McDermott Will & Emery’s OSHA, MSHA & Catastrophe Response Group secured an important victory when it convinced a unanimous U.S. Occupational Safety and Health Review Commission that a distribution terminal owned by client Motiva Enterprises LLC was not covered by a major chemical process safety regulation of the Occupational Safety and Health Administration (OSHA).
The regulation, known as the Process Safety Management (PSM) Standard (29 C.F.R. § 1910.119), was adopted in the wake of several chemical plant tragedies in the 1980s that involved releases of hazardous chemicals. Compliance with the regulation is onerous, and its precise coverage is unclear and controversial. Not only chemical plants but any business with more than 10,000 pounds of flammable liquids or gases "on site in one location" in a single "process" may fall within its reach.
Motiva owned a distribution terminal at which tanker trucks were filled with liquefied propane, a flammable gas, at loading racks. The terminal received the propane through pipes originating at a nearby oil refinery, which contained processes covered by the regulation. OSHA claimed the piping connection alone meant the distribution terminal was also covered. Motiva, represented by Art Sapper and Bob Gombar of McDermott’s OSHA Group, argued that a mere piping connection was not enough and that OSHA had to show that an incident at the distribution terminal could involve the refinery’s propane tanks in a potential release or vice versa.
The independent Commission agreed with Motiva that, at least with regard to flammable liquids and gases, mere interconnection or proximity is not enough to establish coverage under the regulation. Instead, there must be evidence that "a release in one of the refinery’s propane storage tanks could involve the distribution terminal [or c]onversely ... that an event originating at the distribution terminal could affect the refinery’s propane storage tanks." Finding no evidence on these points, the Commission vacated the citation. It also noted that OSHA had not offered any explanation of the crucial phrase "on site in one location" in the regulation’s coverage provision.
The decision resolves a major question involving the coverage of an important regulation and is apt to be of considerable importance to not just the petroleum refining and chemical industries, but to any employer with large amounts of flammable liquids or gases on a site. Such an employer may be able to avoid coverage under OSHA’s PSM Standard of a facility that has less than 10,000 pounds of flammables but is connected to or near a covered facility by ensuring that an event in one facility cannot affect the other.
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