturers and sells a number of
different types of electric devices, including medical devices and
control panels for electrical industrial equipment (OSHA-2009-0026-
0048; OSHA-2009-0026-0049). Both of these companies sell their products
in the United States (see OSHA-2009-0026-0046; OSHA-2009-0026-0047)
and, if used in a U.S. workplace, the products would require NRTL
approval. Thus, Wendel is a major owner of these companies, and OSHA
believes Wendel could exert undue influence on CSL to certify products
made, sold, or used by these companies or reject products made, sold,
or used by these companies' competitors.
Moreover, CSL does not control Wendel, and OSHA would have no
authority to impose a condition that would override Wendel's authority
to become a major owner of other companies that are manufacturers,
vendors, or major users of products that an NRTL must test and certify.
That Wendel could become a major owner of other companies that are
manufacturers, vendors, or major users of products that an NRTL must
test and certify is a distinct and realistic possibility. Wendel is an
investment company with the stated purpose to "invest for the long
term as the majority or leading shareholder in listed or unlisted
companies, taking the lead in order to accelerate their growth and
development" (OSHA-2009-0026-0028). Therefore, Wendel's divestment of
ownership in Legrand does not provide clear and convincing evidence to
rebut the presumption of pressures that exist as a result of CSL's
affiliation with Wendel.
Finally, OSHA notes that, in response to the preliminary finding, a
member of the BVCPS board of directors claimed an "absence of
pressures by or through [the BVCPS] Board upon Curtis-Straus LLC (CSL)
to certify any products under the scope of its NRTL recognition"
(OSHA-2009-0026-0007). In support of this claim, the board member
asserted that "while CSL and BVCPS share board members, there is no
common board membership between either BVCPS or CSL and either BVSA,
Wendel, or Legrand"; "national and international certification
schemes have been satisfied by CSL's ability to implement reasonable
controls"; "there are no NRTL certifications by CSL for Legrand,
Legrand affiliates or any other entities owned by Wendel"; and Wendel
"reduce[d] its ownership stake in Legrand . . . to a mere 5.8%"
(id.).
OSHA rejects the commenter's claim primarily for the reasons stated
in OSHA's preliminary finding. For the most part, the commenter
restates arguments that OSHA rejected in its preliminary finding, but
does not provide substantive evidence to rebut the presumption of
pressures. OSHA addressed Wendel's divestment in Legrand above, and
addresses CSL's ability to implement reasonable controls below.
Accordingly, neither CSL nor the member of the BVCPS board of directors
provided any additional information that would rebut the presumption of
pressures.
C. Imposing Conditions on CSL Is Consistent With OSHA's Independence
Policy
In its preliminary finding, OSHA determined that it cannot impose
conditions on CSL that would assure its independence because, in large
part, OSHA cannot reliably monitor the various CSL and Wendel ownership
arrangements, and the affiliations Wendel has with its numerous
subsidiaries. The Agency's policy on independence provides an approach
to determining whether an organization meets the requirement for
independence (76 FR 62855, October 11, 2011). Consistent with this
policy, OSHA does not require its staff to analyze extensive and
complex actual or potential business activities that could cause
conflicts and pressures. Moreover, OSHA found that, when these
activities are as extensive and complex as they are for the world-wide
operations of Wendel, this information is far beyond OSHA's auditing
capabilities under the NRTL Program. Therefore, OSHA concluded in the
preliminary finding that it would be unreasonable for it to determine
with its existing resources the extent to which Wendel-affiliated
companies contribute to the sale and manufacture of products submitted
to CSL for NRTL testing and certification (id.).
In response to this finding, CSL proposed hiring an outside
contractor, at CSL's expense, to monitor all mergers and acquisitions
of CSL's clients and ensure that none of these transactions involve a
Wendel subsidiary or a Wendel-affiliated product. CSL determined that
this condition, in concert with "extensive safeguards" proposed by
CSL before OSHA issued its preliminary finding, would cure the "matter
of `infeasibility' of monitoring [those] mergers and acquisitions"
(OSHA-2009-0026-0005).
OSHA finds this recent condition proposed by CSL, in concert with
other conditions proposed by CSL and the additional conditions
developed by OSHA, to be consistent with OSHA's independence policy.
OSHA believes, with certain qualifications discussed below, that the
use of a third party to examine the mergers and acquisitions associated
with CSL's clients will allow OSHA to monitor Wendel's vast operations
and ensure that none of CSL's transactions involve a Wendel subsidiary
or a product manufactured by a Wendel subsidiary.\7\
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\7\ While this discussion refers to Wendel, it pertains to any
organization that may develop a subsequent ownership interest in
CSL.
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In this respect, OSHA notes that Wendel could exert pressure on CSL
to certify products containing components manufactured or sold by a
Wendel subsidiary. While CSL stated, prior to OSHA issuing the
preliminary finding, that "[w]e are willing to not test or certify
[such] products" (OSHA-2009-0026-0017), OSHA believes the use of a
third party to examine components used in CSL-certified products also
will allow OSHA to ensure that none of CSL's transactions involve
components or products manufactured by Wendel subsidiaries.
Moreover, OSHA had concerns that Wendel could exert undue influence
on CSL to reject products made, sold, or used by the competitors of a
Wendel subsidiary that makes, sells, or uses NRTL approved products.
