Forget About the Feds, States are Moving on Expanded PSM/RMP Rulemaking - California Dreamin’ or a Glimpse into the Future?

2018 4C HSE Conference, San Antonio, TX

April 3, 2018

• Tale of the Tape • California Refinery PSM/ARP Legislation History • Other States • California Refinery PSM/ARP Regulation v. Federal - Scope - Employee Representative - Major Change - Management of Organizational Change - Human Factors - Process Safety Culture Assessment • What Actions Companies Should Take • Closing and Q&A

Today’s Agenda

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Tale of the Tape – Universe of RMP Facilities

Approximately 12,500 RMP Facilities

EPA RMP Amendments Regulatory Impact Analysis, 12/16/16

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Tale of the Tape – RMP 10 Year Accident History

EPA RMP Amendments Regulatory Impact Analysis, 12/16/16

April 3, 2018 5

Tale of the Tape – RMP Accidents by Industry Sector

EPA RMP Amendments Regulatory Impact Analysis, 12/16/16

Total in U.S. • 1,328 RMPs have an accident history • 24 RMPs have had fatal accidents • $1.3 Billion in Property Damage • 127,039 people have been evacuated • 16,598 Injuries or Sought Medical Attention

• California Top Ten - #1 with 15,098 RMP related injuries - #1 with 75,526 RMP related evacuations - #3 with 75 RMP 5-year accident history

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Tale of the Tape - California

The data were obtained from the U.S. EPA's Risk Management System database

State Approved OSHA Plans Alaska Maryland Puerto Rico

Arizona Michigan South Carolina

California Minnesota Tennessee

Connecticut Nevada Utah

Hawaii New Jersey Vermont

Illinois New Mexico Virgin Islands

Indiana New York Virginia

Iowa North Carolina Washington

Kentucky Oregon Wyoming

Maine

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Tale of the Tape – State OSHA Plans

2016 Presidential Election

• Section 18 of the OSHA Act – states may administer their own State Plans , if they meet minimum federal requirements

• Currently 22 states and jurisdictions administer State Plans

• Majority of state plans adopt Federal OSHA regulations and standards verbatim

• States Plans that differ significantly from Federal OSHA

- California

- Michigan

- Oregon

- Washington

• January, 2018 – Washington Department of Labor and Industries’ Division of Occupational Safety and Health releases draft safety rule increasing existing PSM requirements for refineries

• Washington draft rule “mirrors” new California regulations

Other States

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• Aug. 2012: Fire at Chevron’s Richmond Refinery

• Fall 2012: Interagency Working Group, with CalEPA and CalOSHA to improve public and worker safety through enhanced oversight of refineries

• Feb. 2014: Interagency Working Group report on four key areas:

- Oversight and coordination

- Emergency Response and Preparedness

- Safety and Prevention of Hazardous Events

- Improved communication and interaction with the public and surrounding environment

• July 2016: Proposed Refinery PSM Standard

• May 2017: Refinery PSM Standard approved by CA Occupational Safety and Health Standards Board

• Oct. 2017: Refinery PSM Standard for refineries goes into effect

- CalARP simultaneously issues complimentary RMP regulation for refineries

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California Refinery PSM/ARP Regulatory History

California

• Petroleum refinery activities involving a highly hazardous material

• Utilities and process equipment included if they could potentially contribute to a major incident

• Process Equipment is broadly defined

• Process includes interconnected vessels and vessels that could affect another vessel

• Excludes office buildings, labs, warehouses, maintenance shops and change rooms

Federal

• Specific chemicals and threshold quantities

• Category 1 flammable gases > 10,000 lb.

• Flammable liquids with a flashpoint < 100 F and > 10,000 lb.

• Exceptions (e.g. atmospheric tanks)

California PSM Regulation – Scope

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California

• Union facility – union representative

• Non-union facility – employee designated representative

• Term is to be construed broadly

• May include local union or international union

• May include a designated contract employee

Federal

• Not defined

• Consult with employees and their representative on development of PSM

• Consult with employees and their representative on the conduct and development of PHA’s

• Provide employees and their representative access to PHA’s and all other information

California PSM Regulation – Employee Representative

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California

• Introduction of a new process

• Introduction of new process equipment

• Introduction of new highly hazardous material

• Any operational change outside of established safe operating limits

• Any alteration that introduces a new process safety hazard or worsens an existing process safety hazard

• Must complete a Damage Mechanism Review (DMR) and Hierarchy of Controls Analysis (HCA)

• Must include a written analysis of Human Factors

Federal

• No distinction between a Major Change and Change

• Inform and train employees, update procedures and PSI, conduct PSSR

California PSM Regulation – Major Change

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California

• For all PHA recommendations with a potential for a Major incident

• For all Incident Investigation recommendations from a Major Incident

• As part of a Major Change review

• During the design and review of new processes

• HCA team must develop written recommendations in priority order: - Eliminate hazards using first order inherent safety measures; - Reduce any remaining hazards using second order inherent safety measures; - Effectively reduce remaining risks using passive safeguards; - Effectively reduce remaining risks using active safeguards; and, - Effectively reduce remaining risks using procedural safeguards.

