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May 19, 2014 Articles

Major Accident Response: Managing the First 96 Hours

What to do in the aftermath of a disaster.

By Mark L. Farley – May 19, 2014

The energy industry continues to experience high-profile accidents that bring with them intense public scrutiny and the potential for significant reputational harm. These incidents are not limited to any one sector. They have occurred upstream (exploration and production), midstream (transportation), and downstream (refining and chemical manufacturing).

Whether it is a prolonged loss of well control, the fiery derailment of tank cars carrying volatile crude oil, or a refinery explosion, these incidents present a “perfect storm” of unique challenges that can readily overwhelm even the most sophisticated organizations. Federal criminal investigators are often among the first personnel at an incident scene, which raises the stakes even higher. A prompt, sure-footed response by counsel experienced in crisis management is essential.

In the United States, multiple federal and state statutes are implicated by a major accident and establish jurisdiction for subsequent investigations by government authorities. It is not unusual to have an alphabet soup of five or more independent agencies, each with its own statutory mandate, investigating an incident.

The Occupational Safety and Health Administration (OSHA) and the U.S. Environmental Protection Agency (EPA) routinely initiate enforcement inspections after major accidents. Independent investigating agencies, such as the National Transportation Safety Board (NTSB) or the U.S. Chemical Safety Board (CSB), also respond depending on the nature of the incident. The NTSB investigates transportation incidents while the CSB investigates chemical accidents at stationary facilities that are not incident to transportation. The U.S. Coast Guard (USCG) and the Department of the Interior’s Bureau of Safety and Environmental Enforcement (BSEE) may be involved in offshore incidents. State and local agencies and authorities also are likely to respond to major events occurring within their jurisdictions.

Crisis Management and the Role of Counsel
Crisis management of a major accident occurs at two levels within an organization: the tactical—the site at which the incident occurred, and the strategic—the corporate organization. The role of a lawyer advising a crisis-management team spans these levels with two primary responsibilities: (1) ensuring timely compliance by the company with applicable legal requirements implicated by the crisis (e.g., incident-reporting requirements and evidence preservation); and (2) ensuring reasonable steps to protect the company’s legal rights and interests (e.g., preparing for government investigations and third-party litigation, safeguarding legal privileges, and making certain that communications are accurate and do not represent admissions).

On a more practical level, the lawyer finds himself or herself in the familiar roles of issue spotter, legal advisor, strategic counselor, project manager, and communication facilitator, albeit under very demanding circumstances. Fundamentally, the lawyer’s job is to consider the legal implications of almost every major decision taken in response to the crisis in an effort to ensure that the company is not unknowingly compromising its interests.

As with every corporate decision, a balancing of interests will occur, and the company may conclude that it must undertake a course of action that adversely affects its legal rights. The lawyer, however, must be knowledgeable and experienced in spotting relevant issues so as to allow appropriate consideration, as circumstances and time permit.

Although the facts and circumstances of any individual crisis may vary, major accidents always implicate similar legal issues and considerations.

Incident Reporting Requirements
Depending on the type and extent of the incident, there likely will be government notification requirements. Such notification requirements are often fact-specific (e.g., identity of chemical, quantity released, duration of release). The identity of the agencies to which the release must be reported will depend on the location of the event, the resulting environmental impacts (e.g., whether the release is to air, water, or the soil), and the nature and extent of any injuries. Initial notifications usually must occur within hours of the event with follow-up notifications in specified periods of time.

Site Preservation and Evidence Collection
After an incident, a primary concern of any investigating agencies will be the preservation of the incident scene and the collection of relevant evidence. Protecting against subsequent claims of spoliation or obstruction is of critical importance.

Safety and environmental concerns remain paramount, however. Emergency response and site stabilization, including those activities necessary to place operating units in a safe condition, should occur as needed.

As soon as possible under the circumstances, counsel must ensure that appropriate controls are imposed with respect to the incident site. Access should be limited. Changes made during the emergency response must be documented and go-forward changes should be cleared with interested parties, including investigating agencies. In many instances, government agencies such as OSHA or the CSB will seek to enter into an evidence and site-control agreement with the employer/site operator. Such an agreement will impose specific restrictions with respect to changes at the incident scene and provide a framework for the development of future protocols regarding documenting the incident scene, as well as evidence collection and subsequent testing.

Litigation is all but assured in the aftermath of major accidents. In anticipation of such litigation and in light of any government investigations, counsel will need to issue typical directives to preserve documents and electronically stored information (ESI). Major accidents implicate unique ESI, however. The energy industry, for example, relies on process-control systems that automate and continuously monitor aspects of operations (e.g., distributed control systems (DCS) or supervisory control and data acquisition (SCADA)). These systems monitor and record key conditions of the process or pipeline systems, including temperature, pressure, and other parameters. DCS or SCADA retain detailed data for set periods of time before a more limited amount of data is recorded by a data historian or some other automated archiving system. After an accident, it is important to back up the most detailed version of the data before data granularity is lost.

Internal Investigations
A major objective for the company is to independently investigate the causes of the incident. It is important to note that an investigation may be required by law. In the United States, for example, both OSHA’s Process Safety Management standard (29 C.F.R. § 1910.119(m)) and the EPA’s Clean Air Act Risk Management Program rules (40 C.F.R. § 68.81) require that the employer/facility owner investigate certain process-safety incidents and near misses. These rules impose requirements on any such investigations (e.g., deadlines for initiation, team composition). In addition to these required investigations, the company also will need to investigate the incident and develop facts necessary for the legal defense of the company in follow-on enforcement by the government or litigation by third parties.