OSHA believes that the use of a third party to examine whether CSL's
transactions involve products manufactured, sold, or distributed by the
competitor of a Wendel subsidiary would alleviate this concern. OSHA
notes that it will carefully monitor the effectiveness of this
condition, and will reconsider this condition if it appears to be
ineffective. OSHA also is imposing the following additional conditions
on CSL:
Ethical constraints and firewalls. Prior to the preliminary finding
made by OSHA, CSL informed OSHA of several self-imposed ethical
constraints and firewalls that ensure that it does not succumb to any
pressures resulting from the control Wendel could exert over CSL. For
example, CSL asserted that, because it is an affiliate of BVSA, it is
required to "adhere to a compliance program that meets the standards
of, and has been approved by," the International Federation of
Inspection Agencies ("IFIA") (OSHA-2009-0026-0014). CSL also has a
policy of requiring its staff to remain objective and avoid conflicts
of interest when conducting product testing (id.). For example, CSL has
external auditing policies, and, according to CSL, its external
auditors perform several functions, including: (1) Conducting annual
reviews and risk-based audit sampling on whether CSL's corporate-
compliance programs and internal-management systems meet the IFIA
ethical standards; and (2) conducting investigations of ethics
violations (id. and Exhibit F thereto). In another example, CSL
indicated that it was establishing a Compliance Committee to, among
other functions, "provide oversight to make sure that no influence or
pressure is exercised by any affiliate of Curtis-Straus on any employee
of Curtis Straus" (id.).
OSHA believes that the ethical constraints and firewalls CSL
imposes on itself are vital to CSL maintaining complete independence as
required by OSHA's NRTL Program regulations. Therefore, OSHA imposes on
CSL, as a condition of its renewal, that CSL maintain the ethical
constraints and firewalls described here, and all other ethical
constraints and firewalls described by CSL in its submissions to OSHA
in conjunction with its application for renewal. These submissions
include the following exhibits in the docket: comment from Michael
Buchholz, Curtis-Straus LLC, OSHA-2009-0026-0005; Ex. 4--CSL letter to
OSHA, dated 8-27-2007, OSHA-2009-0026-0014; Ex. 5--CSL letter to OSHA,
dated 1-31-2008, OSHA-2009-0026-0015; Ex. 7--CSL letter to OSHA, dated
2-20-2009, OSHA-2009-0026-0017; and Ex. 9--CSL Revised Renewal
Application, dated 10-18-2010, OSHA-2009-0026-0019.
Composition of boards. As stated above, a member of the BVCPS board
of directors asserted that "while CSL and BVCPS share board members,
there is no common board membership between either BVCPS or CSL and
either BVSA, Wendel, or Legrand" (OSHA-2009-0026-0007). OSHA agrees
with the BVCPS board member that restricting access to the boards of
BVCPS and CSL will help minimize the risk of undue influence by Wendel.
Therefore, OSHA imposes on CSL, as a condition of its renewal, that
neither CSL nor BVCPS share any common board members with Wendel, BVSA,
or any other Wendel subsidiary.
OSHA believes that the proposed conditions, in combination with the
additional conditions developed by OSHA, are consistent with OSHA's
independence policy. The additional conditions provide for a third-
party monitor to evaluate CSL and Wendel transactions and submit to
OSHA reports of any findings that result from the monitor's activities,
thereby ensuring that OSHA has adequate oversight of these
transactions. Therefore, OSHA finds that, even though CSL is still not
free of the commercial, financial, and other pressures that could
compromise the results of its NRTL testing and certification processes,
CSL may still retain its recognition if it complies with the conditions
specified herein.
D. OSHA's Position on Conditions Imposed on NRTLs
Prior to the preliminary finding made by OSHA, CSL argued that OSHA
imposed conditions in the cases of Intertek Testing Services NA, Inc.
(Intertek), National Technical Systems,
Inc. (NTS), and Wyle Laboratories, Inc. (Wyle), and that these cases
indicate that OSHA also should impose conditions in CSL's case (OSHA-
2009-0026-0019). OSHA rejected these arguments in the preliminary
finding, but now is reconsidering this decision.
In the Intertek case, Intertek's parent acquired, and merged into
Intertek's overall laboratory operations, a small manufacturer of
laboratory test equipment, Compliance Design. Consequently, Intertek
lost its independence because its parent company owned a manufacturer
of equipment that needed NRTL approval. OSHA, however, imposed a
condition on Intertek's recognition that effectively eliminated the
pressures associated with Intertek's relationship with Compliance
Design (66 FR 29178, May 29, 2001). This condition included a "no-
testing" policy for Compliance Design, and for any other manufacturer
affiliated with Intertek. Although OSHA received no information showing
that Intertek or its parent owned any other manufacturing interest, the
Agency imposed the broader condition as a precaution. OSHA found that
it could impose this condition because, unlike CSL's situation,
Compliance Design was a small company that produced just one type of
product; therefore, OSHA found that Intertek could enforce the no-
testing policy. Consequently, OSHA found that it had the resources to
monitor effectively Intertek's compliance with the independence policy
because of Compliance Design's limited operations. OSHA found in the
preliminary finding that CSL's situation is much different than
Intertek's because Wendel's and Legrand's operations involve multiple
products manufactured and sold by numerous and variable subsidiaries,
making it difficult for OSHA to impose conditions on CSL's recognition
that would mitigate all of the pressures, and that OSHA could monitor
reasonably and effectively.
