Texas Chemical Council Environmental, Health & Safety Seminar Moody Gardens Convention Center Galveston, Texas

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1 Texas Chemical Council Environmental, Health & Safety Seminar Moody Gardens Convention Center Galveston, Texas TIPS FOR PREPARING FOR YOUR OSHA PSM INSPECTION June 5, 2013 Mark S. Dreux, Esq. Arent Fox LLP 1717 K Street, N.W. Washington, D.C (o) (c) mark.dreux@arentfox.com Mark S. Dreux

2 OVERVIEW CONGRESSIONAL HEARINGS CRITICIZING OSHA OSHA S RESPONSE TO CRITICISM TWO NEP S WEST FERTILIZER REFINING NEP ENFORCEMENT STATISTICS CHEMICAL NEP Overview Chemical NEP Enforcement Statistics LESSONS LEARNED FROM PSM CITATION PATTERNS INDUSTRY STANDARDS CITED MOST FREQUENTLY OSHA INTERPRETATION LETTER ON THRESHOLD QUANTITIES RECOMMENDATIONS 2

3 CONGRESSIONAL HEARINGS ON BP DISASTER MARCH 22, 2007 Chairman Miller Is OSHA doing its job? OSHA has failed to protect workers BP is the story of the failure of OSHA OSHA s penalty structure is ineffective Congressman Holt OSHA is the lap dog of the industry 3

4 KEY WITNESS AT THE CONGRESSIONAL HEARINGS Carolyn Meritt Chairperson of CSB OSHA s regulatory oversight was ineffective Rigorous enforcement of PSM would have prevented this incident OSHA has few trained inspectors. All witnesses agreed Chemical Industry and Refining Industry have similar safety issues. 4

5 OSHA S RESPONSE TO THE CRITICISM Two National Emphasis Programs Released in June 2007 Refining NEP Released in July 2009 Pilot Chemical NEP Released in November 2011 Chemical NEP Interpretation letters pulled from OSHA s website New interpretation letters and aggressive enforcement to expand PSM coverage More PSM trained compliance officers 5

6 CRITICISM SURROUNDING THE WEST FERTILIZER Numerous New Articles OSHA does not have the resources. OSHA and state plans have 2,000 inspectors for 8 million workplaces or once every 131 years. OSHA s penalties are too low. Congressional hearings Potential legislation Increased enforcement by OSHA 6

7 REFINING NEP ENFORCEMENT STATISTICS Based on the 65 NEP citations: Total Citations 1,542 PSM 1088 (70%) Non-PSM 454 (30%) Total Fines $9,401,

8 REFINING NEP CHARACTERIZATION OF THE CITATIONS Serious % OTS 77 5% Willful/Unclassified 92 Repeat 38 8% Total 1, % 8

9 REFINING NEP ENFORCEMENT STATISTICS Most Citations Fewest Citations 93 (88 PSM) 1 (0 PSM) Highest Penalty $3,042,000 Lowest Penalty $1,125 Average 24 citations $144,638 penalty 9

10 REFINING NEP PSM ENFORCEMENT STATISTICS (65 NEP Citations Issued as of 3/14/11) Mechanical Integrity 202 Process Safety Information 189 Process Hazard Analysis 188 Operating Procedures 184 Management of Change 92 Incident Investigation 71 Compliance Audits 47 Contractors 33 Training % 10

11 REFINING NEP PSM ENFORCEMENT STATISTICS (65 NEP Citations Issued as of 3/14/11) (cont d) Emergency Planning and Response 17 Employee Participation 15 Pre-Startup Safety Review 13 Hot Work Permits 8 Trade Secrets 0 Total PSM Citations

12 REFINING NEP ENFORCEMENT STATISTICS MECHANICAL INTEGRITY J(1) Process equipment 0 J(2) Written procedures 37 J(3) Training 3 J(4) Inspection and testing 0 J(4)(i) Inspection and testing 29 J(4)(ii) Engineering practices 22 J(4)(iii) Frequency J(4)(iv) Documentation 14 J(5) Equipment deficiencies 61 J(6)(i) Quality assurance 0 J(6)(ii) Inspections 9 J(6)(iii) Materials and spare parts 4 TOTAL

