January 31, 2008

Mr. Howard J. Feldman
Director, Regulatory Analysis and Scientific Affairs
American Petroleum Institute
1220 L Street, NW
Washington, DC 20005-4070

Dear Mr. Feldman:

Thank you for your May 12, 2004 letter to the Occupational Safety and Health Administration's (OSHA's) Directorate of Enforcement Programs (DEP). Our response is based on information you provided in your letter, and information individuals representing your organization and other representatives from Synergy presented in a meeting with members of my staff, attorneys from the Department of Labor Solicitors Office, representatives from the U.S. Environmental Protection Agency, and me on May 17, 2004 in our building. You have issues regarding OSHA's Process Safety Management of Highly Hazardous Chemicals; Explosives and Blasting Agents Standard (PSM), 29 CFR 1910.119. Please be aware that this response may not be applicable to any question or situation not delineated within your original correspondence. Your specific issues are related to the application of OSHA's requirements for utility systems as they relate to the prevention and mitigation of releases of highly hazardous chemicals from PSM-covered processes and whether OSHA's standard 29 CFR 1910.269, Electrical Power Generation, Transmission and Distribution, preempts the PSM standard for power generation facilities that serve covered processes.

Issue 1 – PSM Coverage of Utility Systems

From your incoming letter, issue paper, and attachments, the following scenario summarizes the information you have provided in your request to have OSHA clarify guidance that utility systems are not covered by PSM.

Scenario: Plant utility systems such as steam, nitrogen, electricity, plant air, and process water are used to operate refinery equipment and processes that may be covered by OSHA's PSM standard. You stated that API believes that:

• the PSM standard does not apply specifically to these utility systems;
• the standard industry practice is to consider utilities in the Process Hazard Analysis (PHA) for covered process;
• the language of the PSM standard, the rulemaking record, and other guidance published by OSHA establish that utilities are not "processes" under the PSM standard;
• OSHA has always intended employers to address the impact of a failure of utilities in their PHAs and not to treat utilities as covered processes;
• PSM was developed to address systems management of processes that have the potential for catastrophic impacts if compromised;
• plant utilities, in and of themselves, do not pose this catastrophic potential and do not contain threshold quantities of hazardous substances. In fact, all of the aforementioned utilities do not contain any hazardous substances as outlined under PSM;
• utilities can have an impact on a covered process; and
• adequate safety measures are in place throughout the petroleum industry that cover the safe operation and maintenance of plant utility equipment and systems. API, CCPS, NFPA, and other industry and professional societies have developed numerous industry standards on safe work procedures, equipment integrity, and fire prevention practices that cover utilities and other equipment and processes that are not in the scope of PSM.

Response 1: Based on the PSM standard, a history of catastrophic incidents involving the failure of utility systems resulting in the release of hazardous chemicals, and industry practice, we concur with much of the information you have provided to us regarding utility systems and their relationship to preventing and mitigating catastrophic releases of highly hazardous chemicals (HHC) from PSM-covered processes.

Areas of Agreement Related to Utility Systems and Their Relationship to PSM

We agree with you and your representatives on the following points related to utility systems and their relationship to PSM:

• Plant utility systems are used to operate chemical processes which may or may not be covered by PSM;
• OSHA has always intended employers to address the impact of a failure of utilities in their PHA;
• If the employer determines that the loss of utilities could result in a potential release of HHC from the process, then, the employer would determine which engineering controls, standard operating procedures, instrumentation, employee training, etc. would be necessary to prevent or minimize the potential loss of a utility from contributing to a catastrophic release;
• Plant utility systems do not normally contain HHCs;
• Just as there are recognized and generally accepted good engineering practices (RAGAGEPs) for equipment (e.g., pressure vessels – ASME Boiler and Pressure Vessel Code and API 510; Piping, Valves and Fittings – API 570; etc.) which contain HHCs and are part of a PSM-covered process, there are RAGAGEPs for other equipment which may or may not contain HHCs and may or may not be part of the covered process;
• The boundaries of a PSM-covered process are determined by the PSM standard's requirements – 1910.119(a)(1)(i)¹ and (a)(1)(ii)² and the definition of process³ found at 1910.119(b).
• The boundaries of the covered process are based on the equipment which contain HHCs, either through interconnection or separate vessels which are located such that an explosion would affect interconnected and nearby unconnected vessels which contain quantities of the HHC that when added together would exceed the threshold quantity and provide a potential for a catastrophic release.

