In 2012, following a 2010 oil pipeline accident in Marshall, Michigan, NTSB recommended that API develop a pipeline Safety Management Standard (SMS). SMSs are used in various sectors (aviation, maritime, labor, food management, etc.), and typically follow ISO frameworks. The general intent behind a SMS is to ‘provide a systematic way to identify hazards and control risks while maintaining assurance that these risk controls are effective,’ and they are meant to reflect a ‘businesslike approach to safety.’
API has worked with the NTSB, PHMSA, states and industry to develop a proposed SMS standard (API RP 1173), which was issued for public comment in February 2014, revised and issued for further comment in July of this year. The standard is expected to be issued in final form by the end of this year, or early 2015.
RP 1173 states that the overall industry-wide goal for any safety program is ‘zero incidents.’ The specific goals of RP 1173, however, are enhancing the effectiveness of risk management and enabling continual improvement of pipeline safety performance. These goals reflect the process-oriented nature of the RP; a SMS is intended to provide a framework to help improve performance, regardless of the specific goals established by the operator. A pipeline SMS should ideally be tailored to an operator’s own current needs, with goals reflecting improved performance revised over time, as appropriate.
Relationship of a P-SMS to IMP or O&M
RP 1173 uses numerous terms that are already defined in PHMSA’s IMP and O&M regulations, such as: data gathering, risk management, risk assessment, prevention and mitigation, record keeping, accident investigation, management of change, lessons learned, etc. Such terms have been clarified in application over more than a decade of rulemaking, guidance and enforcement precedent. At present, there is no plan to formally adopt IMP or O&M definitions into RP 1173, in large part because the SMS is intended to have more broad coverage than IMP or O&M rules. An operator – and the agencies – would be wise to refer to established definitions in development and application of their SMS programs, however, because the definitions that have been developed under IMP or O&M have the benefit of many years of use and clarification, and adoption of differing definitions could lead to inconsistent interpretation and application of analogous principles. Note also that the IMP and O&M regulations are, in themselves, a form of safety management systems, but they are by necessity limited in scope and application. The purpose of API RP 1173 is to encourage operators to take the best of those existing programs and apply them more generally.
Effect of an Incident on an Existing Pipeline SMS
If an incident occurs even though an operator has a pipeline SMS in place, that does not necessarily mean that the SMS was deficient. Accidents can happen despite comprehensive planning, anticipation and mitigation of risks. A SMS, as set forth in draft API RP 1173, is intended to create a process for operators to learn from any incident and continually improve their operations and safety culture. Just as we each do as individuals, the true test of resilience is how we respond to and learn from setbacks that do occur. Depending on the circumstances, the occurrence of an incident may either be unpredictable or unavoidable, or it may illustrate some aspect of safety management that needs further focus and development. The latter alternative is most often the case, which is why part of the purpose of a SMS is to reflect a process of continual review and improvement, rather than to be an end in itself.
Legal Effect of a SMS
Once finalized, RP 1173 will only be a ‘Recommended Practice,’ and it is not anticipated to become codified into federal regulations. Pipeline operators would be wise, however, to consider the use and adoption of a SMS, even though it is not a legal requirement. An operator’s use of the standard will be watched closely by agencies and the public (including shareholders, citizen groups, insurers and plaintiff attorneys). A SMS will likely be used as a reference point for assessing an operator’s performance – and potential liability – following any incident. Even though it is not mandatory to adopt a SMS, under common law theories of negligence, an operator may be found negligent for not adopting and following a pipeline SMS consistent with RP 1173 in the event of an incident. An operator that does not have a SMS will likely be challenged as to whether having such a program in place would have been ‘reasonably prudent’ and may have helped prevent an incident. It is also possible that PHMSA may impose SMS requirements indirectly, through enforcement actions (e.g., CAOs, Safety Orders, Compliance Orders).