13 REFINING NEP ENFORCEMENT STATISTICS J-2 Mechanical Integrity Program No Procedures for: Pressure vessels with integrally bonded liners Corrosion under insulation inspections for pressure vessels and piping Addressing anomalous readings pertaining to metal thickness Determining thickness measurement frequency for pressure vessels Determining the representative number of thickness measurements 13

14 REFINING NEP ENFORCEMENT STATISTICS J-4 Testing and Inspections Failure to follow own scheduled T/I Visual inspections Ultra sound Internal corrosion TML s Vibration analysis Failure to follow RAGAGEP Testing of wrong locations Testing of wrong frequency Insufficient number of tests Failure to document the T/I results 14

15 REFINING NEP ENFORCEMENT STATISTICS 119(J)(5) Equipment Deficiencies TML s below recommended thickness H 2 S, HF & LEL detectors not working Temperature gauge broken Chains for operating valves missing Relieve valve set at 270 PSI when MAWP was 150 PSI 15

16 REFINING NEP ENFORCEMENT STATISTICS PROCESS SAFETY INFORMATION (PSI) D Schedule/Prioritization 2 D(1) Information re: Hazards 0 D(2) Technological Information 17 D(3) Equipment Information 170 Total

17 REFINING NEP ENFORCEMENT STATISTICS PROCESS SAFETY INFORMATION (PSI) D(3)(i) Information on Equipment 5 D(3)(i)(A) Materials of Construction 5 D(3)(i)(B) P&ID s 38 D(3)(i)(C) Electrical Classification 7 D(3)(i)(D) Relief System Design and Design Basis 27 D(3)(i)(E) Ventilation System Design 2 D(3)(i)(F) Design Codes and Standards 9 D(3)(i)(H) Safety Systems 1 D(3)(ii) D(3)(iii) Document Equipment complies with RAGAGEP Equipment Designed on a Code no Longer in General Use Total

18 REFINING NEP ENFORCEMENT STATISTICS P&ID s Inaccurate info on P&ID s Vessel or pump out of service Wrong pressure or temperature Lines mislabeled Omissions from P&ID s Temperature indicator Sight glass By-pass line New equipment New lines 18

19 REFINING NEP ENFORCEMENT STATISTICS 119(d)(3)(i)(D) Relief System Design and Design Basis Blowdowns/Atmospheric Discharge Lack of technical data to show safe release to atmosphere Relief Systems Adequacy following changes especially changes in thru-put Design basis lack of technical support 19

20 REFINING NEP ENFORCEMENT STATISTICS 119(d)(3)(ii) Equipment with RAGAGEP Facility Siting NFPA 496 and API 752 Electrical classifications API 500 Trailers API 753 Relief Valves and Design ASME & API 520 Adequacy and sizing of valves No PSV s Intervening valves 20

21 REFINING NEP ENFORCEMENT STATISTICS PROCESS HAZARD ANALYSIS E(1) Appropriate PHA/Prioritization 12 E(2) Methodologies 0 E(3) PHA addresses 0 E(3)(i) Hazards 15 E(3)(ii) Incidents 10 E(3)(iii) E and A Controls 15 E(3)(iv) Failure of Controls 11 E(3)(v) Facility siting 31 E(3)(vi) Human factors 23 E(3)(vii) Qualitative evaluation 2 E(4) Team of Experts 0 E(5) Findings/recommendations 53 E(6) Revalidation 15 E(7) Revalidation records 1 TOTAL

22 REFINING NEP ENFORCEMENT STATISTICS 119(e) PHA s PHA Failure to consider all scenarios Loss of utilities or control rooms Fires and releases of HHC s Failure to consider near misses Propane leaks Oil Spills Fires Failure to adequately consider Facility Siting Human factors 22

23 REFINING NEP ENFORCEMENT STATISTICS Failure to address findings Ranged 2-15 years Complexity gravity time (citation factors) Failure to document corrective measures 23

24 REFINING NEP ENFORCEMENT STATISTICS OPERATING PROCEDURES F(1) Written procedures 18 F(1)(i) Operating phases 65 F(1)(ii) Operating limits 26 F(1)(iii) Safety and health 12 F(1)(iv) Safety systems 9 F(2) Access 3 F(3) Certification 23 F(4) Safe work practices 28 TOTAL

25 REFINING NEP ENFORCEMENT STATISTICS SOP s Lack operating limits or consequences of deviation Missing essential step in procedure Referring to outdated equipment, step or specific manager Error with locks or carseals on valves for startup 25

