Practical proposals for improving the Department of Labour’s approach to high hazard industries
Recommendation two: Draw on certification, verification, plans and notifications
As a regulator, there is a wealth of information that the Department can draw upon about the current state of safety in high hazard areas - particularly in the specially regulated high hazard industries of mining and petroleum.
The New Zealand health and safety regulatory environment is broadly consistent with other, similar jurisdictions. It shares many common features with other 'performance-based' regulatory frameworks. Where there are differences, these tend to be small and appropriate.
However, one important and significant difference between the New Zealand regulatory approach to petroleum exploration and extraction and other similar jurisdictions, such as Australia, is the use of third party inspection bodies to inspect safety on-board installations and to issue certificates of fitness (see Attachment 1 for list of inspection bodies under the petroleum regulations). Independent third parties, like these inspection bodies, can also support operators to manage their own detailed verification schemes. These verification schemes take the performance-based approach to its fullest extent, placing a significant expectation on the operator to systematically and effectively manage safety.
The New Zealand regulations for both mining and petroleum also contain additional reporting and notification expectations on employers/operators as well as requiring additional and detailed information such as safety cases from petroleum operators and maps for mines.
These additional aspects of the regulatory environment provide a wealth of information about the operators and the places of work that may help our regulatory activities and provide a greater level of insight/monitoring for assurance purposes.
For these reasons, the Labour Group should be making full use of these additional sources of information.
At present the Department has neither the systems nor the capability to collect, collate and store this kind of data and information. As a result, it is largely unaware of this valuable information. Some key findings highlight the extent to which the Department is unaware of this:
- safety cases are not systematically stored nor are easily retrievable outside of the New Plymouth Office. Physical copies are stored and where electronic files have been submitted, they have been stored in local files and not easily accessible by the wider group
- certificates of fitness are not held systematically (or if they are, it is not known by key players) and are not easily accessed
- records of verification schemes approved by the Department have not been maintained
- daily drilling reports and other regulatory notifiable events are received electronically by the Senior Advisor Petroleum. However, this information is not managed as effectively as it could be. Information systems, such as INSITE, are limited in capturing this kind of information and allowing the Senior Advisor to conduct analyses
- the Labour Group has not maintained updated information about third party inspection bodies after they are gazetted
- the Department does not know when, where and why third parties are using subcontractors to undertake verification or inspection work
- the Department's information systems do not necessarily help the Labour Group to store, access, analyse and share information.
This last point is important to note because it helps temper the enthusiasm for additional information with the reality of the limitations of how this information might be accessed, stored and used.
Ensure all required information is up to date
There is a range of notifications and other documents, such as safety cases, test certificates and confirmed verifications that the industry should have in place and the Department should have on record.
To ensure the Department and the industry are clear about all of the documentation and to ensure all information is up to date, the Department should update all of its information by asking operators to provide up to date copies of all documentation including:
- copies of safety cases (and alterations)
- recent notifications including all reportable well drilling events (and alterations) for current wells (petroleum)
- copies of current certificates of fitness (petroleum)
- copies of verification schemes (petroleum)
- copies of current certificates of competence (mines)
- copies of mine places copied to inspectors (mines)
- notifications made to inspectors (mines)
- accident notifications made in the last six months in accordance with the regulations (mines).
Obtaining this information provides a two-fold benefit. It:
- ensures the Department and the operators have clear and up to date information
- sends a clear signal to operators that they have a range of information requirements that they must meet.
24. The National Support Manager should advise both mine and petroleum operators that the Department intends requesting this information and follow this up with a formal, written request. [NSM]
25. Manager Technical Support Services should implement a short-term solution for indexing all information received from the operators and look for a longer-term optimal solution to hold and manage this information. [MTSS]
26. To ensure the information is maintained up to date, the Manager Technical Support Services should investigate ways of making it easier for operators to keep this information up to date. [MTSS]
27. The High Hazards Unit should review all received information to ensure:
(a) It is comprehensive (i.e. identify any gaps, omissions or issues) [MTSS/SAHHP/SAHHE]
(b) Ensure required elements and forms have been completed/used [MTSS]
(c) Follow-up with the relevant operators any gaps, omissions or errors. [SAHHP/SAHHE]
28. The unit should also prioritise any issues identifiable in the information provided. [MTSS/SAHHP/SAHHE]
29. The High Hazards Unit should consider engaging a specialised third party to help identify and review any potentially unsafe issues or practices. [MTSS/SAHHP/SAHHE].
