## Facts

- OSHA promulgated the Process Safety Management (PSM) Standard in 1992 to regulate workplaces handling “highly hazardous chemicals” and included an exemption for “retail facilities.”
- For years, OSHA applied a “50-percent test” under which a facility qualified for the retail exemption if more than 50% of its income came from direct sales to end users.
- After a 2013 fertilizer-facility explosion in West, Texas, OSHA issued a July 22, 2015 enforcement memorandum addressing the retail exemption.
- The memorandum rescinded prior policy documents applying the 50-percent test and announced that a “retail facility” is an establishment that sells small quantities of materials to the general public.
- The revised approach subjected many agricultural retailers and fertilizer distributors—previously exempt—to PSM compliance obligations.
- Industry trade groups petitioned for review in the D.C. Circuit, arguing the memorandum was an unlawfully issued or amended OSH Act “standard” because OSHA did not use notice-and-comment procedures.

## Issues

1. Whether OSHA’s 2015 memorandum narrowing the PSM retail exemption constituted issuance or amendment of an occupational safety and health “standard” under the OSH Act, triggering direct court-of-appeals review.
2. If the memorandum was a “standard,” whether it was invalid because OSHA issued it without the notice-and-comment procedures required by the OSH Act.

## Decision

- The D.C. Circuit held that the memorandum functioned as issuance or modification of a “standard” because it substantively narrowed the retail exemption and expanded the set of employers subject to the PSM Standard.
- The court rejected OSHA’s characterization of the memorandum as merely interpretive guidance or an internal enforcement adjustment.
- Because OSHA did not conduct notice-and-comment rulemaking required for adopting or modifying standards, the memorandum was procedurally invalid.
- The court granted the petition for review and vacated the 2015 memorandum.

## Legal Principles

- Under the OSH Act, an action is a “standard” when it requires workplace conditions or the adoption or use of practices, methods, operations, or processes necessary or appropriate for safety.
- Agency action that corrects a particular hazard by changing regulated parties’ substantive rights and obligations is treated as a “standard,” not merely enforcement policy.
- A document labeled as interpretive or enforcement guidance can be treated as a legislative change when it alters the substantive scope of an existing regulatory exemption.
- OSHA must use statutory notice-and-comment procedures to promulgate or modify a standard; urgency or policy concerns do not excuse noncompliance with the OSH Act’s procedural requirements.

## Conclusion

The D.C. Circuit vacated OSHA’s 2015 memorandum redefining the PSM “retail facility” exemption because it effectively amended the PSM Standard by narrowing the exemption and imposing new compliance duties without the notice-and-comment rulemaking mandated by the OSH Act.


Agricultural Retailers Ass’n v. U.S. Dep’t of Labor, 837 F.3d 60 (D.C. Cir. 2016)