No one is likely to disagree with the four objectives of the new rules on the safety of offshore oil and gas activities which have just been proposed by the European Union.
However already there is disagreement on whether these rules are necessary, desirable, practical and may even compromise safety rather than improve it.
Explaining the need for a specific EU legislation the Commission says offshore accidents do not know borders and if a similar accident to the Gulf of Mexico were to happen in European waters it could have serious effects not just for the member state involved but also for its neighbours.
They say the highest safety standards already followed in some Member States will be made mandatory across the Union where the offshore industry currently operates to different environmental, health and safety standards in different states.
However Oil and Gas UK has suggested that imposing blanket EU regulation could have the reverse effect and undermine safety and environmental performance. They point out that the EU has no established competence in this matter and only three out of the 27 member states have an offshore oil and gas industry of real scale.
It seems to me that what is being proposed is very similar to the onshore COMAH (Control of Major Accident Hazards Regulations 1999) in which I have considerable experience . That experience leads me to a number of concerns about the proposals.
COMAH are the enforcing regulations within the United Kingdom of the Seveso II Directive which was drawn up in Brussels following the Seveso disaster, a chemical plant leak in the Italian town of that name in 1976.
My deep insight into the working of the COMAH regime comes partly from the fact that with my Bond Pearce team - which is recognised as the leading one in the UK in this sphere - I advised on the investigation and prosecutions which followed the Buncefield disaster in 2005. A number of people were injured and there was massive disruption following several explosions at the Buncefield oil storage depot.
The proposed regulations are, to some extent, focussed on the roles and responsibilities of 'operators'. Although in the draft Regulation 'operator' is to be defined by reference to an early Directive, in practice that may not be as straightforward as it seems. In Buncefield much of the criminal trial was concerned with establishing who was, in fact, the 'operator.' Given that in the oil and gas sector many operations are carried out under contractual joint venture agreements this is potentially an area of uncertainty.
However, the European Regulation as proposed sets out four objectives:
- To ensure a consistent use of best practices for major hazards control by oil and gas industry offshore operations potentially affecting Union waters or shores;
- To implement best regulatory practices in all European jurisdictions with offshore oil and gas activities
- To strengthen the Union's preparedness and response capacity to deal with emergencies potentially affecting Union citizens, economy or environment;
- To improve and clarify existing Union liability and compensation provisions
These are laudable aims and in some respects akin to the COMAH regime for onshore sites which have major accident environmental risks around them.
I have spent much of the last five years dealing with Buncefield which was prosecuted under the COMAH regulations and that process highlighted a number of challenges to their effectiveness. This seems to be a move to establishing a similar regime for offshore activity.
For example there is mention in the draft regulation of 'Competent Authorities' to be set up by the member states. Under the COMAH regulations the responsibility rests with the Competent Authority and in the UK the Competent Authority is the Health and Safety Executive and the Environment Agency working together.
The draft regulations propose that 'technical solutions presented by the operator which are critical for safety on the installation will have to be verified by an independent third party prior to and periodically after the installation is taken into operation.'
The draft regulations propose that 'technical solutions presented by the operator which are critical for safety on the installation will have to be verified by an independent third party prior to and periodically after the installation is taken into operation.'
I have two concerns about that. The whole thrust of European regulation and legislation in the field of health and safety and environment since 1989 has been towards risk assessment - organisations should assess their own risks and manage them.
The basis is that the organisations themselves, particularly in very technical fields such as this, are best able to understand the risks associated and put in place measures to reduce and control those risks.
We have moved away from prescriptive regimes on health and safety, and we have done that with good sense, so I am rather surprised at the language of this.
Another concern on independent verification is - Who is going to carry it out for companies like Shell and BP with their resources, their internal knowledge and skills? Who is going to have the expertise to verify their cutting edge technology? It seems to me that any independent consultant is likely to have some connection with the major players in any event. I am struggling to see how it is going to work in practice.
Independent verifiers will heavily qualify their verification to avoid litigation but how is their independence assessed? Who do they owe a duty to? Who instructs them and decides on the scope of their instruction? What if there is a dispute between the national Competent Authority and the independent verifier or the independent verifier and the operator?
The draft regulations propose that Member States will take enforcement action against companies which fail to meet the minimum standards by stopping their drilling or production operations.
That's fine because it is akin to health and safety enforcement in the UK as we know it but it ignores the huge economic reality which is that particularly in specialist areas such as offshore safety the HSE is understaffed and under resourced and that is only going to get worse. Resourcing is likely to be a major problem for national Competent Authorities.
Expertise and manpower is stretched thin as it is and this is likely to cause problems and delays.
The fourth objective set out by the Commission is clearly designed to resolve the issue about who is liable in the event of a major disaster and while I understand the reasoning I can envisage significant problems.
Few would disagree with the principle that liability for health, safety and environmental damage should rest with the person responsible for that damage, which is envisaged to be the operator, although as I highlighted earlier 'the operator' will have to be defined. But if that statutory liability rests with the operator which has had its systems verified by an independent third party then I can see litigation for indemnity by the operator against the third party who has verified his systems. There may also be efforts to try to involve the Competent Authority.
Another concern I have is whether the national Competent Authorities will be expected to 'verify' safety or approve the Major Hazards Report (MHR) which is being called for before any offshore operation begins. As worded this may create a duty on the Competent Authority which will be targeted by operators in the event of an incident. Again this is similar to COMAH where statutory obligations are placed on the Competent Authority to review safety reports prepared by the operator.
What happens if there is delay in approval of the MHR by the national Competent Authority, as demanded, due to development in research/criteria as per the 'continuously upgrading assessment?'
I also wonder whether operations will be prevented from taking place at all while the MHR is assessed and if an update is requested if operations will have to stop in the interim?