The case is Scalia [Secretary of Labor] v. Wynnewood Refining Co., LLC, et al, No. 19-9533 (U.S. Tenth Circuit, October 27, 2020). Wynnewood LLC’s refinery in Oklahoma processes crude oil and on a daily basis produces 70,000 barrels of gasoline, propane, propylene, butane, fuel oils, and solvents. In 2012, one of Wynnewood Refining Co’s boilers—the Wickes boiler—exploded, resulting in two employee fatalities.[1] The Occupational Safety and Health Administration (“OSHA”) cited the refinery’s owner for violating the regulation that creates a standard for process safety management (“PSM”) of highly hazardous chemicals, 29 C.F.R. §1910.119. The PSM standard sets out “requirements [employers must follow] for preventing or minimizing the consequences of catastrophic releases of toxic, reactive, flammable, or explosive chemicals.” §1910.119. The Occupational Safety and Health Review Commission (the “Commission”) upheld the violations.[2]
Wynnewood appealed from the Commission’s decision to the U.S. 10th Circuit, arguing that §1910.119, and therefore the PSM standards, do not apply to the boiler.
On appeal, the Tenth Circuit held that:
- the boiler could be part of a process as defined in § 1910.119(b) even if it does not contain highly hazardous chemicals;
- the Secretary of Labor was not required to demonstrate that the boiler posed a risk of releasing a highly hazardous chemical for the boiler to be considered part of a process through interconnection; and
- Wynnewood waived its argument that the boiler was not interconnected with a PSM-covered process, upholding the Commission’s finding that the boiler is part of a process covered by the regulation because it is interconnected with the FCCU and the alkylation unit.[3]
“Process” Definition
The PSM regulation applies only to “process[es] which involve[]” a threshold amount of highly hazardous chemicals. §1910.119(a)(1). The regulation provides a specific definition of “process” that is broken out into two sentences.
- The first sentence states that “process” is “any activity involving a highly hazardous chemical including any use, storage, manufacturing, handling, or the on-site movement of such chemicals, or combination of these activities.” 29 C.F.R. § 1910.119(b).
- The second sentence explains what constitutes a single process: “For purposes of this definition, 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 shall be considered a single process.”
The Commission’s Determination
In analyzing the two-part definition, the Commission determined the Wickes boiler was part of a process covered by the regulation—in other words, that it was part of a “PSM-covered process” or was “PSM-covered.”
First, the Commission determined that the Wickes boiler was interconnected with the FCCU and the alkylation unit, both of which are covered by the PSM standard.
Second, and alternatively, the Commission determined that the Wickes boiler was located such that a highly hazardous chemical could be involved in a potential release.
The Tenth Circuit Opinion
On appeal, Wynnewood argued that the PSM regulation does not apply to the Wickes boiler because the Wickes boiler did not contain any highly hazardous chemicals and was not interconnected.
The Tenth Circuit rejected both of Wynnewood’s arguments holding that the first sentence of the regulation does not require a vessel to contain a highly hazardous chemical in order to be part of a process—“any activity involving a highly hazardous chemical including any use, storage, manufacturing, handling, or the on-site movement of such chemicals, or combination of these activities.” According to the Court, “the comprehensive phrase ‘any activity involving’ captures a wide swath of vessels in that they need only be part of an any activity that involves a highly hazardous chemical.”
Next, the Court rejected Wynnewood’s argument, focusing on the second sentence of the process definition, that an interconnected vessel is not part of a process unless it poses a risk of catastrophic release of highly hazardous chemicals—“For purposes of this definition, 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 shall be considered a single process.” §1910.119(b)(emphasis added). Wynnewood argued that the requirement that vessels be “located such that a highly hazardous chemical could be involved in the potential release” applies to both “separate vessels” and to “vessels which are interconnected.” Applying a purely textual analysis, the Court disagreed, finding instead that:
the text of the regulation is unambiguous: the phrase “such that a highly hazardous chemical could be involved in the potential release” applies only to “vessels which are located.” And therefore, the Commission did not err in concluding that the Secretary need not demonstrate that the Wickes boiler posed a risk of catastrophic release of highly hazardous chemicals in order to be part of a process. Rather, he need only prove that the boiler was interconnected with a PSM-covered process.[4]
Thus, the Court agreed with the Commission that the Wickes boiler was interconnected physically by pipeline to the FCCU and Alkylation Unit, both of which were indisputably PSM-covered processes by virtue of the flammables contained in each. This connection, according to the Court, was sufficient for PSM coverage.