OSHA also imposed a condition on Wyle (59 FR 37509). When OSHA
granted Wyle NRTL recognition, Wyle was part of an organization with a
division that manufactured and distributed electronic-enclosure
cabinets. As with Intertek, the condition imposed on Wyle required that
Wyle not test or certify any equipment that used electronic enclosures
manufactured by this division. In its preliminary finding, OSHA found
that, unlike CSL's situation, this condition was easy for Wyle and OSHA
to monitor because the only product at issue was electronic-enclosure
cabinets.
Lastly, OSHA imposed conditions on NTS (63 FR 68306, December 10,
1998). NTS was a public company that "could conceivably perform the
design and engineering services . . . for manufacturers or vendors of
the products covered within the scope of the test standards for which
OSHA has recognized NTS" (63 FR 68306, December 10, 1998). Because NTS
is a public company, OSHA had a concern that manufacturers or vendors
could acquire ownership of NTS. Accordingly, OSHA imposed a condition
on NTS that restricted it from testing and certifying products for a
client to which it sells design, or similar, services. OSHA also
required NTS to provide OSHA an opportunity to review NTS's NRTL
Quality Manual, Quality Assurance Procedures, and other procedures
within 30 days of certifying its first products under the NRTL Program
(63 FR 68306, 68309, December 10, 1998). OSHA imposed these conditions
only as a preemptive measure because, unlike the CSL case, there was no
evidence in the record that any manufacturers or vendors owned NTS, or
that NTS was providing design and engineering services to manufacturers
or vendors. In the preliminary finding, OSHA determined that, in the
case of CSL, Wendel's ownership of a manufacturer and the potential for
indirect affiliation with numerous other manufacturers and vendors that
were beyond OSHA's capability to track results in a presumption of
pressure that violates the NRTL independence policy.
As stated above, OSHA now imposes on CSL, as a condition of its
renewal, that CSL hire an outside contractor, at its expense, to (1)
monitor all mergers and acquisitions of CSL's clients; (2) ensure that
none of CSL's transactions involve Wendel, a Wendel subsidiary, or a
product or component made by such a subsidiary; and (3) ensure that
products that fail to attain NRTL certification from CSL, or components
of such products, are not made, sold, or used by competitors of Wendel
or Wendel subsidiaries. The combination of CSL's proposed conditions
renders CSL's case similar to that of Intertek, NTS, and Wyle. As noted
earlier, OSHA believes that the use of a third party to examine the
mergers and acquisitions involving CSL's clients will allow OSHA to
monitor Wendel's vast operations and ensure that CSL maintains its
independence.
In its comments to the preliminary finding made by OSHA, CSL also
asserted that OSHA should apply the same conditions to CSL as OSHA
applied to TUV Rheinland PTL, LLC (TUVPTL), in a Federal Register
notice (76 FR 16452) dated March 23, 2011 \8\ (see the list of
questions from CSL attached to OSHA-2009-0026-0021). Arizona Technology
Enterprises (AzTE), a company that acts as an agent to license
technologies and that takes an equity stake in the companies that
commercialize them, is a partial owner of TUVPTL (76 FR at 16453-
54).\9\ However, OSHA found little potential, and no actual, pressures
associated with AzTE's ownership of TUVPTL (id.). As OSHA stated in
TUVPTL's final notice of recognition, the vast majority of AzTE's
technologies do not involve the types of products for which OSHA
requires NRTL approval (id. at 16454). In fact, only one of its
licensed technologies may require NRTL approval, and the company to
which AzTE licensed that technology apparently was not manufacturing
any products at the time of OSHA's recognition of TUVPTL. Therefore, at
the time OSHA issued its final decision on TUVPTL's application, there
was no violation of OSHA's independence policy because a major owner of
a manufacturer, vendor, or major user of products requiring NRTL
approval, or their major owners, did not have an ownership interest in
TUVPTL in excess of two percent (NRTL Program Directive, Appendix C.V).
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\8\ CSL also asked why its ownership and management were more
complex than that of Underwriters Laboratories, Inc. (UL), and SGS
U.S. Testing Company, Inc. (SGS) (see the list of questions from CSL
attached to OSHA-2009-0026-0021). CSL asked further "what concerns
for independence were raised by OSHA with regard to UL's acquisition
of Springboard Engineering, a company offering engineering advisory
services to improve product reliability." However, OSHA did not
impose conditions related to independence on either UL or SGS, and
CSL did not provide a cogent explanation of the relevance of its
situation to that of UL and SGS.
\9\ While AzTE is only one of the owners of TUVPTL, OSHA found
that the remaining equity stakes of AzTE did not provide any
potential independence conflicts, and, thus, presented no potential
sources of undue influence on TUVPTL (76 FR at 16453-54).
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Nevertheless, OSHA believed it was appropriate to impose conditions
on TUVPTL's recognition "[t]o address future business ventures by
AzTE" and to "avoid any situation that could conflict with OSHA's
NRTL independence requirement" (76 FR at 16454, March 23, 2011).
