March 31, 2016

OSHA Delays Controversial PSM Chemical Concentration Enforcement Policy

Facing industry litigation and congressional criticisms, OSHA has delayed until the end of the 2016 fiscal year implementation of its controversial policy for determining threshold concentrations for when some so-called Appendix A chemicals are subject to the agency’s process safety management (PSM) standard for highly hazardous chemicals.

“Through September 30, 2016, employers will not be cited for violations of the PSM standard based on the June 5, 2015, enforcement policy,” OSHA said in a notice quietly posted to its website March 22.

“However, PSM citations may still be issued based on the previous ‘commercial grade concentration’ policy, under which OSHA considers the total weight of the chemical in the process at commercial grade concentrations and higher,” the statement adds.

The delay could complicate ongoing litigation challenging the policy filed by the American Chemistry Council and a host of other petrochemical industry groups, who are concerned that the policy could expand the universe of businesses subject to the PSM requirements without formal notice and comment.

And it could also give OSHA time to advance its pending PSM overhaul, which could eventually include codifying the now delayed enforcement policy.

At issue is OSHA’s June 5 enforcement policy on the concentration of a chemical that must be present in a process to determine whether the chemical is at or above the threshold quantity listed in Appendix A of the standard. OSHA says the revision falls under President Obama’s August 2013 executive order on improving chemical facility safety and security.

OSHA says the policy — known as the 1 percent policy — is intended to address inconsistencies and ambiguities in prior agency policy for determining when chemical concentrations subjected facilities to PSM requirements.

The current policy generally sets threshold concentrations for only 11 of the 137 chemicals listed in Appendix A. The remaining 126 substances that lacked specified concentration limits were subject to the PSM when they were present at commercial grade percentages of purity “because the commercial grade of most of the [highly hazardous chemicals] HHC’s is approximately 99 percent purity,” OSHA says.

In 1994, OSHA clarified that those 126 substances are covered at “commercial grade” concentrations and higher, with “commercial grade” defined as “a typical maximum concentration of the chemical that is commercially available and shipped.”

EPA Policy

But OSHA says that under the 1994 policy, it is not clear “whether the threshold quantity of a chemical without a specified concentration must be accounted for under the standard if the commercial grade concentration is significantly less than 99 percent or the chemical is used in the process at a concentration that is greater or lesser than maximum commercial grade concentration.”

In addition, it is not clear “whether the threshold quantity of a chemical in a mixture (e.g., a solution containing the chemical and a solvent) includes only the weight of the chemical or includes the weight of the mixture as a whole.”

OSHA was also concerned that the prior policy does not adequately account for the potential that the chemicals listed in Appendix A without specified concentrations may retain their hazardous characteristics even at relatively low concentrations.

To address such concerns, OSHA adopted the approach EPA used when it developed its List of Regulated Toxic Substances and Threshold Quantities for Accidental Release Prevention. There, EPA adopted a provision requiring that if a listed substance with no specified cut-off concentration is present in a mixture at a concentration of one percent or greater by weight, the threshold quantity of the substance must be determined unless the owner or operator can demonstrate that the partial pressure of the substance under all conditions in the process is below 10 millimeters of mercury (mm Hg).

“OSHA believes that the one percent concentration cut-off established in the EPA rule is the appropriate policy on the concentration of an Appendix A chemical that must be present in a mixture before the threshold quantity of the chemical must be determined,” OSHA says in the policy.

For chemicals for which no concentration is specified, employers are required to calculate “the total weight of the chemical in the process at a concentration of one percent or greater. However, the employer need not include the weight of such chemicals in any portion of the process in which the partial pressure of the chemical in the vapor space under handling or storage conditions is less than 10 millimeters of mercury (mm Hg),” the policy says.

Stiff Resistance

But the policy, as well as several other guidance documents issued around the same time, was met with stiff resistance, in large part because the policies were developed without notice-and-comment rulemaking.

Key senators, including Lamar Alexander (R-TN), chair of the Senate health committee, and James Lankford (R-OK), chair of a key regulatory affairs subcommittee, formally requested that OSHA rescind the guidance, as well as several other informal policy measures issued around the same time, and go back to the drawing board with a public rulemaking process.

“These guidance documents took effect immediately when they were issued; therefore parties not previously subject to certain requirements were deprived of notice that they were about to fall subject to OSHA enforcement. For example, OSHA’s chemical concentration guidance substantially expanded the universe of chemical manufacturers and distributors subject to the process safety management standard,” they said in a Sept. 29 letter to Labor Secretary Thomas Perez.

And ACC and other petrochemical sector groups sued in the U.S. Court of Appeals for the District of Columbia Circuit. In its non-binding statement of issues, ACC said it would ask the court to determine whether the memo “violates the OSH Act, violates procedural requirements set forth in the Administrative Procedure Act (APA), or is arbitrary and capricious, unsupported by substantial evidence, or otherwise inconsistent with reasoned decision-making under the APA.”

The American Petroleum Institute said in its statement that the OSHA memorandum “will require members to identify and comply with industry standards not previously applicable.”

The industry petitioners are slated to file their opening briefs in the case June 10. Industry intervernors must file by June 27 and OSHA is slated to respond by July 28.

But even as the litigation is proceeding, OSHA is advancing a rulemaking to overhaul its PSM regulation that could include the clarifications in the June 5 policy memo.

The rulemaking is required by President Obama’s executive order 13650, “Improving Chemical Facility Safety and Security,” which requires the agency to “identify issues related to modernization of the PSM Standard and related standards necessary to meet the goal of preventing major chemical accidents.”

OSHA recently announced that it is conducting a Small Business Advocacy Review (SBAR) panel to determine any adverse impacts on small entities. Topics for consideration in the SBAR include consideration of “additional minor modifications which largely codify existing OSHA interpretations of the PSM standard” and “solicit feedback on any similar provision of EPA’s [risk management program] rule and the PSM standard that could be streamlined.”

An ACC spokesman declined comment.


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