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2014-05-26

Regulation of Operational Pollution from Offshore Oil

and Gas Activities in Ghana: Tales from Norway

Owusu, Emmanuel Kofi

Owusu, E. K. (2014). Regulation of Operational Pollution from Offshore Oil and Gas Activities in

Ghana: Tales from Norway (Unpublished master's thesis). University of Calgary, Calgary, AB.

doi:10.11575/PRISM/27588

http://hdl.handle.net/11023/1557

master thesis

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UNIVERSITY OF CALGARY

Regulation of Operational Pollution from Offshore Oil and Gas Activities in Ghana: Tales from

Norway

by

Emmanuel Kofi Owusu

A THESIS

SUBMITTED TO THE FACULTY OF GRADUATE STUDIES

IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE

DEGREE OF MASTER OF LAWS

FACULTY OF LAW

CALGARY, ALBERTA

MAY, 2014

© Emmanuel Kofi Owusu 2014

ii

Abstract

Operational pollution from offshore oil and gas exploration and production has become a major

environmental problem for governments. Regulators have adopted either prescriptive or

performance-based regulation to address this problem. This thesis examines both approaches and

argues that performance-based regulation is best suited for the purpose of regulating operational

pollution.

The thesis further identifies essential elements of effective performance-based regulation and

identifies the key elements in the Norwegian regime for regulating offshore operational pollution

including: the use of performance-based regulation; comprehensive legislative arrangement; and

a regulator with clearly defined roles and responsibilities. The thesis then explores the extent to

which these elements identified are present in the Ghanaian regime to regulate operational

pollution. The thesis concludes by recommending a transfer of the key elements from Norway to

Ghana to ensure that an effective regime is in place for regulating operational pollution from the

offshore oil and gas industry going forward.

iii

Acknowledgements

I am grateful to God for the strength and peace of mind to write this thesis despite the numerous

health issues I faced. My deep appreciation goes to Professor Sharon Mascher, my supervisor, for

her constant words of encouragement, wonderful guidance on my write-ups and prompt replies to

my draft whenever I sent them. Sharon, I am grateful for the wonderful supervision.

My sincerest gratitude goes to members of the Faculty of Law, Prof Nigel Bankes and Prof

Nickie Vlavanos for their help in directing me on where to find the appropriate materials for my

research. I am appreciative of the support of Brenda Tschanz and Eunice Wong who faithfully

answered all questions I had during the tenure of my studies at the Faculty of Law, University of

Calgary.

I also wish to acknowledge the Faculty of Graduate Studies, University of Calgary and the Hon.

N. D McDermid Fund for generously offering me scholarships to support my studies at the

University of Calgary. Additionally I am grateful for the support and encouragement from fellow

graduate students within the LL.M at the Faculty of Law especially, Nelson, Deji, Chi, Segun,

Garima, Guneet, Meriam, Ximena, Jennifer, Omar and Andrea, whose warm company and

occasional conversation served as an avenue of relaxation when I was tired.

My deepest gratitude also goes to my family; my Father, Samuel Owusu; my Mother, Agnes

Faibi; my siblings, Nana Kofi, Maame Adwoa and Kwame Annin for the love, encouragement

and support. Finally, I am grateful to friends and adopted family here in Calgary who made life

easier especially Ansbert Monuah, Irene Aboagye, Nana Yaw Korang, Peter Ponsu, Mariama

Zaami, Rita Sewornu, Charles Odame-Ankrah and family, Edward and Faustina Opoku-

Ameyaw.

iv

Dedication

To Kwame Annin and Nhyira, for the gift, the joy, inspiration and motivation.

v

Table of Contents

Abstract…………..…………………………………………………………………………..……ii

Acknowledgement...……………………………………………………………………….……..iii

Dedication…………………………………………………………………………………….…..iv

Table of Contents……………………………………………………………………………….…v

CHAPTER ONE………………………………………………………………….…………….…1

INTRODUCTION AND BACKGROUND……………………………………….……………...1

1.1 Introduction…………………………………………………………….……………...1

1.2 Research Problem…………………………………………………….…………….…5

1.3 Research Question…………………………………………………………………...10

1.4 Methodology………………………………………………….……………….……..10

1.5 Justification of the Choice of Norway as a Comparator……….………………….…12

1.6 Legal Transplant Theory…...………………….…………………………………......14

1.6.1 Legal Transplant Theory in Ghana…………….…………………………………..17

1.7 Structure of Thesis…………………………….……………………………………..19

CHAPTER TWO………………………………………………………………………………...22

ACHIEVING A PERFORMANCE BASED REGULATORY SYSTEM OF OFFSHORE

ENVIRONMENTAL REGULATION…………………………………………………………..22

2.1 Introduction…………………………………………………………………………..22

2.2 The Nature of Environmental Regulation……………………………………………23

2.2.1 What is regulation?...................................................................................................23

2.2.2 Who should regulate?...............................................................................................24

