IIAR Government Affairs

By Lowell Randel, IIAR Government Affairs Director

Regulations in 2013: A Look Ahead

The November 2012 elections brought no change in the balance of power in the Federal Government. President Obama won a second term, the House of Representatives remains controlled by Republicans, and the Democrats retained their majority in the Senate. With no changes in the balance of power, major legislative efforts will require some level of compromise.

However, in the area of regulations, the Obama Administration will be able to advance its agenda without Congressional approval. The Republican controlled House will actively be conducting oversight of federal agency activity, but oversight does not diminish the broad discretion and authority of agencies to promulgate and enforce regulations.

In its first term, the Obama Administration was very active in creating new regulations and enforcement programs, many of which impacted the industrial refrigeration industry and business in general. A good example of this is the National Emphasis Program for Chemical Facilities (NEP) administered by the Occupational Safety and Health Administration (OSHA). In addition to new programs like the NEP, OSHA has also increased its penalties and become more aggressive with its enforcement activities.

Over the first three years of the Obama Administration finalized 106 major regulations which added $46 billion in annual regulatory costs. There are currently over 4,100 pending regulations in the pipeline, many of which are economically significant (meaning they will cost the economy $100 million or more). To further illustrate this point, from 2009 to 2011, over 600 economically significant regulations were placed into the pipeline and 193 have been finalized.

An additional indication of regulatory activity is the number of pages in the Federal Register. The Federal Register is the publication where agencies are required to release information about regulations and provide the opportunity for public comment. The average number of pages in the Federal Register has risen during the Obama Administration to over 81,000 pages per year.

In 2012, there was a slowdown in regulatory activity. In fact, the Obama Administration missed the last two deadlines requiring publication of the government’s regulatory agenda (April 2012 and October 2012). Many believe that this was due to the election and the Obama Administration’s reluctance to release economically significant regulations before the election. At the time of the election, there were over 150 regulations awaiting review by the Office of Management and Budget (OMB). Seventy eight percent of the regulations awaiting review were been pending at the office for more than 90 days, the maximum time allowed. Of the pending regulations at OMB, the following agencies have the highest number awaiting action: 29 from the Environmental Protection Agency (EPA), 16 from Health and Human Services (HHS), 11 from Department of Labor (which includes OSHA) and 10 each from the Departments of Energy and Transportation.

In January, the Obama Administration finally released its regulatory agenda for Fall 2012. The following is a summary of some of the major regulatory issues impacting the industrial refrigeration industry that are expected to receive attention during President Obama’s second term.

Occupational Safety and Health Administration (OSHA)

With another four years of the Obama Administration, companies should be prepared for OSHA to continue its emphasis on aggressive enforcement. Efforts like the Severe Violator Enforcement Program and the National Emphasis Program for Chemical Facilities will continue to see much activity from the agency. As a reminder, at least 25 percent of all NEP inspections will be in ammonia facilities. Industry is also experiencing an increase in OSHA utilizing the General Duty Clause. This is particularly evident in facilities with less than 10,000 pounds of ammonia. OSHA is using the General Duty Clause in such facilities and expecting facilities to implement process safety management like standards to control hazards. For IIAR members with less than 10,000 pounds of ammonia, it is more important than ever to make sure you have an active safety plan in place. Read more about this issue and what you can do on page 30 of this issue of Condenser.

In 2013, OSHA will also continue its implementation of the Globally Harmonized System of Classification and Labeling of Chemicals. Under the regulation issued in 2012, chemical manufacturers and importers are responsible for providing information about the identities and hazards of chemicals they produce or import. This includes specific criteria for classification of health and physical hazards, as well as classification of mixtures. Chemical manufacturers and importers will be required to provide a label that includes a harmonized signal word, pictogram, and hazard statement for each hazard class and category. The harmonized system also requires employers to use a 16 section safety data sheet. Employers are required to train workers by December 1, 2013 on the new labels elements and safety data sheets format to facilitate recognition and understanding. Training should address workers, emergency responders, and those involved with preparation of labels, SDS and HazCom strategies as part of risk management systems.