Establish a national standard for petroleum installation inspection bodies
There is currently no standard or other specification for inspection bodies issuing Certificates of Fitness under the HSE Petroleum Regulations.
The legal burden is on operators to determine what is required for safety and what needs to be inspected and certified as being fit. It would be inappropriate therefore to unduly diminish this obligation by being too prescriptive about the elements necessary for checking. However, it is likely that there is already a broad consensus about the elements of equipment necessary for ensuring and maintaining safety on petroleum operations and therefore what broad set of skills is necessary for inspection bodies to provide inspection and certification work.
Aside from being clearer about the scope, level or type of work needed to issue a certificate of fitness, the absence of clarity about the inspection activities makes it very difficult for the accreditation authorities (NATA and IANZ) to confidently accredit parties for these inspection activities. In fact, IANZ has been forced to develop its own informal set of criteria upon which inspection bodies are accredited under this regime. This informal set of expertise requirements developed by IANZ might prove a useful platform for developing a more formal set of required areas.
Of concern, there is no a neat overlap of accredited skills in each of the current inspection bodies (see Attachment 2). As discussed in the body of this report, each of the inspection bodies currently accredited has differing scopes of accreditation. For example, the scope of Bureau Veritas' accreditation includes helidecks whereas this is not the case for either Lloyd's or American Shipping. To make up for these gaps in their scope, it is expected that inspection bodies subcontract to specialists. This subcontracting should also conform to the general accreditation standard for general inspection bodies.
This type of standard does not easily fit with the purpose of Codes of Practice under the HSE Act.
Developing standards should involve:
- industry representatives
- current inspection bodies
- an independent regulator (e.g. NOPSA).
This process should focus on developing a comprehensive overview of the major areas of competence that inspection bodies will be accredited for:
- defining the areas requiring assurance in order to issue a certificate of fitness
- defining the areas of expertise required by inspection bodies in order to issue certificates of fitness.
30. The NSM should invite industry representatives, current inspection bodies, IANZ and independent regulators to participate in a joint effort to develop a new standard to help guide accreditation. This new standard can then be used by IANZ (and NATA) to determine the sets of competencies that sit within the petroleum regulations. [NSM]
Collect information about inspection bodies' use of subcontractors
While it is expected that inspection bodies would be able to competently undertake most of the inspection work required to support the issuing of Certificates of Fitness, requirements for inspection body accreditation in New Zealand set out that inspection bodies employing subcontractors to undertake specialised activities shall access qualified and experienced people to form an independent assessment of the results of the subcontracted activities. The general expectation is that the inspection body undertakes its own work but where it does not have the skills (or accreditation) it uses subcontractors.
Under section 14.3 of the Requirements for Inspection Body Accreditation in New Zealand, inspection bodies are expected to record and retain details of their investigation of the competence and compliance of subcontractors and that these details should be maintained in a register.
From a regulator's point of view, finding out what subcontractors are being used to provide third party assurance and the competence of these subcontractors is useful intelligence. It helps the Department maintain an oversight of inspection bodies' work (and the extent to which they are relying on specialist third parties) and provides a degree of comfort (through transparency) that the third parties being used are competent and that their work is being independently assessed.
Based on the inspection body standard, the information that the inspection should already be collecting and would be of interest to the Department would be:
- Name of the subcontractor
- Work undertaken by the subcontractor (when, where and what)
- Assessed areas of competence
- Explanation of competence (i.e. were they accredited etc)
- Inspection/assurance work undertaken by the subcontractor
- If the work being undertaken by a subcontractor is specialised work that the inspection body is not accredited to undertake, and if so, who provided the independent verification to the inspection body that the subcontractor's work was satisfactory.
