Federal Register / Vol. 72, No. 85 / Thursday, May 3, 2007 / Notices 24617 

Dated at Arlington, Virginia, this 27th day 

of April, 2007. 

David L. Meyer, 

Director, Office of Administration and 

Management. 

[FR Doc. E7–8432 Filed 5–2–07; 8:45 am] 

BILLING CODE 4510–43–P 

DEPARTMENT OF LABOR 

Occupational Safety and Health 

Administration 

[Docket No. OSHA–2007–0038] 

Electrical Reliability Services, Inc. 

(ERS) (Formerly Electro-Test, Inc.); 

Application for Renewal of Recognition 

AGENCY: Occupational Safety and Health 

Administration (OSHA), Labor. 

ACTION: Notice. 

SUMMARY: This notice announces the 

application of Electrical Reliability 

Services, Inc. (formerly Electro-Test, 

Inc.) for renewal of its recognition, and 

presents the Agency’s preliminary 

finding to deny renewal of its request. 

DATES: You must submit information or 

comments, or any request for extension 

of the time to comment, by the 

following dates: 

<bullet≤ Hard copy: Postmarked or 

sent by July 2, 2007. 

<bullet≤ Electronic transmission or 

facsimile: Sent by July 2, 2007. 

ADDRESSES: You may submit comments 

by any of the following methods: 

Electronically: You may submit 

comments electronically at http:// 

www.regulations.gov, which is the 

Federal eRulemaking Portal. Follow the 

instructions on-line for making 

electronic submissions. 

Fax: If your submissions, including 

attachments, are not longer than 10 

pages, you may fax them to the OSHA 

Docket Office at (202) 693–1648. 

Mail, hand delivery, express mail, 

messenger or courier service: You must 

submit three copies of your comments 

to the OSHA Docket Office, Docket No. 

OSHA–2007–0038 (formerly NRTL2– 

94), U.S. Department of Labor, Room N– 

2625, 200 Constitution Avenue, NW., 

Washington, DC 20210. Deliveries 

(hand, express mail, messenger and 

courier service) are accepted during the 

Department of Labor’s and Docket 

Office’s normal business hours, 8:15 

a.m.–4:45 p.m., e.t. 

Instructions: All submissions must 

include the Agency name and the OSHA 

docket number (OSHA Docket No. 

OSHA–2007–0038; formerly NRTL2– 

94). Submissions, including any 

personal information you provide, are 

placed in the public docket without 

change and may be made available 

online at http://www.regulations.gov. 

Docket: To read or download 

submissions or other material in the 

docket, go to http://www.regulations.gov 

or the OSHA Docket Office at the 

address above. All documents in the 

docket are listed in the http:// 

www.regulations.gov index, however, 

some information (e.g., copyrighted 

material) is not publicly available to 

read or download through the Website. 

All submissions, including copyrighted 

material, are available for inspection 

and copying at the OSHA Docket Office. 

Extension of Comment Period: Submit 

requests for extensions concerning this 

notice to the Office of Technical 

Programs and Coordination Activities, 

NRTL Program, Occupational Safety and 

Health Administration, U.S. Department 

of Labor, 200 Constitution Avenue, 

NW., Room N–3655, Washington, DC 

20210. Or, fax to (202) 693–1644. 

FOR FURTHER INFORMATION CONTACT: 

MaryAnn Garrahan, Director, Office of 

Technical Programs and Coordination 

Activities, NRTL Program, Occupational 

Safety and Health Administration, U.S. 

Department of Labor, 200 Constitution 

Avenue, NW., Room N–3655, 

Washington, DC 20210, or phone (202) 

693–2110. 

SUPPLEMENTARY INFORMATION: 

I. Introduction 

The Occupational Safety and Health 

Administration (OSHA) is giving notice 

that Electrical Reliability Services, Inc. 

(formerly Electro-Test, Inc.) (ETI) has 

applied for renewal of its recognition as 

a Nationally Recognized Testing 

Laboratory (NRTL). (OSHA will refer to 

this NRTL by its former name 

throughout this notice.) OSHA’s current 

scope of recognition for ETI may be 

found in the following Web page: http:// 

www.osha.gov/dts/otpca/nrtl/ers.html. 

OSHA has reviewed ETI’s renewal 

application and has preliminarily 

determined that ETI is not 

‘‘independent’’ (29 CFR 1910.7(b)(3)), a 

prerequisite to initial and continued 

NRTL recognition. For this reason, 

OSHA is proposing to deny ETI’s 

application. 

OSHA requests comments on this 

preliminary determination, in 

accordance with Appendix A to 29 CFR 

1910.7. Any comments must be received 

by July 2, 2007. 

The most recent application 

processed by OSHA specifically related 

to ETI’s recognition granted an 

expansion of recognition. The final 

notice for this expansion was published 

on March 9, 1999 (64 FR 11500). The 

only other Federal Register notice 

related to ETI’s recognition that OSHA 

published covered its recognition as an 

NRTL, which OSHA granted as 

described below. The current address of 

the only ETI site recognized by OSHA 

is: Electro-Test, Inc., 6900 Koll Center 

Parkway, Suite 416, Pleasanton, CA 

94566. 

II. Background 

a. The NRTL Program and Application 

Process 

Many of OSHA’s safety standards 

require that equipment or products used 

in places of employment covered by the 

Occupational Safety and Health Act of 

1970 be tested and certified to help 

ensure they can be used safely (see, e.g., 

29 CFR 1910, Subpart S). In general, this 

testing and certification must be 

performed by an NRTL. In order to 

ensure that the testing and certification 

are done appropriately, OSHA 

implemented the NRTL Program. The 

NRTL Program establishes the criteria 

that an organization must meet in order 

to be and remain recognized as an 

NRTL. 

The NRTL Program requirements are 

set forth at 29 CFR 1910.7, ‘‘Definition 

and requirements for a nationally 

recognized testing laboratory.’’ To be 

recognized by OSHA, an organization 

must: (1) Have the appropriate 

capability to test, evaluate, and approve 

products to assure their safe use in the 

workplace; (2) be completely 

independent of the manufacturers, 

vendors, and major users of the 

products for which OSHA requires 

certification; (3) have internal programs 

that ensure proper control of the testing 

and certification process; and (4) have 

effective reporting and complaint 

handling procedures. OSHA recognition 

of an NRTL signifies that the 

organization has met the legal 

requirements in Section 1910.7. 

