The government is proposing the introduction of civil sanctions for offshore oil and gas companies that breach environmental law.

In a potential further expansion of the role of civil sanctions for environmental offences, the Offshore Petroleum Regulator for Environment and Decommissioning (OPRED) has introduced a consultation (PDF) seeking views on a civil sanctions regime for offshore oil and gas companies who are found to be in breach of environmental regulations. Implementation would be done through the Offshore Environmental Civil Sanctions Regulations 2018.

Additional deterrents

Offshore oil and gas companies are currently subject to criminal prosecution and penalties for non-compliance but, as with many other environmental offences, there is concern that there is no alternative sanction for minor offending not deemed sufficiently serious for a criminal prosecution (something Professor Richard Macrory, a leading figure in the role of civil sanctions, termed a “compliance deficit”).

The introduction of civil sanctions will expand OPRED's powers as they can choose whether to impose financial sanctions or proceed to criminal prosecution. OPRED believes that this will enable them to deliver a more flexible, proportionate and timely enforcement response in respect of breaches.

Fixed and variable penalties

The new regulations will impose fixed and variable financial penalties, where OPRED is satisfied to a criminal standard of proof that a contravention of the relevant provisions have occurred. Fixed penalties will range from £500 to £2,500. This will apply to the majority of contraventions. As with comparable environmental regimes, variable penalties will be influenced by aggravating and mitigating factors and will range from £5,000 to £50,000.

Aggravating factors will include the duration of the non-compliance, any history of non-compliance, financial gain resulting from non-compliance, the level of any harm to the environment and the conduct of the operator after the non-compliance has been identified.

Mitigating factors will include swift action being taken to return to compliance and to eliminate, reduce or repair any harm to the environment, a good compliance record and whether the breach has been reported voluntarily.

It is hoped that the enforcement measure will help to prevent the non-compliance from becoming persistent and will remove the short term financial gain to companies arising from the non-compliance.

The rise of the civil sanction

These proposals are part of a wider trend of expanding the role of civil sanctions for criminal offences. It is a decade since the Regulatory Enforcement and Sanctions Act 2008 came into force. In that time we have seen businesses and regulators become accustom to, and over time embrace, these flexible sanctioning tools.

Civil sanctions began by being applied to a limited scope of environmental offences but there has been gradual and piecemeal expansion over time, such as the inclusion of enforcement undertakings, a type of civil sanction, for onshore environmental permits.

New environmental legislative initiatives, such as the Environmental Protection (Microbeads) (England) Regulations 2017 banning the manufacture and sale of certain rinse-off personal care and cosmetic products containing microbeads, include civil sanctions as an option.

Our experience over the past ten years dealing with civil sanctions is that these are powerful tools for businesses who wish to take responsibility for environmental non-compliance but also avoid the negative publicity and drain on management time that accompanies a full prosecution. Regulators also benefit because limited resources can be targeted at more persistent or troublesome offenders.

However, it is also worth noting that not everyone is in favour of civil sanctions for what are, after all, criminal offences, and there are signs of a backlash. An article in the Guardian on Thursday 18 January 2018 made express reference to the fact that offences relating to a producer’s responsibility for packaging waste have rarely been prosecuted since civil sanctions came into force, with almost all cases being addressed through enforcement undertakings, and claimed that some were concerned the enforcement was “not tough enough”.

What can you do?

The consultation is open from now until 15 February 2018. You may respond by completing an online survey here.