Department Of Labor And Industries, V. Phillips 66 Company
80685-8
Wash. Ct. App.Jun 28, 2021Background
- Phillips 66 operates a Ferndale refinery with an extensive fire water system (1,000,000‑gallon tank, ponds, hydrants, grid piping, pumps, 30,000+ gpm capacity, redundant water sources).
- The Department of Labor & Industries inspected the refinery, observed leaks and a leaking hydrant, and cited Phillips 66 for alleged violations of the PSM rules: mechanical integrity (WAC 296‑67‑037) and process hazard analysis (WAC 296‑67‑017).
- Phillips 66’s written policy inspected above‑ground fire equipment but did not include standards for inspecting underground piping or the interior of the storage tank.
- The Board and Whatcom County Superior Court concluded the fire water system was not a “process” or “process equipment” under WAC 296‑67 and vacated the citations because the system contains no highly hazardous chemicals.
- The Court of Appeals reversed: it held the fire water system falls within the PSM definition of “process” and that both the mechanical integrity and PHA regulations apply; it remanded to the Board to determine compliance (including the proper RAGAGEP).
- Parties disputed compliance specifics: the Department relied on NFPA 25 as RAGAGEP (interior tank inspection required), while Phillips 66 relied on API inspection methods and testimony that its inspections satisfied applicable standards.
Issues
| Issue | Plaintiff's Argument (Department) | Defendant's Argument (Phillips 66) | Held |
|---|---|---|---|
| Whether the fire water system is a “process” under the PSM rules | The system is involved in activities that mitigate releases of highly hazardous chemicals and thus falls within the PSM definition of “any activity involving” a highly hazardous chemical | The fire water system contains no highly hazardous chemicals and is not connected to process equipment, so it is not a PSM‑covered process | Held: Fire water system is a “process” under the PSM rules because it mitigates consequences of catastrophic releases and fits the definition’s broad, non‑exhaustive scope |
| Whether the mechanical integrity regulation (WAC 296‑67‑037) applies to the fire water system | The regulation applies to listed process equipment (piping, pumps, tanks, valves) and Appendix C specifically identifies fire protection systems as components for mechanical integrity programs | The Board previously treated similar utility components as outside the mechanical integrity scope; Phillips 66 argues its system is not process equipment because it lacks hazardous chemicals | Held: Mechanical integrity regulation applies; many fire water components fall within the regulation and Appendix C contemplates including fire protection systems |
| Whether the process hazard analysis regulation (WAC 296‑67‑017) applies | PHAs must address consequences of failure of controls; the fire water system controls hazards and thus must be analyzed | Because the system contains no hazardous chemicals, Phillips 66 contends it need not be the subject of PHAs | Held: PHA regulation applies because the fire water system is part of a PSM‑covered process and controls hazards at the refinery |
| Whether Phillips 66 complied with mechanical integrity and PHA requirements (RAGAGEP and adequacy of PHAs) | Phillips 66 failed to inspect interior tank and underground piping per NFPA 25 (RAGAGEP); PHAs did not meaningfully analyze fire water system failure | Phillips 66 contends it used API inspection methods and certified inspectors and that PHAs considered loss of controls; evidence conflicted | Held: Court did not decide compliance; remanded to the Board to determine appropriate RAGAGEP and whether Phillips 66 complied with mechanical integrity and PHA requirements |
Key Cases Cited
- Delek Ref., Ltd. v. Occupational Safety & Health Rev. Comm’n, 845 F.3d 170 (5th Cir. 2016) (federal decision treating a safety/utility unit that mitigates releases as within PSM coverage)
- Erection Co. v. Dep’t of Labor & Indus., 160 Wn. App. 194 (2011) (standard for reviewing Board decisions under WISHA)
- Potelco Inc. v. Dep’t of Labor & Indus., 191 Wn. App. 9 (2015) (Washington courts may consult federal OSHA decisions as persuasive authority)
- Mader v. Health Care Auth., 149 Wn.2d 458 (2003) (interpretation of unambiguous regulations by plain meaning)
- Schimmick Constr. Co. Inc. v. Dep’t of Labor & Indus., 12 Wn. App. 2d 770 (2020) (deference to Department interpretations and rules on statutory/regulatory construction)
- Associated Press v. Wash. State Legislature, 194 Wn.2d 915 (2019) (use of “including” as non‑exhaustive list in statutory/ regulatory interpretation)