Recognition is an acknowledgment that 

the organization can perform 

independent safety testing and 

certification of the products covered 

within its scope of recognition and is 

not a delegation or grant of government 

authority. 

OSHA requires NRTLs to submit a 

detailed application when applying for 

recognition under the program. Once 

granted, an NRTL’s recognition is for a 

period of five years, near the conclusion 

of which the NRTL must apply for 

renewal of recognition. Appendix A to 

Section 1910.7 establishes the renewal 

process. This process provides NRTLs 

with several opportunities to present 

information to the Agency to justify 

their continued recognition under the 

program. 

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24618 Federal Register / Vol. 72, No. 85 / Thursday, May 3, 2007 / Notices 

The regulations provide for OSHA 

staff to make a preliminary finding as to 

whether an NRTL continues to meet the 

program requirements (Appendix 

A.1.B). If the staff makes a negative 

finding, OSHA notifies the applicant of 

this in writing and allows a reasonable 

period for a response (Appendix 

A.1.B.3). After receipt of this written 

notification, the applicant may either: 

(1) submit a revised application; or (b) 

request that the original application be 

forwarded to the Assistant Secretary of 

OSHA to determine whether the 

renewal application warrants approval 

(Id.). 

After these initial steps, the Assistant 

Secretary of OSHA makes a preliminary 

finding as to whether the applicant has 

met the requirements for renewal of 

recognition (Appendix A.1.B.4). The 

Agency notifies the applicant of the 

preliminary decision and publishes a 

Federal Register notice informing the 

public, which also provides the public 

an opportunity to comment on the 

applicant’s ability to meet the 

recognition requirements (Appendix 

A.1.B.5). After the public comment 

period, the Assistant Secretary may 

make a final decision on the renewal 

application. Alternatively, if there is 

public objection, the Assistant Secretary 

may initiate a special review of the 

information submitted during the public 

comment period and may supplement 

the record by either reopening the 

public comment period or convening an 

informal hearing (Appendix A.1.B.7). At 

the conclusion of this process, a final 

decision is made by the Assistant 

Secretary and published in the Federal 

Register (Id.). 

b. ETI’s Application 

ETI applied to OSHA for its initial 

recognition in November 1992. At that 

time, it was a privately held 

organization, incorporated in California. 

After processing the application, 

including performing the necessary onsite assessments, OSHA announced its 

preliminary finding on the application 

in a notice published in the Federal 

Register on June 9, 1995 (60 FR 30595). 

At the time and unknown to OSHA, ETI 

was in the process of being acquired by 

Emerson Electric Company (Emerson). 

The acquisition of ETI by Emerson 

was consummated on October 4, 1995. 

The notice to recognize ETI as an NRTL 

was published in the Federal Register 

on October 6, 1995, and ETI provided 

written notification of the acquisition by 

letter dated October 16, 1995. In that 

notification, ETI stated that, as a result 

of the acquisition, it would report to a 

new Board of Directors. This new Board 

consisted of one person who worked 

directly for Emerson (‘‘Corporate 

Development’’) and one who worked for 

another subsidiary of Emerson 

(‘‘Customer Service & Support’’), the 

latter named as the new Chairman of the 

Board. 

Emerson is a global manufacturer of 

electrical, electromechanical, and 

electronic products and systems. It is a 

Fortune 500 company with more than 

60 divisions that operate over 270 

manufacturing locations around the 

world. In 2006, Emerson received over 

$20 billion in revenues. The electrical 

products manufactured by Emerson’s 

subsidiaries, divisions, and units, are 

the types of products for which OSHA 

requires NRTL approval. In its October 

16 letter informing OSHA of the 

acquisition, ETI stated that the 

‘‘acquisition will provide [ETI] the 

necessary capital to accelerate its 

growth as a nationwide organization’’ 

(see Exhibit 9–1). 

In December 1999, ETI submitted its 

renewal application. It stated that the 

ownership and independence of ETI 

had not changed since 1995. Two 

individuals closely associated with 

Emerson remained on the ETI Board of 

Directors, a ‘‘Vice President Emerson 

Electric’’ and a ‘‘Director Corporate 

Development Emerson Electric.’’ The 

Chairman of the Board was the ‘‘Vice 

President of Emerson Electric’’ (see 

Exhibit 16–1). 

On April 19, 2000, OSHA first 

informed ETI that the information 

supplied in its application did ‘‘not 

meet the policy on independence’’ (see 

Exhibit 16–4). In that letter, OSHA 

asked ETI to respond and submit 

additional documentation regarding its 

independence: ‘‘Please provide a 

statement to explain or clarify how ETI 

does meet the [independence] policy. 

As a minimum, your statement * * * 

must present clear and convincing 

information showing that the particular 

relationship is not applicable to ETI or, 

if it is applicable, showing how ETI still 

meets the requirement for complete 

independence.’’ OSHA also attached its 

policy on independence (described 

below). 

ETI responded to OSHA on May 17, 

2000 (see Exhibit 16–5). The company 

informed OSHA that it was changing its 

policies and procedures to address the 

independence requirement by including 

the following statement in its proposals 

regarding NRTL work: ‘‘In accordance 

with [ETI’s] corporate policy and due to 

[ETI’s] affiliation with Emerson Electric, 

to prevent the appearance of any 

conflict of interest we will not 

knowingly perform any listing or 

product recognition projects for other 

Emerson companies.’’ (Hereinafter this 

is referred to as the ‘‘corporate notesting policy.’’) The May 17 letter 

indicated no changes to ETI’s Board of 

Directors. It also did not explain how 

ETI intended to implement its corporate 

no-testing policy. 

OSHA again responded to ETI and 

reiterated its concerns about 

independence: (1) ETI had described no 

policies or procedures to implement the 

corporate no-testing policy; (2) two ETI 

Board members were still associated 

with Emerson; and (3) ETI had received 

significant financing from Emerson 

when it was acquired (see Exhibit 16– 

6). 

