OSHA Indicates Regulatory Changes Are Coming to Fix “Gaps” in PSM Standard

Recently, OSHA unveiled a new regulatory agenda that included proposed rulemaking on “Process Safety Management and Flammable Liquids.” This decision is hardly a surprise given the catastrophic explosions in West, TX, Geismar, LA, and Donaldsonville, LA, all of which have occurred within the past few months.

At the same time, OSHA has faced increased public scrutiny, most recently from US Chemical Safety Board (CSB) Chairperson, Rafael Moure-Eraso, who, on July 25th, publicly criticized OSHA’s lack of response to several PSM-related CSB recommendations as “unacceptable.” Shortly thereafter, President Barack Obama issued an Executive Order re: “Improving Chemical Facility Safety and Security” on August 1st, calling for regulatory updates to cover additional hazardous chemicals (including reactives), interagency cooperation on information sharing, identification of best practices for chemical facility safety and security, and greater enforcement.

If OSHA follows through with its regulatory agenda, employers can expect several changes to the PSM standard that will undoubtedly affect their operations.

According to the rulemaking abstract, OSHA is “considering revising” the PSM standard to “address gaps in safety coverage.” These revisions include: (1) “clarifying the PSM exemption for atmospheric storage tanks;” (2) “expanding coverage and requirements for reactivity hazards;” (3) expanding the scope of paragraph (j) to cover the mechanical integrity of any safety-critical equipment;” and (4) “expanding the scope of paragraph (l) to require greater organizational management of change from employers.” A request for information (RIF) is scheduled for October 2013.

Commentary on some of the expected changes is provided below:

Clarifying the Atmospheric Tank Storage Exemption

The general consensus is that OSHA will try to eliminate the atmospheric storage tank exemption for flammable liquids that are connected to a PSM-covered process. As the law currently stands under the Meer decision, the PSM standard and its requirements do not apply to flammable liquids stored without benefit of refrigeration in atmospheric tanks, even if they are interconnected to a covered process.

OSHA voiced its disagreement with the Meer decision in a May 12, 1997 Memorandum, arguing that the decision was “contrary to consistent OSHA interpretations of the standard.” As a result, the Directorate of Safety Standards Programs was asked to “consider developing amendments to the standard which would clearly state [OSHA’s] intention to cover flammables stored in atmospheric tanks when they are connected to a covered process, or when they are located such that there is a reasonable probability that they could be involved in the release of a covered highly hazardous chemical.”

In the intervening 15 years, no such amendments have been drafted or implemented.

Expanding Coverage and Requirements for Reactivity Hazards

Preliminary conclusions about the fertilizer plant explosion in West, TX point to ammonium nitrate as the primary cause for the blast. In the aftermath of the incident, the chemical has often been characterized as a hazardous reactive.

As a result, many are calling on OSHA for an effective response to reduce the risks associated with handling ammonium nitrate and reactive chemicals in general. The Senate Environment and Public Works Committee recently held a hearing on reactive hazards (with specific focus on the West, TX explosion) where it called on the EPA to include ammonium nitrate on its list of “extremely hazardous chemicals” and noted OSHA’s failure to enforce provisions on ammonium nitrate storage at the West, TX fertilizer plant, which had not been inspected since 1985. Additionally, President Obama’s August 1st Executive Order called on OSHA to put together a list of regulatory proposals “to improve the safe and secure storage, handling, and sale of ammonium nitrate and identify ways in which ammonium nitrate safety and security can be enhanced under existing authorities.”

These calls to update PSM’s coverage of reactive chemicals have been coming for quite some time – even from OSHA itself. On April 27, 1998, OSHA announced by way of regulatory agenda that it was considering an Advance Notice of Proposed Rulemaking (ANPRM) “to address issues related to reactive chemicals raised by the explosion of a chemical plant in Lodi, New Jersey in 1995,” where 4 employees were killed. Then on May 14, 2001, OSHA clarified its intent to publish an ANPRM “to address the need to add reactive chemicals that are not currently covered by PSM….” By December 3, 2001, however, the entry on reactives was withdrawn from the agenda.

In addition, the CSB has been asking OSHA to address reactive chemicals not covered under the PSM standard for over 10 years. In a 2002 report on “Improving Reactive Hazard Management,” the CSB recommended that OSHA amend the PSM standard to broaden its application from “self-reactive chemicals” to “reactive hazards resulting from process-specific conditions and combinations of chemicals.” According to the report’s many findings, over 50% of the 167 serious “uncontrolled chemical reactivity” incidents from 1980 to June 2001 involved chemicals not covered by OSHA’s existing PSM standard. As a result, the CSB concluded that the “OSHA PSM Standard has significant gaps in coverage of reactive hazards because it is based on a limited list of individual chemicals with inherently reactive properties.”

Despite the repeated and public criticism from the CSB, OSHA has still not drafted or promulgated a standard to regulate reactive chemicals.

Greater Organizational Management of Change from Employers

Neither the PSM Management of Change (“MOC”) standard – 29 C.F.R. § 1910.119(l) – nor the MOC recommendations in § 1910.119 Appendix C make any mention of “organizational change.” Notwithstanding, OSHA still issued an Interpretation Letter in 2009, expanding MOC coverage to “changes in facility organization, staffing, and policies (Organizational Changes).”

OSHA supported its position by arguing “[s]ome organizational changes, such as changes resulting from mergers, acquisitions, reorganizations, staffing changes, or budget revisions, may affect PSM at the plant level and would therefore trigger a PSM MOC procedure.” Additional examples of organizational change that, in OSHA’s view, would require an MOC included:

• “personnel changes, including changes in staffing levels, staff experience, or contracting out that directly impact PSM covered processes; and

• policy changes such as budget cutting that impact PSM covered processes.”

OSHA originally explained that the 2009 MOC Interpretation Letter was “intended to increase CSHO awareness of potential sources of changes covered under the PSM standard”; namely, organizational changes. Now it appears the agency will formulate its interpretation into law.

Conclusion

It’s difficult to predict when, or even if, these changes to PSM will occur. As with the atmospheric storage tank exemption and reactives, OSHA has made public promises to amend provisions of the PSM standard for years and done nothing. In light of the recent publicized catastrophes and current political pressure, though, there certainly is more reason to speculate that OSHA may actually begin rulemaking on these topics. If so, employers should be prepared to act accordingly.

For more information, please contact Mark Dreux, Head of the Arent Fox OSHA Group, at 202-857-6405.