Offshore Environmental Civil Sanctions Regulations 2018

Thursday 21st June 2018 Lords Chamber

Motion to Approve

17:47

Moved by

[Lord Henley]

That the draft Regulations laid before the House on 23 April be approved.

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)]

My Lords, the regulations will provide BEIS’s Offshore Petroleum Regulator for Environment and Decommissioning—OPRED—with powers to impose financial civil sanctions as an enforcement option for contraventions of offshore environmental legislation. The regulations do not create new offences; they allow OPRED to impose financial civil sanctions for breaches of a suite of existing regulations.

The current enforcement options available to OPRED are not consistent with those held by onshore regulators and do not provide for sufficient deterrence against non-compliance with environmental legislation. This is because, in the majority of cases, the only enforcement options available are criminal prosecution, or to take no action at all. As prosecutions are disproportionate in the majority of cases, no action can be taken. Expanding OPRED’s powers to allow for the imposition of civil sanctions would bridge this enforcement gap.

OPRED investigates breaches of environmental legislation in respect of offshore oil and gas platforms operating on the United Kingdom continental shelf. Unlike onshore regulators, OPRED does not have the powers to impose financial civil sanctions in respect of the majority of those breaches. Current enforcement options for OPRED include: serving an enforcement or prohibition notice, revocation of a permit, and referral for consideration of prosecution. OPRED can issue civil sanctions in relation to breaches of the European Union Emissions Trading Scheme but has no power to do so in relation to its remaining regulatory regime.

Since 2016, OPRED has been made aware of 4,178 potential breaches of environmental legislation by offshore operators and has undertaken 78 formal investigations. Seven resulted in the issue of enforcement notices and two were referred for criminal prosecution. Although the remaining 69 were judged to meet the required standard of proof and involved significant non-compliance with legislation, most involving spills of over 1 tonne of oil or chemicals, OPRED could take no formal enforcement action due to the lack of an appropriate and proportionate response. This has had the consequence of undermining the deterrent effect of the existing environmental regulation. The introduction of civil sanctions would allow for fines to be awarded in the more serious of these cases.

The regulations provide for a more appropriate and proportionate enforcement response, allowing OPRED to maintain a consistent approach with onshore regulators and encourage greater compliance by operators. Enforcement or prohibition notices are not appropriate in all cases and the revocation of a permit, with the result that a holder could no longer operate, would not be a proportionate response to the majority of regulatory breaches. Prosecutions are reserved for only the most serious of cases. They are costly and time-consuming, with cases frequently taking more than a year to reach resolution. In addition, the decision whether to proceed with a prosecution is taken by bodies other than OPRED. Expanding OPRED’s existing powers to enable the imposition of civil sanctions would allow for a more timely, cost-effective and proportionate response that would not unnecessarily criminalise oil and gas operators.

The civil penalties currently available to OPRED may be awarded only in respect of CO₂ emissions and cannot be utilised for any other regulatory breaches such as oil or chemical spills. As such, the vast majority of contraventions of environmental legislation currently result in no enforcement action being taken. The regulations will allow OPRED to take swift action where previously it could not, thereby providing greater deterrence against non-compliance and tackling the behaviour of those who perform poorly or ignore their environmental responsibilities. Civil sanctions will be applied instead of, not in addition to, criminal prosecution in cases where the criminal standard of proof is met. The fact that breaches must be proved to the criminal standard before a sanction can be issued is required by the parent legislation. The fixed and variable civil sanctions that OPRED will have will give it the ability to impose fines ranging from £500 to £50,000. This range has been chosen to maintain a consistent approach with onshore regulators and reflects the statutory minimum and maximum fines available to the courts through criminal prosecution.

The objective of the regulations is to provide OPRED with the powers to impose financial civil sanctions on offshore oil and gas operators who contravene specified environmental legislation. To this end, the regulations will provide a more proportionate enforcement response than criminal prosecution alone while retaining this option for the most serious breaches. They will maintain a consistent approach with onshore regulators and encourage greater compliance by offshore operators by allowing for enforcement action to be taken more swiftly in more cases. The regulations will come into effect on 1 October 2018 and I commend them to the House.

