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U.S. safety board members clash over regulatory overhaul proposal

By Erwin Seba

HOUSTON (Reuters) - The U.S. Chemical Safety Board (CSB) rejected a proposal on Wednesday night from its staff to recommend a sweeping overhaul of California's system for regulating crude oil refineries.

The proposal, called the safety case system, could eventually force refineries to adopt the safest technologies possible and justify their ability to safely make gasoline, diesel and jet fuel, and would emulate regulatory regimes in the United Kingdom, Australia and Norway.

Board Chairman Rafael Moure-Eraso said during a hearing on Wednesday night that California could provide a laboratory for proving the effectiveness of the safety case system for regulating U.S. refineries, which reported 125 incidents involving chemical releases in 2012.

"California could become the national testbed for promoting refinery safety," Moure-Eraso said during a hearing at the Richmond, California City Hall.

But the board's two other members clashed with staff and Moure-Eraso in a vote on sending the recommendations to California's governor and legislature.

"The goal is to make the report stronger in short order," said CSB member Beth Rosenberg after she and fellow board member Mark Griffon rejected Moure-Eraso's plea to adopt the proposal as part of a second report from a probe into an August 6, 2012 fire at Chevron Corp's Richmond refinery.

The fire sent 15,000 San Francisco Bay-area residents to hospital with respiratory problems.

Griffon said work needed to be done to see if regulatory agencies in California and Contra Costa County would be more effective in enforcing the current rule-based regulatory system, which is seen as setting minimum safety standards for refiners, increasing the risk of explosions and fires.

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Contra Costa County, which is home to four refineries, is considered one of the strongest local regulators in the United States. California is also seen as more aggressive in regulating industry than many other states.

"We need to see if this model didn't work," Griffon said.

Former CSB Chairman John Bresland told the board it had yet to prove the change in regulatory systems would lead to greater safety.

"The CSB's safety case system falls short in this case," Bresland said. "There is no proof that the safety case system would be better than California's current system."

Oil industry organizations criticized the proposal as introducing sweeping changes that were unfamiliar in the United States, leading to greater risk of accidents during such a switch.

The CSB has no regulatory authority and acts only as an investigator of chemical explosions and fires. The board makes recommendations about improvements to industry and government which can lead to changes in industrial practices and government policy.

No fatalities were reported due to the August 6, 2012, fire, which the CSB said in an April report was due to the failure of a heavily corroded pipe that Chevron failed to replace or properly monitor.

By a 2 to 1 vote, the board directed its staff to further research how to strengthen the current regulatory system in California as well as more clearly delineate the strengths and weaknesses of the safety case system.

(Editing by David Holmes)

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