26 REFINING NEP ENFORCEMENT STATISTICS Safe Work Practices Procedures/practices for controlling motorized vehicles in process areas OSHA relies electrical classification drawings to show a hazard 26

27 REFINING NEP ENFORCEMENT STATISTICS MANAGEMENT OF CHANGE L(1) Written procedures 40 L(2) Considerations 2 L(2)(i) Technical basis 3 L(2)(ii) Impact of change 9 L(2)(iii) Operating procedures 1 L(2)(iv) Time Period 3 L(2)(v) Authorization requirements 2 L(3) Employee training 4 L(4) Update PSI 22 L(5) Revise operating procedures 6 TOTAL

28 REFINING NEP ENFORCEMENT STATISTICS MOC s Failure to do MOC s (adequacy) Throughput increases Changing startup pressures Rerating boilers Removing column, quench water Failure to do related updates PSI Procedures Training 28

29 Summary of OSHA s Chemical NEP Pilot Program has ended. National Program started in November Applies to chemical plants subject to PSM. Applies nationwide to all OSHA regions and state plans. State plans must implement the chemical NEP within 6 months or develop one that is at least as effective. 29

30 Chemical NEP Programmed and Unprogrammed Inspections Programmed inspections under this NEP shall be randomly selected sites from the Region s revised lists 3-5 programmed inspections per Area Office per year (52 Area Offices) Unprogrammed inspections: other triggers for a Chemical NEP inspection: Accident Catastrophe Complaint Referral Site-specific targeting plan 30

31 Chemical NEP Dynamic Lists CSHO s should verify the implementation of PSM elements to ensure that the employer s actual program is consistent with their written program. Three OSHA inspection protocols called Dynamic Lists : PSM General Ammonia Refrigeration Chemical Processing These lists will be periodically updated and are not available for public review 31

32 Chemical NEP Prior PSM Citations: Abatement Requirement During the course of the inspection, the CSHO shall review abatement for all PSM citations issued within the previous 6 years to determine whether the hazard still exists. If a hazard exists, the CSHO shall determine whether there has been a failure to abate in accordance with CPL FOM, and issue a notice for failure to abate as appropriate. FTA penalties can be up to $7,000 per day per violation. 32

33 Chemical NEP Staffing and Duration of Inspection Usually 1-2 compliance officers Inspectors must take specialized PSM training classes 134 man hours for Chemical NEP inspection (includes preparation, opening, site work and drafting citations and reports) 25 man hours for average OSHA inspection 1000 man hours for Refining NEP inspection 33

34 Current Inspection Data for Chemical NEP CHEM NEP data from May 1, 2009 to Nov. 9, 2012 Total Inspections Unprogrammed Programmed CHEM NEP Violations (Federal only)...2,339 34

35 OSHA New Citation Data Tabulation System New citation data system still being implemented Current Statistical Breakdown for Top Five PSM Violations for Chem NEP. 1. (j) Mechanical Integrity 2. (d) Process Safety Information 3. (f) Operating Procedures 4. (e) Process Hazard Analysis 5. (l) Management of Change Same top five PSM citations as in Refining NEP. 35

36 CHEMICAL NEP ENFORCEMENT STATISTICS (Based on Sample of 98 Citations) Based on the 98 NEP citations sampled: Total Citations 1031 PSM 678 (65%) Non-PSM 353 (35%) Total Fines $4,147,

37 CHEMICAL NEP CHARACTERIZATION OF THE CITATIONS Serious % OTS % Willful/Unclassified 7 Repeat 15 2% Total % 37

38 CHEMICAL NEP ENFORCEMENT STATISTICS Approximately 20 Facilities with No Citations (No PSM Process) Most Citations Fewest Citations 49 (25 PSM) 1 ( 0 PSM) Highest Penalty $441,000 Lowest Penalty $ 0 Average 11 citations $42,300 penalty 38

39 CHEMICAL NEP PSM ENFORCEMENT STATISTICS (98 NEP Citations Sampled) Mechanical Integrity 156 Process Safety Information 140 Operating Procedures 114 Process Hazard Analysis 106 Management of Change 44 Compliance Audits 35 Training 21 Incident Investigation 19 Employee Participation % 39