2.2.3 Justification of Environmental Regulation………………………………………...26

2.2.4 Effects of Environmental Regulation………………………………………………28

2.3 Prescriptive and Performance-Based Regulation……………………….……………29

vi

2.3.1 Prescriptive-Based Regulation…………………………………….…………….…30

2.3.2 Performance-Based Regulation………………………………………………........32

2.3.3 Essential Elements of Performance-Based Regulation……………………….........35

2.3.4 Advantages and Disadvantages of Performance-Based Regulation………….........37

2.3.5 Implementing Performance-Based Regulation……………………………….........40

2.4 Conclusion…………………………………………………………………….……..41

CHAPTER THREE……………………………………………………………………………...43

EXAMINATION OF THE INTERNATIONAL AND THE NORWEGIAN LEGAL

FRAMEWORKS FOR REGULATING OFFSHORE OPERATIONAL POLLUTION………43

3.1 Introduction………………………………………………………………………......43

3.2 Examination of International Regime Regulating Offshore Operational

Pollution………………………………………………………………………………….44

3.2.1 Introduction………………………………………………………………………...44

3.3 Review of Conventions……………………………………………………………....45

3.3.1 UNCLOS…...………………………….……………………….…………………..45

3.3.2 London Dumping Convention……………………………………………….……..46

3.3.3 MARPOL 73/78………………………..……….……………………………..……47

3.3.4 Abidjan Convention………………………………………………………………..48

3.4 Conclusion on the International Regime for Regulating Offshore Operational

Pollution……..…………………………………………………………………………...49

3.5 Petroleum Resources in Norway: An Overview …………………………………….50

3.6 Ownership and Control of Petroleum Resources…………………………………….52

3.7 Environmental Management in Norway……………………………………………..53

3.7.1 State of the Environment…………………………………………………………..53

3.7.2 Environmental Policy………………………………………………………………54

3.8 Regulating Operational Pollution……………………………………………………55

vii

3.8.1 Introduction………………………………………………………………………...55

3.8.2 Operational Pollution in Norway’s Offshore………………………………………56

3.8.3 Features of the Regulatory Regime………………………………………………...57

3.8.3.1 Regulatory Approach……………………………………………….....................57

(A) Initial Regulatory Approach…………………………………………………………57

(B) Current Regulatory Approach………………………………………………….........58

3.8.3.2 Institutional Arrangement………………………………………………………..60

3.8.3.3 Comprehensive Legal Arrangement……………………………………………..62

3.8.3.3.1 Pollution Control Act…………………………………………………………..63

3.8.3.3.2 Environmental Impact Assessment under the Pollution Control Act………….68

3.8.3.3.3 Compliance Monitoring and Enforcement under the Pollution Control Act…..69

3.9 Conclusion…………………………………………………………………………...71

CHAPTER FOUR..………………………………………………………………………………73

EXAMINATION OF THE GHANAIAN LEGAL AND REGULATORY FRAMEWORK FOR

REGULATING OFFSHORE OPERATIONAL POLLUTION…………………………………73

4.1 Introduction…………………………………………………………………………..73

4.2 Structure of Chapter………………………………………………………………….73

4.3 Ghana: History and Overview of the Petroleum Industry……………………….......74

4.4 Ownership and Control of Petroleum Resources………………………………….....76

4.5 Environmental Management in Ghana………………………………………………78

4.5.1 State of the Environment………………………………………………………..…79

4.5.2 National Environmental Policy…………………………………………………….80

4.6 Regulating Operational Pollution…………………………………………………....81

4.6.1 Introduction……………………………………………………………………..….81

4.7 Features of the Regulatory Regime………………………………………………......82

4.7.1 Regulatory Approach ……………………………………………………….……..82

viii

4.7.2 Institutional Arrangement and Capacity…………………………………….……..83

(A) Environmental Protection Agency…………………………………………….…….83

(B) Petroleum Commission………………………………………………………….…..85

4.7.3 Legal Arrangement…………………………………………………………...……87

4.7.3.1 Petroleum Exploration and Production Law (PNDCL 84)…………………...…87

4.7.3.2 Environmental Protection Agency Act (Act 490)………………………….…......89

4.7.3.3 Environmental Impact Assessment under Act 490……………………….…..….89

4.7.3.4 Oil in Navigable Water (Act 235)…………………………………….……..…...92

4.7.3.5 Marine Pollution Bill………….……………………………………………...….93

4.7.4 Compliance and Enforcement..………………………………………………..…...95

4.8 Conclusion………….……………………………………………………………......98

CHAPTER FIVE………………………………………………………………………….…......99

OVERVIEW, RECOMMENDATIONS AND CONCLUSION.................................................100

5.1 Introduction…………………………………………………………………….…...100

5.2 Overview of Thesis………………………………………………………………....101

5.3 Recommendations from the Norwegian Regime………………………………...…103

5.4 Conclusion……………………………………………………………………….....105

5.5 Recommendations for Further Research…………………………………………....106

BIBLIOGRAPHY……………………………………………………………………...……….107

1

CHAPTER ONE

INTRODUCTION AND BACKGROUND

1.1 Introduction

The offshore oil and gas industry has rapidly expanded since the first oil was

produced in the 1940s.1 Offshore oil production has grown from one million barrels per day

(mb/d) in the 1960s to 25mb/d in 2005, representing a third of the world crude oil

production.2 In the past two decades, the offshore industry has become an increasingly

important source of world oil production due to the stagnant growth recorded from onshore

oil production and the paucity of new onshore discoveries.3 Accompanying this increase in

offshore oil production is the potential for economic growth. Many countries expect to

generate significant revenue from this industry.4 As a result, many governments have turned

1 Ivan Sandrea & Rafael Sandrea, “Global Offshore Oil: Geological Setting of Producing Provinces, E & P

trends, URR and Medium Term Supply Outlook” (2007) Oil and Gas Journal 5 [Sandrea & Sandrea]. 2 Ibid. With recent discoveries and production in West Africa countries like Ghana and Ivory Coast, the figure is

expected to increase. Ghana for instance has an estimated oil reserve of 1.8million barrel from seven offshore

wells with more wells expected to be discovered as further exploratory work is done in other areas offshore.

Ghana Oil Info, Ghana Oil Facts, online: Ghana Oil Info <http://www.ghanaoilinfo.com/?page=facts>. 3 Sandrea & Sandrea ibid, appendix 2 on page 24; Within the past decade, over half of oil and gas reserves were

discovered offshore, Alex Chakhamkhchev & Peter Rushworth, Global Overview of Offshore oil & gas

operations for 2005-2009 online: Offshore Magazine < http://www.offshore-mag.com/articles/print/volume-

70/issue-50/international-e_p/global-overview-of.html > [Chakhamkhchev & Rushworth]; With the advent of

fracking (an activity which “involves pumping water, sand and some trace chemicals under high pressure into a

completed wellbore to create fissures” that allow oil or gas to flow into the well) onshore oil production is

increasing. In the Unites States (US) official estimates of recoverable natural gas have doubled from 2010 to

2011 due to the projected influence of fracking. See Kathleen Hartnett White, “The Fracas about Fracking”

(2011) 63:11 National Review 38. 4 For example conservative estimates indicate that in about seven years of initial production in the US Outer

Continental Shelf will produce approximately $4.8billion in coastal state and local tax revenue and $11.1billion

in federal tax income. This estimation is without the $156billion that the US federal government has collected in

terms of lease and royalty payments. Joseph Mason, The Economic Contribution of Increased Offshore Oil

Exploration and Production to Regional and National Economies, online: American Energy Alliance <

http://www.americanenergyalliance.org/images/aea_offshore_updated_final.pdf> at 19.

2

their attention to their offshore and are currently engaged in exploratory activities hoping to

discover oil.5 Ghana is no exception.

Despite the potential economic benefits, a variety of adverse environmental impacts

are associated with offshore oil and gas exploration and production activities, particularly in

the form of marine pollution. These environmental impacts have attracted significant

attention, leading many governments to put in place stringent regulatory measures.6 Most key

actors and decision-makers are of the opinion that for political, economic and more

importantly environmental protection reasons, this form of activity should be strictly

controlled.7

From the literature, it is possible to distinguish three forms of pollution derived from

offshore exploration and production (E&P) activities:

[t]he first form, intentional pollution, is less common because any loss of

hydrocarbons contravenes commercial interests. The second category,

accidental pollution, derives from blow-outs, pipeline ruptures, tanker

spillages and collisions when ships are docking the platforms. This form of

pollution can have substantial impacts on both the environment and the oil and

gas industry. Finally, there is operational pollution, that is pollution arising as

a result of the normal operation of offshore installations. Though this is a

relatively recent issue, it is attracting growing attention from governments,

industry, environmental activists and increasingly the wider public in many

parts of the world.8

5 Sandrea & Sandrea, supra note 1 at 24. The Persia Gulf topped the list of offshore producers in 2005 followed

by the North Sea. Governments in West African countries like Ghana and Ivory Coast have made commercial

discoveries in their offshore; See Chakhamkhchev & Rushworth, supra note 3. 6 Sergei Vinogradov & Jay Paul Wagner “International legal Regime for the protection of the Marine

Environment Against Operational Pollution from Offshore Petroleum Activities” in Zhuiguo Gao, ed,

Environmental Regulation of Oil and Gas (London: Kluwer Law International, 1998) 93. 7 Ibid.

8 Ibid 93-94.

3

Operational pollution, which is the focus of this thesis, poses many risks, some of

which may be potentially catastrophic.9 During the exploration stage, operational pollution

can occur when drilling discharges composed of drilling fluids and cuttings, which may

contain hydrocarbons and other active chemicals, are released into the marine environment.10

Operational pollution may also occur during the production stage, at which point the impact

has the potential to be much more severe, as the main activity here involves the active

recovery of hydrocarbons from producing formations. The release of produced water is the

largest source of pollution in this stage.11

Other discharges also include formation water from

the petroleum reservoir, chemical biocides, cement residues, well-completion and work-over

fluids, blow-out preventer fluids, gas and oil processing wastes, desalination brine.12

Even though operational pollution is a relatively minor source of marine pollution

compared to shipping and land based activities, it nevertheless has harmful effects on the

oceans.13

The cumulative effects of such operational discharges are injurious to the marine

environment.14

In the North Sea for example, 14-27 % of oil discharged from 1984 to 1990

originated from operational pollution.15

9 Supra, note 6 at 96.

10 Ibid.

11 Ibid; Produce water is the water produced jointly with oil during the oil recovery. It is composed of dispersed

oil, dissolved organic and inorganic compounds and traces of chemicals added during the production of oil.

Zhiguo Zao & Ibibia L Worika, “Petroleum Environmental Glossary” in Zhiguo Zao, ed, Environmental

Regulation of Oil and Gas (London: Kluwer Law International, 1998) 547; Oil and Gas Uk, Produced Water,

online: Oil and Gas UK <http://www.oilandgasuk.co.uk/knowledgecentre/producedwater.cfm>. 12

Supra, note 6 at 96. 13

Ibid at 97. 14

Ibid. 15

Ibid.