ETI responded by providing OSHA 

some internal procedures it 

implemented for the corporate notesting policy. It also informed OSHA 

that it was changing its Board of 

Directors. However, one of the members 

of the new Board was President of an 

Emerson subsidiary, albeit one that ETI 

claimed manufactured no products. 

Another member was the former 

Chairman of ETI’s Board, who had since 

retired from Emerson (see Exhibit 16–7). 

OSHA again carefully reviewed ETI’s 

ownership situation and the efforts it 

took to address the independence issue. 

OSHA concluded, however, that ETI 

simply did not comply with its 

independence policy. In November 

2004, OSHA formally informed ETI of 

the negative finding and indicated that 

ETI could either submit a revised 

application for further review or submit 

the original application to the Assistant 

Secretary with a statement of reasons 

supporting application approval. That 

letter, and accompanying Federal 

Register notice document, set forth in 

detail the reasons for the negative 

finding. The notice explained how ETI’s 

ownership situation violated the 

independence policy and how ETI had 

not addressed the ‘‘fundamental 

relationship of concern, i.e., its 

ownership by a manufacturer of the 

types of products that must be approved 

by NRTLs and from which NRTLs must 

be ‘completely independent’ ’’ (see 

Exhibit 16–8). 

Upon receipt of this letter, ETI 

requested additional time to respond to 

OSHA, which the Agency granted. The 

company also asked for more 

information from the Agency to further 

explain OSHA’s negative finding on 

independence. OSHA responded on July 

7, 2005 (see Exhibit 16–9). It reiterated 

the reasons for denial, and further 

explained OSHA’s independence 

policy. On September 1, 2005 (see 

Exhibit 16–10), ETI submitted its 

original application to the Assistant 

Secretary for review, along with a 

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Federal Register / Vol. 72, No. 85 / Thursday, May 3, 2007 / Notices 24619 

1 NRTLs, including ETI, were given the 

opportunity to comment on an early draft of the key 

policies in the Directive, including the 

independence policy. ETI provided no comments 

on it (Exhibit 17–2). 

supplemental statement of reasons 

supporting the application. 

c. The NRTL Independence Policy 

OSHA requires NRTLs to be 

‘‘completely independent’’ of 

manufacturers of equipment being 

tested (29 CFR 1910.7(b)(3)). This 

independence requirement is 

fundamental to the third-party testing 

and certification system. When OSHA 

instituted the NRTL program, it 

intended to extend the practices that 

two NRTLs—Underwriters Laboratories 

(UL) and Factory Mutual Research 

Corporation (FMRC)—had instituted in 

their testing and certification programs. 

UL and FMRC were at the time, and still 

are, not affiliated with manufacturers of 

the equipment they certify. In many 

ways, ‘‘independence’’ is the 

cornerstone of the NRTL program, 

which is designed to ensure that certain 

dangerous equipment is tested and 

certified as safe by organizations that 

have no affiliation with manufacturers 

of the products or employers that might 

use the products in the workplace. The NRTL Program application guide 

that was in effect when ETI applied for 

recognition in 1992 addressed 

independence by specifying the 

following: ‘‘Written evidence of the 

independence of the applicant should 

be presented to achieve objectivity and 

preclude conflict of interest and to meet 

the provisions of 29 CFR 1910.7, i.e., the 

NRTL may not be owned by 

manufacturers or suppliers of the 

product(s) to be tested and certified’’ 

(Affiliation, page 2, A Guide For 

Applying As A Nationally Recognized 

Testing Laboratory (Exhibit 17–1) 

(emphasis added)). ETI’s application 

letter claimed that it followed the guide 

in preparing its application. In December 1999, OSHA finalized a 

Directive implementing certain policies 

and procedures of the NRTL program. In 

the Directive, OSHA further interpreted 

the independence requirement (see 

NRTL Program Policies, Procedures, and 

Guidelines—CPL 01–00–003—CPL 1– 

0.3 (NRTL Program Directive), 

Appendix C.V). The Directive stated 

that in order to meet the independence 

requirement, NRTLs ‘‘must be free from 

commercial, financial and other 

pressures that could compromise the 

results of its testing and certification 

processes.’’ The Directive makes clear 

that NRTLs must avoid these pressures 

from manufacturers of equipment.1

Under its independence policy, 

OSHA presumes that ‘‘pressures’’ exist 

if there is a substantial relationship 

between the NRTL and a manufacturer 

‘‘of products that must be certified 

which could compromise the objectivity 

and impartiality in determining the 

results of its testing and certification 

processes.’’ Substantial, for purposes of 

the policy, ‘‘means of such a nature and 

extent as to exert undue influence on 

the testing and certification processes.’’ 

The policy recognizes that certain 

relationships between an NRTL and a 

manufacturer of products that need to 

be certified can affect the objectivity of 

an NRTL’s testing and certification 

processes. A laboratory that has these 

relationships generally would not be 

independent and could not be 

recognized by OSHA as an NRTL. The Directive also sets forth a nonexclusive list of relationships that are 

‘‘substantial’’ for purposes of the policy: <bullet≤ The NRTL is a supplier or 

major user of products that an NRTL 

must certify, or is organizationally 

affiliated with such a supplier or major 

user; 

<bullet≤ The NRTL significantly 

finances, invests in, sells product 

design, similar services or products to a 

supplier or major user of products that 

an NRTL must certify; <bullet≤ The NRTL is owned in 

excess of two percent (2%) by a supplier 

or major user of products that an NRTL 

must certify, or their major owners; <bullet≤ The NRTL receives 

significant financing from a supplier or 

major user of products that an NRTL 

must certify, or their major owners; <bullet≤ A person holding a 

substantial position with the NRTL has 

a significant financial interest in a 

supplier or major user of products that 

an NRTL must certify, or is a director or 

key personnel of either. OSHA has determined that if a 

laboratory has these relationships it 

would not be free from undue 

influences on its testing and 

certification operations and OSHA 

presumes that pressures exist in these 

situations. As stated, however, this is a 

non-exclusive list; OSHA may 

determine in a specific case that other 

relationships would be ‘‘substantial’’ for 

purposes of the policy. Applicants can rebut the presumption 

that such pressures exist by clear and 

convincing evidence. OSHA intended 

this rebuttal to provide applicants an 

opportunity to clarify their 

organizational relationships and explain 

how the nature of those relationships 

does not create pressures. If the 

applicant cannot rebut the presumption, 

then the applicant would not meet the 

independence requirement. In some limited situations, the policy 

allows OSHA to prescribe ‘‘conditions’’ 

on NRTLs for initial or continued 

recognition even when the Agency 

determines that pressures exist. Such 

conditions, however, ‘‘must be 

consistent with the policy,’’ in that they 

must effectively eliminate the pressures 

stemming from the substantial 

relationship. The Directive also 

provides examples of conditions OSHA 

may consider imposing: (1) Restricting 

the suppliers for whom the NRTL may 

test and certify products; or (2) 

restricting the type of products the 

NRTL may test and certify. 

