Compliance Assurance - Overview and Implementation Solutions

1. Compliance Assurance- Overview and Implementation Solutions Air & Waste Management Association Southern Section Annual Conference Callaway Gardens Lodge & Spa Pine Mountain, Georgia August 3rd, 2011 Scott Kirby, Ph.D. Environmental Resources Management

2. What is Compliance Assurance? • Quantifiable measure of confidence that ALL regulatory requirements are being fulfilled and appropriately documented. • Drivers: • Compliance Enforcement Actions • Civil and Criminal Penalties • Company Liability • Difficult to keep track of seemingly perpetual expansion of regulatory requirements, revisions and deadlines • Moving Target

3. Off-the-Shelf Software • Numerical-data gathering and reporting (task management). • Task-tracking has been viewed as the only way to exert real-time control of the compliance process. • Alerts sent out to task performers before due dates, and second tier alerts can invoke the chain of command for reinforcement if necessary. • Intent is to provide real-time feedback to management about the completion of tasks, and to spread out the task-completion documentation workload among the employees who perform the task.

4. Issues with Off-the-Shelf Software • Standardized format • Difficult to incorporate with company-specific policies and procedures; • Requires constant updating as new and revised regulations are promulgated, and, as employees turnovers occur; and • No option for feedback (Path of Least Resistance); • Development of a “check-box” mentality. • Allows for the creation of a parallel universe where it appears as if events have been completed while the reality may be significantly different.

5. Parallel Universe – Real World Example • EPA investigator asked to see records for the last two quarters of drain inspections required by the benzene waste NESHAP (40 CFR 61) at a petroleum refinery. • After reviewing the neat listing of drains that had been signed off on as “Inspected”, the investigator asked to look at the drains and the facility staff who performed the initialling was unable to locate about one third of the drains.

6. Opposite Parallel Universe • Conversely, the opposite of this is possible, where work is done but, for whatever reason (e.g. shift change), the electronic documentation in task-tracking system is not completed, or the inspection form is completed but not properly filed so it cannot be located during an agency inspection. Perpendicular Universe

7. How Do We Get Back To The “Real” Universe • 2 Primary Approaches • Compliance Auditing • Periodic Checks

8. Compliance Auditing • Outside third-parties auditors • Number of requirements assessed is typically limited (time and knowledge) • Audit protocols merely restate the regulations, leaving the auditor to rely on his or her experience to devise a means of determining whether the facility complies.

9. Periodic Checks • Combines the looking-backward approach of a compliance audit with the periodicity of a task management process. • Typically does not entail significant work-habit changes since checks involve looking back at a number of actions at one time rather than time-consuming check-offs as each task is completed. • Checks can be assigned to someone other than the original task performer, resulting in a check-and-balance system, but without the “Big Brother” feel that an audit may have. • Can easily accommodate multiple levels of checking.

10. Periodic Checks - Concept • Checks are developed by taking the time to describe very specifically the records and documentation to be consulted and exactly how to check them against a specific requirement. • If written effectively, anyone familiar with a process or equipment should be able to perform the check and not just senior environmental personnel. • Since checks would be repeated on an ongoing basis, careful construction of task description can result in significantly more efficient performance over time • Allows for employee feed back • A wise southern gentleman once said: “There is more than one way to skin a cat!” • Promotes a collaborative environmental between operations personnel and the “red-headed step-children” (A.K.A. HSE Staff)

11. Implementation • Key stakeholders should define overall goals for the process. • All parties should buy in to process or else the “your system versus our system” labeling will undermine what might otherwise be a great idea • Due to complexity, typically new compliance assurance systems are implemented in phases. Phases should be planned based on a determination of depth of coverage. • Applicable requirements should be prioritized based on risk. Requirements deemed most important to the agency (as demonstrated by the greatest potential for agency-identified violations) should receive greater attention. • Industry and location-specific compliance issues should also be considered when assessing the risk associated with requirements.

12. Applicability Review • Applicability review should be transparent. • Not uncommon for facilities to reinvent the applicability determination each time someone new assumes responsibility for this function. • Create test for applicability at the rule level and then compile the test and the results of the test for each potentially applicable rule. • Ex. “Applies to Chemical Plants” • Further tests can then be compiled for individual citations such as “does this tank store material with a vapor pressure equal to or greater than 0.5 psia” • This systematic approach to the applicability determination makes revisiting it a reading exercise instead of a re-creation exercise. • Not every applicable citation will result in a compliance obligation. • Some citations contain definitions, cross-references to other citations, or may be merely informational in nature. • These can be classified as “does not contain a requirement” and can be removed from the list requiring tasks or checks.

13. Developing Ongoing Checks • Process begins with looking at information that has already been compiled in the form of reports, procedures, and forms. • Matching these to specific regulatory citations forms the basis for developing the text of the ongoing checks. • This process reduces excess workload and identifies areas of potential improvement. • In our experience, fewer than 10% of existing requirements are covered by what is already in writing. Thus, it is important that interviews be conducted to gather information on how facility complies with most requirements.

14. Developing Ongoing Checks • Who (Personnel) • What (Task) • When (Frequency) • Where (Process and Documentation) • Why (Regulatory Requirement) • “Where would you look, and what would you compare to what criteria to determine compliance? • Example: “Each quarter, review the periodic tank-seal inspection forms to ensure that each tank was inspected within 12 months of its last inspection (as indicated from by the date of the last form).”

15. Development Guidelines • Assigned Responsible Position: The person who has direct access to the data that will be assessed and either is responsible for the task to be checked or is a line or staff reviewer of that work. • Frequency: Sufficiently often so that if there is a significant risk of a deviation, it would not run too long without discovery; also consider whether specific deviations require any sort of prompt reporting • Clarity: Checks should not be merely cut-and-paste from a regulatory requirement, but rather clearly describe the check in language that would be familiar to plant operations, maintenance, and other non-environmental staff • Completeness: Checks should cover all main points in a requirement. Several independent checks may be needed for a single requirement. • References: Checks based on a form or a procedure should clearly identify not just the document, but also the exact portion of it that addresses the requirement.

16. Functional Role Assignments • More efficient to assign these roles after the checks have been developed. • Following roles are typically involved: • Unit Operations Foreman: • Responsible for procedures that either contain the required operational practices and/or reference environmental procedures. • Unit Process Engineer: • Responsible for equipment design parameters and operational data review. • Unit Environmental Staff Person: • Performs checks that compare operational data between multiple sources, such as comparing vessel depressurizing reports to flaring logs to ensure that the proper records are being captured. • Environmental Staff Rule Experts: • Ensure that the environmental procedures cover the rule requirements, such as providing forms that request the proper information; also, responsible for long-term record retention.

17. Rolling out the Periodic Check Process • Does not require special software and often times does not require a computer. • Does not require real-time completion logging but instead a cascade of sign-offs at specified times is conducted indicating the personnel are performing their duties. • Roll-out can be accomplished by unit, by task performing group, or by regulatory area. • Management of change process is essential to the success of a compliance assurance program. Regulatory information will need to be periodically updated as rules change, management goals change, and facility operations change. • Advantage of a periodic check system versus task-tracking software lies in the transparency of the MOC process.

18. Questions/Comments • Scott Kirby, Ph.D. • 820 University Boulevard South Suite 1A • Mobile, AL 36609 • Email: Scott.Kirby@erm.com • Office: (251) 380-0046 • Mobile: (251) 591-4451 THANK YOU!