BILL ANALYSIS �
Senate Committee on Labor and Industrial Relations
Senator Ben Hueso, Chair
Date of Hearing: March 26, 2014 2013-2014 Regular
Session
Consultant: Alma Perez-Schwab Fiscal:Yes
Urgency: No
Bill No: SB 1300
Author: Hancock
As Introduced/Amended: February 21, 2014
SUBJECT
Refineries: turnarounds
KEY ISSUES
Should the Legislature require the Department of Industrial
Relations to recoup from the owner of a refinery, the full costs
of extraordinary expenditures resulting from the division's
response to an emergency hazardous material release or similar
occurrence?
Should oil refineries be required to annually report their
schedule for "turnarounds" to the Division of Occupational
Safety and Health and provide documentation on refinery safety
and infrastructure?
Should the Legislature prohibit certain information on refinery
safety and infrastructure that is submitted to the State as a
"trade secret" from being released to the public?
ANALYSIS
Existing law established the California Division of Occupational
Safety and Health (Cal/OSHA), within the Department of
Industrial Relations (DIR), to protect workers from health and
safety hazards on the job through research and standards,
enforcement and consultation programs. Among other things,
Cal/OSHA promotes worker safety through implementation of
training and process safety management in refineries and other
facilities, as specified.
Existing law, under the California Refinery and Chemical Plant
Worker Safety Act of 1990:
1) Declares that the potential consequences of explosions,
fires, and releases of dangerous chemicals may be
catastrophic; thus immediate and comprehensive government
action must be taken to ensure that workers in petroleum
refineries, chemical plants, and other related facilities
are thoroughly trained and that adequate process safety
management practices are implemented.
1) Defines "process safety management" as the application
of management programs, as specified, when dealing with the
risks associated with handling or working near hazardous
chemicals and is intended to prevent or minimize the
consequences of catastrophic releases of acutely hazardous,
flammable, or explosive chemicals.
2) Among other things, "Process Safety Management
Standards" require:
(Labor Code �7850 - 7870)
a. The Occupational Safety and Health Standards
Board to adopt process safety management standards for
refineries, chemical plants, and other manufacturing
facilities.
b. An employer to develop and maintain a
compilation of written safety information to enable
the employer and employees operating the machinery to
identify and understand the hazards posed by processes
involving acutely hazardous and flammable material. A
copy of this information is to be accessible to all
workers.
c. An employer to perform a hazard analysis for
identifying, evaluation, and controlling hazards
involved in the process.
d. An employer to develop, implement, and update
periodically written operating procedures that provide
clear instructions for safely conducting activities
involved in each process consistent with the process
safety information.
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e. Each employee whose primary duties includes
the operating or maintenance of a process to be
trained in an overview of the process with an emphasis
on the specific safety and health hazards, procedures,
and safe practices applicable to the employee's job
tasks as well as refresher and supplemental training
documented by the employer's certification record.
f. An employer to inform contractors performing
work on, or near, a process of the known potential
fire, explosion, or toxic release hazards related to
the contractor's work; and requires that contractors
have trained their employees to a level adequate to
safely perform their job.
Existing law requires the Division of Occupational Safety and
Health to annually fix and collect reasonable fees for
consultation, inspection, adoption of standards, and other
duties conducted pursuant to the act. The fees shall be
sufficient to cover, at a minimum, the annual cost of 15 staff
positions. All revenue collected is to be deposited into the
Occupational Safety and Health Fund and subject to appropriation
by the Legislature in the annual Budget Act.
This Bill would 1) expand on the requirements for fees collected
from refineries, 2) define what a "turnaround" at refineries is
and would establish specific requirements of refineries in
notifying the state of any planned turnarounds, and 3) would
prohibit certain information submitted to the state as a trade
secret from being released to the public.
With regards to the fees collected from owners for refinery
safety, this bill would:
1) Authorize the Department of Industrial Relations
(instead of the division within the department) to fix and
collect reasonable fees to cover all necessary expenses,
including administrative and indirect costs, for the
existing consultation, inspection, adoption of standards
and other duties required under the Refinery and Chemical
Plant Safety Act.
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Senate Committee on Labor and Industrial Relations
2) Additionally, authorize the fees to be used to fund
participation in interagency efforts to improve safety in
refineries and chemical plants.
3) Delete the requirement in law that the fees must be
sufficient to cover 15 staff positions.
4) Require the director of DIR to adopt rules and
regulations governing the criteria and procedures to fix
and collect the fees, including emergency regulations as
necessary.
5) Require the director of DIR to recoup from the owner of
a refinery (by adding the amount expended to next year's
assessment), the full costs of extraordinary expenditures
resulting from the division's response to a hazardous
material release or similar occurrence. The director shall
document expenses for which reimbursement is sought.