40 CHEMICAL NEP PSM ENFORCEMENT STATISTICS (98 NEP Citations Sampled) Contractors 14 Emergency Planning and Response 7 Pre-Startup Safety Review 5 Hot Work Permits 1 Trade Secrets 0 Total PSM Citations

41 CHEMICAL NEP ENFORCEMENT STATISTICS MECHANICAL INTEGRITY J(1) Process equipment 0 J(2) Written procedures 41 J(3) Training 5 J(4) Inspection and testing 0 J(4)(i) Inspection and testing 28 J(4)(ii) Engineering practices 11 J(4)(iii) Frequency J(4)(iv) Documentation 10 J(5) Equipment deficiencies 28 J(6)(i) Quality assurance 2 J(6)(ii) Inspections 6 J(6)(iii) Materials and spare parts 4 TOTAL

42 CHEMICAL NEP ENFORCEMENT STATISTICS J-2 Mechanical Integrity Program Summary No procedures for mechanical integrity Procedures Inadequate Inconsistent with RAGAGEP Critical Step Wrong Critical Omissions Written procedures contained no reference to applicable RAGAGEP No procedures in place for piping or valves showing signs of degradation or rust The employer s critical equipment list did not include certain storage tanks and air compressors Procedures did not specify the necessary torque for flange bolts 42

43 CHEMICAL NEP ENFORCEMENT STATISTICS J-4 Testing and Inspections Summary No Inspection Schedule Did Not Follow Own Inspection Schedule Schedule Inconsistent with RAGAGEP Examples Inspections were not done on storage tanks for anhydrous ammonia, liquid chlorine, and sulfur dioxide Inspections were not done on pre-existing TML locations Employer did not conduct inspections per IIAR Bulletin 110 or its equivalent Pressure relief valves had not been inspected every 5 years to comply with ASHRAE-15 Inspection and NDE were not done on process equipment per RAGAGEP such as API 570, API RP 575, and ASME/ANSI B

44 CHEMICAL NEP ENFORCEMENT STATISTICS 119(J)(5) Equipment Deficiencies Visual concerns detected during walkaround Poor condition of paint/external coating was not addressed Rusted, pitted, and corroded piping were in use Valves were missing handles and could not be operated Calculated data TML s below recommended thickness Emergency exhaust and relief discharge piping were undersized 44

45 CHEMICAL NEP ENFORCEMENT STATISTICS PROCESS SAFETY INFORMATION (PSI) D Schedule/Prioritization 4 D(1) Information re: Hazards 0 D(2) Technological Information 21 D(3) Equipment Information 115 Total

46 CHEMICAL NEP ENFORCEMENT STATISTICS PROCESS SAFETY INFORMATION (PSI) D(3)(i) Information on Equipment 7 D(3)(i)(A) Materials of Construction 2 D(3)(i)(B) P&ID s 26 D(3)(i)(C) Electrical Classification 5 D(3)(i)(D) Relief System Design and Design Basis 11 D(3)(i)(E) Ventilation System Design 6 D(3)(i)(F) Design Codes and Standards 7 D(3)(i)(G) Material and Energy Balance 1 D(3)(i)(H) Safety Systems 3 D(3)(ii) D(3)(iii) Document Equipment complies with RAGAGEP Equipment Designed on a Code no Longer in General Use Total

47 CHEMICAL NEP ENFORCEMENT STATISTICS P&ID s Current P&IDs were not available Errors Two valve tags were reversed Pressure indicators were missing in the field Pipe sizes were labeled improperly Valves were in the wrong place Omissions P&ID did not include information required by RAGAGEP, ANSI/ISA S5.1 Code Valves or equipment missing 47

48 CHEMICAL NEP ENFORCEMENT STATISTICS 119(d)(3)(i)(D) Relief System Design and Design Basis No worst case scenario had been developed No information for the relief system was available No documentation for design basis for the relief system for tanks and vessels 48

