9631 Federal Register / Vol. 86, No. 29 / Tuesday, February 16, 2021 / Proposed Rules 
because of the 5-year phase-in of some provisions. 
This proposed rule does not have any lengthy phase-in provisions, supporting OSHA’s decision to 
use a 10-year annualization period for this PEA. 29This methodology was modeled after an 
approach used by the Environmental Protection 
Agency. More information on this approach can be found at U.S. Environmental Protection Agency, ‘‘Wage Rates for Economic Analyses of the Toxics Release Inventory Program,’’ June 10, 2002 (Ex. 2066) (Document ID 0046). This analysis itself was based on a survey of several large chemical manufacturing plants: Heiden Associates, Final Report: A Study of Industry Compliance Costs under the Final Comprehensive Assessment Information Rule, prepared for the Chemical Manufacturers Association, December 14, 1989 (Ex. 2065) (Document ID 0048). 
30In June of 2019, BLS reported: ‘‘Employer costs 
for employee compensation for civilian workers averaged $36.77 per hour worked in March 2019 . . . Wages and salaries cost employers $25.22 while benefit costs were $11.55.’’ The fringe markup of 31.4 percent of total compensation ($11.55/$36.77) is equivalent to a benefits markup of 45.8 percent in relation to the base wage ($11.55/ $25.22). (BLS, 2019, Document ID 0224). using a three percent discount rate are 
also provided in the Excel spreadsheets that support this PEA, which are contained in the docket (OSHA, 2020, Document ID 0049). 
For the purpose of calculating loaded 
wage rates, OSHA did not include an overhead labor cost in the FEA in support of the 2012 HCS final standard. The Department of Labor has since determined that it is appropriate, in some circumstances, to account for overhead expenses as part of the methodology used to estimate the costs and economic impacts of OSHA regulations. For this PEA, in addition to applying fringe benefits to hourly (‘‘base’’) wages, OSHA also applied an overhead rate when estimating the marginal cost of labor in its primary cost calculation. 
Overhead costs are indirect expenses 
that cannot be tied to producing a specific product or service. Common examples include rent, utilities, and office equipment; however, there is no general consensus on the cost elements that fit the definition of overhead in the context of occupational safety and health. The lack of a common definition has led to a wide range of overhead estimates. Consequently, the treatment of overhead costs needs to be case- specific. For this PEA, OSHA has adopted an overhead rate of 17 percent of base wages, which is consistent with the overhead rate and methodology used for (1) sensitivity analyses in the FEA in support of the 2017 final rule delaying the deadline for submission of OSHA Form 300A data (82 FR 55761, 55765 (Nov. 24, 2017)); and (2) the FEA in support of OSHA’s 2016 final standard on Occupational Exposure to Respirable Crystalline Silica (81 FR 16285, 16488– 
16492 (March 25, 2016)).
29 
To calculate the total labor cost for an 
occupational category, OSHA added together three components: Base wage + fringe benefits (derived as 45.8 percent of the base wage)
30+ applicable 
overhead costs (derived as 17 percent of the base wage). For example, the median hourly wage of an Occupational Health and Safety Specialist is $35.63. Applying a fringe markup of 45.8 percent (applied to the base wage) and an overhead rate of 17 percent (applied to the base wage) yields a fully-loaded hourly wage of $ $58.00 ($35.63 × .458 
= $16.32; $35.63 × 0.17 = $6.11; $35.63 
+ $16.32 + $6.11 = $58.00). Note that, for this labor category, the fringe markup is equal to 28.13 percent of the fully-loaded hourly wage and that the overhead rate is equal to 10.53 percent of the fully-loaded hourly wage. Using this methodology, OSHA calculated the fully-loaded labor cost for four occupational categories: (1) Manager, Standard Occupational Classification (SOC) code 11–0000, $82.70; (2) Logistics Personnel, SOC code 13–1081, $58.51; (3) Production Worker, SOC code 51–0000, $28.18; and (4) Occupational Health and Safety Specialist, SOC code 19–5011, $58.00. 
(For further details, see Document ID 0049, tab ‘‘Wages’’.) 
Table VII–12 shows the estimated 
annualized compliance costs and cost savings by cost category and by industry sector. All costs and cost savings are reported in 2019 dollars. As shown in Table VII–12, the total annualized net 
cost savings of compliance with the 
proposed rulemaking is estimated to be $26.8 million—consisting of about $4.4 million of annualized costs and $31.1 million of annual cost savings. Note that where tables in this PEA report estimated annualized costs, as in Table VII–12, cost savings appear as a negative number. 
As shown by the three-digit NAICS 
Subsectors 325 (for Chemical Manufacturing) and 424 (for Merchant Wholesalers, Nondurable Goods) in Table VII–12, most of the estimated compliance costs and cost savings associated with the proposed rule would be incurred or realized by the chemical manufacturing industry and its distributors. However, the table also shows that familiarization costs would be spread across most manufacturing and wholesale industries in the U.S. economy subject to OSHA’s jurisdiction, reflecting the fact that employee exposures to hazardous chemicals occur in many industry sectors. 
OSHA expects that all compliance 
costs would be incurred in the first year, as the proposed rule would incorporate a one-year transition period into the compliance schedule for the standard. Specifically, for purposes of estimating the annualized compliance costs, OSHA assumed that the compliance costs associated with chemical reclassification, employee training, and management familiarization would be incurred in the first year following the effective date of the proposed revisions to the HCS. 
BILLING CODE 4510–26–P 
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31OSHA proposes that the revisions become 
effective 60 days after publication (paragraph (j)(1)) 
and that chemical manufacturers, importers, and distributors evaluating substances comply with all 
modified provisions within one year after the effective date (paragraph (j)(2)). OSHA also proposes that chemical manufacturers, importers, and distributors evaluating mixtures comply with all modified provisions within two years after the effective date (paragraph (j)(3)). BILLING CODE 4510–26–C 
Estimation of Compliance Costs and 
Cost Savings 
The remainder of his section explains 
how OSHA calculated the estimated compliance costs and cost savings arising from the proposed rule by describing the data and methodology used. 
The major elements of the proposed 
revisions to the HCS that involve compliance costs or cost savings are (1) the cost of revising SDSs and labels for select hazardous chemicals to reflect chemical reclassifications (per proposed changes to appendix B) and to conform to language criteria in precautionary statements and other mandatory language (per proposed changes to appendices C and D); (2) the cost of management familiarization and other management-related costs necessary to ensure compliance with the revised standard (associated with all of the proposed revisions to the standard); (3) the cost of training employees as necessitated by the proposed changes to the HCS (see existing 29 CFR 1910.1200(h)(1)); (4) cost savings from the new released-for-shipment provision (proposed revisions to 29 CFR 1910.1200(f)(11)); and (5) cost savings from limiting labeling requirements for certain very small containers (proposed 29 CFR 1910.1200(f)(12)). 
The estimated compliance costs and 
cost savings presented in this analysis of the proposed revisions to the HCS are based partly on analysis conducted in support of the 2012 HCS final rule (77 FR 17605–17683) and partly on new analysis prepared with the assistance of OSHA’s contractor, ERG. 
The estimated costs of compliance 
with most provisions of the proposed rule involve wages paid for the labor hours required to fulfill the requirements. In some cases, compliance could be achieved by purchasing services or products in lieu of paying employees directly. The estimated compliance costs are intended to capture the resources required for compliance regardless of how individual establishments may choose to achieve compliance. 
With the exception of the proposed 
revision to the standard addressing precautionary statements and other mandatory language, for this cost analysis OSHA estimated a baseline compliance of zero percent. The agency’s estimate of baseline compliance for the revisions in appendices C and D addressing precautionary statements and other mandatory language are discussed below in the section, Revisions to SDSs and Labels Due to Revised 
Precautionary Statements. 
Costs Associated With Reclassifications 
and Revisions to Safety Data Sheets and Labels 
The proposed revisions to the HCS 
will not change the existing requirement for firms that sell hazardous chemicals to employers to provide information about the associated hazards. Information must be presented in an SDS in the format specified in the standard, and some information must also be presented on product labels. The proposed rule would require affected chemical manufacturers to revise SDSs 
and labels for select hazardous 
chemicals to reflect chemical reclassifications (appendix B) and to conform to language criteria in precautionary statements and other mandatory language (appendices C and D). Revisions to SDSs and labels would be required under provisions in the existing HCS, which require chemical manufacturers and importers to update SDSs and labels within three months and six months, respectively, of becoming aware of significant new information regarding the hazards of the chemicals they produce or import (see 29 CFR 1910.1200(f)(11), (g)(5)). 
It is OSHA’s understanding that 
chemical manufacturers and importers periodically review, revise, and update the electronic templates they use to create SDSs and labels. Changes are made, for example, as information regarding specific hazards becomes available, new information about 
protective measures is ascertained, or 
revisions are made to product information and marketing materials. Labels and SDSs are also produced and modified when products are first introduced to the market or when products change. Therefore, there is a regular cycle of change for these documents (see 77 FR 17634–17637 in the FEA of the 2012 final rule for a discussion of factors that compel employers to update SDSs and labels voluntarily). The proposed rule would require limited changes to some SDSs and labels. Given the phase-in period for the proposed changes to the standard,
31OSHA expects that chemical 
manufacturers and importers would be able to phase in revisions to their labels and SDSs in accordance with the 
normal cycle of change, and therefore would not need to replace existing labels or SDSs. OSHA requests comments on this preliminary assumption. 
