Merchant Shipping (Recognised Organisations) (Amendment) (EU Exit) Regulations 2019

Baroness Sugg Excerpts

Wednesday 23rd January 2019 Grand Committee

Moved by

[Baroness Sugg]

That the Grand Committee do consider the Merchant Shipping (Recognised Organisations) (Amendment) (EU Exit) Regulations 2019.

[The Parliamentary Under-Secretary of State, Department for Transport (Baroness Sugg) (Con)]

My Lords, the draft regulations that we are considering will be made under powers in the European Union (Withdrawal) Act and are needed if we leave the EU in March without a deal.

Recognised organisations, or ROs, play an important role in ensuring that ships are built and maintained to operate in compliance with standards on safety and the prevention of marine pollution. They carry out these functions on behalf of maritime nations. In the UK, the Maritime and Coastguard Agency delegates about 85% of its survey work to ROs.

Globally, the International Maritime Organization develops rules on ROs. The IMO’s Recognized Organizations Code entered into force in 2015. The code contains criteria against which ROs are approved, authorised and assessed, and gives guidance on how flag states should monitor ROs.

The EU has adopted legislation to harmonise the way in which member states implement those IMO requirements. Under EU legislation, member states may delegate the inspection and survey of ships to EU-recognised ship inspection and survey organisations, or EU ROs, by authorising them to act on their behalf. At present there are 12 EU ROs. Six of them have been authorised to act on behalf of the UK. The Maritime and Coastguard Agency intends that these six ROs would remain authorised by the UK and be recognised as UK ROs following our exit from the EU.

The MCA regularly meets UK-authorised ROs and has kept them informed of these proposals. They have raised no objection and understand why the changes are needed to ensure that the UK continues to have a functioning statue book for the approval of ROs.

EU Regulation 391/2009 and related legislation established a system for approving ROs; criteria for assessing RO performance, which is based on IMO criteria; monitoring measures and remedial measures if ROs are underperforming, including fees and penalties and, finally, the removal of RO status.

The European Union (Withdrawal) Act retains in UK law EU directly applicable legislation, such as that on ROs. It makes provision in Section 8 to correct deficiencies in such EU legislation as arises from the UK leaving the European Union. We need to amend that retained EU legislation on ROs for the legislation to function correctly in the future. The regulations will therefore amend EU Regulation 391/2009 and subsidiary EU legislation, and they will make the changes needed to adapt an EU system for ROs to one that can function as a UK system after exit. The regulations will change references to “Member State” and “the Commission” to “Secretary of State” or “the United Kingdom” where appropriate, and they will change definitions and other wording to reflect the UK’s position outside the EU. Redundant reporting requirements have been removed.

Powers have been transferred from the European Commission to the Secretary of State in relation to standards for RO performance and to keep up with changes in the minimum performance criteria for ROs, especially in the light of IMO changes. In addition, the powers of the Commission to regulate in Article 14 of Regulation 391/2009 have been transferred to the Secretary of State. This will enable the Secretary of State to legislate in order to establish criteria to measure the effectiveness of the rules, performance and procedures of ROs and criteria to determine whether an RO’s performance is an unacceptable threat to safety and the environment. The Secretary of State will also be able to legislate to make and amend rules for imposing fines and penalties and ultimately for withdrawing recognition, and rules for interpreting the minimum criteria for ROs.

The regulations include provision to ensure that ROs that are, immediately before exit day, both recognised by the EU and authorised by the UK continue to be recognised after we leave. These ROs will become recognised directly by the UK and will continue to be authorised by the UK through new agreements to be put in place with the ROs before exit day. That will help provide ROs with certainty and clarity. Another transitional provision will ensure that ROs continue to maintain an independent quality assessment certification entity.

Commission Decision 2009/491 relates to using data from port state control inspections of ships to assess the work that ROs do. The regulations make changes to the decision to replace an EU procedure with powers to amend criteria for using port state control data. Article 8(1) of Regulation 391/2009 provides for assessment of ROs every two years by the Commission and the member state that put forward an RO for approval. The regulations retain the two-yearly assessment but transfer responsibility for it to the Secretary of State.

The regulations also transfer powers to review fines and penalties from the European Court to the UK courts by way of a statutory appeals procedure. Finally, they remove provisions relating to derogation from certain provisions of international law in Article 13(2) of Regulation 391/2009 and Commission Implementing Regulation 1355/2014. In the case of the latter, this has been revoked. The EU introduced these derogations on the basis that they appeared to be incompatible with EU law. We do not regard the provisions as incompatible with UK law and, as the UK did not lodge objections to them in the IMO, any attempt to derogate from them would be in breach of the UK’s international law obligations.

These regulations will be accompanied by Merchant Shipping Notice 1672. This provides information to the industry on the standards that ROs apply and on requirements for recognising, authorising and monitoring ROs. This shipping notice has been drafted and will be issued once the SI has been passed.

I should also mention Directive 2009/15, which governs the relationship between flag states and ROs. The UK implemented the directive administratively through formal agreements between the MCA and each RO. The directive will not be saved in UK law after exit. However, the MCA will put in place new arrangements with each RO when the regulations come into force. These will be very similar to the current arrangements between the MCA and the ROs but will reflect the changes made in these regulations.

The changes made in these regulations are needed to ensure that the law on recognising, authorising and monitoring ROs continues to function after the UK’s withdrawal from the European Union. This will enable the UK to continue to comply with its international obligations to ensure the safety of ships and the prevention of pollution. I beg to move.

