2015-04-27 Implementing PSM - Perspective from a Process Engineer turned PSM Attorney

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Implementing PSM: Perspective from a Process Engineerturned PSM Attorney

D.A. DuggarArent Fox LLP

1717 K Street NWWashington, D.C. 20006

[email protected]@gmail.com

Prepared for Presentation atAmerican Institute of Chemical Engineers

2015 Spring Meeting11th Global Congress on Process Safety

Austin, Texas April 27-29, 2015

AIChE shall not be responsible for statements or opinions containedin papers or printed in its publications

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Implementing PSM: Perspective from a Process Engineerturned PSM Attorney

D.A. DuggarArent Fox LLP

1717 K Street NWWashington, D.C. 20006

[email protected]@gmail.com

Keywords: PSM Standard, boundaries, covered process, Akzo Nobel, Motiva, Kaster, process equipment, recommendations

Abstract

OSHA’s Process Safety Management Standard was rolled out in 1992. One year later, I started my career as a process engineer in the petrochemical industry. As any process engineer will tell you, PSM is a large part of your daily responsibilities when working in a production unit. During my time as a process engineer, I developed process safety information, participated in numerous PHAs, wrote operating procedures, trained operations personnel on new equipment and new product lines, completed MOCs, conducted PSSRs, served on incident investigation teams and assisted with compliance audits. Now as an attorney, I counsel industry on defending PSM citations, resolving facility-siting issues, and addressing RAGAGEP questions (just to name a few). And it has been during this time as an attorney that I have realized that when it comes to Process Safety Management, process engineers and OSHA are actually talking at cross-purposes.

Readers will learn the distinction between how process engineers view PSM, how OSHA views the PSM Standard, and how attorneys navigate between the two views. With these insights, readers will be better equipped to minimize the risk of falling out of compliance with the PSM Standard.

1. Defining PSM and what is required for compliance.

For the purposes of this paper, I would contend that process engineers view PSM as a safety philosophy, as everything that could be done to manage risk. PSM is more than OSHA’s PSM Standard. For example, PSM includes PHAs (required by the Standard) and LOPAs (not required by the Standard).

OSHA enforces the health and safety laws—therefore, it views PSM as the PSM Standard. Furthermore, OSHA views the PSM Standard as what should be done to minimize risk (though OSHA would probably use the term shall).1 Note two distinctions at the outset: (1) should, not

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could and (2) minimize, not manage. Because PSM is the (capital S) Standard and the Standard is the law, it should be done.

But OSHA faces a very real problem. It is confined to enforcing only those written words. Therefore, OSHA must read the words of the Standard as broadly as possible to capture all that it contends should be done.

In addition, OSHA is tasked with protecting workers. Minimizing the risk is the actual objective, not merely managing it.

Attorneys generally have no opinion as to what could or should be done to manage or minimize risk. To them, PSM is what legally has to be done. And what legally has to be done is governed by legal canons of construction applied to the text of OSHA’s PSM Standard.

Figure 1. The Multiple Views of what PSM Compliance means

While these three views overlap in some areas, they are not congruent. Views on what constitutes compliance with PSM differ. As a result, one can envision seven distinct understandings of what compliance with PSM means.

2. The text of the PSM Standard – different meanings to different people.

Two men are sitting at a bar having a conversation. One is from London (England), the other Paris (Texas). A baseball game is playing on the TV overhead. “Baseball is nice but I really prefer football. It’s what I played when I was a kid.” says the one.

“Yes,” says the other, “the people in my neighborhood were more passionate about football than just about anything else. It was like a religion to them.”

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“You know, I think we met once before. Were you at the conference back in 2012?”

“Not sure,” says the other, “I’d have to check my diary.”

“Are you hungry? I’m going to meet some friends for dinner shortly.”

“Sure, just give me a moment to go to my room and grab my coat. I’ll meet you on the first floor.”

After each waited on the first floor for fifteen minutes, they left separately never aware neither understood anything the other was saying. Why? Both men were speaking English. Both men were using common, everyday words. Nonetheless for these two, the meanings of at least the italicized words were quite different.

It pays to know your audience. When discussing PSM, it also pays to know your speaker. What the speaker is saying may not be what the listener understands. While the previous example may not be very realistic, it is illustrative. Words mean different things to different people. Confusion happens in everyday conversation and it happens when discussing PSM compliance.

3. Here is where my process ends.

Most process engineers would say an entire facility is covered by at least some aspects of process safety management. Again, this is because PSM is more of a safety philosophy than a set of regulations. The process engineer does not stop thinking about safety just because there is no highly hazardous chemical (HHC) in a given process unit of the plant.

But this does not mean that the process engineer believes all elements of OSHA’s PSM Standard should be applied throughout the entire facility. The process engineer will draw processboundaries demarcating the OSHA PSM Standard covered processes. The process engineer’s demarcation will frequently coincide with the production unit boundaries. Unit A makes chemical A so Unit A becomes process A.