OSHA has, however, estimated costs 
for the time it will take to update the electronic files that will be used to generate new SDSs and labels in accordance with the proposed revisions to the HCS. OSHA developed cost estimates based on the methodology used in its FEA in support of the 2012 HCS final rule (77 FR 17634–17637). The estimated compliance costs represent the incremental costs that would be incurred to achieve compliance with the proposed rule. These estimated costs, shown below in Tables VII–13 and VII–14, would be in addition to the costs that already need to be incurred to comply with applicable requirements of the existing HCS and represent the time it would take to identify the changes that need to be made to the relevant computer files (i.e., the files that are used to generate 
SDSs and labels) and then to make those changes. 
Producers of affected chemicals 
already have an obligation, under the existing HCS, to ensure that the 
information provided in their SDSs and labels is accurate and current (29 CFR 1910.1200(f)(2) and (g)(5)). They also are generally required to revise SDSs and labels in accordance with new information regarding hazards that may be associated with their products (29 CFR 1910.1200(f)(11) and (g)(5)). For every affected product that is newly created, reformulated, mixed with new ingredients, modified with new or different types of additives, or has any changes made in the proportions of the ingredients used, chemical manufacturers and importers are required, under the existing HCS, to review the available hazard information (29 CFR 1910.1200(d)(2)), to classify the chemical in accordance with applicable hazard criteria (29 CFR 1910.1200(d)(1)), and to develop corresponding SDSs (29 CFR 1910.1200(g)) and labels (29 CFR 1910.1200(f)). OSHA is not estimating costs for activities already required; rather, the agency is estimating costs for activities that would be newly conducted in conformance with the proposed revisions to chemical reclassifications (appendix B) and language criteria in precautionary statements and other mandatory language (appendices C and D). 
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Revisions to SDSs and Labels Due to 
Chemical Reclassification 
The NAICS industries listed in 
Columns 1 and 2 of Table VII–13 are those that OSHA expects would 
manufacture aerosols, desensitized explosives, or flammable gases. Of course, not all chemicals covered in these NAICS industries are aerosols, 
desensitized explosives, or flammable gases. Column 3 of Table VII–13 reflects OSHA’s judgment that approximately 50 percent of the SDSs (or more specifically, 50 percent of the electronic templates (files) that are used to produce SDSs and labels) in these 
NAICS industries would be affected by the proposed requirements for aerosols, 
desensitized explosives, and flammable gases. OSHA invites public comments on its preliminary projection that 50 percent of the electronic files for SDSs and labels would be affected in these industries. 
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OSHA derived the number of directly 
affected electronic files for SDSs and labels in Column 4 of Table VII–13 by 
applying the 50 percent factor to the overall number of affected SDSs (electronic files) from Table VII–5. For 
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32Note that OSHA estimated no baseline 
compliance for chemical manufacturers already 
having revised electronic files to reflect reclassified chemicals as specified in the proposed rule; the current HCS does not allow SDSs or labels to display chemical classifications that are not in conformance with the current rule. 33See discussion in the 2012 preamble (77 FR 
17634). 
34OSHA proposes that the revisions become 
effective 60 days after publication (paragraph (j)(1)) 
and that chemical manufacturers, importers, and distributors evaluating substances comply with all modified provisions within one year after the effective date (paragraph (j)(2)). OSHA also proposes that chemical manufacturers, importers, and distributors evaluating mixtures comply with all modified provisions within two years after the effective date (paragraph (j)(3)). example, in NAICS 211130, Table VII– 
5 shows the overall number of affected SDSs (technically, the number of electronic files) is 15,810. Applying a factor of 50 percent, OSHA estimated that 7,905 SDSs (electronic files) would be directly affected by the reclassification provision (see Table VII–13, NAICS 211130 within the section ‘‘Total/Average’’). All of the estimates of directly affected SDSs (electronic files) presented in Table VII– 13 are similarly derived from Table VII– 5, but only those NAICS industries with affected SDSs (electronic files) are reported in Table VII–13. 
The estimated compliance costs 
associated with the reclassification of hazards and related changes to SDSs and labels are directly related to the number of chemicals for which electronic files will need to be updated in order to prepare updated SDSs and labels. OSHA developed estimates of the number of potentially affected SDSs for each of the industries producing the corresponding chemicals and products (based on estimates of the total number of SDSs (and the supporting electronic files) by industry as shown in Table VII– 5 of this PEA). OSHA expects downstream users, distributors, and wholesalers would continue to rely on SDSs and labels provided by manufacturers to fulfill their obligations under the OSHA standard, and would not incur costs associated with chemical reclassification under the proposed revisions to the HCS. It is OSHA’s understanding that this has been the practice for decades. 
Table VII–13 also contains estimates 
of the amount of time OSHA expects it will take to update electronic files for SDSs and labels under the proposed revisions to the standard. OSHA believes that the estimates provided in Table VII–13 are reasonable because they reflect only the incremental time needed to identify affected labels and SDSs (electronic files) and to update electronic files through modification of the templates that are used to prepare 
labels and SDSs, without allocating costs to any time that would be spent updating files in the absence of any revisions to the HCS. 
OSHA also believes that the estimated 
time to update SDSs and labels (electronic files) used in this analysis 
represents a reasonable average for most chemicals. In the FEA in support of the 2012 HCS final rule (77 FR 17635– 17637), OSHA estimated that a Health and Safety Specialist would spend between three and seven hours per SDS requiring reclassification—with smaller entities, having fewer SDSs, incurring larger costs per SDS. The revisions to the HCS currently being proposed are significantly more limited in scope than 
the 2012 final rule, with fewer affected 
hazard categories and more limited changes; however, the proposed revisions to the standard still present opportunities for scale efficiencies in reclassification. As a result, OSHA estimates that a Health and Safety Specialist would spend about 25 percent as much time to reclassify a chemical as OSHA estimated for the 2012 HCS rule—depending on establishment size, from 0.75 hours to 1.75 hours per SDS (electronic file) requiring reclassification (1.75 hours per SDS for establishments with fewer than 100 employees; 1.25 hours per SDS for establishments with 100–499 employees; and 0.75 hours per SDS for establishments with 500 or more employees).
32At a loaded hourly wage 
(including overhead) of $58.00 for a Health and Safety Specialist, this would result in unit costs of $101.51, $72.51, and $43.50 per SDS for small, medium, and large establishments, respectively. Multiplying these unit costs by the estimated number of affected chemicals (i.e., electronic files) and summing the 
totals yields an undiscounted one-time estimated cost of $6.4 million for affected employers to comply with this provision. Annualizing this one-time cost using a 7 percent discount rate over a 10-year period results in estimated annualized costs of approximately $915,095 for reclassification in accordance with the criteria specified in the proposed revisions to the HCS. OSHA invites interested parties to comment on these cost estimates and the assumptions underlying them. 
Revisions to SDSs and Labels Due to 
Revised Precautionary Statements, etc. 
The proposed revisions to the HCS 
would require establishments to revise 
their electronic templates for SDSs and labels to conform to formatting and 
language criteria in precautionary statements and other mandatory language specified in appendices C and D. Under the proposed changes to the standard, affected establishments would have to update labels and SDSs for select hazardous chemicals to include updated signal word(s), hazard statement(s), pictogram(s), and precautionary statement(s) for each hazard class and associated hazard category (see existing 29 CFR 1910.1200(f) and (g)). The modification of SDSs and labels under the revisions proposed in appendices C and D would involve conforming to formatting and language standards, but would not require any additional testing, studies, or research. As previously stated, OSHA believes that chemical manufacturers and importers generally review, revise, and update their electronic templates for SDSs and labels periodically, such that there is a regular cycle of change for these documents.
33The proposed 
changes to the appendices would require only limited changes to the electronic content of SDSs and labels, and, as explained previously, OSHA expects that the phase-in period for the proposed changes to the standard would allow chemical manufacturers and 
importers to take advantage of the normal cycle of change to phase in the revisions to their labels and SDSs, and therefore that it would not be necessary to replace existing labels or SDSs.
34 
OSHA requests comments on this preliminary assumption. 
The estimated compliance costs for 
revising electronic templates for SDSs and labels to conform to formatting and language criteria in precautionary statements and other mandatory language specified in the proposed revisions to appendices C and D represent the incremental costs that would be incurred to achieve compliance with the proposed changes to the appendices. These estimated costs, shown below in Table VII–14, would be in addition to the costs that are already incurred to comply with applicable requirements of the existing HCS. 
