American Oil and Gas Reporter - July 2016 - 27

WASHINGTONWATCH
OSHA Includes
Upstream Activities In
HHC Standard
The Occupational Health and Safety Administration is considering revisions to its process safety management (PSM)
standard for catastrophic releases of highly hazardous chemicals
(HHCs) that may affect upstream oil and gas operations.
OSHA issued its PSM standard to prevent or minimize the consequences of catastrophic HHC releases in 1992 under a congressional mandate in the Clean Air Act Amendments of 1990.
It requires employers to adopt comprehensive management programs for HHCs that integrate technologies, procedures and management practices to help assure safe and healthy workplaces.
While OSHA is considering a number of revisions, several are
of particular concern to the upstream industries:
* Expanding them to oil and gas well drilling and servicing
operations;
* Enforcement of existing standards for oil and gas production; and
* Removing the exemption for atmospheric storage.
As the name suggests, PSM is intended to be performancebased, rather than prescriptive. Initially, it covered the manufacturing of explosives and processes involving threshold quantities (10,000 pounds) of flammable liquids and flammable gases, as well as 137 HHCs. The "process" required employers to
implement safety programs that identified, evaluated and controlled
these hazards. PSM outlines the key features of HHC safety programs, yet is intended to give employers the flexibility to tailor
their programs to the conditions unique to their facilities.
When issued, the PSM standard did not apply to oil and gas
well drilling, as OSHA intended to adopt a separate rule to address the process safety hazards at oil and gas drilling facilities.
However, OSHA never promulgated that separate standard. According to OSHA, there is no standard that covers process safety hazards at oil and gas drilling facilities.
The PSM standard always has included oil and gas production facilities, although OSHA agreed in a 1999 memorandum to
not enforce the standard for production facilities until completing an economic feasibility analysis. This analysis is under way
with a particular focus on the impact on small businesses.
On June 21, OSHA began conducting interviews with small
business entities in accordance with the Small Business Regulatory
Enforcement Act (SBREFA). With a plethora of acronyms, the
Small Business Advocacy Review Panel-composed of representatives of OSHA, the Small Business Administration's Office
of Advocacy, and the Office of Information and Regulatory Affairs within the Office of Management and Budget-provides small
entity representatives (SERs) an opportunity to convey the impact of the draft framework and suggest ways to minimize the impact, yet meet OSHA's statutory goals.
SERs in the oil and gas industry generally would be defined
as those representing companies with no more than 500 employees
and $7.5 million in average annual receipts. Formal responses to
the interview questions are due within one month of the interviews.
The PSM standard historically exempted processes with a
flammable liquid or gas "stored in atmospheric tanks or transferred,
which are kept below their normal boiling point without benefit of

"OSHA is considering revisions to its process
safety management standard for catastrophic

releases of highly hazardous chemicals.

chilling or refrigeration." OSHA intended this atmospheric storage
tank exemption to be limited to processes that involved only
flammable liquid storage, such as those at a fuel depot or terminal.
An administrative review suggested that atmospheric storage
tanks connected to processing operations were exempt, which
prompted OSHA to consider limiting the exemption to petroleum
and petroleum-product merchant wholesalers. OSHA would further
define "process" tank relative to a "storage" tank.
OSHA estimates applying the PSM standard to oil and gas well
drilling and servicing operations, and production, will affect 2,144
total drilling entities and 106,368 employees. Of those, 2,085 are
small entities with 42,555 employees. Of those small entities, 80
percent have fewer than 20 employees. Total new PSM program
costs range from $26,468 to $184,482. OSHA estimates it will
cost $15,746-$35,193 to add a process, with program maintenance
costs ranging from $8,470 to $53,308.
For production entities, OSHA estimates 6,194 total entities
and 116,500 employees. Of those, 6,101 are small entities with
45,883 employees. Of those small entities, 92 percent have fewer than 20 employees. OSHA estimates identical cost ranges as
for drilling entities.
OSHA provided questions to the affected small entity representatives and seeks feedback on the estimated costs, operations,
and special circumstances specific to small entities.
While the outreach to SERs is required by law, it is encouraging to see this opportunity for give-and-take between regulated industries and federal agencies. All too often, regulations are
proposed-and even adopted-without the pertinent agency possessing a good grasp of industry operations.
While it is too early in the "process" to see whether the proposed
changes to PSM will play out with fair consideration given to SER
input, the SBREFA interviews should provide a model for other agencies to follow. The significant contribution of small entities to the
oil and natural gas industry certainly warrants such attention. r

SUSAN GINSBERG is vice
president of crude oil and natural gas regulatory affairs for
the Independent Petroleum
Association of America. She
covers legislation and regulation, focusing on the CFTC
and FERC. Her experience in
natural gas regulatory affairs
spans 25 years.
JULY 2016 27

American Oil and Gas Reporter - July 2016

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