Failure of a Utility System can be a Pre-condition for a Catastrophic Release

As you mentioned, plant utility systems are used to operate chemical processes. Plant operation, of course, not only includes production considerations, but also involves safety. In fact, many parts or aspects of the PSM-covered process are important for preventing and mitigating catastrophic releases. These parts or aspects include:

• those whose failure could lead directly to a catastrophic release (e.g., a flexible hose connection, pump seals, vessel/tank welds);
• those whose failure creates the necessary pre-conditions for a catastrophic release occurring (e.g., an inerting system, a utility system, a lube oil system on a large compressor, software for a distributive control system, portable combustible gas meter);
• all safety devices, both mechanical and instrumentation (e.g., relief valves and rupture disk, gas detectors, safety instrumented systems); and
• all means of limiting the potential damage (e.g., emergency equipment – fire prevention and protection systems, deluge systems, evacuation alarms, etc.).

Utility Systems Are Part of the PSM-covered Process

OSHA does not agree that utility systems are categorically outside the scope and application of the PSM standard. It is OSHA's long-standing position that utility systems are part of the PSM-covered process when employers use them to control/prevent and mitigate catastrophic releases of HHC.

A process is defined in 29 CFR 1910.119(b) as any activity involving a highly hazardous chemical including any use, storage, manufacturing, handling, or the on-site movement of such chemicals, or a combination of these activities (emphasis added). In the preamble to the final rule, OSHA noted, specifically, that the standard, as written, reflects the intent of the Clean Air Act Amendments, which requires the standard to be designed to protect employees from hazards associated with accidental releases of highly hazardous chemicals in the workplace. 57 FR 6356, 6372 (February 24, 1992). As such, the proper safe functioning of all aspects of a process, whether they contain HHC or not, are important for the prevention and mitigation of catastrophic releases of HHC, due to their direct involvement in the overall functioning of the process.

As a result, it is OSHA's position that if an employer determines that a utility system or any aspect or part of a process which does not contain an HHC but can affect or cause a release of HHC or interfere in the mitigation of the consequences of a release, then, relevant elements of PSM could apply to these aspects. OSHA's position is that any engineering control, including utility systems, which meets the above criteria must be, at a minimum, evaluated, designed, installed, operated (training and procedures), changed, and inspected/tested/maintained⁴ per OSHA PSM requirements.

If an employer determines, through a PHA, that a component failure of a utility system can no longer affect or cause a release of HHC or interfere in the mitigation of the consequences of the release, then, the utility system, at that point, would no longer be considered part of the covered process. If an employer makes this determination, then, the employer must be able to proactively demonstrate why the utility system is no longer part of the covered process.

If the employer takes credit for other credible safeguards in the process, which will prevent and mitigate a release of an HHC in lieu of the subject utility system, then, they must assure that those safeguards are adequate. For example, an employer determines, through its PHA, that its electrical utility system needs to be relied upon for the safe operation of their covered process. In response, the employer determines that an uninterruptible power supply (UPS) would be a safeguard against the loss of electrical utility to the process equipment. With respect to this example, one scenario the employer would need to account for would be the need to assure that the on-site electrical distribution system, from the main power supply and the UPS, would not be compromised by an explosion or some other reason. In this case, if the electrical utility cannot function to safely operate the process because the electrical distribution system is compromised, the UPS safeguard would not be a credible safeguard for the process. Again, for aspects which do not contain HHCs, OSHA expects those other credited safeguards would, at a minimum, be evaluated, designed, installed, operated (training and procedures), changed, and inspected/tested/maintained per OSHA PSM requirements.

In your incoming document package, you asked us to withdraw an interpretation letter⁵ on the matter of PSM coverage of utilities. We are not withdrawing this interpretation letter because we believe it accurately reflects our long-standing enforcement policy as discussed above. To reiterate, OSHA's position regarding PSM coverage of utility systems is as follows: Based on the employer's analysis, utility systems may be subject to various elements of PSM to the point where a failure in a component of the utility system can no longer affect a potential release of a covered chemical. It is OSHA's view that utility systems that are part of the covered process need to be, at a minimum, depending on the circumstances of the process in question, evaluated, designed, installed, operated (training and procedures), changed, and inspected/tested/maintained per OSHA PSM requirements.

Issue 2 – Preemption of the PSM Standard by OSHA's 1910.269 Standard

Scenario: Based on API's analysis, you believe that OSHA's 1910.269 standard, Electric Power Generation, Transmission, and Distribution, preempts the application of the PSM standard to electrical utility systems at facilities with PSM-covered processes. The bases of your preemption conclusion are that:

• this standard, as stated in 1910.269(a)(1), applies to "the operation and maintenance of electric power generation, control, transformation, transmission, and distribution lines and equipment" and is the vertical standard governing the electric utility industry;
• a vertical standard generally preempts a horizontal standard, provided that the vertical standard contains provisions addressing the safety issues covered by the horizontal standard;
• 1910.269 covers electrical generating stations owned and operated by facilities with PSM-covered processes, as well as electric utilities that provide power to customers; and
• 1910.269 regulates the same industrial power generation that OSHA implies is regulated by the PSM standard. 1910.269 regulates the same hazards addressed by the PSM standard by requiring measures such as safety procedures and operator training. As the vertical standard applicable to electric power generation, 1910.269, therefore, preempts the application of the PSM standard to on-site power generating facilities that serve covered processes.

