March 27, 2007 |

Should We Criminalize Bad Safety Management? Is There a Better Option?

The articles/speeches at the end of this article and a CSB press release posted at the “continue” link below seem to indicate that the path to improved worker safety is more aggressive regulation and increased criminalization of bad safety management.

As you all know, I’m in favor of improved safety. But I think we should carefully consider if the paths being suggested are the best way to get there.

For example, let’s just do a quick estimate of the $$$ cost of criminalization of bad safety management …. (Yes – I know there are costs besides dollars and I value human life more than dollars but … I think looking at the potential dollar cost is eye opening when evaluating the options.)

The CSB spent more than $2 million investigating the BP Texas City Explosion. Why did they spend so much? Because it takes an exhaustive investigation to prove that BP had bad safety management. (From what I’ve heard so far, the criminal part of the investigation by the DOJ is just starting to get into full swing.) So let’s just use $2 million as an average investigation cost for one of the exhaustive investigations with senior management implications.

There are about 5,000 fatalities at industrial sites per year in the US. That doesn’t count the 98,000 deaths due to medical errors – which also could be due to bad management … and may be subject to criminalization of bad safety management. So a conservative guess would be 2,000 investigations per year at a cost of $2 million each.

Thus the government cost will be $4 billion per year for investigations. This does not including the cost of criminal prosecutions that result.

Of course, no rational manager would allow a federal investigation without conducting an equally costly investigation to prove they are innocent. Therefore, industry will match governments costs and spend $4 billion investigating their management in defense of the government investigation.

So far … $8 billion per year without legal costs. (Investigators – Get ready – This looks like a growth industry!)

Now for legal costs …

Let’s guess that 10% of the investigations go to prosecution …

That’s 200 per year.

How much will the high priced attorneys, expert witnesses, government experts, court costs, depositions, management time, … cost?

Let’s guess twice the investigation cost. That’s $8 million for each side or $16 million total for one case. (Look at the cost of special prosecutors if you think these costs are way off.)

200 X $16 million (cost for both sides) = $3.2 billion more.

That’s over $10 Billion/year invested in criminalization of un-safe management practices.

Of course, this is only a guesstimate… Problems with the estimate could include –

Government could get more efficient …

Bad management could improve … reduce costs

Industry could just leave US … avoid potential for prosecution

Courts – already overloaded – may not be able to handle 200 high priced cases with contentious corporate lawyers …

We may include the medical examples and the number would go up by a factor of 100 or more.

Is this really the best investment we can make in improving safety performance and saving lives?

I always think that instead of believing that the government (OSHA?) is the answer and is responsible for worker (or patient) safety, the managers and employees should be primarily responsible. Thus, System Improvements’ focus has always been on educating management and employees so that they can see the value of implementing best practices to improve performance and avoid disaster.

I know this may sound corny and optimistic … and it doesn’t always work … but I think it is the best way to change performance across industry in the US and around the world.

Don’t get me wrong. I understand the need for regulation. But I think that industry should be improving to the point that regulations look antiquated and unnecessary. Industry should “peer pressure” the bad performers (AND THERE ARE BAD PERFORMERS!) to improve (much as they have in the nuclear industry) to stay free of burdensome, inefficient regulations.

If we can’t make improvement happen without heavy handed regulation, I’m afraid that we will “regulate” ourselves out of jobs. Excessive new regulations and criminal cases will be just one more reason for companies move production to less regulatory intense parts of the world.

That’s why I need your help.

Let’s spread the word about proactive improvement, advanced root cause analysis, and stopping human errors. Let’s get management trained to understand the right way to improve performance. Let’s spread good practices around your company and industry.

If you think this sounds like a good idea, let me suggest that you start but attending one of the Best Practice tracks at the TapRooT® Summit. This is a great way to learn best practices and network with industry leaders. And if you can find several other people – including managers – who will attend with you, you can put together a high performance improvement team to change your site, your company, and perhaps start changing your industry.

That was MY GOAL when I started the Summit in 1994. And with your help, perhaps we can save jobs and lives by making improvement happen without excessive regulation. At least that is my hope.

I look forward to seeing you at the Summit in San Antonio on April 25-28, 2007.

