Audit, Compliance and Risk Blog

OSHA Narrows Process Safety Management Exclusion For Retail Facilities

Posted by Jon Elliott on Tue, Aug 11, 2015

http://www.stpub.com/search.asp?keyword=oshaThe Occupational Safety and Health Administration (OSHA) adopted its Standard for Process Safety Management of Highly Hazardous Chemicals (usually referred to as “PSM”) in 1992, to require extensive risk assessment and reduction efforts by facilities where a significant chemical incident might have catastrophic consequences. OSHA has made only minor technical revisions in the ensuing two decades. However, during that time OSHA has issued a series of regulatory interpretations and enforcement guidelines that affect how the Standard is implemented.

In late July, OSHA issued another of these interpretations. This one reinterprets the application of the Standard’s exemption for “retail” facilities, narrowing the applicability and thereby bringing more facilities under PSM requirements (as in “Yesterday you were exempt but today you aren’t”).

Which “Retail Facilities” Remain Exempt Under OSHA’s New Interpretation?

The PSM Standard includes a simple statement that it does not apply to “retail facilities” (29 CFR §1910.119(a)(2)(i)) – but does not define that term. In 1992, the regulatory “preamble” – which accompanies a regulation when issued in the Federal Register but is not formally codified – explained that chemicals in retail facilities (such as gas stations) are generally sold in small packages, containers, and allotments that don’t present the risk of catastrophic incidents. OSHA also issued a Compliance Directive in 1992, stating that “[w]ith respect to enforcement of the PSM standard, a retail facility means an establishment that would otherwise be subject to the PSM standard at which more than half of the income is obtained from direct sales to end users.”

The new policy rescinds this “50 percent test”, because OSHA has observed over the years that many “end users” of chemicals may themselves be commercial facilities, and many of the containers sold to them are much larger than the small-scale retail-type containers envisioned in OSHA’s PSM Standard preamble. Instead, OSHA attempts to return to its initial focus by limiting applicability of the exclusion to facilities in North American Industrial Classification System (NAICS) codes 44 and 45 (“retail trade”). OSHA will review and revise or rescind all other earlier guidance and enforcement materials inconsistent with this new interpretation.

The end result is that any facility that claimed exemption from PSM because of sales to “end users” will lose that exemption unless its primary activities are “retail trade” as defined by the NAICS codes. OSHA’s latest documents state that the agency will focus resources over the next 6 months on providing information to newly-regulated facilities and employers, deferring most enforcement actions until after that transition period expires.

What Does The PSM Standard Require?

The PSM Standard applies to facilities with any process that manages highly hazardous chemicals, in quantities that meet or exceed OSHA’s compliance threshold quantity. These criteria are met at many petroleum refineries, chemical plants, explosives manufacturing operations, and other industrial facilities. PSM defines these terms as follows:

  • Process -- “[a]ny activity involving a highly hazardous chemical including any use, storage, manufacturing, handling, or the onsite movement of any of the preceding substances such as chemicals, or combination of these activities.” A process also includes “any group of vessels which are interconnected and separate vessels which are located in such a way that a highly hazardous chemical could be involved in a potential release....”

  • Highly hazardous chemical --

    •  129 specific substances listed because of toxic, reactive, flammable, or explosive properties, and in quantity exceeding its specified threshold quantity (TQ). TQs vary from as low as 100 pounds for toxic gases such as arsine, to 15,000 pounds for chemicals such as methyl chloride

    • A “Category 1 flammable gas” or a flammable liquid with a flashpoint below 100 °F “on site in one location,” in a quantity of 10,000 pounds 

    • Manufacture of any quantity of explosives or pyrotechnics.

How Do Facilities Comply With PSM? 

The PSM requires covered employers to do the following:

  • Compile written process safety information on chemical hazards and process technology and equipment. 

  • Perform process hazard analysis to identify, evaluate, and control the hazards. Analyses must:

    • Use appropriate methodology(ies) (e.g., What-If and/or Checklist, Hazard and Operability Study (HAZOP), Failure Mode and Effects Analysis, Fault Tree Analysis).

    • Address the following: process hazards; any previous incident with a “likely potential for catastrophic consequences”; applicable engineering and administrative controls, and their interrelationships; consequences of failure of controls, including qualitative evaluation of possible safety and health effects; evaluate facility siting; and human factors.

    • Use a process hazard analysis team with appropriate engineering and process knowledge, including at least one person familiar with each specific process and one familiar with the analytical methodology.

  • Establish a framework for process hazard analysis, including a system to address the analysis team’s findings and recommendations.

  • Implement written operating procedures, including startup, temporary, normal, and emergency operations, normal and emergency shutdown, and startup after shutdowns; and safe work practices to control hazards during such operations as lockout/tagout, confined space entry, opening equipment and piping, and controlling worker access.

  • Provide employee training.

  • Inform contractors of the potential hazards.

  • Perform pre-startup safety reviews for any new or modified process that changes information required by PSM.

  • Ensure the mechanical integrity of critical process equipment.

  • Issue “hot work” permits for work, such as welding, that may cause ignition near a covered process.

  • Establish written “Management of Change” procedures.

  • Investigate every incident that could reasonably have resulted in a catastrophic release as promptly as possible (no more than 48 hours), prepare a report with findings and recommendations for any appropriate changes, and address all such findings and recommendations.

  • Implement emergency planning.

  • Perform compliance audits at least every three years.

  • Involve employees in these activities, and provide information and training.

  • Establish required record keeping.

Self-Assessment Checklist

Does the organization manage chemicals regulated by PSM, in quantities above PSM thresholds?

Does the organization sell these chemicals to others, including to “end users”?

Has the organization reviewed the NAICS code(s) applicable to such facilities, and determined whether any are properly coded as being in codes 44 or 45?

If not, has the organization met PSM Standard compliance requirements (even at a facility considered exempt under OSHA’s former policy)?

Where Can I Go For More Information?

Specialty Technical Publishers (STP) provides a variety of single-law and multi-law services, intended to facilitate clients’ understanding of and compliance with requirements. These include:

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About the Author

http://www.stpub.com/environmental-compliance-a-simplified-national-guide-onlineJon Elliott is President of Touchstone Environmental and has been a major contributor to STP’s product range for over 25 years. He was involved in developing 12 existing products, including Environmental Compliance: A Simplified National Guide and The Complete Guide to Environmental Law.

Mr. Elliott has a diverse educational background. In addition to his Juris Doctor (University of California, Boalt Hall School of Law, 1981), he holds a Master of Public Policy (Goldman School of Public Policy [GSPP], UC Berkeley, 1980), and a Bachelor of Science in Mechanical Engineering (Princeton University, 1977).

Mr. Elliott is active in professional and community organizations. In addition, he is a past chairman of the Board of Directors of the GSPP Alumni Association, and past member of the Executive Committee of the State Bar of California's Environmental Law Section (including past chair of its Legislative Committee).

You may contact Mr. Elliott directly at: tei@ix.netcom.com.

photo credit: Former Circuit City / Bottom Dollar in Garfield Heights, Ohio via photopin (license)

Tags: Health & Safety, Environmental risks, Environmental, Hazcom