Whether imposing conditions on an 

applicant is appropriate is a judgment 

made by the Agency on a case-by-case 

basis. OSHA has discretion whether to 

impose conditions in a particular case. 

The independence policy does not 

require OSHA to impose conditions; it 

only allows for conditions to be 

imposed. In most cases, pressures 

stemming from a substantial 

relationship could not be effectively 

eliminated and thus OSHA could not 

impose conditions ‘‘consistent with the 

policy.’’ OSHA’s ability to impose 

conditions is limited to those rare 

instances when the substantial 

relationships cause only ‘‘minimal’’ 

pressures. 

In analyzing these situations, OSHA 

must carefully examine the ownership 

situation, the types of products at issue, 

the scope and magnitude of the NRTL’s 

operations and the operations of 

manufacturers or employers using the 

products, as well as other factors. OSHA 

also must consider the degree to which 

it can monitor NRTL compliance with 

any conditions. This is particularly 

important. OSHA typically audits 

NRTLs once a year to ensure they 

continue to meet the NRTL 

requirements and to maintain the 

quality of their testing and certification 

operations. If imposing conditions on an 

NRTL would be impossible for OSHA to 

audit effectively, on that basis alone 

conditions would not be appropriate. 

OSHA intends its policy on NRTL 

independence to be a straightforward 

approach for judging the NRTL’s 

compliance with the Agency’s 

independence requirement under 29 

CFR 1910.7. OSHA cannot perform indepth analyses of an applicant’s or 

NRTL’s ownership or financial 

relationships and interests. The 

applicant or NRTL has the burden of 

showing it is independent, and, in 

considering if it meets the requirement, 

those relationships must present none 

or only minor pressures. 

For the reasons set forth below, OSHA 

preliminarily finds that ETI does not 

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24620 Federal Register / Vol. 72, No. 85 / Thursday, May 3, 2007 / Notices 

2 Even if such assurances were provided, OSHA 

would be unable to verify that no financial 

contributions occurred, given the technical (nonfinancial) nature of OSHA’s audits and the vast 

scope of Emerson’s operations. 

meet OSHA’s NRTL independence 

requirement. There is a substantial 

relationship between ETI and Emerson, 

one of the leading global manufacturers 

of electric and electronic equipment. 

This relationship creates pressures that 

could compromise the results of ETI’s 

testing and certification processes, 

which have not been rebutted by clear 

and convincing evidence. In addition, 

there are no conditions that OSHA 

could impose to mitigate the pressures. 

And, even if such conditions could be 

imposed, OSHA has preliminarily 

concluded that it could not effectively 

monitor ETI’s compliance with them. In 

making this preliminary determination 

regarding ETI’s independence, the 

Agency emphasizes that this 

determination does not include any 

positive or negative finding about ETI’s 

other technical capabilities that would 

be needed to support continued 

recognition. 

III. Preliminary Finding of NonIndependence 

a. ETI Has a ‘‘Substantial Relationship’’ 

With Emerson 

ETI is wholly-owned by Emerson. 

Emerson is a manufacturer of electrical 

and electronic products, many of which 

require NRTL certification if used in the 

workplace. Under the NRTL 

independence policy, this constitutes a 

‘‘substantial relationship’’: ETI is 

organizationally affiliated with—and is 

owned in excess of two percent by—a 

supplier of products requiring NRTL 

certification. ETI does not dispute that 

it has a substantial relationship with 

Emerson. Because there is a substantial 

relationship, OSHA presumes that 

pressures exist that could compromise 

the results of its testing and certification 

processes and that ETI is not 

independent. 

b. ETI Has Failed To Rebut the 

Presumption of Pressures 

ETI has attempted to rebut the 

presumption of pressures. In various 

letters to the Agency ETI has explained 

why it believes it is not subject to 

pressures from Emerson that could 

compromise the results of its testing and 

certification processes. ETI states that it 

has decision making independence from 

Emerson, as well as economic 

independence. Furthermore, it contends 

that the organizational relationship 

between ETI and any Emerson 

manufacturing company is indirect and, 

as a result, should raise fewer concerns 

that pressures exist. Finally, ETI claims 

that it has taken a variety of steps to 

ensure that it does not test or certify any 

products from Emerson. The Agency has 

carefully considered this information; 

however, it finds that the presumption 

of pressures has not been adequately 

rebutted. 

1. ETI’s Independence From Emerson 

ETI states that it ‘‘receives no 

financing whatsoever from Emerson, 

[and] [t]here is no evidence in the 

record suggesting that Emerson wields 

any decision making influence on ETI’’ 

(ETI’s Statement of Reasons, p. 6 

(Exhibit 16–10)). ETI suggests that it is 

a completely separate entity that 

operates independently from Emerson. 

OSHA is not convinced by these 

statements. 

ETI’s statements that Emerson 

possesses no decision making influence 

over ETI do not address the 

fundamental aspect of control that a 

parent company has over a ‘‘controlled’’ 

subsidiary (e.g., a wholly-owned or 

majority-owned subsidiary). According 

to the Securities and Exchange 

Commission, control is 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’’ (17 CFR 230.405). The 

parent company of a wholly-owned 

subsidiary has ultimate control over the 

subsidiary even though it may delegate 

some aspects of that control to the 

subsidiary. Control can be exerted 

through changes in policy, changes to 

the leadership of the wholly-owned 

subsidiary, and even buying and selling 

the subsidiary. As the Supreme Court 

has stated in the antitrust context: 

A parent and its wholly owned subsidiary 

have a complete unity of interest. Their 

objectives are common, not disparate: their 

general corporate actions are guided or 

determined not by two separate corporate 

consciousnesses, but one. They are not 

unlike a multiple team of horses drawing a 

vehicle under the control of a single driver. 