Accordingly, OSHA requires AzTE to annually report the companies in
which it has an ownership interest, as well as a description of each of
the company's business purposes (id. at 16455). OSHA also requires that
TUVPTL not test or certify any product manufactured, distributed, or
sold by a company owned in excess of 2 percent by AzTE,
and that TUVPTL cease certifications related to the NRTL Program if (1)
AzTE has more than a 10 percent ownership interest in a company; (2)
OSHA determines that such a company or one of its subsidiaries,
affiliates, or significant owners, either makes, distributes, or sells
a type of product for which OSHA requires NRTL approval (i.e., one
currently shown in OSHA's Web page titled "Type of Products Requiring
NRTL Approval"); and (3) OSHA determines that the risk of actual or
potential undue influence resulting from this ownership is not minor
(id.). Finally, OSHA requires the implementation of various conditions
to allow OSHA to monitor TUVPTL's independence (id.).
While TUVPTL's situation differs from that of CSL, OSHA finds that
it can impose conditions on CSL for reasons similar to the reasons that
it used to justify imposing conditions on TUVPTL. Specifically, the
conditions OSHA imposes on CSL (described more fully below in Section
V, "Final Decision," below) will help identify and prevent
transactions that may involve a current or future product of one of
Wendel's subsidiaries.
Finally, OSHA finds CSL's situation to be different than that of
Electrical Reliability Services, Inc. (formerly Electro-Test, Inc.
(ETI)), in which OSHA denied ETI's application for renewal of its NRTL
recognition (73 FR 35415-01, June 23, 2008). When applying to renew its
NRTL recognition, ETI had a substantial relationship with its owner,
Emerson Electric Company, and, therefore, OSHA presumed that pressures
existed that could compromise the results of ETI's testing and
certification processes (ETI Preliminary Finding, 72 FR 24617-01,
24620, May 3, 2007). OSHA found that ETI did not sustain its burden of
rebutting the presumption of pressures, despite ETI's established
policy that it would not knowingly perform NRTL testing, evaluation, or
certification work for Emerson-owned companies, because, in relevant
part: (1) ETI's policy did not address the direct ownership
relationship that existed between ETI and Emerson and the control that
Emerson could assert over ETI's operations; (2) ETI's corporate no-
testing policy appeared to address only final products manufactured by
Emerson, and not component parts; (3) Emerson's operations and product
lines were so vast that OSHA seriously doubted ETI's ability to
effectively enforce its own policy; (4) it would be virtually
impossible for OSHA to monitor ETI's corporate no-testing policy; and
(5) OSHA's did not have the resources to audit ETI's independence
because Emerson's operations were in constant flux, and because Emerson
was continually buying and selling new companies (id. at 24620-22). In
summary, OSHA found that it could not impose conditions on ETI's
recognition because the scope of products that Emerson produced was
enormous, and OSHA did not have the resources to monitor the various
ownership relationships and affiliations ETI had with Emerson's
numerous subsidiaries (id. at 24622).
OSHA took these considerations into account in analyzing CSL's
application for renewal, thereby assuring consistent application of
conditions. However, in performing this analysis, OSHA found CSL's
situation to be different than that of ETI because CSL proposed a
condition, which OSHA accepted, that enables OSHA, with existing
resources and auditing capabilities, to monitor Wendel and its
subsidiaries.
Accordingly, OSHA's determination regarding the imposition of
conditions on CSL's NRTL recognition is consistent with the Agency's
previous actions. Although, CSL is not entirely free of the commercial,
financial, and other pressures that could compromise the results of the
NRTL testing and certification processes, OSHA finds that it is able to
impose conditions that are consistent with the NRTL Program's
independence policy and that will enable it to monitor and audit those
conditions effectively.
IV. Summary and Analysis of Additional Comments
As noted above, OSHA received eight comments in response to its
preliminary determination on CSL's application for renewal. When
appropriate, OSHA addressed some of these comments in the preceding
section. OSHA responds to the remaining comments in this section.
A. Validity and Application of the NRTL Independence Policy
CSL questioned the basis of the NRTL Program's independence policy
and how OSHA applies that policy to existing NRTLs (see the list of
questions from CSL attached to OSHA-2009-0026-0021).\10\ CSL and one
other commenter raised concerns about the potential economic impact
associated with denying CSL's application for renewal (OSHA-2009-0026-
0008; see the list of questions from CSL attached to OSHA-2009-0026-
0021). Other commenters asked OSHA to consider every possible renewal
condition within its scope of authority (OSHA-2009-0026-0008; OSHA-
2009-0026-0009; OSHA-2009-0026-0010; OSHA-2009-0026-0011).
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\10\ Many of the other questions in CSL's list addressed
oversight of OSHA's NRTL Program, OSHA's deliberative process, and
other issues that go beyond the scope of this final determination
(see the list of questions from CSL attached to OSHA-2009-0026-
0021). Therefore, OSHA is not addressing these questions in this
Federal Register notice. The remaining questions addressed issues
such as the actual or potential pressure exerted by Wendel on CSL,
whether it is appropriate for OSHA to impose conditions on CSL, and
does OSHA apply its independence policy consistently (id.). OSHA
addressed these issues in other sections of this notice.
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OSHA specifies its independence requirement in 29 CFR 1910.7, and
this requirement is fundamental to the NRTL system of third-party
testing and certification. Independence is, in many ways, the
cornerstone of the NRTL Program, ensuring that those organizations that
certify the safety of workplace products are not owned by, affiliated
with, or subject to pressures by manufacturers or vendors of the
products, or by employers that may use the products. OSHA imposed the
independence requirement on NRTLs to ensure that such ownerships or
affiliations do not compromise the NRTLs' testing and certification of
these products in such a way as to render the products unsafe for use
in the workplace. As explained above, OSHA's NRTL Program Directive
specifies under 29 CFR 1910.7 an approach for judging an NRTL's or
applicant's compliance with the Agency's independence requirement. The
policy recognizes that certain relationships between an NRTL and any
manufacturer, supplier, or user of products that require NRTL
certification can affect the objectivity and impartiality of the NRTL's
testing and certification procedures.