4

Governments have adopted two approaches to the regulation of operational pollution

in the offshore industry: performance-based and prescriptive-based regulation.16

According

to Coglianese, Nash & Omlstead, a performance-based regulation or standard “specifies the

outcome required, but leaves the specific measures to achieve that outcome up to the

discretion of the regulated entity.”17

This kind of regulation is based on regulating to achieve

specified results.18

The main concern therefore of performance-based regulation is

prescribing the desired outcome for the regulated entity to achieve.

A prescriptive-based approach or regulation, on the other hand, tends by nature to

specify exactly the kind of technology or means that should be used to achieve certain

results.19

The focus of this type of regulation, therefore, is not on the desired outcomes but

the means used to achieve those outcomes.20

A prescriptive approach presupposes the fact

that adherence to those specified technologies or means will lead to an achievement of the

desired outcomes.21

There is a great deal of discussion in the literature relating to which of the two

approaches is best suited for environmental regulation of offshore petroleum exploration and

production. Countries such as the United States and Norway have adopted the prescriptive

16

Anne L Hanson, “Offshore Drilling in the United States and Norway; A Comparison of Prescriptive and

Performance-Based Approaches to Safety and Environmental Regulation” (2011) 23 Geo. Int’l Envtl. L. Rev

555 at 556 [Hanson]. 17

Cory Coglianese, Jennifer Nash & Todd Olmstead, “Performance-Based Regulation: Prospects and

Limitations in Health, Safety and Environmental Protection” (2003) 55 Admin L. Rev. 705 at 709 [Coglianese,

Nash & Olmstead]. 18

Peter May, “Performance-Based Regulation and Regulatory Regimes: The Saga of Leaky Buildings” (2003)

25:4 Law & Policy 381 [May, Leaky Buildings]. 19

Hanson, supra note 16 at 557. “For instance, environmental and safety regulations under a prescriptive-based

approach might require an operator to install specific pollution control equipment that is proven to keep

emissions at an acceptable level, or to employ a particular safety mechanism on all rigs.” 20

Peter May, “Regulatory Regimes and Accountability” (2007) 1 Regulation and Governance 8 at 9. 21

May Leaky Buildings, supra note 18; Coglianese, Nash & Olmstead, supra note 17 at 708.

5

and performance-based approaches respectively.22

Both approaches have been critiqued in

the literature for their strengths and weakness, yet the performance-based approach is

preferred to the prescriptive-based approach because of its ability to better achieve set

environmental outcomes.23

The United States (US) Presidential Commission on the British

Petroleum (BP) Oil Spill recommends in its final report that the government agencies should

shift their focus from prescriptive-based regulation to performance-based regulation.24

This

thesis will argue that the performance-based approach is better suited for offshore

environmental regulation.

1.2 Research Problem

The Republic of Ghana is located in the western part of Africa bordering the Gulf of

Guinea to the south, Togo to the east and Ivory Coast to the West.25

It has an area size of

238,533 square kilometers (km²) and covers approximately 539 kilometers (km) of

coastline.26

Ghana has numerous natural resources such as gold, bauxite, timber and in recent

times, has discovered oil and gas in commercial quantities.27

22

Hanson, supra note 16 at 556. 23

Ibid, Hanson argues that the highly-based prescriptive US system is a failure and advocates employing

performance approaches as done successfully by countries such as Norway. Steinzor however argues that

performance-based regulations (or safety cases as she calls it) have failed in the British regime and should

therefore not be implemented in the US. See Reina Steinzor, “Lessons from the North Sea: Should Safety Cases

Come to America?” (2011) 38 B C Envtl Aff L Rev 417. Steinzor’s argument is primarily based on the fact that

British Petroleum (BP), the company involved in the Macondo Oil disaster, is a British formed company and

has extensive experiences in the British Offshore system. If the Safety Case approach was effective, BP would

not have spilled that large quantity of oil. This argument is untenable because oil companies operate within the

context of the regulations governing their area of operations not where they are incorporated. Hence the failure

of BP in the Macondo disaster is attruable to the shortfalls of the US prescriptive-based regulatory approach. 24

Online: National Commission on the BP Deep Horizon Oil Spill and Offshore Drilling

<http://www.oilspillcommission.gov/sites/default/files/documents/FinalReportChapter9.pdf> 25

Tullow Oil Ghana Limited, Introduction to Ghana, online: Tullow Oil Ghana Limited

<http://www.tullowoil.com/ghana/index.asp?pageid=27>. 26

Central Intelligence Agency, The World Factbook, Ghana, online : Central Intelligence Agency

<https://www.cia.gov/library/publications/the-world-factbook/geos/gh.html>. 27

Ibid.

6

Even though oil and gas production in Ghana is of recent origin, initial exploration

for oil in the country dates as far back as 1896 where several wells were drilled in Half

Assini, a town in the Western Region of Ghana.28

Between 1978 and 1985, the onshore

Saltpond field was producing oil but in relatively small quantities.29

Ghana’s discovery of

commercial quantities of oil in its offshore marked a huge milestone in the development of

the country’s energy sector.30

On the 15th of December 2010, Ghana joined the community

of oil-producing countries by commissioning the Jubilee Oil Field operations. The Jubilee

Oil Field is found in the Deep Water Tano and West Cape Three Points blocks, about 60 km

offshore Ghana and 130 km south-west of Takoradi, the regional capital of the Western

Region.31

It falls within the 200 Nautical Miles (NM) exclusive economic zone prescribed by

the United Nations Convention of the Law of the Sea (UNCLOS) as being accessible to

states.32

In 2012, more discoveries were made in the Ntome fields at Wawa33

and the Pecan-1

field found in the Deep Water Tano basin.34

There is an estimated 700 million barrels of oil

28

“Ghana National Petroleum Corporation (GNPC), Exploration & Production, online: GNPC<

http://www.gnpcghana.com/activities/explorationIntro.asp> 29

It is estimated that the Saltpond field produced about 3.47 million barrels of oil during its active lifespan.

Currently it is producing about 600 barrels of oil per day; supra, note 25. 30

Carly Ahiable, Feature: Oil gives Ghana Hope, online: MyJoyOnline

< http://opinion.myjoyonline.com/pages/feature/201010/53631.php >. The Ghana National Petroleum Company

(GNPC) together with the oil field partners (also known as jubilee partners) announced the discovery of oil in

commercial quantities in June 2007 after decades of exploration dating as far back as 1970. 31

George Agyei et al, “Oil Industry Activities in Ghana: Community Perceptions and Sustainable Solutions”

(2012) 4:5 Research Journal of Environmental and Earth Sciences 583 at 584. 32

Part V – Exclusive Economic Zone, Article 56 of United Nation Convention on the Law of the Sea

(UNCLOS). States have exclusive right to the use of natural resources found within this zone. 33

Kosmos Energy, Deep Tano Block, online: Kosmos Energy < http://www.kosmosenergy.com/operations-

ghana-deepwater-tano.php> 34

MyJoyOnline, Ghana Discovers More Oil at Cape Three Points, online: MyJoyOnline

<http://business.myjoyonline.com/pages/news/201212/98915.php>

7

reserves with the possibility of new discoveries being made.35

The government of Ghana

projects oil revenues of approximately US$777 million in 2014 alone.36

Despite the promise associated with the industry, the production of offshore oil and

gas poses significant risks to the marine environment. The most obvious risk that of

accidental pollution from of drilling blowouts and oil spills, which leads to the release of

toxic substances that could adversely affect the marine and coastal environment of Ghana

and, potentially, neighbouring countries. However, in addition to the risk of accidental

pollution, ongoing operational pollution associated with routine offshore drilling and

production operations also releases toxic substances into the water.37

Emissions into the

atmosphere of toxic chemicals during gas flaring also have adverse health effects on marine

life and residents living in nearby communities.38

In commenting on the environmental risks

arising as a result of petroleum activities, Williams and O’Connor state that:

[r]isks to the environment may arise from the release of contaminants into the

environment as a result of failure of or discharge of petroleum production

transfer or storage facilities. … These effects may be aesthetic (visual or

odour) or may be reflected in distressed vegetation or mortality within a

particular population of animals, fish and other organisms.39

35

Extractive Industries Transparency Initiative, Ghana, online: Extractive Industries Transparency Initiative <

http://eiti.org/Ghana >. 36

This was indicated by the Minister of Finance in the 2014 budget statement presented to the parliament of