With or without a formal ‘‘agreement,’’ the 

subsidiary acts for the benefit of the parent, 

its sole shareholder. * * * [T]he parent may 

assert full control at any moment if the 

subsidiary fails to act in the parent’s best 

interests. 

Copperweld Corp. et al. v. 

Independence Tube Corp., 467 U.S. 752, 

771–72 (1984) (emphasis added). At any 

time, Emerson has the power to dictate 

ETI’s actions. ETI does not have 

decision making independence. 

ETI’s claims of economic 

independence from Emerson are also 

unpersuasive. First, acquisition itself is 

a form of financing. The cash or other 

assets of the purchased company are 

maintained and typically enhanced by 

the purchasing company. In fact, after 

the acquisition of ETI by Emerson, ETI 

stated that ‘‘[t]he acquisition will 

provide [ETI] the necessary capital to 

accelerate its growth as a nationwide 

organization’’ (see Exhibit 9–1) 

(emphasis added)). Second, while ETI 

states that to date it has received no 

additional financing from Emerson 

(since the initial acquisition), this could 

change at any time. OSHA has received 

no assurances from Emerson that it will 

refrain from making financial 

contributions to ETI.2 In fact, on its Web 

page ETI suggests the opposite: ‘‘As a 

wholly-owned subsidiary [of Emerson], 

we have direct access to the combined 

resources of one of the world’s most 

respected industrial leaders’’ (see 

Exhibit 17–3). 

2. ETI’s Organizational Relationship to 

Emerson 

ETI also contends that Emerson is 

simply a holding company, which owns 

only a ‘‘few’’ subsidiaries that 

manufacture products that require 

NRTL certification (ETI’s Statement of 

Reasons, p. 6. (Exhibit 16–10)). For this 

reason, ETI contends that its 

relationship with Emerson ‘‘is indirect 

and, as a result, should raise a 

significantly less concern that pressures 

could be exerted on the NRTL’’ (Id.). 

Furthermore, ETI suggests that because 

no member of its Board of Directors is 

directly affiliated with an Emerson 

owned manufacturer, there is little 

opportunity for pressures to be exerted 

on ETI. OSHA finds that the 

organizational relationship between ETI 

and Emerson does not rebut the 

presumption of pressures. 

When ETI was first purchased, ETI’s 

Board, which includes a total of only 

three members, consisted of two 

Emerson executives: Director Corporate 

Development Emerson; and President, 

Customer Service & Support, a 

subsidiary of Emerson Electric Co. As 

stated above, ETI changed its Board of 

Directors in response to concerns raised 

by OSHA. Even so, the replacement 

Board still consisted of two individuals 

closely affiliated with Emerson: One 

was a former longtime Emerson 

employee who was a Vice President of 

Emerson; and one was the President of 

an Emerson-owned subsidiary. The 

third member was ETI’s President. As a 

result, these changes in the Board of 

Directors provided little organizational 

separation between ETI and Emerson. 

With the exception of the retired 

Emerson employee, the Board of 

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Directors still included a director who 

was part of the Emerson family of 

companies. Even the retired member 

had considerable ties to Emerson and its 

management from his many years of 

working with the company in a variety 

of capacities. Due to these close 

associations, comprising a majority on 

the ETI Board of Directors, the potential 

remains for Emerson to influence ETI’s 

testing and certification operations, as 

would be expected with a whollyowned subsidiary. At the very least, 

these associations make Emerson privy 

to the Board’s deliberations on behalf of 

ETI. 

Furthermore, it is clear that ETI is an 

integral part of Emerson’s operations. 

ETI is part of the Emerson Process 

ManagementTM brand platform of 

Emerson. Emerson Process 

ManagementTM is one of the largest 

Emerson brand platforms with over 20 

divisions and subdivisions. ETI is 

considered a ‘‘division’’ of Emerson and 

is highlighted on Emerson’s Web pages. 

ETI itself describes its important role in 

Emerson’s operations: ‘‘Within the 

Emerson family of companies, we are an 

integral part of the Asset Optimization 

team of Emerson Process Management 

which aggregates the service divisions 

of over 100 Emerson companies. Our 

goal is to create solutions to optimize 

the process industry’’ (see Exhibit 17–3). 

Emerson’s Web pages emphasize a 

close relationship between Emerson and 

ETI. For example, Service Data Sheets 

put out by ETI include the Emerson 

Process ManagementTM logo, copyright 

information, and address (see Exhibit 

17–4). When ETI announced its name 

change to Electrical Reliability Services, 

it stated: ‘‘While our new identity 

symbolizes our comprehensive 

solutions offering, it also demonstrates 

our relationship to our parent company, 

Emerson. As part of Emerson’s Asset 

Optimization Division, Electrical 

Reliability Services provides you with 

full access to Emerson’s vast technical 

and human resources’’ (see Exhibit 17– 

5). OSHA is not convinced that ETI’s 

relationship with Emerson is so distant 

that pressures do not and will not exist 

that could compromise the results of its 

testing and certification processes. 

3. Corporate No-Testing Policy 

ETI has established a policy that no 

NRTL testing, evaluation or certification 

work will be knowingly completed for 

Emerson owned companies. The policy 

states further that ‘‘[t]he ownership of 

each client will be verified as not being 

part of Emerson prior to [ETI] 

submitting a proposal and on an 

ongoing basis for as long as the listing 

relationship between the client and 

[ETI] exists’’ (see Exhibit 16–7, 

Attachment 2, page 1). This is a key 

aspect of ETI’s rebuttal. ETI contends 

that it will have no pressures because it 

will not knowingly test or certify any 

products produced by Emerson 

companies. While OSHA appreciates 

the steps taken by ETI, these policy 

changes do not rebut the presumption of 

pressures. 

First, ETI’s policy does not address 

the fundamental ownership situation of 

ETI and the control that Emerson can 

assert over its operations. At any time, 

Emerson can change ETI’s policies, 

including the corporate no-testing 

policy. The bottom line is that ETI is 

owned in excess of 2% by a major 

supplier of products that must be NRTL 

approved when used in the workplace. 

