Major Changes Proposed for the PSM Standard: OSHA Issues Request for Comment on 14 Potential Revisions to the PSM Standard that Could Fundamentally Alter Industry Practices

OSHA’s request for information includes, in most instances, an explanation and examples of possible revisions that it is considering to the PSM standard. These proposed changes represent an enormous expansion of coverage and compliance requirements for employers. Both the fiscal and administrative burdens of complying with such dramatic changes could prove to be enormous.

A brief description of each request for information follows:

1.  Eliminating the PSM Exemption for Atmospheric Storage Tanks

The PSM standard applies to processes involving a flammable liquid or gas on site in one location in a quantity of 10,000 pounds or more. But the so-called “atmospheric storage tank exemption” (see 29 C.F.R. § 1910.119(a)(1)(ii)(B)) exempts flammable liquids stored in atmospheric tanks, or in transfer to or from storage, which are kept below their normal boiling point without benefit of chilling or refrigeration. OSHA would like to revise paragraph (a)(1)(ii)(B) to include flammable liquids in atmospheric storage tanks within or connected to a PSM covered process. The agency therefore requests comments on revising the paragraph to clarify that the PSM standard covers all stored flammables that are connected to or in close proximity to a process. 

2.  Oil and Gas-Well Drilling and Servicing

OSHA is seeking public comment as to whether the PSM standard exemption for oil and gas-well drilling and servicing operations should be retained or deleted. The PSM standard currently exempts oil and gas-well drilling and servicing operations under 29 C.F.R. § 1910.119(a)(2)(ii). According to the preamble of the final rule, this was because OSHA had already begun a separate rulemaking for these types of operations. This rulemaking was subsequently abandoned, though, leaving the agency with a need to re-evaluate the current exemption.

3.  Resuming Enforcement for PSM-Covered Oil and Gas Production Facilities

As long as the PSM standard has existed, OSHA has conceded that it does not apply to oil and gas production facilities.  In 1999, it attempted to bring such facilities within coverage of the standard, but failed when industry objected, stating the PSM coverage of oil and gas production facilities was invalid because OSHA did not conduct an economic analysis during the original PSM rulemaking proceedings. OSHA agreed with industry and admitted it in a letter in March 2000, stating that OSHA would suspend enforcement of the PSM standard for oil and gas production operations until it performed the analysis. Now OSHA wants to complete this financial analysis so that it can resume enforcement of the PSM standard for oil and gas production facilities. Accordingly, OSHA requests public comment on completing the economic analysis and possibly resuming enforcement of the PSM standard at oil and gas production facilities.

4.  Expanding PSM Coverage and Requirements for Reactive Hazards

OSHA has frequently faced criticism for not including certain reactive compounds in the list of highly hazardous chemicals found in Appendix A of the PSM standard. OSHA’s challenge to date has been to develop a workable definition of a reactive compound. OSHA is now inviting comment as to whether it should adopt New Jersey’s approach under the New Jersey Toxic Catastrophe Prevention Act to regulating reactives, an approach which examines a list of reactives and functional groups of chemical compounds to determine whether or not the standard should apply. 

5.  Updating the List of Highly Hazardous Chemicals in Appendix A of the PSM Standard

The list of highly hazardous chemicals provided in Appendix A of 29 C.F.R. § 1910.119 has remained unchanged since the PSM standard’s promulgation in 1992. With this in mind, OSHA is seeking public comment on Appendix A in two regards: (1) whether any chemicals should be added to Appendix A, and (2) methods for updating Appendix A with new chemicals in the future as “new hazards are discovered and as technology and advancements in chemical science evolve.”

6.  Revising the PSM Standard to Require Additional Management-System Elements

OSHA is additionally seeking public comment on any additional management-system elements not already included in the PSM standard. As OSHA explains, when the PSM standard was first adopted in 1992, it adopted management-system elements that were based on best practices in the industry at that time. However, because these practices have evolved since 1992, “additional management-system elements may now be recognized to be necessary to protect workers.” One of the selected examples for comment is the Center for Chemical Process Safety’s (CCPS) Risk Based Process Safety (RBPS) program, which specifies 20 management-system elements. Among the RBPS’s elements is “Process Safety Competency,” which requires “(1) continuously improving of knowledge and competency, (2) ensuring that appropriate information is available to people who need it, and (3) consistently applying what has been learned.”

7.  Re-evaluation of Equipment Based on Evolving RAGAGEP

Employers are currently required by the standard to meet recognized and generally accepted good engineering practices. The Agency is inviting comments on how to ensure evolving updates to RAGAGEP are also implemented by employers after the process has already been designed and constructed.

8.  Defining RAGAGEP for Employers

The phrase “recognized and generally accepted good engineering practices” is currently undefined by the PSM standard making its meaning unclear to many employers. OSHA is seeking feedback as to whether the phrase should be expressly defined and if so, what the definition should be.

9.  Expansion of Mechanical Integrity to Any Safety-Critical Equipment

Currently the PSM standard’s Mechanical Integrity provisions apply only to the following items: (1) pressure vessels and storage tanks, (2) piping systems (including piping components such as valves), (3) relief and vent systems and devices, (4) emergency shutdown systems, (5) controls (including monitoring devices and sensors, alarms, and interlocks) and (6) pumps. The Agency is inviting public comment as to whether safety-critical equipment should also be included.

