On 28 July 2014, the Government launched two consultations in parallel on the implementation of the Offshore Safety Directive (the OSD). One of the consultations is led by DECC and the HSE (the DECC/HSE Consultation) and the other is led by Defra and the Welsh Government (the Defra Consultation). Both consultations run from 28 July 2014 to 21 September 2014.
The DECC/HSE Consultation concerns the transposition of the OSD and the establishment of an offshore competent authority. It also seeks comments on HSE’s proposals to update onshore oil and gas health and safety legislation to take account of emerging energy technologies and the review of two Approved Codes of Practice. The DECC/HSE Consultation annexes a suite of draft regulations for comment.
The Defra Consultation is narrower. It concerns the transposition of Article 38 OSD, which extends the scope of environmental liability under the Environmental Liability Directive to Marine Waters. Separate consultation exercises will be taking place later in the year in relation to marine waters off Scotland and Northern Ireland.
The safety and environmental regime which OSD required the UK Government to implement closely resembles the existing offshore regulatory regime in the UK. Therefore this consultation does not involve proposals to completely dismantle and then reassemble the offshore regime.
However there are some important issues that this consultation opens up for public comment and debate. Oil and gas companies would be well advised to give careful consideration to the issues raised. Key points of interest include:
- Consolidation of legal duties under one appointed operator. DECC take the view that as a result of the OSD the same entity must be appointed as both safety duty holder and operator under the Petroleum Act. This is not consistent with the approach taken by many operators in the North Sea. The OSD requirements on this point need to be considered carefully.
- Proposed new Competent Authority. The OSD requires a single authority to be responsible for safety and environmental regulation. The consultation proposes, as expected, a “competent authority” made up of both HSE and DECC to deliver this – similar to the Competent Authority under the onshore COMAH regime. However, arguably this complicates rather than simplifies the current regulatory structure. The new “hybrid” authority will be responsible just for the documentation required under the OSD, whereas operational environmental licences will still be issued by the existing offshore division within DECC.
- Operator / Licensee Liability for Environmental Damage. The OSD extends “environmental damage” under the Environmental Liability Directive to include marine waters. This will have the effect of increasing the potential liability of operators to remediate environmental damage in the event of a major spill from an offshore installation. Article 7 of the OSD requires licensees under the Petroleum Act to be “financially liable” for such remediation work. Defra are consulting on whether any changes need to be made to existing Environmental Damage Regulations to achieve this.
We will be reporting further on these and other points of interest in due course.