Ghana. The estimates are based on an estimated average crude oil price of US$93.33 per barrel and a production

of 93,029 barrels per day. Ministry of Finance and Economic Planning, The 2014 Budget Statement and

Economic Policy, online: Ministry of Finance and Economic Planning < http://www.mofep.gov.gh/sites/default/files/budget/2014_Budget_Statement_0.pdf >. 37

See Zhuiguo Gao “Environmental Regulation of Oil and Gas in the Twentieth Century and Beyond: An

Introduction and Overview” in Zhuiguo Gao, ed, Environmental Regulation of Oil and Gas, (Kluwer Law

International, 1998) 3 at 5. The author in a table identifies a list of petroleum environmental problems in

upstream stream operations. 38

Samuel Marfo-Sau, Is Ghana Prepared to Manage the Potential Environmental Challenges of an Oil and

Gas Industry? (LL.M, University of Dundee, 2009 ) [unpublished]. 39

DR Williams & MJR O’Connor, “Developing Site Reclamation Strategies: A Risk Management Approach”

in D. Schotte, ed, Site Reclamation and Abandonment in the Petroleum Industry (Toronto: Insight Press, 1993)

191 at 195.

8

Before large scale oil production started, Ghanaians and civil society organizations

were apprehensive about the likelihood of the aforementioned environmental disasters

occurring. The government was encouraged to implement existing laws and enact new ones

to meet the environmental challenges associated with the large-scale offshore oil and gas

operation.40

However, after commercial production commenced in the Jubilee Field, laws

relating to the protection of the marine environment were not enacted. The Government of

Ghana introduced three (3) bills to Parliament; key among them was the Marine Pollution

Bill, 2010 which focuses on pollution of the marine environment. However, this Bill has still

not been passed into law after almost three years of oil production.41

This is despite the fact

that Tullow Oil, the main operator of the joint venture in the Jubilee Field, identified the

absence of environmental and safety regulations as one of the key challenges of Ghana’s

young offshore oil and gas industry.42

A few years after production commenced in the Jubilee Field, disaster struck; oil

spillage by KOSMOS43

was said to have occurred in Ghana’s territorial waters. It was

reported that during its routine operations KOSMOS “spilled 699 barrels of mud which

contains poisonous heavy metals on three occasions that could affect Ghana’s ecosystem.”44

Tullow Oil was also reported to have spilled some quantity of oil during its operations in the

40

Ghana Oil Watch, Communiqué Issued by Christian Council of Ghana and Ghana Pentecostal Council,

online: Ghana Oil Watch <http://ghanaoilwatch.org/images/Articles/communique.pdf > especially paragraph 7

and 10; Christiane Bagdley, Ghana Community Fears Oil Spills, online: Pipe Line Dreams

<http://www.pipelinedreams.org/2012/01/ghanas-fishing-communities-fear-oil-spills>. 41

The Petroleum Revenue Management Bill, 2010 (PRM), Petroleum (Exploration and Production) Bill, 2010

and the Marine Pollution Bill were laid before parliament. Only the PRM has been enacted leaving many to

wonder whether government takes the issue of marine environment protection seriously. Ghana Maritime

Authority, Marine Pollution Act before House, online: Ghana Maritime Authority <

http://www.ghanamaritime.org/en/posts/marine-pollution-act-before-house26.php> 42

Graham Brunton, Environment, Health and Safety in Ghana, online: Tullow Oil Ghana Limited

<http://www.tullowoil.com/files/pdf/ghana/Environment-Health-Safety-Ghana.pdf>. 43

One of the joint venture partners in Ghana’s oil fields. 44

MyJoyOnline, Comment: Oil Spills in Ghana and the Kosmos Energy’s Snub: Averting the Gulf Coast

Disaster, online: My Joy Online <http://opinion.myjoyonline.com/pages/feature/201104/63635.php >.

9

Jubilee Field.45

The Environmental Protection Agency (EPA), the state environmental

regulatory body, was reportedly unaware of either of these incidents. The Government of

Ghana set up an inter-Ministerial Committee whose duty was to both determine whether

KOSMOS was at fault for the release of mud in the Jubilee Field and if necessary, prescribe

sanctions. The Committee found KOSMOS at fault and advised that it should pay a $35

million fine. KOSMOS, however, refused to pay arguing that the fine was “totally unlawful,

unconstitutional, ultra vires and without basis" and that “the Minister had no power under the

Ghanaian Constitution or any other law of the country to impose a fine on any person in the

event of an oil spillage”. This led to a protracted dispute between the company and the

government of Ghana.46

The incidents discussed above lend credence to the fact that the Ghanaian regulatory

regime does not effectively regulate operational pollution arising from offshore petroleum

exploration and production. Consequently there is the urgent need for regulatory action to

rectify the situation and ensure an effective regime for the regulation of operational pollution

arising from the emerging offshore oil and gas industry.47

45

WakeUp Ghana, Oil Spills at Jubilee Oil Field, online: WakeUp Ghana

<http://www.wakeupghana.com/2010/01/07/oil-spills-at-jubilee-oil-field.html >; Platform, Tullow Oil’s Foul

Play in Ghana, online: <http://platformlondon.org/2012/06/28/tullow-oils-foul-play-in-ghana/>. 46

Supra note 44, Government, seemingly persuaded by this challenge to their authority, backed down from its

claims and is alleged to have reached an agreement with KOSMOS which was never disclosed publicly. 47

Unless otherwise stated, reference in any part of this thesis to the regulatory regime means the offshore

environmental regulatory regime.

10

1.3 Research Question

Drawing on lessons from Norway, what regulatory measures should Ghana

implement to effectively regulate operational pollution arising from offshore oil and gas

activities?

1.4 Methodology

Doctrinal analysis of literature reviews and comparative methodology will be used to

answer the research question. The literature review sets out the context of this thesis, clearly

demarcates what is and is not within the scope of investigation and justifies those decisions.48

I review the literature on prescriptive and performance-based regulation and identify the

strengths and weaknesses of each approach and conclude that performance-based regulation

is best suited for the regulation of offshore operational pollution. I further identify the key

elements of the performance-based approach and discuss how this type of regulation can be

successfully implemented. The literature considered in this thesis was selected based on

results generated from the search of specific phrases or terminologies in legal databases,49

the

relevance of the literature and their citation in scholarly journals.

I further discuss the Norwegian approach to regulating operational pollution by

identifying the key elements in their regime. I note the use of performance-based regulation,

a comprehensive legislative arrangement and an effective compliance and enforcement

mechanism as key elements of their regulatory regime. A brief historical background of

48

David N Boote & Penny Beile, “Scholars before Researchers: On the centrality of the Dissertation Literature

Review in Research Preparation” (2005)34:6 Educational Researcher 3 at 4. 49

Terms like “prescriptive regulation” “performance-based regulations” “environmental regulation” “regulatory

approaches” were searched through online legal databases such as LegalTrac, HeinOnline, Westlaw, Quicklaw,

etc.

11

Ghana’s environmental law regime is later described and the current legal framework is

analyzed. In this regard, the Environmental Protection Agency Act, 1994 (Act 490),

regulations enacted under the authority of Act 490 and other relevant legislations and policy

documents emanating from the Ministry of Environment, Science, Technology and

Innovation, Ghana are considered. Information acquired from secondary sources, especially

available Ghanaian literature, are also examined. A comparative approach is employed to

assess how the key elements identified from the Norwegian regime are addressed under the

Ghanaian regime. This approach is apt because it effectively employs analytical skills to

draw out the similarities and differences between legal systems or parts of the legal systems

under comparison.50

It also enlarges the “supply of solutions” to problems which a domestic

legal system cannot adequately solve.51

Statutory provisions, subsidiary regulations and

policies of regulatory bodies in both jurisdictions will be used in undertaking the comparison.

Scholarly secondary literature and information on both regulatory regimes will be used as

well.

Based on the comparative analysis in relation to the elements identified and drawing

on the strengths of the Norwegian regime, this thesis will conclude by making specific

recommendations that best fit Ghana’s offshore oil and gas industry to ensure the effective

regulation of operational pollution.

