OSHRC Decision in Wynnewood Dramatically Expands Scope of PSM Standard

Secretary of Labor v. Wynnewood Refining Co., LLC

In the underlying case, OSHA issued citations to Wynnewood Refining Co., LLC related to a steam boiler powered by natural gas at the company’s oil refinery in Wynnewood, Oklahoma. The “Wickes” boiler at issue was one of four boilers in the refinery’s Alkylation Unit and Fluid Catalytic Cracking Unit (FCCU) that provided steam to a 225-pound steam header used for various purposes within the FCCU. During a September 2012 “turnaround,” the Wickes boiler exploded during the start-up process, tragically killing two employees. Wynnewood argued unsuccessfully at trial that the boiler was not part of a covered “process” under the PSM Standard, and thus that the citations should be vacated because the PSM Standard did not apply. Wynnewood appealed to the Commission, which affirmed all citations.

Implications of Wynnewood

The Commission’s decision in Wynnewood is significant, and if affirmed on appeal, will likely result in significantly increased compliance costs for PSM-covered employers. The PSM Standard generally applies to any process that involves the use, storage, manufacturing, handling, or on-site movement of a highly hazardous chemical above a threshold quantity contained in the Standard.

“The PSM Standard expressly defines the boundaries of a process, in relevant part, as “any group of vessels which are interconnected … . (emphasis added).” For the last twenty years, OSHA has relied upon interpretation letters to limit the breadth of the term “interconnected,” indicating in a February 28, 1997 interpretation letter that a covered “process” does not include downstream, interconnected equipment if it cannot cause the release of a highly hazardous chemical, “interfere with the mitigation of the consequences of a [highly hazardous chemical] release, and the equipment does not itself contain a [threshold quantity] or greater amount” of a highly hazardous chemical. In other words, OSHA only considered interconnected equipment to be part of a covered process if it either contained a threshold quantity of a highly hazardous chemical, or if it could contribute to a release or interfere with the mitigation of a catastrophic chemical release.

However, in Wynnewood, the Commission rejected Wynnewood’s argument, which was based on OSHA’s long-standing interpretations regarding the boundaries of covered processes, holding that the Wickes boiler at issue was part of a PSM-covered process. The Commission based that decision on its finding that the Wickes boiler was interconnected with “virtually all of the refinery’s processes” through a refinery fuel gas pipeline and steam header. More specifically, the Commission stated: “We find, however, that the indirect, physical link between the Wickes boiler and FCCU and Alkylation unit is sufficient for PSM coverage … [and] the 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.” Simply put, under the Wynnewood decision, the mere physical connection of the boiler to the process constituted “interconnection” for the purposes of the PSM Standard.

As such, the Wynnewood decision, if upheld, is likely to increase the number of processes that are covered under the PSM Standard, as well as expand what OSHA will consider the boundaries of processes that are already covered. Both will likely impose significant costs on employers who must then ensure compliance for newly-covered processes and expanded processes with each of the eleven elements of the PSM Standard. For example, the boundaries of a process determine the equipment that must be included in an employer’s mechanical integrity program, the employees who must be trained and periodically retrained, the written procedures that must be drafted, and the units that require process hazard analyses, incident investigations, and audits. As such, if the Wynnewood decision were to be affirmed, employers will need to evaluate all of the processes at their facilities—as well as interconnected equipment—to determine whether they are covered under the PSM Standard and whether their PSM programs are adequate. Furthermore, because OSHA’s PSM Standard and the Environmental Protection Agency’s (EPA) Risk Management Program (RMP) define a covered “process” in the exact same way, the rationale in the Wynnewood decision could be used by EPA to expand the boundaries of an RMP-covered process, which would also drive up costs.

Uncertainty Remains

Until Wynnewood Refining Co., LLC and the Secretary of Labor’s appeals are fully briefed and the Tenth Circuit issues a decision, the practical implications of the Wynnewood decision for employers remain unclear. However, employers should begin taking steps to review their existing PSM-covered processes as well as interconnected vessels to evaluate the boundaries of these PSM covered processes.

If you would be interested in receiving updates about this case, please contact Mark Dreux, Alexandra M. Romero, or click here to subscribe to our mailing list.