The independence policy extends to any parent, or ultimate parent,
of an NRTL or NRTL applicant, and applies equally to all NRTLs and
applicants. OSHA's policy is to review the independence of each
organization when it applies to the NRTL Program, during routine audits
of NRTL testing and certification facilities, and again when an
existing NRTL applies to renew its recognition under the NRTL Program.
For these reviews, OSHA takes into consideration the same
organizational and management factors that it did for CSL. In the event
OSHA identifies relationships that raise doubt about an NRTL's
independence, OSHA will follow the same procedure as it did for CSL.
OSHA has a duty to American workers to ensure that NRTLs meet the
independence requirement because
failure to do so could compromise testing and, thereby, lead to the
introduction of unsafe products in the workplace. The benefit to the
American worker resulting from the integrity of the NRTL Program far
outweighs any adverse effects that may result from denying an
application for renewal because an NRTL does not meet the independence
requirement. Employers may expose workers to serious hazards when they
do not use a properly approved NRTL product as required by an OSHA
standard. NRTL approval ensures that a product meets applicable test-
standard requirements and will operate safely in the workplace. For
example, NRTL approval ensures that an electric product will operate at
its rated voltage, current, and power, and will not exceed specified
limits and pose hazards to the workers who use the product. These
hazards include electric shock, arc flash, blast events, electrocution,
equipment shorts, explosions, burns, fires, and toxic atmospheres
generated by burning and decomposing materials.
Because of the vital importance of the independence requirement to
assuring the use of safe products in the workplace, the question of the
potential economic impact associated with denying CSL's application was
not a factor in OSHA's final determination in this matter. Accordingly,
OSHA did not consider the economic-impact arguments made by commenters
(OSHA-2009-0026-0008; see the list of questions from CSL attached to
OSHA-2009-0026-0021).
In reviewing CSL's application for renewal, OSHA followed Agency
policy and examined whether it could impose conditions on CSL's
recognition that would be consistent with the NRTL Program independence
policy. As described above, OSHA found that it could impose such
conditions.
B. CSL's Proposal To Implement an Independent Board of Managers
CSL suggested, as an alternative to its third-party monitoring
proposal, that it could eliminate pressures by ceding its certification
authority to an independent board of managers, and that OSHA could
appoint one of the members of this board (OSHA-2009-0026-0005). This
alternative now is moot because OSHA is implementing instead CSL's
third-party monitoring proposal as a condition of renewal. OSHA notes,
however, that it would be inappropriate for its representative to sit
on a CSL board of managers because of the ethical concerns that may
arise under such an arrangement; in addition, this alternative would
involve OSHA directly in a laboratory's certification process, which is
contrary to the basic purpose of the NRTL Program.
C. CSL's Request for a Hearing
CSL requested that OSHA convene a special review and a hearing to
address its application for renewal (OSHA-2009-0026-0005). Pursuant to
Appendix A to 29 CFR 1910.7, if the public objects to OSHA's
preliminary finding on an application for renewal of an NRTL's
recognition, OSHA may, at the discretion of the Assistant Secretary,
initiate a special review of any information provided in the public
record that appears to require resolution. During the special review,
OSHA supplements the record either by reopening the public comment
period or convening an informal hearing (see Appendix A.I.B.7 of 29 CFR
1910.7). The Assistant Secretary hereby denies CSL's request to convene
a special review and hearing. CSL's request now is moot because OSHA is
granting CSL's application for renewal. Moreover, no information
provided in the public record appears to require resolution.
V. Final Decision
Pursuant to the authority granted to it under 29 CFR 1910.7, OSHA
hereby gives notice of the renewal of recognition of CSL as an NRTL. In
making this determination, OSHA thoroughly reviewed CSL's request for
renewal of recognition and all other pertinent information provided by
CSL and other commenters. CSL made an acceptable proposal that
satisfies the NRTL Program policies regarding independence found in
Appendix C to the NRTL Program Policies, Procedures, and Guidelines
Directive (OSHA Instruction CPL 01-00-003-CPL 1-0.3). OSHA accepted the
conditions proposed by CSL and developed additional conditions to
address issues surrounding CSL's independence. Based on OSHA's
examination of comments made in response to the preliminary notice, it
finds that CSL meets the requirements of 29 CFR 1910.7 for renewal of
its recognition. This renewal is subject to the original terms of CSL's
recognition (65 FR 26637, May 8, 2000) and its existing scope of
recognition, as well as the conditions of renewal specified below.
Failure to comply with these conditions may result in OSHA revoking, or
imposing additional limits on, CSL's NRTL recognition.
Definitions
The following definitions apply specifically to CSL and the
conditions of the renewal of recognition as an NRTL:
Affiliate of CSL--Wendel and any Wendel subsidiary.
Failure to attain NRTL certification--A product fails to attain
NRTL certification when a product submitted by a client of CSL for
testing and certification does not meet one or more test parameters or
requirements, as defined in an appropriate NRTL Program test standard.
