From: Thomas, Amanda [mailto:Amanda_L._Thomas@omb.eop.gov] 

Sent: Wednesday, February 24, 2016 12:24 PM 

To: Cogliano, Gerain <Cogliano.Gerain@epa.gov>; Jones, Danielle <Danielle_Y_Jones@omb.eop.gov> 

Subject: RE: RIA 5.7 edit 

Gerain, I’m fine with EPA’s edits. Please thank your team for a productive meeting this morning. 

Thanks, Amanda

From: Cogliano, Gerain

Sent: Wednesday, February 24, 2016 12:22 PM

To: Jones, Danielle <Danielle_Y_Jones@omb.eop.gov>; Thomas, Amanda

<Amanda_L._Thomas@omb.eop.gov>

Subject: RIA 5.7 edit

Attachment:

Section 5.7 tpa &

root cause 022416.d

Hi,

Attached is the edit to the RIA section 5.7 as we discussed this morning. Please let me know if this works.

We’re working on preparing the documents to conclude review.

Thanks

Gerain
Attachment: Section 5 7 tpa root cause 022416.docx

Third-party audits

Purpose of audit, potential for actions resulting from information collected

The purpose of a compliance audit is to examine whether the facility’s accident prevention program –

PHA, mechanical integrity program, operating procedures, etc. – is properly implemented and in

compliance with 40 CFR part 68 requirements. Such an audit can result in a wide range of potential

findings. The purpose of involving a third-party to conduct the audit following an accident is to ensure

that the information gathered is from an unbiased source to look objectively at compliance with the

RMP rule. Relative to the baseline audit requirement, EPA expects the third-party audits to lead to a

different and more objective audit report that may result in more costly changes in facility processes;

less costly changes; or changes with approximately the same cost as the baseline audit. One view is that

we may expect more costly changes since the objectivity of the third-party auditor may give less regard

to ensuing costs. However, EPA believes that such changes that may require more up-front costs than

baseline audits could reduce the probability of another accident and bring the facility into compliance.

More efficient allocation of resources

Rigorous auditing that takes advantage of expert advice provides a detailed and thorough examination

of potential problems and constructs careful ideas to remedy those problems. In the baseline without

the proposed rule, audits are being conducted with potentially less expertise or with biased information.

The remedies suggested by a third-party audit are expected to be more efficient at identifying

deficiencies and correcting risky situations than remedies that would occur in the baseline. From this

perspective, there is an expectation that the more efficient remedies suggested by third-party audits will

impose different costs but not necessarily additional costs. They may reveal underlying problems and

remedies that result in a more efficient allocation of the resources targeted at bringing the facility into

compliance with the RMP rule.

Examples of auditing results that could lead to additional expenditures

Examples of potential actions resulting from audits could include more frequent equipment inspections,

use of different or additional inspection methods, equipment upgrade or replacement, installation and

use of different or additional hazard controls, altering process operating conditions, materials, or

chemistry, modification of operating procedures, additional training, staffing changes, etc. The wide

scope of compliance audits and variation in potential follow up actions causes uncertainty in estimating

expected costs. This uncertainty is exacerbated by a lack of information about the incremental

difference in changes that result from a third-party audit compared to a baseline audit. Due to these

uncertainties and this lack of information, EPA did not estimate the expected costs from follow-up

actions.

How do we characterize these costs?
1 In the preamble to the proposed rule, EPA has requested public comment on the types of coststhat result from

independent audits(other than the cost of the audit) that are different from self-audit costs.

