The Department for Business, Energy and Industrial Strategy (BEIS) is conducting an informal consultation on the Offshore Petroleum Regulator for Environment & Decommissioning’s (OPRED) proposal to introduce The Offshore Environmental Civil Sanctions Regulations 2018. This targets offshore oil and gas installations engaged in hydrocarbon-related operations on applicable territorial waters and the UK Continental Shelf. Under the proposal, OPRED will have the power to impose financial civil penalties on offshore oil and gas companies contravening specified provisions in existing environmental legislation. OPRED must be satisfied after investigations that one of the existing relevant regulatory provisions has been contravened. OPRED will operate to the criminal standard of proof whereby it needs to be satisfied beyond all reasonable doubt that a breach occurred.

Currently the targeted breaches can only be dealt with by way of criminal prosecution and criminal penalties. The monetary civil penalties are designed to be imposed instead of, rather than in addition to, criminal prosecution. The civil sanctions will be available in addition to the criminal sanctions, thus expanding OPRED’s existing powers and allowing for a more proportionate enforcement response. It is proposed that criminal prosecutions will be retained for the most serious breaches only.

Sanctions will be imposed in line with OPRED’s enforcement policy and will depend upon the regulation being breached and the nature of the contravention.

Sanctions:

Fixed monetary penalties

Fixed monetary penalties apply to the majority of breaches and range from £500 to £2,500. When satisfied that an offence has been committed, OPRED will issue a notice of intent setting out the amount of the sanction and the grounds upon which it is to be imposed. A discount is applied if the operator pays within 28 days. By paying two-thirds of the stated amount, the liability can be discharged. Alternatively, the operator may submit written representations within the 28 days, setting out why he should not be sanctioned.

Once the 28 days have elapsed, OPRED will take account of any representations made and decide whether to impose the sanction. Where imposed, OPRED will issue a final notice detailing its grounds, how payment should be made, the rights of appeal and consequences of non-payment.

Variable monetary penalties

Variable monetary penalties, resulting from and influenced by aggravating and mitigating factors, range from £5,000 - £50,000 for the most serious offences.

Aggravating factors include the nature of non-compliance, the financial gain and level of harm to the environment resulting therefrom as well as the conduct of the operator after identification of non-compliance. Where the breach is not remedied urgently and/or causes environmental harm, it can be expected that the maximum variable monetary penalty will be imposed.

Mitigating factors include swift action taken to comply and to eliminate, repair or reduce any harm to the environment. A good compliance record and whether the breach has been reported voluntarily will also be taken into account. Mitigating factors can reduce the starting point of £5,000 down to either the level of a fixed monetary penalty for that offence or to £2,500 where there is none.

Similarly to fixed monetary penalties, OPRED will issue a notice of intent; however, here the early payment discount is not available. The recipient has 28 days to make representations, respond with mitigating factors or where appropriate offer an undertaking to take actions to benefit persons affected by the breach.

Thereafter OPRED will decide whether to issue the sanction as proposed, reduce it or not issue it at all. Where a sanction is imposed, a final notice will be issued as with the fixed monetary penalty procedure above.

Notably, OPRED can impose a non-compliance penalty where an undertaking given by the company was accepted and taken into account by OPRED in the final sanction but was subsequently breached.

Types of Offences

The following regulations are caught by the proposal:

  • The Offshore Combustion Installations (Pollution Prevention and Control) Regulations 2013;
  • The Offshore Petroleum Activities (Oil Pollution Prevention and Control) Regulations 2005;
  • The Offshore Installations (Emergency Pollution Control) Regulations 2002;
  • The Merchant Shipping (Oil Pollution Preparedness, Response and Co-operation Convention) Regulations 1998; and
  • The Offshore Chemicals Regulations 2002.

Variable monetary penalties and larger fixed monetary penalties apply to regulation specific offences such as:

  • Operating an offshore combustion installation without a permit;
  • Allowing a release or continually releasing oil in contravention of a permit;
  • Failing to comply, contravene or obstruct a person acting on behalf of the Secretary of State;
  • An operator or responsible person failing to submit an Oil Pollution Emergency Plan or failing to comply with it; or
  • To discharge offshore chemicals without a permit.

More generally, such penalties are further imposed for failing to comply with an enforcement, information or prohibition notice.

Most fixed monetary penalties of £1,000 under all relevant regulations relate to:

  • The refusal to provide information, produce documents or afford facilities and assistance;
  • Providing false or misleading information; or
  • Obstructing an inspector in any other way.

Appeals and Enforcement:

A recipient can appeal a civil sanction within 28 days of receipt in the First Tier Tribunal (General Regulatory Chambers) of the Courts and Tribunals Service. The grounds for appeal are that the decision to impose a civil sanction was:

  • Based on an error of fact;
  • Wrong in law;
  • Unfair or unreasonable for any reason (including that the amount was unreasonable).

The Tribunal may:

  • Confirm;
  • Reduce; or
  • Cancel the sanction; and
  • Award costs.

Any unpaid penalty that remains unpaid following a final notice subject to any appeal, will be enforced by OPRED as a civil debt.

No criminal proceedings can be brought where:

  • A fixed monetary penalty is imposed or where liability was discharged by payment within 28 days; or where
  • A variable monetary penalty is imposed unless an undertaking is not complied with that fully discharges the penalty.

The informal consultation closes on 25 January 2018. It provides industry with an opportunity to voice their concerns ahead of the formal consultation, which will be launched early 2018. Formal consultations normally last for at least 12 weeks. Thereafter, government will provide a summary of who responded to the consultation and the views expressed to each question. The feedback will justify decisions determined and will be published with any further actions taken, such as laying legislation before Parliament.