[Baroness Randerson (LD)]

My Lords, these regulations involve ship inspections. The four sets of regulations this afternoon will lead me to repeat myself on a couple of occasions because the same themes come through in each one. All of them have safety issues at their core. The current EU-based system will be replaced with a UK-only system. As I understand it, it will continue to work within a system of international standards and the new legislation will retain existing criteria for the recognition, authorisation and monitoring of ROs: so far, so good. But ships move about and currently we have obligations to report to the EU to share information. How will this sharing happen effectively in future? Most of our ships will be sailing through EU waters at some point in their journey and many of the ships that visit our shores are EU ships. We need to know how that information is going to be shared in the future because of the safety implications.

The inspection of ships, both UK and foreign ones, is a key issue for the safety of ports. Therefore, I was quite surprised to read that there has been no formal consultation. Reasons were given on each of these SIs why there was no formal consultation. If you take the SIs together they are a pretty significant bundle of legislation and would be worth consultation in the round, if not as individual pieces of legislation.

It states in the Explanatory Memorandum that the Secretary of State will be given power to make subordinate legislation. Can the Minister clarify whether this will be an affirmative or a negative procedure?

Finally, the list of ROs we have been provided with makes for interesting reading. I do not in any way pretend to be an expert in these issues. Can the Minister enlighten me as to how this list is drawn up? How is this rather disparate list of organisations there and how do we change it? What are the criteria for changing it if we want to? I would be grateful for some information on that.

--- Later in debate ---

I have subjected the Explanatory Memorandum as best I can to the generic test of whether it includes any necessary policy change. I could not find any areas of such change, but, as a result of studying the statutory instrument, I realised that I did not understand the role of the IMO. Can the Minister develop a little further what the role of the IMO is with respect to us and the EU now and what it will be after exit day? In particular, where does the IMO create regulations which are mandatory for the United Kingdom?

[Baroness Sugg]

I thank noble Lords for their consideration of these regulations. As I said, they will ensure continuity for ROs and the shipping companies which rely on their services and make no changes to the way in which ROs operate or to their relationship with the MCA.

The noble Baroness, Lady Randerson, raised safety, which is of course a priority. We are currently a member of the European Maritime Safety Agency. We want to continue our close working with the EMSA after we leave the EU. The political declaration recognised that the EMSA and the MCA should continue to share data in a future relationship. In the event of no deal, we still hope to continue that relationship, but it will be subject to negotiations. Where the MCA may need to cover a role currently played by the EMSA, it has contingency plans for doing so.

No formal consultation on this statutory instrument was done, as the noble Baroness pointed out. The MCA has a close working relationship with the ROs. It authorises them, meets them regularly and has discussed with them the content of the instrument. As I said, they recognise that the aim of the regulations is to maintain the status quo as far as possible. The regulations will have no impact on the working of ports. We have had no specific discussion with ports on the regulations, but obviously we do that as part of our wider work on EU exit.

On the Secretary of State’s powers, secondary legislation that amends the criteria that ROs must meet to continue to enjoy recognition, the system of fines and periodic penalty payments or any withdrawal of recognition is subject to the affirmative procedure. Secondary legislation on interpreting the criteria for assessing RO performance and the effectiveness of their rules or amending the criteria for use of port state control inspection data for assessing unacceptable levels of performance by ROs is subject to the negative resolution procedure.

On how we approve ROs, the list is slightly disparate, as the noble Baroness pointed out—I had not seen it myself before getting to know these regulations. There is an EU list and, from it, the UK recognises six ROs. The MCA enters a formal agreement with each RO acting on behalf of the UK and assesses those ROs periodically. It is a long-standing list, but it is possible to change it and if people wish to apply, we will certainly consider that.

In response to the points made by the noble Lord, Lord Tunnicliffe, this applies to all the regulations we will be discussing today and perhaps tomorrow. It is a no-deal SI. During an implementation period, the SI will not be needed because the withdrawal agreement provides that EU law should continue to have the same effect in the UK as in the EU during that period. The EU withdrawal agreement Bill will be introduced as soon as possible and, as we set out in the White Paper, we will make provision to defer, revoke or amend any SIs that are made but then not needed during an implementation period if a deal is secured. The same applies to the rest of the SIs that we will be discussing.

On the relationship between recognised organisations, the EU and the IMO, we have authorised six ROs which are recognised by the EU. The relationship between the UK and the ROs will not change and there will be no change in the relationship between the UK and the IMO. The ROs will carry out the same inspections and surveys on UK ships as they do now. The only changes are to reflect the UK’s status outside the EU; for example, the EU will take over responsibility for monitoring and assessing its authorised ROs.

The IMO sets the global framework for maritime safety and security and the prevention of marine and atmospheric pollution by ships. Its recognised organisation code contains those criteria and the UK is a signatory to the IMO convention that implemented the RO code. The difference, I suppose, is that, while the relationship between the UK and IMO will stay the same, there will not be that relationship with the EU; at the moment, ROs are approved or recognised at EU level. Since the IMO conventions came in, the EU has harmonised them; we will be removing ourselves from that harmonisation and recognising ROs ourselves. After exit, decisions on recognition of new ROs and evaluations of the performance of existing ROs, which were previously made by the EU, will now be made by the Secretary of State. There will be no change in our relationship with the IMO.

I hope that I have answered all the questions; if not, I will follow up in writing.

Motion agreed.