[Lord Bruce of Bennachie (LD)]

My Lords, I thank the Minister for that explanatory introduction, and I have just a couple of points to raise with him. I welcome the purpose behind this change in the law, which I assume is to reduce the number of incidents. Has the regulator made an assessment of the impact it will have? The figures the Minister gave are for the number of breaches, most of which were not serious. However, those that were serious cause a little concern, and obviously the point that prosecutions are not effective under the present law has to make it a consideration as to whether civil sanctions will make a significant difference.

My second point is whether the criminal burden of proof will have a difficult impact in the sense that it is quite a high standard of proof, although that is right and proper given that these are new regulations. Nevertheless, is the regulator satisfied that it will be able not only to prosecute effectively but, more importantly, that it will be able to create a climate in which there will be a significant reduction in the number of incidents? That is really what I am seeking. Has there been any assessment by the regulator of that?

[Lord Teverson (LD)]

My Lords, when I first read the regulations, I had a vision of a motorboat chugging up to an offshore oil rig and sticking a parking ticket on it with a fixed penalty fine, but obviously that will not be the situation.

One of the questions I was going to ask is about numbers. I thank the Minister for going through them. It is certainly very stark that we have two prosecutions for environmental offences out of 4,000. I guess that is one of the reasons that this measure is needed.

Paragraph 7.2 of the Explanatory Memorandum states:

“The need for the instrument has arisen due to a number of contraventions of environmental Regulations”—


the Minister has gone through those very well—

“going unpunished as a result of OPRED’s lack of a proportionate enforcement response”.

What resources does OPRED have? Is it an organisation with capacity? Is it underfunded at the moment? Is that part of the problem? Can it do enforcement in a quicker and cheaper way?

I want to expand on my noble friend Lord Bruce’s point. It rather surprised me that we were moving from criminal law to civil law but the burden of proof did not move to balance of probability; it stayed at the level of criminal proof—that is, beyond reasonable doubt.

Regulation 9(1) states:

“A person on whom a final notice is served may appeal to the Tribunal in relation to the decision to impose the fixed monetary penalty”.


That is fair enough. However, Regulation 9(2) states:

“In any appeal where the commission of an offence is an issue requiring determination, the relevant enforcement authority must prove that offence according to the same burden and standard of proof as in a criminal prosecution”.


If I were faced with a £48,000 fine, what would I do? I would just say, “Take me to court. Go through this criminal proof”. If that is getting in the way of prosecutions at the moment, the barrier is still there. There is a quick and easy way for justice to be avoided once again.

Going through the regulations, I looked at the fixed penalties. Although I realise that they are rather more draconian than going through a Cornish village at more than 30 mph, I wonder whether £500, £1,000—as for most of them—or the top limit of £2,500 would even be in the petty cash of the sort of organisations that we are talking about, which I assume are the potential offenders. Although I realise that the fines can go up to £50,000, I wonder whether organisations would even notice these fixed penalties, which are the cutting edge of these regulations. It seems that it will be part of the P&L line where you just pay your money to avoid environmental regulations.

I have a final question for the Minister. I assume that the answer will be no. I like the idea of immediate penalties in low-impact environmental impacts, so that the system is sped up and more enforcement takes place. Might this apply to any marine-based activities other than the hydrocarbons industry?

[Lord Grantchester (Lab)]

I thank the Minister for his introduction to the regulations before the House. They are relatively straightforward, which the memorandum explains very well.

The instrument will allow the offshore petroleum regulator for environment and decommissioning—OPRED—to impose civil sanctions under the Regulatory Enforcement and Sanctions Act 2008 for RESA offences and the European Communities Act 1972 for ECA offences. The memorandum explains that these regulations are due to the number of contraventions going unpunished, as the noble Lord, Lord Teverson, explained. However, I am a little more relaxed than he is on them. I will explain why. The regulations are a sufficient and proportionate deterrence against non-compliance. They will tackle poor behaviour and stop it becoming persistent. They are consistent with measures available to onshore environmental regulators.

