Oil, water and law don’t mix: environmental liability …

1 Oil, water and law don't mix: environmental liability foroffshore oil and gas operations in the UKPart 2: Regulatory law, the environmental liability Directive andOPOLGreg GordonSenior Lecturer in Law, Co-director, Aberdeen University Centre for Energy LawIntroduction*This article addresses the extent to which an oil spill froman offshore installation operating on the United KingdomContinental Shelf (UKCS) might give rise to environ-mental liability in the UK. environmental liability has beendefined broadly so as to encompass both civil and first part of this article considered the extentto which environmental liability would be imposed by thelaw of tort/delict and by the petroleum this, thesecond part of the article, consideration will be givento the extent to which liability is imposed by domesticregulatory law, the environmental liability Directive (inboth its current form and as it will stand when amendedby the recently-adopted Directive on offshore Safety andEnvironmental liability ) and article will conclude that while many of the keyelements of a functional system of environmental liabilityare presently in place, the current law is neverthelessattended by considerable uncertainty and contains anumber of worrying gaps.

2 The author's conclusion is that,with some simple and readily-achievable adjustment, thesystem can be made adequately to protect private in-terests. However, if the public interest in the remediationof the environment is to be adequately protected, moreambitious reform is law in the UKOffshore environmental law is comprised of a complexpatchwork of disparate of these haveno bearing upon environmental liability . However, threesets of regulatory provisions bear at least to some extentupon matters of environmental liability . The MerchantShipping (Oil Pollution Preparedness, Response and Co-operation Convention) Regulations 1998 are relevantbecause they require operators to produce (and, if neces-sary, implement) Oil Pollution Emergency Plans (OPEP);DECC has published guidance which refers to these plansin a manner suggesting that they may impose an obliga-tion upon the operator to pay third party offshore Installations (Emergency PollutionControl) Regulations 2002, although essentially emer-gency response provisions, merit consideration becausethey empower the Secretary of State to direct orundertake pollution control operations which (like theimplementation of its OPEP) may involve the operator ofa polluting installation in very considerable expense.

3 TheOffshore Petroleum Activities (Oil Pollution Preventionand Control) Regulations are relevant because theyprovide for the possibility of criminal liability (in the formof a potentially unlimited fine) to arise as a result ofdischarges or releases of oil from offshore of these sets of regulations will be further Merchant Shipping(Oil Pollution Preparedness, Response andCo-operation Convention) Regulations 1998 These regulations,3by which the government implementsa number of its obligations under the IMO's InternationalConvention on Oil Pollution Preparedness, Response andCo-operation, apply to all offshore installations locatedwithin the UK's territorial waters or upon the operator of an ` offshore installation', an expressiondefined so as to include pipelines as well as oil load-ing and unloading facilities,5is placed under an obligationto produce an Oil Pollution Emergency Plan. The OPEP must be submitted to DECC for approval6and must be2 An event which, likeDeepwater Horizon, caused both oil pollution andendangered human safety could of course in addition be the subject ofprosecution under relevant health and safety laws or, in extremecircumstances, the Corporate Manslaughter and CorporateHomicide Act 2007.

4 For a discussion of health and safety regulationon the UKCS see eg J Paterson `Health and safety at work offshore ' inGordon, Paterson and Usenmez (n 1) 187^230. For a discussion of theposition as to corporate manslaughter and corporate homicide on theUKCS see P Gray,R JamiesonThe Corporate Manslaughter and CorporateHomicide Act 2007(W Green & Sons Ltd Edinburgh 2008) 38^ Merchant Shipping (Oil Pollution Preparedness, Response and Co-operation Convention) Regulations 1998 (SI1998/1056).4 ibid reg 3(2). Regulation 3(1) provides that the regulations also apply tocertain harbours and oil handling facilities, but this article will considerthe regulations only in so far as relevant to offshore ibid reg 4(3) read with reg 4(7). Harbours and oil handling facilitieswhich are not pipelines submit instead to the Maritime andCoastguard Agency (MCA).* Part 1 of this article was published in (2013) 25 ELMI ssue 1 and is avail-able in full on The principal regulations can be found on DECC's OffshoreEnvironmental Legislation microsite For an account see L Havemann` environmental law and regulation' in G Gordon, J Paterson andE UsenmezOil and Gas Law: Current Practice and Emerging Trends(2nd edn Dundee University Press Dundee 2011) 231^ liability FOR offshore OIL AND GAS OPERATIONS IN THE UK (PART 2) : GORDON : (2013) 25 ELM121 environmental LAW & MANAGEMENT PUBLISHED BY LAWTEXT PUBLISHING `majorchangewhichaffectsorcouldaffectthe validityoreffectivenessofaplantoamateria lextent'.