50

John C Reitz, “How to Do Comparative Law” (1998) 46 Am J Comp L 617 at 620. 51

Kai Schadbach, “The Benefits of Comparative Law: A Continental European View” (1998) 16 BU Int’l L J

331 at 331 at 350 [Schadbach].

12

1.5 Justification of the Choice of Norway as a Comparator

A preliminary question is why the choice of Norway as a comparator? To determine

which regulatory regime will provide the best lessons for Ghana to adopt in regulating

operational pollution in its offshore oil and gas industry, it is important to explore a regime

that effectively addresses similar challenges in its offshore oil and gas industry, shows

correlations in its legal system and presents a politically viable option.

In the recently published 2012 Environmental Performance Index (EPI) by Yale

University, which ranks how countries perform on the issues of protection of human health

from environmental harm and protection of ecosystems, Norway ranked third as one of the

strongest performers over the past decade, while Ghana ranked a disappointing ninety-first,

as one of the weakest performers.52

More specifically, the Norwegian oil and gas industry is

seen as one of the most successful globally due to the prudent management of the resource

and the good record it has in safety and environmental regulation.53

Another reason for the choice of Norway as a comparator for Ghana is the

commonalities between the legal systems of both countries. It is not uncommon to transfer

principles, laws or concepts from one country to another where appropriate to do so; an

52

Environmental Performance Index, EPI Rankings, online: Environmental Performance Index <

http://epi.yale.edu/sites/default/files/downloads/2012-epi-full-report_0.pdf>. Switzerland and Latvia are the two

countries to have outperformed Norway on the rankings. Switzerland fails as a better option than Norway

because it is a landlocked country and does not have an offshore oil and gas industry, see European

Environment Agency, Switzerland (Country Profile), online: European Environment Agency

<http://www.eea.europa.eu/soer/countries/ch/soertopic_view?topic=country%20introduction >. Latvia cannot

also serve the purposes of a comparator because it does not currently operate an offshore oil and gas industry

though located along the Baltic Sea. See Princeton University, Geography of Latvia, online: Princeton

University < http://www.princeton.edu/~achaney/tmve/wiki100k/docs/Geography_of_Latvia.html>. 53

Ishmael Setsoafia Amegah, Regulation of the Petroleum Industry; A Tale from the North Sea-Norway, online:

Ghana Oil Watch< http://ghanaoilwatch.org/index.php/ghana-oil-and-gas-news/282>.

13

approach which can be beneficial to the receiving state.54

However, sharp differences

between two countries may make it virtually impossible to adapt legal lessons from one

jurisdiction to the other. A perfect fit is not possible in all cases but the country chosen

should have similarities with the receiving state to aid local implementation of the

transplanted principles/ laws.55

In relation to this thesis, Norway is a unitary state just like

Ghana but with a constitutional monarch. It is a civil law jurisdiction with a written

constitution which limits the power of government, practices separation of powers and

promotes the principle of the sovereignty of its citizenry.56

Ghana, on the other hand, is a

common law jurisdiction, but has a written constitution, practices separation of powers and

promotes the sovereignty of its citizenry just like Norway.57

Despite the difference in legal

systems, lessons to be transferred from Norway are not the legal systems in its entirety but

the key concepts which have aided them solve the problem of operational pollution.

Therefore the limited similarities in both legal regimes support such a transfer.

Another factor that influenced the choice of Norway as a comparator for this thesis is

political expediency. The Government of Ghana, through parliament, has sole responsibility

for making laws.58

As such, the country of choice must be one that Ghana has good bilateral

relations with. It is instructive to note that the government of Ghana, through the EPA, is

collaborating with its counterpart from Norway to formulate rules on environmental impact

54

Odumosu Ibironke Tinuola, Reforming Gas Flaring Laws in Nigeria: the Transferability of the Alberta

Regulatory Framework (LLM Thesis, University of Calgary, 2005) [unpublished]. 55

Ibid. A discussion of the legal transplant theory is carried out below. 56

Constitution of Norway. 57

Constitution of the Republic of Ghana, 1992 [1992 Constitution]. Specifically, see the preamble, articles 57,

93 and 125. 58

Article 93 of the 1992 Constitution.

14

assessment (EIA) for oil and gas companies.59

Since the Ghanaian government has already

initiated collaborative steps with its Norwegian counterparts, it is only prudent to follow their

lead.

A more important justification is that after more than fifty years of oil exploration and

production, Norway’s approach to regulation of its offshore oil and gas industry on the

Norwegian Continental Shelf (NCS) is respected by industry players and is recognized by

many as a leader in offshore environmental regulation.60

To achieve this, Norway employed

a performance-based regulatory approach that shifted the burden of ensuring “a high level of

safety and environmental protection from the regulator to the operator.”61

It is important to

note that both countries have offshore oil and gas industries as such Ghana will be facing

similar problems experienced by Norway when it started its offshore operations.62

1.6 Legal Transplant Theory

According to Schadbach, comparative methodology provides knowledge of the

workings of a different legal system63

in order to understand one’s legal system64

and

59

Norwegiam Petroleum Directorate, Ghana, online: Norwegian Petroleum Directorate <

http://www.npd.no/en/Publications/Reports/Oil-for-development-2010/OfD-projects-Core-countries/Ghana >.

Norway in 2008 made Ghana a core country under the Ofd program and provided technical assistance in the

technical development of Jubilee Fields. 60

See Int'l Energy Agency [IEA], Energy Policies of lEA Countries: Norway 2005 Review, at 28, (OECD/IEA

2005), “To achieve environmental sustainability, the government's aim is to limit energy use in Norway through

its policies to a level below that which would occur without an active government policy, and to produce

petroleum assets with a minimum impact on the environment and safety. Consequently, the NCS and the

Barents Sea are areas with very high standards of environmental regulation for petroleum production.” 61

Hanson, supra note 16 at 556. 62

In 1973, the Ministry of Petroleum and Energy (MPE) established the Norwegian Petroleum Directorate

(NPD) whose main duty was to oversee oil development in Norway’s offshore. The NPD failed in performing

its duties because it could not keep up with the rate of development of the industry. After the Bravo blowout in

1977 and the Alexander L. Kielland disaster in 1980, Norway overhauled its regime and passed the 1983

Petroleum Activities Act which adopted a performance-based approach to regulation, see Hanson, supra 13 at

565. 63

Supra note 51 at 335.

15

enlarges “the supply of solutions” available to solve a legal problem.65

A close nexus exists

between comparative methodology and the idea of legal transplant as the latter is the

underlining theory which supports the transfer of legal rules once a comparison of two legal

systems is seen as efficient.66

Legal transplants simply connote the idea of borrowing or

movement of legal rules from one system to another.67

It may either be the movement of an

entire legal system or a single rule in that system.68

Transplants can also occur within the

same legal system from one branch of law to another or from international law to domestic

law.69

The possibility of legal transplant is a highly contested issue. Based on the literature,

there exist two main schools of thoughts on the viability of legal transplants occurring.70

The

64

Ibid at 344. The knowledge acquired from a different legal system in how they deal with certain common

legal problems and issues helps one to effectively comprehend the workings of his legal system. Pierre Lepaulle

states that “I never completely understood the French law before coming to the United States and studying

another law.” Pierre Lepaulle, “The function of Comparative Law- With a Critique of Sociological

Jurisprudence” (1922)35 Harv L Rev 838 at 858. 65

Schadbach, ibid at 350. Domestic law cannot at all times provide solutions to problems in its legal system,

looking to other legal systems will increase the bag of solutions available. Schadbach cites the example of

cyberlaw. He argues that since internet originated from the United States, it will be advisable and efficient for

other countries where the internet has become a new phenomenon to look to the US especially their

Communications Decency Act 47 USC 1996 to effectively deal with some of the early problems that might

arise. 66

M Zongling Shen, “Legal Transplant and Comparative Law” (1999) 54:4 RIDC 583. 67

Alan Watson Legal Transplants: An Approach to Comparative Law 2nd

ed. (Atlanta: University of Georgia

Press, 1993) at 21.[Alan Watson, Legal Transplants] 68

Alan Watson, “Aspect of Reception of Law” (1996) 44:2 Am J Comp L 335; Hideki Kanda & Curtis J

