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

Baroness Randerson Excerpts

Wednesday 23rd January 2019 Grand Committee

[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.

[Lord Tunnicliffe (Lab)]

I thank the Minister for presenting this instrument. I have no great problem with it but I lack a little bit of understanding. The first thing I would like to be clear on is whether this is a no-deal instrument, that is, something that needs to be processed quickly because it is necessary if we fall out of the EU without a deal—which in my view and that of my party would be the least satisfactory outcome. I can see that the instrument does its work in the event of a no deal; I am not so clear about what happens to it if there is a deal. Will it be repealed or will it be paused? Will it continue to exist? The Minister may find it efficient to answer that question referring to all four statutory instruments if it is the same answer.