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BILLING CODE 4510–26–C Table VII–14 shows the estimated 
costs associated with modifications to electronic templates for SDSs and labels 
to conform to formatting and language 
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35As described above in the discussion 
explaining Table VI–5, OSHA’s estimate of the total 
number of SDSs per NAICS industry was developed to support the agency’s FEA for the 2012 final standard. The analysis started with the number of SDSs per establishment by establishment size, as 
originally derived in the economic analysis in support of the 2009 proposed revisions to the HCS using a sampling of company websites and the SDSs posted there. (ERG, 2012, Document ID 0029). The analysis then combined the estimated number of SDSs per establishment by establishment size with the estimated number of establishments to estimate the weighted average number of SDSs per establishment in a given NAICS industry. This estimate was then multiplied by the average number of establishments per firm to estimate the number of SDSs per firm for each NAICS industry. Multiplying by the number of firms per NAICS industry yields the total number of SDSs in each NAICS industry (as shown in Column 5 of Table VI–5). Although OSHA has preliminarily determined that this methodology remains sound, the agency invites public comment on the reasonableness of this methodology for the current analysis. 
3636 By comparison, the 2012 rule changes 
included completely revised SDS formats, the addition of pictograms, and various other revisions for specific SDS sections and chemical designations. Note that there are no estimated new software costs associated with the proposed revisions to the standard, as there were for the 2012 final rule, because OSHA expects that the necessary software is already in place in those larger firms for which the software is economically justified. 37As noted above, because the current HCS does 
not allow SDSs or labels to display chemical classifications that are not in conformance with the 
current rule, OSHA estimated no baseline compliance for chemical manufacturers already having revised electronic files to reflect reclassified chemicals as specified in the proposed rule. With respect to the mandatory language proposed in Appendices C and D, however, SDSs and labels could present standards stricter than seen under previous GHS revisions (for example, if mandatory language is adopted internationally by consensus) and still remain in conformance with the current HCS standard. Therefore, baseline compliance can be non-zero for industry practices involving use of precautionary statements and other mandatory language. 
38That is, mathematically, (1—the relevant 
baseline compliance rate). Estimated non- compliance rates are shown in Column 6 of Table VI–14 by employment size for each affected NAICS industry. 39Larger employers were estimated to have 
greater familiarization costs for the 2012 HCS final rule because they have more managers. criteria in precautionary statements and 
other mandatory language specified in the proposed revisions to appendices C and D by NAICS industry and establishment size. The NAICS industries listed in Columns 1 and 2 of Table VII–14 are those that OSHA expects would need to update SDSs and labels under the proposed revisions to appendices C and D. The industries included are the ones OSHA identified as incurring costs for SDSs in the FEA in support of OSHA’s 2012 HCS final rule (77 FR 17644–17650). The estimated costs associated with the proposed revisions to the appendices are directly related to the number of SDSs (or, in other words, the number of electronic templates) affected. These numbers were previously derived and presented in Tables VII–5, VII–6, and 
VII–7.
35 
OSHA estimates that the time needed 
to revise electronic templates for labels 
and SDSs to comply with the proposed revisions to appendices C and D would vary by establishment size and would be equal to 10 percent of the unit time (from 3 to 7 hours per SDS (electronic template)) estimated in the 2012 FEA (77 FR 17635–17637), as the changes the proposed revisions would require are relatively minor in comparison to the types of changes costed in 2012.
36As 
shown in Column 4 of Table VII–14, OSHA estimates that Health and Safety Specialists would spend 0.7 hours per SDS (electronic template) in small establishments with fewer than 100 employees; 0.5 hours per SDS in medium establishments with 100 to 499 employees; and 0.3 hours per SDS in large establishments with 500 or more employees to comply with the proposed mandatory changes to appendices C and D. Multiplying these labor burdens by the loaded hourly wage of $58.00 results in unit costs for Health and Safety Specialists of $40.60, $29.00, and $17.40 per SDS for small, medium, and large establishments, respectively. 
As in the FEA for the 2012 HCS final 
rule, OSHA anticipates that some manufacturers, particularly larger ones heavily involved in international trade, have already adopted the mandatory language proposed in appendices C and D. For the affected NAICS industries, OSHA estimates baseline compliance rates of 75 percent for establishments with 500 or more employees, 25 percent for establishments with 100 to 499 employees, 5 percent for establishments with 20 to 99 employees, and 1 percent for establishments with fewer than 20 employees.
37These baseline 
compliance rates are the same ones OSHA used in the 2012 FEA (77 FR 17636). 
Multiplying the number of affected 
SDSs (electronic files) by the unit cost of Health and Safety Specialists, and accounting for the relevant non- compliance rates,
38results in an 
estimated total one-time cost associated with revising SDSs and labels to conform to the proposed appendix language on precautionary statements and other mandatory language. As shown in Column 7 of Table VII–14, this total one-time cost is estimated to be about $18.4 million. Annualizing this one-time cost using a 7 percent discount rate over a 10-year period results in estimated annualized costs of approximately $2.6 million for affected employers to revise SDSs and labels to comply with the proposed revisions to appendices C and D. OSHA invites interested parties to provide comments 
on these cost estimates and the assumptions underlying them. 
The estimates of total costs in Table 
VII–14 are included within a broader cost category shown earlier in the aggregate costs presented in Table VII– 12. Column 5 of Table VII–12 displays, by NAICS code, the combined annualized cost estimates for reclassifying chemicals (from Table VII– 13) and revising SDSs and labels to be consistent with the precautionary statements and other language specified in the proposed revisions to the mandatory appendices (from Table VII– 14). 
Management Familiarization and Other 
Management-Related Costs 
In order to implement the proposed 
new requirements in the HCS, or determine whether they need to implement any of the revisions to the standard, all employers currently covered by the standard would need to become familiar with the updates OSHA is making as part of this rulemaking. The nature and extent of the familiarization required would vary depending on the employer’s business. 
In the 2012 HCS final rule (77 FR 
17637–17638), OSHA estimated that eight hours of time per manager, or an equivalent cost, would be associated with the necessary familiarization and implementation of revisions to hazard communication programs in affected establishments in the manufacturing sector.
39This proposed rule would 
require some changes to hazard communication programs in affected establishments, but those changes would be significantly less extensive than those required by the 2012 rule. Therefore, OSHA believes that much less time would be needed for familiarization and implementation under this proposed rule than was necessary under the 2012 rule. 
For the present proposed rule, OSHA 
estimates that management familiarization time would vary by establishment size. It would also vary depending on whether an establishment would simply be familiarizing itself with the proposed rule or would also need to take further action because it would be affected by one or more of the proposed changes to the standard. Above in Section VII.C Profile of Affected Industries, Establishments, and Employees, Table VII–10 presents, by NAICS industry, the percentage of establishments (and for training, 
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40Wholesalers in NAICS 424910 and NAICS 
424950 are not expected to incur costs for revising 
SDSs/labels or for training employees, but OSHA expects that they will be affected by the provisions of the proposed rule that are anticipated to result 
in cost savings. 
41Note that the numbers of small, medium, and 
large establishments reported above are derived in the ‘‘Rule Fam’’ tab of the OSHA spreadsheet in 
support of this proposed rule (see Document ID 0049). entities) expected to be affected by rule 
familiarization and whether those establishments or entities would incur additional costs or no additional costs— that is, whether those establishments or entities would or would not incur additional costs for revising SDSs/labels or for training employees as a result of the proposed rule.
40In terms of 
manufacturing establishments that would have costs in addition to management familiarization costs resulting from the provisions of the proposed rule, OSHA estimates that there are 38,018 small establishments (those with fewer than 20 employees), 11,273 medium establishments (those with 20 to 499 employees), and 394 large establishments (those with 500 or more employees). In terms of establishments that would not have costs other than management familiarization costs resulting from the provisions of this proposed rule, OSHA estimates that there are 79,500 small establishments, 22,657 medium establishments, and 467 large establishments; their only costs associated with this proposal would be as a result of rule familiarization.
41 
To estimate unit costs, OSHA first 
considered establishments that would incur costs, in addition to rule familiarization costs, because of the proposed rule. As noted earlier, for the 2012 FEA OSHA applied a Manager hourly wage to estimate familiarization costs. For this PEA, because the new requirements found within this proposed standard would be significantly less extensive than those required by the 2012 rule, OSHA expects that the employer will delegate to a Health and Safety Specialist the responsibility for management familiarization of the new requirements found within this proposed standard. OSHA requests public comment on the agency’s preliminary assumptions for estimating the cost of management familiarization. 
For small establishments, OSHA 
estimated management familiarization costs of 0.5 hours of a Health and Safety Specialist’s labor time. For medium establishments, OSHA estimated 2 hours of a Health and Safety Specialist’s labor time. For large establishments, OSHA estimated 8 hours of a Health and Safety Specialist’s labor time. Multiplying these labor burdens by the loaded hourly wage of $58.00 results in estimated management familiarization costs per establishment of $29.00, $116.01, and $464.04 for small, medium, and large establishments, respectively. 
For establishments that would not 
incur other costs as a result of the proposed rule, OSHA estimates that rule familiarization will take half as long; in those cases, management will not need to devote as much time to considering (or making compliance decisions about) the provisions in the proposed rule that are expected to result in costs. Therefore, OSHA adopted estimates of 0.25 hours, 1 hour, and 4 hours of a Health and Safety Specialist’s labor time for small, medium, and large establishments, respectively. Multiplying these labor burdens by the loaded hourly wage of $58.00 results in management familiarization costs per establishment of $14.50 for small establishments, $58.00 for medium establishments, and $232.02 for large establishments. 
