IIAR

On March 14, 2016, the Environmental Protection Agency (EPA) published in the Federal Register a proposed rule to modernize the Risk Management Program. The rulemaking comes as a part of the Obama Administration’s efforts to implement Executive Order 13650 – Improving Chemical Facility Safety and Security. The Executive Order was issued in response to an incident at a fertilizer plant in West, Texas in April 2013.

(Note: The Bureau of Alcohol, Tobacco and Firearms has since ruled the incident in West to have been a criminal act. Despite the finding that what happened in West was not an accident, the EPA has shown no signs of slowing its efforts to move forward with amending the RMP regulation.)

Since the Executive Order was signed, agencies including EPA, the Occupational Safety and Health Administration (OSHA) and the Department of Homeland Security (DHS) have been considering regulatory changes to their chemical safety and security programs. One of the first steps taken by EPA was a Request for Information (RFI) seeking input on nineteen possible changes to RMP. IIAR led a coalition of industry partners in responding to the RFI and expressing concerns with the suggested changes to RMP.

After gathering input through the RFI process, EPA began developing a Proposed Rule to change RMP. Because of the significant impact the rule would have on regulated small businesses, EPA convened a Small Business Review Panel to gain insights from small businesses subject to RMP. Lowell Randel, IIAR Director of Government Relations, actively participated in the panel process. EPA published the Proposed Rule shortly after the Small Business Review Panel completed its work.

In its Proposed Rule, EPA is proposing changes to RMP in the following areas:

• Independent Third Party Audits
• Root Cause Analysis
• Inherently Safer Technology Assessments
• Emergency Response Enhancements
• Enhanced Availability of Information

A summary of the proposed changes, along with some of the key industry concerns follows below:

Summary of Major Provisions

Independent Third Party Audits

The proposed rule would require regulated facilities contract with an independent third-party to perform a compliance audit after the facility has a reportable release. Compliance audits are required under the existing rule, but are allowed to be self-audits (i.e., performed by the owner or operator of the regulated facility). The independent third party audits apply only to the first audit following an accident/reportable incident.

The Proposed Rule includes some strong restrictions on auditor independence that are causing concerns with industry. Independent auditors could not have performed any services other than audits for the last three years, and would be prohibited from doing any non-audit work for three years after the audit. Many third party firms in the industrial refrigeration industry, offer audits as only one of many services. If enacted, the independence criteria will effectively disqualify some of the most qualified third party firms in our industry from conducting audits after reportable accidents.

The Proposed Rule also lays out a list of auditor qualifications. Most of the proposed qualifications are reasonable, such as knowledge of the type of facility being audited and training in conducting RMP audits. However, the proposal includes a requirement that the audit team have a Professional Engineer (PE), which many think is too narrow a qualification. IIAR has commented to EPA that they should add additional options to demonstrate that an auditor is qualified, not just having a PE.

Industry concerns:

• The agency has provided insufficient cost/benefit analysis for the audit restrictions and underestimates the cost burden on facilities.
• The assumption that non-associated audits are always better is not well founded in the available data.
• Restrictions on who can conduct audits may lead to problems with qualified auditor availability.
• All qualified auditors, regardless of current or prior connections with the facility or company should be allowed to conduct audits.

Root Cause Analysis

he proposed rule would require facilities to conduct a root cause analysis as part of an incident investigation of a catastrophic release or an incident that could have reasonably resulted in a catastrophic release (i.e., a nearmiss). Within 12 months, facilities must complete a root cause investigation that identifies the fundamental reason why an incident occurred and the correctable failures(s) in management systems for all RMP reportable incidents and near miss incidents. The report would not need to be submitted to EPA, but must be retained by the facility for at least 5 years. EPA will expect any corrective actions to be addressed in a reasonable time. Facilities may risk enforcement exposure for corrective actions identified in the report that are not addressed.