OSHA has a different view of a process. OSHA’s regulatory definition of a covered processencompasses groups of vessels: (1) interconnected vessels containing a minimum amount of a highly hazardous chemical and (2) certain nearby separate vessels. Whether the groups of vessels comprising the process all reside within one production unit is irrelevant. To fully understand OSHA’s view, one must examine OSHA’s published interpretations regarding PSM covered processes.

3.1 The boundaries of the PSM covered process under Akzo Nobel

If a production unit downstream of a covered process is interconnected with a covered process, OSHA’s default position is that the downstream production unit is also covered under OSHA’s PSM Standard. In other words, the default position is if there is an interconnection, there is coverage. The two production units are one covered process.

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Yet OSHA has recognized limits to this default position. In response to litigation with Akzo Nobel, OSHA proposed a three-part analysis to answer the question, “Where does the covered process end?” Akzo Nobel conceded the upstream production unit was covered by OSHA’s PSM Standard. Akzo Nobel differed with OSHA as to whether an interconnected, downstream production unit was also covered by OSHA’s PSM Standard.

In a memorandum2 written in response to litigation, OSHA stated:

In this case, the company does not dispute it has a covered process, as defined by 29 CFR 1910.119. However, what is disputed is the limits or the boundaries of the process downstream from the equipment the company stipulates is part of the covered process. The company contends that interconnected equipment downstream from what it stipulates as the covered process should not be included in the boundaries of the covered process. The company contends there is no circumstance, i.e. deviations, upsets, releases, etc., which might occur downstream (outside) from the stipulated covered process, which could affect a catastrophic release of HHC in the upstream stipulated covered process. Therefore, the company contends that since there is no potential for a catastrophic release of a HHC, those downstream aspects should be considered as being outside the limits or boundaries and should not be considered as part of the covered process.

OSHA proceeded to recommend a three-part analysis be performed. First, include all the interconnected vessels as well as separate nearby vessels that could be involved in a potential release of a highly hazardous chemical. Second, determine whether these vessels contain (at any particular time) a threshold quantity (TQ) of a highly hazardous chemical. Lastly, consider each aspect of the process to determine whether the particular aspects could either (a) cause a highly hazardous chemical release or (b) interfere with mitigating the consequences if there was a highly hazardous chemical release. As the memo went on to state:

If based on this analysis, it is determined that interconnected equipment downstream from the stipulated covered process cannot cause a HHC release or interfere with the mitigation of the consequences of a HHC release, and the equipment does not itself contain a TQ or greater amount of a HHC, then such equipment could safely be considered outside the limits or boundaries of the covered process.

The Akzo Nobel Memorandum explicitly recognizes the interconnection of the downstream production unit to the upstream covered process but accepts it “could safely be considered outside the limits or boundaries of the covered process.” No problem, right?

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3.2 Motiva and Kaster – Did the boundary just move?

Ten years after the Akzo Nobel memorandum, OSHA published the Motiva Interpretation in the Federal Register.3 Under Motiva, “the PSM standard presumes that all aspects of a physically connected process can be expected to participate in a catastrophic release.”4

A process engineer might disagree with OSHA’s presumption but would expect it could be rebutted by utilizing the recommended Akzo Nobel analysis. Turns out, that may not be thecase.

Two years later on May 21, 2009 OSHA published the Kaster Letter of Interpretation.5 With this letter of interpretation, OSHA stated that mere interconnectivity extended the boundaries of the covered process. A rebuttable presumption seemingly no longer exists. The Kaster letter states: “Because Process A and Process B are interconnected, Process B is a PSM covered process because together with Process A it meets the definition of a process in 29 CFR 1910.119(b).” That’s it. No discussion of an Akzo Nobel analysis. No discussion of a possibility that Process B might not be a PSM Standard covered process.

OSHA goes on to claim that the Kaster Letter is consistent with the Motiva Interpretation published in 2007 despite the apparent elimination of the rebuttable presumption. So is an interconnected, downstream process covered by the PSM Standard?

A careful analysis of the Kaster Letter as well as informal discussions with OSHA representatives indicate that OSHA believes one more question should be asked: Does the highly hazardous chemical exist downstream? If the answer is yes, then the downstream process would be considered one process together with the upstream process. Figure 2 below helps to illustrate OSHA’s position.

Figure 2. A hypothetical chemical plant with four production units

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From OSHA’s perspective, the decision to draw a process boundary congruent with the production unit boundary is an arbitrary one. In Figure 2, Unit A is interconnected with Unit B and together there is more than a threshold quantity of a highly hazardous chemical. Therefore, Unit A and Unit B constitute one PSM Standard covered process from OSHA’s point of view.