These management familiarization 
costs per establishment are multiplied by the relevant number of small, medium, and large establishments, 
resulting in an estimated undiscounted 
one-time familiarization cost of $5.2 million. Annualizing this one-time cost using a 7 percent discount rate over a 10-year period results in an estimate of 
annualized costs of $735,894. Table VII– 
15 presents the detailed unit values factoring into OSHA’s estimate of management-related costs. The distribution of these management- familiarization costs by NAICS code is displayed in Column 3 of Table VII–12. OSHA invites interested parties to provide comments on these cost estimates and the assumptions underlying them. 
TABLE VII–15—T OTAL COSTS ASSOCIATED WITHMANAGEMENT FAMILIARIZATION WITH THE PROPOSED REVISIONS TO  
THEHCS 
[by establishments size, 2019 dollars] 
Small 
establishments 
(<20 employees) 
affected Medium 
establishments 
(20–499 employees) 
affected Large 
establishments 
(≥ 500 employees) 
affected Total 
Directly Affected Establishments 
Total Establishments ............................................................................................ 38,018 11,273 394 49,685 
Wage .................................................................................................................... $58.00 $58.00 $58.00 ......................
Hours .................................................................................................................... 0.50 2.00 8.00 ......................
Unit Cost Per Establishment ................................................................................ $29.00 $116.01 $464. 04 ......................
Total One-Time Cost ........................................................................................... $1,102,609 $1,307 ,771 $182,830 $2,593,210 
Total Annualized Cost (7%) .......................................................................... $156,987 $186,197 $26,031 $ 369,215 
Indirectly Affected Establishments 
Total Establishments ............................................................................................ 79,500 22,657 467 102,624 
Wage .................................................................................................................... $58.00 $58.00 $58.00 ......................
Hours .................................................................................................................... 0.25 1.00 4.00 ......................
Unit Cost Per Establishment ................................................................................ $14.50 $58.00 $232.0 2 ......................
Total One-Time Cost ........................................................................................... $1,152,841 $1,314 ,209 $108,353 $2,575,403 
Total Annualized Cost (7%) .......................................................................... $164,139 $187,114 $15,427 $ 366,679 
Total 
Total Establishments ............................................................................................ 117,518 33,930 861 152,309 
Total One-Time Cost ........................................................................................... $2,255,450 $2,621 ,980 $291,183 $5,168,613 
Total Annualized Cost (7%) .......................................................................... $321,125 $373,311 $41,458 $ 735,894 
Source: U.S. DOL, OSHA, Directorate of Standards and Guidance, Office of Regulatory Analysis-Health. 
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42OSHA has preliminarily concluded that these 
would be the only training costs associated with the 
proposed revisions to the HCS. The agency requests comments on this determination. 
43OSHA anticipates that, in practice, training 
would be organized more efficiently at the corporate (firm) level than at the establishment 
level. 
44The estimated number of affected firms, 
logistics managers and production workers are 
derived in Document ID 0049, tab ‘‘Training’’. The affected number of firms (2,754) can also be calculated by matching the NAICS codes with 
training costs from Table VI–12 with the number of affected firms in the identical NAICS codes in Table VI–1 and multiplying by 50 percent (only 50 percent are estimated to require training). Note: Figures may not add to totals due to rounding. 
Costs Associated With Training 
Employees 
For this preliminary economic 
analysis, OSHA estimated the incremental costs to train chemical production employees who are covered by, and are already trained in accordance with, the existing standard but would need to receive additional training to become familiar with the updates to SDSs and labels for impacted aerosols, desensitized explosives, and flammable gases.
42This analysis is 
described below. OSHA is not estimating any training costs for users of aerosols, desensitized explosives, or flammable gases in the workplace. OSHA does not believe that these users would need to dedicate more than a trivial amount of time to training associated with the reclassification of these chemicals. This is because the hazards associated with these chemicals have not changed. The only thing that would change under the proposed revisions to the HCS is the way the hazards are classified. For example, users of pyrophoric gases should already have received training on the fire and explosive-related hazards associated with these chemicals. At most, such users might require notification of a change in the classification of those chemicals. 
Similarly, even though desensitized 
explosives is a new hazard classification, the explosion hazards were and are well-known and should have been included in prior hazard training. For example, should the water or other wetting solution dry out, an explosion could occur. In this case, even the hazard pictogram (flames) remains 
unchanged. 
OSHA considered whether some 
increase in user training might be required for non-flammable aerosols not under pressure, since a small portion of these may not currently be classified as either flammable aerosols or gas under pressure; as noted in the Summary and Explanation section for appendix B, such aerosol containers differ from pressurized gas cylinders in terms of container characteristics and failure mechanisms. Training for non- flammable aerosols might include their revised classification and hazard avoidance measures (such as: Keep away from heat, hot surfaces, sparks, open flames and other ignition sources; no smoking; do not pierce or burn, even after use). However, based on observation of the industry over time, OSHA believes that non-flammable aerosols not under pressure are fairly uncommon and, therefore, OSHA has preliminarily concluded that the total user training time required for non- flammable aerosols not under pressure would also be negligible. The agency requests comments on its preliminary conclusions regarding training time for users of reclassified chemicals. 
As discussed above, under the 
proposed revisions to the HCS, some chemical production employees who are covered by, and are already trained in accordance with, the existing standard would need to receive additional training to become familiar with the updates to SDSs and labels for impacted aerosols, desensitized explosives, and 
flammable gases. OSHA expects that the incremental training costs for these employees to become familiar with the revisions to the HCS will be small. In certain cases, affected employers will be able to integrate the necessary training into existing training programs and related methods of distributing safety and health information to employees; those employers would not incur any meaningful additional costs. 
OSHA estimates that each affected 
chemical manufacturing firm
43would 
need to devote 2.5 hours of a Health and Safety Specialist’s time to preparing new training under the proposed rule, and that each affected logistics or production worker would spend 12 minutes receiving the training. Multiplying the labor burden for each labor category by the loaded hourly wages of $58.00 for a Health and Safety Specialist, $58.51 for logistics personnel, and $28.18 for production workers, results in unit costs of $145.01, $11.70, and $5.64, respectively. 
Multiplying these unit costs by the 
2,754 affected firms, 1,179 affected logistics managers, and 76,447 affected production workers yields an undiscounted estimated one-time cost of $843,940.
44Annualizing this one-time 
cost using a 7 percent discount rate over a 10-year period results in estimated annualized costs of $120,158. The unit values that factored into OSHA’s estimate of training costs are shown in Table VII–16. The distribution of these training costs by NAICS code is displayed in Column 4 of Table VII–12. OSHA invites interested parties to provide comments on these cost estimates and the assumptions underlying them. 
TABLE VII–16—T RAINING COSTS ASSOCIATED WITH THE PROPOSED REVISIONS TO THE HCS S TANDARD  
[2019 Dollars] 
Health & safety 
specialist hours 
per firm to 
prepare training Logistics 
personnel hours 
per emp. to 
receive training Production 
worker hours per 
emp. to receive 
training Total 
Affected Firms ............................................................................................................. 2,754 .................................. ................................ 2,754 
Employees Needing Training ...................................................................................... ............... ............... 1,179 76,447 78,489 
Wage ........................................................................................................................... $58.00 $58.51 $28.18 ......................
Hours ........................................................................................................................... 2.5 0.2 0.2 2.9 
Unit Cost ..................................................................................................................... $145.01 $11.70 $5.64 $162.35 
Total One-Time Cost ................................................................................................... $399,289 $13,796 $430,855 $843,940 
Total Annualized Cost (7%) ................................................................................. $56,850 $1,964 $61,3 44 $120,158 
Source: U.S. DOL, OSHA, Directorate of Standards and Guidance, Office of Regulatory Analysis-Health. 
Note: Figures may not add to totals due to rounding. 
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45In principle, pesticide manufacturers would 
also be affected by the proposed revision to the 
standard, but pesticide labeling in the United States is covered by the U.S. Environmental Protection Agency under the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) (7 U.S.C. 136 et seq.). For that reason, any cost savings due to OSHA’s proposed revisions to paragraph (f)(11) would not apply to manufacturers in NAICS 325320: Pesticide and other agricultural chemical manufacturing. 
46Email to Maureen Ruskin of OSHA Re: 
Comments Supplementing a Petition Submitted to OSHA on May 24, 2016 Requesting a Revision of Paragraph (f)(11) of 29 CFR 1910.1200 (CPDA, 2017, Document ID 0006). 47These labeling changes occur when the 
manufacturer becomes newly aware of significant information regarding the hazards of a chemical. See existing 29 CFR 1910.1200(f)(11). 
