The stakes just got higher for Contractors who work offshore. The federal agency that regulates offshore oil and gas is making it very clear that it intends to hold service companies accountable for incidents. Oil and gas leaseholders have faced fines for offshore accidents or failures to meet safety requirements all along, but now the Bureau of Safety and Environmental Enforcement (BSEE) is stepping up the effort to fine contractors as well.
In what is called an Interim Policy Document, BSEE says, ““While the primary focus of BSEE’s enforcement actions will continue to be on lessees and operators, BSEE will, in appropriate circumstances, issue incidents of non-compliance to contractors for serious violations of BSEE regulations.”
That means that, if there is an incident or if a BSEE inspector finds a problem at an offshore facility, it will cite the operator first, but then it will look to see if the contract service company was at fault. If so, it may also cite the contractor. The main reason for this new approach is BSEE’s belief that there was a lot of blame to spread around after the 2010 Macondo spill. In addition to citing BP, the agency cited Transocean and Halliburton for Incidents of Noncompliance (INCs).
This is still a controversial policy because the agency has never fully explained why it believes it has the authority to cite contractors. In fact, the interim policy points to a part of the regulations that at least appears to say the agency needs to go through a rulemaking process to expand its enforcement. Sounds like this is one for the lawyers to sort out.
An article on the BSEE policy can be found here, including a link to the actual BSEE document.
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Every once in while common sense wins out. It happened late last week when an Administrative Law judge with the Occupational Safety and Health Review Commission (OSHRC) threw out an OSHA citation for a company that had not required its employees to wear flame-resistant clothing.
First, a little background, the industry wants to protect workers, including purchasing and requiring the use of Personal Protective Equipment (PPE). However, many in the industry argue that flame resistant clothing (FRC) is not needed for the protection of oil and gas workers and can cause other safety concerns. They say the industry does not generally have the kind of flash-fire hazards that FRCs are designed to protect against. The flame retardant material is only designed to last about three seconds, enough to protect workers from a sudden, intense flash of heat. However, many safety professionals say incidents where FRCs would actually protect workers from flash-fires are extremely rare on drilling and production sites. On the other hand, FRCs retain so much body heat that heat-related illness becomes a real concern when FRCs are required.
In 2010, OSHA issued an enforcement directive to its offices saying FRCs needed to be used in oil and gas drilling and servicing operations and its field units started writing citations. Petro-Hunt was fined $5,390 after a fire at one of its wells, even though the workers in question were not involved in fighting the fire and do not appear to have been on-scene when it broke out. The company appealed the fine and the administrative law judge ruled in favor of Petro-Hunt on June 8.
The judge’s ruling indicates that OSHA failed in two major areas:
- Its decision to require FRCs constituted a rulemaking, but didn’t follow the usual process for making rules.
- By making a blanket requirement that workers at all oil and gas sites that had any potential for fires needed to wear FRCs, the agency never looked at whether there was actually a risk and whether that risk could be addressed through other means.
That first point is the one that really gave industry associations heartburn. If an agency can impose an industry-wide requirement without ever looking at the cost/benefits of the action or taking public comment, how do individuals and companies make their case with the agency? How many other directives will an agency impose?
The second point may actually open up a larger legal can of worms. As the judge pointed out, “ As with most cases involving the general industry PPE standard, the concern is that it is so broad that it can be applied almost indefinitely.” Translation: if the agency doesn’t have to prove there is an actual hazard at the site and if industry doesn’t have the chance to utilize other design/engineering controls or administrative controls to avoid the risk, it can require just about any PPE. You can bet that lawyers representing companies that have been cited for not requiring PPE will pounce on that one.
In the meantime, this is a fairly major victory for groups like the Association of Energy Service Companies and the International Association of Drilling Contractors. Those groups have really led the charge to get OSHA to step back from its FRC directive and arrive at commonsense solutions that can protect workers without exposing them to new hazards like heat exhaustion.
This does not end the issue however. The agency has not said whether it will appeal this ruling. If it does not appeal the ruling, it may decide to go through a formal rulemaking process to require FRCs. In the meantime, companies will need to figure out whether to continue to make workers wear FRCs while the agency figures out what to do next.
Both SEMS (Safety and Environmental Management System) and the soon to come GHS (Global Harmonization System) will definitely affect how both operators and contractors manage their MSDS’s. Here is a helpful article from 3E Company, one of our industry partners, that spells out how these regulations impact your MSDS management and how 3E Company can help you in the years to come. Note that SEMS affects only offshore operations at this point but GHS will affect both onshore and offshore in the near future.
To read the full article click here.
PEC and our partner, 3E Company, will be offering a free webinar on MSDS management on April 12, 2012 at 10 AM Central Time (8 AM PST, 10 AM MST, 11 AM EST). Here’s some information on what the webinar will cover:
With the newly required Safety and Environmental Management System (SEMS) requirements here and GHS (Globally Harmonized System of Classification and Labeling of Chemicals)* imminent, 3E and PEC bring you this comprehensive EH&S Compliance Solution and we’re ready for your enrollment. This cost effective program provides your company access to OSHA required information to meet operator and government requirements and maintain a safe working environment for all employees.
Our Special 3E / PEC Premier MSDS Management & Transportation Compliance Services Solution includes:
3E Online MSDS Management offers web-based access to your hazardous material inventory associated MSDSs, critical product-level data, and integrated regulatory content. Instant access to this information assists in Environmental, Health and Safety (EH&S) compliance requirements.
3E MSDS & Transportation Hotlines, 24-7-365access to live professionals and the entire 3E database of millions of MSDS, which are sent via email or fax directly to employees or other staff. 3E also offers access to Transportation Specialists for instructions on shipping hazardous materials.
3E Chemical Spill and Exposure Hotlines, offers toll-free 24-7-365 access to spill specialists for information and guidance on hazard assessment and spills including on-demand poison exposure assistance from accredited health care professionals and chemical spill assistance from 3E’s HazMat Response Team.
Learn more by attending our upcomingLIVE Demo webinar of 3E Online – MSDS Management System and a New MSDS on Demand, Chemical Spill and Exposure Demonstration.
To register for the free webinar click here and fill out the simple form.
I you have any questions feel free to contact PEC at 1.800.892.8179; ask for the Industry Benefits Department.
This month, PEC rolls out a new one-day workshop for Contractors that need to understand SEMS. Classes have already been scheduled for Houston, Lafayette and Mandeville, Louisiana. In order to meet customer needs, PEC has added a second workshop in Lafayette for April 17th.
The workshops focus on providing Contractors with a nuts-and-bolts explanations of the SEMS rule and the different ways that Operators are requiring Contractors to comply with their plans. The workshops were developed as a simple, cost-effective way to bring employees from throughout a company up to speed on SEMS.
More information can be found on the PEC website on the SEMS workshop page. PEC can also work with Contractors to hold a session at their office for up to 25 people. At those sponsored workshops, PEC will focus on the specific scope of work and processes for that company. It is a great way to cross train people from different departments on the company’s approach to SEMS. For more information contact Ken Wells at 800.892.8179.