31. Invite inspection bodies to provide details about subcontractors from their subcontractor registers. [set a reasonable timeframe] [NSM]
32. Invite inspection bodies to keep the Department updated on the use of subcontractors. [NSM]
33. This information about use of subcontractors can be incorporated and linked to particular installations/places of work. [NSM]
Encourage the use of verification schemes
Verification schemes are a powerful means of driving responsibility for health and safety back to the operator. This is wholly consistent with the Robens' model used in New Zealand. The Health and Safety in Employment Act imposes a clear duty on employers to ensure the health and safety of people while at work. It is therefore consistent that responsibility for developing a verification scheme which includes among other things, the nature and frequency of examination and testing lies with the operator. A competent, concerned employer would probably want testing and examinations regardless of this requirement. However, the fact that inspection and third party certification can involve examination and testing allows operators to step back from this responsibility. Some jurisdictions, such as England, have moved fully over to verification.
New Zealand's approach of having both certification and verification is not problematic, in that it provides a degree of flexibility which may be appropriate for the maturity and sophistication of the local industry. However, verification ought to remain the ultimate objective.
Rather than simply waiting for providers to adopt a verification scheme, the Department could promote the merits of verification schemes. This could be sold to providers as an in-house process (although involving a competent, independent party) enabling the operators to be more clearly focused on known risk areas and enabling scheduling and timing of verification actions to minimise impact on production schedules.
34. The Department should encourage operators who have not utilised verification schemes to do so. [Standards]
Remind operators of all notifiable requirements and pull this information to the centre
Aside from the standard HSE Act notifications (e.g. serious harm notifications) high hazard operators are, under regulations, required to provide certain notifications to the Department. Attachment 3 sets out the types of notifiable events and actions required under the HSE Act and its regulations. These notifications currently go directly to the relevant inspectors and senior adviser(s). This information should be sent to a central point, such as an email account operated by the high-hazards team and copied to the relevant local office and high hazard specialist(s).
The Department should also consider options for making it easier for duty-holders to make these types of notifications.
35. Remind all current operators of the reporting expectations under the HSE Act and regulations. [NSM]
36. Invite the operators to identify any systems or assistance they may require to comply. [NSM]
Invite petroleum operators to provide copies of reports of audits completed over the past six months
Under the Regulations, petroleum operators must ensure reports are made of any audits undertaken at the installation. In this context, 'audit' means any "systematic examination of any safety management system with the objective of assessing the effectiveness of that system in minimising hazards associated with the installation". Not only must operators make a report of any audit, the operator must also record any action taken as a consequence of the audit. Under the Regulations, the operator must keep copies of these reports and records at the installation.
These reports and records have potential as a source of valuable insight and intelligence into the safety systems and safety culture at a particular installation. As well as being an obvious source of insight into issues and actions being dealt with by operations, these reports and records also have some potential to provide a broader insight into the operator's general attitude and approach to safety. For example, it may be informative to see how frequently audits are being undertaken, the span of audits and the way in which the operators have (or have not) responded to any issues raised.
The Department does not have any rights of access to these reports or records beyond its general powers of entry and inspection. However, there is no restriction on the Department asking operators to provide this information. With electronic storage and email, it is likely the cost to operators of providing copies of audit reports and records regularly to the Department (in addition to the regulatory requirement of storing copies on-site) is likely to be inconsequential.
On the face of it, this seems like a useful potential source of information and intelligence about installation safety issues and, possibly, the operator's general approach and attitude to safety. Given the likely small costs involved in sending, obtaining, storing and collating this type of material, the benefits seem to outweigh any costs.
However, several points ought to also be considered:
- the Department cannot require operators to comply with a request for information. If the Department was to make this kind of request, it will need the operators to agree and support the proposal
- the Department needs to be mindful about how and whether it can actually use this type of information. In principle, the idea of gaining more information about an installation is useful. However, with limited resources to analyse this information, it could be that the Department simply does not have the capacity to properly analyse and make use of this information
- perhaps the most serious concern is also the potential for this kind of request to distort the behaviour of operators. If operators knew that the Department would likely see the results of audits it may change the way operators conduct and use audits to help manage safety.
All this suggests the Department must first consider whether it can make use of this type of information and, if so, cautiously approach the industry to test whether there is any appetite for this kind of sharing.
