DC Circuit's Process Safety Decision a Setback for OSHA

In a unanimous decision, three D.C. Circuit judges -- Sri Srinivasan, Judith W. Rogers, and Patricia A. Millett -- ruled that OSHA failed to follow the required notice-and-comment procedure when it narrowed the retail exemption in its PSM standard following the West Fertilizer explosion in 2013.

OSHA lost an important federal appeals court case on Sept. 23 when a panel of the U.S. Court of Appeals for the D.C. Circuit ruled unanimously that the agency had not properly changed the retail facilities exemption in its Process Safety Management (PSM) standard following the explosion at a fertilizer facility in West, Texas, on April 17, 2013. Fifteen people died in the explosion, 12 of whom were firefighters trying to quench the fire at the West Fertilizer Company when 30 tons of stored ammonium nitrate exploded.

In the aftermath of the disaster, the White House directed several executive agencies, including the Labor Department and EPA, to examine their process safety management and hazmat regulations in light of the event and recommend changes in those regulations to prevent another such catastrophe. OSHA's actions included changing the PSM standard, which all along had exempted retail facilities from its requirements. OSHA narrowed the scope of the exemption so the standard would cover formerly exempt facilities like the West plant, and the D.C. Circuit panel -- Judges Sri Srinivasan, Judith W. Rogers, and Patricia A. Millett -- ruled in Agricultural Retailers Association and the Fertilizer Institute v. U.S. Department of Labor and OSHA, No. 15-1326, that OSHA by this action was enacting a standard, but the agency failed to follow the required notice-and-comment procedures for standards established in the OSH Act.

"As OSHA describes the measure, it aims to eliminate 'policy and regulatory gaps' so as to help 'prevent incidents like the West Fertilizer explosion.' OSHA, Questions and Answers—PSM Retail Exemption Policy, July 22, 2015. By redefining retail facilities, the Memorandum, in purpose and effect, subjects a substantial number of businesses previously classified as exempt retail facilities to additional safety standards in order to address a 'particular significant risk.' Given those specific circumstances, the measure, under our decisions, qualifies as a standard within the meaning of the OSH Act," the judges ruled in a decision that vacates OSHA's action.

"Because the Memorandum amounts to a standard within the meaning of the OSH Act, we have jurisdiction to review it and to vacate it for failure to comply with the procedural requirements established by that Act. Of course, nothing in our decision necessarily calls into question the substance of OSHA’s decision to narrow the exemption for retail facilities and correspondingly to expand the scope of the PSM Standard. We hold only that, insofar as OSHA does so, it must follow the notice-and-comment procedures for standards set forth in the OSH Act," they held.

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