10.  Clarifying Paragraph (l) of the PSM Standard with an Explicit Requirement that Employers Manage Organizational Changes

Paragraph (l) of the PSM standard does not require a Management of Change (MOC) for organizational changes; e.g., “changes in management structure, budget cuts, or personnel changes.” Notwithstanding, since a 2009 Interpretation Letter on the topic, it has been OSHA’s standing policy that such changes require an MOC. In OSHA’s view,“[s]ince the original promulgation of the PSM rule, it has become well established in the safety community that organizational changes can have a profound impact on worker safety and, therefore, employers should evaluate organizational change like any other change.” OSHA is therefore seeking public comment on whether requiring an MOC for organizational changes “will increase worker safety;” i.e., whether 29 C.F.R. § 1910.119(l) should be amended to explicitly require an MOC for organizational changes.

11.  Requiring Coordination of Emergency Planning with Local Emergency-Response Authorities

Paragraph (n) of the PSM standard requires employers to establish and implement an Emergency Action Plan, but it does not currently require employers to coordinate with local emergency-response authorities when doing so. Pointing to the catastrophe at the West Fertilizer Plant on April 17, 2013 in which several people, the majority of whom were firefighters responding to a fire at the facility, were killed, OSHA believes that revising the PSM standard to require facilities to coordinate emergency planning with local emergency response authorities could help prevent or mitigate similar incidents. OSHA thus seeks comment on the appropriate mechanism and corresponding language to incorporate such a requirement into paragraph (n) of the PSM standard.

12.  Overhauling the Auditing Requirements in Paragraph (o) of the PSM Standard  

It appears OSHA is contemplating making several dramatic changes to paragraph (o) of the PSM standard, which governs auditing requirements.  Paragraph (o) requires employers to conduct triennial audits of their facilities for compliance.  These audits must be conducted by at least one person knowledgeable in the process. The knowledgeable person need not be a third party. OSHA believes, however, that a third party auditor is more likely to provide heightened objectivity when conducting an audit, thus OSHA seeks comment on whether revising paragraph (o) of the PSM standard to require employers to use a qualified third party for compliance audits would increase worker protection through a more objective PSM auditing process. OSHA also seeks comment on whether PSM audits should be conducted more frequently. And finally, it requests stakeholder insights into whether specific timeframes for responding to deficiencies found in compliance audits should be incorporated into the PSM standard.

13.  Expansion of 1910.109 to Cover the Dismantling and Disposal of Explosives, Blasting Agents and Pyrotechnics

With this proposed change to the Explosives and Blasting Agents standard, OSHA appears to be developing a more complete cradle to grave regulatory scheme for these materials. Currently the standard only applies to the manufacture, keeping, having, storage, sale, transportation, and use of explosives, blasting agents, and pyrotechnics presumably because it was assumed the “use” of the items would be the final step in the life cycle.  In the event the materials are not consumed during a usage step, OSHA is seeking public comment on developing regulations to cover the dismantling and disposal of these materials.

14.  Updating the Flammable Liquid and Spray Finishing Standards

In its request for information, OSHA notes that these standards were first published almost 40 years ago and even then, the standards were based on 1960s-era NFPA consensus standards. OSHA is seeking public comment what aspects of these standards should be modernized.

15.  Updating the Regulations Addressing the Storage, Handling and Management of Ammonium Nitrate

 In light of the recent tragedy at the West Fertilizer Company storage and distribution facility, OSHA is inviting comment on how to update its regulatory requirements regarding the safe storage, handling and management of ammonium nitrate.

16.  Application of PSM Standard to Retailers that Sell Large or Bulk Quantities of Highly Hazardous Chemicals

The PSM standard has an exemption from coverage for retail facilities at 29 C.F.R. § 1910.119(a)(2)(i).  But the term “retail facility” is not defined anywhere within the standard. As a result, OSHA has issued conflicting opinions about what facilities constitute retail facilities exempted from coverage. OSHA wishes to clarify what it believes to be the meaning of a “retail facility” exempt from PSM coverage. Specifically, OSHA urges that facilities selling large or bulk quantities of materials not be considered retail facilities; thus, the PSM standard would apply to such establishments. So under OSHA’s proposed definition, wholesalers and retailers who sell ammonium nitrate to farms, for example, would no longer be exempt from the PSM standard. Only retail facilities that sell highly hazardous chemicals in small containers would qualify. OHSA is therefore inviting comment on what precisely the retail exemption should cover and whether OSHA’s current enforcement policy adequately addresses workplace hazards associated with these facilities.  

17.  Changing Enforcement Policy for Highly Hazardous Chemicals Listed in Appendix A of the PSM Standard without Specific Concentrations

11 of the 137 chemicals listed in Appendix A provide specific concentrations to establish PSM coverage. For the remaining 126 without, OSHA’s policy is that the chemical is covered if there is a threshold quantity present at commercial grade. With no further guidance in the standard, OSHA is now seeking public comment whether it should cease using the commercial grade approach and instead use EPA’s approach provided in its Risk Management Program (RMP). Under the system, “EPA considers a mixture containing an RMP-listed substance to be covered if the concentration is greater than one percent and the calculated weight of the substance in the mixture is greater than the threshold quantity.”

Conclusion

These proposed changes, should they be implemented, would have a profound effect on the PSM standard, enforcement actions, and how employers operate on a day-to-day basis. Employers should timely respond to OSHA’s request, providing sufficient data and analysis to ensure that any revisions made to the standards are cost effective and, most importantly, actually improve employee safety. We will provide additional commentary on how the proposed changes could affect employers in the coming weeks.

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