48A review of the products covered under the 
manufacturing NAICS codes reveals they are all, or almost all, chemicals. Released for Shipment 
In paragraph (f)(11) of the current 
HCS, chemical manufacturers, 
importers, distributors, or employers who become newly aware of any significant information regarding the hazards of a chemical must revise the labels for the chemical within six months of becoming aware of the new information and ensure that labels on containers of hazardous chemicals shipped thereafter contain the new information. OSHA proposes to modify 
paragraph (f)(11) such that chemicals that have been released for shipment and are awaiting future distribution need not be relabeled; however, the manufacturer or importer must provide an updated label for each individual container with each shipment. 
OSHA anticipates that these proposed 
modifications to paragraph (f)(11) would provide cost savings to manufacturers and distributors of certain products— those with large (and typically infrequent) production runs and lengthy shelf lives (often five years or longer) that, during production, are labeled, boxed, palletized, and shipped, and then go through the distribution chain usually without the chemical contents, packaging, or label being disturbed. In Columns 1 and 2 of Table VII–17, OSHA has identified the six industries (four manufacturing and two wholesale) that it expects would be impacted by the proposed modifications to paragraph (f)(11).
45These are primarily fertilizer 
manufacturers, paint manufacturers, and wholesalers of related farm and paint supplies. OSHA invites comments on whether other industries are potentially affected by this proposed modification to paragraph (f)(11) and whether there might be other health or economic effects of this proposed modification that OSHA has not considered in this proposal. 
The first factor used to estimate the 
cost savings resulting from the proposed changes to paragraph (f)(11) is the avoided economic loss for affected manufacturers or wholesalers who would otherwise have to relabel products being held in storage. To estimate the potential economic loss avoided, OSHA relied on comments submitted to the agency by the Council of Producers & Distributors of Agrotechnology (CPDA) on April 21, 2017.
46The CPDA comments included 
a summary of cost estimates associated with relabeling non-pesticide agricultural chemical products in distribution. Those estimates were obtained from an industry survey and were based on the following unit costs: Shipping costs to move product out of and back into the warehouse (for off-site package opening and replacement); relabeling space per square foot per month; safety equipment and training per employee involved in relabeling; labor and materials to break down pallets and shrink-wrap and redo product packaging in new plastic bags; and labor and materials to move liquid to new containers and dispose of old containers (CPDA, 2017, pp. 4–5, Document ID 0006). 
For OSHA’s purposes, the critical 
costing information from CPDA is the estimate of summary relabeling costs presented as a percentage of the value of the products requiring relabeling. According to the CPDA survey results, these summary costs range from 1.5 percent to 204 percent of the value of the product, depending on product type (e.g., liquid versus dry), container type 
(plastic bags, etc.), and the volume and value of the product (CPDA, 2017, p. 8, Document ID 0006). As a practical matter, OSHA expects that manufacturers and wholesalers would simply discard a product rather than incur relabeling costs in excess of the 
value of the product. Of course, there may be some disposal costs for the discarded material, but there may also be some salvage value for the improperly-labeled product. If one assumes that the disposal cost and the salvage value are relatively minor and, on net, offset each other, then the upper limit on the relabeling costs for any product would be approximately 100 percent of the value of the product. Furthermore, with an effective range of labeling costs from 1.5 percent to 100 percent of the value of the product, OSHA estimates, without further information on the distribution of the costs, that the average labeling cost would be approximately 50 percent of the value of the products requiring relabeling. While this cost estimate as a percentage of the value of the product was developed from data on relabeling non-pesticide agricultural chemical products in distribution, OSHA has assumed that this same estimate would also apply to relabeling paints and 
related chemical products in distribution. The agency invites comments on this assumption. 
The 50 percent average cost savings 
estimate would apply only to those products requiring relabeling. In order to estimate the expected cost savings for all products in the NAICS codes affected by the proposed revisions to paragraph (f)(11), OSHA also needs to estimate three other factors (in addition to the average cost savings of 50 percent): (1) 
What percentage of the products in these NAICS industries would be 
warehoused for more than six months; (2) what percentage of products warehoused for more than six months would be relabeled in any particular year due to a manufacturer-initiated labeling change;
47and (3) the 
percentage of all products in the NAICS industries that are covered by this proposed rule. 
OSHA was unable to identify data 
relevant to factors (1) and (2) above and instead worked with its contractor, ERG, to develop estimates of both of these factors. For (1) above, OSHA expected that the percentage of products warehoused for more than six months would be quite low because it is expensive to hold inventory over long periods of time. Therefore, OSHA estimated that just five percent of the products in the six NAICS industries potentially impacted by the proposed modifications to paragraph (f)(11) would be warehoused for more than six months. For (2) above, OSHA anticipates that manufacturer-initiated relabeling would be rare, and estimated that only one percent of products warehoused for more than six months 
would be relabeled in any particular year due to a manufacturer-initiated labeling change to one or more of its chemical ingredients. See existing 29 CFR 1910.1200(f)(11). OSHA invites comments on these estimates. 
For factor (3) above, OSHA assumed 
that 100 percent of the products in the four NAICS manufacturing industries are covered by the HCS.
48For the two 
wholesale industries, however, some substantial portion of the covered products do not qualify as hazardous chemicals covered by the HCS or are not subject to the HCS labeling requirements. For NAICS 424910: Farm Supplies Merchant Wholesalers, a significant majority of the wholesale 
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492012 Economic Census of the United States, 
Table EC1242SLLS1—Wholesale Trade: Subject 
Series—Product Lines: Product Lines Statistics by Industry for the U.S. and States: 2012 (Document ID 0043). 
50Under the proposed revisions to paragraph 
(f)(11), when relabeling is not required for chemicals that have been released for shipment, the 
chemical manufacturer or importer would still be required to provide an updated label for each individual container with each shipment. The agency estimates that any incremental costs associated with providing updated labels are likely to be negligible, as OSHA believes this is already standard industry practice. 
51Derived for each NAICS by dividing Column 3 
of Table VII–9 (total industry revenues) by Column 7 of Table VII–1 (number of affected firms). 
52Obtained from Column 7 of Table VII–1. supplies are non-fertilizers, such as 
grains (e.g., alfalfa, hay, livestock feeds) 
and nursery stock (e.g., plant seeds and 
plant bulbs). Based on data from the 
2012 Economic Census,49ERG 
estimated that 41.7 percent of the 
wholesale supplies in NAICS 424910 would be fertilizers affected by the proposed released-for-shipment provision (Document ID 0049, tab ‘‘RF Shipment’’). For NAICS 424950: Paint, Varnish, and Supplies Merchant Wholesalers, some proportion of the wholesale supply consists of non-paints and non-chemicals, such as wallpaper and painting supplies such as paintbrushes, rollers, and spray-painting 
equipment. Based on data from the 2012 Economic Census, ERG estimated that 77.6 percent of the wholesale supplies in NAICS 424950 would be paints and related chemicals affected by the 
proposed released-for-shipment provision (Document ID 0049, tab ‘‘RF Shipment’’). OSHA used ERG’s estimates to develop the expected cost savings attributable to the proposed revisions to paragraph (f)(11). The agency invites comments on these estimates.
50 
Column 3 of Table VII–18 shows the 
average product value (revenue) for each of the six NAICS industries that OSHA expects would be affected by the proposed modification to paragraph (f)(11).
51Column 4 of Table VII–18 
shows the number of affected firms (entities) for each of these six NAICS industries.
52Column 5 of Table VII–18 
shows the estimated loss avoided due to 
the proposed released-for-shipment provision for each of these six NAICS industries as a percentage of that industry’s revenues. That percentage is 
the product of the four factors estimated above: (1) The costs of relabeling as a percentage of the value of the products requiring relabeling; (2) the percentage of the products in these NAICS industries that would be warehoused for 
more than six months; (3) the percentage of products warehoused for more than six months that would require relabeling in any particular year due to a manufacturer-initiated labeling change; and (4) the percentage of all products in the NAICS industries covered by this proposed rule. 
Table VII–17 presents, by NAICS 
industry, these four factors and the calculated percentage loss in revenue OSHA anticipates would be avoided under the proposed released-for- shipment provision. 
TABLE VII–17—C ALCULATION OF THE PERCENTAGE LOSSAVOIDED DUE TO THE PROPOSED RELEASED -FOR-SHIPMENT  
PROVISION  
[2019 Dollars] 
NAICS NAICS industry Percentage 
cost 
savings Percentage of 
products 
warehoused 
≥ six months Percentage of 
products 
warehoused 
≥ six months 
and require 
relabeling Percentage of 
products 
covered by the 
proposed rule Product of 
percentages 
(A) (B) (C) (D) (A), (B), (C), and 
(D) 
325311 ........... Nitrogenous Fertilizer Manufacturing ............................... 50 5 1 100 0.03 
325312 ........... Phosphatic Fertilizer Manufacturing ................................. 50 5 1 100 0.03 
325314 ........... Fertilizer (Mixing Only) Manufacturing ............................. 50 5 1 100 0.03 
325510 ........... Paint and Coating Manufacturing ..................................... 50 5 1 100 0.03 
424910 ........... Farm Supplies Merchant Wholesalers ............................. 50 5 1 41.70 0.01 
424950 ........... Paint, Varnish, and Supplies Merchant Wholesalers ....... 50 5 1 77.60 0.02 
Source: U.S. DOL, OSHA, Directorate of Standards and Guidance, Office of Regulatory Analysis-Health. 
