Court of Appeals Rules on “Repeat” Violations, Scope of PSM Standard
Scalia v. Wynnewood Refining, (10th Cir., Oct. 27, 2020) arose from a 2012 boiler explosion at an Oklahoma refinery which killed two workers at the refinery. After the explosion and investigation, OSHA issued the refinery 12 citations for violations of the Process Safety Management (PSM) standard, including 11 citations relating to the boiler itself. OSHA also assessed all 12 citations as “repeat” violations, because of previous PSM violations at the refinery which became final orders in 2008.
Wynnewood appealed the citations to the OSH Review Commission. (See article on the Commission’s decision in our June 2019 Newsletter). Wynnewood argued that the boiler was not covered under PSM because it did contain highly hazardous chemicals. The Review Commission upheld the PSM violations, holding that even though the boiler itself did not contain the threshold amount of highly hazardous chemicals, it was a vessel that was “interconnected” with the PSM-covered process and therefore covered by PSM requirements. The Commission also found that the boiler met the “location” test for PSM coverage in that it was located “such that a highly hazardous chemical could be involved in a potential release.”
The Commission also held, however, that the PSM violations could not be upheld as “repeat” violations because the refinery, under new ownership after 2008, had hired several new managers, including persons responsible for safety and health.
Both Wynnewood Refining and OSHA appealed the Review Commission decision to the Court of Appeals.
The Court of Appeals affirmed the Commission decision on both issues. Regarding whether the boiler was covered by PSM, the Court said that the text of the PSM regulation was clear, and “supports the Commission finding that the Wickes boiler is part of a process covered by the regulation because it is interconnected with the FCCU and the alkylation unit.” Because the Court found that the boiler met the “interconnected-ness” test, the Court did not reach the question of whether the boiler was covered under the “location” test.
The Court also upheld the Commission’s conclusion that the citations were not “repeat” violations. The issue of whether the citations could be cited as “repeat” violations arose because the predecessor citations, in 2008, were issued when the refinery was owned by Gary-Williams Energy Corporation and operated as Wynnewood Refining Company. The stock of the parent company was subsequently purchased by CVR Energy, and the new owners registered Wynnewood as an LLC.
The Court of Appeals agreed that the Commission had traditionally applied the “substantial continuity” test to such questions, and that was the applicable test here. The “substantial continuity” test analyzes three factors: (1) the nature of the business and the continuity of products/services and customers, (2) the similarity and continuity of jobs and working conditions, and (3) the continuity of personnel, particularly the personnel who control decisions related to health and safety.
The Court’s holding and discussion on this issue is important for any employer facing a repeat violation after changes in ownership and/or corporate structure.
The Court majority (2-1) found that the Commission properly applied the “substantial continuity” test. Although the first two factors weighed in favor of “substantial continuity,” the Court said that the Commission could, in considering the totality of the circumstances, find that the third factor, changes in management personnel, defeated a repeat violation. The Court’s holding and discussion on this issue is important for any employer facing a repeat violation after changes in ownership and/or corporate structure.
The Court of Appeals decision includes a discussion of the role of “preamble” in the interpretation of an OSHA standard. The “preamble” to an OSHA standard is the lengthy material printed with the standard in the Federal Register, and includes background, economic analysis, response to comments on a proposed rule, and explanation of the standard’s provisions. The preamble is generally hundreds of pages long, and OSHA (and other agencies) sometimes use the preamble to “create” obligations beyond those in the standard itself. Here the reverse was the case. In Wynnewood, the company cited language in the preamble which limited PSM coverage to interconnected vessels which contained highly hazardous chemicals. However, the language in the preamble was not in the text of the regulation itself, and the Court of Appeals declined to consider the language in the preamble. The Court said that the text of the regulation itself was not ambiguous, and only if the text of the regulation is ambiguous, after “giving each word its ordinary and customary meaning,” should other sources outside the regulation, including the preamble, be considered.