Balancing trust and authority

The relationship between freedom and control as well as the intelligent use of authority are key issues for professor Ole Andreas Engen. He is one of Norway’s leading experts on the Norwegian safety regime.

Trust between government, companies and unions is crucial for today’s system, says Ole Andreas Engen, who belongs to the department of safety, economics and planning at the University of Stavanger.

“The government sets the parameters and shows trust in the companies, and that gives them the room to choose for themselves how to conduct their activities.

“For this system to work, the companies must intend to comply as far as possible with the regulations. We’re entirely dependent on people playing by the rules.”

Trust rests on expectations, he points out – that those you collaborate with will behave as expected. It is easy to demolish but hard to rebuild.

“Striking a good balance between trust and distrust – between freedom and control – is also important. The government must ensure that it exerts its authority in an appropriate way.”

Studies

This trust-based system has been assessed several times in recent years, and Engen himself chaired two of the key studies which identified strengths and weaknesses with the model.

He led a government-appointed committee of experts in 2013 which conducted a broad review of HSE regulation in the petroleum sector.

And he chaired a tripartite working group in 2017 to assess and discuss HSE conditions in the same industry, which formed the bases for the White Paper approved last year.

Both these bodies proposed improvements within the regime, but their main conclusion was that the existing system is robust and well-functioning and should be retained.

“We occasionally hear criticism of the trust-based safety model, but the critics seldom propose an alternative or address the consequences of abandoning today’s approach,” Engen observes.

Comparisons

He points to comparisons with other countries, which reveal big differences in the way regulations are formulated, the regulator’s role and the relationship between the various sides.

“The US model, for example, is not trust-based, and provides a clear contrast with ours. There, the regulator fines companies, conducts unannounced inspections on platforms and takes court action over legal breaches.

“Prescriptive – in other words, detailed – legal requirements form the basis for the regime, with less emphasis on performance-based regulation.”

Engen points out that prescriptive requirements make it easier to present concrete evidence in court, but says the question is whether this regime functions better and provides greater safety.

“First, it takes much greater government resources to enforce the regulations when you’ve literally got to check each valve on every platform.

“Second, responsibility for safety moves from the companies to the government. If anything goes wrong, the blame lies with the latter – because it’s checked and approved the equipment.

“And when they have no responsibility, the companies lack the same incentives for devoting their full attention to safety they get here in Norway.”

Challenged

Engen regards the Goliat oil development in the Barents Sea as an example of a project where trust between company and regulator came under challenge.

“In this case, operator Eni apparently applied pressure and overstepped the boundaries set by the government. Trust was undoubtedly stretched a little too far.”

A number of commentators have suggested that the PSA could have underestimated the importance of intervening early and clearly enough in important phases of the Goliat project.

“If a company breaks the rules of the game and shows it’s not worthy of trust, the regulator must take action,” says Engen. “It may take no more than one incident before trust is undermined.

“The question is when and how firmly you should intervene. And that’s a difficult decision. You can act often, be tougher and use stronger reactions. But what would that mean in the long run?

“It’s not automatically the case that the companies will thereby get better at thinking safety. Punishing somebody doesn’t necessarily mean they’ll then do what you want.”

He points out that the companies could instead begin to reckon with orders, and thereby stretch the limits as far as before. In that case, more use of reactions would have little effect.

“I believe the PSA could have been a bit firmer. It’s necessary to show the companies some muscle, make it clear that enforcement powers exist and will be used if necessary.

“That’s basically what we said in our expert report in 2013 and in the tripartite working group in 2017.”

Collaboration

In his view, tripartite collaboration between companies, unions and government is very important for building trust. He points to such fixed meeting places as the Safety and Regulatory Fora.

“Working together in this way is perhaps the most distinctively Norwegian part of our safety regime. You don’t find it done in the same way elsewhere.

“This ensures communication and openness, and thereby helps to build confidence. At the same time, it’s very important that the discussions occur within these fora rather than outside them.

“All the companies have a responsibility to contribute to this. Shifting the debate out of the tripartite arenas would weaken the overall level of trust.”

Responsibility

“Our safety regime assumes that operating safely is in the companies’ own interest, and that they accept their social responsibility,” Engen explains.

“Anything else would be hopeless. That’s the fundamental logic of a trust-based system. The companies also know that good safety makes sense in financial and quality terms.“

In Norway, he notes, the companies have the sole responsibility for operating prudently and for the safety of their operations and technology.

“The government is responsible for doing system audits, checking that the companies comply with the regulations and that they close nonconformities which have been identified.

“If the authorities are to be responsible for checking activities by the companies, we’ll no longer have a trust-based system but a control regime.”

Rooting for the regime

Norway’s trust-based system of supervision has been subject to several detailed assessments in recent years. The various rewievs have revealed broad support for the model among experts, politicians, the government, the companies and unions.

The following major analyses have been conducted.

* 2013: A committee of experts appointed by the Ministry of Labour carried out a broad review of HSE regulation in the petroleum sector. It concluded that the regime functioned well and should be maintained.

* 2017: A broad-based working group drawn from companies, unions and government assessed and discussed HSE conditions in the petroleum sector. In a report which formed the basis for the 2018 White Paper on HSE, it concluded that the regime was in the main well-functioning and should continue.

* 2018: Report no 12 to the Storting (2017-2018) on HSE in the petroleum industry was approved by the Storting (parliament). It concluded that the present regime is robust, functions well and should be retained.

* 2019: The Office of the Auditor General presented an investigation of the PSA’s supervisory practice in January. While recommending no changes in the actual safety regime, it maintained that the PSA’s supervision has had a limited effect on safety work by the companies in specific cases.