Industry Concerns:

• A clear definition of “near miss” is needed to ensure consistent application across regulated facilities.
• Setting the bar too low for triggering analysis could lead to less reporting.
• Flexibility on “root cause” analysis is needed.

Inherently Safer Technology

Assessments

The proposed rule would add an element to the process hazard analysis (PHA), which is updated every five years. Specifically, owners or operators of facilities with Program 3 regulated processes in North American Industrial Classification System (NAICS) codes 322 (paper manufacturing), 324 (petroleum and coal products manufacturing), and 325 (chemical manufacturing) would be required to conduct a safer technology and alternatives analysis (STAA) as part of their PHA, and to evaluate the feasibility of any inherently safer technology (IST) identified. This provision would not apply to the industrial refrigeration industry.

Industry Concerns:

• While this provision would not apply to industrial refrigeration, the establishment of this precedent could lead to a slippery slope and future application to other industries.
• Mandated alternatives analysis adds significant costs and the agency has not demonstrated sufficient cost-benefit analysis.

Emergency Response Enhancements

The proposed rule would require owners or operators of all facilities with Program 2 or 3 processes to coordinate with the local emergency response agencies at least once a year to ensure that resources and capabilities are in place to respond to an accidental release of a regulated substance. As a result of improved coordination between facility owners and operators and local emergency response officials, EPA believes that some facilities that are currently designated as non-responding facilities may become responding facilities.

Additionally, facilities would be required to conduct notification exercises annually to ensure that their emergency contact information is accurate and complete. This provision is intended to reduce the impact of accidents by ensuring that appropriate mechanisms and processes are in place to notify local responders when an accident occurs.

Facilities subject to the emergency response program requirements of the rule (or “responding facilities”) would be required to conduct a full field exercise at least once every five years and one tabletop exercise annually in the other years. Responding facilities that have an RMP reportable accident would also have to conduct a full field exercise within a year of the accident.

Industry Concerns:

• A clear and consistent definition of “coordination” is needed.
• EPA should recognize facility due diligence to engage with responders, even when responders do not reciprocate.
• The change could lead to non-responding facilities to become responding facilities.
• Costs associated with transitioning from non-responder to responder are significant.

Enhanced Availability of Information

The proposed rule would require all facilities to provide certain basic information to the public through easily accessible means such as a company website. If no website exists, the owner or operator may provide the information at public libraries or government offices, or use other means appropriate for particular locations and facilities. In addition, facilities would be required, upon request, to provide the Local Emergency Planning Committee (LEPC), Tribal Emergency Planning Committee (TEPC) or other local emergency response agencies with summaries related to: their activities on compliance audits (facilities with Program 2 and Program 3 processes); emergency response exercises (facilities with Program 2 and Program 3 processes); accident history and investigation reports (all facilities that have had RMP reportable accidents); and any ISTs implemented at the facility.

The proposed rule would also require all facilities to hold a public meeting for the local community within 30 days after an RMP reportable accident. This provision is intended to give first responders and members of the community easier access accident information.

Industry Concerns:

• Public meetings were required through the RMP program in the past and proved to provide little to no value. Questionable benefits do not justify the costs involved.
• The time period (30 days) to conduct a public meeting after an accident is insufficient. Companies have 12 months to complete an incident investigation and the amount of information available within 30 days will be minimal.

Compliance Dates

EPA’s proposal includes its current thinking on compliance dates for facilities to implement the rule changes. Below is the proposed timeline for the various requirements based on the effective date of the Final Rule.

1 year: Emergency response coordination activities.

3 years: Owner or operator of a non-responding facility source to develop an emergency response program following an LEPC or equivalent’s written request to do so.

4 years: Comply with new provisions, unless otherwise stated.

5 years: Correct or resubmit RMPs to reflect new and revised data elements.

IIAR again led coalition efforts to send a strong message to EPA about industry concerns with the agency’s proposal and will continue to actively engage with the EPA as the process moves forward. Because the RMP rulemaking is a high priority for the Obama Administration, it is expected that a Final Rule will be published before the end of 2016.