Policing Environmental Regulatory Enforcement - Assignment Example

Texas City Assessment Task 1 (591): Identify Laudable and Culpable Decision ranked in order by merit and demerit Reaction to the Disaster British Petroleum’s reaction to the disaster in Texas City, in which they ultimately decided to invest one billion dollars to upgrade and maintain the plant facilities, was perhaps the single most laudable decision during the course of the disaster and its aftermath. The company’s reaction however was mixed as initial reports were inaccurate, and misleadingly so, about the causes of the disaster, and therefore the responsibility for it, directly contradicting initial promises of a full investigation. Proximate Causes The disaster occurred when “an ‘isom’ at Texas City was overfilled during start-up.” Flammable gas was pumped into a tower for an extended period in violation of safety procedures. The gas condensed into a liquid that was ultimately ignited by an idling truck. The workers on the crew that overfilled the tank, as well as the driver of the idling truck are in this sense directly responsible for the disaster. They violated proper procedure and those failing to intervene or report these violates are culpable. This culpability is mitigated by the requirement that fatigue workers work 12 hour shifts, in the context of normative, company-led safety violations and lack of safety training, functioning alarms and other safety equipment. The driver of the truck, while perhaps the most proximate individual trigger for the disaster, is fairly neutral in terms of culpability, having no knowledge of the gas inside the tank. Government Oversight Laudability and culpability are mixed, though weighted more toward culpability when it comes to the government body tasked with overseeing workplace safety. OSHA, despite issuing a warning to BP before the disaster, OSHA failed to instigate comprehensive inspections. This lax attitude nullified the lastline of defense against such tragedy. Corporate Management & Culture Merritt, lead investigator for the CSB, said that “the drastic effects of corporate cost-cutting” caused the fire. At the time of the disaster, the company had recently merged with Arco. Low oil prices put pressure on management that ultimately resulted in the most culpable decisions leading to the disaster; lack of investment in plant safety and infrastructure, deliberate skirting of needed safety equipment and precautions, as well as staff cuts and overwork. According to the CSB, BP managers cut capital spending and spending on maintenance in the years leading to the disaster, and following years of low investment. This was, however, an industry norm at the time. Safety features such as alarms were not present or not working, while the layout of the plant made it prone to disaster. Massive cuts to safety training programs resulted in fewer trained staff, while required 12 hour shifts and massive cuts to staffing levels resulted in fatigued staff. These safety issues were not simply a matter of benign neglect, but active choice: “In 2002, BP engineers proposed connecting the blowdown drum system to a flare but BP chose a less expensive option.” The executive in charge argued that it was best to “Bank the savings in 99.999% of the cases.” These failures came in the context of prior knowledge that should have alerted managers for the need to change course, thus enhancing their culpability Managers should have been aware of a previous fire at Buncefiled oil storage depot caused by tank overfilling, but resulting in no injuries. In fact, BP managers ignored “eight serious releases of flammable material from the ‘isom’”, but did not investigate them. It is this willing blindness in the service of short-term profit that is most culpable in the disaster. Task 2 (434): In this case Browne’s resignation, and his later memoir suggest that despite the apparent lack of concern on the part of BP executives regarding safety prior to the incident, and the apparently conflicted labor relations that held sway at the plant, Brown along with his manger critics (Heyward) and successor shared a “moral community” with the victims, as well as the public at large, ultimately accepting responsibility and culpability for the disaster. This was not initially the case. At first, a company spokesman downplayed the impact o the incident, noting that a “tiny” part of the plant was affected, while Browne denied that the tragedy could have been predicted. BP’s later report accepted that “management failures” were partly to blame, but also (and equally) blamed “employee mistakes.” The tone began to change with input from BP’s critics, including the CSB report placed the blame more squarely on management failures. Plaintiffs lawyers attempted to characterize this responsibility in legal terms, citing 25% budget cuts as the ultimate and most significant source of the problem, with a more general cost cutting, short-term culture as the impetus for such cuts. Given that competitors in the industry were also investing little in infrastructure during a period of low oil prices, blame could have been conceivably cast upon industry standards (or government regulation) but such blame would have been much less legally actionable, and, as it is even less proximate than BP management, perhaps also less morally or ethically compelling. Instead, these sentiments began to be echoed by critics within BP; Hewyard blamed a “top down” corporate culture that failed to listen to workers and managers closer to the shop floor. He also denied the possibility that BP could shift the blame to Arco, the previous corporate owner of the plant. Don Parus, the director of the ill-fated plant characterized the plant as “taped together” and wondered why his workers showed up to work in such unsafe conditions. Malone rejected chance as a significant factor in the disaster, saying that he wouldn’t “blame bad luck.” These utterances obscure any personal responsibility, but nevertheless place the blame squarely on BP management and Browne in particular. Ultimately this arrangement for blame is agreed upon by the “moral community” at large, including Brown, critical BP managers, outside critics and victims; Browne’s memoir characterizes the disaster as the worst day of his career, while he admits to the prior knowledge of safety concerns on which his personal culpability, as well as that of BP more generally, rests. Meanwhile, the legal responsibility was also accepted in terms of a settlement with plaintiffs. Task 3 (432): In light of the British Petroleum Texas City disaster, ethical standards prove ineffective in preventing predictable externalities in the course of business, but effective in creating standards for agreement with regard