Wendel subsidiary--An entity is a Wendel subsidiary when either
Wendel, or an entity below Wendel in the organizational chain between
Wendel and CSL (e.g., BVSA or BVCPS), has a net ownership interest of
more than two percent in that entity.\11\
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\11\ For example, an entity would be a Wendel subsidiary if
Wendel owns 50 percent of an entity that owns 10 percent of that
entity. Here, Wendel's net ownership interest in that entity would
be 5 percent (i.e., 50 percent of a 10 percent ownership interest).
On the other hand, an entity would NOT be a Wendel subsidiary if
Wendel owns 50 percent of an entity that owns 2 percent of that
entity. In this second example, Wendel's net ownership interest in
that entity would be 1 percent (i.e., 50 percent of a 2 percent
ownership interest).
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Conditions of Renewal
1. Third-Party Monitoring
(a) A third-party monitor shall review CSL's independence.
(b) CSL shall bear full financial responsibility for the cost of
services rendered by the third-party monitor.
(c) OSHA shall retain final approval over any third-party monitor
chosen by CSL to conduct the monitoring.
(d) CSL must submit the name of the third-party monitor for the
coming year (beginning January 1) to OSHA on or before October 1 of the
prior year.\12\
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\12\ To cover the period following publication of this notice
until January 1, 2015, CSL must submit the name of the third-party
monitor to OSHA within 30 days following the date of publication of
this notice.
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(e) The third-party monitor shall monitor CSL's clients and each
client's products that are subject to NRTL certification to determine,
in a timely fashion, and with due diligence and all reasonable speed,
whether:
(i) Wendel, or any Wendel subsidiary, manufactures, distributes,
sells, or uses any products that CSL tests or certifies under the NRTL
Program; and
(ii) Wendel, or any Wendel subsidiary, manufactures, distributes,
sells, or uses any components in products that CSL tests or certifies
under the NRTL Program;
(f) Should a product manufactured by a CSL client fail to attain
NRTL certification from CSL, the third-party monitor also shall
determine, in a timely fashion, and with due diligence and all
reasonable speed, whether Wendel, or any Wendel subsidiary,
manufactures, sells, distributes, or uses
a product that competes with the client's product or with a component
in the client's product.
(g) The third-party monitor shall provide to OSHA a separate report
10 days after making an affirmative finding under Conditions 1(e)(i),
1(e)(ii), or 1(f); the report shall include the basis for making the
affirmative finding: 13 14
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\13\ The basis shall include a statement indicating the net
ownership interest that Wendel, and entities below Wendel in the
organizational chain between Wendel and CSL (e.g., BVSA and BVCPS),
have in the clients or Wendel subsidiaries that are the subjects of
the affirmative finding, and an explanation of how the third-party
monitor calculated net ownership.
\14\ The third-party monitor shall send any of the information
required or requested by OSHA to: Office of Technical Programs and
Coordination Activities, Directorate of Technical Support and
Emergency Management, Occupational Safety and Health Administration,
U.S. Department of Labor, 200 Constitution Avenue NW., Room N-3655,
Washington, DC 20210, or by email to NRTLProgram@dol.gov.
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(h) The third-party monitor shall also provide to OSHA, by December
31 of each year:
(i) An annual report listing each component contained in each
product certified by CSL, including the manufacturer, distributor, and
vendor of the component; and
(ii) An annual report listing the names of Wendel's directors,
BVSA's directors, BVCPS's directors, and CSL's directors, and, for each
named director, a listing of all other Wendel subsidiaries for which
the named director is a member of the board of directors.
(i) In complying with Condition 1:
(i) The third-party monitor may rely exclusively on all information
and documentation that the third-party monitor receives from CSL
pursuant to the information-sharing and documentation-sharing
requirements specified for CSL in Conditions 2(b)(i)(A), 2(b)(i)(B),
and 2(d)(i), below.
(ii) The third-party monitor also may rely exclusively on the
information and documentation that the third-party monitor receives
from CSL pursuant to the information-sharing and documentation-sharing
requirements specified for CSL in Condition 2(b)(i)(C) below to the
extent that CSL provides a list of components in products requiring
NRTL certification. The third-party monitor shall perform its own
independent search for the manufacturers, distributors, and vendors of
those components in accordance with Condition (1)(i)(iii) below.
(iii) The third-party monitor shall perform its own search for all
other information and documentation required by Condition 1. In so
doing, the third-party monitor:
(A) Must ensure that this search is independent of the other
information and documentation it receives from CSL pursuant to the
information-sharing and documentation-sharing requirements specified
for CSL in Conditions 2 and 4, below; and
(B) May use the other information and documentation it receives
from CSL pursuant to the information-sharing and documentation-sharing
requirements specified for CSL in Conditions 2 and 4 below, but only in
conjunction with the information and documentation the third-party
monitor obtains in its own independent search.
(iv) The third-party monitor shall inform OSHA immediately of any
information or documentation it obtains in its own independent search
that is inconsistent with the information or documentation it receives
from CSL pursuant to the information-sharing and documentation-sharing
requirements specified for CSL in Conditions 2 and 4 below.
2. Information and Documentation Provided by CSL
(a) CSL shall cooperate fully in the efforts of the third-party
monitor to perform the monitoring specified herein.