In addition to current enforcement efforts, it is likely that new regulations such as the Injury and Illness Prevention Program (I2P2) will begin to move through the regulatory process. I2P2 is a new regulation being developed by OSHA that would establish a requirement for employers to find and fix potential workplace hazards regardless of whether they specifically relate to an existing OSHA standard. OSHA sites the use of I2P2 type programs in a number of states as demonstrating the success of this proactive approach to preventing workplace injuries. However, there are concerns about the costs and burdens that would be placed on employers if the new program goes into effect.

Some are likening I2P2 to the General Duty Clause on steroids. Much like the General Duty Clause, it is feared that OSHA will use the I2P2 standard to cite employers for failing to address a hazard, even if it there is not an established hazard specific standard. For example, some believe that I2P2 may be a way for OSHA to address ergonomics without advancing a rule on that specific topic.

Dr. David Michaels, Assistant Secretary of Labor and head of OSHA, has made the implementation of I2P2 one of his top priorities. However, progress on the proposed I2P2 rule was slowed because of the election. With the election complete, it is widely speculated that OSHA will now move forward with promulgating the I2P2 regulation.

Environmental Protection Agency (EPA)

While no regulatory changes are expected to the Environmental Protection Agency’s Risk Management Program (RMP), EPA will continue an active program of enforcement under the Risk Management Program (RMP). IIAR members are encouraged to make sure that their plans are current and operating effectively. EPA does have a large number of high profile regulations in the pipeline touching a wide variety of industries and issues.

Regulations restricting greenhouse gas emissions could have the most overall impact on the economy. With Republicans maintaining control of the House, “cap and trade” legislation is unlikely to pass. As a result, the Obama Administration is looking to curb greenhouse gas emissions through regulations. While early regulatory efforts are expected to focus on the energy production sector such as coal, EPA is likely to expand these restrictions across other industries. It has been estimated that EPA proposals would cost between $300 and $400 billion a year and ultimately raise gas and electricity prices. As a non-greenhouse gas emitting refrigerant, ammonia has a good story to tell and IIAR will continue to build its relationships with EPA to promote the environmental benefits of ammonia.

Another major EPA proposal is to tighten the ozone standard. This would likely place over 600 counties in “non-attainment” status which would severely limit these counties’ ability to pursue economic development. These and other EPA regulations are pending release from OMB and could begin to move through the regulatory process in 2013. While these regulations do not directly impact ammonia refrigeration, the economic impacts of such regulations could impact companies.

Department of Homeland Security (DHS)

The Department of Homeland Security (DHS) continues to further implementation of the Chemical Facilities Anti-Terrorism Standards (CFATS) program. One of the main issues currently receiving attention if personnel surety. In 2011, DHS invited public comment regarding its proposal to collect information under what they are calling the CFATS Personnel Surety Program (PSP). Under the program, facilities would be required to submit to DHS personally-identifying information regarding individuals seeking access to restricted areas and critical assets at the facility. DHS would then arrange for these individuals to be checked against the FBI’s classified Terrorist Screening Database (TSDB).

IIAR, along with a number of like-minded industry organizations sent a letter to DHS expressing concerns with the Department’s PSP proposal. The letter argued that the PSP program, as proposed by DHS, is unnecessarily prescriptive on how facilities meet the risk based performance standard on personnel surety and in many cases is duplicative. The proposal did not recognize the many facility workers who possess security credentials already subject to review by DHS. As a result of these concerns, DHS withdrew its information request and sought further input from industry on the PSP program. Representatives from IIAR participated in a call with DHS to further discuss concerns about proposals that would place additional personnel surety responsibilities on employers in the industrial refrigeration industry. A follow-up letter was also sent by IIAR to DHS.

It is expected that a revised PSP proposal will be released by DHS in 2013. IIAR will continue to work with like minded organizations and DHS is this proposal moves forward.

These are just a sampling of some of the major regulatory efforts that the industrial refrigeration industry will likely face during President Obama’s second term in office. In response to increased regulatory activity, IIAR has recently created a Government Relations Committee to further guide IIAR’s government relations program. The committee, chaired by Mark Stencel of Emerson, has already held strategy sessions to discuss the impacts of government policies on the industrial refrigeration industry and develop a proactive strategy for the future.