The European Commission’s recent proposal to regulate offshore health and safety across the EU has provoked significant reaction with The Netherlands, Malta and The United Kingdom all coming out against the idea.
The proposal, mentioned in our previous newsletter, is for a regulation to be introduced setting strict health, safety and environmental standards for offshore operations in the European Union. As a regulation this would become directly applicable in all Member States – meaning those countries with comprehensive offshore safety regimes in place, such as the UK, could see changes to the systems they currently have.
The proposed regulation does largely reflect the UK regulatory regime and covers important areas such as licensing, transparency, emergency response and liability for environmental damage. However the worry is that there could be areas where the Regulation deviates from the UK position, either in its original form or in the future, and even in areas where there appears to be little material difference there could be unintended consequences arising from a new regime.
This is part of the reason why the UK, and other countries, have come out against this proposal, with Oil and Gas UK being particularly vocal in their opposition and preferring to see a Directive enacted which it believes could achieve the Commission’s goal of raising safety standards across the European Union while allowing the UK regime to continue unaffected.
One question arising from all this is what can these countries and organisations do to try and persuade the European Commission, European Parliament and the Council of Europe round to their way of thinking?
To understand this, it is first important to understand the EU Legislative Procedure and also the lobbying process by which parties can attempt to influence the decision-making process. Although the focus of this article is on the proposal to regulate offshore oil and gas, the below could be equally applicable to any regulation in any industry.
The European Legislative Process
It is well worth noting that this is currently only a proposal. For the proposed Regulation to come into force it will have to pass through the entire EU ‘co-decision’ decision-making procedure. This means that the Regulation will have to be approved by both the European Parliament and the Council of Europe, made up of the governments of all 27 Member States. As this proposal takes the form of a Regulation it will be directly applicable and therefore could immediately come into force across all Member States upon being adopted by the Council and European Parliament. The European Commission envisage that this may happen sometime in 2012 and, initially, the legislation would only apply to new installations with transitional periods of up to two years for existing installations foreseen. The new rules could therefore be in force for existing production installations in 2014. A one year transition period is planned for planned production installations and also for non-production installations, for example drilling installations, meaning that, according to the European Commission’s timetable, the new rules would be in force at some point in 2013.
In brief - the process for the proposal passing through the European Parliament and Council begins by both institutions reviewing the proposal and suggesting amendments to it. If they cannot agree upon the amendments, a second reading will take place. In this second reading, amendments will again be proposed by both the Council and the Parliament, with Parliament having the power to block the Regulation if it cannot agree with the Council. If there is no agreement, a conciliation committee (made up of 27 Members of Council and 27 representatives from the European Parliament) can try and find a solution, although both institutions can block the proposal at this final reading.
Initially the proposal will be considered by the European Parliament in a ‘first reading’ where a position will be delivered by the relevant parliamentary committee. This will then be debated in plenary session where it can be adopted by a simple majority. There is no time limit set for the opinion to be delivered, although in practice this may take an average of around 15 months and may take much longer depending on the complexity of the issues involved.
Once the committee (or committees if the issue covers several areas) has finalised its position the proposal will be placed on the agenda of the plenary session. In the course of this debate, the Commission will announce and explain their position on the changes suggested by the Committee. A simple majority is then required to adopt the amended proposal and this, invariably, is obtained. Should the proposal fail to gain majority approval then the Commission may be asked to withdraw. Should they refuse to do so, the matter will be passed back to the relevant committee.
The Commission can then amend its proposal accordingly, incorporating the changes which it supports - either as suggested or suitably reworded.
While the European Parliament is considering the proposal, the Council will also be reviewing the proposed legislation, although it cannot adopt its position until after the Parliament has acted. The Council’s position will be prepared by specific working parties which are made up of expert representatives from the Member States and chaired by the Member State currently holding the Presidency. These parties then report to the Committee of Permanent Representatives which will prepare the Council’s decision. Their position will be finalised on the basis of the Commission’s proposal, amended where necessary following the first reading of the Parliament. There are three possible scenarios at this stage:
- The act will be adopted where the Council accepts, without alteration, a proposal which has not been amended by the European Parliament.
- The act will be adopted where the Council accepts all the European Parliament’s alterations which have been incorporated into the final proposal; or
- In all other cases the Council will adopt a common position.
If the Council is approving a proposal which incorporates the Parliament’s amendments or simply has no amendments then a qualified majority (currently 73.91% of the vote) will be required for it to be adopted by Council. Should the Council be approving a proposal as amended by the European Parliament but where the changes have not been incorporated by the Commission then unanimity will be required.
