OSHA’s Next Move Uncertain as Court Halts Stricter Enforcement of PSM Standard

The U.S. Court of Appeals for the D.C. Circuit has blocked efforts by OSHA to more strictly enforce its Process Safety Management (PSM) standard.

The PSM standard mandates that all businesses handling, manufacturing, or storing large amounts of certain hazardous chemicals take specific steps to prevent unexpected releases. Fertilizer retailers are especially impacted. In 2001, OSHA issued a letter of interpretation stating businesses could claim an exemption from the PSM standard if they dealt directly with farmers and/or sold in small quantities. Most industry observers believe this exemption was intended only for smallest-size retailers, but there is evidence that large handlers of hazardous chemicals interpreted it to mean that they were exempt from the PSM standard as well. For example, the West Fertilizer Co., which kept over 50,000 pounds of anhydrous ammonia onsite, considered itself exempt from the PSM standard.

After the West, Texas disaster of April 2013, OSHA announced it would take steps to close what it viewed as a loophole in the PSM exemption. On July 22, 2015, it issued a revised interpretation of the exemption. OSHA specified that the exemption would now apply only to facilities with the North American Industrial Classification System codes of 44 and 45, such as “office supply stores, computer and software stores, building materials dealers, plumbing supply stores, and electrical supply stores.” OSHA said it would pursue this stricter enforcement immediately, but not issue actual citations (only warnings) until July of 2016.

The petition to halt OSHA’s stricter PSM enforcement was brought by the Agricultural Retailers Association, the Fertilizer Institute, and other businesses that claimed OSHA is required to follow notice-and-comment procedures when enforcing a rule more strictly, because it is tantamount to creating a new standard. The three-judge panel hearing the case unanimously agreed.

In its decision, the court said:

“. . .when an action by OSHA corrects a particular hazard, as opposed to adjusting procedures for detection or enforcement, it amounts to a “standard.” Applying that understanding, we conclude that the agency’s narrowing of the substantive scope of the exemption for retail facilities qualified as issuance of a “standard.” [Therefore]. . . OSHA was required to adhere to notice-and-comment procedures. Consequently, we grant the petitions for review and vacate OSHA’s action.”

Representatives from the fertilizer industry stated that complying with the stricter enforcement would have cost the average fertilizer supplier around $100,000. The Agricultural Retailers Association estimated that over 3,800 fertilizer retailers would have been impacted had the tighter enforcement been upheld.

How OSHA will proceed in light of this decision is not immediately clear. Some sources are reporting that OSHA is likely to pursue an en banc appeal which would allow it to have the case heard a second time before a larger bench of judges. OSHA has until November 27, 2016 to file that appeal. However, if OSHA is forced to complete a formal rulemaking process for tighter PSM enforcement — including soliciting input from stakeholders — it could be years before the revised enforcement would actually take effect.

It is also unclear where this decision leaves businesses that may have already been cited or warned by OSHA under the tighter PSM enforcement.

No matter how you stand to be impacted by this latest development, it’s important to keep in mind that a good chemical management system can always can help position you for compliance, even in the face of a changing regulatory climate. For example, an electronic solution from MSDSonline can help you quickly cross reference chemicals against federal, state, and international regulatory lists to easily identify all compliance/reporting obligations. Need to take it to the next level? Management of Change, Compliance Management, and Risk Analysis solutions from VelocityEHS can help you manage risks across all your locations and facilities to take control and help ensure your organizational processes are where they need to be.

This latest news is just more evidence that staying on top of your chemical inventory is key to succeeding in today’s environment and positioning your business for long term compliance.