Wynnewood had attempted to challenge this conclusion. But the Tenth Circuit disregarded the argument because Wynnewood had not made it in its opening brief, only in its reply brief. That is, Wynnewood’s opening brief focused on whether interconnected vessels must pose a risk of the release of highly hazardous chemical, not on whether the Wickes boiler was interconnected with the FCCU or Alkylation Unit.[5] So, the Court ruled that Wynnewood had waived the argument and upheld the Commission’s decision on interconnectedness.[6]
The Dissent
The dissent found convincing that the boiler itself contained no highly hazardous chemicals (abbreviated as “HHC” in the dissenting opinion). The dissent focused on the two-part structure of the “process” definition and reasoned that:
The two sentences reflect two ways that a vessel can constitute part of a single PSM “process”:
- if the vessel is used in an “activity” involving an HHC or
- if a group of vessels is “interconnected” or “located such that [an HHC] could be involved in a potential release.”
Thus, according to the dissent, under the first sentence, the boiler could be subject to PSM as a PSM “activity” if the boiler had been used in a process with the FCCU or Alkylation Unit. However, the Commission and majority opinions did not turn on the first sentence. Rather, the Commission and Tenth Circuit applied the PSM standard based on the boiler’s interconnection with the FCCU and Alkylation Unit. The reliance on the second sentence rather than the first was dispositive to the dissent. It noted that the underlying decision from the initial administrative law judge relied heavily on the Fifth Circuit case of Delek Refining, Ltd., which focused on whether a piece of equipment was part of a covered activity. Delek Refining, Ltd., 25 BNA OSHC 1365 (No. 08- 1386, 2015), 2015 WL 1957889 at *7, aff’d in relevant part, 845 F.3d 170 (5th Cir. 2016). Delek concluded that the at-issue-equipment (a positive pressurization unit located in the control room of the FCC) was “part of a ‘process’ covered by the PSM standard because [the equipment was] an integral part of the ‘manufacturing, handling [and] on-site movement of [highly hazardous chemicals].” Id. (quoting the first sentence of the “process” definition in 29 C.F.R. § 1910.119(b)).
Delek thus rested on the first sentence of the regulatory definition of “process.” Because Delek focused on the first sentence and not whether vessels were interconnected pursuant to the definition in the second sentence, the Commission had rejected the administrative law judge’s reliance on Delek.
Therefore, according to the dissent, the only question before the Court was whether the second sentence meant that the boiler was PSM covered. And, in reviewing the preamble and history of the process definition, the dissent found that the second sentence covered vessels only if they contain an HHC:
Given this explanation [from the preamble to the rule defining “process”], the second sentence unambiguously applies only when HHCs exist in the interconnected or nearby vessels.
Note that the Tenth Circuit had declined to consider the history and preamble of the rule because it found the language of the definition to be unambiguous.
Reprocussions of the Tenth Circuit Decision
So where does this leave us? The holding in this case seems to stand for the proposition that every boiler (or other equipment) that is physically connected to a PSM covered unit is also PSM covered, regardless of whether it contains highly hazardous chemicals and regardless of whether it poses a risk of releasing a highly hazardous chemical.
This is not necessarily in contrast to prior OSHA decisions. For instance, the Delek case referenced by the dissent cited a 2008 OSHA interpretive letter stating that: equipment or connections which contain utility services, process cooling water, steam, electricity, or other non-regulated substances may be considered part of a process if such equipment could cause a regulated substance release or interfere with mitigating the consequences of an accidental release. OSHA Std. Interp. 1910.119 (D.O.L.), 2008 WL 2565070 (Jan. 31, 2008). Moreover, OSHA has previously advised that machinery not containing highly hazardous chemicals can nonetheless be a part of a process, insofar such machinery is used to control, prevent, or mitigate catastrophic releases. OSHA Std. Interp. 1910.119 (D.O.L.), 1997 WL 33798325 (Feb. 28, 1997). Thus, the boiler need not necessarily contain highly hazardous chemicals; rather, the question under the prior OSHA interpretive guidance is whether the boiler could cause a regulated substance release or interfere with mitigation efforts so as to qualify it as “any activity involving a regulated substance” under the first sentence of the definition—“any activity involving a highly hazardous chemical including any use, storage, manufacturing, handling, or the on-site movement of such chemicals, or combination of these activities.” 29 C.F.R. § 1910.119(b).
Accordingly, the analysis and Court’s reasoning under the first sentence is not necessarily in contrast to current understanding of the definition of a process. But, the Tenth Circuit did not render its holding under that analysis. Rather, it held that the interconnectedness was dispositive, upholding the Commissions’ finding that:
[T]he PSM standard’s use of the term “interconnected” makes it irrelevant whether the Wickes boiler is directly connected to, or involved with, the processes of the FCCU and Alkylation Unit. The main point is that [the refinery fuel gas] generated by the FCCU and the Alkylation Unit is piped to the Wickes boiler, and steam from the boiler is piped to the FCCU and Alkylation Unit; the Wickes boiler is therefore one of a “group of vessels which are interconnected,” 29 C.F.R. § 1910.119(b), and therefore covered as part of a “process” by the PSM standard. 29 C.F.R. § 1910.119(a)(1)(ii).[7]
Thus, the Tenth Circuit’s holding affirms the Commission’s finding that the second part of the second sentence of the process definition—“which are located such that a highly hazardous chemical could be involved in a potential release”—is only applicable to “separate vessels” and not to “any group of vessels which are interconnected.”