The estimated cost savings for each of 
the six affected industries arising from 
the proposed modifications to paragraph (f)(11) then is simply the product of Columns 3, 4, and 5 in Table VII–18. Summing the cost savings for each of the six industries yields an estimated annual cost savings of $29.8 million. OSHA requests comments on the reasonableness of this estimate and the assumptions underlying it (including 
the various factor percentage estimates listed in Table VII–17). 
TABLE VII–18—C OSTSAVINGS ASSOCIATED WITH THE PROPOSED RELEASED -FOR-SHIPMENT PROVISION  
[2019 Dollars] 
NAICS NAICS industry Average 
product 
value 
(revenue) Affected 
firms Loss avoided 
as a % of 
revenue Loss 
avoided 
325311 ........ Nitrogenous Fertilizer Manufacturing ..................................... $37,902,969 163 0.03 $1,544,546 
325312 ........ Phosphatic Fertilizer Manufacturing ...................................... 127,231,784 45 0.03 1,431,358 
325314 ........ Fertilizer (Mixing Only) Manufacturing ................................... 13,737,854 359 0.03 1,232,972 
325510 ........ Paint and Coating Manufacturing .......................................... 28,813,229 998 0.03 7,188,901 
424910 ........ Farm Supplies Merchant Wholesalers ................................... 28,809,209 4,965 0.01 14,911,683 
424950 ........ Paint, Varnish, and Supplies Merchant Wholesalers ............ 18,022,834 1,012 0.02 3,538,387 
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53The number of very small containers in 
Column 3 of Table VII–19 for each of these six 
NAICS industries was obtained from Column 4 of Table VII–5. 54The Flavor and Extract Manufacturers 
Association of the United States (FEMA) provided 
OSHA (in a letter to Robert Stone of OSHA, dated April 27, 2018) (Document ID 0257) a summary of survey results obtained from member companies concerning how they might benefit from relaxed OSHA labeling requirements on small containers. Those results included an estimate of $0.85 per label for small capacity containers compliant with the 2012 HCS. However, this estimate applies to expensive labels—such as pull-out labels, fold-back labels, and full-information tags—and therefore is not applicable to the cost savings associated with using only the product identifier in lieu of the abbreviated labeling specified in proposed paragraph (f)(12)(ii). OSHA believes it is likely that most of the cost savings reported from the FEMA survey would be attributable to the expensive types of labels. 
Based on the unit cost data provided by FEMA, 
OSHA estimated a unit cost savings of $0.05 in 2018 dollars for the use of labels with the minimum 
information—the product identifier—required for very small containers (versus abbreviated labels). Updating the 2018 estimate to 2019 dollars using the BEA (2020) implicit price deflator for Gross Domestic Product, OSHA derived an estimate of $0.05087 in cost savings per label (with the unrounded estimate used in the analysis). TABLE VII–18—C OSTSAVINGS ASSOCIATED WITH THE PROPOSED RELEASED -FOR-SHIPMENT PROVISION —Continued 
[2019 Dollars] 
NAICS NAICS industry Average 
product 
value 
(revenue) Affected 
firms Loss avoided 
as a % of 
revenue Loss 
avoided 
Total ..... ................................................................................................ ........................ 7,542 ........................ 29,847,846 
Source: U.S. DOL, OSHA, Directorate of Standards and Guidance, Office of Regulatory Analysis-Health. 
Note: Figures may not add to totals due to rounding. 
Labels on Very Small Containers 
Proposed paragraph (f)(12), which 
addresses the labeling of small 
containers, would limit labeling requirements for chemical manufacturers, importers, or distributors where they can demonstrate that it is not feasible to use pull-out labels, fold-back labels, or tags to provide the full label information as required by paragraph (f)(1). As proposed in paragraph (f)(12)(ii), manufacturers, importers, and distributors would be able to use an abbreviated label (requiring only the product identifier, pictogram(s), signal word, chemical manufacturer’s name and phone number, and a statement that the full label information is provided on the immediate outer package) on containers with a volume capacity of 100 ml or less—referred to as ‘‘small containers’’ in this PEA. As proposed in paragraph (f)(12)(iii), manufacturers, importers, and distributors would need to put only the product identifier on containers with a volume capacity of 3 ml or less—referred to as ‘‘very small containers’’ in this PEA—if they can demonstrate that any label would interfere with the normal use of the container. 
Following publication of the 2012 
updates to the HCS, stakeholders requested that OSHA clarify its enforcement policy on labels for small containers. In response, through letters of interpretation, OSHA adopted practical accommodations that specified: (1) The minimum information required for a label on the immediate 
container of the shipped chemical; and (2) the minimum information required for the outer packaging of shipped small containers (see, e.g., Collatz, 2015, 
Document ID 0174; Watters, 2013, Document ID 0200; Blankfield, 2017, Document ID 0170). Proposed paragraph (f)(12)(ii) would incorporate into the HCS the accommodations for small containers described in these letters of interpretation; however, the letters did not contain any guidance unique to very small containers, which would be covered by proposed paragraph (f)(12)(iii). For costing purposes, OSHA estimates 
that no cost savings will arise from 
proposed paragraph (f)(12)(ii) (small containers); OSHA expects that employers are already benefitting from the practical accommodations on the labeling of small packages described in the aforementioned letters of interpretation. OSHA invites public comments on this preliminary determination and the magnitude of any cost savings that should be attributed to proposed paragraph (f)(12)(ii). 
OSHA has estimated cost savings 
under proposed paragraph (f)(12)(iii) for manufacturers, importers, and distributors of very small containers (volume capacity of 3 ml or less) where the use of any label (even an abbreviated label as specified in proposed paragraph (f)(12)(ii)) would interfere with the normal use of the container and only the product identifier would be required. OSHA has preliminarily determined that affected manufacturers would fall in only a few NAICS industries: Other Basic Chemical Manufacturing, Inorganic and Organic (NAICS 325180 and 325199, respectively) and Pharmaceutical and Medical Manufacturing (NAICS 3254— encompassing 6-digit NAICS 325411, 325412, 325413, and 325414). As shown in Column 3 of Table VII–19, OSHA estimates that there are approximately 
63.5 million labels on very small containers in these six 6-digit NAICS manufacturing industries that OSHA anticipates could be affected by this part of the proposed rule.
53 
Even in these six NAICS industries, 
however, manufacturers would not be able to take advantage of proposed paragraph (f)(12)(iii) in all cases because that provision applies only when the manufacturer, importer, or distributor can demonstrate that it is not feasible to use pull-out labels, fold-back labels, or tags containing the full label information and that even an abbreviated label would interfere with the normal use of the container. Of the 63.5 million potentially affected labels 
on very small containers, OSHA estimates that for only 40 percent of them, or for an estimated total of 25.4 million very small containers, would manufacturers fall under proposed paragraph (f)(12)(iii) (see Column 5 of Table VII–19 and, equivalently, Column 7 of Table VII–5). 
Manufacturers with containers falling 
under proposed paragraph (f)(12)(iii) could expect to obtain cost savings from avoided labeling costs on very small containers (with only the product identifier required) versus the labeling costs of abbreviated labels (requiring the product identifier, pictogram(s), signal word, manufacturer’s name and phone number, and a statement that the full label information is provided on the immediate outer packaging). OSHA estimates an incremental unit cost savings of $0.051 per label for very small containers.
54That unit cost 
savings is expected to be net of the cost of providing a full label on the immediate outer package (containing a set of very small containers) per proposed paragraph (f)(12)(iv)(A). As shown in Table VII–19, multiplying the number of affected labels by the unit cost savings of $0.051 per label for very 
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small containers yields estimated 
annual cost savings of $1.3 million. OSHA invites interested parties to provide comments on these cost estimates and the assumptions underlying them. 
TABLE VII–19—E STIMATED COSTSAVINGS ASSOCIATED WITHABBREVIATED LABELS ON VERYSMALL CONTAINERS  
UNDER THE PROPOSED HCS S TANDARD  
[2019 Dollars] 
NAICS NAICS industry Labels— 
very small 
containers Percentage 
of labels 
with cost 
savings Labels 
w/cost 
savings Annual cost 
savings 
325180 ........ Other Basic Inorganic Chemical Manufacturing .................... 14,768,423 40 5,907,369 $300,518 
325199 ........ All Other Basic Organic Chemical Manufacturing ................. 35,524,371 40 14,209,748 722,874 
325411 ........ Medicinal and Botanical Manufacturing ................................. 5,106,176 40 2,042,471 103,904 
325412 ........ Pharmaceutical Preparation Manufacturing ........................... 6,471,452 40 2,588,581 131,685 
325413 ........ In-Vitro Diagnostic Substance Manufacturing ....................... 501,664 40 200,665 10,208 
325414 ........ Biological Product (except Diagnostic) Manufacturing .......... 1,113,080 40 445,232 22,650 
Total ..... ................................................................................................ 63,485,165 40 25,394, 066 1,291,839 
Source: U.S. DOL, OSHA, Directorate of Standards and Guidance, Office of Regulatory Analysis-Health. 
