1. OSHA’s New Silica Rule and Its Implications for the Oil & Gas Industry Jeffrey Jackson and Chris Schlag 1

2. Objectives Defining the silica exposure Overview of OSHA’s Current Regulatory Framework Examination of OSHA’s Proposed Silica Regulations Status Check: Where is the Proposed Rule now? Discussion on the Potential Impact of OSHA’s Proposed Standard on the Oil & Gas Industry Questions and Answers

4. Silica (Quartz) Silica is a very common material Silicon (SI) is the main element SiO 2 = Silicon combines with oxygen to form silicon dioxide, which is essentially silica or quartz Silica exposures are regulated by the Occupational Health and Safety Administration (“OSHA”)

6. Silica Exposures “Silica exposure” refers specifically to respirable crystalline silica Inhalation of respirable crystalline silica has been linked to –silicosis, –lung cancer, –autoimmune disorders, –kidney disease, and –an increased risk of tuberculosis. Silica exposures are primarily regulated to minimize an individual’s risk of silicosis or lung cancer 

9. Silica Exposures Silica is found in: –Cement dust –Sandblasting operations –Ceramics –Resin-coated sand –Proppants –Aluminum Pellets –Sintered Bauxite

10. Silica Exposures Hydraulic fracturing operations have silica in 7 main areas: –Thief Hatches –Sand Movers –Vehicle Traffic –Transfer Belts –Bender Hoppers –Sand Drops –Sand Transfer Belt (Dragon’s Tail)

11. Silica Exposures

15. OSHA’s Current Regulatory Framework OSHA regulates silica exposure using a permissible exposure limit (“PEL”) A PEL is the maximum amount of airborne dust that an employee can be exposed to during a full work shift (usually a time weighted average for 8 hours) The PEL for silica is dependent on the amount of crystalline silica that is present in the dust The current PEL is 100 ųg/m3 as an 8-hour time weighted average (“TWA”)

16. OSHA’s Current Regulatory Framework Silica exposures are calculated by analyzing: –The percentage (%) of crystalline silica in the air samples (also look at percentage quartz, cristobalite, tridymite) –The total weight of the dust collected in the air samples –The total volume of air sampled for each sample in cubic meters (1000 liters = 1 cubic meter) –Total sampling time for each air sample in minutes PEL (Respirable Fraction) = 10 ÷[% quartz + (% cristobalite x 2) + (% tridymite x 2) + 2] PEL (total dust) = 30 ÷ [% quartz + (% cristobalite x 2) + (% tridymite x 2) + 2]

17. OSHA’s Current Regulatory Framework OSHA’s current silica PEL was established in 1971 To ensure compliance with the PEL, OSHA also requires: –Hierarchy of Hazard Controls –Medical Monitoring –Hazard Assessment –Training –Posted Warning Signs –Compliance with Hazard Communication

18. OSHA’s Current Regulatory Framework OSHA currently has a National Emphasis Program aimed at ensuring compliance with silica exposure limitations, which consists of –Programmed inspections for companies and industries known to have silica exposures –Enhanced current enforcement efforts aimed at ensuring awareness and compliance with the silica PEL

19. OSHA’s Current Regulatory Framework A programmed inspection under OSHA’s National Emphasis Program consists of: –Air Sampling and Monitoring –Respiratory Protection Program Review –PPE Spot Check

20. OSHA’s Current Regulatory Framework Work Site Inspections –OSHA typically conducts between 85,000 and 100,000 work site programmed and targeted inspections during the fiscal year –Though the total number of inspections has remained steady since 2000, OSHA has increased the percentage of inspections at Oil and Gas sites

21. OSHA’s Current Regulatory Framework

24. Silica in the Oil and Gas Industry In 2013, the National Institute for Occupational Safety and Health (“NIOSH”) released a report concluding that Oil and Gas workers had significant silica exposures, well over the OSHA established PEL. The basis of the report: –NIOSH performed exposure assessments at 11 well sites in 5 states (CO, TX, DA, AK, and PA) from August 2010- September 2011 –Personal breathing zone samples were collected from various employees during 8 and 10 hour shifts

