“Since the Department of Labor didn’t go through the formal rulemaking process, these key stakeholders weren’t afforded the opportunity to comment on the impact that these changes in regulation will have on their livelihoods.”

WASHINGTON, D.C. – Today at a Homeland Security and Governmental Affairs subcommittee on Regulatory Affairs and Federal Management hearing entitled, “Examining the Use of Agency Regulatory Guidance,” U.S. Senator Joni Ernst (R-IA) expressed concerns raised by Iowans over the Department of Labor’s Occupational Safety and Health Administration’s (OSHA) recently issued guidance that negatively impacts anhydrous ammonia retailers in Iowa. Senator Ernst has heard from many Iowans that this guidance is overreaching and economically burdensome, as it would impact the majority of traditional farmer co-ops in Iowa. 

Witnesses on the panel included Ms. Michelle Sager, Director of Strategic Issues at the U.S. Government Accountability Office; Ms. Mary Beth Maxwell, Principal Deputy Assistant Secretary for Policy at the U.S. Department of Labor; and Ms. Amy McIntosh, Deputy Assistant Secretary Delegated Duties of Assistant Secretary at the U.S. Department of Education.

OSHA’s guidance entitled, Process Safety Management of Highly Hazardous Chemicals and Application of the Retail Exemption, would require more paperwork and increase compliance costs for each anhydrous ammonia retail site, which are the majority of farm co-ops in Iowa. Iowa retailers sell over a half a million tons of anhydrous ammonia to farmers each year, from nearly 800 locations across the state. Retailers estimate the cost for compliance up to $25,000 per site which could push smaller retailers out of business. Ultimately, OSHA’s guidance will impact the cost of this widely used crop nutrient for Iowa farmers.

Senator Ernst pressed Mary Beth Maxwell on the Department’s decision to issue guidance in lieu of a formal rulemaking process, a choice that bypasses the ability for key stakeholders like Iowa’s farmers, retailers and co-ops to submit comments. “Is it possible to go back and have OSHA go through the proper rulemaking process so that it is enforceable? If we are truly trying to correct a problem, then why don’t we go through the rulemaking process and make sure that we understand what it takes to go into compliance, open that up for public comment and review,” the Senator questioned.

“…this Administration seems to be making a habit of circumventing the American people and their right to comment before they make these changes.”

Click here or on the image below to watch.

Senator Ernst emphasized the significant costs and burden for Iowans to comply with OSHA guidance in stating that “the changes OSHA has made with be difficult, if not impossible, for the companies to implement within the six months provided for in the guidance and will yield little, if any, safety benefits. Further, they will cost these retailers tens of thousands of dollars per site – a cost that will ultimately be passed on to the farmers, the family farms that they serve. Unfortunately, since the Department of Labor didn’t go through the formal rule making process, these key stakeholders weren’t afforded the opportunity to comment on the impact these changes in regulation will have on their livelihoods… it sounds like maybe we should have gone through the rule-making process, rather than doing a memorandum on this.”

Click here or on the image below to watch. 

Senator Ernst also questioned OSHA over their choice to issue memorandum which “sounds like you’re trying to get around rulemaking. It’s the rulemaking process without the full enforcement without rulemaking, so again a way to circumvent actually reaching out to the American public and extending an invitation to everyone to comment on these practices and the cost to them in doing business.”

TRANSCRIPT OF FIRST VIDEO:

SENATOR ERNST: Thank you to all of our witnesses for being here today.  I’m gonna spend the bulk of my time just getting into some of the specifics, but I just wanted to express the frustration that I am hearing from some, so many of my constituents on some of these very issues that are in front of us today.  I hear from them that they feel the government is really out to get them through some of these memorandums and the changes and as we look at the proposed guidance like the ones that we have today, our farmers, our ranchers, and industry in Iowa are finding them, the changes, to be economically significant. And they’re just really fueling skepticism and distaste for our government, and it seems no matter what the issue of the day is, this Administration seems to be making a habit of circumventing the American people and their right to comment before they make these changes. So we need to really address that. The memorandum, and you mentioned it, Ms. Maxwell, about the process safety management of highly hazardous chemicals and application of the retail exemption, issued by the department of labor in July, it does reclassify the majority of traditional farmer cooperatives in Iowa. And these farmer owned businesses, warehouse and distribute crop nutrients, including anhydrous ammonia at hundreds of sights across the state and, in fact, Iowa uses more anhydrous ammonia than any other state, as it is the most cost effective form of nitrogen for farmers to utilize in producing the affordable food and fuel for our growing population. The changes OSHA has made will be difficult, if not impossible, for the companies to implement within the six months provided for in the guidance and will yield little if any safety benefits.  Further, they will cost these retailers tens of thousands of dollars per site, a cost that will ultimately be passed on to the farmers of the family farms that they serve. Unfortunately, since the Department of Labor didn’t go through the formal rule making process, these key stakeholders were not afforded the opportunity to comment on the impact these changes and regulations will have on their livelihoods. So going back to the anhydrous ammonia safety, the July 22nd memorandum, what prompted the change in the retail exemption to do away with the fifty percent rule?