Note: Figures may not add to totals due to rounding. 
Sensitivity Analysis 
In this section, OSHA presents the 
results of a sensitivity analysis to 
demonstrate how robust the estimates of net cost savings are to changes in various cost parameters. In this analysis, OSHA made a series of isolated changes to individual cost input parameters in order to determine their effects on the agency’s estimates of annualized net cost savings, with a seven-percent discount rate as the reference point. The agency has conducted these calculations for informational purposes only. 
The methodology and calculations 
underlying the cost estimates associated with this rulemaking are generally linear and additive in nature. Thus, the sensitivity of the results and conclusions of the analysis will generally be proportional to isolated variations in a particular input parameter. For example, if the estimated time that employees will need to devote to attending new training doubles, the corresponding labor costs would double as well. 
OSHA evaluated a series of such 
changes in input parameters to test whether and to what extent the general conclusions of the preliminary economic analysis held up. OSHA considered changes to input parameters that affected only costs and cost savings and determined that each of the sensitivity tests on cost parameters had only a very minor effect on total costs or net costs. On the whole, OSHA found that the conclusions of the analysis are robust, as changes in any of the cost input parameters still show significant net cost savings for the final rule. The results of the individual sensitivity tests are summarized and are described in more detail in Table VII–20. In the first of these sensitivity tests, 
OSHA reduced from 1 percent to 0.5 percent its estimate of the percentage of products warehoused for more than six months that require relabeling in any particular year. The effect of this change would be to reduce by 50 percent the estimated cost savings associated with the proposed released-for-shipment provision. Table VII–20 shows that the estimated net cost savings from the proposed rule would decline by $14.9 million annually, from $26.8 million to $11.8 million annually, or by about 56 percent. 
In a second sensitivity test, OSHA 
reversed the first sensitivity test, that is, the agency increased from 1 percent to 2 percent the percentage of products warehoused for more than six months that require relabeling in any particular year. The effect of this change would be to increase by 100 percent the estimated cost savings associated with the proposed released-for-shipment provision. Table VII–20 shows that the estimated net cost savings from the proposed rule would increase by $29.8 million annually, from $26.8 million to $56.6 million annually, or by about 112 percent. 
In a third sensitivity test, OSHA 
reduced from 40 percent to 20 percent the percentage of very small containers that would be affected by proposed paragraph (f)(12). As shown in Table VII–20, if OSHA’s estimates of other input parameters remained unchanged, the estimated net cost savings from the proposed rule would decline by $0.6 million annually, from $26.8 million to $26.1 million annually, or by about 2 percent. 
In a fourth sensitivity test, OSHA 
applied the same rule familiarization costs to all firms regardless of whether they are affected by other provisions of 
this proposal, i.e., OSHA did not reduce 
estimated familiarization time for firms that are not affected by other parts of the proposal. The effect of this change would be to raise compliance costs for 102,624 establishments in 
manufacturing and wholesale trade; the 
estimated net cost savings from the proposed rule would be reduced by $0.4 million annually, from $26.8 million to $26.4 million annually, or by about 1 percent. 
In a fifth sensitivity test, OSHA 
doubled the estimated labor hours assigned to revising SDSs and labels due to the reclassification of chemicals and revised mandatory language in the appendices of the HCS (from Tables VII–13 and VII–14). The effect of this change would be to double labor costs for the affected six-digit NAICS industries; estimated net cost savings would be reduced by $3.5 million annually, from $26.8 million to $23.2 million, or by 13.2 percent. 
In a sixth sensitivity test, OSHA 
excluded overhead costs from the fully loaded hourly wage rates used throughout the PEA. Overhead costs were not applied in the 2012 FEA and this sensitivity test provides consistency with the treatment of overhead in the 2012 analysis. The effect of this change would be to remove the factor of 17 percent of base wages from the hourly costs for the four job categories used in the cost analysis. Applying this change, the estimated net cost savings from the 
proposed rule would increase by $0.5 million annually, or by 1.7 percent, resulting in a total estimate of annualized net cost savings of $27.2 million. 
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TABLE VII–20—S ENSITIVITY TESTS AND REGULATORY ALTERNATIVES —IMPACTS ON NETCOSTSAVINGS  
[7 Percent discount rate, 2019 dollars] 
Uncertainty (cost) scenarios Change from OSHA’s best estimate Difference from 
proposed rule Percentage 
impact on 
net cost 
savings Net cost 
savings 
Proposed Rule—OSHA’s midpoint estimate ................. N/A ..................................................................... ........... $0 0.0 $26,753,711 
Reduce from 1 percent to 0.5 percent the percentage 
of products warehoused for more than six months 
that would require relabeling in any particular year.Halves cost savings associated with proposed re-
leased-for-shipment provision.¥$14,923,923 ¥55.8 11,829,788 
Increase from 1 percent to 2 percent the percentage 
of products warehoused for more than six months that would require relabeling in any particular year.Doubles cost savings associated with proposed re-
leased-for-shipment provision.29,847,846 111.6 56,601,557 
Reduce from 40% to 20% the percentage of very 
small containers that would be affected by proposed paragraph (f)(12).Halves cost savings for affected firms .......................... ¥645,919 ¥2.4 26,107,792 
Rule familiarization time would not be reduced for 
firms that are not affected by any other cost provi-sions; it would be identical to rule familiarization time for those that are affected by other provisions.Raises costs for the 31,577 establishments in NAICS 
31–33—Manufacturing, and the 71,047 establish-ments in NAICS 42—Wholesale Trade not affected by other provisions.¥366,679 ¥1.4 26,387,032 
Doubles labor hours for the reclassification of chemi-
cals and compliance with the new mandatory lan-guage in the appendices to the proposed standard.Doubles labor costs for the approximately 13 six-digit 
NAICS industries affected by proposed changes to paragraph (d) and appendices B, C, and D.¥3,529,921 ¥13.2 23,223,790 
Excludes overhead costs from fully loaded hourly 
wage rates.For the four job categories in the cost model, over-
head costs (17 percent of base wages) are not ap-plied and estimated wage rates are correspondingly lower.458,003 1.7 27,211,714 
Remove the proposed provisions that result in cost 
savings for very small labels.Eliminates cost savings for affected employers ........... ¥1,291,839 ¥4.8 25,461,873 
Eliminate the proposed released-for-shipment provi-
sions and associated cost savings.Eliminates cost savings for affected employers ........... ¥29,847,846 ¥111.6 ¥3,094,135 
Source: U.S. DOL, OSHA, Directorate of Standards and Guidance, Office of Regulatory Analysis-Health (Document ID 0049, tab ‘‘Ta bles’’). 
Not part of this table, but discussed in 
A. Introduction and Summary, the 
agency examined the effect of lowering the discount rate for annualizing costs from 7 percent to 3 percent. Lowering the discount rate to 3 percent would yield annualized net cost savings of $27.5 million, approximately $700,000 more in annual cost savings than the net cost savings at a 7 percent discount rate. 
Regulatory Alternatives 
This section discusses two regulatory 
alternatives to the changes OSHA is 
proposing in this NPRM: (1) Removing the proposed changes to paragraph (f)(12) regarding labeling of very small containers, which would eliminate cost savings for manufacturers, importers, and distributors that label such containers; and (2) removing the proposed changes to paragraph (f)(11) regarding labeling of containers that have been released-for-shipment, which would eliminate cost savings for manufacturers, importers, and distributors that have such containers. In Table VII–20, each regulatory alternative is described and analyzed relative to the proposed revisions to the HCS. Midpoint estimates are presented in all cases. Under Regulatory 
Alternative (1) (elimination of changes related to labeling of very small containers), cost impacts total $1.3 million (4.8 percent of baseline cost savings), resulting in a reduction of estimated annualized net cost savings to a total of $25.5 million. Under Regulatory Alternative (2) (elimination of changes related to labels on packages that have been released for shipment), cost impacts on employers total $29.8 million (112 percent of baseline cost savings), resulting in an overall estimate of annualized net costs of $3.1 million. 
In summary, these regulatory 
alternatives would result in a reduction of cost savings—a significant reduction in the case of the second alternative (resulting in positive, but modest, overall net costs). The elimination of neither alternative, however, would alter the agency’s determination of economic feasibility for the proposed revisions to the HCS as a whole. Nor would the elimination of these alternatives result in a significant impact on a substantial number of small entities (see Section VII. G. Economic Feasibility and Impacts). 
G. Economic Feasibility and Impacts 
This section presents OSHA’s analysis 
of the potential economic impacts of the 
proposed rule and an assessment of economic feasibility. A separate analysis of the potential economic impacts on small entities (as defined in accordance with SBA criteria) and on very small entities (those with fewer than 20 employees) is presented in the following section as part of the Initial Regulatory Flexibility Screening Analysis, conducted in accordance with the criteria laid out in the Regulatory Flexibility Act. A standard is economically feasible 
‘‘if it does not threaten massive dislocation to, or imperil the existence of, [an] industry.’’ Lead I, 647 F.2d at 1265 (internal citations and quotation marks omitted). To determine whether a rule is economically feasible, OSHA begins with two screening tests to consider minimum threshold effects of the rule under two extreme cases: (1) A scenario in which all costs are passed through to customers in the form of higher prices (consistent with a price elasticity of demand of zero); and (2) a scenario in which all costs are absorbed by the firm in the form of reduced profits (consistent with an infinite price elasticity of demand). 
