In a memo dated July 22, the Occupational Safety and Health Administration (OSHA) announced that it was revising its interpretation of the “retail facilities” exemption from its Process Safety Management (PSM) standard, as codified at 29 C.F.R. § 1910.119(a)(2)(1). The PSM standard requires employers to manage hazards associated with processes involving highly hazardous chemicals. The standard exempts retail facilities and for years OSHA interpreted that exemption to apply to employers who derived more than 50% of their income from sales of highly hazardous chemicals to end users. In its July 22 memo, OSHA rescinded that interpretation and will prospectively only exempt facilities that fall within the scope of the “retail trade” sectors as classified by the North American Industry Classification System (NAICS), as published by the U.S. Department of Commerce, namely sectors 44 and 45. According to the OSHA memo, the earlier so-called “50 percent test” exempted from PSM employers who, among others, sold or distributed large, bulk quantities of highly hazardous chemicals to other commercial entities even if those commercial entities, albeit “end users” of the highly hazardous chemicals, used those chemicals in additional processes for application or to make other products. OSHA now claims in its memo that exempting those sellers from the PSM standard was inconsistent with the original intent of the standard, reasoning that those sellers are engaged more in “wholesale” than “retail” sales. The agency estimates that its new interpretation will result in about 4800 employers no longer being eligible for the exemption. Sellers of bulk fertilizer (anhydrous ammonia) and liquid petroleum gas are identified as two common types of operations that will be affected. In related guidance here and here, OSHA states it will relax enforcement for six months to give affected employers time to come into compliance.

Sellers of highly hazardous chemicals that have previously taken advantage of the retail exemption but that do not fall within NAICS sectors 44 or 45 should consult with counsel about the implications of this revised interpretation.