Federal

• No requirement for HCA

• Proposed in RMP Amendments in PHA’s for Chemical/Refineries/Paper

California PSM Regulation – Hierarchy of Controls Analysis

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California

• Employer may reject a team recommendation if:

- It contains material factual error

- The recommendation is not relevant to process safety,

- The recommendation is infeasible (not based solely on cost)

• Employer may change a team recommendation if that an alternative measure would provide an equivalent or higher order of inherent safety

• Employer may change a team recommendation for a safeguard if an alternative safeguard provides an equally or more effective level of protection

Federal

• Promptly address and resolve the incident report findings and recommendations

• Document resolutions and corrective actions

California PSM Regulation – Implementation

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California

• Conduct MOOC prior to

- Reducing staffing levels

-Reducing classification levels of employees

- Changing shift duration

-Increasing employee responsibilities at or above 15%.

• Provide for employee participation

• Applies to contractors in permanent positions

Federal

• MOC is required for equipment, technology, procedures, materials and processing conditions if not replaced in kind, but not for organizational changes

California PSM Regulation – Management of Organizational Change

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California

• Analysis of Human Factors in

- Major Changes

- Incident Investigations

- PHA’s

- MOOC’s

• Standalone analysis of operating and maintenance procedures every 5 years

Federal

• PHA’s shall address Human Factors

California PSM Regulation – Human Factors

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California

• PSCA required every 5 years

• Shall include an individual with expertise in assessing process safety culture in petroleum refining

• Provide for employee representative

• Evaluate the effectiveness of:

- Hazard reporting program

- The employer’s response to reports of hazards

- Incentive program

- Emergency procedures

Federal

• General duty to provide a place of employment free from recognized

• OSHA’s new anti-retaliation rule

California PSM Regulation – Process Safety Culture Assessment

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• Assess existing PSM/RMP programs against new requirements • Optimize programs to be in the best compliance position • Understand new requirements and possible interpretations to

defend potential citations • Consider implementing new requirements to improve process and

potentially grandfather in existing programs • Consider required skill sets (e.g. human factors, damage mechanism

reviews) in hiring and succession planning

What Actions Should Companies Take?

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• New California PSM/ARP regulations contain vague language and present challenges in implementation and compliance

• Washington State DOSH has issued draft regulations that mirror California

• Other states may follow • New rules can affect agency interpretation of existing PSM/RMP

rules • Companies should review and optimize their existing programs to be

in compliance and defend against citations • Questions ?

In Closing

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Contact dgrucza@hunton.com

Atlanta 404 888 4001 direct

Counsel Education JD, Faulkner University, 2002, cum laude MS, Industrial Engineering, Auburn University, 1994 BS, Chemical Engineering, Auburn University, 1982 Bar Admissions Alabama Georgia

Selected Relevant Experience • Advised energy company on scene of employee and contractor fatalities and subsequent

agency investigations, enforcement and private actions. • Managed release of toxic gas from plastics plant, including crisis management, interface

with regulators, and corrective actions. • Lead Counsel in response to refinery fire resulting in significant media attention and agency

response. • Advised large mining company during significant slurry spill into navigable waters, including

reporting, citations, abatement actions and successful resolution of dispute with insurance company. Handled multiple other spills and releases at manufacturing operations.

Dan Grucza

Dan’s clients turn to him for advice on matters related to process safety management (PSM), occupational safety and environmental issues in chemical and industrial manufacturing and mining. As a chemical engineer, and former chemical plant Environmental, Health & Safety (EHS) manager and in-house counsel, he provides a unique perspective to strategic operational efficiencies and corporate compliance. Dan brings unique and deep experience in the complex chemical manufacturing, foundry, mining and coking industries. He was Senior Counsel and Vice President of a major energy company and provided legal support for mines, gas operations, foundries, manufacturing facilities and distribution centers in the United States, Canada, and Wales. Dan also served as Corporate Compliance Officer, responsible for compliance programs, conducting training, due diligence, and hotline complaint responses. Dan has a strong chemical and technical background that complements his legal training and experience. He was an EHS Manager for over 10 years for one of the world’s largest companies, where he had responsibility for EHS compliance, Process Safety Management, Risk Management, Security, Wastewater Treatment Operations, auditing, and training.

Presentation at 4C SHE Conference San Antonio, TX