The D.C. Court of Appeals ruled that the Occupational Safety & Health Administration (OSHA) violated the Occupational Safety & Health Act when it issued an enforcement memorandum on July 22, 2015, redefining the "retail facility" exemption to the Process Safety Management (PSM) Standard.

After a chemical explosion at a fertilizer company in West, Texas, that resulted in 15 deaths, President Barack Obama issued an executive order that directed the secretary of labor to identify any changes that needed to be made to the PSM Standard to prevent future chemical accidents. OSHA responded in 2015 by issuing a memo that made farm supply establishments, like the Texas facility that sold chemical fertilizers in bulk to farmers, subject to the PSM Standard requirements for managing highly hazardous chemicals.

OSHA’s policy would have required facilities that store or transport 10,000 lb. or more of anhydrous ammonia to obtain PSM Standard documentation. If the facility is unable to obtain this documentation, it would be forced to purchase new storage tanks, which can cost $70,000 or more.

The new standards were announced in July 2015 and became effective immediately. OSHA estimated that its revised definition would subject up to 4,800 facilities to “new” and necessarily “more demanding,” substantive standards for the management of highly hazardous chemicals.

The judge vacated OSHA’s memorandum for failure to abide by procedural requirements of the Occupational Safety & Health Act. When promulgating or modifying a “standard,” OSHA must adhere to notice-and-comment procedures set forth in the act. “OSHA concedes that, when it promulgated its memorandum redefining ‘retail facility,’ it did not satisfy the procedural requirements for standards,” the court document stated.

"OSHA made a bad decision in regulating ammonia in response to an ammonium nitrate incident, and the agency made that decision incorrectly," Agricultural Retailers Assn. (ARA) president and chief executive officer Daren Coppock said. "Although ARA could only challenge on the procedural point and not the decision itself, we're still very pleased to see the court rule in our favor and to provide this relief to our members."

Agricultural retailers are exempt from the PSM Standard until OSHA completes a notice-and-comment rule-making process regarding PSM, which could take several years to finalize. ARA is currently reviewing the court's decision and said it will provide additional analysis once its assessment is completed.

For now, retailers can celebrate a victory on the legal front. "It's a big win. Given the significant economic costs and absence of any safety benefit, the court made the correct decision," ARA chairman Harold Cooper said. "The retail exemption has been in place for more than 20 years, and OSHA should not have redefined it without an opportunity for stakeholders to comment."

Cooper said this easily could have gone another way.

"As an industry, ag retailers tend to be complacent about regulations that come our way; we keep our heads down and do what's required, but this rule would have limited farmers and retailers options through an agency's improper regulatory overreach," he said. "Thankfully, ARA was uniquely prepared and positioned to defend our industry. They gave us a vehicle to fight and win this battle."