– – –

Articles/speeches that got me thinking about this:

http://www.chron.com/disp/story.mpl/business/4654446.html

http://www.house.gov/apps/list/speech/edlabor_dem/RelMar20BPReport.html

http://www.house.gov/apps/list/speech/edlabor_dem/rel032207.html

Testifying before House Committee on Education and Labor, Chairman Carolyn W. Merritt Calls for Increasing Oversight of Refining Industry by OSHA

Washington, DC, March 22, 2007 – Carolyn W. Merritt, Chairman of the U.S. Chemical Safety Board (CSB), told a congressional committee today there should be  increased oversight of the oil refining industry by the Occupational Safety and Health Administration (OSHA) in order to prevent accidents such as the one that occurred at the BP refinery in Texas City, Texas, in 2005.  She spoke before the House Committee on Education and Labor, chaired by U.S. Rep. George Miller of California who convened the hearing ‘to examine what we can learn from the missteps that preceded this disaster in order to help prevent future ones.’

Chairman Merritt said the CSB’s exhaustive investigation into the BP accident, the results of which were released two days ago in Texas City, showed the company had not followed OSHA process safety regulations, and that OSHA had not adequately inspected the facility to see if BP was complying with those regulations.  As a result, she said, cuts in training, staffing, maintenance, equipment modernization, and safety, which the investigation found were a result of significant budget cuts ordered by BP, left the Texas City facility vulnerable to catastrophe.

Ms. Merritt said, ‘The CSB found that regulatory oversight of this refinery was ineffective.  In recent years, OSHA has focused its inspections on workplaces with high injury rates, but these rates do not predict the likelihood of a catastrophic process accident at a facility.’

Ms. Merritt noted that the BP facility, like thousands of other petrochemical plants, is regulated under OSHA’s Process Safety Management standard, issued in 1992. ‘Rigorous application and enforcement of this rule – including its preventative maintenance and incident investigation requirements – would almost certainly have prevented this tragedy,’ she said.  She noted the BP refinery had a long history of deadly accidents and dangerous hydrocarbon releases from the same equipment that was involved in the Texas City accident.

The work of the CSB received bipartisan praise from committee members for the CSB’s investigation of the BP tragedy and other accidents. Several expressed concern about the paucity of regulatory inspections in the petrochemical industry.

Chairman Miller said, ‘Protecting the safety of refinery and chemical workers is reason enough to get this right. But the safety of our refineries and chemical facilities also has broader implications for the communities surrounding these plants.  The disaster at BP Texas testifies to the steep price we pay as Americans for not enforcing the nation’s laws that are supposed to protect working men and women in this country.’  He said further hearings may be convened.

Following Chairman Merritt’s testimony, other panelists addressed the committee, including Eva Rowe, who lost both parents in the explosion.  They were among the 15 contract workers meeting in work trailers at the time of the blast.  The CSB found the trailers were sited in a hazardous location at the plant, near a blowdown drum which spewed highly flammable hydrocarbons that were ignited by an idling pickup truck.  The agency has recommended to the American Petroleum Institute (API) that trailer siting guidelines be revised.

Other panelists included Kim Nibarger, health and safety specialist for the United Steelworkers (USW), Frank L. ‘Skip’ Bowman, retired admiral and member of the BP Refineries Independent Safety Review Panel, which was instituted on the recommendation of the CSB and headed by former U.S. Secretary of State James Baker III, and Red Cavaney, American Petroleum Institute president and CEO.

The CSB is an independent federal agency charged with investigating industrial chemical accidents. The agency’s board members are appointed by the president and confirmed by the Senate. CSB investigations look into all aspects of chemical accidents, including physical causes such as equipment failure as well as inadequacies in regulations, industry standards, and safety management systems.

The Board does not issue citations or fines but does make safety recommendations to plants, industry organizations, labor groups, and regulatory agencies such as OSHA and EPA. Please visit our website, www.csb.gov.

For more information, contact Sandy Gilmour at (202) 261-7614 / (202) 251-5496 cell.

This message was transmitted at 5:14 PM Eastern Time (U.S.A.) on March 22, 2007.

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