Safety Culture Issue at Callaway. Or Not.

We just read a KBIA* report on the handling of an employee’s safety concern at the Callaway nuclear plant that piqued our interest. This particular case was first reported in 2009 but has not had widespread media attention so we are passing it on to you.

The history seems straightforward: an employee raised a safety concern after an operational incident, was rebuffed by management, drafted a discrimination complaint for the U.S. Dept. of Labor, received (and accepted) a $550K settlement offer from the plant owner, and went to work elsewhere. The owner claimed the settlement fell under the NRC’s Alternative Dispute Resolution (ADR) process, and the NRC agreed.

We have no special knowledge of, nor business interest in, this case. It may be a tempest in a tea pot but we think it raises some interesting questions from a safety culture perspective.

First, here is another instance where an employee feels he must go outside the organization to get attention to a safety concern. The issue didn't seem to be that significant, at most an oversight by the operators or a deficient procedure. Why couldn’t the plant safety culture process his concern, determine an appropriate resolution, and move on?

Second, why was the company so ready to pony up $550K? That is a lot of dough and seems a bit strange. Even the employee noted that it was a generous offer. It makes one wonder what else was going on in the background. To encourage licensees to participate in ADR, the NRC closes investigations into alleged discrimination against employees when an ADR settlement is reached. Can safety essentially be for sale under ADR if an owner can settle with an employee?

Third, what happened to the original safety concern? According to another source,** the NRC found the operators’ actions to be “not prudent” but did not penalize any operators. Did the plant ever take any steps to address the issue to avoid repetition?


* P. Sweet and R. Townsend, KBIA Investigative Report: Looking Into Callaway Nuclear Power Plant’s “Safety Culture” (May 24, 2010).  KBIA is an NPR-member radio station owned by the U. of Missouri school of journalism.

**  FOCUS/Midwest website, "Did Ameren pay a whistleblower to shut up and go away?" (Jan. 4, 2009).

Toothpaste and Oil Slicks

At the end of last week came the surprise announcement from the former Dominion engineer, David Collins, that he was withdrawing his allegations regarding his former employer’s safety management and the NRC’s ability to provide effective oversight of safety culture.* The reasons for the withdrawal are still unclear though Collins cited lack of support by local politicians and environmental groups.

What is to be made of this? As we stated in a post at the time of the original allegations, we don’t have any specific insight into the bases for the allegations. We did indicate that how Dominion and the NRC would go about addressing the allegations might present some challenges.

What can be said about the allegations with more certainty is that they will not go away. Like the proverbial toothpaste, allegations can’t be put back into the tube and they will need to be addressed on their merits. We assume that Collins acted in good faith in raising the allegations. In addition, a strong safety culture at Dominion and the NRC should almost welcome the opportunity to evaluate and respond to such matters. A linchpin of any robust safety culture is the encouragement for stakeholders to raise safety concerns and for the organization to respond to them in an open and effective manner. If the allegations turn out to not have merit, it has still been an opportunity for the process to work.

In a somewhat similar vein, the fallout (I am mixing my metaphors) from the oil released into the gulf from the BP spill will remain and have to be dealt with long after the source is capped or shut off. It will serve as an ongoing reminder of the consequences of decisions where safety and business objectives try to occupy a very limited success space. In recent days there have been extensive pieces* in the Wall Street Journal and New York Times delineating in considerable detail the events and decision making leading up to the blowout. These accounts are worthy of reading and digesting by anyone involved in high risk industries. Two things made a particular impression. One, it is clear that the environment leading up to the blowout included fairly significant schedule and cost pressures. What is not clear at this time is to what extent those business pressures contributed to the outcome. There are numerous cited instances where best practices were not followed and concerns or recommendations for prudent actions were brushed aside. One wishes the reporters had pursued this issue in more depth to find out “Why?” Two, the eventual catastrophic outcome was the result of a series of many seemingly less significant decisions and developments. In other words it was a cumulative process that apparently never flashed an unmistakable warning alarm. In this respect it reminds us of the need for safety management to maintain a highly developed “systems” understanding with the ability to connect the dots of risk.

* Links below

25 Standard Deviation Moves

A Reuters Breakingviews commentary in today’s New York Times makes some interesting arguments about the consequences of the BP oil spill on the energy industry. The commentary draws parallels between BP and the financial implosion that led to Lehman Brothers bankruptcy. ". . . flawed risk management, systemic hazard, and regulatory incompetence" are cited as the common causes, and business models that did not take account of the possibility for "25 standard deviation moves". These factors will inevitably lead to government intervention and industry consolidation as the estimated $27 billion in claims (a current estimate for the BP spill) is ". . . a liability no investor will be comfortable taking, . . ."

While much of this commentary makes sense, we think it is missing a big part of the picture by not focusing on the essential need for much more rigorous safety management. By all reports, the safety performance of BP is a significant outlier in the oil industry; maybe not 25 sigma but 2 or 3 sigma at least. We have posted previously about BP and its safety deficiencies and its apparent inability to learn from past mistakes. There has also been ample analysis of the events leading up to the spill to suggest that a greater commitment to safety could, and likely would, have avoided the blowout. Safety commitment and safety culture provide context, direction and constraints for risk calculations. The potential consequences of a deep sea accident will remain very large, but the probability of the event can and should be brought much lower. Simply configuring energy companies with vastly deep pockets seems unlikely to be a sufficient remedy. For one, money damages are at best an imperfect response to such a disaster. More important, a repeat of this type of event would likely result in a ban on deep sea drilling regardless of the financial resources of the driller.

