By Brent I. Clark, Meagan Newman, and Craig B. Simonsen

bottleThe Occupational Safety and Health Administration issued yesterday an enforcement memo (Memo) and an interim policy (Policy) on the PSM retail exemption.

Tho Memo revised OSHA’s interpretation of the exemption of retail facilities from coverage of the Process Safety Management of Highly Hazardous Chemicals (PSM) standard (29 CFR 1910.119). The revision, according to OSHA, is in accordance with the President’s August 1, 2013, Executive Order 13650, Improving Chemical Facility Safety and Security (EO). We had previously blogged about the EO.

While OSHA in its PSM rule had not defined the term “retail facility,” the preamble to the final standard explained that chemicals in retail facilities (“e.g., gasoline stations”), are sold in “small volume packages, containers, and allotments, making a release unlikely.” (57 Fed. Reg. 6356, 6369 (February 24, 1992)). Following the adoption of the PSM standard OSHA issued a series of interpretation letters and a PSM compliance directive (CPL 02-02-045) that, according to the Memo “interpreted the exemption more broadly.” Under the interpretations an establishment was exempt from PSM coverage if it “derived more than 50 percent of its income from direct sales of highly hazardous chemicals to the end user” (the “50 percent test”).

In a turn-around now, though, OSHA claims that the 50 percent test has “no relationship to OSHA’s original intent for application of the exemption, nor is it consistent with either the commonly understood meaning of retail establishment or the definition recognized by the U.S. Department of Commerce in the NAICS Manual.” For instance, OSHA believes that the 50 percent test allows employers who sell or distribute large, bulk quantities of highly hazardous chemicals directly to end users to claim the exemption, even if the end users are themselves commercial establishments.

OSHA through this Memo has now withdrawn and rescinded all prior policy documents, letters of interpretation, and memoranda related to the retail exemption and the 50 percent test. According to the Memo OSHA will now interpret the retail facilities exemption as follows:

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 may be afforded the retail exemption at 29 CFR 1910.119(a)(2)(i).

In OSHA’s related Interim Enforcement Policy, it indicated that for the first six months following the issuance of the Memo (July 22, 2015), OSHA will “focus its resources on providing compliance assistance to affected employers, engage key industry stakeholders, and will inform its State On-Site Consultation Projects that during this period, requests from newly covered employers should be their highest priority for receiving an on-site visit.”

For employers, and especially retail establishments, what this means now is that an OSHA inspector may recommend issuance of a citation for violations of the PSM Standard after determining that the employer’s primary NAICS related to the sale of “highly hazardous chemicals” is something other than a retail trade, as defined in NAICS sectors 44 or 45, and PSM coverage is otherwise established.

Use this six month interim enforcement period to examine and bring all of your facilities into compliance with the “revised” standard.