Milhaupt, “Re-examining Legal Transplants: The Director’s Fiduciary Duty in Japanese Cooperate Law”

(2003) 51:4 Am J Comp L 887 [Waston, “Aspects of Reception of Law”]. 69

Jonathan B Weiner, “Something Borrowed for Something Blue: Legal Transplants and Evolution of Global

Environmental Law” (2001) 27 Ecology L Q 1295. An example of transplant within the same legal system may

be in the form of moving principles from tort to environmental law or banking to insurance law. The author

describes borrowing within the same legal system as horizontal legal borrowing and from national to

international law or vice-versa as vertical legal borrowing. 70

A third school of thought termed “moderates” has been identified. This group of people is not opposed to the

idea of legal transplants but argue that it is affected by other socio-cultural factors. Otto Kahn-Freund posits that

there are different levels of transferability but it is imperative to inquire whether the new law will fit in well into

its new environment. Montesquieu identifies factors of geographical, social, economic, environmental, cultural

and political nature as affecting the level and extent of transferability. The main point of this school is that

transplant is possible but it is affected by certain factors. Essentially, they support the views of Alan Watson but

with some clarifications. For a detailed discussion of this view see Otto Kahn-Freund, “On the Uses and

Misuses of Comparative Law” (1974) 37 Mod L Rev 1; Odumosu, supra note 54.

16

first view, spearheaded by Alan Watson, believes in the possibility of the transfer of legal

rules from one system to another. For Watson, legal rules are devoid of their social and

cultural connections and there is no inherent relationship between legal rules and society.

Legal transplant is therefore possible because of this existent dichotomy of legal rules and

other social connections.71

Because these rules are not socially connected in any way, their

transferability to another system cannot be hindered by historical and social factors.72

However Watson’s view that legal rules do not have historical and social connections has

been criticized. According to Pierre Legrand, a rule is never devoid of its social and cultural

connections because the interpreter who gives meaning to the rules has his social and cultural

prejudices.73

Ewald, however, notes that such criticisms are due to misinterpretation of

Watson’s argument.74

Ewald argues that law and the legal system have been defined on

several occasions in terms of non-legal factors75

and Watson is simply providing an

explanation of law in terms of legal factors.76

The second school of thought on legal transplant, which is at extreme odds with the

first view, is championed by Pierre Legrand. Legrand’s views are in sharp contrast to those

espoused by Watson, especially the fact that legal rules are segregated from all social and

historical connections.77

To Legrand, no rule is without any form of semantic content

because every rule has a meaning. The meaning of a rule is affected by the way the

71

Alan Watson, Legal Transplants, supra note 67 at 95; Kanda & Milhaupt, supra note 68 at 890. 72

Pierre Legrand, “The Impossibility of Legal Transplants” (1997) Maastricht J Eur & Comp L 111 at 113. 73

Ibid at 114. 74

Watson makes the point that his views were misrepresented by Pierre Legrand in the latter’s article titled the

“Impossibility of Legal Transplants”, see Alan Watson, “Legal Transplants and European Private Law” online:

(2000) 4:4 Electronic Journal of Comparative Law 3 at 1 < http://www.ejcl.org/44/art44-2.html >. 75

William Ewald, “Comparative Jurisprudence (II): The logic of Legal Transplants” (1995) 43:4 Am J Comp L

489 at 490. Authors like Monstequieu, Savigny, Marx, Hegel have done so based on factors such as religion,

geography, class interests, etc. 76

Ibid. 77

Legrand, supra note 72 at 114.

17

interpreter understands the context within which it arises. This interpreter has his prejudices

which have been formed over a period of time through his social interactions.78

Legrand

concludes that “the meaning of a rule, accordingly, is therefore a function of the interpreter's

epistemological assumptions which are themselves historically and culturally conditioned.”79

To transport a rule or word without any form of distortion, the entire language around it must

be transported as well. The audience in the originating legal system must also be transported

to the host legal system to maintain its original meaning. Legal transplant can be said to have

effectively occurred when this happens.80

As Alan Watson points out in reaction to extremist views against legal transplant,

there have been several cases of transplant occurring in practice which did not involve the

transplanting of the audience to give the law in the originating country the same effect in the

receiving country. He cites the example of lawyers from Botswana who received graduate

studies at the University of Edinburgh in Scotland. On their return home, they applied some

Scottish law to solve legal problems to which their local law could not offer a solution.81

The

obvious conclusion is that legal borrowing is possible and various legal systems are replete

with specific legal ideas or concepts borrowed from other jurisdictions.

1.6.1 Legal Transplant in Ghana

The history and evolution of the Ghanaian legal system lends much credence to the

concept of legal transplant. This is evident from the borrowing of complete legal texts to key

78

Ibid. 79

Ibid. 80

Ibid at 117. See also Eva Hoffman, Lost in Translation (New York: Penguin Group, 1991). 81

Watson “Aspects of Reception of Law”, supra note 68 at 339-41. He also cites the example of the translation

of the Justinian Digest into English due to efforts by Dr. Carleton Chapman, something which has gone a long

way to aid legal practice in South Africa.

18

concepts or ideas from the British legal system to the Ghanaian legal system. Ghana, as a

former British colony, had most of its early laws directly transplanted from Britain and also

trained its first batch of lawyers there.82

Section 17 of the Courts Ordinance, 193583

supports

the idea of complete borrowing of legal texts or rules. It provided that “the Supreme Court of

the Gold Coast should exercise its jurisdiction in probate, divorce, and matrimonial matters

in conformity with the law and practice for the time being in force in England.”84

In fact,

section 83 allowed the application in Ghana of the doctrines of the common law, the

principles of equity and the statutes of general application which were in force in England

before the passage of the Judicature Acts of 1893.85

Also the Supreme Court (Civil

Procedure) Rules of 195486

were a direct adoption of Britain’s Supreme Court Rules before

its amendment in 1954.87

Apart from this direct application of British laws, several concepts

were also borrowed as were necessary, modifications were made.88

In modern times, legal borrowing has shifted from transplanting rules to more of

concepts or ideas. In developing a scheme for the management of potential petroleum

revenue, Ghana partnered with Norway to develop certain policies. Based on this association,

82

See William Burnett Harvey, The Evolution of Ghana Law since Independence, online: Duke Law

Scholarship Repository < http://scholarship.law.duke.edu/cgi/viewcontent.cgi?article=2940&context=lcp> at

587. As at 1960 when Ghana achieved Republican status, almost all of the 350 practicing Ghanaian lawyers

received legal education in the United Kingdom. 83

As amended by CAP.4, Laws of the Gold Coast (1951). Ghana was formerly known as the Gold Coast. 84

Harvey, supra note 82 at 588-89. 85

Ibid at 588. Section 83 states that “subject to the terms of this or any other Ordinance, the common law, the

doctrines of equity and the statutes of general application which were in force in England on the 24th

day of July

1874 shall be in force within the jurisdiction of the courts.” 86

The Rules were however amended in 2004. 87

Ivan L Head, “The Alien’s Access to Local Remedies: The African Commonwealth Countries Experiecne”

(1967-1968) 21 Vand L R 701 at 705. 88

The use of term “statutory instruments” was copied from the United Kingdom in their Statutory Instruments

Act of 1946. Ghana however broadened the meaning of the term to encompass not only laws passed in the

Republic but also include all instruments made under statutory authority. See Francis Bennion, Constitutional

Law of Ghana-Part III Law Making Power under the Republic, online: Francis Bennion <

http://www.francisbennion.com/pdfs/fb/1962/1962-001-259-ghana-pt3-ch6.pdf > 264.

19

Ghana mirrored its Stabilization and Heritage Funds to that of Norway’s Government

Pension Fund-Global and Government Pension Fund.89

Similarly, the idea of decoupling the

dual functions of the Ghana National Petroleum Company, both as a regulator and a national

oil company engaged in petroleum production activities, was borrowed from Brazil.90

From the foregoing scenarios, it is evident that legal transplant, whether in the form

of borrowing exact legal texts or key concepts is possible within the Ghanaian legal system.