49 CHEMICAL NEP ENFORCEMENT STATISTICS 119(d)(3)(ii) Equipment with RAGAGEP No documentation of compliance with the HFIPI Guideline for the Bulk Storage of Anhydrous Hydrogen Fluoride No documentation of compliance with IIAR Bulletin 110 where relief valves could relieve to an unsafe location No documentation that relief valves complied with IIAR Bulletin 114 No documentation of compliance with RAGAGEP where a vessel s U-1 had not been maintained Failure to document compliance with API 520 for relief systems Technical Engineering Issues and Non-Compliance Co-location of equipment using combustion air and equipment containing refrigerant did not comply with ANSI/ASHRAE 15 Location of discharge for pressure relief devices did not comply with ANSI/IIAR Relief systems not located properly Pipes and valves not labeled properly 49

50 CHEMICAL NEP ENFORCEMENT STATISTICS PROCESS HAZARD ANALYSIS E(1) Appropriate PHA/Prioritization 10 E(2) Methodologies 1 E(3) PHA addresses 1 E(3)(i) Hazards 17 E(3)(ii) Incidents 4 E(3)(iii) E and A Controls 9 E(3)(iv) Failure of Controls 6 E(3)(v) Facility siting 11 E(3)(vi) Human factors 9 E(3)(vii) Qualitative evaluation 0 E(4) Team of Experts 1 E(5) Findings/recommendations 26 E(6) Revalidation 10 E(7) Revalidation records 1 TOTAL

51 CHEMICAL NEP ENFORCEMENT STATISTICS 119(e) PHA s Failure to conduct an initial PHA on a covered process Failure to consider all scenarios Loss of power Hazards associated with combustible dust Outdoor environmental factors affecting the safe operation of process equipment Failure of pressure relief devices Specific incident that occurred at the plant (either before the PHA was done or after) Failure to adequately consider Facility Siting Human Factors 51

52 CHEMICAL NEP ENFORCEMENT STATISTICS 119(e) PHA s (cont d) Failure to address findings Employer could not verify that recommendations from a 1998 PHA were resolved Failure to establish a system to address recommendations Failure to document the reasons an alternative resolution was adopted rather than that recommended by the PHA team Failure to communicate resolutions of PHA recommendations to affected employees Complexity gravity time (citation factors) Failure to re-do or revalidate a PHA within 5 years 52

53 CHEMICAL NEP ENFORCEMENT STATISTICS OPERATING PROCEDURES F(1) Written procedures 21 F(1)(i) Operating phases 38 F(1)(ii) Operating limits 10 F(1)(iii) Safety and health 14 F(1)(iv) Safety systems 6 F(2) Access 2 F(3) Certification 17 F(4) Safe work practices 6 TOTAL

54 CHEMICAL NEP ENFORCEMENT STATISTICS SOP s Operating procedures were not being implemented by employees Factual errors Listing out of service equipment Omitting steps Regulatory errors Steps were unclear Procedures did not address which employees were authorized to perform the various steps Procedures had not been developed for each phase of operating the process 54

55 CHEMICAL NEP ENFORCEMENT STATISTICS Annual Certification of Operating Procedures Certification was not done Certification was not valid because procedures were not accurate 55

56 CHEMICAL NEP ENFORCEMENT STATISTICS Management of Change (44 Citations) Failure to do MOC Throughput changes Change in PPE for employees opening a vessel Change in TML location MOC was not completed before the equipment change occurred Failure to evaluate Impact of the change on safety and health Failure to do related updates PSI Procedures Training 56

57 LESSONS LEARNED FROM PSM CITATION PATTERNS OSHA s aggressive interpretations of PSM standard OSHA s selective interpretations of RAGAGEP OSHA demands documentation for PHA, audit and incident investigation findings. Citation patterns show OSHA s PSM priorities 57

58 OSHA S AGGRESSIVE INTERPRETATIONS Piping and Instrumentation drawings Applying steam constitutes a change Covering mixtures of less than 10,000 lbs of flammables under the PSM standard. Facility siting: Determining that 1 in 100 million years risk basis for a willful citation. Required to keep PHA documentation from 1994 and

59 OSHA s Use of RAGAGEP Most Frequently Referenced RAGAGEPs API 752 API 570 API 510 Management of Hazards Associated with Location of Process Plant Permanent Buildings Piping Inspection Code: In-Service Inspection, Rating, Repair, and Alteration of Piping Pressure Vessel Inspection Code: In-Service Inspection, Rating, Repair, and Alteration API 521 Pressure-Relieving and Depressuring Systems 59