The Council will adopt a common position when it does not share the stance taken by Parliament and this will be submitted, along with a statement of reasons, to the European Parliament. The common position is usually initially prepared by the working parties and then adopted by the Council of Ministers, with or without a debate, and a qualified majority is required. It is possible that the Council reaches a position before the European Parliament does – if this does happen then this position will be termed a ‘general approach’ and the Commission will wait until the Parliament gives its opinion on the proposal before it reacts.
Again no time limit is laid down for the Council to reach a common position. In recent years the average time as been around the two year mark although much will depend on the complexity of the proposal.
Once the Council has submitted its common position, the European Parliament has a three month period to respond. The adoption procedure for this second reading is largely similar as described above for the first reading, except the document the relevant committee will be dealing with is the Council position rather than the Commission’s proposal. The amendments suggested must either include those adopted at the first reading but not accepted by the Council or be concerned with a part of the common position which is significantly different from the initial proposal or did not appear in it at all, or introduce an element of compromise between the parties. These amendments will then be put to a vote in the parliamentary committee with a simple majority required. An absolute majority (half of the members rather than half the vote) in the European Parliament is then required for Parliament to adopt the amendments.
Should the European Parliament endorse the common position without amendment, fail to obtain the absolute majority required to adopt the amendments or fail to make a decision within the time frame then it will be declared that the common position is approved at the act will be enacted accordingly. Parliament also has to option to reject the Council position by an absolute majority vote.
If the amendments are adopted the Commission must then deliver an opinion on these amendments with the position taken at this stage affecting the type of vote required in the Council. Should the Commission give a negative opinion on at least one of the amendments; a unanimous verdict will be required by the Council as regards overall acceptance of the Parliament’s position.
Upon receipt of the Parliament’s amendments, the Council will have a period of three months to approve them – either unanimously (in the above situation) or by qualified majority (if they are accepted by the Commission). Again the internal process is similar to that in the first reading. If the Council agrees that it will accept all the amendments then the act will be adopted, according to the wording after the Parliaments second reading.
Should the amendments not be approved by the end of the three month period then the conciliation procedure shall begin. A conciliation committee will have to be convened within six weeks from the time of the Council’s formal decision (or the end of the time period). This committee will bring together members of the Council and an equal number of representatives from the European Parliament (27 of each), along with the Commissioner responsible. The committee will the attempt to negotiate and approve a joint text for the proposal – within a stipulated time limit of six weeks (which can be extended to eight weeks) from the first meeting. The Council delegate will have to act by qualified majority when making decisions while the European Parliament’s delegation may act through a simple majority. If a joint text is approved with in the time frame then the act will be adopted, otherwise the act will be deemed to have not been adopted and the procedure is ended.
Interested parties may wish to attempt to influence the decision made by the European Parliament or Council of Europe and the direction of the proposal going forward.
Lobbying can be carried out directly to one of the decision making elements of the EU or indirectly through other channels. The Council of Europe is arguably the least accessible of the main bodies in terms of lobbying, although views can be expressed to national interest groups and to national governments. The relevant national minister may then take these views into account and put them forward to the Council when discussions regarding a proposal begin.
The European Parliament and Commission are perhaps more easily accessible to lobbyists. A jointregister is now in place, from which interest representatives can be accredited and allowed access to the Parliament and speak with MEPs. The register currently has over 1200 organisations listed, from which over 2000 individuals are also listed – although it is likely there are even more lobbyists and lobbying organisations present in Brussels. The types of organisations listed range from multi-national companies and industry associations to regional representatives and not-for-profit organisations.
Interested parties can attempt to put forward their views and influence the decision making process of the EU either by being accepted onto this Transparency Register and then being accredited to the European Parliament or by going to an organisation that already has been. It is an approach that can yield results – for example the European Parliament voted against a proposal to force food manufacturers to add ‘traffic light’ labels to products to highlight the levels of salt, sugar and fat after intense lobbying by the food industry in 2010.
The European Commission’s proposal to regulate offshore oil and gas is certainly one that is exercising those involved in the current regime in the United Kingdom. They, along with representatives from other member states, are concerned that the proposal will do little to benefit offshore health and safety in countries with an established regime in place and, in fact, may be detrimental to those regimes.
However, the European legislative process is long and complicated with many hurdles to overcome before this proposal becomes law. This will take time and provide significant opportunity for debate. Considering there is also the possibility of lobbying the European Parliament, European Commission or the Council of Europe in several ways – it can be seen that it is by no means a certainty that the proposal will become a regulation.
With the UK in many ways being the Member State that stands to lose the most and gain the least from a European-wide Regulation in this area it will be very interesting to see how this develops over the coming months and the actions taken by those with a major interest in this area.