Recent incidents
Ensuring compliance


Recent incidents

In recent years a number of significant incidents have taken place at industrial sites in the Netherlands. In many of these incidents, the companies involved did not comply with the health, safety and environmental regulations. A well-known example is the fire and the explosions that took place at the Chemie-Pack site in Moerdijk, which released large quantities of chemicals. The damages were estimated at approximately €70 million, the company went bankrupt and Chemie-Pack's directors were criminally prosecuted for violation of the permit provisions.

More recently, the Odfjell tank storage terminal in Rotterdam made the headlines because of several health, safety and environmental issues. Not only has the tank storage terminal been closed as a result of these issues, but Odfjell is also the subject of a criminal prosecution. Another example is the accident on the GdF Suez drilling platform in the North Sea in June 2013, resulting in the death of two employees and one being seriously injured. The accident occurred on the platform during maintenance activities and is being investigated by the police and the State Supervision of Mines.

These incidents show that industrial companies can be hugely affected by non-compliance with health, safety and environmental regulations. In response to incidents such as those at Chemie-pack and Odfjell, the Dutch local and national authorities have intensified their inspection and enforcement activities at industrial sites. The authorities have numerous, often far-reaching powers to inspect whether industrial companies comply with the many health, safety and environmental regulations. In case of non-compliance, the authorities have several options to enforce the regulations, including repair and punitive penalties. The authorities are taking increasingly severe measures. For example, as of January 1 2013 a penalty of up to €50,000 can be imposed for failing to report an accident requiring notification in a timely manner. Directors' liability and damage to the company's reputation are also major risks.

Ensuring compliance

It is therefore important for industrial companies to know the details of the health, safety and environmental regulations. Compliance with such regulations should be a top priority. In addition, industrial companies should be aware of the actions to take in the event that non-compliance is established or an incident takes place. This is particularly so as regulators often arrive to investigate immediately, while in most cases the company and its legal staff have no experience of handling incidents and carrying out damage control.

Many companies have health, safety and environmental policies. However, this does not necessarily mean that these policies are embedded at each level of the organisation (from the board of directors to senior management and employees), or that the company has set down guidance on how to act when an incident occurs. As a result, these policies may not suffice to prevent non-compliance or resulting incidents. Some easy steps can be taken to improve compliance and limit the risks of incidents.

A management review should be performed as a first step to becoming an organisation where compliance with health, safety and environmental regulations is embedded at each level. Such management review consists of a management interview and a desk study of the relevant documents, including permits, correspondence with the authorities, compliance reports, hazard identification and risk assessments. The management review will help to reveal the most important non-compliance risks within the company and can serve as a basis for a plan of action to prevent incidents.

Such a plan of action should also include providing a compliance regime that describes not only aspects of the day-to-day business to ensure that the relevant regulations are complied with, but also the actions to take in case an incident does take place. This compliance regime can be discussed with the authorities to determine how inspections can take place in an effective way, without too much intrusion on the company's day-to-day business. In addition to such compliance regime or code of conduct, tailormade training for management and employees can help to raise awareness of health, safety and environmental issues and to limit the risk of incidents.

For further information on this topic please contact Maartje Govaert or Jan Jakob Peelen at Norton Rose Fulbright LLP by telephone (+31 20 46 29 300), fax (+31 20 46 29 333) or email ([email protected] or [email protected]).