This relationship and the control that 

can be asserted are not addressed by the 

corporate no-testing policy. 

Second, ETI’s corporate no-testing 

policy appears to deal only with final 

products manufactured by Emerson, and 

not component parts. Emerson-owned 

and affiliated companies produce 

countless electrical components used by 

other manufacturers in final products, 

and use major components or products 

of other manufacturers in Emerson’s 

electrical final products. The corporate 

no-testing policy does not affect this 

part of Emerson’s business, which is a 

major area of pressures that could be 

exerted on ETI. Even if other 

organizations perform the testing now, 

this does not prevent Emerson from 

establishing a policy in the future that 

instead relies on ETI testing for 

components if Emerson found this to be 

beneficial for itself and affiliated 

organizations. 

Third, the policy does not appear to 

cover contractors hired by Emerson or 

the other affiliations and joint ventures 

Emerson has throughout the world. 

According to Emerson Web pages, 

Emerson operations in China alone 

consist of ‘‘30 wholly owned and joint 

venture facilities’’ (see Exhibit 17–6). 

OSHA anticipates that the number and 

scope of these relationships will only 

increase as Emerson continues to grow 

its sales and manufacturing presence 

around the world, in such areas as Asia, 

Latin America, and Eastern Europe (see 

Exhibit 17–7). Products from these 

operations could enter the U.S. market 

and thus U.S. workplaces. ETI’s 

corporate no-testing policy in no way 

alleviates the pressures that can result 

from these relationships. 

Furthermore, Emerson’s operations 

are so vast that OSHA seriously doubts 

ETI’s ability to effectively enforce its 

own policy. ETI says that Emerson has 

a ‘‘significant’’ number of subsidiaries, a 

‘‘few’’ of which manufacture products 

requiring NRTL certification. OSHA 

reviewed Emerson’s 2006 10–K filing 

with the Securities and Exchange 

Commission, and it shows that Emerson 

has over 800 subsidiaries in countries 

throughout the world (see Exhibit 17–8). 

Emerson owns over 270 manufacturing 

sites and employs approximately 

128,000 people worldwide. 

Emerson’s product lines are also vast. 

The company’s 10–K provides just a 

snapshot of the variety of products 

Emerson companies manufacture, 

including: electrical distribution 

conduit and cable fittings, plugs and 

receptacles; industrial lighting, and 

controls; uninterruptible AC and DC 

power systems; cooling products for 

computers, telecommunications, and 

other equipment; refrigeration products 

in industrial applications; electric 

motors, HVAC equipment, furnaces, 

fans, heat pumps; professional tools 

such as wet-dry vacuums; and other 

assorted power tools that can be used in 

the workplace. Some of these products 

fit within the two test standards 

included in ETI’s current scope of 

recognition. For example, Emerson 

produces power conversion units, 

which can be tested pursuant to UL 

508C Power Conversion Equipment. ETI 

is currently recognized to test products 

in accordance with that test standard. 

ETI has also requested that OSHA 

expand its NRTL recognition to add new 

test standards that would also include 

other Emerson products. Given the vast 

nature of Emerson’s operations, OSHA 

believes it is virtually impossible for ETI 

to effectively enforce its corporate notesting policy. 

It would also be virtually impossible 

for OSHA to monitor ETI’s corporate notesting policy. OSHA typically audits its 

NRTLs annually to ensure they are 

complying with the NRTL regulations 

and procedures, as well as their own 

internal policies and procedures. These 

audits are technical in nature and focus 

on the quality of the NRTL’s testing and 

certification operations. OSHA does not 

have, nor did it ever intend to have, the 

resources to enable it to audit ETI’s 

corporate no-testing policy, especially 

given the vast scope of Emerson’s 

operations. The number of subsidiaries 

and other affiliated companies, 

manufacturing facilities, and the broad 

array of products manufactured by 

Emerson and its affiliated organizations, 

would prohibit OSHA from effectively 

performing its audit functions. 

To add to an already complex 

situation, OSHA’s ability to audit would 

be made more difficult because of the 

changing nature of Emerson’s 

operations. Emerson is continually 

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24622 Federal Register / Vol. 72, No. 85 / Thursday, May 3, 2007 / Notices 

3 OSHA announced the removal of the condition 

on January 28, 2002 (67 FR 3913), after Intertek 

informed OSHA that the unit had ceased operation. 

4 The only other instance where OSHA imposed 

a condition on an NRTL with a known conflict 

related to independence was for Wyle Laboratories, 

Inc. At the time of its recognition, Wyle was part 

of an organization with a division that 

manufactured and distributed electronic enclosure 

cabinets. Like Intertek, OSHA was able to impose 

a condition that Wyle not test or certify any 

equipment that utilized an electronic enclosure 

manufactured by Wyle. This condition was easy for 

Wyle and OSHA to monitor since the only product 

at issue was electrical enclosure cabinets. OSHA 

notes that the condition is no longer in place since, 

in 1997, Wyle informed OSHA that it had sold this 

division. 

buying and selling new companies. For 

example, according to its 2005 Annual 

Report (see Exhibit 17–9, page 18): 

The Company acquired Do+Able, a 

manufacturer of ready-to-assemble storage 

products, and Numatics, a manufacturer of 

pneumatic and motion control products, and 

several smaller businesses during 2005. * * 

* During 2004, the Company acquired the 

North American outside plant and power 

systems business of Marconi Corporation 

PLC, as well as several other small businesses 

for a total of approximately $414 million in 

cash. 

Emerson describes as part of its business 

focus to ‘‘seek to grow through emphasis 

on ‘‘strategic acquisitions and 

divestitures * * * that better position 

our company in terms of markets and 

breadth of product offerings’’ (see 

Exhibit 17–10). Based solely upon the 

nature of Emerson’s continually 

changing holdings, it would be almost 

impossible for OSHA to continually 

monitor ETI’s adherence to the 

corporate no-testing policy. 

