Creating a Legal Registry for Compliance Attainability

by | Apr 11, 2016

The compliance challenges that entities such as chemical, energy, or mining companies face are seemingly endless – and endlessly complex. And because the word “compliance” means different things to different people, there are various ways to consider the state of being in compliance. For example, compliance has traditionally been thought of as the things a company does because an external regulatory body has demanded it. Additionally, there are standards bodies such as ISO and non-governmental organizations (NGOs) such as the World Bank, Dow Jones Sustainability Index, and the Global Reporting Initiative that also have expectations of what “thou shalt do” for favorable sustainability ratings. But to really excel, you must also take into account the things your own internal body within the company has decided it must do. So when we say “environmental management,” we mean being in compliance with regulations, standards from industry bodies as well as NGOs and internal corporate policies.

Creating an enterprise compliance registry for all these entities has become a necessity, because an organization must first attain and sustain compliance before it can begin to achieve operational excellence.

Operational Organization around Compliance – Creating the Registry Both globally and regionally, the trends are very clear: regulatory changes are accelerating more today than ever before. During the last decade alone, we’re measuring between 60,000 to 80,000 changes a year to the global registry, a fact that clearly creates burdens for those in the “dirty and dangerous” industries. Only a dozen years ago, a typical energy company would have ten or more EH&S professionals at a single location to maintain compliance; now, with both the natural attrition due to the aging workforce and constant labor cost reduction pressure, organizations have a smaller and less experienced workforce dealing with a growing and increasingly complex regulatory regime. It is more important now than ever to create a comprehensive and systematic enterprise wide asset based compliance program, while critical expertise, insight, and knowledge is available.

To begin, the sustainability or compliance group within a company completes a comprehensive positive applicability analysis to assess and record which specific regulations, permits, policies, or standards apply for the many assets and operating scenarios. This critical exercise pinpoints how the obligations and supporting actions of one operation may be significantly different than that of an adjacent operation within the same location or across the company. For example, a vessel processing a certain raw material may be restricted by a maximum flow rate, while the same vessel used to process another material later in the day could be restricted by a minimum temperature. Monitoring these obligations and limitations in a dynamic operation requires a robust management system.

Equally important but often overlooked is the completion of a negative applicability analysis to document why certain obligations do not apply to an asset or operation. Completing this activity limits compliance exposure because it affirms that the regulation was considered and excluded for specific reasons.

Maintaining the Registry Once the registry is established, then the specific actions needed to demonstrate the company is following the mandates must be assigned.. However, monitoring both high frequency process data against established limits and the completion of work orders and tasks across the operation requires a robust automated system. By automating the process, your company captures and systematizes the collective knowledge of the most senior experts to support the generation of engineers with little experience replacing those with decade of experience leaving the workforce. For example, integrating your compliance system with your maintenance system allows a single work order generated for inspecting a tank for preventiave maintenance to also satisfy a regulatory obligation with no additional effort or knowledge in the field by the maintenance department.

Keeping the Registry Evergreen Finally, to sustain a registry over time, a company must have a way of knowing, from quarter to quarter and year to year, how regulations have changed and what the implications of those changes are. A comprehensive compliance assurance program can ensure that the regulatory changes are tracked and followed. For example, software can inform companies when something about the regulation, permit, policy, or standard has been changed even in the smallest way. Changes to applicable regulations are highlighted for review to determine the impact on the registry or associated compliance actions. Moreover, the subject matter expert reviewing the change is able to see every asset and operation across the enterprise that is associated to the mandate and potentially impacted.

Equally important to tracking the changes as they arise is keeping maintaining an accurate history of the legal registry, so that a few years down the road they can show what the existing regulation was and why their actions at that time kept them in compliance – in other words, so they can recreate the past when asked.

The implications of being in violation of compliance go far beyond fines; they can have significant negative impacts on your brands. It is imperative that a company can say, “We were in compliance in the past, and here’s how we can certify it. We are in compliance now, and here’s the data that supports it. We know these tasks were done because we have these work orders to show they were done.” Everything must be transparent and auditable; having a legal registry provides a crucial defense of your position.

David Bradley is a Managing Director, Operational Excellence & Risk Management at IHS, consulting with clients to develop their Operational Excellence vision and Environmental, Health, Safety and Sustainability (EHS&S) plan. Mr. Bradley has specialized in EHS&S information management for the past twenty years while leading consulting, business case and project plan development, and implementation engagements for the energy and manufacturing sectors. Mr. Bradley holds a B.S. in Chemical Engineering from Texas A&M University.

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