(b) On or before July 1 of each year, CSL shall provide OSHA and
the third-party monitor with the following information and
documentation:
(i) A list, in electronic format, of CSL's clients having
product(s) requiring NRTL certification, and which includes, at a
minimum:
(A) Each client's name and address;
(B) The name(s) and model number(s) of each product requiring NRTL
certification; and
(C) Each component in each product requiring NRTL certification,
including, to the extent CSL has knowledge, the manufacturer,
distributor, and vendor of each component;
(ii) A list, to the extent it has knowledge, of Wendel
subsidiaries, that contains the following information and
documentation:
(A) For each Wendel subsidiary in the list, a statement indicating:
1. The net ownership interest that Wendel, and entities below
Wendel in the organizational chain between Wendel and CSL (e.g., BVSA
and BVCPS), have in that Wendel subsidiary;
2. An explanation of how CSL calculated net ownership; and
3. A description of that Wendel subsidiary's business purpose.
(B) To the extent it has knowledge, whether Wendel, or any Wendel
subsidiary, manufactures, distributes, sells, or uses a type of product
shown on OSHA's Web page at http://www.osha.gov/dts/otpca/nrtl/prodcatg.html.
(C) For each Wendel subsidiary in the list, the record(s) or
document(s) that describe the net ownership interest that Wendel, and
entities below Wendel in the organizational chain between Wendel and
CSL (e.g., BVSA and BVCPS), have in that Wendel subsidiary.
Note to Condition 2(b)(ii)(C): CSL does not need to provide to
OSHA, or to a third-party monitor, record(s) or document(s) it
provided to OSHA and that third-party monitor in prior years (unless
those documents have been updated or amended), but it must note in
the list that it previously provided such record(s) or document(s)
to OSHA and that third-party monitor. However, if the third-party
monitor is new, then CSL must provide these records and documents to
the new third-party monitor within 30 days of replacement (see
Condition 2(g) below).
(iii) A list, to the extent it has knowledge, of CSL's client(s)
which have product(s) requiring NRTL testing and certification, and are
either Wendel itself or a Wendel subsidiary.
(iv) A list, to the extent it has knowledge, indicating those
products for which Wendel, or any Wendel subsidiary, manufactures,
distributes, sells, or uses a product that CSL tests or certifies under
the NRTL Program; and
(v) A list, to the extent it has knowledge, indicating those
products for which Wendel, or any Wendel subsidiary, manufactures,
distributes, sells, or uses a component(s) in a product that CSL tests
or certifies under the NRTL Program; included in this list shall be the
component(s) that Wendel, or any Wendel subsidiary, manufactures,
distributes, sells, or uses.
(c) CSL shall report to the third-party monitor and OSHA any
product that fails to attain NRTL certification from CSL within 30 days
of such an event; in so doing, CSL shall indicate, to the extent it has
knowledge, whether Wendel, or any Wendel subsidiary, manufactures,
sells, distributes, or uses a product that competes with the product
that failed to attain NRTL certification, or that competes with a
component in the product that failed to attain NRTL certification.
(d) CSL shall report to the third-party monitor and OSHA when it
begins testing and certifying product(s) under the NRTL Program either
for a new client, or an existing client for which it did not previously
test and certify product(s) under the NRTL Program, within 30 days of
beginning such testing and certifying; in so doing, CSL shall provide
the third-party monitor and OSHA with the following information and
documentation:
(i) The new client's or existing client's name and address;
(ii) To the extent CSL has knowledge, whether the new client or
existing client is either Wendel itself or a Wendel subsidiary.
(iii) If the new client or an existing client is a Wendel
subsidiary:
(A) Information on the net ownership interest that Wendel, and
entities below Wendel in the organizational chain between Wendel and
CSL (e.g., BVSA and BVCPS), have in that Wendel subsidiary;
(B) An explanation of how CSL calculated net ownership;
(C) A description of that Wendel subsidiary's business purpose; and
(D) Record(s) and document(s) that describe the net ownership
interest that Wendel, and entities below Wendel in the organizational
chain between Wendel and CSL (e.g., BVSA and BVCPS), have in that
Wendel subsidiary.
(e) CSL shall provide to OSHA and the third-party monitor
corrected, completed, and updated information or documentation, within
30 days after it becomes aware that the information or documentation it
provided to OSHA and the third-party monitor under Conditions 2 or 4
was, or has become, incorrect, incomplete, or outdated.
(f) CSL shall provide, in addition to the information and
documentation required from CSL under Conditions 2 and 4, any
information or documentation requested by either OSHA or the third-
party monitor within 30 day of such a request, or an explanation as to
why it cannot provide the requested information or documentation.
(g) If a new third-party monitor replaces the existing third-party
monitor, CSL shall provide to the new third-party monitor, within 30
days of replacement, a copy of all information and documentation that
CSL provided to the previous third-party monitor in accordance with
Conditions 2 and 4.
(h) To comply with Conditions 2 and 4, CSL shall perform, and shall
attest in its submissions to OSHA and the third-party monitor that it
performed, an active and complete search, both within and outside CSL,
for the information and documentation required by Conditions 2 and 4.
3. OSHA Determination
(a) After reviewing an affirmative finding of the third-party
monitor (see Conditions 1(g) and (1)(i)(iv)), or any other information
or documentation concerning CSL's independence, OSHA will make a
determination about whether to amend CSL's scope of recognition (by,
e.g., disallowing CSL from testing and certifying a product(s) that it
could otherwise test and certify under its scope of recognition) or
revoke CSL's recognition.