25. Silica in the Oil and Gas Industry Assessed health risks to oil & gas workers Silica air sampling –47% greater than OSHA limit 9% of all samples more than 10x the OSHA limit –79% greater than NIOSH limit 31% of all samples more than 10x the NIOSH limit

26. Silica in the Oil and Gas Industry The NIOSH report concluded that Oil and Gas workers engaged in sand moving operations and “hot loading” faced significant silica exposures, which often exceeded OSHA’s PEL for quartz silica exposures. NIOSH’s report also recommended that OSHA’s PEL for silica exposures be reduced In response to the NIOSH report, OSHA proposed a reduction in the silica PEL, action PEL, and comprehensive medical monitoring program requirement

27. Proposed Changes OSHA issued a Proposed Rule on Occupational Exposure to Respirable Crystalline Silica on September 12, 2013 The Proposed Rule would: –Restate and reduce the PEL from 100 ųg/m 3 to 50 ųg/m 3 –Require Employers to employ the hierarchal approach to silica management –Require medical monitoring programs –Require consistent and frequent air monitoring

28. Opposition to the Proposed PEL The Business Community and the Oil and Gas Industry have actively opposed OSHA’s proposed standard and argued that –The need for an enhanced PEL (i.e. NIOSH study was based on outdated processes and used inadequate testing) is unclear; –Oil and Gas companies may be economically or physically unable to comply with the proposed PEL; –OSHA’s stated cost analysis for the benefits and costs if the new regulation are inaccurate; and –Alternative Approaches are available which would be just as effective.

29. Status Check

30. OSHA has not officially released any new information regarding the proposed rule since July 2014 OSHA has indicated however, that OSHA will finalize the proposed silica rule during 2016 Covered employers, including those in the Oil and Gas Industry, could be expected to comply with the new silica PEL towards the end of 2016 or beginning of 2017

31. Impact on the Oil and Gas Industry OSHA’s proposed Rule claims that implementation would result in –Average annual costs of $1,242 per workplace to implement –While preventing the development of 1,600 new cases of silicosis per year in the Oil and Gas and Construction industries OSHA claims that the new rule is more than feasible because –Costs would equal or be less than $637 Million annually over the first 10 years of implementation and –The new rule will result in $4.6 billion annually.

32. Impact on the Oil and Gas Industry –OSHA’s proposed rule would require Oil and Gas companies to ensure complete compliance with the PEL of 50 ųg/m3 – In effect, Oil and Gas companies will have to ensure the following: Documented air monitoring and surveillance programs Medical monitoring and exams for employees working near sand blasting or fracking operations Implementation of all feasible engineering controls or product substitutions (largest expense) Implementation of Respiratory Protection Program with consistent assessments, testing, and training All Oil and Gas Contractors on a site are in compliance with silica PEL exposure limitations

33. Impact on the Oil and Gas Industry

34. –Specific work practices in the Oil and Gas Industry that could be impacted: Fill ports and lock caps may need to be employed on sand movers in sand operations A reduction in heights between the sand transfer belt and T-belts and blender hoppers may need to be engineered or installed to reduce the amount of distance that sand falls through the air Administrative controls may need to be implemented to limit the number of workers and the time workers spend in areas where dust and silica levels may be elevated Routine applications of fresh water may need to be incorporated into sand use operations to reduce dust around the well site

35. Impact on the Oil and Gas Industry –Specific changes in the equipment process: Belt operations where dust is released may need to be enclosed under OSHA’s engineering control requirement Operator cabs and booths may need to be enclosed and equipped with HEPA filtration systems Modify sand moving from belt transfer systems to auger systems which have less movement and produce less dust

36. Impact on the Oil and Gas Industry –New Legal Challenges: Increased Claims by Employees Alleging Injuries Negligence Per Se

37. Conclusion OSHA is moving forward with implementing a reduced silica PEL Under the new standard, Oil and Gas Companies will face new air monitoring requirements, administrative tasks, and expenses related to minimizing silica exposures.