“ The Gulf Oil Spill: Problems in Implementing Process Safety Regulations ”¹

1. “The Gulf Oil Spill: Problems in Implementing Process Safety Regulations”¹ Isadore Rosenthal Senior Fellow, Wharton Risk Management and Decision Processes Center, University of PA * Presented at the U of PA Center for Public Health Initiatives 10-13-2010 seminar on Perspectives on the Public Health Impact of the Gulf Oil Spill

2. Process Management Systems • A process management system (PMS) can be defined as: “A group of interrelated methods, procedures, and routines, designed to ensure that a firm’s products are produced and made available to customers free from legally and/or socially unacceptable risks of injury to its employees, the environment and consumers.” • Safety is clearly an important element of a firm’s production and distribution systems.

3. Process Safety Stakeholders • It is generally difficult to ensure that adequate attention and resources are devoted to monitoring the LP-HC process safety risks of a firm’ production processes by the: • Firms who own these processes • Persons at risk from the consequences of such LP-HC accidents • Regulators charged with ensuring that firms adequately manage their process safety risks, e.g. OSHA PSM & EPS RMP regulations

4. Process Management System A process management system (PMS) can be defined as: “A group of interrelated methods, procedures, and routines, designed to ensure that a firm’s products are produced and made available to customers free from legally and/or socially unacceptable risks of injury to its employees, the environment and consumers.”

5. Implementation of the EPA’s and OSHAProcess Safety Management(PSM) Regulations Process safety accidents are LP-HC events Unfortunately, as the following observation will show, neither EPA nor OSHA have adequately implemented their regulations dealing with LP-HC process safety risks.

6. Observation 1 on the Implementation of OSHA’s Process Safety Management(PSM) Regulation A 2010 Center for Progressive Reform (CPR) report on “Workers at Risk: Regulatory Dysfunction at OSHA” noted that: “Today OSHA’s enforcement staff is stretched thin and the rulemaking staff struggle to produce health and safety standards that can withstand industry legal challenges. In short, OSHA is a picture of regulatory dysfunction.”

7. Observation 2 on the Implementation of OSHA’s Process Safety Management(PSM) Regulation • The US Chemical Safety Board (CSB) noted that: “OSHA conducted only one planned process safety management inspection of the Texas City refinery facility in the 1998–2005 time periods though this facility was one of the largest refineries in the USA”.

8. Observations on the Implementation of EPA’s Process Safety Management (RMP) Regulation In 2009, EPA’s Inspector General Office (IG) commented on EPA’s implementation of the RMP program and made the following observations: • “Over 65 percent of all active RMP facilities had not received an on-site inspection or audit since inception of the Risk Management Program in 1999.” • “EPA had not inspected or audited over half (296 of 493) of the high-risk facilities identified by EPA’s Office of Emergency Management (OEM). • “Of the 296 uninspected high-risk facilities managed by EPA, 151 could each impact 100,000 people or more in a worst-case accident”.

9. Observation1 on the Implementation ofthe USDA/FSIS HACCP Regulation In 2002, ConAgra recalled 18 million pounds of E. coli contaminated ground hamburger and the USDA’s Office of the Inspector General (OIG) report on this incident noted: “One of the factors that led to the distribution of this defective product was that accurate assessments of HACCP plans had not been made because FSIS lacked sufficient competent staff to make those assessments.” HAACP: is the acronym for the USDA ‘s Food Safety Inspection Services’ “Hazard Analysis and Critical Control Point “ Regulation

10. Observation 2 on the Implementation ofthe USDA/FSIS HACCP Regulation In 2006, more than ten years after FSIS promulgated its HACCP regulation, USDA’s Office of the Inspector General (OIG) issued a report on the efficacy of FSIS assessments of covered facility’s food safety and concluded: “Based on our audit results, we question whether FSIS has the systems in place, at this time, to provide reasonable assurance that risk can be timely or fully assessed, especially since FSIS lacks current, comprehensive assessments of establishments’ food safety systems.”

11. Lessons Learned and Challenges to be Met • Regulations dealing with LP-HC risks are generally inadequately implemented and this leads to high injury rates and very significant financial losses to the public and employees • The challenge is to develop a better approach to implementing such regulations