Response 2: The 1910.269 standard does apply to the operation and maintenance of electric power generation, control, transformation, transmission, and distribution lines and equipment. However, as the regulatory text and the preamble provide, OSHA did not intend for the 1910.269 standard to preempt the application of the PSM standard at covered processes/facilities. OSHA explicitly stated in 1910.269(a)(1)(iii) (emphasis added):

This section applies in addition to all other applicable standards contained in this Part 1910. Specific references in this section to other sections of Part 1910 are provided for emphasis only.

Further, OSHA explained in the preamble to the 1910.269 standard that other Part 1910 standards (e.g., 1910.119 – PSM) are not preempted by 1910.269, unless an exception is given in 1910.269:

Paragraph (a)(1)(iii) of final 1910.269 explains the application of the section with respect to thev rest of part 1910. All other General Industry Standards continue to apply to installations covered by this new standard unless an exception is given in 1910.269. For example, 1910.269(p)(1)(i) requires the critical components of mechanical elevating and rotating equipment to be inspected before each shift. This provision does not supersede existing 1910.180(d), which details specific requirements for the inspection of cranes. References in 1910.269 to other sections of part 1910 are provided only for emphasis.

59 FR 4320, 4341 (Jan. 31, 1994)

As you stated, the application of the 1910.269 standard is for the operation and maintenance of electric power generation, control, transformation, transmission, and distribution lines and equipment. The purpose and application of the PSM standard is to prevent and mitigate catastrophic releases of HHC, which include fire/explosion hazards, toxic hazards, reactive hazards, and explosive hazards. As stated in Response 1, utility systems, including electrical utility systems can be part of a covered process. As such, they are one component part of a holistic safety system for a PSM-covered process and relevant provisions of both 1910.119 and 1910.269 are applicable. Indeed, this result is necessary to protect employee safety. The application of 1910.269 procedures alone would not adequately prevent and mitigate the release of HHCs and their associated hazards – fire/explosion due to the release of flammable materials and toxic, reactive, and explosive material hazards – that are subject to PSM provisions. Additionally, 1910.269 does not address the hazards associated with PSM-covered processes in a holistic manner, as is required by the management systems elements of the PSM standard.

Therefore, given OSHA's intent, as explicitly stated in the 1910.269 standard and preamble, and the differing hazards and requirements to assure safe operations, the 1910.269 standard does not preempt application of the PSM standard.

Thank you for your interest in occupational safety and health. We hope you find this information helpful. OSHA requirements are set by statute, standards, and regulations. Our interpretation letters explain these requirements and how they apply to particular circumstances, but they cannot create additional employer obligations. This letter constitutes OSHA's interpretation of the requirements discussed. Note that our enforcement guidance may be affected by changes to OSHA rules. Also, from time to time we update our guidance in response to new information. To keep apprised of such developments, you may consult OSHA's website at http://www.osha.gov If you have any further questions, please feel free to contact the OSHA Office of General Industry Enforcement at (202) 693-1850.

Sincerely,



Richard E. Fairfax, Director
Directorate of Enforcement Programs

¹ 1910.119(a)(1)(i) – This section applies to the following – A process which involves a chemical at or above the specified threshold quantities listed in Appendix A to this section; [ back to text ]

² 1910.119(a)(1)(ii) – A process which involves a flammable liquid or gas (as defined in 1910.1200(c) of this part) on site in one location, in a quantity of 10,000 pounds (4535.9 kg) or more. . . [ back to text ]

³ 1910.119(b) – "Process" means any activity involving a highly hazardous chemical including any use, storage, manufacturing, handling, or the on-site movement of such chemicals, or combination of these activities. For purposes of this definition, any group of vessels which are interconnected and separate vessels which are located such that a highly hazardous chemical could be involved in a potential release shall be considered a single process. [ back to text ]

⁴ OSHA stated in the PSM preamble [FR Vol. 57, No. 36, pg. 6389] that other equipment (i.e., aspects), than that equipment identified in 1910.119(j)(1) might be critical to the safety of the process, It is the position of OSHA that at least the equipment specified in proposed paragraph (j)(1) must be subject to the requirements contained in paragraph (j). However, if an employer deems additional equipment to be critical to a particular process, that employer should consider that equipment to be covered by this paragraph and treat it accordingly. [ back to text ]

⁵ OSHA Interpretation Letter to James B. Evans, Union Carbide, The term "interconnection" as it would apply to utilities, steam and electric, used in a covered process. 9/14/95, [http://www.osha.gov/pls/oshaweb/owadisp.show_document?p_table=INTERPRETATIONS&p_id=21932] [ back to text ]