But this is not how the process engineer views a process. For the process engineer, Unit A is a process and Unit B is a separate process. Because Unit B is a different process and Unit B does not contain a threshold quantity of a highly hazardous chemical, the process engineer would be inclined to say Unit B is not covered by OSHA’s PSM Standard.

That’s not the only difference. While the process engineer and OSHA would agree that Unit A is covered, the process engineer might conclude (using an Akzo Nobel analysis) that not all of Unit A is covered by the PSM Standard. Figure 3 illustrates.

Figure 3. A hypothetical production unit

If the process engineer performed an Akzo Nobel analysis and determined that interconnected equipment downstream of the Reaction Section (i.e. the Separations Section, the Washing and Blending Section, and the Finished Product Section) could not cause a highly hazardous chemical release or interfere with the mitigation of the consequences of a highly hazardous chemical release, and that the equipment did not contain a threshold quantity of a highly hazardous chemical, then the process engineer might conclude “such equipment could safely be considered outside the limits or boundaries of the covered process.”

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However it is highly unlikely OSHA would agree with this approach. For OSHA, all sections within Unit A are interconnected, there is more than a threshold quantity of a highly hazardous chemical within Unit A, therefore all of Unit A is a PSM Standard covered process.

4. More misunderstood words.

Process engineers and OSHA are doing more than just talking past each other. When two sides talk past each other, each believes the other is challenging a particular point that is in fact not being challenged. Rather the two are talking at cross-purposes.

For process engineers, PSM is a safety philosophy and a process is a distinct production unit with the goal of producing a particular product. For OSHA, PSM is a legally enforceable standard and a process is where a highly hazardous chemical may be found, either by design or by accident. There are other differences as well.

4.1 Equipment in the Process and Process Equipment

With the exception of RAGAGEP, the phrases equipment in the process and process equipmentare the most likely to lead to misunderstandings. For the process engineer, process equipment is equipment that physically touches the process chemicals. It is pressure vessels, storage tanks, reactors, distillation columns, heat exchangers, filters, pumps, agitators, etc. Piping is that which connects process equipment. Piping in and of itself is not process equipment. And control systems are a different beast entirely. However, with the introduction of the PSM Standard, process engineers begrudgingly accepted piping and control systems as process equipment. Today, process equipment is what must be present for the process to occur.

For OSHA, this is too narrow a definition. Rather, process equipment is largely everything that falls within the physical footprint of the covered process, regardless of whether it normally comes into day-to-day contact with process chemicals. And the distinction is important because equipment in the process6 and process equipment7 appear numerous times in the PSM Standard.

On the one hand, OSHA’s broad interpretation of process equipment is to be expected. OSHA is bound by the text of the Standard so the broadest definition of process equipment provides it with the broadest reach to regulate. But on the other hand, control room vents and eyewash stations, while important, are not in the same class as reactors and distillation columns. Take away the control room vent and eye wash station and the process goes on. Take away the reactor or distillation column and the process comes to a halt.

4.2 PHA and Incident Investigation Recommendations and Resolution

OSHA’s PSM Standard requires that after completing a PHA, “[t]he employer shall establish a system to promptly address the team’s findings and recommendations; assure that the recommendations are resolved in a timely manner and that the resolution is documented . . . .”8

Following an incident investigation, “[a] report shall be prepared at the conclusion of the investigation which includes . . . any recommendations resulting from the investigation.”9 The

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employer shall also be required to “establish a system to promptly address and resolve the incident report findings and recommendations. Resolutions and corrective actions shall be documented.”10

To the process engineer, these recommendations are intended to be suggestions. It is something that could be done. In fact, if the hazard has a low likelihood or low consequence, nothing need be done at all. Indeed the recommendations are often preceded by the word consider. For example, “consider adding a detector [to address the hazard identified].” Management considers the suggestion, reviews the hazard, and then decides whether the recommendation should be implemented, altered or rejected.

OSHA views recommendations differently. In its view, the recommendation should be done. This is because the recommendation results from a recognized hazard. Existing safeguards were deemed deficient. A recommendation was made. For OSHA, a hazard has been identified and something should be done. Doing nothing is not acceptable. If the recommendation is not implemented, the employer must document what other actions are to be taken and complete those actions as soon as possible.11 The employer cannot decide to do nothing.

CalOSHA’s recent DRAFT 2.0 PSM Regulatory Text Process Safety Management for Refineries best reflects OSHA’s view:

The PHA report shall include: (i) the findings of the PHA team; (ii) the team’s recommendations; and (iii) an implementation schedule for all recommended actions.

The employer shall establish a system to promptly implement all recommended actions. Each recommended action not requiring a process shutdown shall be completed within two years after the completion of the PHA unless the employer can demonstrate in writing that it is not feasible to do so. Where a recommended action cannot be implemented within two years, the employer shall document the decision and rationale for the delay and implement the corrective action as soon as possible.12

So while both the process engineer and OSHA are using the term recommendation, the word has very different meanings to each. As with the other examples, the two sides are talking at cross-purposes.