Transplanted rules or concepts have flourished particularly in the oil and gas context. As a

result this thesis argues that transplanting concepts and ideas relating to the regulation of

operational pollution from Norway to Ghana is beneficial as well.

1.7 Structure of Thesis

This thesis is divided into five (5) chapters. This chapter provides background

information and gives a brief history of the oil and gas sector in Ghana, highlighting the

nature and scope of the exploratory and production activities. It sets out the research problem

and the legal question to be answered by the thesis. As such, a discussion of the legal

transplant theory is carried out to underscore the notion that transfer of ideas from Norway to

Ghana is possible. Finally, a structure of the remaining part of the thesis is provided.

89

Heikki Holmas & Joe Oteng-Adjei, “Breaking the Mineral and Fuel Resource Curse in Ghana” in J Brian

Atwood, ed, Development Co-operation Report 2012: Lessons in Linking Sustainability and Development

(OECD, 2012) at 123-131. 90

Brazil took away the regulatory functions of Petrobas and made it a national oil company. Similarly the

GNPC lost it regulatory mandate with the passing of the Petroleum Commission Act establishing a new industry

regulator. See Ama Jantuah Banful, “The Legal Regime of Ghana’s Upstream Petroleum Industry and the Role

of the GNPC as Player and Regulator” (2010) The Ghana Policy Journal 68 at 71; Dorothy Afriyie-Ansah,

Reforming Ghana’s National Oil Company: Possible Lessons from Norway and Brazil (LL.M Thesis,

University of Calgary, 2010) [Unpublished].

20

In Chapter Two, a discussion of performance-based regulation (the key element in

Norway’s regime) as the best approach to environmental regulation of offshore petroleum

activities is carried out. The Chapter commences by attempting to answer the question of

what is regulation and who should be ultimately responsible for regulation. A justification of

environmental regulation and discussion of its effects is carried out. The discussion then

focuses on the advantages and disadvantages of prescriptive-based regulation and

performance-based regulation. The chapter concludes with a discussion on the essential

elements of performance-based regulation and how it is implemented.

Chapter Three discusses the international and the Norwegian regulatory regime for

regulating offshore operational pollution. The Chapter commences with a discussion of the

international legal regime for the environmental regulation of offshore petroleum activities,

to establish the fact that international law proffers no solution and leaves the issue to

individual states to fashion out their respective solutions. Based on this, a discussion of the

Norwegian approach to regulating operational pollution is undertaken. Chapter Three

concludes with an analysis of the key features in Norway’s approach to tackling the issue of

operational pollution in its offshore oil and gas industry including the use of performance-

based regulation as the underlining means to effectively solve the issue.

Chapter Four concerns itself with the Ghanaian approach to environmental regulation

in its offshore oil and gas industry. The Chapter commences with a brief historical

background of environmental regulation in Ghana and provides the constitutional authority

for environmental protection. The various statutes and institutional framework governing the

21

offshore petroleum industry in Ghana are then discussed.91

Chapter Four then discusses and

evaluates the Ghanaian regime vis-à-vis the key concepts identified from the Norwegian

approach.

By way of conclusion, the final chapter provides a brief overview of the key issues

raised in the preceding chapters. It draws necessary conclusions based on the discussion in

the previous chapters and provides recommendations needed to ensure an effective

regulatory regime for regulating operational pollution arising from offshore petroleum

exploration and production in Ghana.

91

The other relevant legislation are the Environmental Protection Agency Act of Ghana, 1994, (Act 490),

Environmental Assessment Regulation of Ghana, (LI 1652), Ghana National Petroleum Corporation Law,

1983, (PNDCL 64)

22

CHAPTER TWO

ACHIEVING A PERFORMANCE BASED REGULATORY SYSTEM OF OFFSHORE

ENVIRONMENTAL REGULATION

2.1 Introduction

The primary purpose of this chapter is to explain why performance based regulation is a

better option in offshore environmental regulation compared to prescriptive based regulation. In

order to do so, it is important to first briefly discuss some preliminary issues. As such, this

chapter begins with a brief overview of the nature and importance of regulation and the

justification of environmental regulation. The chapter then makes a case for performance-based

regulation rather than prescriptive regulation as the preferred choice for environmental regulation

in relation to offshore petroleum development. The discussion commences by examining

prescriptive-based regulation, highlights its advantages and disadvantages and explains why this

type of regulation is not the best fit for environmental management in the offshore. The chapter

then examines the essential elements of performance-based regulation, considers the advantages

and disadvantages of this type of regulation, and concludes that performance-based regulation is

the better option to regulate offshore petroleum activities.

23

2.2 The Nature of Environmental Regulation

2.2.1 What is regulation?

Regulation can simply be defined as “a set of rules promulgated under statute.”1 This

view is, however, narrow and shuts out inquiry into what the process of regulation entails, the

actors involved and makes it difficult to differentiate regulations from other body of laws.2

Selznick defines regulation as a “sustained and focused control exercised by a public agency

over activities that are valued by the community.”3 To Prosser, regulation “consists of public

interventions which affect the markets through command and control.”4 A critical look at

Selznick and Prosser’s definitions reveals two shortcomings. First the definitions are restrictive

by limiting regulation exclusively to the public sphere and cutting off all possibilities of

regulation occurring in private areas. Secondly, they also do not take into account the purpose or

the expected outcomes of the regulatory activity.

The word “regulation” for others connotes the idea of dictating to individuals and

institutions what they can and cannot do.5 According to Black,

[r]egulation is the sustained and focused attempt to alter the behaviour of others

and according to defined standards or purposes with the intention of producing a

1 Barry Barton, “Theoretical Context of Regulation” in Barry Barton, Alastair Lucas, Lila Barrera-Hernandez &

Anita Rome, eds, in Regulating Energy and Natural Resources (Oxford: Oxford University Press, 2006)12 at 14. 2 Ibid. Such other body of laws includes criminal law. Barton gives another definition of regulation as “any

mechanism for social control and influence, whether or not intentional and whether or not by the state.” He however

notes even though this definition is less legalistic, it is overly inclusive and would therefore capture the work of a

school teacher teaching kids in a class. 3 P Selznick, “Focusing Organizational Research on Regulation” in R. Noll, ed, Regulatory Policy and the Social

Sciences (Berkeley, California: University of California Press, 1985) 363. 4 T Prosser, Law and Regulators (Oxford: Clarendon Press, 1997) at 4. The author makes the point that command

and control may be delegated through the use of self-regulation. Command and control is understood by the author

to mean little more than conventional regulation backed by legal sanctions. 5 Cary Coglianese, Jennifer Nash & Todd Olmstead, “Performance-Based Regulation: Prospects and Limitations in

Health, Safety and Environmental Protection” (2003) 55 Admin L Rev 705 at 706.

24

broadly identified outcome or outcomes, which may involve mechanisms of

standard-setting, information-gathering and behavior modification.6

In another instance, Black speaks of regulation as “the intentional, goal-directed,

problem-solving attempts at ordering undertaken by both the state and non-state actors.”7

According to Coglianese, Nash & Olmstead, regulation entails attempts “to improve individual

and organizational behavior in ways that reduce social harms, whether by improving industry's

environmental performance, increasing the safety of transportation systems, or reducing

workplace risk.”8 For Barton,

Regulation is a process intended to alter activity or behaviour or to carry out an

ordering, often by restricting behavior, but at times enabling or facilitating

behavior that would otherwise not be possible. It is systematic and intentional. It

is goal-oriented, even if there are multiple goals, and even if the goals get

forgotten.9

Overall, these various definitions of regulation suggest that it should be seen as a process

which may either alter or encourage a behavioural pattern to meet some set outcomes. Alteration

is necessary when there is a need to change certain behaviours which are seen to be inimical to

social order and to set objectives. Three elements make up the domain of regulation; there is a

conscious ordering of activity, that activity is economic in nature and finally the process is

institutionalized.10

2.2.2 Who should regulate?

According to Barton, due to the nature of regulation it is useful to consider where

regulatory functions are carried out within the apparatus of government.11

Regulations are not

6 J Black, “Critical Reflections on Regulation” (2002) 27 Aust J Leg Phil 1 at 25.

7 J Black, “Regulatory Conversations” (2002) 29 J L & Soc 163 at 170.

8 Supra note 5.

9 Barry Barton, supra note 1 at 13.

10 L Macgregor, T Prosser & C Villiers, Regulation and Markets Beyond 2000 (Aldershot: Ashgate, 2008) at 348.

11 Barry Barton, supra note 1 at 14.

25

implemented by the legislative arm of government for a variety of reasons including: “the

magnitude, technical complexity and the variability of material; and at times the need to remove

a matter from direct political control, or to follow a quasi-judicial mode of procedure such as in

enforcement.”12

Regulation is not left to judges because it seeks to achieve multiple purposes.

