Photo of Daniel W. Wolff

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 In its July 22 memo, OSHA rescinded that interpretation and will prospectively only exempt facilities that fall within the scope of the “retail trade” sectors as classified by the North American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.

Most everyone knows that the First Amendment restricts the government’s ability to limit commercial speech. Similarly, most everyone would probably think the First Amendment also restricts the government’s ability to compel commercial speech. But are there times when the government may compel commercial speech? Indeed it can in some circumstances, and the D.C. Circuit recently expanded those circumstances in American Meat Institute v. U.S. Department of Agriculture (AMI). AMI involved a trade association’s challenge to regulations requiring meat producers to include country-of-origin labels on their products. This decision is important to almost any company that is, or could be, subject to a regulatory mandate to disclose what the court calls “purely factual and uncontroversial information.”

Rehearing en banc a case decided in the government’s favor by a three-judge panel, the D.C. Circuit in AMI upheld the regulations, applying the test from the U.S. Supreme Court’s decision in Zauderer v. Office of Disciplinary Counsel. Zauderer upheld, against a First Amendment challenge, a state’s disciplinary action against an attorney whose advertisements had the potential to deceive consumers by failing to comply with state regulations mandating certain cost disclosures to prospective clients. Although the regulations concerning meat origins in AMI had nothing to do with countering consumer deception, the D.C. Circuit nonetheless applied Zauderer and thus extended its application beyond protection against consumer deception to the advancement of consumer edification.

Continue Reading To Label Or Not To Label? Companies May Have No Choice