Wynnewood Refining Co., LLC (Wynnewood) was cited by OSHA after its boiler exploded at a refinery in Oklahoma.  The Occupational Safety and Health Review Commission upheld the violations after noting it had previously violated 29 C.F.R. § 1910.119.  Wynnewood appealed the Commission’s order.  It stated 29 C.F.R. § 1910.119 did not apply to the boiler that exploded.  The U.S. Court of Appeals disagreed.  It found § 1910.119 applied to the boiler and affirmed the Commission’s order upholding the violations.

Background

Wynnewood Inc, a subsidiary of Gary-Willaims Energy Corporation, owned the refinery prior to December 2011.  CVR Energy, Inc. acquired stock from Gary-Willaims Energy Corporation and its subsidiaries, including Wynnewood Inc.  After the purchase, Wynnewood Inc. was renamed Wynnewood LLC.

In September 2012, one of Wynnewood’s boilers exploded after too much natural gas entered its firebox.  Two employees died as a result of the explosion.  After the explosion, OSHA cited Wynnewood for violations including § 1910.119, which was characterized as a repeat violation.  An Administrative Law Judge (ALJ) affirmed most of the violations, but because OSHA based its repeat violations under Wynnewood Inc. and not Wynnewood LLC, the ALJ changed the violations from repeat to serious.

Wickes Boiler

Regulation § 1910.119 creates a standard for process safety management (PSM) of highly hazardous chemicals.  The PSM regulation sets requirements employers must follow to prevent or minimize the consequences of “catastrophic releases of toxic, reactive, flammable, or explosive chemicals.  It applies to processes involving a threshold amount of highly hazardous chemicals.  The Commission concluded the Wickes boiler could be a part of a process covered by the regulation even though it did not contain any highly hazardous chemicals.  It determined the boiler was interconnected with the FCCU and alkylation unit, both units covered by the PSM standard.  It also found it was covered by the standard because it was “located such that a highly hazardous chemical could be involved in a potential release.”  Wynnewood argued the regulation did not apply to the Wickes boiler.  It stated the boiler did not contain highly hazardous chemicals, its interconnection with or location near a process, and the Secretary of Labor’s new interpretation deprived Wynnewood of fair notice.

Highly Hazardous Chemicals

The U.S. Court of Appeals noted “process” in § 1910.119(a)(1) is defined as “any activity involving a highly hazardous chemical.”  Wynnewood argued the definition is ambiguous and relies on extratextual sources.  The Court found the definition does not require a vessel to contain a highly hazardous chemical.  It concluded the Wickes boiler may be considered part of a process, even if it didn’t contain highly hazardous chemicals.

Interconnection to PSM-Covered Units

Wynnewood asserted a vessel cannot be a part of a process because it is interconnected to a PSM-covered process.  It argued, “an interconnected vessel is not part of a process unless it poses a risk of catastrophic release of highly hazardous chemicals.”  The Court found the text of the regulation “unambiguous.”  It stated the phrase “such that a highly hazardous chemical could be involved in the potential release applies only to “vessels which are located.”  It held in favor of the Commission’s conclusion that the Secretary need not demonstrate the Wickes boiler posed a risk of catastrophic release of hazardous chemicals to be a part of a process.

Repeat Violation

The OSH Act increases penalties for employers who repeatedly violate standards under the Act.  Repeated liability applies to successor entities as long as there is “substantial continuity between the two enterprises.”  The Secretary asserted Wynnewood LLC is the same employer as Wynnewood Inc.  The Secretary argued the Commission should have considered its pre-2011 violations when considering whether the violations were serious or repeat. 

The Commission determined Wynnewood Inc. and Wynnewood LLC were not the same employers by using the substantial continuity test.  Under this test, the Commission considered the totality of circumstances by analyzing “the nature of the business,” the jobs and working conditions due to their correlation with safety and health standards, and continuity of personnel who control decisions related to safety and health.  It noted many of the supervisors at Wynnewood LLC remained the same as Wynnewood LLC took an increased role in the day-to-day operations at the refinery.  It found “these managers merely implemented the safety policies set by the previous parent company and then CVR Energy.  The Commission concluded there was not a continuity in personnel and Wynnewood LLC was not a successor of Wynnewood Inc.

The Secretary asserted the Commission did not apply the substantial-continuity test correctly.  It argued the Commission failed to consider the totality of the circumstances and considered irrelevant evidence.  The U.S. Court of Appeals reviewed the question of law de novo.  The Court agreed with the Commission.  The Commission stated the change in personnel directly impacted the safety of the refinery.  It noted the third factor demonstrated the “changeover in ownership resulted in changes in management practices, procedures, and culture significant enough to break the chain of liability stemming from Wynnewood Inc.’s previous actions."

Conclusion

The Secretary argued the Commission incorrectly relied on Wynnewood not changing its legal identity to avoid a repeat characterization.  The Court found the Commission did not incorporate Wynnewood’s motive into its three-part analysis.  The Commission noted Wynnewood’s motive only after it concluded there was no substantial continuity.  The Court rejected the Secretary’s totality-of-the-circumstances argument and concluded the Commission applied the substantial continuity test correctly.  The U.S. Court of Appeals affirmed the PSM-standard violations.