(b) In making a determination under Condition 3(a), OSHA will,
among other factors, independently determine whether:
(i) Wendel, or a Wendel subsidiary, is a manufacturer, distributor,
vendor, or major user of a product that CSL tests or certifies under
the NRTL Program;
(ii) Wendel, or a Wendel subsidiary, is a manufacturer,
distributor, vendor, or major user of a component in a product that CSL
tests or certifies under the NRTL Program;
(iii) Wendel, or a Wendel subsidiary, manufactures, sells,
distributes, or is a major user of, a product that competes with a
product that failed to attain NRTL certification from CSL; and
(iv) Wendel, or a Wendel subsidiary, manufactures, sells,
distributes, or is a major user of, a product that competes with a
component in a product that failed to attain NRTL certification from
CSL.
(c) If OSHA makes a determination under Condition 3(a) to amend
CSL's scope of recognition, OSHA shall notify CSL of its determination
and give CSL an opportunity to oppose the determination.\15\
Accordingly, CSL may either:
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\15\ OSHA may make a determination under Condition 3(a) to
revoke CSL's recognition outright, without undertaking the
procedures described in following paragraphs (i) through (iii); in
such a case, OSHA will take appropriate action pursuant to the
procedures in Appendix A to 29 CFR 1910.7.
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(i) Accept OSHA's determination, in which case CSL shall abide by
the determination; or
(ii) Oppose OSHA's determination, in which case CSL shall:
(A) Within 10 days of notification, inform OSHA in writing of its
opposition to the determination; and
(B) Within an additional 30 days, provide OSHA with a written
rebuttal to OSHA's determination.
(iii) OSHA shall notify CSL if CSL does not rebut OSHA's
determination to OSHA's satisfaction, and, after notification, OSHA
shall:
(A) Give CSL 10 days from receipt of notification to withdraw its
opposition; and
(B) If CSL does not withdraw its opposition in the specified time,
take appropriate action pursuant to the procedures in Appendix A to 29
CFR 1910.7.
4. Ethical Constraints and Firewalls
(a) CSL shall maintain the ethical constraints and firewalls
described in this notice, and all other ethical constraints and
firewalls described by CSL in its submissions to OSHA in conjunction
with its application for renewal.
(b) The submissions specified in Condition 4(a) include the
following exhibits in the docket:
(i) Comment from Buchholz Michael, Curtis-Straus LLC, OSHA-2009-
0026-0005.
(ii) Ex. 4--CSL letter to OSHA, dated 8-27-2007, OSHA-2009-0026-
0014.
(iii) Ex. 5--CSL letter to OSHA, dated 1-31-2008, OSHA-2009-0026-
0015.
(iv) Ex. 7--CSL letter to OSHA, dated 2-20-2009, OSHA-2009-0026-
0017.
(v) Ex. 9--CSL Revised Renewal Application, dated 10-18-2010, OSHA-
2009-0026-0019.
(c) Examples of the ethical constraints and firewalls with which
CSL must comply include the following:
(i) CSL shall adhere to a compliance program and internal-
management systems that meet the standards of, and are approved by, the
International Federation of Inspection Agencies (IFIA), and Bureau
Veritas shall maintain its membership in IFIA;
(ii) CSL shall maintain a policy requiring its staff to remain
objective and avoid conflicts of interest when conducting product
testing;
(iii) CSL shall maintain internal auditing policies and conduct
such audits pursuant to those policies;
(iv) CSL shall maintain external auditing policies, and its
external auditors shall perform several functions, including conducting
annual reviews and risk-based audit sampling on whether CSL's
corporate-compliance programs and internal-management systems meet the
IFIA ethical standards, and conducting investigations of ethics
violations; and
(v) CSL shall maintain a Compliance Committee of its Board, as
described in its submissions (see, e.g., OSHA-2009-0026-0014), to,
among other duties, provide oversight to ensure that no affiliate of
CSL exercises undue influence or pressure on any employee of CSL, and
that there are no undue pressures to compromise CSL's NRTL testing and
certifications.
(d) Upon completion of any audit (internal or external) required
under Condition 4, CSL shall submit the results of that audit, and any
reports generated as a result of that audit, to the third-party monitor
and to OSHA.
5. Composition of Boards
Neither CSL nor BVCPS shall share common board members with Wendel,
BVSA, or any other Wendel subsidiary.
6. OSHA Notification
CSL shall inform OSHA's Office of Technical Programs and
Coordination Activities as soon as possible, in writing, of any change
of ownership, facilities, or key personnel, and any major change in its
operations as an NRTL, and provide details of these change(s).
VI. Authority and Signature
David Michaels, Ph.D., MPH, Assistant Secretary of Labor for
Occupational Safety and Health, 200 Constitution Avenue NW.,
Washington, DC 20210, authorized the preparation of this notice.
Accordingly, the Agency is issuing this notice pursuant to Section
8(g)(2) of 29 U.S.C. 651 et al., Secretary of Labor's Order No. 1-2012
(77 FR 3912, Jan. 25, 2012), and 29 CFR 1910.7.
Signed at Washington, DC, on April 16, 2014.
David Michaels,
Assistant Secretary of Labor for Occupational Safety and Health.
[FR Doc. 2014-09072 Filed 4-21-14; 8:45 am]
BILLING CODE 4510-26-P