MS. MAXWELL: Thank you very much, Senator, for your question. Let me talk a little bit about the process and what lead to that, and because the Senators I’m sure are aware as well, that these guidance documents are now the subject of litigation, so I can talk more, really, about the process, and probably not appropriately about the substance of the specifics of those.  As we all know, this was in response to this tragic explosion in west Texas that killed 15 people, injured hundreds more. It was reported 100 million dollars in damage. West Texas will never be the same. And all of us I know, are dedicated to preventing any such catastrophic event from happening again, so how do we work together to make that happen? I think there really was a very robust stakeholder engagement process as we embarked on following that.  This began with an executive order from the President, right, saying to look at the gaps.  A careful look at the regulation and a conclusion that the guidance was out of date. We then embarked on a very robust stakeholder engagement process. We published an RFI, in the Federal Register that clearly forecast that we were looking at the retail exemption. That we were looking at the hazardous chemicals percentages, so really communicated to the community, this is what we are looking at.

SENATOR ERNST: Right.

MS. MAXWELL: We published an RFI in the Federal Register. And we’re getting these comments back.

SENATOR ERNST: I’ll stop you right there. One, and it sounds like maybe we should have gone through the rule making process rather than doing a memorandum on this, if we are engaging the public in such a manner.

MS. MAXWELL: I think this is a case where we looked at the requirements for OMB on significant guidances, this didn’t meet those requirements but we knew this was a really important issue that would benefit from more public input and so we pursued strategies that would get that. We also had meetings and webinars that involved, you know, thousands, of folks, so we really worked hard.

SENATOR ERNST: And this was in response to the west Texas explosion.

MS. MAXWELL: Yes. Then-

SENATOR ERNST:  That was determined to be ammonium nitrate, not anhydrous ammonia. Those are two entirely separate substances. So again my question would be, why the change in the fifty percent rule for a substance wasn’t even involved in that incident.

MS. MAXWELL: Thank you for clarifying that it was in response to west Texas and other chemical explosions, but looking at we needed to have some commonsense, practical approach to make sure that we were actually implementing the intent of that PSM standard and those regulations. That we were giving clear guidance to the regulated community about what we need to be doing differently, to keep people safe, and to prevent an explosion like this from happening again.

SENATOR ERNST: But again, two separate substances. And we’re responding to a situation that certainly needed some guidance to fill some gaps, but what the agency ended up doing, was covering a whole other group of chemicals where there hasn’t been incidents.

MS. MAXWELL: And we were, we were charged with looking at those regulations, was the guidance actually effectuating Congress’s intent, right, of these standards? There were gaps to be closed and that’s what we worked to do. And worked very, very hard over a two year process to have a lot of stakeholder engagement-

SENATOR ERNST: I guess my point would be back then. If we are going through a two-year process, engaging the public, then it should be through a formal rule making process. If it’s that lengthy, we’re engaging thousands of people; they need the formalized rule making process. If we’re taking that time, we might as well do it in a way that we’re able to engage all of the stakeholders especially when it is so economically impactful to their livelihoods, but again it was done through a more informal process where the agency was able to determine that even substances that weren’t involved in such a significant accident are included. I guess that would be my point that if we are taking the time to do this it should be through formalized rule making. Thank you, Mr. Chair. 

TRANSCRIPT OF SECOND VIDEO:

SENATOR ERNST: I would like to, to jump in again and talk about some of the process as well. We all agree today that the guidance is non-legally binding and yet with the, I’m gonna go back to my folks in Iowa, the retail exemption memorandum that came out on the 22nd of July, it is requiring these retailers, who are now reclassified, to follow this regulatory process through reclassification and OSHA has estimated that the cost of compliance for each of the retailers would be $2100 per site to come into compliance.  But those retailers, those on the ground where the rubber meets the road, they actually calculated it could cost up to $25000 per retailer. And again that is significant cost, you know, if you look at the retailers and the areas that they cover in Iowa, that’s a big cost. That’s a really big cost.  So, you know, in light of that, is it possible to go back and have OSHA go through the proper rule making process so that it is enforceable? If we are truly trying to correct a problem, then why don’t we go through the rule making process and make sure that we understand what it takes to go in to compliance, open that up for public comment and review? Is that something that OSHA would be willing to do?

MS. MAXWELL: So I think in this case, we were really clear that we were following the APA and the OMB bulletin in the course that we pursued on this guidance. And that the RFI and the long public comment period was designed specifically to get that feedback. We are always though, Senator, always open door and want to continue to be in dialogue with folks about this. In fact, it’s partly why OSHA has a delayed enforcement policy around this; to give people more time to come into compliance and to give additional compliance assistance.

SENATOR ERNST: Okay, six months for compliance to bring these ag retailers, and again this is a manufacturing rule, that is now extended to retailers where there is absolutely no manufacturing process. They are not mixing chemicals. They are distributors, and so I think whoever went ahead with this guidance maybe doesn’t fully understand what these ag retailers do.  So I am encouraging OSHA to open this up to formal rule making and it sounds like you’ve extended periods of time, there was a lengthy comment process, it sounds like you’re trying to get around rule making. It’s a rule making process without the full enforcement of rulemaking, so again a way to circumvent actually reaching out to the American public and extending an invitation to everyone to comment on these practices and the cost to them in doing business. My original point was if you’re doing that, why not formal rule making where everyone can engage in an open dialogue and process and ensure that their comments are being heard? I think that seems very commonsense.

MS. MAXWELL: Thank you for your question, Senator, and I will just say this; we would never be circumventing the formal rule making process. It wouldn’t be appropriate and we wouldn’t do it, but we’re totally committed to working with you and following up with you on this issue.

SENATOR ERNST: Thank you, I appreciate that. 

# # #