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Published January 25, 2011, 01:44 PM

Safety spotlight shines on elevator industry

FARGO, N.D. — Recent high-profile accidents cases have put a regulatory spotlight on grain elevators. Speakers at the North Dakota Grain Dealers Association annual meeting in Fargo, N.D., talked about a range of financial perils elevators must deal with today.

By: Mikkel Pates, Agweek

FARGO, N.D. — Recent high-profile accidents cases have put a regulatory spotlight on grain elevators. Speakers at the North Dakota Grain Dealers Association annual meeting in Fargo, N.D., talked about a range of financial perils elevators must deal with today.

Mike Maslowski, compliance assistance officer for the Occupational Safety and Health Administration, based in Bismarck, N.D., says recent elevator incidents in Colorado and South Dakota are among a collection of cases nationwide. There have been 89 fatalities reported to OSHA involving grain elevators nationwide since 2009, including 40 engulfments, 32 falls and seven dust explosions, all of which has triggered increased concern by the Occupational Safety and Health Administration.

OSHA has four safety inspections checking elevators in the Dakotas, Maslowski says. OSHA has done 10 inspections in North Dakota and 10 in South Dakota in its first emphasis year for grain elevators. It expects to do 20 to 30 per year through its Bismarck-area office. Inspections can be triggered by complaints from current employees or other agencies. If there is a fatality, or if three people have been hospitalized within eight hours, there also is an automatic inspection.

New penalty structure

Maslowski says that effective Oct. 1, 2010, OSHA imposed a new penalty structure that largely doubles penalties, which had been around for about 40 years and hadn’t been changed since the start. The penalty levels have been changed because there isn’t the deterrent of earlier penalties. The agency also extended the time frame under which the penalties could be considered a repeat penalty.

Further, the agency changed its schedule for offering “adjustments” to the penalties based on size. Small elevators, with one to 25 employees, for example, used to get a 60 percent discount and now are eligible for a 40 percent discount.

Stu Letcher, the NDGDA safety and health director, touched on numerous issues, but particularly regulations surrounding so-called “sweep augers,” used regularly to clean out the bottoms of grain bins and elevators, and on farms.

An insurance agency representative started inquiring with OSHA about the sweep augers in 2008, and Dec. 24, 2009, an agency official responded that elevator employees “cannot be in the bin where there is an unguarded sweep auger, where an employee could be exposed” to the auger.

Letcher says OSHA hasn’t told elevators how they can safely operate with sweep augers and that various OSHA regional offices are interpreting the rules differently. Until the issue is resolved, probably in early 2011, Letcher advises elevators to have “a system in place that you’re comfortable with.” The only alternative is shovels, hand brooms and vacuums, which isn’t always practical with the volumes involved.

Maslowski says he’s become aware of a new model of automated bin sweep, manufactured in South Dakota, which does not operate with a screw auger and may be approved to work in bins where people are working. He says the sweep he’s seen advertised has a 7-foot display model, which could be seen at a South Dakota Grain and Feed Association, in Sioux Falls. They have models which handle a 60-foot diameter bin.

Letcher notes new rules regarding bin entry, especially when employees go in to free grain that has become stuck or frozen. An assistant secretary for OSHA has written a letter that says that if anyone dies in a grain storage facility in a bin entry issue, and that incident is related to workers entering storage bins, OSHA will go beyond civil penalties and consider referring the incident to the Department of Justice for criminal prosecution. Several North Dakota firms have received letters on the topic.

Letcher says it is not only OSHA, but also the Food and Drug Administration, the Department of Transportation and the Environmental Protection Agency, that have stepped up interest in the industry.

Banktruptcy entanglement

Lowell Bottrell, a Fargo attorney who specializes in bankruptcies, told elevators how to help protect themselves from financial exposure in these legal entanglements — especially how to avoid being labeled as a “preferential transfer,” if the transaction is within 90 days of a bankruptcy. Farmers and elevators who had become entangled with the VeraSun Energy L.L.C. situation were threatened with repayment. Most, if not all, had valid defenses to the claim for repayment.

Among other things, Bottrell answered these hypothetical questions for elevators and others dealing with companies or individuals they think may be on the brink of an insolvency or bankruptcy:

n Should you accept a cashier’s check? Only if you’ve consistently been paid by cashier’s checks.

n Should you accept payment if you know the debtor is on the verge of bankruptcy? Absolutely. Get the money. Encourage them to wait 91 days, 100 days, but encourage them to move along.

n Should you agree to a workout agreement with a debtor? Yes. Bankruptcy Judge William A. Hill recently approved a deal like this between a debtor and John Deere because the company was willing to work out a payment.

n Should you take a payment from a third party? Maybe. If a father pays a son’s bill, that’s not considered a preferential payment, but the son can’t give money to the father to pay the bill.

n Should you accept a payment that is earmarked? If a father, for example, gives funds to the son to the money to pay you, that’s probably OK. But the funds must be “earmarked” to go entirely to you to withstand a challenge.