What’s New With PSM? OSHA’s New NEP and EPA’s Revised RMP Rule
Chemical Industry Update
Date: February 22, 2017
Chemical facilities and oil refineries may see closer attention from inspectors under OSHA’s new Process Safety Management (PSM) national emphasis program (NEP) and be subject to new requirements under EPA’s revised Risk Management Program (RMP) rule published in the final days of the Obama administration. Although enforcement may depend on the new leadership for the Department of Labor and EPA, companies should prepare for these changes.
OSHA’s New NEP
In the Obama administration’s last days, OSHA issued a revised NEP for PSM-covered chemical facilities. The new NEP, issued on January 17, 2017 and described in OSHA Directive CPL-03-00-021, replaces OSHA’s prior NEP for PSM-covered chemical facilities issued on November 29, 2011. Although it is unclear how the Trump administration will enforce the new NEP (which now also includes petroleum refineries), the directive strongly suggests that companies will face even more scrutiny under this new program.
To justify its more rigorous NEP, OSHA highlights in its directive the numerous citations it issued during the last NEP. In the last five years, OSHA brought 69 significant enforcement actions (cases with penalties over $100,000) against chemical facility employers and 24 against petroleum refinery employers.
The new NEP is similar to the old program in many respects. OSHA will continue to use several sources to target chemical facilities and refineries for programmed PSM inspections. OSHA will then create target lists for its regional and area offices and require them to conduct a certain number of inspections annually. As in the past, OSHA also will arm compliance officers with a “dynamic” list of confidential questions to ask facilities, instructions on how to select PSM-covered processes for inspection and a lengthy list of PSM-related documents to request from employers. The NEP also provides compliance officers with extensive resources on OSHA’s intranet and a “cookbook” of sorts on how to issue PSM citations, all of which likely will lead to a greater number of PSM citations.
The more noteworthy changes under the new NEP include:
- Places a greater emphasis on inspecting facilities that were previously cited for PSM violations from January 1, 2000 to September 30, 2015. Facilities inspected within the last three years are not included in the NEP, however.
- Encourages compliance officers to access each facility’s EPA RMP prior to commencing NEP inspections.
- Groups chemical facilities targeted for NEP inspections into four categories:
- Employers whose principal highly hazardous chemical is anhydrous ammonia
- Petroleum refineries
- Chemical facilities
- All other facilities that are likely PSM-covered
By contrast, the prior NEP was limited to (1) chemical facilities likely to have ammonia used for refrigeration as the only highly hazardous chemical and (2) facilities likely to have ammonia used for refrigeration or those with highly hazardous chemicals other than ammonia.
- Each year, OSHA’s national office will create target lists of facilities to be inspected within each OSHA region. Ammonia facilities will comprise roughly 25 percent of all NEP inspections, chemical facilities will comprise roughly 45 percent and all other PSM-covered facilities will comprise the remaining 30 percent. For refinery inspections, OSHA will set a national goal for the number of NEP inspections to be conducted each year. The number of refineries to be inspected will be divided among OSHA’s regional offices according to each region’s relative contribution to the total number of refineries nationwide. For example, if OSHA intends to conduct 30 programmed refinery inspections in 2018 and Region 5 contains 10 percent of all operational refineries, three refineries within Region 5 will be inspected in 2018.
- Each OSHA region will be responsible for distributing a number of assignments to its area offices for the four categories listed above. Under the prior NEP, area offices were only required to complete three to five NEP inspections per year; under the new NEP, each area office probably will be expected to complete a larger number of NEP inspections.
- OSHA is continuing to commit significant resources to the NEP for PSM-covered facilities. For example, compliance officers must have prescribed levels of expertise and training on PSM, and OSHA’s Health Response Team at the Salt Lake City Technical Center will be readily available for NEP inspections as circumstances warrant.
- While continuing to emphasize compliance by outside contractors, the new NEP also focuses on contract employees and temporary workers paid by staffing agencies. Compliance officers will be given confidential “host and contract employee questions” designed to determine whether host employers have evaluated contractor safety information and programs. Compliance officers also are instructed to issue citations to host employers and temporary workers in joint employer situations.
The directive states that NEP inspections under the new program will begin “immediately.” Although OSHA’s rulemaking on revisions to the PSM standard is stalled and new appointees are expected to take office in the Department of Labor and OSHA, companies subject to PSM requirements should anticipate these inspections will commence soon.
EPA’s Amended RMP Rule
After nearly two years of rulemaking, on December 21, 2016, the EPA finalized its rule amending the Accidental Release Prevention Requirements for Risk Management Programs under the Clean Air Act (RMP Rule). The changes are designed to reduce the likelihood of accidental releases at chemical facilities and improve emergency response actions when releases occur. The final RMP Rule was published in the Federal Register on January 13, 2017, and was scheduled to be effective on March 14, 2017.
As widely reported, President Trump issued an Executive Order on January 20, 2017 freezing new or pending regulations for 60 days to ensure that his new appointees have an opportunity to review them. The new RMP Rule is included in the freeze, and will now become effective on March 21, 2017 unless the administration delays the effective date further.