5 7 Detailedguidancenotes,reviewedintheafter mathoftheDeepwaterHorizondisaster, ,theplanmustcontainaninventoryofthetypea ndvolumeofhydrocarbonsonaninstallation,a nticipatepossiblecausesofoilspillsandinc ludemodelledworst-casescenarioswhich,for alloperationsrelatingtoexploration,appra isalanddevelopmentwells, , ,followingconvictiononindictment, ,takentogether, ,particularlyifameasuresuchasthedrilling ofareliefwellisinvolved, ,andcontrarytotheimpressiongiveninDECC's GuidelinesonFinancialResponsibility, ,theyaredirectedtowardsthestepsofapracti calandoperationalnaturethatmustbeunderta kentocontain, (EmergencyPollutionControl)Regulations20 02 Asdiscussedabove, ,theOffshoreInstallations(EmergencyPollu tionControl)Regulations2002(the2002 Regulations)14providetheSecretaryofState (or,inpractice,hisrepresentative,general lyknownasSOSREP)15withpowerstointervene` forthepurposeofpreventingorreducingpollu tionortheriskofpollution'.16 TheregulationspermittheSecretaryofStatet oissuetotheoperatorormanagerofanoffshore installationdirections`totake,orrefrainf romtaking,anyactionofanykindwhatsoever'.

6 IftheSecretaryofStateconsidersthatissuin gdirections`isorhasproventobeinadequate' ,heisempoweredhimselftotake`anyactionofa nykindwhatsoever'inrelationto`anoffshore installationoritscontents'. ,particularlygiventhattheregulationsimpo seaclearobligationimposedupontheSecretar yofStatetocompensatetheoperatorforanylos sessufferedasaresultofanineptinterventio nontheSecretaryofState' ;perhapsitwasthoughtthat,giventheotherle galobligationstowhichtheoperatorissubjec t, ,asweshallseeintheConclusiontothisarticl e, (OilPollutionPreventionandControl)Regula tions2005(asamended)TheOffshorePetroleum Activities(OilPollutionPre-ventionandCon trol)Regulations2005,19whichhave14 OffshoreInstallations(EmergencyPollution Control)Regulations2002(SI2002/1861).15 ForanaccountoftheSOSREP'sfunctionandpowe rsseeHShaw`Dealingwithmaritimeemergencie sintheUnitedKingdom:theroleoftheSOSREP'i nRCaddell,RThomas(eds)Shipping,LawandMar ineEnvironmentinthe21stCentury(LawtextPu blishingWitney2013)176^ (EmergencyPollutionControl)Regulations20 02(n14)reg3(2).

7 17 Thepowersgrantedbytheseregulationsaredes cribedbyTromansandNorrisas`extensive'.Se eSTromans,JNorris`WhatifDeepwaterHorizon occurredwestofShetland'(2010) ,however,submittedthattheregulations'eff ectivenessispotentiallyunderminedbyanumb erofweaknessesintheirdraftingwhich,asnot strictlyrelevanttothemainthrustoftheargu menthere, (EmergencyPollutionControl)Regulations20 02(n14).Regulation4(1)providesthatcompen sationispayablebytheSecretaryofStatetoan ypersonincurringexpenseorsufferingdamage asaresultofadirectionorinterventionthat: `(a)wasnotreasonablynecessarytopreventor reducepollutionortheriskofpollution;or(b )wassuchthatthegooditdidorwaslikelytodow asdisproportionatelylessthantheexpensein curred,ordamagesufferedasaresult'.19 OffshorePetroleumActivities(OilPollution PreventionandControl)Regulations2005(SI2 005/2055)(the2005 Regulations).7ibidreg4(53).8 DECC`GuidancenotestooperatorsofUKoffshor eoilandgasinstallations(includingpipelin es)onOilPollutionEmergencyPlanrequiremen ts'(July2012). (OilPollutionPreparedness,ResponseandCo- operationConvention)Regulations1998(n3)r eg4(6).