The issues related to internal investigations (e.g., single as distinct from multiple investigations, issues of applicable legal privilege, team composition, use of external experts) are among the most important and challenging decisions facing the company in the immediate hours after an incident. The meaningful involvement of legal counsel in making these decisions is critical. The initial inclination of counsel unfamiliar with major accidents may be to conduct a single, privileged investigation. Such advice may have negative consequences, especially if an underlying regulation requires the company to conduct an investigation. A company pursuing a single privileged investigation may soon find itself confronting complex issues of waiver when an enforcement or investigating agency ultimately asks to review the legally mandated investigation report.

A company should carefully consider the selection of investigation team leaders and members. Team leaders should have excellent judgment and be accustomed to forging consensus on key issues while appropriately directing a diverse group of potentially opinionated subject-matter experts. Previous experience in handling complex investigations and working well with legal counsel on sensitive matters also are important considerations.

Interacting with Government Inspectors 
One of the most challenging tasks of on-scene counsel is ensuring appropriate interaction with government inspectors. The government investigations may be lengthy and inspectors may be working at the scene for long periods of time. It is not uncommon, for example, to have investigators maintain an almost continuous presence at an incident scene until relevant physical evidence is collected, a process that sometimes may take four to five months. The inspectors’ first interactions with company personnel and legal counsel have a significant role in setting the tone of the relationship and can greatly influence the perceptions of the inspectors with respect to the company’s commitment to environmental, health, and safety issues and its response to the investigation.

At the same time, it is imperative that company counsel establish appropriate controls over the investigative process and safeguard the legal rights of the company and its employees. Finding a balance between these interests can be challenging, especially in the traumatized atmosphere that often accompanies a major accident. The general approach should be to accommodate the reasonable requests of the inspectors, but counsel should be prepared to establish appropriate limits or deny requests if there are compelling reasons for doing so. Cooperation does not require an abdication of responsibility or control. With respect to issues such as changes to the incident scene that are necessary to further stabilize the situation, conferring with the inspectors prior to such changes and documenting no objection is essential.

Document Retention, Collection, and Production
The company must promptly develop an effective process for document collection and production. In the case of major accidents, counsel should anticipate receiving requests from multiple agencies within hours or days of the event. The NTSB, the CSB, and OSHA often make requests immediately upon deployment with an initial production deadline of 24 hours.

It also is unlikely that the agencies will coordinate their requests. The magnitude of produced documents may ultimately reach tens of thousands of pages. If a systematized approach is not adopted, there is a high risk that the overall integrity of custodian files will deteriorate as multiple documents are retrieved, copied, and refiled.

It is also important to ensure that a system exists that will allow counsel at some point in the future (often years from the event) to identify with specificity the exact file location (which custodian, which file, etc.) from which a document was produced.

Certain original documents may also prove to be of such importance that counsel should collect and secure them immediately so as to ensure a documented (and ideally, limited) chain of custody. For example, the start-up checklist being used by a control-room operator in the time immediately preceding an incident may warrant such measures.

Witness Interviews
The inspectors will make requests to interview certain witnesses. It is often in the company’s interests to facilitate these interviews, but it is important for the company to make certain that employees understand their individual rights and the company’s expectations (e.g., to be professional and polite, to tell the truth, not to speculate). It also is important to ensure that individuals understand and acknowledge that company counsel does not represent them personally.

Most agencies will allow observation of their interviews with exempt employees (e.g., supervisors or engineers) by counsel for the company. Agencies, however, often will initially resist efforts to have counsel or others present, so counsel should be prepared to push back. Exempt employees should be made aware of their right to have counsel for the company present. In most cases, the exempt employees will condition their interviews on having counsel present.

OSHA, the EPA, and the CSB almost never allow observation of their interviews with nonexempt, hourly employees. Counsel should make every effort to debrief these employees after their interviews if the employee is willing.

In the aftermath of a catastrophic accident (e.g., an incident with multiple fatalities or significant off-site impacts), it often is difficult for an organization and its leadership to appreciate the true magnitude of the event. A period of denial sometimes exists where management does not fully appreciate the nature and extent of the investigations that are about to commence and the demands that will be placed on the organization. It is important for counsel to begin anticipating and planning for how the organization will promptly provide resources to allow for an effective response to the demands of the agencies.

As discussed above, multiple agencies will respond (some within hours) to the event. It is not uncommon for there to be 15 governmental representatives on site within the first 24 hours and 25 to 30 within the first 48 hours. Large numbers of other personnel assisting the company (e.g., corporate subject-matter experts, in-house and outside attorneys, technical experts, public-affairs personnel) also will soon descend on the site with their own demands and needs.

To prepare for the building legal storm, companies should develop reference materials and resources for in-house attorneys. Such major-accident guidebooks do not establish procedures that should be strictly followed in every instance. Instead, they are intended to assist in-house counsel in identifying and managing issues likely to arise within the first 48 to 96 hours after an event. These guidebooks should include as appendices examples of relevant documents, including forms that may be used to support the response. The company and its counsel should routinely conduct crisis-response drills using these materials. Only through adequate preparation and practice can an organization hope to ride out and properly manage a crisis.

Keywords: energy litigation, crisis response, OSHA, EPA, CSB, NTSB

Mark L. Farley is a managing partner with Katten Muchin Rosenman LLP in Houston, Texas.

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