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‘Search [Ato ZIndex [En Espafol [Contact Us FAQS ‘About OSHA OSHA Newsletter RSS Feeds Menu Occupational Safety & Health Administration We Can Help (@ StondardIntrretations - Tate of Contents ‘* Standard Number: 1910.119(@)2K0) (OSHA requirements are set by statute, standards and regulations. Our interpretation eters explain these requirements and how they apply to particular Ccrcumstances, but they cannot create adtional employer obligations. Ths eter constitutes OSHA's interpretation of the requirements cscussed, Note that our enforcement guidance may be aflected by changes to OSHA rules, Also, fram me to time we update our guidance in response to new information. To keep apprised of such developments, you can consult OSHA's website at hto:// sudy 2, 2035 [MEMORANDUM FOR: REGIONAL ADMINISTRATORS SSTATE PLAN DESIGNEES THROUGH: DOROTHY DOUGHERTY Deputy Assistant Secretary FROM: THOMAS GALASSI, Director Directorate of Enforcement Programs SUBIECT: Process Safety Management of Highy Hazardous Chemicals and Applicaton ofthe Retail Exemption (29 CFR 1910.119(@)2x0)) “This memorandum revises the Occupational Safety and Health Administrations (OSHA) interpretation ofthe exemption of retail faites from coverage ofthe Process Safety Management of Highly Hazardous Chemicals (PSM) standard (29 CFR 1910.118). The revision isin accordance with the Presiéent's August, 2013, Executive Order 13650, Improving Chemical Faclty Safety and Security.) The PSM standard contains an exemption from coverage for retal flies at 29 CFR 1910,119(2)(2)(), Altough the term “etal facity” i nat defined, the preamble to the final PSM standard explains that chemicals in retalfaclites are generaly sol in small packages, containers, ad allotments (57 FR 6356, 6369 February 24, 1982), The preamble gives the example of gasoline stations 2s a typeof fecilty that would typically qualify for the exemption, Other Federal Government agencies define eta facies in simfar terms. In particular, the U.S. Department of Commerce, which is responsible forthe evelopment ofthe North American Industry Classification System (NAICS) that organizes businesses into speci industrial sectors for economic an statistical purposes, characterizes retail trade as follows “The Retail Trade sector comprises establishments engaged inrealing merchandise, generaly without transformation, ard rendering services inciertal to the sale of merchandise. The retaling process isthe final step Inthe distribution of merchandise; retalers are, therefore, organized to sell merchandise in smal quantities tothe general public. North American Industry Classification System Manual ("NAICS Manual"), Secor 44-45 - Retail Trade, Following the promulgation ofthe PSM standard, however, OSHA issued a series of eters of Interpretation and made statements In the PSM compliance recive (CPL 02-02-045) interpreting the exemption much mare broadly. According to these statements, an establishment was exemot from PSM coverage if it derived more than 50 percent ofits income from circt sales of highly hazardous chemicals to the end user (‘the 50 percent test"). This interpretation, however, has no relationship to OStA's origina intent for apalcation ofthe exemption, nor ist consistent with either the commonly understood meaning of retail establishment or te dentin recognized by the U.S. Department of Commerce inthe NAICS Manual {In addition, the $0 percent test allows employers who sell or distribute large, buk quantites of highly hazardous chemicals directly to end users to cla the ‘exemption, even f the end users are themselves commercial establshments, Ths result fs drecty contrary to OSHA's orignal intent, as stated n the preamble to the PSM standard, There, OSHA sac tat it cose to exclude real faites from PSM coverage because the smal container, package, or alotment sizes of the chemicals typicaly found at these faites donot present the same safety hazards as establishments that hanle large, bulk quantities of materials. The 'ypes of facies described in the preamble generally fll nto NAICS Sectors 44-45 -Retall Trade. In convas, facies that handle large, buk quanti of| ‘materials