8 11ibidreg4(8). `GuidancenotetoUKoffshoreoilandgasoperat orsonthedemonstrationoffinancialresponsi bilitybeforeconsentmaybegrantedforexplor ationandappraisalwellsontheUKCS'(January 2013) (2013)25 ELM:ENVIRONMENTALLIABILITYFOROFFSHOREOIL ANDGASOPERATIONSINTHEUK(PART2):GORDONENV IRONMENTALLAW& (ConsequentialModifications)(OffshoreEnv ironmentalProtection)Order201020andtheOf fshorePetroleumActivities(OilPollutionPr eventionandControl)(Amend-ment)Regulatio ns2011,21wereintroducedpartlyinordertoim plementtheUK' ,theprincipaloilindustrytradeasso-ciatio n,describestheregulations'purposeasbeing toen-courageoperators`tocontinuetoreduce thequantitiesofhydrocarbonsdischargeddur ingthecourseofoffshoreoperations'. ,iftheallowancewasexceeded,acivilpenalty wouldbeincur-redof 300perkilogrammeofdispersedoildischarged inexcessofallowancessurrendered; , ,asTromansandNorrisnote,itappliednottodi schargesofoilassuch,butonlytodispersedoi linproducedwater;26and,secondly, ,however, ' , ,punishableonindict-mentbyanunlimitedfin e, :`discharges'and`releases'.

9 Dischargesaredefinedasintentionalemissio nsofoilfromanoffshoreinstallation:33itis anoffencetodischargeoilfromanoffshoreins tallationinto`therelevantarea' ,bydefinition, , (ifprosecutedonindictment) ^alwaysassumingthattheprosecutorisableto secureaconviction40^ ,however,noprovisionfortheimpositionofac ivilpenaltyoutsideoftheoperationofanytra dingscheme41andtheregulationscontainno30 2005 Regulationsreg3(1)readtogetherwithregs16 (1)(a)and16(5).31 DECCG uidanceonthe2011 Regulationsstatesthatthe2005 Regulations`alreadycover[ed]oilspillsand leaks' (n17) ,sincereg4ofthe2011 Regulationsenteredintoforceon29 March2011,as`aninstallationorpipelinewhi chisusedforthepurposesof,orinconnectionw ith,anyactivityinrespectofwhichtheSecret aryofStateexercisesfunctionsunderthePetr oleumAct1998'.Thisdefinitionavoidsatleas tsomeoftheuncertaintywhichattendsthe2002 Regulations, (a).34ibidreg4(i).352005 Regulationsreg3(1)readwithreg16(1)(a).36 2011 Regulationsreg4(h).37ibidreg6readwithreg 21(a)(i).38 Thelatterdefenceisunavailableifthecourti ssatisfiedeitherthatthethingdone`wasnota reasonablesteptotakeinthecircumstances'o rthatitwasnecessaryasamatterofurgencyfor thepreservationoflife,`butthenecessitywa sduetothefaultofthedefendant'.

10 39 Otheroffencesalsoexist, , (ConsequentialModifications)(OffshoreEnv ironmentalProtection)Order2010(SI2010/15 13).21 OffshorePetroleumActivities(OilPollution PreventionandControl)(Amendment)Regulati ons2011(SI2011/983)(the2011 Regulations).Anunofficialbuthelpfulversi onofthe2005 `Anewframeworkformanagingoildischargesin theoffshoreoilandgasindustry'(2005)2 OGEL1.`Producedwater' (July2013) (n17) ,NMolhoandNWisely`Governmentrevokesoilin producedwatertradingscheme'(15 July2008) `Consent' # ,PatersonandUsenmez(n1) ,onOGUK'swebsite,theregulationsarediscus sedundertheheading`Producedwaterdischarg eandreinjection'.ENVIRONMENTALLIABILITYF OROFFSHOREOILANDGASOPERATIONSINTHEUK(PAR T2):GORDON:(2013)25 ELM123 ENVIRONMENTALLAW& ,itspreviousrecord, ,itwouldseemthatthereisthepotential,wher ealargecompanyhasbehavedinanegregiousman nerandseriousen-vironmentaldamagehasbeen caused, ^inparticular,thedefencethatthedischarge orreleasecouldnotreasonablyhavebeenpreve nted^ (Aberdeen)vTaqaBratani, :intheabsenceofanypriorindicationthatthe equipmentwaslikelytofail, , `apubliclawcompensationscheme'which`prov idesforasystemthatrequirespublicauthorit iestoensurethatthepolluterrestoresthedam ageden-vironment'.