The nature of audits is to discover areas of facility operation that are not in compliance with existing rule

standards and identify actions to improve safety. This is true of existing audits as well as third-party

audits. Indeed, the purpose of the proposed third-party audit provision is the same as the purpose of

the self-audit provision in the current rule – to identify and correct failures in the facility’s prevention

program. EPA believes that an accident occurring after a self-audit suggests that the self-audit may have

been inadequate and may be an indicator that the firm was in non-compliance with applicable prevention

program elements of the rule. EPA recognizes that coming into compliance following an audit may entail

additional expenditures by facility owners. While the costs of facilities coming into compliance were

estimated in the 1996 RMP RIA, for the purpose of future analyses The costs of facilities coming into

compliance were estimated in the original RMP RIA but no additional costs were estimated and

attributed to changes from a compliance audit. However, EPA would like to better understand better

the magnitude of this additional spending. andEPA requests comment on how much, if any, additional

spending is expected from actions taken due to third-party auditor reports, relative to actions expected

in response to auditor reports in the baseline. 1

Incident investigation/Root Cause Analysis

Purpose of investigation, potential for root cause provision to result in additional costs

The existing rule already requires incident investigations to be performed and findings to be addressed.

However, the proposed rule contemplates a more thorough “root cause” investigation to identify

underlying causes of an incident. The outcome of a root cause investigation could reveal more

substantial system-related reasons why an incident occurred and identify correctable failures in

management systems. These underlying causes may not be identified under the baseline incident

investigation provision.

Examples of investigation findings from the root cause analysis that might involve significant costs

Similar to the audits, incident investigations can reveal a wide variety of incident causes. These can

range from the immediate or proximate causes of an incident to its underlying, system-related cause or

causes. For example, an investigation may reveal that the immediate cause of an incident was

equipment failure (e.g., failure of a corroded pipe), or operator error (e.g., an operator performed

procedural steps in an incorrect sequence). A deeper “root cause” investigation would go beyond these

findings and identify the underlying reasons for why the equipment failed (e.g., underlying deficiencies

in the facility’s mechanical integrity program) or why the operator made the error (e.g., underlying

deficiencies in the facility’s operator training program).

The baseline incident investigation provision requires the owner or operator to determine “the factors

that contributed to the incident,” but does not explicitly require the owner to perform a root cause

investigation. Some regulated facilities may already interpret the baseline provision as requiring root
2 In the preamble to the proposed rule, EPA has requested public comment on the types of coststhat result from

root cause investigations as compared to non-root-cause investigations.

cause investigations, but EPA believes that many others do not. Because the proposed root cause

investigation requirement is likely to result in many facilities identifying deeper system-related causes of

incidents, actions taken to resolve these causes may require greater expenditures than those taken for

the baseline investigation requirement, which may not lead to identification of system-related causes.

For example, instead of replacing a single piece of failed piping, a root cause investigation may lead to

facility-wide enhancements in piping inspections, and replacement of numerous additional piping

sections where excessive corrosion was subsequently identified. Similarly, instead of providing

additional training for a single operator, the root cause investigation may prompt a full overhaul of the

facility’s operator training program, including use of new training techniques, and additional training for

all process operators. Root cause investigations may also reveal multiple systemic accident causes. For

example, in addition to identifying systemic training problems, the investigation may reveal that there

were other underlying root causes such as an equipment design problem that led the operator to make

the error (e.g., confusing labeling or equipment configuration), or unclear operating procedures.

How do we characterize these costs?

Resolving such system-related deficiencies is expected, on average, to require greater expenditures than

resolving investigation findings related to baseline (i.e., non-root-cause) investigations. However, 

similar to audits, EPA expects that resolving underlying problems will, in the long term, reduce the

probability and magnitude of a future accident. Similar to the audit, the incident investigation is

intended to bring facilities into compliance by revealing deficient aspects of facility operations – in this

case, aspects that have caused an accident, and may cause future accidents. Just as with audit results,

EPA recognizes that coming into compliance may entail additional expenditures by facility owners. Even

though Tthe costs of coming into compliance were estimated in the original RMP RIA, EPA would like to

better understand the magnitude of this additional spending to possibly include it in future analyses. but

no additional costs were estimated and attributed to changes from an incident investigation. On the

other hand, if a root cause investigation results in correction of a system-related deficiency that would

have eventually led to another accident, then it not only avoids inefficient expenditures for resolution of

incident findings, but it also avoids the costs of future accidents that may have arisen from the same or

similar causes. EPA requests comment on additional costs that might occur due to root cause analysis,

that are over and above costs that would occur in the baseline from the existing incident investigation

requirement.2