The risk of oil spill and discharge breaches continues to be a significant issue for the energy sector.
Duty holders should have in place robust measures to ensure compliance with discharge permits, including the preparation of Oil Pollution Emergency Plans and detailed processes for sampling, analysing and recording oil levels prior to, and during the course of, planned discharges.
Despite those measures, planned discharges from offshore installations can exceed permitted levels. Separately there is the risk of unplanned releases of oil and other pollutants into water.
In this update, we explain the role of the relevant regulators and their powers of investigation. We also explain how to manage a regulatory investigation.
The Offshore Petroleum Regulator for Environment & Decommissioning (OPRED)
OPRED is responsible for regulating environmental and decommissioning activity for offshore oil and gas operations in the UK. It is part of the Department of Business, Energy and Industrial Strategy (BEIS).
In practice, OPRED and the Health and Safety Executive (HSE) work in partnership to act as the Offshore Major Accident Regulator – the competent authority for regulating offshore major hazards.
In the event of an oil discharge incident, OPRED will lead the investigation. Their investigation will focus on whether the discharge failed to comply with the terms and conditions of a discharge permit. It is an offence under The Offshore Petroleum Activities (Oil Pollution Prevention and Control) Regulations 2005 (2005 Regulations) to discharge oil otherwise than in accordance with a discharge permit.
OPRED inspectors' powers of investigation include powers to board any offshore installation, give a direction requiring that any part of the offshore installation be left undisturbed, take measurements, photographs and samples, and require the production of records. It is worthing noting that the 2005 Regulations do not give inspectors the power to compel the production of any document protected by legal professional privilege.
OPRED inspectors also have powers to compel individuals to attend for interview and answer their questions. Of course, individuals may elect to attend voluntarily.
In the event of a compelled interview, any answer given by the person interviewed cannot be used to support criminal proceedings raised against that person. That said, the answers can be used to support the prosecution of others i.e. other individuals and / or organisations.
While an individual may be invited or compelled to attend for interview as a witness, their status may change to that of a suspect in the course of the interview. OPRED's Enforcement Policy explains: "If during…interview it becomes apparent that the individual may have committed an offence, the interview will be suspended and the individual will be advised to seek legal advice."
As explained, HSE and OPRED work in partnership. The HSE website confirms the respective roles: "BEIS's Offshore Petroleum Regulator for Environment & Decommissioning unit (OPRED) is responsible for implementing offshore environmental legislation. HSE's Energy Division (ED) is responsible for implementing health and safety legislation for offshore oil and gas operations." In this respect, there is a Memorandum of Understanding between OPRED and BEIS explaining that the two regulators will, generally speaking, share information with one another following an incident.
In practice, OPRED will often take the lead on offshore investigations keeping HSE updated. In the event HSE elects to actively investigate, it has similar powers of investigation to OPRED. Those powers are contained in the Health and Safety at Work etc Act 1974 and include the power to compel individuals to attend for interview – often known as the section 20 power.
Potential consequences of an incident
In the event OPRED decides to take further action having investigated a discharge incident, it can issue Enforcement notices (specifying steps to be taken to remedy a breach) and Prohibition notices (requiring specified activities to cease).
OPRED can also impose a civil monetary penalty under the Offshore Environmental Civil Sanctions Regulations 2018. OPRED's Enforcement Policy explains that "A variable monetary penalty is appropriate for serious offences under the 2018 Regulations where the imposition of the variable penalty may change the offender’s behaviour, deter others and/or lead to a faster resolution. A variable monetary penalty may be appropriate in cases where there is evidence of negligence or mismanagement." For discharging oil outwith the terms and conditions of a permit, the maximum level of civil monetary penalty that can currently be imposed is £50,000.
Alternatively, OPRED may decide to report matters to Scottish Crown Office and Procurator Fiscal Service (the Crown) being the sole prosecuting body in Scotland. The Crown will consider a report from OPRED and decide whether (1) there is sufficient evidence of criminal conduct and (2) it is in the public interest to raise criminal proceedings.
Managing regulatory investigations
It is important to have in place a process for managing regulatory investigations. That process should include seeking professional support at the outset to engage with the regulators, and to provide advice throughout the investigation.
Organisations in the energy sector often have internal investigations teams that are mobilised to investigate incidents in parallel to regulators. It is important to ensure that internal investigations are set up to ensure that legal professional privilege applies. As explained above, OPRED cannot require the production of documents protected by legal professional privilege. Terms of Reference documents should be prepared explaining the purpose and scope of the internal investigation as well as noting the instruction of legal support. The agreed Terms should be followed throughout an internal investigation.
If you have any questions on the powers of regulators and how to manage investigations, please do not hesitate to contact us.