OSHA Revises Exemption for Industrial Chemical Retailers

By Roy Maurer Jul 27, 2015

Some companies with hazardous chemicals onsite but formerly exempted as retail facilities will now be covered under process safety management (PSM) regulations.

The Occupational Safety and Health Administration (OSHA) announced July 22, 2015, that certain employers will no longer be exempt from compliance requirements under the agency’s PSM standard for highly hazardous chemicals. OSHA’s PSM standard is a comprehensive regulation that requires facilities with highly hazardous chemicals to implement technologies, procedures, and management practices to protect workers from chemical releases.

Under the new PSM enforcement policy, the retail facilities exemption applies only to facilities that fall in the North American Industrial Classification System definition of retail trade (NAICS 44 and 45, which includes hardware stores and gas stations).

The new interpretation replaces the 1992 interpretation that defined a retail facility as an establishment at which more than half of the income derived is obtained from direct sales of highly hazardous chemicals to end users. OSHA now says that this interpretation has no relationship to the agency’s original intent for application of the exemption, nor is it consistent with either the commonly understood meaning of retail establishment or the NAICS definition.

“OSHA chose to exclude retail facilities from PSM coverage because the small container, package, or allotment sizes of the chemicals typically found at these facilities do not present the same safety hazards as establishments that handle large, bulk quantities of materials,” said Thomas Galassi, director of enforcement programs at OSHA. He said that the types of facilities intended for exemption generally fall into NAICS 44 and 45. “Because the exemption is limited specifically to retail facilities, it should never have been interpreted to cover facilities engaged in distinctly wholesale activities,” he said, referring to for example, farm supply wholesalers that handle bulk quantities of materials. Galassi said these employers typically fall into NAICS 42.

The agency noted that “nearly all” of the now nonexempt facilities already face similar compliance requirements under the Environmental Protection Agency which requires employers to develop and execute a safety management strategy that covers a majority of the OSHA PSM requirements. That said, employers will need to address the remaining PSM rules.

OSHA is offering employers something of a safe harbor until January 2016, during which time it will focus on providing compliance assistance to affected employers, engage industry stakeholders, and inform its state onsite consultation providers that requests from newly covered employers should be their highest priority for receiving an onsite visit for assistance.

The agency will also exercise its enforcement discretion during this period and refrain from citing employers for violations of the PSM standard at facilities that were formerly exempted. The only exception to this policy will be if OSHA discovers conditions that expose workers to an immediate and severe danger, and it’s determined that the employer has not made a reasonable good-faith effort to eliminate or substantially control the hazard.

The Agricultural Retailers Association voiced disapproval of the change. “For dozens of years, our members and other agricultural retailers have operated in a safe and sound manner under the myriad rules and regulations that apply to anhydrous ammonia; to make an abrupt change without allowing for public comment is unreasonable and is contrary to prior statements and efforts by OSHA to partner with industry,” the group said in a statement.

“This rule change inappropriately applies standards designed for manufacturing facilities to agricultural retailers, adding tens of thousands of dollars in costs and additional burdensome regulatory hurdles for each facility, without significantly increasing the safety and security of employees or the surrounding community. Furthermore, costs and red tape are compounded as additional risk management compliance, through the Environmental Protection Agency, is required.”

The revised definition was brought about by President Barack Obama’s 2013 executive order on chemical facility safety and security, which was a response to the deadly explosion at a fertilizer plant in West, Texas earlier that year.

Roy Maurer is an online editor/manager for SHRM.

Follow him @SHRMRoy

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