Practical proposals for improving the Department of Labour’s approach to high hazard industries
Recommendation four: Bolster the analysis of Safety Cases
General observations
Safety cases are an important aspect of New Zealand's regulatory approach. Installation operators use safety cases to describe all of the relevant particulars set out in the Petroleum Regulations for the design, construction, operation and abandonment of installations.
Safety cases must be provided to the Secretary of Labour at least two months before the commencement of construction, operation or abandonment. While safety cases are not formally accepted or approved by the Department, they are important documents because an employer must take all practicable steps to ensure the installation is constructed, operated, and abandoned in a manner 'consistent' with the relevant safety case.
The Regulations are reasonably detailed in the particulars that must be covered by safety cases. However, because there is no formal acceptance or approval, there is no real check on the quality of the safety case. The implication of requiring safety cases to be provided to the Secretary of Labour two months prior to commencement of the design/construction phase or operation or abandonment indicates a general expectation that the Department has a reasonable opportunity to review the cases, and to provide any feedback to the operator.
With only one specialised petroleum resource in the Department, its ability to assess the safety case is reasonably limited unless it obtains specialist third party assistance. Other jurisdictions that operate safety cases, such as Australia's NOPSA, are large enough to maintain a significant standing capacity to undertake safety case reviews. It is unlikely New Zealand's inspectorate capacity for petroleum will ever be big enough to maintain such a standing capacity.
The Department's ability to review safety cases is not specifically outlined in the Regulations. There is also no requirement on operators to make any amendments or changes suggested by the Department. However, there is every reason to believe that it is appropriate for the Department to exercise some sort of review of safety cases at the very least to ensure that they conform with the required elements set out in the Regulations and, more generally, pass a test of reasonableness in terms of their comprehensiveness. This is particularly important prior to the commencement of operations, construction or abandonment - but it ought to not just be constrained to these times. The Department can play a useful role in also reviewing current safety cases as well.
The Department can also check conformity of installations in terms of the safety cases. Elements of safety cases can be selected for inclusion in subsequent assessment/inspections.
Third party review of current safety cases
General findings
Operators of offshore installations are required to provide the Department with copies of their safety cases at least two months before the design and construction, operation and abandonment of an installation. Any subsequent revisions to these safety cases must be sent to the Department "as soon as practicable after the revision is made". Operators must also take all practicable steps to ensure their employers are aware of the relevant parts of the safety case and that the installation is constructed, operated and abandoned in a manner "which is consistent" with the safety case. It is an offence to breach this regulation (and is liable on summary conviction to be fined up to $250,000).
This means the Department should have a clear record of the intended design, construction, operation and abandonment of a facility. The Department could engage a competent third party to review a safety case or any part of a safety case. The Department could focus this review on a particular area of a safety case to ensure it meets known international standards and is "in accordance with generally accepted and appropriate industry practice". This is a reasonable test given that operators must also take all reasonable steps to be consistent with the standards specifically outlined in or with the generally accepted and appropriate industry practice.
Actions
71. The Department should identify particular parts of safety cases for review. [NSM]
72. The Department should advise operators that they intend to review a safety case and invite them to conduct their own review prior to the Department conducting the review. [NSM]
73. After advising operators of the intention to review safety cases, the Department should give operators at least three months to conduct any reviews and submit any revisions to their safety case. [NSM]
74. The Department should identify competent third parties capable of conducting a review of a safety case (or part thereof) against the current standards or generally accepted and appropriate industry practice. [NSM]
Third party review of future safety cases
General findings
When an operator of an offshore installation provides a safety case to the Secretary of Labour, they do so two months in advance of the construction, operation or abandonment of an offshore installation. While the Department does not have any acceptance role, it does have the opportunity to review the case and to make comments if necessary.
However, this work is technically demanding and time-consuming. With the Department's limited internal resources, this task is a significant imposition on the Department's other safety work with operators. Accordingly, the Department should consider the option of having third parties undertake preliminary reviews of safety cases as they are received, to enable the Department to provide advice back to the operators on whether the Department is convinced the safety case adequately covers the particulars set out in the Regulations and reflects current standards or accepted and appropriate industry practice.
This work could be undertaken by an independent competent party (independent of the industry, that is) or alternatively could be undertaken by other regulators on the Department's behalf. Given the length of time before NOPSA could be in a position to assist, the Department is likely to require the use of commercial third parties, at least for the immediate short-term future for activities such as safety case reviews.
Actions
75. The Department should advertise for a panel of potential competent bodies/persons to act as reviewers of safety cases. [NSM]
76. The Department will need to develop a business case for funding third party review. [NSM]
Consider developing an ACOP or guidance note on safety case development and/or assessment
General findings
Other jurisdictions that utilise safety cases, like the UK and Australia, have detailed information available to duty-holders about safety cases. New Zealand has very little that is similar. Outside of the matters set out in regulation that must be covered, there is very little other guidance available to duty-holders.
This effectively means it is entirely up to duty-holders to determine what is or is not satisfactory - although it should be noted most operators develop safety cases using similar international safety case standards and templates. Unlike other jurisdictions, New Zealand does not have an acceptance process for safety cases. The absence of any guidance on safety cases and the lack of acceptance is a dangerous combination. The MED comparative report highlighted the absence of a safety case acceptance regime in New Zealand, but this is an issue that would require more detailed analysis and regulatory changes. However, there is nothing to stop the Department from working with industry to develop some sort of structured guidance on the safety case process and to be clearer to itself and duty holders about its own process for considering and providing feedback on safety cases.
Actions
77. The high hazards team should work with the Standards team to formulate some sort of guidance on safety cases. At a minimum, this guidance will provide clear expectations about the level of detail expected to adequately address the matters needed to be covered. [NSM]
78. Industry should be involved in the development of any guidance notes. [HHT and Standards]
Selectively test conformity with safety cases
General findings
Given the Regulations require employers to take all practicable steps to operate consistently with safety cases and that safety cases are important expressions of how an operator intends to manage identified hazards, testing their conformity with the safety case should be an important part of any workplace assessment.
In order to keep such conformity checks focused and manageable, a selective approach could be taken where one or two critical elements are selected from the safety case and the inspectorate can test conformity with those elements during a workplace assessment/inspection. The Department could also engage third parties to assist their inspectors to undertake such conformity checks.
Actions
79. During the annual inspection planning of petroleum facilities, installation safety cases should continue to be used to help inform aspects to check conformity. The high hazards team should ensure systems and processes are put into place to ensure the effective continuance of this practice. [MTSS and SAsHH-P]