In profit-earning entities, compliance 
costs can generally be expected to be absorbed through a combination of increases in prices and reductions in profits. The extent to which the impacts of cost increases affect prices or profits depends on the price elasticity of 
demand for the products or services 
produced and sold by the entity. 
The price elasticity of demand refers 
to the relationship between changes in 
the price charged for a product and the 
resulting changes in the demand for that 
product. A larger price elasticity of 
demand implies that an entity or 
industry is less able to pass increases in 
costs through to its customers in the 
form of a price increase and must absorb 
more of the cost increase through a 
reduction in profits. 
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55Document ID OSHA–2010–0034–4247, 
Attachment ‘‘Silica FEA Chapter VI: Economic 
Feasibility Analysis and Regulatory Flexibility Determination’’ (Document ID 0045). 56Document ID OSHA–2010–0034–4247, 
Attachment ‘‘Silica FEA Chapter VI: Economic Feasibility Analysis and Regulatory Flexibility Determination’’ (Document ID 0045). If the price elasticity of demand is 
zero, and all costs can be passed to 
customers in the form of higher prices, the immediate impact of the rule would be observed in the form of increased industry revenues. In the absence of evidence to the contrary, OSHA generally considers a standard to be economically feasible for an industry when the annualized costs of compliance are less than a threshold level of one percent of annual revenues. Common-sense considerations indicate that potential impacts of such a small magnitude are unlikely to eliminate an industry or significantly alter its competitive structure, particularly since most industries have at least some ability to raise prices to reflect increased costs and normal price variations for products typically exceed three percent a year (OSHA, 2016, Chapter VI, pp. VI– 20/VI–23 and Table VI–3).
55Of course, 
OSHA recognizes that even when costs are within this range, there could be unusual circumstances requiring further analysis. 
If, however, there is infinite price 
elasticity of demand, and all costs are absorbed by affected firms, the immediate impact of the rule would be observed in reduced industry profits. OSHA uses the ratio of annualized costs to annual profits as a second check on economic feasibility. In the absence of evidence to the contrary, OSHA generally considers a standard to be economically feasible for an industry when the annualized costs of compliance are less than a threshold level of ten percent of annual profits. This is a fairly modest threshold level, given that normal year-to-year variations in profit rates in an industry can exceed 40 percent or more (OSHA, 2016, Chapter VI, pp. VI–20/VI–23 and Table VI–5).
56 
In order to assess the nature and 
magnitude of the economic impacts associated with compliance with the proposed rule, OSHA developed quantitative estimates of the potential economic impact of the requirements on each of the affected industry sectors. The estimated costs of compliance presented in Section VII.F of this preamble were compared with industry revenues and profits to provide a measure of potential economic impacts. 
Table VII–21 presents data on revenues and profits for each affected industry sector at the six-digit NAICS industry level, along with the corresponding estimated annualized costs of compliance in each sector. Potential impacts in the table are represented by the ratios of compliance costs to revenues and compliance costs to profits. 
The nature of the proposed revisions 
to the HCS is such that all affected firms would incur some costs, but only a small subset would derive the cost savings that are monetized in this PEA (although most or all would enjoy non- monetized benefits, e.g., in foreign 
trade). To examine the economic impacts of the proposed revisions to the standard for those affected establishments that obtain no monetized cost savings from any of the proposed revisions to the HCS, OSHA estimated 
the ratio of compliance costs to revenues and the ratio of compliance costs to profits using only gross positive costs (i.e., costs exclusive of cost 
savings) as the numerator in the ratio. Table VII–22 presents this part of the agency’s screening analysis. 
BILLING CODE 4510–26–P 
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In the case of costs that may be 
incurred due to the requirements of the proposed revisions to the HCS, all 
businesses within each of the covered industry sectors would be subject to the same requirements. Thus, to the extent 
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57OSHA’s screening criteria underlying the 
determination of significant economic impacts were 
developed in accordance with published guidelines for implementation of the Small Business Regulatory Enforcement Fairness Act amendment to the Regulatory Flexibility Act; Executive Orders 12866, 13563, and 13771; and the Unfunded Mandates Reform Act. For a recent example of the application of these screening criteria, see the Final Economic Analysis and Final Regulatory Flexibility Analysis for the Final Rule for Occupational Exposure to Respirable Crystalline Silica, Chapter VI: Economic Feasibility Analysis and Regulatory Flexibility Determination, Document ID 0045. potential price increases correspond to 
costs associated with achieving compliance with the revised standard, the elasticity of demand for each entity will approach that faced by the industry as a whole. 
Furthermore, if OSHA adopts the 
proposed revisions to the HCS, hazardous chemicals distributed in the United States will have to be in compliance with the updated provisions, and chemical producers and users in most advanced economies will be operating under comparable requirements based on the GHS specific to their own country or economic union. For this reason, affected domestic establishments should not be susceptible to a loss of domestic market share resulting from the competition of foreign commercial entities not bound by the requirements of the HCS or similar GHS requirements. 
Given the small increases in prices 
potentially resulting from compliance with the proposed revisions to the HCS 
in any particular industry, and the lack of readily available substitutes for the products and services provided by the covered industry sectors, demand is expected to be sufficiently inelastic in each affected industry to enable entities to substantially offset compliance costs through minor price increases without experiencing any significant reduction in revenues or profits. For example, for NAICS 324191: Petroleum Lubricating Oil and Grease Manufacturing, even if zero cost savings are obtained and gross positive costs reach OSHA’s estimated total ($1,221,994; see Table VII–22), revenue impacts (0.0074 percent, rounded to 0.01 percent) and profit impacts (0.108 percent, rounded to 0.11 percent) fall well below OSHA’s screening criteria associated with economic feasibility concerns. OSHA therefore preliminarily concludes that the proposed rule, if implemented, would be economically feasible. The agency invites comments on this 
preliminary conclusion. 
H. Preliminary Regulatory Flexibility 
Act Certification 
To determine whether the proposed 
revisions to the HCS will have a significant economic impact on a substantial number of small entities, OSHA evaluated the impact of compliance costs on the revenues and profits of small entities in affected industries. As discussed previously, the proposed rule would impose costs on impacted industries for training; for reclassification of aerosols, desensitized explosives, and flammable gases; and for becoming familiar with the proposed changes to the standard. The proposed rule would also result in cost savings to the extent it would limit employers’ duties with respect to the labeling of some very small containers and provide more flexible relabeling requirements for packaged chemicals released for shipment. 
OSHA believes that the estimated 
costs are one-time costs that would be incurred during the first-year transition period after the rule is promulgated. In addition, as mentioned above, there will be annual cost savings due to the flexibilities introduced in the proposed provision related to the labeling of very small containers and in the proposed released-for-shipment provision. 
Tables VII–23 and VII–24 present 
OSHA’s screening analysis of the impact of compliance costs and cost savings on revenues and profits of small and very small entities. Tables VII–25 and VII–26 present OSHA’s screening analysis of impacts on revenues and profits for small and very small entities under the scenario that zero-cost savings are realized, i.e., only positive costs are 
incurred by affected employers. OSHA’s 
screening criteria for determining whether there are significant economic impacts on small firms assesses whether, for small entities in any given industry, the annualized costs exceed one percent of revenues or five percent 
of profits.
57 
The total annualized cost savings 
resulting from the proposed revisions to the HCS for small entities and very small entities are estimated to be approximately $17.1 million and $1.7 million, respectively (see Tables VII–23 and VII–24). To assess the potential economic impact of the proposed rule on small entities and very small entities, OSHA calculated the ratios of compliance costs to profits and to revenues. These ratios are presented for each affected industry in Tables VII–23 (small entities) and VII–24 (very small entities). Those tables show that in no industries do the annualized costs of the proposed revisions to the standard exceed one percent of annual revenues or five percent of annual profits, either for small entities or for very small entities. Similarly, under a cost scenario exclusive of cost savings (shown in Tables VII–25 and VII–26), in no industries do the annualized costs of the proposed rule exceed one percent of annual revenues or five percent of annual profits. Because no adverse revenue and profit impacts are expected to result from this proposed revision to the HCS, OSHA preliminarily certifies 
that the proposed changes to the standard will not have a significant economic impact on a substantial number of small entities. The agency invites comments on this preliminary certification. 
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EP16FE21.074</GPH>khammond on DSKJM1Z7X2PROD with PROPOSALS29684 Federal Register / Vol. 86, No. 29 / Tuesday, February 16, 2021 / Proposed Rules 
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EP16FE21.075</GPH>khammond on DSKJM1Z7X2PROD with PROPOSALS29685 Federal Register / Vol. 86, No. 29 / Tuesday, February 16, 2021 / Proposed Rules 
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EP16FE21.076</GPH>khammond on DSKJM1Z7X2PROD with PROPOSALS2