Industry Needs Regulators

Insurers understand the consequences of proposed cutbacks in federal agencies

By Dirk Willard, Contributing Editor

Be careful what you wish for. That old admonition applies to those cheering the Trump Administration’s plans to reduce the budget of regulatory bodies, such as the U.S. Environmental Protection Agency (EPA) and Occupational Safety and Health Administration (OSHA), and completely defund the U.S. Chemical Safety Board (see “Save the U.S. Chemical Safety Board").

Insurers have a vested interest in plant safety and environmental protection.

It’s important to understand the role that such federal bodies play. Many engineers undoubtedly feel that the EPA and OSHA focus on regulating and enforcing environmental and safety standards to prevent incidents. Actually, though, they usually act most forcefully only after an accident. During my 37-year career, I’ve only seen one instance where a regulator stopped an operation for a safety violation! Mainly, the bodies levy fines for not complying with requirements or after accidents occur. Company lawyers often drag out the proceedings and finally settle for peanuts, long after anyone remembers the incident.

So, contacting regulators isn’t necessarily productive for quickly resolving an issue. Consider the situation I encountered at a plant some time ago. Its blenders were working with 99% isopropyl alcohol, a Class 1B flammable material according to the National Fire Protection Assn. (NFPA) 30 standard on flammable and combustible liquids. I alerted the vice president of manufacturing to the danger and also to the relevant requirements in the NFPA 70 standard for electrical area classifications. Yet, he vetoed my proposal to add grounding clamps and take other steps, dismissing the two standards as unenforceable.

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Sending a report to OSHA in Washington, D.C., probably wouldn’t have had an effect: it likely just would be forwarded to the state office. State offices usually are under the thumb of governors, who want the jobs manufacturers produce. So, the chances are the net result would be nothing got done.

Of course, had a serious accident eventually occurred, government bodies would impose fines and maybe even bring criminal charges. The company might face serious threats to its ongoing viability.

In retrospect, perhaps I should have done one more thing: mail my report to the plant’s insurance company. Insurers have long memories.

The insurance companies are the real enforcers. When Archer Daniels Midland reported one fatality a year back in the 1990s, it wasn’t OSHA fines that prompted the company to put greater emphasis on safety to cut accidents — it was the bite of exorbitant insurance premiums.

This underscores an important and under-appreciated impact of OSHA and EPA. They furnish guidance not only to manufacturing and engineering firms but also to insurance companies. In addition, as many Field Notes columns imply, OSHA and EPA bodies supply the backbone to organizations such as the NFPA and the American Petroleum Institute that issue guidelines and standards. A social consciousness exists among these organizations and insurers. Combined, this safety net saves lives and reputations. We must heed the advice of Eleanor Roosevelt: “Learn from the mistakes of others. You can’t live long enough to make them all yourself.”

Thus, it’s not surprising, that when the Trump Administration revealed its proposed budget cutting back the EPA and OSHA and eliminating the CSB, some insurers quickly voiced opposition.

For instance, Jack Kaskey and Jennifer Dlouhy noted in an article in Insurance Journal on March 21st: “Despite Trump’s proposal, the CSB probably won’t be eliminated because it acts as a safety net for industry as well as the public, said Katie Bays, an analyst at Height Securities LLC, an advisory and investment firm based in Washington. Without the CSB identifying problems, safety can sometimes slip through the cracks at industrial plants, Bays said, increasing the potential for accidents and companies’ liability.” (See: http://goo.gl/CaUT6y.)

Regardless of what ultimately happens with the budget, insurers have a vested interest in plant safety and environmental protection, and will keep holding chemical companies accountable for their performance. Engineers can continue to rely on this social consciousness to keep the workplace safe.


dirk.jpgDIRK WILLARD is a Chemical Processing contributing editor. He recently won recognition for his Field Notes column from the ASBPE. Chemical Processing is proud to have him on board. You can e-mail him at dwillard@putman.net

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