In the nuclear industry the potentially large consequences of an incident have, so far, been assumed by the government. In this respect there is something of a parallel to the financial crisis where the government stepped in to bail out the "too large to fail" entities. Aside from the obvious lessons of the BP spill, nuclear industry participants have to ensure that their safety commitment is both reality and public perception, or there may be some collateral damage as policy makers think about how high risk industry, including nuclear, liabilities are being apportioned.

Underestimating Risk and Cost

Good article in today's New York Times Magazine Preview about economic decision making in general and the oil industry in particular. In summary, when an event is difficult to imagine (e.g., the current BP disaster), people tend to underestimate the probability of it occurring; when it's easier to imagine (e.g., a domestic terrorist attack after 9/11), people tend to overestimate the probability. Now add government caps on liability and decision-making can get really skewed, with unreasonable estimates of both event-related probabilities and costs.

The relevance of this decision-making model to the nuclear industry is obvious but we want to focus on something the article didn't mention: the role of safety culture. Nuclear safety culture guides planning for and reacting to unexpected, negative events. On the planning side, culture can encourage making dispassionate, fact-based decisions regarding unfavorable event probabilities and potential consequences. However, if such an event occurs, then affected personnel will respond consistent with their training and cultural expectations.

Oil and Nuclear – Again

We saw an essay on Clean Skies that suggests the oil industry could learn from the nuclear industry, in particular, that the oil industry should adopt international standards of practice similar to the nuclear industry’s response to Chernobyl. We totally agree. The one point we would add is that the single most important thing the oil industry could learn from nuclear is the significance of establishing and maintaining an adequate safety culture. Safety culture is the sine qua non of safe, profitable operations in any high-hazard business.

And safety culture has to be real. Beleaguered executives proclaiming that safety is number are simply not convincing when equipment and methods haven’t been tested (or don’t work), and profit has obviously been driving decision-making.

We want to remind the nuclear industry that they are one significant incident away from an even worse political and public relation disaster. As we have said before, the oil industry is not as tightly interwoven in the public mind as nuclear; to date, BP is being vilified in Washington and in the press, but the damage to other companies has been incidental, a temporary stop in issuing drilling permits. The nuclear industry would not get off so relatively easy if an incident of similar magnitude were to occur in their bailiwick.

How Do We Know? Dave Collins, Millstone, Dominion and the NRC

This week the issues being raised by former Dominion engineer David Collins* regarding safety culture at Millstone are receiving increased attention. It appears David is raising two general issues: (1) Is Dominion's safety culture being eroded due to cost and competitive pressures and (2) is the NRC being effective in its regulatory oversight of safety culture?

So far the responses of the various players are along standard lines. Dominion contends it is simply harvesting cost efficiencies in its organization without compromising safety and specific problems are isolated events. The NRC has referred the issues to its Office of Investigation thus limiting transparency. INPO will not comment on its confidential assessments of nuclear owners.

What is one to make of this? First we have no special insights into the bases for the issues being raised by Collins. We have interacted with him in the past on safety culture issues and he is clearly a dedicated and knowledgeable individual with a strong commitment to nuclear safety culture. Thus we would be inclined to give his allegations serious consideration.

On the broader issues we see both opportunities and risks. We have emphasized cost and competitive pressures as a key to understanding how safety culture must balance multiple priorities to assure safety. What we do not see at the moment is how Dominion, the NRC or INPO would be able to determine whether, or to what extent, such pressures might be impacting decisions within Dominion. We doubt whether current approaches to assessing safety culture can be determinative; e.g., safety culture surveys, NRC performance indicators, or INPO assessments. In addition a plant-centric focus is unlikely to reveal systemic interactions or top-down signals that may result in decisional pressure at the plant levels. Recall that a significant exogenous pressure cited in the space shuttle Challenger accident was Congressional political pressure.

So while we understand the nature of the processes underway to evaluate Collins’ issues, it would be helpful if any or all the organizations could explain their methods for assessing these type of issues and the objective evidence to be used in making findings. The risk at this point is that the industry and NRC appear to be more focused on negating the allegations than in taking a hard look at their possible merits, including how exactly to evaluate them.

* Follow the link below for an overview of Collins' issues and other parties' responses.

EUCG Recognizes Safety Culture's Importance

Today's EUCG* press release on their Spring meeting highlights their discussions on, among other topics, safety culture and safety performance. One quote from an EUCG executive caught our attention: "Data are emerging that a company's safety performance correlates strongly with other performance measures such as profitability, customer satisfaction and service reliability."

We are happy to see other organizations recognize the importance of safety culture but their realization of positive correlation among performance measures is hardly new. For example, back in the 1990s we saw that the best nuclear industry plants were top quartile performers in production, cost AND safety. We recommended to our clients that it was reasonable, even essential, for them to aspire to top-level performance in all three dimensions.

* EUCG used to be (and perhaps still is) the Electric Utility Cost Group. Initially, they focused on sharing various cost performance data among their members, now it appears they are also collecting and sharing other data.