The Elements of PSM: Trade Secrets

“This hour I tell things in confidence. I might not tell everybody, but I will tell you.”  — Walt Whitman

I once worked at a plant that produced performance chemicals. Performance chemicals are sold based on what they do rather than what they are. The key specifications are the performance specifications, not the composition specifications. Management at this company was very concerned about keeping the composition of the products secret, in order to make it harder for competitors to steal the formula.

The production department had a difficult time making product that met the very tight performance specifications. So much so that the production supervisor once commented, “I don’t know why we worry so much about keeping the formulas secret. We know the formulas and we can’t make the damn product.”

Despite the need for disclosure of chemical composition in safety data sheets, “secret formulas” remain a feature of the chemical process industries. What accommodations have the regulations made for this?

Trade Secrets in Process Safety Management

There are 14 elements of OSHA’s Process Safety Management (PSM) standard, 29 CFR 1910.119. The fourteenth element is (p) Trade secrets. The trade secret element has three requirements.

First, employers can consider anything they want as a trade secret.

Second, employers cannot keep information that has anything to do with process safety or developed as part of complying with the other thirteen elements of the PSM standard a secret from their employees.

Third, employers can require employees to enter into confidentiality agreements (non-disclosure agreements) before disclosing trade secret information to employees or their representatives.

Trade Secrets in Hazard Communication

One of the ways to get at a “secret formula” is to read the Safety Data Sheet (SDS). After all, Section 3 – Composition/Information on Ingredients, discloses the formula. One of the sections of the OSHA Hazard Communication (HazComm) standard, which is where the requirements for SDSs come from, is on trade secrets: 29 CFR 1910.1200(i). In that section of the regulation, it says that the SDS “may withhold the specific chemical identity, including the chemical name, other specific identification of a hazardous chemical, and/or the exact percentage (concentration) or concentration range of the substance in a mixture.

The claim must be supported, however.

The mechanism most commonly used by those preparing SDSs who don’t want to disclose their exact formula is to use ranges. The HazComm standard allow for the following ranges

0.1% to 1%,

0.5% to 1.5%,

1% to 5%,

3% to 7%,

5% to 10%,

7% to 13%,

10% to 30%,

15% to 40%,

30% to 60%,

45% to 70%,

60% to 80%,

65% to 85%, and

80% to 100%.

So, when an SDS gives a range for the concentration of one of its components, it is not because the manufacturing process is sloppy, but because they don’t want to give away the exact formula.

By the way, an SDS does not need to report an ingredient that is present at less than 1% if it is not carcinogenic.  If an ingredient is carcinogenic, it does not need to report it if the concentration is less than 0.1%.

Trade Secrets in Risk Management Planning

The EPA despises the very idea of trade secrets.  Program 3 of the EPA’s Risk Management Planning (RMP) rule, 40 CFR 68 Subpart D, which was supposed to mirror the PSM standard, only has 12 elements, not the 14 elements in the PSM standard. What’s missing? Paragraph (n), Emergency planning and response, and paragraph (p), Trade secrets. To be fair, emergency planning and response is not missing from the RMP rule, just from Program 3. Instead, Emergency Response gets its very own subpart, 40 CFR 68 Subpart E.

But trade secrets? They are not there.

Instead, there are two paragraphs: 40 CFR 68.151, Assertion of claims of confidential business information, and 40 CFR 68.152, Substantiating claims of confidential business information.

The first paragraph lists types of information that CANNOT be claimed as confidential business information:

• Registration data
• Offsite consequence analysis data
• Prevention program data
• Emergency response program data

That’s pretty much the whole ball of wax. If there is other information that a stationary site wants to claim as “confidential business information,” they must substantiate the claim and the EPA then decides if it really is. However, in 40 CFR 2.301, the EPA asserts that “any information to which this section applies may be released by EPA because of the relevance of the information to a proceeding, notwithstanding the fact that the information otherwise might be entitled to confidential treatment.”

Regulators and Trade Secrets

So, as far as OSHA is concerned, employers can have their process safety secrets; they just can’t keep them from their employees. SDSs can rely on ranges to muddle secret formulas, but cannot outright refuse to disclose significant ingredients.

But when it comes to the EPA, which unlike OSHA requires that reports be submitted, assume that anything disclosed to them is or will become public information.

Plan accordingly.