HSE Proposes additional cost recovery for the energy industry

The Health and Safety Executive ("HSE") has published a consultation paper alongside proposals in relation to its cost recovery arrangements. The focus of the proposal is on certain energy sectors, where HSE considers that it requires extended powers to recover their full costs for all activities. The sectors subject to the proposal are as follows:

• Oil, gas and chemicals pipeline systems;
• Onshore oil, gas and geothermal exploration and production;
• Wind and marine energy (renewables).

In support of its proposal, the HSE has set out that these are highly specialised, high hazard sectors with strategic national importance from both an economic and social infrastructure perspective. Accordingly, the HSE considers that it is essential that their regulation of these sectors is adequately funded to allow them to take a proactive approach in ensuring that health and safety risks are properly managed.

The proposal would go further than the HSE's current cost recovery under Fee for Intervention ("FFI") which is only triggered when an inspector is of the opinion that a material breach of health and safety law has occurred. However, the HSE contends that FFI is not adequately suited to their approach to regulating these sectors which they say will require highly specialised staff and a significant amount of sector specific activity.

So what will be covered?

The change in policy will see the HSE move to a "full cost recovery" basis.

What the HSE proposes will mean that not only enforcement action or action triggered by a material breach of health and safety law will be cost recoverable. In addition to the traditional areas of cost recoverable work, assessment of safety cases, specifically, will be a recoverable cost. In addition, the necessary inspections of offshore installations will also now be subject to a financial charge as well as any enforcement action taken and/or incident investigation.

"Assessment" will cover all work undertaken in consideration of a safety case and/or design notification. Applications for exemptions from the safety case requirements will also be treated as part of the overall safety case assessment and will be subject to recoverable costs.

Inspection

In addition to the "assessment" all inspection activity will also be a cost recoverable activity. This will include any directly linked activity and planned inspections for conformity with the safety case and investigations. Cost recoverable activity will also cover the provision of general advice. However, the HSE has been keen to stress that they do not wish to deter duty holders from contacting them for advice and information and that a request for information or advice which can be dealt with, for example, by means of a brief telephone call would be exempt and not considered a cost recoverable activity. Anything more complicated or something which requires more of an investment of the inspector's time would be categorised as a cost recoverable activity. Such activity would be recorded as 'inspection'.

Enforcement action

The consultation paper sets out that work undertaken by the HSE inspectors in connection with the service of either an Improvement or Prohibition notice would be a recoverable cost activity. They propose that even in the event of a successful appeal against the issuing of such a notice, the inspector's time would still be cost recoverable. However, the time spent in dealing with the appeal would not be recoverable.

Fees

The fees proposed are on a "full costs basis" This means that all time spent by the inspector would be chargeable. For example, in the event of an inspection of an offshore installation, the HSE inspector is "on the clock" from the moment of check-in at the heliport until they land 'back on the beach'.

The following are the proposed hourly rates for each of the sectors:

If these proposals come into force, they will have a very significant cost impact on the industry. Clients and their contacts in the wider industry are encouraged to review the consultation paper which can be accessed via this link and to submit their responses directly to HSE. Consultation closes on Monday 4 September 2023.

For any questions or further discussion please contact Victoria Anderson.