6) Authorize the department to credit against the owner's
subsequent year's assessment, any unexpended funds or hold
them in reserve as a contingency fund for expenditures
required by an emergency response to a hazardous material
release or other situation.
With regards to "turnarounds," this bill would:
1) Define "turnaround" as a planned, periodic shutdown,
total or partial, of a refinery process unit or plant to
perform maintenance, overhaul, and repair operations and to
inspect, test, and replace process materials and equipment.
2) Specify that "turnaround" does not include unplanned
shutdowns that occur due to emergencies or other unexpected
maintenance matters in a process unit or plant, or routine
maintenance, as specified.
3) Require a refinery employer to submit to the division a
full schedule of planned "turnarounds" for the various
units on September 15 of each year.
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4) At the request of the division, require a refinery
employer to provide on-site access and specified
documentation relating to a planned turnaround at least 60
days prior to the shutdown of a process unit or plant,
including:
a. Corrosion reports and risk-based inspection
reports;
b. Process Hazard Analyses;
c. Boiler permit schedules;
d. Management of change records related to
repairs, design modifications and process changes;
e. Work orders scheduled to be completed in the
planned turnaround; and
f. Temporary repairs since the last turnaround.
5) Require the refinery employer to submit notification of
any changes and supporting documents at least 30 days prior
to a planned turnaround.
6) Authorize the division, by agreement with a refinery
employer, to modify the reporting period as to any
individual item of information.
7) Require the division to develop an electronic
information management system to facilitate monitoring of
petroleum refineries.
With regard to information contained within documentation of a
"turnaround," this bill would:
1) Authorize a person providing information regarding a
"turnaround," to identify all or a portion of the
information submitted to the division as a trade secret.
2) Prohibit any information that is submitted to the
division as a trade secret from being released to the
public. However, the fact that the information is claimed
to be a trade secret is public information.
3) Establish procedures for notifying a refinery of any
requests for the release of information claimed to be a
trade secret, subsequent requirements of the refinery, and
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final determination by the division on whether or not the
information will be released.
4) Establish legal proceedings for the person seeking the
release of information or the person requesting that the
information remain a trade secret.
COMMENTS
1. Overview on Refinery Turnarounds:
According to the American Petroleum Institute (API), a
refinery turnaround is a planned, periodic shut down (total or
partial) of a refinery process unit or plant to perform
maintenance, overhaul and repair operations and to inspect,
test and replace process materials and equipment. Turnarounds
are scheduled at least 1-2 years in advance and depending on
the process unit and the amount of maintenance needed, the
length of the turnaround can vary from 1 to 4 weeks or more.
API also stated that the less often units are started up and
taken down, the safer it is since refinery incidents are more
likely to occur during turnarounds.
2. Background on August 2012 explosion at Chevron Richmond Oil
Refinery:
According to an Interim Investigation Report from the U.S.
Chemical Safety and Hazard Investigation Board on the Chevron
Richmond Refinery Fire:
On August 6, 2012, the Chevron U.S.A. Inc. Refinery in
Richmond, California experienced a catastrophic pipe
failure in the #4 Crude Unit. The pipe ruptured, releasing
flammable, hydrocarbon process fluid that partially
vaporized into a large vapor cloud that engulfed nineteen
Chevron employees. All of the employees escaped, narrowly
avoiding serious injury. The ignition and subsequent
continued burning of the hydrocarbon process fluid resulted
in a large plume of unknown and unquantified particulates
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and vapor traveling across the Richmond, California, area.
In the weeks following the incident, approximately 15,000
people from the surrounding area sought medical treatment
due to the release.
Multiple agencies opened investigations in response to the
incident including the Division of Occupational Safety and
Health (Cal/OSHA), the U.S. Chemical Safety and Hazard
Investigation Board (CSB), and the U.S. Environmental
Protection Agency (U.S. EPA). Additionally, Chevron also
completed its own internal investigation. All investigations
identified serious concerns about process safety management
procedures at the refinery and expressed the need for stronger
preventative safeguards.
On January 30, 2013, the Division of Occupational Safety and
Health issued 25 citations against Chevron USA, with proposed
penalties totaling nearly $1 million ($963,200 exactly), for
state safety standard violations related to the refinery
explosion. The citations included eleven "willful serious"
and twelve "serious" violations, resulting in the highest
penalties in Cal/OSHA's history. Among Cal/OSHA's finding,
they reported that:
Chevron did not follow the recommendations of its
own inspectors and metallurgical scientists to replace
the corroded pipe that ultimately ruptured and caused
the fire. Those recommendations dated back to 2002.
Chevron did not follow its own emergency shutdown
procedures when the leak was identified, and did not
protect employees.
3. Improving Public and Worker Safety at Oil Refineries: Report
of the Interagency Working Group on Refinery Safety
Following the August 2012 explosion at Chevron's Richmond Oil
Refinery, Governor Brown convened a 13-agency Working Group to
explore ways of improving public and worker safety at and
around oil refineries through enhanced oversight, and to
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strengthen emergency preparedness. Over an 18-month period,
the group met internally and with industry, labor, community,
environmental, academic, local emergency response and other
stakeholders.
