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Understanding Recent Process Safety Management (PSM) Changes

October 19, 2015 - Kestrel Management

The PSM Final Rule was established in 1991, with the initial intent to prevent or minimize the consequences of catastrophic releases of toxic, reactive, flammable, or explosive chemicals and the hazards that these chemicals entail. The PSM standard applies to facilities with processes that involve:

  • Chemicals at or above certain concentrations that exceed threshold quantities (TQs), as specified in Appendix A of the PSM Standard
  • Flammable liquids or gases, as defined by OSHA (flash point 100°F), in one onsite location in quantities of 10,000 lbs. or more (some exceptions exist)

PSM_graphicSince its creation, OSHA has issued a series of letters of interpretation and directives to clarify the PSM Rule, including the two most recent:

  1. One-Percent Rule
  2. Retail Exemption

One-Percent Rule

Of the 137 chemicals listed with TQs in Appendix A, only 11 of them have a minimum concentration listed (see table below, information taken from Appendix A). This has created questions concerning whether those TQs listed without concentrations (the other 126 listed) apply only to chemicals in “pure” form or also to mixtures in which the chemicals are present at some concentration.

PSM_min_concentrationInitial OSHA letters of interpretation suggested that the TQs applied only to “pure” or chemical grade chemicals; however, later interpretations seem to modify this by adding in “commercial grade” as a defining medium. Understandably, these conflicting interpretations have only led to further confusion and questions.

In response, OSHA began to take a critical look at the commercial grade policy in an effort to provide clarification and to ensure consistency with the initial purpose of the PSM standard. During this review, OSHA evaluated EPA’s experience developing and implementing the Clean Air Act Amendments (CAAA) Risk Management Plan (RMP) Rules. The USEPA concluded that for a few chemicals, the specific cut-off concentrations below which chemicals need not be considered in determining whether a TQ is present could be determined. However, the remaining substances could reasonably be considered hazardous in concentrations at or above one percent.

Based on this, OSHA rescinded all previous policy documents, letters of interpretation, and memoranda in June 2015, in favor of a One-Percent Rule similar to that adopted by the USEPA. Accordingly, in determining whether a process involves a chemical (pure or in a mixture) at or above the specific TQs listed in Appendix A, employers must calculate:

  • The total weight of any chemical in the process at a concentration that meets or exceeds the concentration listed for that chemical in Appendix A
  • The total weight of the chemical in the process at a concentration of one percent or greater, with respect to chemicals with NO concentrations listed in Appendix A

(However, if the partial pressure of the chemical in the vapor space under handling and storage conditions is less than 10 mm Hg, the employer need not include the weight of such chemicals in any portion of the process.)

See the PSM 1% Decision Matrix to help better understand the applicability of this rule.

Retail Exemption

In addition to the One-Percent Rule changes, there have also been changes to the retail exemption criteria. The PSM standard includes an exemption for “retail facilities” (1910.119 (a)(2)(i)). Until now, this exemption has not been clearly defined as to what a retail facility is, explaining only that chemicals in retail facilities “are generally sold in small packages, containers and allotments”.

The U.S. Department of Commerce, the entity that develops the North American Industry Classification System (NAICS), defines retail facility in a similar manner to the PSM standard, but goes on to add that the retail facility ”is the final step in the distribution of merchandise; retailers are, therefore, organized to sell merchandise in small quantities to the general public”.

OSHA has issued a series of letters of interpretation and has made statements interpreting the PSM standard much more broadly. One such letter even stated that an establishment is exempt from PSM coverage if it derives more than 50% of its income from direct sales of Highly Hazardous Chemicals (HHC) to the end user (i.e., the 50% Test).

OSHA has recently explained that when looking at the original intent of the retail exemption, prior interpretations have no relationship to nor are they consistent with the commonly understood meaning of a retail establishment, as defined by NAICS.

As a result, OSHA has recently rescinded all prior policy documents, letters of interpretation, and memoranda related to the retail exemption and the 50% Test. OSHA’s latest interpretation states that the retail facility exemption applies to “only facilities, or the portions of facilities, engaged in retail trade, as defined by the current and any future updates to sectors 44 and 45 of the NAICS Manual.”

See the PSM Retail Exemption Decision Tree to help better understand this exemption.

Taking Action

It is important that you understand how these recent PSM changes may affect your organization and any future decisions you make. Take a minute to walk through the decision trees and evaluate if the One-Percent Rule and retail exemption affect you. Note that there are specific exemptions that still may apply under these rules, but you will need to examine your organization closely to be certain.

There is action being taken against OSHA’s latest interpretations that may change these rules, yet again.  Kestrel will continue to watch the status of the PSM Rule and OSHA’s actions.

Submitted by: Randy Block, Jake Taylor


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