Retail exemption for PSM standard must undergo rulemaking process, appeals court rules

Washington – OSHA failed to follow federal rulemaking requirements when it used a memorandum to announce a revised definition of retail facilities exempt from the Process Safety Management Standard, the U.S. Court of Appeals for the District of Columbia Circuit has ruled.

Prior to the revision, farm supply facilities that sell bulk chemical fertilizers to farmers – as well as retail establishments such as gas stations that sell hazardous chemicals in small quantities – had been exempt from the PSM standard. However, OSHA amended its definition of retail facilities following a deadly explosion in April 2013 at the West Fertilizer Co. facility in West, TX. The facility, which possessed more than 50,000 pounds of ammonium nitrate that exploded and killed 15 people, had been exempt from the standard because more than half of its earnings came from direct sales to end users.

The revised standard interpretation, released in a July 2015 memorandum, stated that only retail trade facilities with North American Industry Classification System codes of 44 and 45 – such as hardware stores and office supply stores – would be exempt.

The Agricultural Retailers Association and The Fertilizer Institute filed suit, claiming that the Occupational Safety and Health Act requires OSHA to undergo the formal rulemaking process, including notice and comment periods, before issuing a revised interpretation. In addition, a bipartisan group of lawmakers sent a letter to Secretary of Labor Thomas Perez in October 2015, noting that the changes would be costly to small and medium-sized businesses.

On Sept. 23, the court sided with the Agricultural Retailers Association and The Fertilizer Institute, concluding that OSHA’s new definition “amounts to a standard” and must be “subject to the notice-and-comment procedures for standards set forth in the OSH Act.”

ARA issued a press release praising the decision. “Given the significant economic costs and absence of any safety benefit, the court made the correct decision. The retail exemption has been in place for more than 20 years and OSHA should not have redefined it without an opportunity for stakeholders to comment,” ARA Chairman Harold Cooper said.