Emerging Trends With EPA and OSHA

1. Emerging Trends With EPA and OSHA J. Barton Seitz October 2008

2. Introduction • EPA Developments • OSHA Developments • Lessons for Systematic EHS Programs

3. EPA Developments • Climate change • RCRA generators & corrective action sites • Chemicals management • Watershed regulation • Greater data transparency

4. Climate Change • Pending rulemaking to regulate CO2 • Court decision in Massachusetts v. EPA • Proposed rule due by 12/08 • 7/08 proposed rule on underground sequestration • 10/08 Dingell-Boucher "discussion draft" • Common ground issues • Flexible near-term emission targets (6% <2005 levels by 2025) • Preempt state cap-and-trade programs • Allocate allowances based on past emissions • Debated elements • Proper approach for allocating emissions (allowances; adaptation programs; consumer rebates, etc.) • Preempt state vehicle emission standards?

5. RCRA • Generator issues • New "Definition of Solid Waste" Rule • Encourages recycling of hazardous secondary materials (on-site or off-site) • "Non-waste" petitions • eCycling • Product stewardship • Corrective action completion

6. Chemicals Management • Chemical Assessment and Management Program (ChAMP) • Builds on HPV • Covers chemicals produced at levels between 25,000 lbs/yr and 1 million lbs/yr • Voluntary industry partnerships • TSCA reform • REACH-lite? • Children's health issues

7. Watershed Management • Comprehensive watershed-based approach to water quality • Stormwater enforcement

8. Environmental Data Transparency • "ECHO" Database (Enforcement and Compliance History Online) - http://www.epa-echo.gov/echo/ • Access to environmental compliance data for regulated facilities • For example, Valley, NE: • http://www.epa-echo.gov/cgi-bin/get1cReport.cgi?tool=echo&IDNumber=110000596800 • Microflect - Salem, OR: • http://www.epa-echo.gov/cgi-bin/get1cReport.cgi?tool=echo&IDNumber=110004779286 • TRI reporting • EPA online database

9. OSHA Developments • Enforcement and rulemaking priorities • Voluntary programs and incentives • Inspections for targeted industry sectors

10. OSHA Enforcement & Rulemakings • National Emphasis Programs (NEPs) • Combustible dusts • Updated amputation risk inspections (e.g., lockout/tagout) • http://www.osha.gov/dcsp/partnerships/industry/amputations.html • Refineries • Process safety management • Rulemaking on PPE enforcement per employee (8/19/08) • Intended to clarify remedies available for violations of PPE and employee training requirements • OSHA: Employer who violates one PPE and/or employee training requirements commits separate violation for each employee

11. OSHA Enforcement & Rulemakings (cont'd) • Proposed construction standard for tower cranes and derricks (10/9/08) • Identifies standards for ground conditions, assembly and disassembly of cranes, operation of cranes near power lines, certification and training of crane operators, use of safety devices and signals, and inspections of cranes.

12. Voluntary Programs/Initiatives • Voluntary Protection Program • OSHA recognition of industry leaders in safety • Requires comprehensive safety & health program • Performance-based eligibility criteria • Strategic Partnership Program • OSHA partners with industry to provide compliance assistance to address sector-specific needs • Available to individual companies or industry sectors/groups

13. Inspections for Targeted Industries • Emphasis on high hazard industries • Valmont processes - most-cited standards • SIC 3441 (fabricated structural metal) • General requirements for all machines (1910.212) • Hazard communication (1910.1200) • Lockout/tagout (1910.147) • Respiratory protection (1910.134)

14. Lessons For Systematic EHS Programs • Critical importance of "corporate culture" • All personnel have EHS "responsibilities" • But priorities start at the top • Develop useful EHS metrics • Strike balance between necessary "controls" and adaptive management • Avoid information "silos" - "near miss" takeaways should be shared among facilities • Maintain adequate oversight

15. EHS Case Study - Texas City • March 23, 2005 explosion at BP Texas City refinery • Occurred during isomerization unit restart; tower flooded with hydrocarbons, was overpressurized & released • 15 killed; 180 injured • CSB urgent recommendation for independent panel • Panel led 18-month review using multifaceted plan • Refinery visits and public meetings • Interviews of refinery and corporate-level personnel • Process safety reviews conducted by technical consultants • Process safety culture survey of refinery workforces • Targeted document review

16. Independent Panel Findings • Incident resulted from inadequacies in: • Corporate EHS culture • Corporate and site EHS management systems • Corporate EHS oversight

17. Corporate Culture Findings (examples) • Process Safety Leadership • Process safety not a core value • Ineffective leadership regarding process safety performance • Emphasis on personal safety but not process safety • Use of improving personal safety performance (i.e., personal injury rates) as indication of acceptable process safety performance created false sense of confidence • Employee Empowerment • Absence of positive / trusting environment with effective lines of communication

18. Panel's Recommendations • Panel issued ten recommendations • Goal was sustainable improvements • EHS Leadership • Provide effective leadership / establish appropriate goals • Clear message on importance of EHS performance matched with policies and actions • Integrated and Comprehensive Management System • Systematically and continuously identifies, reduces, and manages risks • Knowledge and Expertise • System to ensure personnel, including executive management, possess appropriate level of knowledge

19. Panel's Recommendations • Culture • Involve relevant stakeholders to develop positive, trusting, and open process safety culture • Clearly Defined Expectations and Accountability • Define expectations and strengthen accountability for process safety performance at all levels • Support for Line Management • More effective and better coordinated process safety support • Leading and Lagging Performance Indicators • Use integrated set of leading and lagging performance indicators for more effectively monitoring process safety performance

20. Panel's Recommendations • Process Safety Auditing • Establish and implement effective audit system • Board Monitoring • Board should monitor implementation of the recommendations and ongoing process safety performance • Engage independent monitor • Report publicly on the progress of implementation and on ongoing process safety performance • Industry Leader • BP should use lessons learned from Texas City tragedy and Panel’s report to transform company into recognized industry leader in process safety management

21. New Realities: OSHA Under Pressure • Fallout from BP Texas City • CSB repeatedly criticized OSHA for not having done more to avoid accidents like BP Texas City • CSB has now directed specific recommendations to OSHA, including recommendation to strengthen "comprehensive enforcement" of PSM standard • Target facilities at greatest risk of catastrophic accident by using EPA risk management program data • Conduct comprehensive inspections at facilities identified as posing greatest risk • Hire more inspectors and expand process safety training • http://www.chemsafety.gov/index.cfm?folder=current_investigations&page=info&INV_ID=52 • OSHA may not accept recommendations but expect - • More inspections, more citations, higher penalties per violation

22. EHS Systems Review • Questions to consider • What is EHS tone at the top? Do actions match words? • How are EHS hazards incorporated into decision-making? • Do our people understand the hazards? • How do we measure performance? Who is monitoring it? • What is our culture? • What is our system for reducing risk? • Are external best practices implemented at our sites? • Are we learning from our incidents and near misses? • Are we correcting problems when we find them? • What is our Board's role? What info does the Board receive? • Are we meeting our performance goals? • How do we know if management actions worked?

23. For More Information Bart Seitz Baker Botts LLP 1299 Pennsylvania Avenue, NW Washington, DC 20004-2400 202.639.7895 bart.seitz@bakerbotts.com