OSHA’s Appeal is Denied in PSM Exemption Case

The U.S. Court of Appeals for the District of Columbia Circuit has denied OSHA’s appeal of a prior ruling that blocked OSHA’s ability to more strictly enforce its Process Safety Management (PSM) standard. This means that, in order to tighten PSM enforcement, OSHA may have to begin a new, formal rulemaking process — something that could take years to complete.

The PSM standard requires businesses handling, manufacturing, or storing large amounts of certain hazardous chemicals to take specific steps to prevent unexpected releases. In 2001, OSHA issued a letter of interpretation stating certain businesses could claim an exemption from the PSM standard if they dealt directly with farmers and/or sold chemicals in very small quantities. However, while this exemption was intended only for smallest-size retailers, there is evidence that large handlers of hazardous chemicals interpreted it to mean that they were also exempt from the PSM standard. For example, the West Fertilizer Co., which kept over 50,000 pounds of anhydrous ammonia onsite, considered itself exempt from the PSM standard. After the West, Texas disaster, OSHA announced it would close what it considered a loophole in the PSM exemption and issued a revised interpretation of the exemption which specified that the exemption would now apply only to small facilities with North American Industrial Classification System codes of 44 and 45. However, OSHA did not follow notice-and-comment procedures when making this adjustment to the rule.

A court challenge was brought by industry groups contending that this adjustment essentially amounted to a new standard, and thus required a notice-and-comment period. A three-judge panel hearing the challenge agreed, and found against OSHA in September of last year.

After that ruling, OSHA submitted an appeal for a rehearing of the matter before the judges involved (also called an “en banc” hearing). This rehearing would have given OSHA another opportunity to make a case that its adjustment to the PSM enforcement did not constitute the creation of a new standard. It is that appeal for a rehearing which has now been denied. In its dismissal, the court did not provide any information as to why it was disinclined to hear further arguments from OSHA on the matter.

Now that the appeal has been denied, OSHA’s lone option for pursuing stricter PSM enforcement seems to be starting a new formal rulemaking process which includes soliciting input from stakeholders via a formal notice-and-comment procedure.

OSHA has not yet indicated how (or if) it intends to proceed.

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