The report details recommendations to improve emergency
response and preparedness. Specifically, the report made the
following recommendations:
Coordinating regulatory activities to avoid
duplication and increase effectiveness;
Establishing clear criteria for unified response
during emergencies and aligning radio communications
between industry firefighters and local first responders;
Improving information and data flows from refineries
to the public and state and local agencies;
Requiring refineries to implement inherently safer
systems to prevent emergencies and better protect workers
and neighboring communities;
Strengthening enforcement capacity to ensure
adequate oversight of refineries;
Assessing operational safety and organizational
structures at refineries to reduce human factors such as
lack of training, insufficient experience or fatigue that
can cause hazards;
Providing greater community access to air quality
monitoring information in and around refineries.
An Interagency Refinery Task Force was established in August
2013 to continue overseeing progress on the recommendations,
and will meet bimonthly to ensure proper implementation.
4. Need for this bill?
The devastating explosion that occurred at the Chevron
Richmond Refinery has sparked much discussion and debate on
current safety standards, their effectiveness, or lack
thereof, and need for improvement. After several
investigations and the highest ever penalties issued in
Cal/OSHA's history, it has become clear that more needs to be
done. Among Cal/OSHA's findings with regards to the Chevron
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Refinery explosion, were violations in Chevron's
implementation of its own "process safety management"
procedures required of all refineries.
Under current law, "process safety management" procedure
regulations require refineries to implement a comprehensive
safety plan that includes a precise determination of what
hazards exist and procedures to eliminate or reduce them.
Employers must ensure that machinery and equipment are in good
condition, that work procedures are safe, that hazards are
controlled, and that workers are trained to safely operate the
equipment, recognize hazards and respond appropriately in
emergency situations. Chevron's Richmond Refinery failed to
meet these requirements which resulted in the catastrophic
explosion which put many lives in danger and left the refinery
with an almost $1 million fine.
This bill is necessary to establish specific requirements of
refineries in notifying the department of any planned
"turnarounds" as well as provide documentation regarding the
refinery safety and infrastructure to allow for a more
thorough review.
5. Proponent Arguments :
According to the author, oil refineries have no obligation
under state law to report their "turnaround" schedule to any
part of state or local government. Nor are they required to
disclose important information, such as repair schedules or
corrosion reports. The author argues that given the importance
of "turnarounds," both to the refinery itself as well as the
public safety risk they pose, allowing the Division of
Occupational Safety and Health to know this information may
allow it to conduct targeted inspections of refinery
facilities. This bill would require petroleum refineries to
annually report their schedule for "turnarounds" to the
division and would require them to also submit documentation
on refinery safety and infrastructure.
Proponents argue that in the case of Chevron, had Cal/OSHA
known that Chevron had not inspected the section of piping
that caused the explosion, it is possible that Cal/OSHA could
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have done their own inspection. Doing so, they argue, could
have prevented an incident that threatened public health,
affected the environment, and imposed severe financial costs.
6. Opponent Arguments :
None received.
7. Staff Comment :
On page 5, line 24-25 of the bill would require the division
(Cal/OSHA) to develop an electronic information management
system to facilitate monitoring of petroleum refineries;
however, the bill provides no further indication as to what or
how this system would work, which user it is targeting - the
refineries, the public or the department? The author may wish
to amend the bill to provide further clarification on this
provision.
8. Double Referral :
This bill has been double referred and, if approved by this
committee, it will be sent to the Senate Judiciary Committee
for a hearing.
9. Prior Legislation :
SB 438 (Hancock) of 2013: Held in Assembly Appropriations
Committee
SB 438 from last year is very similar to the provisions found
in this bill, however, this year the author has chosen to also
address costs associated with the State's response to a
hazardous occurrence and allows certain information to be
protected from public disclosure.
SB 71(Budget and Fiscal Review Committee) of 2013: Chaptered
SB 71 included changes to Labor Code which directed the
Department of Industrial Relations to use its statutory
authority to approve a fee by March 31, 2014, to support an
increase in funding and at least 15 new positions for the
Process Safety Unit, which inspects oil refineries and
chemical plants.
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Senate Committee on Labor and Industrial Relations
AB 3672(Elder) of 1990: Chaptered
AB 3672 established the California Refinery and Chemical Plant
Worker Safety Act of 1990 including process safety management
standards to prevent or minimize the consequences of
catastrophic releases of toxic, flammable or explosive
chemicals.
SUPPORT
Asian Pacific Environmental Network (APEN)
OPPOSITION
None received
Hearing Date: March 26, 2014 SB 1300
Consultant: Alma Perez-Schwab Page 11
Senate Committee on Labor and Industrial Relations