In June 2016, the Occupational Safety and Health Administration (OSHA) convened a Small Business Advocacy Review (SBAR) Panel to get feedback from small businesses about potential changes to the Process Safety Management (PSM) regulation. The SBAR panel is a part of the Obama Administration’s overall efforts under Executive Order 13650, “Improving Chemical Facility Safety and Security,” which is intended to modernize policies to prevent major chemical accidents.

The Executive Order came in response to the tragic incident in West, Texas, where there was an explosion at a fertilizer facility. It was originally assumed by the government that the incident in West was the result of management failures at the facility. However, the Bureau of Alcohol, Tobacco and Firearms announced in May 2016 that the explosion in West was caused by criminal activity. Despite the finding that the explosion in West was a criminal act, agencies including OSHA and the Environmental Protection Agency (EPA) are continuing to move forward with efforts to revise chemical safety regulations.

The SBAR panel solicited input from small businesses from PSM regulated industry, including two representatives from the ammonia refrigeration industry. The panel received both oral and written comments from the small entity representatives and released a report on August 1, 2016 with its findings and recommendations.

OSHA will take the panel’s report into consideration as it begins drafting a formal Proposed Rule. The OSHA regulatory process is slower than that of agencies such as EPA. It is unclear when a Proposed Rule will be published, although it is unlikely to see a Proposed Rule in 2016. IIAR will continue to actively work with OSHA and industry partners to communicate concerns as the regulatory process moves forward.

Below is a summary of the major changes under consideration that would have an impact on IIAR members, industry concerns, and recommendations from the SBAR panel report:

SAFER TECHNOLOGIES AND ALTERNATIVES ANALYSIS

Current Policy: No requirement of analysis of safer technology and alternatives under PSM

Issue to Address: OSHA believes that safer technology and alternatives analysis may identify safer solutions to current risks that currently are being missed. This issue was also included in EPA’s recent Proposed Rule on RMP.

Potential Change: Requiring employers to use the hierarchy of controls in considering safer alternatives and technology when identified hazards result in an employer-specified level of risk.

Industry Concerns: The regulatory burden of requiring costly IST reviews tends to stifle innovation. For businesses who are already looking to improve safety by implementing IST options, a formal IST review would add costs to a process by forcing them to document the activities they are already performing. Many businesses do not have the manpower or expertise to perform such analyses and lack the resources to hire it out cost effectively. For those companies who do not implement IST options, the IST review would likely become a “paper exercise” where they document why it is “infeasible” to implement these options. If facilities are ultimately required to perform safer alternative options analyses and implementation plans, OSHA should not require that the analyses and/or implementation plans be submitted to the agency. Likewise, OSHA should not have any role in analyzing or approving such analysis.

SBAR PANEL RECOMMENDATIONS:

• Not require employers to adopt specified technologies or use prescribed chemicals. OSHA should retain the performance-based language of the PSM standard to allow employers maximum flexibility in evaluating safer technologies and alternatives in a manner appropriate to the nature and risks associated with their specific processes; and,
• Provide guidance to employers on ways that they could implement safer technology and alternatives analysis in a cost effective manner that minimizes paperwork burdens.

UPDATES TO RECOGNIZE AND GENERALLY ACCEPTED GOOD ENGINEERING PARCTICES (RAGAGEP)

Current Policy: There is no requirement that employers update RAGAGEP to reflect revisions made since the employer initially adopted it.

Issue to Address: RAGAGEP can change over time and OSHA is concerned that some facilities may not be implementing current best practices.

Potential Change: Require periodic review of current RAGAGEP and implementation of updates.

Industry Concerns: Creating a new regulatory requirement for periodic evaluations of RAGAGEP changes is not necessary. The Management of Change (MOC) and Process Hazards Analysis (PHA) sections of PSM and RMP are currently sufficient to identify risks without a stand-alone requirement for evaluation of RAGAGEP. It is through these processes that facilities evaluate not just RAGAGEP updates but other factors related to safety.

It would be unduly burdensome to require annual reviews, much less update all processes to maintain conformance with current standards without other design changes which could impose a significant economic burden. Costs will be extremely hard to estimate and it will be virtually impossible for businesses to adequately budget for and plan for changes to RAGAGEP. In many cases it is also impossible to conform with all RAGAGEP because of possible conflicting requirements. The MOC and PHA elements coupled with Employee Participation and PreStartup Safety Review are adequate for identification of new hazards created by process changes or to identify hazards based on incidents since the last PHA Revalidation.

