Statute of Limitations Doesn’t Apply to Process Safety Violations Successor liability at issue

By Roy Maurer May 19, 2015
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The Occupational Safety and Health Review Commission (OSHRC) ruled April 23, 2015, that process safety management (PSM) violations such as failing to conduct or act upon hazard analyses and compliance audits are continuing violations and are not subject to the same six-month statute of limitations as record-keeping violations.

Process safety management applies to certain enumerated processes aimed at “preventing or minimizing the consequences of catastrophic releases of toxic, reactive, flammable or explosive chemicals.”

The PSM standard sets a schedule for auditing and abating potential process hazards and PSM compliance issues, and requires hazard analyses and compliance audits to be completed every five and three years, respectively.

The Occupational Safety and Health Administration (OSHA) cited Delek Refining for failing to address recommendations from several process hazard analyses and a process safety management audit undertaken by the previous owner following an inspection of Delek’s oil refinery in Tyler, Texas. An administrative law judge affirmed all citations, whereupon Delek appealed to the commission.

Delek argued that the citations were time-barred by the Occupational Safety and Health (OSH) Act’s six-month statute of limitations because they were based on record-keeping from the prior owner that preceded the citations by several years.

The employer cited the U.S. Court of Appeals for the District of Columbia Circuit’s decision in AKM LLC v. OSHRC, 675 F.3d 752 (D.C. Cir. 2012), where the court found that OSHA could not issue a citation for a record-keeping violation that was older than six months.

The review commission ruled that the AKM decision had no bearing on the citations issued against Delek. The AKM decision addressed record-keeping for injuries that were distinct events, whereas the alleged violations in Delek were not “one-time failures to perform a task at a specified time,” but rather a continuing failure to take corrective actions toward persistent dangers described in hazard analyses.

Delek also argued that it was not responsible for addressing the findings and recommendations of the prior owner’s hazard analyses and compliance audits. According to Delek, an employer purchasing a facility is not “required to investigate and satisfy obligations created by a prior employer, especially where, as here, the new employer was led to believe that no obligations remained outstanding.” The commission rejected this argument, concluding that the fact that responsibility for these items originated under previous ownership did not absolve Delek of its own OSH Act obligations.

“The standard’s focus remains the ‘process’—there is no language in the standard limiting its obligations to a particular employer, let alone the one that conducted the required [analyses] and compliance audits,” the commission said.

Commissioners Thomasina Rogers and Cynthia Attwood affirmed a penalty of $21,150 for process safety lapses and other violations against Delek. Commissioner Heather MacDougall dissented in part, questioning the extension of successor liability to Delek.

“I am concerned that the majority’s holding here has increased the compliance burdens and costs for employers—particularly those acquiring new facilities,” she said. “The OSH Act itself and its legislative history are silent with regard to whether corporations that purchase the assets of a company that has violated the OSH Act should also acquire that company’s OSH Act liabilities.”

Employer Takeaways

Delek significantly limits the holding in AKM, said Mark Lies, a partner in the Chicago office of Seyfarth Shaw. Employers should review safety audits and ensure that any recommendations have been closed out, he added. “This is especially true of PSM facility operators who should review their prior process hazard analyses and ensure that all of the recommendations have been properly closed out, no matter how old the recommendation may be.”

Lies advised employers who have or will be acquiring facilities covered under the PSM standard to consider a “more comprehensive due diligence inquiry prior to the acquisition to ensure that the PSM program is compliant since the acquiring employer will be assuming liability for PSM violations that pre-existed the acquisition.”

Roy Maurer is an online editor/manager for SHRM.

Follow him @SHRMRoy

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