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OSHA Updates PSM Standards For Retail Exemption

The Occupational Safety and Health Administration (OSHA) has updated its standards on Process Safety Management of Highly Hazardous Chemicals (PSM). Beginning in January of 2016, the federal agency will impose a new interpretation regarding the exemption of retail facilities from chemical compliance.

When first enacted in 1992, PSM standards did not apply to retail facilities that sold hazardous chemicals to end users in small quantities. As such, gas stations, hardware stores, and other purveyors of potentially harmful chemicals were exempt. But because the guidelines were considered ambiguous, OSHA was forced to issue numerous letters of interpretation explaining how the exemption was to be understood. These statements culminated in the so-called "50 percent test," which stipulated that any establishment that obtained more than half of its income from direct sales to end users was exempt from PSM requirements.

In time, however, OSHA decided that the new standard was incompatible with the original intent of the chemical compliance exemption. In particular, the agency noted that many non-retail facilities had incorrectly utilized the exemption. Another troubling repercussion of the 50 percent test was that it allowed establishments to distribute huge quantities of chemicals directly to end users, even if they were commercial customers.

When they go into effect in January 2016, the new changes will nullify all of the earlier chemical compliance statements regarding the 50 percent test and the retail exemption. OSHA believes that these revisions are congruent with the original intent of the NAICS Manual, which plainly states that, "Only facilities, or the portions of facilities, engaged in retail trade as defined by the current and any future updates to sections 44 and 45 of the NAICS Manual may be afforded the retail exemption.”

Real-World Applications

OSHA has proffered a few everyday examples to help employers understand how these new changes might affect them. One example involves a gas station that has three storage tanks that hold more than 10,000 pounds of gasoline – a flammable, hazardous chemical. But because the station sells gasoline to retail customers in small quantities of less than 50 gallons at a time, it is eligible for OSHA's revised retail exemption for chemical compliance.

Immediately after it issued the updates in July, OSHA began working with affected employers. The agency's goal is to help them reach full compliance by the time the updates go into effect in January. Employers who have not made the necessary changes by that time may be cited for PSM violations.

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