5. So who is right?

So who is right, the process engineer or OSHA? What is the correct way to understand the words and phrases process, equipment in the process, process equipment, and recommendation?

Perhaps you are thinking this is where the attorney comes in. Here is where someone hires an attorney to get an unbiased opinion as to who is right, the process engineer or OSHA. Not so fast.

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Recall that attorneys generally have no opinion as to what could or should be done. Rather, PSM is what legally has to be done. And what legally has to be done is governed by legal canons of construction applied to the text of OSHA’s PSM Standard. But there is not only one legal canon of construction. There are several and both the employer and OSHA will have attorneys arguing to the court whose interpretation should prevail.

How is the possible? Examine Figure 4 and ask yourself, is it a white shirt or is it a blue shirt? For the attorney, the answer depends on who is paying the bill.

Figure 4. Do you see a white shirt or a blue shirt?

Attorneys do not interpret the law. The courts do. Attorneys advocate for an interpretation. Soif the one paying the bill is a white shirt manufacturer, then of course the shirt is a white shirt with blue stripes. But if the bill is being paid by a blue shirt manufacturer, then it is obviously a blue shirt with white stripes.

And this demonstrates how the attorney views PSM. If there is a reasonable legal argument to be made using accepted legal canons of construction and the facts can support the argument, then the attorney will make the argument on the client’s behalf. The attorney will advocate for the client’s point of view.

6. Then what is a PSM attorney good for?

If attorneys do not interpret the law but just make arguments, why spend the money on one?

Do you have a life insurance policy? If you do and you are reading this, then you have not needed it. Did you waste your money buying the policy? No. Because what you were really buying was peace of mind.

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Hiring an attorney may not answer who is right. But the attorney should let you know if you have a (legal) leg to stand on and thereby give you some peace of mind. The attorney will counsel you on your compliance efforts and let you know if your point of view is legally reasonable.

7. Okay, but you still have not answered who is right?

So who is right? At the outset, the answer is that OSHA is presumed correct. Unless the employer is willing to contest the citation in court, the fine must be paid, the hazard must be abated, and OSHA’s view prevails.

Yes the employer can contest the citation. But contesting a citation can be expensive. In fact just the pre-trial phase alone can easily exceed the fine proposed by OSHA. A single serious violation of the PSM Standard carries a penalty of $7000. That is enough to buy between 10 –20 hours of an attorney’s time. And two and half days is not enough time for an attorney to gather all the facts, much less do all that is required during the pre-trial phase.

So who is right, the process engineer or OSHA? What is the correct way to understand the words and phrases process, equipment in the process, process equipment, and recommendation? The answers depend. They depend on the judge, the skill of the attorneys, and on how much you are willing to spend in order to prevail. Otherwise, OSHA is right and its point of view prevails.

7. References

[1] In keeping with standard convention for recommended practices, OSHA would probably argue its determinations shall (not should) be done. Shall obligations are mandatory whereas should obligations are recommended but optional.

[2] February 28, 1997 Memorandum for Patricia Clark, Regional Administrator from John B. Miles, Jr.., Director, Directorate of Compliance Programs Assistance available athttp://1.usa.gov/1IYIG50.

[3] Interpretation of OSHA’s Standard for Process Safety Management of Highly Hazardous Chemicals, 72 Fed. Reg. 31453 (June 7, 2007) available at http://1.usa.gov/13v58T5.

[4] Id. (emphasis added).

[5] May 21, 2009 Letter of Interpretation issued to Mr. Mark R. Kaster, Dorsey & Whitney LLP available at http://1.usa.gov/1zohnNl.

[6] The phrase equipment in the process appears three times: 29 C.F.R. §§1910.119(d), (d)(3), (d)(3)(i).

[7] The phrase process equipment appears seven times: 29 C.F.R. §§1910.119(f)(4), (j)(1), (j)(2), (j)(3), (j)(4)(i, iii, iv).

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[8] 29 C.F.R. 1910.119(e)(5).

[9] 29 C.F.R. 1910.119(m)(4).

[10] 29 C.F.R. 1910.119(m)(5).

[11] 29 C.F.R. 1910.119(e)(5).

[12] State of California Department of Industrial Relations – Division of Occupational Safety and Health, DRAFT 2.0 PSM Regulatory Text Process Safety Management for Refineries Proposed General Industrial Safety Order 5189.1 October 31, 2014 (emphasis added).

The author would like to thank Bill Bower, Andrea Cheek, Alec Dobson, and Lincoln Essig for their time and efforts at reviewing this paper and for their suggestions at making it a better paper overall. The author assumes all responsibility for any lack of clarity that remains.