On Tuesday, October 27, 2020, the U.S. Court of Appeals for the Tenth Circuit issued a long- awaited decision in Sec’y of Labor v. Wynnewood Refining Co., LLC. That case originated in 2012 when OSHA inspected the company following a boiler explosion that killed two employees. OSHA issued several repeat citation items under the Process Safety Management (PSM) standard. The company litigated the validity of the citations and repeat classifications at trial and the Administrative Law Judge affirmed all but one of the PSM violations but changed several repeat violations to serious. The ALJ found that the violations occurred under Wynnewood, Inc. and not Wynnewood LLC, a new company formed in December 2011 after Wynnewood, LLC’s parent company acquired all the stock in Wynnewood, Inc’s parent company.
On appeal to the Occupational Safety and Health Review Commission (“the Commission”), the Commission upheld the PSM violations but declined to find repeat liability finding that OSHA did not satisfy the substantial continuity test. Under that test, the Commission considers the totality of the circumstances of the change in ownership to determine whether the current company should be held liable for repeat citations based on citations from the previous company. In making this determination, the Commission applies a three-factor test: (1) the nature of the business, including the continuity in the type of business products or services offered and customers served to determine whether the activities associated with the business and the inherent safety and health considerations have changed; (2) the jobs and working conditions because of their close correlation with particular safety and health hazards; and (3) the continuity of personnel, specifically those who control decisions related to safety and health because their decisions related directly to how well the employer complies with the requirements of the Occupational Safety and Health Act.
The Commission found that the first two factors leaned in favor finding substantial continuity test, but OSHA did not satisfy the third factor. Although there were many supervisors who were the same at either company, “these managers merely implemented the safety policies set by the previous parent company and then the new parent company because new management focuse[d] on improving safety, health, and the proper implementation of [the] PSM [standard]” and that it made substantial investments in safety personnel and equipment, causing a “safety culture shift.”
The Tenth Circuit determined that the Commission correctly applied the substantial continuity test. The Tenth Circuit then reviewed the Commission’s decision under the substantial evidence standard, in which the appellate court asks whether a reasonable mind would consider the evidence adequate to support the conclusion, without reweighing the evidence, second-guessing the factual inferences made from the evidence, or substituting their own judgment on witness credibility. In so doing, the Tenth Circuit determined that substantial evidence in the record supported the Commission’s finding that there was no substantial continuity between Wynnewood, Inc. and Wynnewood.
This decision affects employers across all industries on the issue of repeat citations when companies change ownership and the new ownership makes significant safety improvements. This decision reinforces the Commission’s decision which properly recognized that a new owner should not be penalized for the OSHA history of its predecessor, where it is striving to improve safety and health in the workplace. It also represents a check on OSHA’s authority to issue Repeat citations.