typcall fll nto NAICS Sector 42 - Wholesale Trade - and include facies that sel or arrange the purchase or sale of raw and intermediate materials and supplies used inthe production of other end products. Because the exemption is Imited specifically to retail facies, it should never have been interpreted te cover facies engaged in distinctly wholesale activites. [Asa result, OSHA hereby rescinds al prior policy documents letters of interpretation, and memoranda related to the retail exernpion andthe 50 percent test (OSHA now interprets the retall facies exemption in acord with its original intent, and in reference tothe widely- accepted NAICS Marua: Cnty facies, or the portions of facilites, engaged in retail trade as defined by the current and any future updates to sectors 44 and 45 ofthe NAICS Manual may be afforded the retail exemption at 29 CFR 1910.119(a)(2)(). (OSHA wil also update the statement of policy related to retail faces inthe PSM compliance drecve (CPL. 92-02-045) consistent with this new interpretation, Therefore, a complance safety and health officer (CSHO) may recommend issuance of a citation for any applicable welason(s) af the PSM Standard afer {etermining thatthe employer's primary NAICS related to the sale of HHCs is something other than a retal rade, as defined in NAICS sectors 4 or 45, and PM coverage is otherwise established. The aea office should contact the appropriate regional ofce or the Office of Chemical Prcess Safety and Enforcement Initiatives i there are questions regarding the employers operations as they relate to the application of the retail exemption 1, during the course of an inspection, an employer cams itis eligible forthe retail exemption, a CSHO shoul: (1) ask the employer to provide the bass for their retail exemption claim; and (2) review operations of the employer's fclily to determine the validity of the exemption claim, Appendix A contains example questions and answers related tothe retail exemption to assist CSHOs in determining the application of this enforcement policy ‘memorandum. SM Retail Exemption Questions Q1- Company & has a PSM-covered process that it uses to manufacture a feed stock that a highly hazardous chemical (HH). The feed stock's piped directly toa facity across the fenceline where iis used as part of Company B's process. In other words, Company A sells 100 percent of its product to an end user (Compary 8). Can Company A daim that its PSM-covered process is elloble for the retall exemption, 29 CFR 1910.119(a)(2X1)? RL - No, The retail exemption at 29 CFR 1910.119(a)(2)i) is intended for establishments in retail trade. The manufacturing of chemicals is nota retail trade actvty (NAICS 44 oF 45), Chemical manufacturing facies typialy are dassifed inthe NAICS 325 subsector. As indicated inthe attached memorandum, the Percentage of produc sold to an end user is relevant. Therefore, Company As not eligible forthe retall exemption at 29 FR 1910.119(2)(2)(). (Q2- Company 8, a farm supply company, stores 25,000 pounds of anhyrous ammonia for sale to farmers for applcaton to farmland, Can Company B calm thatthe storage ofthe anhydrous ammonia i eligible forthe retall exemption because sales are ctectl to farmers? R2- No, The retall exemption at 29 CFR 1910.119(a)(2)() Is intended fr estabishments In real trade, Farm supply merchant wholesalers (NAICS 424910) are rot in retail rade decause they donot sell chemicals in small quanttes or containers tothe general public, Therefore, Company 8 is not elgble forthe retail ‘exemption at 29 CFR 1910-119(a.2)(). Note, however, that employers with agrcutural operations covered by Part 1928 ae not subject to the PSM standard (soe 29 CFR 1928.21), 3- Company C, a typical gasoline service station, has three underground storage tanks containing more than 10,000 pounds of grades of gasoline, 8 flammable Iquid. it sels the gasoline to customers in quanties of less than 50 gallons at once. Is Campany C eligible for the retail exemation? 