UPDATE 1-U.S. safety board urges new rules for California refineries

Tue Dec 17, 2013 4:00am IST

Stocks

   

* Board calls for Calif. to adopt "safety case" system

* Recommendations in wake of Chevron 2012 refinery blaze

* Calif. officials weigh possible new rules for refineries (Adds Chevron statement, details throughout on Safety Board's action)

By Erwin Seba

HOUSTON, Dec 16 (Reuters) - The U.S. Chemical Safety Board on Monday called on California officials to adopt new rules for crude oil refineries that would force owners to prove they can operate their plants at the lowest risk practicable, the federal investigative agency said.

An interagency working group representing California state agencies recommended similar action to California Gov. Jerry Brown in July.

The board said the recommended move to a "safety case" system like that in the United Kingdom and Australia grew out of the board's probe of the Aug. 6, 2012 fire at Chevron Corp's San Francisco Bay-area refinery in Richmond, California.

A Chevron spokeswoman, in a statement on Monday afternoon, did not address the CSB's recommendations for changes in the system for regulating California refineries.

"Chevron U.S.A. Inc. will continue to work with the U.S. Chemical Safety Board, the City of Richmond, Contra Costa County and other regulatory agencies and industry groups to implement appropriate measures that enhance safety at our Richmond facility," said Chevron's Melissa Ritchie.

The Aug. 6, 2012 fire sent a gigantic plume of thick black smoke and particles into the sky over the Bay area, leading 15,000 people to seek medical treatment in the days afterward.

"Refinery safety rules need to focus on driving down risk to the lowest practicable level, rather than completing required paperwork," said CSB Chairman Rafael Moure-Eraso on Monday. "Companies, workers, and communities will all benefit from a rigorous system like the safety case. I believe California could serve as a model for the nation by adopting this system."

The board has no regulatory or enforcement authority, but only investigates incidents that fall under the jurisdiction of the U.S. Clean Air Act. The CSB makes recommendations to government and industry as it deems necessary.

Worker safety regulation in California is performed by a state agency, the California Division of Occupational Safety and Health (Cal/OSHA), in contrast with most states where safety rules are enforced by the U.S. Occupational Safety and Health Administration (OSHA).

States can carry out worker safety regulation if their rules are equal to or more strict than that of the federal OSHA. California's rules are seen as more stringent than the federal agency.

The board warned switching from the current activity-based system like that enforced by Cal/OSHA would require a "well-funded," "technically competent" regulator with a compensation system that can attract and retain well-trained and experienced staff.

The CSB did not say how much more the new system would cost.

Critics have previously said the recommended safety case system would essentially be a form of self regulation if there are not government inspectors who audit refineries and carry preventative inspections.

The CSB also said the safety case could also be dynamic reacting to changes in industry standards and discoveries about refinery risk more quickly than the current system.

In a report issued in April, the CSB said that the Aug. 6 2012 fire at the 245,000 barrel-per-day (bpd) refinery sprang from a leak of hydrocarbon coming from a pipe on the refinery's sole crude distillation unit.

Board investigators found Chevron bypassed several opportunities to replace the pipe, which had become dangerously thin prior to the fire due to corrosion caused by the sulfur found in crude oil.

The crude distillation unit, which does the initial refining of crude oil coming into the refinery and provides feedstock for all other production units, was shut for nine months after the blaze, cutting gasoline production by at least 50 percent.

Chevron has since replaced the damaged pipes on the crude unit with corrosion resistant piping. The company continues to carry out investigations on pipes at the refinery, replacing piping as needed, Chevron has said.

In January, Cal/OSHA issued 25 citations for worker safety violations to Chevron related to the Aug. 6, 2012 blaze, with fines totaling $963,200.

"We provided approximately $10 million to affected community members and local government agencies in Richmond and West Contra Costa County for medical and response-related costs," Chevron said.

The CSB recommendations issued on Monday will not be final until the board formally approves them at a meeting in January. (Editing by Dan Grebler and Bob Burgdorfer)

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