18:00

The regulations were subject to an extensive debate in the other place—which also expressed the concerns expressed by the noble Lord, Lord Teverson—where all the interpretations and potential messages implicit in them were examined. However, having enjoyed a long career in agriculture, I understand and appreciate what is being proposed; the use of the court system can be costly, cumbersome and combative—all unnecessarily extravagant to the incident under question. OPRED needs to be able to distinguish splashes and spills from discharges and pollution incidents that would necessitate court action. The burden of proof and the seriousness of the offence are the same, and the enforcement process is not undermined. All operations must be carried out in a safe, clean and environmentally safe manner.

I am grateful to my honourable friend Dr Whitehead in the other place for pointing out that the memorandum had not revealed that OPRED already carries out civil functions and civil sanctions under the Greenhouse Gas Emissions Trading Scheme Regulations 2012. OPRED already has the necessary experience. These regulations will bring the same set of measures—enforcement notices, civil penalties and, for the worst cases, prosecution—to bear on non CO₂-related breaches, most notably oil and chemical spills. I would have thought that, in a marine environment, where spills can be dispersed more quickly, evidence-gathering would be more commensurate to a civil sanction regime than under the court system. This would emphasise that all breaches will be followed up and cut the number of contraventions going unpunished.

Could the Minister share with your Lordships’ House the helpful table that the Minister, Claire Perry, shared with the committee in the other place, portraying the underlying regulation, the offence and the proposed level of sanction? I suggest that the department should consider publishing a report to Parliament each year on the operation of the sanctions. Should the Minister underline and confirm that civil sanctions in no way downplay the significance of environmental breaches and is not a signal that there will be in any way less stringent enforcement of the regulations, I will be very pleased to affirm them.

[Lord Teverson]

My Lords, before the Minister gets up, I declare an interest as a board member of the Marine Management Organisation, which has certain responsibilities relating to marine pollution in the English seas.

[Lord Henley]

My Lords, I note the declaration of interest from the noble Lord, Lord Teverson. I am more than happy to share the table that the noble Lord, Lord Grantchester, referred to, which my right honourable friend Claire Perry shared with colleagues in another place. I will write to the noble Lord and the other noble Lords who took part in the debate.

In response to the noble Lord, Lord Teverson, let me make it absolutely clear that the regulations apply only to breaches of legislation by offshore oil and gas companies in this field and that they do not cover other marine activities. Obviously they are, as the noble Lord, Lord Bruce, put it, designed to reduce the number of incidents. I quoted figures of a little over 4,000 since 2016. That figure sounds rather alarming, but it includes, as far as we know, spillages of the most minor sort, just as any petrol station will report even very minor spillages if it is operating properly. We want to make sure that we can deal with the more serious matters. By extending this to civil sanctions, we are trying to offer OPRED a more proportionate response in how it deals with these matters. I can assure the noble Lord, Lord Teverson, that OPRED is perfectly content with the resources that it has—it has some 20 offshore inspectors, no doubt speeding around in their boats waiting to put their parking tickets on the various rigs, as the noble Lord put it.

However, as we said, we want to make sure that we can make an appropriate response in the right case. The noble Lord, Lord Teverson, said, “But, hold on, you’ve got exactly the same standard of proof, and since they can appeal against this, wouldn’t it be just as easy to use the criminal sanctions, as they are already available?” The point of being able to use civil sanctions is that one can operate much more speedily, whereas with criminal sanctions, OPRED, not being a prosecuting authority, would have to hand this over to other bodies. Not understanding much about criminal law in Scotland—I am sure that the noble Lord, Lord Bruce, will correct me if I am wrong—I imagine that would be to the procurator fiscal, whereas by using civil sanctions, one can be more nimble-footed.

The imposition of civil penalties will be published. Although, as the noble Lord, Lord Teverson, put it, we are talking about small change for some of the big boys, it is our considered view that, because we can publish this information, offshore operating companies would be very keen to avoid the negative publicity. In addition, criminal prosecutions have to be retained in the relevant regulations for the most serious breaches. The noble Lord, Lord Bruce, suggested reducing the burden of proof for the civil prosecutions. I do not think that is possible under the parent legislation in terms of the powers we have to make this regulation—if I am wrong, I will certainly write to the noble Lord to correct it. Therefore, we will be looking at the same standard of proof.

I am grateful for the words of support from the noble Lord, Lord Grantchester. I commend the Motion.

Motion agreed.