For all of these reasons, OSHA finds 

that ETI has failed to rebut the 

presumption of pressures. One of the 

largest electrical manufacturers in the 

world wholly owns an NRTL that tests 

the types of equipment that the 

manufacturer produces. This does not 

satisfy OSHA’s requirement that NRTLs 

be ‘‘completely independent.’’ 

c. OSHA Cannot Impose Conditions on 

ETI 

While OSHA has considered its 

ability to impose conditions in this case, 

and discussed this with ETI, OSHA has 

concluded that conditions are not 

appropriate. The relationship between 

Emerson and ETI is such that imposing 

conditions would not be consistent with 

the independence policy. 

As described above, OSHA’s 

independence policy permits conditions 

to be imposed only in those 

circumstances where there are minimal 

pressures and the conditions would not 

negate the underlying independence 

requirement. The extent to which 

conditions may be imposed in a 

situation of a manufacturer-owned 

NRTL depends upon the ownership 

situation, the scope of testing of the 

NRTL, and the scope of the products 

manufactured, among other things. 

In this case, Emerson wholly owns 

ETI; this is not a situation where a 

manufacturer owns only a small, 

minority percentage of an NRTL and 

thus could exert only minimal pressures 

over the NRTL. Furthermore, the scope 

of products that Emerson produces is 

enormous. Emerson produces a litany of 

products that require NRTL 

certification, as described above. In 

addition, the types of products that ETI 

tests cover the products that Emerson 

produces. ETI is currently recognized to 

test products according to the following 

test standards: UL 508 Electric 

Industrial Control Equipment; UL 508C 

Power Conversion Equipment. These 

standards include the products that 

Emerson companies produce. ETI has 

also requested that it be recognized to 

test products according to several other 

test standards that include other 

products produced by Emerson. Given 

these circumstances, OSHA cannot 

impose conditions without negating the 

fundamental requirement that NRTLs be 

independent of ‘‘any manufacturers or 

vendors of equipment or materials being 

tested for [equipment requirements]’’ 

(29 CFR 1910.7(b)(3)). 

Finally, when imposing conditions, 

OSHA must consider whether it can 

reasonably monitor an NRTL’s 

compliance with those conditions. 

OSHA is simply not equipped to 

monitor the various aspects of ETI’s 

ownership relationships and affiliations 

with the numerous subsidiaries of 

Emerson. As noted earlier, the Agency’s 

policy on independence provides a 

straightforward, practical approach to 

determining whether an organization 

meets the requirement for 

independence. OSHA is not requiring 

through the policy that its staff analyze 

actual or potential business activities or 

determine possible activities that cause 

actual or potential conflicts and 

pressures. This information is beyond 

the reach of OSHA’s auditing 

capabilities under the NRTL Program. 

d. OSHA Has Taken a Consistent 

Position on Independence 

ETI contends that OSHA has applied 

a stricter definition of independence in 

ETI’s case than it has in other cases 

(ETI’s Statement of Reasons, pp. 5–6 

(Exhibit 16–10)). In particular, it 

suggests that OSHA treated another 

NRTL—Intertek Testing Services NA, 

Inc. (Intertek)—differently than it 

treated ETI. It also suggests that OSHA 

has taken different positions on 

independence in its dealings with ETI 

over the last several years. OSHA 

disagrees. The Agency has consistently 

applied its independence policy across 

the board to all NRTLs and throughout 

its dealings with ETI. 

OSHA did not apply a different 

standard for independence in its 

dealings with Intertek. Intertek’s parent 

had acquired, and merged into Intertek’s 

overall laboratory operations, a small 

manufacturer of laboratory test 

equipment, Compliance Design. In 

discussing this ownership situation in 

the context of an application for 

expansion of recognition, OSHA stated: 

In accordance with OSHA policy, if 

[Intertek] were to certify the type of products 

manufactured or sold by Compliance Design, 

then [Intertek] would not meet the 

requirement in 29 CFR 1910.7 for complete 

independence. Also, [Intertek’s] parent 

company is Intertek Testing Services, Ltd. 

(ITSLtd). If [Intertek] were to certify a type 

of product for an entity owned by ITSLtd, 

and that entity is also a supplier of that type 

of product, then [Intertek] would not be 

‘‘completely independent’’ (65 FR 71124, 

November 29, 2000). 

In short, Intertek was not independent 

because its parent company owned a 

manufacturer of equipment that, under 

certain circumstances, needed NRTL 

approval. 

In the case of Intertek, however, 

OSHA was able to impose a condition 

to effectively eliminate the pressures 

stemming from Intertek’s relationship 

with Compliance Design.3 The 

condition included a no-testing policy 

for Compliance Design, and for any 

manufacturer affiliated with Intertek. 

OSHA had no information showing that 

Intertek or its parent owned any other 

manufacturing interest but imposed the 

broader condition as a precaution. This 

condition could be imposed because, 

unlike ETI’s situation, the manufacturer 

at issue was very small and produced 

just one type of product. Intertek could 

enforce the no-testing policy, and, due 

to the very small nature of the 

operations of Compliance Design, OSHA 

was able to effectively monitor Intertek’s 

compliance with the policy. In fact, 

Intertek’s relationship to Compliance 

Design was brought to light in the report 

of an audit of Intertek. ETI’s case, on the 

other hand, is much different. 

Emerson’s operations are so vast—with 

800 subsidiaries, 270 manufacturing 

locations, and countless products 

manufactured—that there are no 

conditions that could mitigate all the 

pressures and that OSHA could 

effectively monitor.4

In addition, OSHA has previously 

informed laboratories that they could 

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Federal Register / Vol. 72, No. 85 / Thursday, May 3, 2007 / Notices 24623 

not become NRTLs because they were 

owned by a manufacturer. In a recent 

case, a laboratory applied but stopped 

the application process after it better 

understood OSHA’s concerns over its 

relationship with its ownermanufacturer, a manufacturer of 

computer and telecommunications 

hardware products. OSHA has applied 

its policy fairly and its determinations 

regarding ETI’s independence are 

consistent with the Agency’s previous 

positions. 

ETI also argues in its rebuttal 

statement that a draft fax it received 

from OSHA staff constituted an 

‘‘interpretation’’ of the independence 

requirement that is at odds with OSHA’s 

current interpretation. In December 

2001, OSHA staff sent a draft fax to ETI 

that detailed some preliminary findings 

and conclusions about ETI’s lack of 

independence. These preliminary 

findings in many ways mirrored 

OSHA’s other correspondence with ETI. 

