Lockout or Be Locked Up

Why biodiesel producers should take lockout/tagout procedures seriously
By Charles B. Palmer and Eric Hobbs | November 17, 2010
Industrial accidents, where a seemingly routine task turns into catastrophe for the unwitting employee, happen every day. The Deep Water Horizon oil platform explosion, which killed 11 workers, followed by an environmental catastrophe; recent mine accidents in the U.S. and Chile; the death of 19- and 14-year-olds in an Illinois grain facility, are just a few recent examples. In the aftermath, there are always calls for stiffer criminal penalties against corporate officers and management. Many states already have a history of prosecuting corporate officers for homicide in extreme cases. About a year ago, OSHA adopted a policy that it will refer all fatalities it concludes resulted from willful violations of an OSHA standard to the U.S. Department of Justice for consideration of criminal prosecution. While only employers (not corporate officers or managers) can be criminally prosecuted under current federal law, this may change.

Under the proposed Robert C. Byrd Miner Safety and Health Act of 2010 (HR5663), U.S. Occupational Safety and Health Act of 1970 would be amended to raise prison terms to 10 years for a first conviction and 20 years for a second conviction in the event of a fatality resulting from a "knowing" (seemingly a lesser standard than "willful") violation of an OSHA standard. In addition, under the proposed amendments, any "knowing" violation of an OSHA standard resulting in "serious bodily injury" could result in imprisonment for up to five years for a first offense and up to 10 years for a second offense. Corporate officers and directors would be subject to prosecution, fines and imprisonment under both proposed changes.

Anatomy of Catastrophe

Most corporate officers and directors don't think that horror stories about catastrophic accidents will ever involve them. After all, in 2010 most U.S. companies have a safety program and at least one person charged with safety responsibility. Yet catastrophic accidents nevertheless happen. In the vast majority, industrial activity creates circumstances in which stored or built-up energy is unexpectedly released with employees in harms' way. Sometimes this is just a fall from a ladder. Other times employees are trapped in machines, equipment or containers for hours, or for coal miners, months. Sometimes there is an explosion and/or fire. Following the event, rescue equipment piles up outside, and news reporters, trucks and helicopters arrive.

Accidents involving a combination of human and equipment error are different from a slip and fall case, a fall from a ladder or similar circumstances. Injuries involving equipment or entrapment are interesting, often gruesome, and therefore, of interest to the press. This can have devastating results for a company and its owners as media, customers, employees, the community where the business is located, and law enforcement officials follow the developing story over days, weeks or even months.

In response, the inevitable "rear view mirror" analysis leads to the knee-jerk conclusion that there had to have been human error-employer failure. The media and law enforcement focus first on the company's past OSHA record available on the internet. Then they ask the difficult questions: Why were the employees exposed to such dangerous conditions? Who knew these conditions existed or should have expected them? What was done to attempt to prevent them? If answers aren't sufficient, a referral for criminal prosecution may follow.

Many of the mega-fines leveled against employers and the criminal prosecutions of companies in the past were based not on the fact that any company manager directed an employee to do something unsafe, but, instead, on the employer's alleged failure to consider the process, to develop a plan to avoid an accident and then to implement that plan. Many times the employer had a rule in place to avoid the incident, but allegedly failed to enforce compliance.

Lockout/Tagout Standards

The biodiesel industry has to deal with some of the more common hazards that have been involved in the recent, high-profile cases mentioned above-fire and explosion hazards, confined spaces, grain or other storage facilities, and flammable material piping processes. But if biodiesel manufacturers had to follow just one regulation, the choice among government regulators likely would be the lockout/tagout standard, 29 CFR 1910.147, often referenced by the shorthand, "LOTO."

LOTO refers to specific practices and procedures employers must adopt and implement to safeguard employees from unexpected energizations or start-up of machinery and equipment, or release of hazardous energy during service or maintenance activities. LOTO procedures can be found in many standards besides 29 CFR 1910.147. Those applicable to biodiesel are addressed in electrical safety standards (29 CFR 1910.306 and 333), process safety management regulations (29 CFR 1910.119-the most commonly cited standard in the biodiesel industry), as well as in confined space standards (29 CFR 1910.146), and grain handling facility standards (29 CFR 1910.272), among others.

Generally, all of these require that a machine, process, space or equipment be rendered safe before an employee enters it or puts a body part in the zone of danger. LOTO-type standards also require that an employee who enters a danger zone have exclusive control over the danger, so that another person cannot reintroduce the hazard unaware of the presence of the employee in harm's way. The employer must insure it has provided a fail-safe mechanism that prevents human error and a potentially-tragic result. Finally, LOTO-type standards recognize that employees may take shortcuts, forget or deliberately bypass safeguards to solve problems more quickly or increase productivity. LOTO requirements mandate training and audits of procedures to verify compliance.

Recently, the head of federal OSHA responded to a series of fatal accidents in grain storage facilities with a letter to 3,300 grain facility storage operators. The letter identified specific steps that, in the OSHA chief's view, are required of employers by existing law. First on the list was to lockout all power equipment. The letter identified three separate companies that were recently issued combined penalties of almost $4 million. The letter concluded with this warning: "If any employee dies in a grain storage facility, in addition to any civil penalties proposed, OSHA will consider referring the incident to the Department of Justice for criminal prosecution pursuant to the criminal provisions of the Occupational Safety and Health Act of 1970."

The OSHA Administrator's letter demonstrates the current tone of his agency, including its bent toward referring all potentially appropriate cases for possible criminal prosecution. It also highlights the focus OSHA is placing on deaths caused by entrapment hazards, especially in the agricultural industry and the relationship of those hazards with LOTO standards.

A rational biodiesel employer should look proactively for entrapment and other LOTO-types of dangers to its employees involved in maintaining, repairing, cleaning and loading/unloading equipment, electrical components, machines, tanks, pipes, containers, and other storage spaces and take steps compliant with the LOTO standard and the LOTO requirements of other standards. Educate employees on LOTO principles and solicit their assistance in identifying related hazards. Create a comprehensive written program that addresses LOTO principles as applied to each of the work practices identified. Create a step-by-step LOTO procedure for each such practice to insure that the hazards are neutralized before any work is done. Document all employee training. Conduct audits at least annually in order to verify continued compliance by the employer and employees, and document the audit and its results. Biodiesel employers may be eligible for free consultation programs from state and federal resources to assist in developing these programs.

Authors: Charles B. Palmer, Eric Hobbs
Attorneys, Michael Best & Friedrich LLP
(262) 956-6518
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