SBAR PANEL RECOMMENDATIONS:

• Consider clarifying, if it chooses to pursue this option, that employers would only be required to track RAGAGEP that they have chosen to follow. OSHA should also only require employers to address new hazards identified by RAGAGEP updates, and not retroactively impose building and design requirements specified by the new RAGAGEP;
• Consider the timing of any periodic updates to RAGAGEP, including the possibility of having it coincide with the PHA update; and,
• Retain performance-based language to allow employers maximum flexibility in addressing RAGAGEP and similar issues in a manner appropriate to the nature and risks associated with their specific processes.

EXPANSION OF MECHANICAL INTEGRITY ELEMENT

Current Policy: Mechanical Integrity element, 1910.119(j), applies only to six explicit categories of equipment.

Issue to Address: OSHA contends that other types of equipment that do not fall in these six categories also have hazards that should be addressed by the Mechanical Integrity requirements

Potential Change: Expand 1910.119(j) to include all equipment deemed “critical”.

Industry Concerns: The determination of what is safety-critical can be subject to broad interpretation. Absent clear direction from the agency, as is currently in place, businesses would feel very vulnerable in an enforcement setting. A business may, in good faith, assess and make equipment determinations, but fear that inspectors may not agree with their interpretations. Facilities must have clear guidance to understand what is expected and care should be taken to avoid penalizing facilities who have made equipment determinations in good faith.

SBAR PANEL RECOMMENDATIONS:

• Include the performance-oriented evaluation of critical equipment in the PSM standard; and, ]
• Develop guidance on how to determine whether an item of equipment is “critical” in order to minimize potential disputes between an employer and an OSHA inspector over what “critical” means.

EMERGENCY PLANNING

Current Policy: Employers must establish and implement an Emergency Action Plan

Issue to Address: PSM has no requirement for employers to coordinate with local emergency response authorities

Potential Change: Requiring emergency planning to foster coordination with local response, including:

• annual meetings with local responders
• emergency drills
• evaluation of local emergency response capabilities

Industry Concerns: Coordination with local emergency planning and response authorities is an important aspect of safety. However, additional regulation in this area is needed by OSHA because coordination is already specifically required in the RMP Rules, which apply to all PSM covered facilities in our industry. Enforcement of this issue is linked through Hazard Communication, Emergency Action and HAZWOPER Standards. The coordination with local agencies (e.g. LEPC, Fire Department, Police, etc.) is required by the EPA’s Chemical Accident Prevention Provisions (40 CFR Part 68.95(c)). The issue of coordination is already well covered and that adding requirements would be redundant.

Many facilities may be in an area with LEPCs that are not very active or have volunteer fire departments that are stretched thin. A clearly defined reasonable level of coordination with planning and response authorities presents a significant challenge. If facilities are “required” to coordinate their response activities, OSHA must recognize that despite the best efforts of facilities sometimes the coordination is a “one-way” street.

SBAR PANEL RECOMMENDATIONS:

• If OSHA chooses to pursue this option, consider limiting coordination requirements to notifying and requesting coordination with outside emergency responders; and,
• Clarify any requirements for evaluations of local responders’ capabilities, considering that local responders might not make information or resources available to the PSM facility.

THIRD PARTY AUDITS

Current Policy: Audit every 3 years by persons knowledgeable in covered process

Issue to Address: Audits done by independent third parties may be more effective

Potential Change: Require audits to be done by independent third parties

Industry Concerns: Compliance audits are useful tools for evaluating a facility’s safety. However, a third party doesn’t necessarily equate to more qualified or independent auditors. Facilities should have the flexibility to utilize internal safety experts from other facilities or corporate headquarters to perform audits. Often, internal auditors are more familiar with the process and the inherent risks. Internal audit teams are often more thorough than a third party and share best practices, company policies and experience from other facilities within the same company. Using internal auditors develops the auditing experience and expertise in-house where it is more accessible as opposed to losing it to a third party. Businesses should have the ability to identify the resources required to conduct audits whether it be by independent internal resource or a third party.

Hiring auditors can be a costly process. If a business has access to qualified internal auditors, they should have the flexibility to use them. In addition, IIAR is concerned that OSHA may follow the EPA’s proposals for third party audits. EPA’s proposed independence criteria are overly restrictive and could make it very difficult to find qualified auditors familiar with our industry that are not already providing services to the company in question.

