Editor's note: This article was originally published in June 2019; we are publishing the article again due to the Oct. 2020 Court of Appeals ruling on the case.
In Wynnewood Refining (3/28/2019), the OSH Review Commission addressed two long-standing issues: (1) when are containers (vessels) which do not themselves contain the threshold amount of hazardous chemicals nonetheless covered by the Process Safety Management (PSM) standard because the vessel is part of a covered “process,” and (2) when may a successor enterprise be liable for a “repeat” violation based on violations by a predecessor.
Wynnewood Refining Company, LLC operates an oil and gas refinery in Oklahoma. During a 2012 “turnaround,” a boiler exploded, killing one employee and critically injuring another, and triggering an inspection by OSHA. OSHA issued 12 citation items, a second inspection resulted in an additional 3 items involving the boiler, and all alleged violations of the PSM standard. Wynnewood LLC argued that the boiler did not contain the threshold level of flammable material, and therefore was not covered by PSM. OSHA alleged that the boiler was covered because the boiler was part of a covered “process” under PSM.
The PSM standard defines a “process” as “any group of vessels which are interconnected and separate vessels which are located such that a highly hazardous chemical could be involved in a potential release.” The Commission interpreted this definition as including two separate tests, either of which would trigger PSM coverage: interconnectedness or location.
Citing the dictionary definition of “interconnect,” the Commission said the “interconnectedness” test did not require a direct connection between the vessel and processing units or equipment. The boiler which exploded at Wynnewood was one of four boilers that were fed into a steam header which in turn provided steam for powering equipment and use in refining processes. The Commission distinguished the term “interconnect,” which “contemplate[s] the linking together of multiple objects, which necessarily includes an indirect link between some of them,” with “connect,” which would describe a direct link.
The Commission also found that the boiler met the “location” test, which the standard defines as “located such that a highly hazardous chemical could be involved in a potential release.” The boiler was located 100 feet from a reactor column containing highly hazardous chemicals. Wynnewood argued that the standard requires the potential for release of a highly hazardous chemical would be “probable.” The Commission rejected this argument, citing the language in the standard – “could be involved in a potential release.” The Commission also cited evidence from the hearing that the consequences of the boiler explosion at Wynnewood could have been much more catastrophic than was in fact the case.
While siding with the Secretary on upholding the PSM citations, the Commission declined to find that any of the citations were “repeat,” as had been alleged by OSHA. The “repeat” characterization as alleged by OSHA was based on PSM citations which became final in 2008, when the refinery was owned and operated by Wynnewood Refining Company. Wynnewood Refining Company was then owned by Gary-Williams Energy Corporation. The stock of the parent corporation was subsequently purchased by CVR Energy, and the new owners registered Wynnewood as an LLC.
Previous Commission decisions applied a “substantial continuity” test to determine whether repeat violations would be upheld where the legal identity of the cited employer has been changed from that of the predecessor employer. The Commission acknowledged that “the refinery’s business, products, jobs, and working conditions were the same under both entities.” However, the Commission majority (the decision was 2- 1 on this part) found that the refinery had hired several new managers, including persons responsible for health and safety at the refinery, and so found that there was not “substantial continuity” of personnel.
The two commissioners in the majority, however, also indicated that that they did not agree that “substantial continuity” was the appropriate test, and that the applicability of the test should be revisited. Without expressly adopting this as a new test, the majority indicated that any change in legal identity would prevent a “repeat” violation, unless the cited employer had altered its legal identity “simply to avoid a repeat characterization.”
The Commission’s decision is the second significant decision in recent months affecting and limiting OSHA’s characterization of violations as “repeat” violations (which currently carry a maximum penalty of $132,598). In Angelica Textile Services, (6/24/2018), the Commission held that a violation of the same standard was not a “repeat” if the conditions and circumstances of the later violation were different from the earlier violations, even if the same standard was cited (see August 2018 newsletter). The Secretary of Labor has appealed the Commission decision in Angelica Textile to the U.S. Court of Appeals for the Second Circuit.