37. The National Support Manager should discuss with petroleum operators the possibility of establishing an information sharing arrangement whereby all reports of audits and records of actions are proactively shared with the Department in addition to the Regulatory requirement to retain copies at the installation. [NSM]
38. If there is general industry support for this type of information provision, the National Support Manager should write to individual petroleum operators inviting them to start providing copies of reports of audits and records of action. [NSM]
39. The National Support Manager should also invite operators to support backfilling this arrangement with some historical information including:
(a) Details of any audits completed over the past 24 months (or since operations commenced) [NSM]
(b) Copies of reports of audits completed within the past six months [NSM]
(c) Copies of any records of actions taken as a consequence of any audits completed within the past six months. [NSM]
40. The Manager Technical Support Services and the Senior Advisers High Hazard Petroleum should develop systems and processes for collecting, collating, indexing and reviewing the audit information. [MTSS]
Refresh inspection bodies and ensure they are kept current
The Secretary of Labour recognises inspection bodies (via Gazette) to issue Certificates of Fitness to petroleum operators. However, examining the Gazette notices, it would appear several inspection bodies currently gazetted are no longer operating. It is also clear that the Labour Group has 'lost sight' of the various inspection bodies. As a matter of house-keeping, the Department should move to update its record of inspection bodies.
Accordingly, the Department should contact all currently gazetted and recognised inspection bodies and invite them to confirm that they are still operating as inspection bodies. It is expected a couple of inspection bodies will no longer be operating. In these cases, the Department will need to initiate the process for withdrawing recognition. This involves writing to inspection bodies and setting out concerns.
The Department may also want to request IANZ review and refresh the accreditation of all inspection bodies.
The Department should also be open to trying to expand the number of inspection bodies operating in New Zealand. A greater diversity of inspection bodies would provide a greater level of comfort about independence and broad sets of skills available to the industry.
41. National Support Manager writes to all currently recognised inspection bodies:
(a) inviting currently recognised inspection bodies to confirm they are still operating as inspection bodies (it is expected this will result in at least two bodies indicating they no longer operate as inspection bodies in New Zealand). [NSM]
(b) advise current inspection bodies of the Department's intention to re-evaluate recognition of inspection bodies to ensure the recognition is still appropriate. This should be done in a way that makes it clear that our expectation that we have no issue with their performance - just good practice to periodically review. [NSM]
Open the possibility of self-inspection or industry-provided mutual inspection
Under the standards for accredited inspection bodies it is not necessary for them to be wholly independent from providers. There are three general types of inspection bodies envisaged in the standards:
- Type A: an inspection body fully independent of the parties involved
- Type B: an inspection body that is part of the organisation it supplies services to but operated as a separate and identifiable part of the organisation
- Type C: an inspection body that is part of an organisation involved in design, manufacture, supply, installation, use or maintenance of items and it provides an inspection service to other organisations.
Currently, the inspection bodies involved in the petroleum regulations are Type A bodies. There is nothing to prevent operators from having Type B inspection bodies or providing Type C services.
The advantage of this is that it allows operators with the ability to undertake the inspection work themselves to possibly save money but it has the added advantage of expanding the pool of inspection bodies in New Zealand and the pool of talent available in the inspection business.
While there is no requirement for inspection services under the mining regulations, if the government did introduce an inspection/certification regime in extractives, one way of dealing with the small size and maturity of the local industry would be for a major operator, like Solid Energy, to provide Type C services to smaller mines.
42. The Department should raise awareness with industry that they themselves can operate inspection bodies and also provide inspection body services to others. [NSM]
Encourage reporting near misses and major events
The Health and Safety in Employment Act requires employers to notify the Department of all incidents that result in serious harm.
Duty-holders may also face other notifications under Regulations - this is the case for both petroleum and mining. There is also a requirement on all duty-holders to maintain a register of any accidents that resulted in serious harm or accidents that "might have harmed" people. While employers must record near misses, there is no requirement to provide this information to the Department. However, information about near-misses is useful information about the safety practices at a place of work.
There is no restriction on the Department asking high hazard operators to provide information about near misses in addition to their other statutory and regulatory requirements.
On the face of it, this seems like a fairly trivial request that operators ought to find reasonably easy to comply with. However, there are some issues the Department ought to consider before requesting this information from operators:
- the Department cannot require high hazard operators to comply with a request for this information. If the Department makes this kind of request, it will need the operators to agree and support the proposal
- the Department needs to be mindful about how and whether it can actually use this type of information. As discussed earlier, in principle, the idea of gaining more information about accidents is useful. However, with limited resources to analyse the information, the Department may not have the capacity make sensible use of this information.
