The work of the Australian Government to implement the recommendations of the Commission of Inquiry into the 2009 Montara incident continues apace. The latest legislation before Parliament proposes significant reforms with respect to offences and penalties for health and safety offences. This article explores the proposed changes and looks at what further changes are anticipated.

What is currently proposed?

On 28 November 2012, legislation was introduced into the Federal Parliament to amend the Offshore Petroleum and Greenhouse Gas Storage Act 2006 (Cth) (OPGGS Act). The key stated aims of the Offshore Petroleum and Greenhouse Gas Storage Legislation Amendment (Compliance Measures) Bill 2012 (Amendment Bill) are:

  • to strengthen the offshore petroleum regulatory regime in respect of compliance, safety, integrity and environment management objectives, and
  • to clarify and strengthen the compliance, monitoring, investigation and enforcement powers of the National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA).

What are the key changes?

The Amendment Bill proposes the following key amendments:

  • two new categories of occupational health and safety offences:
  • recklessness, and
  • negligence.
  • an increase to the maximum criminal penalties for occupational health and safety (OHS) offences for body corporates to $2,975,000 (from a current maximum of $850,000),
  • the introduction of a civil penalty regime for certain offences with a maximum civil penalty of $1,912,500 for a body corporate (depending on the offence), and
  • changes to the way in which NOPSEMA inspectors may discharge their functions.

New OHS offences

The Amendment Bill introduces two new tiers of OHS offences: recklessness and negligence. The effect of the new offences is to categorise the seriousness of offences under the OHS provision of the OPGGS Act. Each of the new OHS offences is subject to substantially increased penalties that are designed to align the penalty regime with the penalties that may be imposed under the newly harmonised onshore safety legislation.

The two tier penalty system and associated penalty levels will apply in relation to every duty holder under Schedule 3 to the OPGGS Act. This includes, among others, operators, employers and persons at a facility.

The stated aim of the new offences and penalties is to encourage duty-holders to ensure compliance with their OHS duties.

Civil penalty regime

The civil penalty regime proposed in the Amendment Bill is designed to provide an alternative enforcement tool to drive compliance with the OPGGS Act. The aim of the proposed amendments is to introduce a range of graduated sanctions that can be imposed to appropriately and proportionally meet the extent of the non-compliance.

The proposed regime is intended to work hand in hand with the Regulatory Powers (Standard Provisions) Act 2012 (Cth) (RP Act) (which is also currently before parliament).

The provisions in the Amendment Bill and the RP Act (when enacted) will allow NOPSEMA to apply to:

  • the Federal Court,
  • the Federal Circuit Court, or
  • the Supreme Court of a state or territory,

for an order that a person has contravened a civil penalty provision. A court may then issue an Order requiring the person to pay a pecuniary penalty. The RP Act will allow the court to order payment of such a penalty as it thinks fit.

However, this penalty must not exceed:

  • for individuals, the amount specified in a civil penalty provision of the Amendment Bill, or
  • for a body corporate, 5 times the amount specified in the civil penalty provision of the Amendment Bill.

What offences will the civil penalty regime apply to?

The civil penalty regime will not apply to the majority of OHS related duties. The Explanatory Memorandum to the Amendment Bill provides that this reflects the communities’ view that any person who has a work-related duty of care but does not observe it should be liable to the more serious criminal sanction for placing another person’s health and safety at risk. However, the civil penalties apply in relation to a number of other areas.

The most significant civil penalty that is proposed by the Amendment Bill is for a failure to follow a direction from NOPSEMA in the event of a significant offshore petroleum incident. Lesser civil penalties are reserved for other provisions including among other things:

  • an operator failing to ensure the presence of the operator’s representative at facility,
  • obstructing or hindering a NOPSEMA inspector,
  • failing to comply with an improvement notice, and
  • failing to retain records of accidents and dangerous occurrences.

NOPSEMA’s powers

NOPSEMA inspectors are also a subject of amendment. The Amendment Bill:

  • merges the 2 existing categories of NOPSEMA inspectors (petroleum project inspectors and OHS inspectors) into a single kind of inspector to be called a ‘NOPSEMA inspector’, and
  • will allow NOPSEMA inspectors to use the monitoring and investigation powers that will become available to them under the RP Act (when enacted).

The proposed revised powers mean that NOPSEMA inspectors will be able to:

  • use the monitoring and investigation powers in the RP Act (when enacted) to investigate compliance with all obligations of persons under the OPGGS Act with a warrant, and
  • monitor compliance by persons with OHS obligations, without warrant, at offshore facilities and at onshore regulated business premises.

In addition to the powers that NOPSEMA inspectors have with respect to compliance with the OHS provision, the proposed amendments will allow NOPSEMA inspectors to monitor compliance by petroleum title holders with environmental management laws, without warrant at offshore vessels and structures and at onshore premises of the titleholder.

What next?

The comments by the Minister for Resources, Energy and Tourism in the second reading speech for the Amendment Bill make it clear that more changes are proposed to the OPGGS Act. In light of the move to harmonise safety laws across industries and to drive compliance with health and safety legislation, it is anticipated that further reforms to introduce personal liability provision for officers of duty holders, including operators, will be introduced into Parliament. It is likely that these duties will be similar to those found in the newly harmonised onshore safety legislation. This will require officers of duty holders to take personal, proactive steps to ensure compliance with the health and safety requirements by their organisation.