“There were found excessive responsibilities, bans and restrictions”: why Rostekhnadzor’s bill On Process Safety is turned down

Important and necessary

The Federal Service for Ecological, Technological and Nuclear Supervision (Rostekhnadzor) began the creation of a new law On Process Safety in autumn 2018. Some clauses of the plan of measures in Basics of State Politics of Russian in process safety through 2025 and further are the foundation for the document.

As head of the working group, Director of the Jacob Bruce Process Safety Research Support Fund Andrey Pechyorkin said, this year the group is planning to develop certain formulations for the Federal Law 116 (or edit the clauses of the new bill). The changes are to be made to the conformity assessment, process safety assessments, technical inspection, extension of safe operation life of technical devices, equipment and facilities used on hazardous production sites, an audit of process safety.

Supervision must become easier and clearer, get rid of obsolete norms and requirements as “regulatory guillotine”. According to plant, the ready-to-use document is to be introduced to the State Duma for consideration in December 2019. Director of the Volga office of Rostekhnadzor Boris Petrov has recently talked about one of the key novelties of the elaborated document.

“The situation is that nowadays most general directors and chief engineers decide nothing. Shareholders, the board of directors decide everything. In the project of the new law On Process Safety, an enterprise owner must be held accountable for those problems arising on his site. Now he is standing on the sidelines, gave money for modernisation and process safety or not, questions only for the administration of the enterprise are arising at the moment, while, first of all, everything depends on this, what the owner requires, a financial and technological result,” he claimed in an interview with business-gazeta.ru.

There can be affected interests of over 74,000 organisations

Rostekhnadzor introduced the project of the new law to the federal government. The document was evaluated by the Ministry of Economic Development for regulatory impact, which prepared its comment together with representatives of a number of enterprises.

“The goal of the bill is to exclude obsolete and excessive requirements, update and adaption of provisions of legislation in process safety to modern-day conditions of running a business, create a legal mechanism of sanction-free control over the compliance with process safety requirements, clarify the classification and categorisation of related facilities. In accordance with Clause 7.1 of the consolidated report, the proposed bill can affect interests of over 74,000 organisations using hazardous production sites,” specialists from Maksim Oreshkin’s agency noted.

Public consultations for the project of the act were held from 2 to 9 August 2019. After that, the Ministry of Economic Development of Russia received stands of the Union of Subsoil Management of Russia, Arkhangelsk Pulp and Paper Mill Company JSC, Gazprom Gas Distribution Penza JSC, Russian Aircraft Corporation MiG JSC, Teplokommunenergo JSC, CSK CJSC, Irkutsk Oil Company CJSC, which don’t contain remarks and proposals regarding the bill, as well as the opinions of the Ministry of Economic Development of Novosibirsk Oblast together with executive authorities of Novosibirsk Oblast as well as businesses (Novosibirsk Aircraft Repair Plant JSC, Iskra Novosibirsk Mechanical Plant, Siberian Anthracite JSC, Novosibirsk Novosibirsk Instrument-Building Plant JSC, Anozit Federal Treasure Enterprise), Russian Steel association, the Council of Power Producers, the Association of Railcar Users and Manufacturers, the Chamber of Commerce and Industry of the Russian Federation for Protection of Entrepreneurship, Mosgas JSC, Neftegazholding JSC, United Engine Corporation JSC, Rostovvodokanal JSC, SBU-Coal HC JSC, SIBUR CJSC, Siberian Generating Company CJSC, Bashneft JSOC, LUKOIL CJSC, MOEK PJSC, Rosneft Oil Company PJSC, RusHydro PJSC, V. Shashin Tatneft PJSC, Fortum PJSC, which are partially considered in the sum-up.

“It is offered to exclude this provision of the bill”

The point about enterprise owners’ responsibility for process safety expressed by Boris Petrov is in Part 3 Article 24 of the bill. The formulation is the following: “Workers of organisations on hazardous production sites who are responsible for production control also provide information about process safety to the founders (participants) of such organisations”.

Experts expressed their opinion about it: “The proposed edition of Part 3 Article 24 is introducing unfounded excessive responsibilities for workers of organisations who deal with production control, it is hard to do it. Provision of all necessary information is regulated by corporate law as well in corporate procedures established in corresponding organisations and can’t be the object of this bill. It is offered to exclude this provision of the bill”.

The specialists of the Ministry of Economic Development think that it is feasible to exclude this provision, as this norm imposing additional unrelated control is excessive.

Some companies using hazardous production sites might have hundreds and even thousands of participants (shareholders). For instance, one can purchase shares on exchange. The adequate notice about the state of process safety on the sites of all such owners will turn into huge costs for a company. And, most importantly, the result is unclear.

Tens, hundreds and even thousands of owners and nominal holders of shares traded in the market of some large enterprise will have to receive information about the state of process safety, but they can’t be held accountable for the consequences of possible accidents in the enterprise whose shares they purchased. So what’s the goal of such information if the majority of shareholders of the company consider the purchase of shares as a profitable investment and know nothing about either production or process safety? What will such a novelty turn into for the enterprise itself? How should a joint-stock company know who its “shareholders, participants, founders” are if its shares are sold and purchased daily? Where should it send the information and to whom? Will this information reach the addressee? Will the addressee read and understand it? Or will everything become a formal burden for the enterprise that has no positive effect on process safety? Only the situation when laymen will get confused, show the officials of the enterprise what should be “improved” in this sphere and how to do it can be worse.

What should the owner of, for instance, 100 Gazprom shares do with the information about process safety of the “national heritage”? And what does his responsibility mean? How is Rostekhnadzor going to find these shareholders if access to rosters is limited by law? And, most importantly, it is unclear how the stock market will react to the novelties that will impose obligations on investors to control the activity of enterprises whose shares they own?

Besides, the adoption of the bill in the proposed edition requires 13 provisions of the Government of the Russian Federation and the creation of over 50 federal norms and rules in process safety.

In the end, it was recommended to send the project of the law to the author, as there were “found provisions imposing excessive responsibilities, bans and restrictions on natural and juridical persons in entrepreneurship and another economic activity or facilitating their imposition as well provisions bringing to the appearance of unfounded costs for natural and juridical persons in entrepreneurship and another economic activity”.

The comment of the Ministry of Economic Development on the evaluation of the regulatory impact of the bill contains 80 pages. It has 395 (!) remarks and proposals, the author is offered to specify, clarify or exclude some provisions from the proposed bill.

It is obvious that the new law On Process Safety is necessary to both reduce the excessive administrative load on businesses and equalise threats of man-made disasters and tragedies in hazardous plants. Will Rostekhnadzor be able to offer a clear control mechanism in this sphere? Won’t the “regulatory guillotine” in this respect turn from a tool reducing excessive supervision into a weapon decapitating enterprises? Will the section dedicated to professional staff training be extended and updated? What can the agency itself contribute to it?

Realnoe Vremya will stay tuned for the developments.