One of the concerns for requesting audit information (see above) is that there is a potential for this to impact negatively on the way operators initiate, conduct and use audit information. However, there is no such concern with near misses. Operators have a statutory obligation to record details of near misses in a register.
The Department might want to consider whether it wants to collect this information in a reasonably timely fashion (within a number of days of the incident) or whether it would want to have operators provide this information in large chunks, periodically.
If coupled with the mandatory notifications under Regulation 19 (failure of containment) and serious harm events, the reporting of near misses would provide a reasonably comprehensive picture that substantially covers the same sort of span of reporting required by NOPSA.
43. The National Support Manager should discuss the idea of high hazard operators voluntarily submitting 'near miss' information to the Department. [NSM]
Develop lead and lagging indicators for high hazards
The Department generally focuses on ex post factors to analyse and understand health and safety performance. This includes analysing injury and complaints. This retrospective analysis helps identify emerging risk areas and provides a useful lens for identifying the relative 'riskiness' of a particular industry or place of work. However, given high hazard industries are places where there is a low probability of something significant happening. As such, ex post analyses are of only limited use. Moreover, learning lessons after a disaster is far less desirable than trying to identify issues which may indicate an elevation of risk and enable operators to act before a disaster.
Accordingly, identifying ex ante 'leading indicators' should be a priority. While this is likely to be challenging, the Department is not necessarily alone. Operators are likely to be interested in leading indicators. This is something ideally suited to international cooperation. Through its involvement with NOPSA and other international bodies like the IRF, the Department should encourage the development and adoption of an international set of leading indicators.
The Department currently supplies statistical information to the IRF. This information is collected and collated by the Senior Adviser High Hazards Petroleum and Geothermal. This work is time-consuming and difficult. Whatever additional reporting burdens are created, the Department needs to try to minimise the impact on businesses and front-line staff. Where possible, any new indicators should be built upon existing information and systems developed for easy collection.
44. National Support Manager to invite operators and other regulators to participate in the development of leading indicators that can be used locally to identify potential issues and internationally to benchmark performance. [NSM]
Develop a new industry liaison forum focused on high hazard
The Department has a good level of contact with mine operators and petroleum operators. But this contact is often at the operational/field level. As valuable as this contact is, it does not necessarily cover the full range of issues and wider discussions that might be usefully had at a managerial/strategic level. Issues like the development of standards, guidance, planned inspections, information requirements, as well as presentations on safety issues, health & safety campaign priorities and other higher level discussions. This could be done as a 'high hazards' meeting or it could be done focusing on sectors (i.e. petroleum or extractives). It would be useful to expand attendance to include other New Zealand regulators and interested agencies (e.g. Maritime NZ, MfE and MED).
45. Once established, the high hazards team should organise annual conferences with operators. [NSM]
Invite inspection bodies to inform the Department of conditions, limitations, qualifications on certificates
Inspection bodies issue certificates of fitness for installations. Installations subject to Certificates of Fitness (i.e. have not received approval to operate a verification scheme) can only operate in accordance with Certificates of Fitness. Non-compliance can occur through damage, wear and tear and modification. If non-compliance occurs, inspection bodies may allow the employer to continue to operate in accordance with such reasonable limitations or conditions as it sees fit to impose. These limitations or conditions must be endorsed on the Certificate including the reason(s) for non-compliance.
46. Write to inspection bodies and invite them to
(a) provide details on all current limitations and conditions on certificates of fitness [NSM]
(b) keep the Department informed on all future conditions, limitations or qualifications applied to certificates of fitness. [NSM]
47. The Department reviews this information with a view to possibly generating hazard alerts or other guidance material on potential issues that operators and inspection bodies might want to know about. [NSM]
48. The Department uses this information to help focus inspections and to share with other regulators. [NSM]
 This applies to the pressure equipment, cranes and passenger ropeways regulations as well – but these regulations do not apply to petroleum wells or offshore drilling installations (see Schedule 2 of PECPR Regulations for exemptions to these activities/equipment).