Fake Based Shakedown

April 10th, 2017

The following article, reprinted with permission, was originally published as the cover story of the April, 2017 edition of Roughneck magazine.

 

The Canadian Standards Association (CSA) has a large facility in Cleveland, Ohio.  It’s where CSA does a lot of product testing and certification.  The CSA employs a lot of people; it has a large parking lot.

One day, a CSA manager was having a heated argument with a CSA engineer in that parking lot.  The argument was hard to miss.  It featured colourful language and a lot of shouting, and it was caught on film.  Earlier, the CSA had taken receipt of a new product for testing.  It’s what they do, they subject new products to vigorous safety testing and, if it passes these tests, CSA certifies that the product is safe for public use, acceptable for import into Canada, and for export elsewhere.  Some of CSA’s tests are duration performance tests, they take time and can’t be shortened without invalidating the test results.

Duration testing requires more staff time and, thus, is more expensive to perform than other tests.  The CSA had discovered that skimping or skipping the testing thickened their margins, and no-one would ever know they’d cheated because no-one ever checks up on them.

Requirements for one duration test prescribed three days for which the CSA’s yelling manager had allocated only four hours of time.  One cannot compress seventy-two hours of duration testing into four hours, it offends the laws of physics.

An engineer familiar with this testing complained, in the parking lot.  Hence the argument.  The CSA manager told the engineer, in creative language and at high volume, that CSA engineers would indeed find a way to cram seventy-two hours of testing into four hours “or I’ll cancel your vacation.”  Well, that’s incentive.

That’s also normal at CSA.  On one occasion, the CSA conducted a month-long duration test in two days.  Or so says the product file, and so confirms our sources.  But, again, the laws of physics get in the way.  What CSA claims as having happened isn’t physically possible. 

So, what’s behind a CSA certification? Well, CSA engineers have quietly told us that managers “end up copying off the previous certification for a similar product, itself having been copied from a previous certification for a similar product, making the results of the current test meaningless.”  These products, so thoroughly certified as safe, are now on sale across the land.  This is how CSA does safety certifications of consumer products.  These products are in your home, and more are coming.

A lot more.  The CSA is aggressively expanding into the energy sector, last year they even opened an office in Calgary.  They’re hoping to become a new regulatory authority governing oil and gas exploration and transmission, remediation, human resources practices, and a long, long list of other, sometimes surreal meddling interests.

Back in the parking lot, there were enough witnesses to the altercation that CSA’s human resources group got involved.  Curiously however, the HR solution didn’t involve actually testing the product prior to certifying that it had been tested.  Instead, the HR team advised the offended engineer that he should just find a way to ensure that the product was certified as tested, without any actual testing. 

Falsified testing and meaningless certifications are a problem with products, but it could cripple the energy sector.  At CSA, the difference between a passed and failed product is often the money paid by the manufacturer.  More money makes a certified product.  It’s pay to play.

At every stage of energy development, from brownfield and blue sky through full production to final remediation, the CSA’s standards apply at law to every project and conduct of the sector, and every standard requires compliance, and each compliance must be certified.  The CSA is gaining a veto by process over every project in the patch.

Thus far, governments are going along with it.  After all, CSA’s part of government, having a government charter makes CSA a Crown Agency, technically an arm of Industry Canada.  It’s just that CSA’s been allowed to function as a private company for a couple of decades.  In practice, then, the CSA has the authority of a government Agency without any of the pesky responsibilities, and they have the perks of a private company without the accountability to investors.  The best of both worlds; the liabilities of neither.

Naturally then, CSA spends like drunken sailors.  The CSA gets its money by taxing industry for standards, certifications and the like at over one-third of a billion dollars per year.  They’re rich sailors, and it shows.  The CSA locates its offices at golf courses and yacht clubs, spending >$88,900 per workday on travel, all posh and privileged, living like princes while the paupers pay for it. 

And while living large, they’re buying bigger.  Every year the CSA takes the money it gets from industry and acquires new corporations around the world, slowly amassing a taxpayer financed asset stable to rival sizeable energy players.

It’s a devastating combination; an unaccountable government Agency, awash in taxpayer dollars, empowered to legislate and to regulate without oversight, burying business in over 2,000 laws and 6,000 regulations, and enforcing compliance through certifications wholly divorced from actual testing, and wholly dependent on increasingly expensive pay-to-play deals.

The energy sector can hardly afford another shakedown artist but that’s what’s fast approaching.  We all have an interest in returning the CSA to the rule of law. This industry would be better off with one less encumbrance, one less extravagance, and one less rogue regulator.

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The Roughneck was founded in 1952 as the voice of the Canadian oil community. The magazine reports on the people and events of that community - both past and present - that have made the oilpatch in Canada what it is today.

The Roughneck analyzes political events that affect the industry and profiles people and businesses that are a part of it. The magazine covers the news that others miss because it is a part of the industry about which it writes.