60 OSHA s Use of RAGAGEP API 574 Inspection Practices for Piping System Components API 520 API 753 Sizing, Selection, and Installation of Pressure-relieving Devices in Refineries Management of Hazards Associated with Location of Process Plant Portable Buildings ANSI/ISA S Functional Safety: Safety Instrumented Systems for the Process Industry Sector ASME/ANSI B31.1 and B31.3 (piping) 60

61 CHEMICAL NEP MOST FREQUENTLY CITED NON-PSM CITATIONS Electrical Safety Respirators Lockout/Tagout Subpart D - Walking/Working Surfaces Machine Guarding 61

62 CHEMICAL NEP MOST FREQUENTLY CITED NON-PSM CITATIONS Electrical Working space around equipment was not kept clear Covers for electrical installations were not secured/all unused openings were not effectively closed Improper grounding Flexible cords and cables were used as a substitute for fixed wiring Unclassified electrical equipment was used in a classified area Defective electrical equipment was not removed from service Proper electrical protective equipment was not provided where necessary (FR clothing, face shields, NFPA 70E considerations for arc flash) 62

63 CHEMICAL NEP MOST FREQUENTLY CITED NON-PSM CITATIONS Respirators Employer failed to determine a reasonable estimate of employee exposure to respiratory hazards Written respiratory protection program was not in place when respirators were necessary Medical evaluations were not provided before employees were fit-tested or required to use respirators Fit-testing was not provided prior to initial use of the respirator Employees did not receive training before being allowed to use tight-fitting respirators Respirators were not cleaned and disinfected as often as necessary to be maintained in a sanitary condition 63

64 CHEMICAL NEP MOST FREQUENTLY CITED NON-PSM CITATIONS Lockout/Tagout Failure to develop, document, and utilize written lockout procedures for specifically identified equipment Lockout/tagout devices did not meet the requirements of (c)(5) identify employee, tagouts must be nonreusable, etc. Periodic inspections of the lockout/tagout procedures were not completed Lockout/tagout training was deficient where each employee had his own way of locking out Lockout/tagout procedures were not implemented as required employees failed to follow the procedures In group lockout scenarios, each employee failed to affix his own lockout device 64

65 CHEMICAL NEP MOST FREQUENTLY CITED NON-PSM CITATIONS Subpart D Walking/Working Surfaces Ladderways and platforms were not adequately guarded Wall openings over 4 feet from the level below were not adequately guarded Open-sided floors and platforms over 4 feet from the level below were not adequately guarded 65

66 CHEMICAL NEP MOST FREQUENTLY CITED NON-PSM CITATIONS Machine Guarding Inadequate guarding for: Drill presses Fans Augers Saws Conveyors Grinders Lathes Shafts and shaft ends Milling machines Chains and belts 66

67 Regulatory Update: May 21, 2009 Kaster Letter PSM - Calculating TQ s Question: Is the total mass of a mixture consisting of a fine, non-soluble, non-combustible solid combined with a flammable liquid considered when determining if a threshold quantity (TQ) is present in a process? Rationale: If the mixture as a whole meets the 29 CFR (c)(iii) definition of a flammable liquid, then the total amount of flammable liquid is 10,000 pounds, even if some components(s) of the mixture alone would not meet the required flash point. Answer: Because the mixture in question meets the definition of a liquid and has a flashpoint of less than 100 F, it is a flammable liquid. A process containing 10,000 pounds or more of the mixture would be covered under the PSM standard. 67

68 RECOMMENDATIONS First Recommendation Use of the Citation Data Auditing Preparing for inspections Settlements and potential repeat citations Due diligence 68

69 RECOMMENDATIONS Second Recommendation Review prior citations for PSM violations Go to osha.gov Check OSHA s records on citations for PSM violations Gather documents to show abated Audit to ensure not recurring Third Recommendation Do the Unit selection analysis for the most hazardous process 69

70 RECOMMENDATIONS (cont d) Fourth Recommendation Conduct an Audit of Selected Unit 70

71 RECOMMENDATIONS (cont d) Traditional Safety Focus include in Unit audit Electrical LOTO PPE Guarding Respirators Walking/Working Surfaces Consider whether you want to do audit under privilege. See case where we successfully defended a claim of attorney privilege for a gap analysis under Refining NEP. 71

72 RECOMMENDATIONS (cont d) Fifth recommendation: Train a team to manage the inspection Sixth recommendation: Interview disgruntled employees 72

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