to culpability and responsibility in terms of a retrospective narrative agreed to by a moral community. Ethical standards, rather than providing a framework for action and management in business, work to provide a framework for social, and at times, legal blame. There is no indication that prior to the disaster, ethical considerations were a criteria for evaluation at any level of practice within BP or the Texas City Plant. Instead, the main considerations were profits in the context of a harsh market environment, on a quarterly basis. The manager of the plant, while highly critical of the level of safety and investment at the site, felt that a death every 18 months was normal operating procedure; he did not, however frame his own participation in this state of affairs in terms of ethics. More senor managers were encouraged do more with less, while budgets were slashed. The culture may have been top down as indicated by critics, but it was also one which was non-ethical; emails debating continued or increased investment in safety training, alarms or infrastructure upgrades did not frame these considerations in terms of ethics but in terms of budget. Meanwhile, workers at the plant were apparently engaged in a framework of conflict with management, and while concerned with safety were concerned less from an ethical standpoint than from one of self-preservation. This situation is hardly unique. A number of scholars have noted that a self-regulation of corporations via ethics is partially effective at best (Helin and Sandstro 2007). Ethical codes of conduct are often not communicated clearly or at all, and are sometimes transformed within practice inside an organization in ways potentially transform and deform their ethical content. *Kaptein, M and Schwartz M 2007), (Helin and Sandstro 2007). These studies suggest that even with a more clear formal written “ethical” corporate culture, the disaster in Texas City may not have been averted. Lodgeson and Wood however remain hopeful about the use of enhanced ethical codes in averting externalities like those on display at Texas City; in their formulation, a more intensive research approach is required to address the “knowledge gap” identified by previous researchers. With a direct approach involving case studies from with an organization, business ethics can perhaps be transformed from a post facto tool for assigning blame to one which in fact transforms practice into one that prevents harm to workers, communities, the company itself and the environment. Task 4 (400): Given the questionable utility of ethics in regulating corporate policy in favor of worker safety, human rights, social good, environmental sustainability or considerations other than long-term or short-term profit, it may be wise to assess the effectiveness of other forms of regulation of corporate practice. The most obvious alternative is government regulation. In the instance of the Texas City disaster, this alternative did not prove effective; OSHA, the government institution charged with regulating safety in workplaces nationwide, was able to successfully investigate the plant. In fact, the agency issued BP with a warning relevant to the ultimate causes of the disaster. This warning went unheeded, however, and BP did not suffer any repercussions at the hands of the agency. The agency also did not conduct any further investigations of the plant or of BP’s other plants. This failure could be attributed to multiple factors; perhaps a policy of laissez-faire regulation with respect to corporations, to underfunding of government agencies. A further alternative is the idea of “regulatory capture,” in which the interests of a given industry (for example, the energy industry) in the regulations impacting is higher than the interest of the overall social body in the potential malfeasance of any given industry. This results in a process by which the regulated industry is the most significant influence in the regulatory body, thus undermining its independence and effectiveness (Ziinn 2002, Laffont 1991). Instead, some thinkers propose a third alternative; shareholder ethics. In this conception, shareholders themselves are responsible for setting the corporate agenda, and therefore for enforcing ethics through the profit motive. This conception harnesses managers position as formal employees of the corporation, and, ideally harnesses their inherent motivation toward short and long-term profits. Shareholders then are responsible for the additional goals of preventing predictable externalities (O’Rourke 2003, Zadek) This strategy depends upon shareholders prioritizing their social or humanist ethics over their motivation to maximize profit, and to do so in sufficient number to impact not only one company, or one industry but all of them. Finally, others argue that the public at large and or members of the public bear the responsibility for holding corporations accountable to ethical standards of conduct. While this alternative does not share the formal legal obligations of that managers have to maximize profit, or those formal motivations that shareholders have toward the same end, this strategy depends on the altruistic and unremunerated efforts of individual citizens. References Bratton W and McCahery J. “Regulatory Competition, Regulatory Capture and Corporate Self-Regulation.” North Carolina Law Review. June 1995. 73 (1861) Helin, S and Sandstro, J. “An Inquiry into the Study of Corporate Codes of Ethics” Journal of Business Ethics (2007) 75:253–271 Husted B and AllenD. “Corporate social responsibility in the multinational enterprise: strategic and institutional approaches. Journal of International Business Studies (2006) 37, 838–849 Kaptein, M and Schwartz M. “The Effectiveness of Business Codes: A Critical Examination of Existing Studies and the Development of an Integrated Research Model” Journal of Business Ethics (2008) 77:111–127. Laffont J and Tirole, J. “The Politics of Governmetn Decision-Making: A Theory of Regulatory Capture. TheQuarterly Journal of Economics. Vol. 106, No. 4 (Nov., 1991), pp. 1089-1127 Logsdon, J and Wood, D. “Global Business Citizenship and Voluntary Codes of Ethical Conduct.” Journal of Business Ethics. (2005) 59: 55–67 O’Rourke, A “A new politics of engagement: shareholder activism for corporate social responsibility. Business Strategy and the Environment.11 JUL 2003 Waddock, S. “Creating Corporate Accountability:Foundational Principles to MakeCorporate Citizenship Real” Journal of Business Ethics 50: 313–327, 2004. Zadek, S. The Civil Corporation: The New Economy of Corporate Citizenship Zinn, M. “Policing Environmental Regulatory Enforcement: Cooperation, Capture, and Citizen Suits” Stanford Environmental Law Journal. January, 2002 Read More