“Retail Exemption” Shields Fertilizer Facilities From Safety Requirements

The Texas fertilizer plant that blew up on April 17, killing at least 15 people, appears to have been claiming an arcane exemption that allowed it to avoid targeted workplace inspections and safety requirements and enter a “streamlined prevention program” with environmental regulators, a government spokesman confirmed.

The owner of the facility near Waco, West Chemical and Fertilizer, apparently determined that the exemption — a few words advocated by industry groups, including The Fertilizer Institute, as part of a 20-year-old regulation — applied. In the wake of the deadly blast in West, Texas, last month, the Occupational Safety and Health Administration is investigating whether this claim was justified, an OSHA spokesman said.

By claiming the exemption, the company became subject to other, less stringent requirements and avoided certain OSHA and Environmental Protection Agency rules.

West Chemical and Fertilizer did not respond to requests for comment.

The interlocking web of company-claimed exceptions has implications beyond a small town in Central Texas. Sites across a host of industries housing large amounts of dangerous chemicals could claim they sell primarily to end users and avoid stricter regulation, though the number of facilities invoking this exemption is unclear. A representative for a company storing toxic chlorine gas, for example, wrote to OSHA in 2005 to clarify that the exemption applied to the site.

“It’s a major flaw,” said Bryan Haywood, an Ohio consultant who advises companies on the safe use of dangerous substances. “This incident’s going to get a lot of people’s interest into how people are squirming out of [stricter requirements].”

Closely related OSHA and EPA rules require facilities using large quantities of hazardous substances to take preventive steps and plan for accidents. West Chemical and Fertilizer had enough anhydrous ammonia — a chemical that attacks the eyes, skin and respiratory system — to require it to follow OSHA’s Process Safety Management standard, issued more than two decades ago.

But the standard contains what is known as the “retail exemption.” The Fertilizer Institute spoke out in favor of the exemption while the rule was being developed. Soon after the rule became final, the institute asked OSHA to confirm that it would not apply to facilities that store and blend fertilizer and sell it primarily to end users, often farmers.

OSHA responded that a fertilizer facility could indeed avoid the strictures of the rule as long as more than half of the company’s sales were to end users. OSHA, however, does not check on the validity of an exemption unless it inspects the site, an agency spokesman confirmed.

The Fertilizer Institute said in a statement to the Center for Public Integrity that it agreed with OSHA when the agency concluded in 1992 that retail facilities “did not present the same degree of hazard to employees as other workplaces covered by the proposal.”

But the institute added, “While the cause of the West, Texas, explosion has yet to be determined, we will re-examine our stance if necessary when the report on the cause is made final.”

OSHA is also investigating whether the West plant was covered by a legislative rider that makes sites with fewer than 10 employees in industries with low reported injury rates off-limits for regular inspections, an agency spokesman said. The site had not been inspected since 1985.

Invocation of the “retail exemption” can begin a chain reaction of less stringent standards. The EPA’s program for designating the risk posed by a facility relies, in part, on the site’s standing with OSHA. The amount of anhydrous ammonia stored at West Chemical and Fertilizer normally would have placed the facility in the EPA category requiring extensive preventive measures and accident-response plans. But because the site claimed the OSHA exemption, it qualified for a “streamlined prevention program” under the EPA’s Risk Management Plan program, known as RMP.

The agency said in a statement that it “reviewed the RMP from the facility to determine the RMP was complete and correct.” Asked whether it verified the basis for placing the site in a lower-risk category — its exemption from the OSHA rule based on its sales records — the EPA did not respond.

This EPA designation, along with the site’s lack of a history of accidents or recent inspections, removed it from a list of facilities subject to an OSHA special inspection program targeting locations using large amounts of hazardous substances, such as anhydrous ammonia.

It is unclear how many facilities enjoy more relaxed regulation as a result of their self-designation as retailers, but Haywood said the number could be large. “A lot of these businesses like in West, Texas, they’re everywhere,” he said. “They’re in every small farming community in the country.”