In the past few weeks, several members of the chemical industry have written congressional leaders defending their safety records under the current RMP guidelines and arguing that the new rule poses significant new costs without improving safety. In early February, Rep. Markwayne Mullin (R-Okla.) introduced a joint resolution under the Congressional Review Act to overturn the amended rule, contending that the EPA has exceeded its jurisdiction by encroaching on OSHA regulatory areas, and that the rule fails to enhance safety and may compromise national security. It is unclear whether the new rule will be subject to additional delays or revised or rescinded in the coming weeks.
Significant changes under the new RMP Rule include:
- Requires third-party audits under certain circumstances. Similar to the requirement under OSHA’s PSM regulations, facilities are currently required to conduct audits of their RMP programs every three years and to correct audit findings in a timely manner. The audits must be conducted by at least one person knowledgeable in the process (either someone in-house or an outside expert). The new rule does not change the requirement to conduct regular RMP audits.
However, under the new rule, third-party audits are now required under two circumstances: (1) if there has been an RMP-reportable accident or (2) if the implementing agency (for example, Ohio EPA) determines that conditions at the facility could lead to an accidental release of a regulated substance or a previous third-party audit fails to meet the competency or independence criteria specified in the new rule. In these situations, the third-party audit must occur within 12 months.
The new rule specifies criteria for determining the competency and independence of the third-party auditors and allows facility staff to participate in the third-party audit. The rule also requires the results of the third-party audit to be submitted to the owner or operator’s senior corporate officer. The company then has 90 days to prepare a certified response to each of the findings in the audit report and implement a schedule to address deficiencies. The company’s response must be submitted to the company’s audit committee of its board of directors.
- Expands incident investigations to consider root cause. If an event occurs that results in a catastrophic release or could reasonably have resulted in a catastrophic release (referred to as a “near miss”), the current RMP Rule and OSHA’s PSM regulations both require that an incident investigation be conducted. Companies often only conduct a root cause analysis for major incidents as determined by company policy.
Under the new RMP Rule, a root cause analysis must now be conducted under an acceptable method for all accidents and defined near misses. A final report must then be completed within 12 months and include the consequences of the accident and any emergency actions taken. The new rule defines a root cause as a fundamental, underlying, system-related reason why the incident occurred. The new rule’s main goal is for incident investigations to delve beyond the immediate cause of the incident and consider the reasons why hazardous or potentially hazardous conditions were allowed to occur in the first place.
- Requires process hazard analysis to consider safer technology alternatives in certain higher-risk industries. Under the current RMP Rule, there is no specific requirement for companies to consider inherently safer technology or designs. Companies are merely required to conduct a process hazard analysis (PHA) every five years and consider recognized and generally accepted and good engineering practices as part of the PHA.
Under the new rule, facilities in three higher risk industries (paper and pulp, petroleum refining and processing, and chemical manufacturing) are now required, as part of the PHA process, to consider applying safer technology and alternative risk management measures to eliminate or reduce the risks from process hazards. The rule requires facilities to consider the following measures in order of preference: inherently safer technology or design, passive measures, active measures, and procedures. Facilities will then determine which, if any, of the inherently safer technologies are practical for their regulated processes. Although the new rule does not necessarily require that safer technology be implemented, it must be considered at least every five years as PHAs are updated.
- Enhances emergency coordination and response programs. The emergency response program requirements generally apply to facilities where employees are assigned to respond to accidental releases. Under the new RMP Rule, a qualifying facility is required to coordinate annually with its local emergency planning committee (LEPC) or equivalent and/or fire department officials to ensure that they are aware of the regulated substances at the facility, their quantities, the risks of the covered process, and the facility’s resources and capabilities to respond to an accidental release of a regulated substance. The facility must provide officials with its emergency response plan, updated emergency contact information and any other information identified as relevant to local emergency response planning. It also is required to review and update emergency response plans as appropriate based on changes at the facility or new information obtained from coordination activities, emergency response exercises, incident investigations or other available information, and to ensure that employees are informed of such changes. All coordination activities with local authorities must be fully documented.
Another major change relates to emergency response exercises. Qualifying facilities are required to conduct emergency response and tabletop exercises and allow public emergency officials to participate. Facilities must consult with local officials to establish an appropriate frequency for the field and tabletop exercises and, at a minimum, conduct one notification exercise per year, one tabletop exercise every three years and at least one field exercise every 10 years. A facility must prepare a report within 90 days of each exercise with a schedule for promptly resolving all areas that need improvement.
- Expands public access to RMP information. The public currently can access RMPs through federal reading rooms and RMPs located in 38 states and the District of Columbia. Under the new RMP Rule, within 45 days of a public member’s request, a facility must provide the names of the regulated substances held in each regulated process; safety data sheets for regulated substances; the five-year accident history information reported in the RMP; a summary of the emergency response program; LEPC and local emergency response organization contact information; procedures for informing the public and local emergency response agencies about accidental releases; and a list of the facility’s scheduled emergency response exercises. The availability of RMP-related information also must be publicly posted on the company’s website or on social media or other publicly accessible locations. If there is an RMP-reportable release, a facility also is required to hold a public meeting within 90 days and provide the public with the information listed above and other relevant chemical hazard information.
The new RMP Rule will become effective on March 21, 2017 unless the effective date is delayed further or the rule is revised or rescinded. Companies should pay close attention to the EPA’s actions concerning the new rule over the next few weeks.
FOR MORE INFORMATION
For more information, please contact:
Gary M. Glass
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