So there now seems to be three tests for determining whether a piece of equipment is PSM covered as a process: (1) the traditional understanding of a “process” under the threshold highly hazardous substance analysis; (2) the Delek analysis of whether the equipment could cause a regulated substance release or interfere with mitigation; and (3) the Wynnewood test of whether the equipment is physically interconnected with a PSM covered unit or is located such that it could be involved in a release. The aggregation of these tests seems to implicate nearly every piece of equipment at a facility. Thus, facilities may need to reevaluate the units and equipment covered under the facility’s PSM plan.
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[1] The Wickes boiler, located about 100 feet from the reactor column in the refinery’s Fluid Catalytic Cracking Unit (FCCU), is one of four boilers in the refinery providing steam to the 225-pound “steam header,” which then routes steam for use in various processes throughout the facility. See https://www.oshrc.gov/assets/1/18/Wynnewood_Refining%5E13-0644%5E13-0791Combined_Decision%5E032819%5EFINAL.pdf?8368.
[2] The decision was originally before a single administrative law judge. Both parties petitioned for review of the judge’s decision to a panel of the commission. See Panel Opinion available at: https://www.oshrc.gov/assets/1/18/Wynnewood_Refining%5E13-0644%5E13-0791Combined_Decision%5E032819%5EFINAL.pdf?8368. The panel’s decision was then appealed to the Tenth Circuit.
[3] Because the Tenth Circuit affirmed the violations based on its conclusion that the Wickes boiler was interconnected to a PSM-covered process, it did not reach Wynnewood’s argument that the Commission erred in finding that the Wickes boiler was part of a process because it was located “such that a highly hazardous chemical could be involved in the potential release.” See §910.119(b). And, according to the Tenth Circuit, because the holding was based on the text of the regulation rather than deference to the Secretary’s interpretation, it did not reach Wynnewood’s arguments about why the Court should not defer to the Secretary’s interpretation.
[4] This is the same conclusion that OSHA proffered in an interpretation opinion dated June 7, 2007 (72 FR 31457):
The presence of the word “or” between interconnected and co-located vessels in the final rule demonstrates that two potential avenues exist to find a covered process when several aspects may be involved in the overall process. The plain language of the definition establishes two distinct burdens of proof when considering the applicability of PSM to an interconnected or a co- located process. With respect to a co-located process, OSHA would be required to demonstrate as part of its prima facie case that unconnected but co-located processes are situated in a manner that a release from one process could contribute to the release of the other. In contrast, the definition of “process” contains no such requirement for an interconnected process. In other words, OSHA’s intent is that the phrase ‘‘which are located such that a highly hazardous chemical could be involved in a potential release’’ modifies only the immediately-preceding “separate vessels,” making the entire phrase parallel to the free-standing phrase “any group of vessels which are interconnected.” Thus, there is no additional requirement on OSHA to show the potentiality of a release with respect to interconnected (as opposed to separate) vessels. Rather, the PSM standard presumes that all aspects of a physically connected process can be expected to participate in a catastrophic release.
(emphasis added).
[5] Whereas Wynnewood waived its right to argue against interconnectivity, a real question of fact and law exists in this question. Boiler construction involves a fire box where gas is burned and which also contains a vessel. The vessel is a pressure vessel that contains water and steam. Gas is burned in the fire box and the hot flue gas contacts the outside of the pressure vessel. Thus the gas from the fuel gas system is not interconnected with the interior of the vessel and only hot combusted gases are in contact with the exterior of the vessel. The concept interconnectivity is intended to cause aggregation of materials found inside connected vessels. A fire box is not a vessel.
[6] Secretary of Labor Eugene Scalia (the “Secretary”) also appealed from the order, arguing that the Commission erred in failing to characterize the violations as repeat violations. The Court also determined that the violations are not considered “repeat” violations under 29 U.S.C. § 666(a), which permits increased penalties for “employer[s] who willfully or repeatedly violate.” Substantial evidence supported the Commission’s finding that there was no substantial continuity between Wynnewood Inc. (prior owner) and Wynnewood LLC (current owner).
[7] Commission Opinion, pg. 10 (available at: https://www.oshrc.gov/assets/1/18/Wynnewood_Refining%5E13-0644%5E13-0791Combined_Decision%5E032819%5EFINAL.pdf?8368).