It expressed concerns about the vast 

nature of Emerson’s operations, the 

Board of Directors of ETI, and the fact 

that neither ETI nor OSHA could 

effectively monitor the corporate notesting policy (see Exhibit 17–11). It also 

listed some conditions that ETI could 

consider as it was evaluating the 

independence criteria and its 

relationship with Emerson. 

The draft fax is not a statement of 

Agency policy (Miller v. Youakim, 440 

U.S. 125, 146 n.25 (1979)). It was 

intended as a discussion piece between 

OSHA and ETI. It is not signed by an 

Agency official and is clearly marked 

draft on each page. ETI knew at the time 

that the document was simply a draft 

that was sent out to solicit comment 

from ETI. This is supported by the fact 

that ETI made no attempts to implement 

any of the suggestions included in the 

draft. In fact, ETI never formally 

responded to the draft. 

OSHA’s official statements regarding 

ETI’s ownership situation have been 

entirely consistent. Starting with the 

first correspondence related to the 

independence issue, OSHA has 

consistently stated that ETI was not 

independent because it was wholly 

owned by Emerson: 

<bullet≤ See Exhibit 16–5: ‘‘Under our 

policy on independence, Emerson 

would be a ‘supplier’ of products that 

must be certified by an NRTL. As 

described in our policy, since Emerson 

owns ETI and two of its officers are 

Directors of ETI, ETI would fail to meet 

the requirement for complete 

independence of an NRTL, under 

paragraph (b)(3) of 29 CFR 1910.7.’’ 

<bullet≤ See Exhibit 16–6: ‘‘After 

consulting with attorneys in the 

Department of Labor’s Office of the 

Solicitor, we believe that the 

information in your May 17 letter does 

in fact confirm that ETI does not meet 

our independence requirement.’’ 

<bullet≤ See Exhibit 16–8: ‘‘The 

independence requirement in § 1910.7 

is intended to prevent relationships that 

could unduly influence and thereby 

compromise the NRTL’s testing and 

certification process. OSHA considers 

an NRTL not to be independent if it is 

owned by a manufacturer of the type of 

products for which OSHA requires 

certification by NRTLs.’’ 

<bullet≤ See Exhibit 16–9: ‘‘The 

fundamental reason for denial is ETI’s 

ownership by Emerson Electrical 

Corporation (Emerson), a manufacturer 

of a wide variety of equipment that 

OSHA requires to be approved (i.e., 

tested and certified) by NRTLs. As such, 

this violates the NRTL requirement for 

independence set forth under 29 CFR 

1910.7(b).’’ 

As these statements demonstrate, 

OSHA has consistently informed ETI 

that its ownership by Emerson violated 

the independence requirement. OSHA 

has provided ETI several opportunities 

to rebut the presumption of pressures. 

ETI simply has not met its burden of 

demonstrating by clear and convincing 

evidence that pressures do not and will 

not exist that could compromise the 

results of its testing and certification 

processes. 

Request for Renewal of Recognition 

ETI seeks renewal of its recognition 

for the site that OSHA has previously 

recognized. ETI also seeks renewal of its 

recognition for testing and certification 

of products for demonstration of 

conformance to the following two test 

standards, which OSHA has previously 

recognized for ETI. Each of these 

standards is an ‘‘appropriate test 

standard,’’ within the meaning of 29 

CFR 1910.7(c): UL 508 Industrial 

Control Equipment; UL 508C Power 

Conversion Equipment. The 

designations and titles of these test 

standards were current at the time of the 

preparation of this notice. 

Preliminary Finding 

Following a review of the application 

file and other pertinent information, and 

for the reasons summarized above, 

OSHA has determined that ETI has not 

met all the requirements for renewal of 

its recognition. OSHA staff, therefore, 

recommended to the Assistant Secretary 

that the application be denied. 

The Assistant Secretary has made a 

preliminary finding that ETI fails to 

meet all the requirements prescribed by 

29 CFR 1910.7 for the renewal of its 

recognition, and, therefore, OSHA 

proposes to deny renewal of that 

recognition. This preliminary negative 

finding does not constitute OSHA’s final 

decision on the application for renewal. 

As stated above, OSHA welcomes 

public comments, in sufficient detail, as 

to whether ETI has met the 

requirements of 29 CFR 1910.7 for the 

renewal of its recognition as a NRTL. 

Your comments should consist of 

pertinent written documents and 

exhibits. Should you need more time to 

comment, you must request it in 

writing, including reasons for the 

request. OSHA must receive your 

written request for extension no later 

than the last date for comments. OSHA 

will limit any extension to 30 days, 

unless the requester justifies a longer 

period. We may deny a request for 

extension if it is not adequately 

justified. You may obtain or review 

copies of the ETI request, the on-site 

review report, ETI’s statement of 

reasons, other pertinent documents, and 

all submitted comments, as received, by 

contacting the Docket Office, Room 

N2625, Occupational Safety and Health 

Administration, U.S. Department of 

Labor, at the above address. Docket No. 

NRTL2–94 contains all materials in the 

record concerning the ETI application. 

The NRTL Program staff will review 

all timely comments and, after 

resolution of issues raised by these 

comments, will recommend whether to 

grant the ETI renewal request. The 

Assistant Secretary will make the final 

decision on granting the renewal and, in 

making this decision, may undertake 

other proceedings that are prescribed in 

Appendix A to 29 CFR Section 1910.7. 

OSHA will publish a public notice of 

this final decision in the Federal 

Register. 

Signed at Washington, DC, this 23rd day of 

April, 2007. 

Edwin G. Foulke, Jr., 

Assistant Secretary of Labor for Occupational 

Safety and Health. 

[FR Doc. E7–8455 Filed 5–2–07; 8:45 am] 

BILLING CODE 4510–26–P 

LIBRARY OF CONGRESS 

Copyright Office 

[Docket No. 2007–4] 

Notice of Intent to Audit 

AGENCY: Copyright Office, Library of 

Congress. 

ACTION: Public notice. 

SUMMARY: The Copyright Office of the 

Library of Congress is announcing 

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