SBAR PANEL RECOMMENDATIONS:

• Consider whether there are benefits to requiring third-party audits based on substantial evidence and whether a sufficient number of such auditors would be available at a justifiable cost;
• If OSHA chooses to pursue this option, evaluate the drawbacks of requiring third-party auditors, such as their lack of knowledge about a specific facility or its processes;
• If OSHA chooses to pursue this option, consider whether requiring a third party auditor be fully “independent” is necessary for an appropriate audit or investigation; and,
• If OSHA chooses to pursue this option, retain the performance-based nature of PSM in allowing employers to determine what types of audits are appropriate for their processes. Stop Work Authority Current Policy: No requirement for employees to have

STOP WORK AUTHORITY

Current Policy: No requirement for employees to have Stop Work Authority

Issue to Address: No procedures and authority for operators to shutdown processes in imminent risk situations

Potential Change: Implement an SWA program

Concerns: The addition of a stop work authority requirement is redundant with current best practices and is not necessary. Current practices of most IIAR members include robust safety committees with employee participation. Additional regulatory requirements are not likely to add any safety value. Companies should maintain the flexibility to adopt stop work plans that fit appropriately with their individual facilities. Care should be taken not to micromanage this process, which could result in unnecessary work stoppages and create significant costs for small businesses.

SBAR PANEL RECOMMENDATIONS:

• In requiring the provision of SWA, consider giving employers flexibility to develop procedures that would mitigate the possibility that the authority might be used improperly (e.g., by disgruntled employees or contractors who have a conflict of interest); and,
• Use performance-based language that will allow employers flexibility in addressing SWA authority and similar issues in a manner appropriate to the nature and risks associated with their specific processes.

ROOT CAUSE ANALYSIS

Current Policy: Incident Investigation must include: “factors that contributed to the incident”

Issue to Address: Root cause analysis can identify systemic safety problems that need to be addressed

Potential Change: Requirement of a root cause analysis as part of any incident investigation

Industry Concerns: Sufficient flexibility is needed when conducting incident investigations, including any root cause analyses. Facilities should have the ability to select the appropriate investigation methodology for the situation and their facility. There are also concerns with the definition of “near miss”. Facilities should be given deference in identifying what situations qualify as a “near miss” and trigger an investigation. What may be a “near miss” in one industry or facility may not rise to that level in a different setting.

SBAR PANEL RECOMMENDATIONS:

• Retain the performance-based nature of the PSM standard by allowing employers to use any recognized method for determining the root cause of an incident or event; and,
• Clarify what types of incidents or classes of events would require a root cause analysis.

PROCESS HAZARD ANALYSIS MANAGEMENT SIGN-OFF

Current Policy: No requirement for affirmative management statement that PHA has adequately addressed all hazards found during the analysis

Issue to Address: Management sign-off can increase thoroughness of organizational review of the PHA

Potential Change: If management decides not to implement or make modifications based on PHA team findings, to document that the hazards identified in the PHA are adequately addressed

Industry Concerns: IIAR is concerned about the legal and enforcement ramifications of such a requirement for management sign-off and do not believe it is necessary. There is the potential for the agency to set up management for potential enforcement actions. Some managers would be reluctant to sign such a document without knowing the potential liabilities. This would require the retention of a lawyer to examine the documents, which will be costly for small businesses. This cost is not reflected adequately in the proposal.

SBAR PANEL RECOMMENDATIONS:

• Consider specifying the level of management sign off required and accepting sign off at the facility/ plant manager level.

WRITTEN PSM MANAGEMENT SYSTEM

Current Policy: Various pieces of a PSM system must be documented in different PSM elements

Issue to Address: No required coordination of all written documentation into a single system, causing difficulties of updates/access to all relevant items of information

Potential Change: A requirement that employers develop and implement a written PSM Management system which would include written procedures for all elements specified in the standard, along with a records retention policy. Require additional management system elements including evaluation and corrective action of PSM program.

Industry Concerns: Requiring written PSM management systems, including additional management system elements is not necessary. Facilities are already required to document their PSM programs. Adding an additional paperwork requirement is not likely to add any safety value and will divert resources away from facility operations.

SBAR PANEL RECOMMENDATIONS:

• Consider the value of adding additional performance based management system elements and consider ways to minimize the cost and paperwork burden associated with this possible revision.