TEXAS AG INDUSTRIES ASSOCIATION

Regulatory Compliance After the West Fertilizer Explosion

Benjamin RhemJackson Walker L.L.P.brhem@jw.com• 512-236-2012

Diana RaderW&M Environmental Group, Inc. drader@wh-m.com• 512-493-9698

Texas City – 1947Texas City – 1947

Presentation OutlinePresentation Outline

• Public Reaction and Increased Scrutiny

• Regulatory Maze– Reporting– Handling– Environmental

• Compliance Recommendations

• Texas Audit Privilege Act

HeadlinesHeadlines

“Texas Fertilizer Plant Fell Through Regulatory Cracks”

HeadlinesHeadlines

“Hearing on West Fertilizer Explosion Shows Lack of Regulation and Coordination”

HeadlinesHeadlines

“Probe of Texas Fertilizer Plant Blast Finds Industry under Lax Regulation”

Increased Federal ScrutinyIncreased Federal ScrutinyAugust 1, 2013 – President Obama signed an Executive Order to improve chemical facility safety and security

– Within 90 days DHS, Labor Dept., and Dept. of Agriculture must develop list of potential regulatory and legislative proposals to improve chemical facility safety standards

– Identify best practices

– Improve Coordination with state and local authorities

Increased Federal ScrutinyIncreased Federal Scrutiny• EPA, OSHA, and the ATF issued a

chemical advisory for ammonium nitrate– Not regulations, just recommendations– Focused primarily on safe handling and

storage of higher density, solid pellets• Avoid storage in confined spaces • Utilize sprinkler systems and automatic fire

detection systems• Avoid storage close to dust producing organic

materials (i.e., grains, seeds, sugar)

State ReactionState Reaction• “I think everyone in the agricultural

community is going to take a real hard look at this. We definitely need to draw lessons from this.” - Tim Herrman, State Chemist

• “Through their elected officials, [Texans] clearly send the message of their comfort with the amount of oversight.” – Gov. Rick Perry

State ReactionState Reaction• “Texas might be better served by

identifying those substances that are catastrophic in nature or have the potential for mass destruction, like ammonium nitrate in West, Texas – so that additional preventative measures may be taken.” – Special Report to the Texas House of Representatives Regarding West, Texas Disaster

Applicable RegulationsApplicable Regulations• Reporting

– Tier II Reports• Extremely Hazardous Substance – 500 pounds• Hazardous Chemical – 10,000 pounds• Exemption – “routine agricultural operations” or

“fertilizers held for sale…to the ultimate consumer”

– Chemical Facility Anti-Terrorism Standards• Top screen threshold for ammonium nitrate:

– 2000 pounds when in fertilizer form (with a nitrogen concentration of 23% or greater)

• Upon review, DHS will determine if the facility is a “high risk” facility

Applicable RegulationsApplicable Regulations• Handling

– U.S. Pipeline and Hazardous Material Safety Administration

– EPA – Risk Management Plans

– State Chemist

Applicable RegulationsApplicable Regulations• Environmental

– Air Quality

– Wastewater Discharge

– Waste Disposal

RecommendationsRecommendations• Evaluate Facility Risks

• Company Culture

• Insurance

• Emergency Management Plans

• Self-Audit

Texas Audit Privilege ActTexas Audit Privilege Act• Legal Requirements

– Notice of Audit– 6 months to Complete Audit– Submit Voluntary Disclosures of Violations

and Corrective Action Plan– 6 months to complete Corrective Actions– Obtain immunity from penalties associated

with violations of state laws that are voluntarily disclosed

Texas Audit Privilege ActTexas Audit Privilege Act• Audit Process

– Define the scope of the audit (air, water, waste, health & safety)

– Step 1 – Review TCEQ records– Step 2 – Site visit, interviews, site records

review– Step 3 – Letter report and Disclosure of

Violations Table

Site VisitSite Visit• Facility tour

• Observe processes

• Incoming materials

• Material storage and handling

• Outgoing products and wastes

• Personnel interviews

• Records review

Typical Records ReviewedTypical Records Reviewed

• Permits, Authorizations, Registrations, Certifications (Air, Water & Waste)

• Plans – Stormwater, SPCC, Hazard Communication Plans

• Waste Manifests

• Inventory Records• Shipping papers• Inspection logs• Material Safety Data

Sheets (MSDS)• Tier 2 reports• TRI reports

Staying in ComplianceStaying in Compliance• Designate a person-in-charge, and train them• Keep waste characterization documents• Use manifests and document monthly waste

generation• Consistency• Look for waste minimization opportunities• Keep records current• Manage your stormwater• Use the Texas Audit Privilege Act

QuestionsQuestions

If you ask me anything I don't know, I'm not going to answer.

- Yogi Berra

brhem@jw.com

drader@wh-m.com