3 - Yes, The retall exemption at 29 CFR 1910, 119(a}(2\() is intended for establishments in retail trade. Service stations, gasline stations, and gasoline stations with convenience stores are in the retail trade (NAICS 4471) because the flammable qui is sed to the general public in smal alooments (e.g, five to 50 gallons), whic is consistent with the intent of the standard. Therefore, Company C i elie for the retall exemption at 9 CFR 1910.119(a}2X() (24 Compeny D reacts anhydrous ammonia and nitric acd to form ammonium nate forsale to farmers to apoyo farmland. Is the facity where this ‘manufacture and sae takes place eligible forthe retail exemption? [AG No. The retail exemption at 29 CFR 1910.119(a)(2)() i intended for establishments in retail trade. Establishments that manufacture ammonium trate in this manner ae classified inthe NAICS as 325311, Nirogenous Fertizer Manufacturing, of 424910, Farm Supplies Merchant Wholesalers. These facies are ot in retail rade, Therefore, Company D is not elie forthe retall exemption at 29 CFR 1910.119(6)2X() (5- Can iquefied petroleum gas (LP gas) wholesalers claim that storage of LP gas is exempt from PSM because of the retal exemption? AS - No, The retail exemption at 29 CFR 1910.119(a)(2)() is intended fr estabishments in retail trade, and wholesale trade by definition fs not etal trade. LP ga wholesalers use the NAICS code 424710, Petroleum Bulk Stations and Terminals or 424720, Petroleum and Petroleum Products Merchants Wholesalers, hich are not retal rage NAICS codes. Therefore, L gas wholesalers are not eile forthe retal exemption at 29 CFR 1910.119(@)(2)). (Q6-- An employer ows and operates @ mobile home park with NAICS - 531190 (Lessors of Other Real Estate Property). Ancilary tothe primary busines, the employer has a propane bul containing more than 10,000 pounds of propane, 2 flammable gas, Therefore, 2 PSM-covered process exists. The employer sells the propane to the park residents a5 well s the general pubic, The employer sells only in 20-, 50, and 100-pound allotments. Does the retail exemption apply to this otherwise covered PSM process? [AG - Yes, The retall exemption at 29 CFR 1910, 119(a)(2X) Is Intended for estabshments in retail trade, Even though the employers primary NAICS (531190) Is 2a non-retal code, the sale of propane is secondary activity with ts own unique NAICS number. In tis case, to decide whether the retail exemption applies, the CSHO needs to determine the appropriate NAICS for the portion of the business that sells the HHC. In this case, based onthe facts proved, including that the employer is selling small etallsize quantities of propane (20-, 50-, and 100-pound allotments), the secondary NAICS forthe sale ofthe propane at this establishment is 454312, Uquetied Petroleum Gas Deales, which isa retall NAICS number, Therefore, the rtal exemption applies to this business, (Q7- What i the distinction between NAICS 454312, Liquefied Petroleum Gas Dealers, and 424710, Petroleum Buk Stations and Terminals, cescrbed in QS above, and 424720, Petroleum and Petroleum Products Merchants Wholesales, discussed in Q6 above? AA7- Uquefied Petroleum Gas Dealers, NAICS 454312, isa code describing 2 retail tore or nor-store fect that sells small allotments of LP gas (propane, r= butane) directly tothe General publ, either by filing small LPG cylinders atthe merchants facity or by fling stationary vessels at residences and businesses. (On the ether hand, both Petroleum Bulk Stations and Terminals, NAICS 424710, and Petroleum and Petroleum Products Merchants Wrolesalers, NAICS 424720, conduct wholesale cstibuton to merchants, even If they also make Some sales to the general pubic. Footnote(t) Executive Order 13650, Improving Chemical Facility Safety and Security, Section 6(e)() "Within 90 days ofthe date of this order, the Secretary of Labor shall identity any changes that need to de made in the retail and commercial grade exemption in the PSM standard." Footnote (2) North American Industry Classification System, United States, 2012, Natonal Technical Information stem, Springfield, Viroinia (© stoncard interrelations - Tate of Contents Freedom of Information Act | Privacy & Security Statement | Disclaimers | Important Web Site Notices | Internatanal |Contact Us US Department of aber | Occupational Safety Heath Admisvaton | 200 Corton Ave, MY, Washington DC 20219 Telephone: 800-321-0SH8 (6742) | TTY OS ge"