The work of the courts is purely adjudicative in nature and they act independently of other

bodies. The process of adjudication is one which involves deciding each issue as and when it is

brought before the courts. The courts deal with the application of the law to past issues.13

Regulation on the other hand is prospective by nature and is in most cases “a long term

engagement with an area of activity.” The regulator must “develop and implement policy

consistently with other public agencies.”14

These stark differences between regulation and the

duty of judges make it impractical to assign judges the power or duty to implement regulation.

The executive is also not entrusted with the duty of regulation because it is important for politics

to be taken out of the fray and to allow independent persons with relevant expertise to handle this

multifaceted duty.15

Barton argues that because of the difficulties associated with assigning either arm of

government regulatory duties, state actors that lie outside the arms of government but control

behavior in the same way as state organs should be allowed to handle these regulatory duties.16

In order for the regulator to effectively discharge its duties, it should be independent and free

12

Ibid at 15. 13

Ibid. 14

Ibid. 15

Ibid. 16

Ibid. Preferably, these independent actors should be accountable to an arm of government preferably the

legislature. The accountability could be expressed in terms of submitting half year/annual reports to an arm of

government preferably the legislature/parliament.

26

from external influence.17

In this context, independence means three things: having an arms-

length relationship with regulated entities; arm’s-length relationship with political authorities;

organizational autonomy (rule-making ability, rule-application ability and litigation).18

The

independent regulator should be well funded in order to fulfill its mandate. It should, however,

be accountable in some way for its actions such as the submission of half year/annual reports to

an arm of government preferably the legislature.

2.2.3 Justification of environmental regulation

Any action geared at ordering or altering social behavior must been supported by cogent

reasons. Economic regulation is justified on grounds that there is the need to address market

failures caused by information deficiencies, third party activities (externalities), and imperfect

competition or transaction costs.19

Economic regulation is basically designed to serve two

purposes: improve the working of the market for goods and services; and ameliorate against

adverse effects of market activities and reduce the attendant social costs.20

On what basis then can environmental regulation be justified? Ashton and Heaton

advance two main reasons to justify environmental regulation. First, environmental regulation

seeks “to internalize the social costs attending market activities - especially those associated with

technology - and it does this by ensuring that the price of goods and services paid by the

17

Katja Sander Johannsen, “Regulatory Independence in Theory and Practice – A Survey of Independent Energy

Regulators in Eight European Countries”, online: Body of Knowledge on Regulation < http://regulationbodyofknowledge.org/wp-content/uploads/2013/03/Johannsen_Regulatory_Independence_in.pdf >. 18

Ibid. 19

Barry Barton, supra note 1 at 17. 20

Nicholas A. Ashton & George R. Heaton, “Environmental and Safety Regulations: Reasons for their Adoption

and Possible Effects on Technological Innovation” (1976) 1 Environmental Law and Policy 172.

27

consumer reflect the true costs to society.”21

The costs in this case include those incurred in

reducing adverse health and safety effects from the use of a particular technology.

The second justification for environmental regulation lies in the protective nature of this

form of regulation.22

It is meant to protect and preserve certain aspects of the ecosystem which

will be affected by market activities. This is justified under the principle of equity and fairness

which posits that there should be a sacrifice of some economic efficiency for some form of

protective or environmental efficiency.23

A third justification for environmental regulation is based on the rights argument.24

The

rights argument is to the effect that individuals possess certain environmental rights which must

be protected and enforced.25

Individuals are said to have environmental rights and obligations

because they have a right to bodily integrity,26

a right to a clean environment27

and an obligation

21

Ibid. 22

Ibid. 23

Ibid. 24

Daveed Garteinsen-Ross “An Analysis of the Right-Based Justification for Federal Intervention in Environmental

Regulation” (2003-2004) 14 Duke Envt’l L & Policy Forum 185 at 187. Though the author was arguing for United

States federal regulation, the argument holds true in its application as a justification for environmental regulation. 25

Ibid. 26

Ibid. Most national constitutions such as that of Ghana guarantee individuals a right to an inviolable dignity,

article 15 of the Constitution of Ghana, 1992. Judge Cardozo indicates that“every human being of adult years and

sound mind has a right to determine what shall be done with his own body” Schloendorff v. Soc’y of N.Y Hosp. 211

N. Y. 125,129 (1914). This indicates an emphasis on the value of the integrity of an individual hence the argument

that levels of pollution that could violate the bodily integrity of individuals and cause harm should be regulated. 27

Garteinsen-Ross, Ibid. The right to a healthy environment is mostly argued under the right to life guaranteed by

Article 6 of the International Covenant on Civil and Political Rights, online: Office of the High Commissioner for

Human Rights < http://www.ohchr.org/en/professionalinterest/pages/ccpr.aspx >. The argument is that countries

must ensure that the environment is in such a state that supports life and as such there is a need for environmental

regulation to ensure this. Several intentional documents have recognized the right of individuals to a live in a clean

environment. Principle 1 of the Stockholm Declaration provides that “Man has the fundamental right to freedom,

equality and adequate conditions of life, in an environment of a quality that permits a life of dignity and well-

being…” United Nations Environment Programme, Declaration of the United Nations Conference on the Human

Environment, online: United Nations Environment Programme

<http://www.unep.org/Documents.Multilingual/Default.asp?documentid=97&articleid=1503 >. Article 11 of the

Additional Protocol to the American Convention on Human Rights also states that “everyone shall have a right to

live in a healthy environment…” online: Organization of American States <

http://www.oas.org/juridico/english/treaties/a-52.html >.

28

to future generations not to pollute the environment.28

As a result of these environmental rights,

states are obligated to enact laws and regulations to protect the environment which is relied on by

individuals.29

2.2.4 Effects of environmental regulation.

Environmental regulation has over the years, transcended the boundaries of being

exclusively comprised of ordinary prohibitions and penalties to serving as an enabling platform

for environmental protection.30

The main or primary effect of environmental regulation, which is

also its characteristic, is that it gives rise to enforcement action when breached. Enforcement, in

this case, is carried out by either the courts or the regulatory agency responsible for regulation.31

From the literature, three broad effects have been attributed to environmental regulation.

The first kind of effect, mostly articulated by regulated entities, is the “restrictive influence

environmental regulations have on corporate activity.”32

Environmental regulation is restrictive

in the sense that without it “environmental concerns would not enter into corporate decision-

making to as great an extent, and that therefore resources devoted to environmental amelioration

would be diverted somewhat for other uses.”33

The manner in which decisions are arrived at is

28

Ibid, current activities which pollute the environment may develop into huge crises which could affect the

environment that future generations will inherit. 29

Dinah Shelton, “Human Rights, Environmental Rights and the Right to Environment” (1991-1992) 28 Stanford

Journal of International Law 103 at 138. The rights based argument is not only restricted to humans but to non-

humans as well. It has been argued that non-humans elements which form part of the environment such as plants,

animals and water bodies have rights and as such do need protection from the state through environmental

regulation. For a detailed discussion on rights of non-humans see Joel Feinberg, “The Rights of Animals and Unborn

Generations” in Joel Feinberg, ed, Rights, Justice and the Bounds of Liberty: essays in Social Philosophy (Princeton:

Princeton University Press) 159. 30

Paul Muldoon, Alastair Lucas, Robert B. Gibson & Peter Pickfield, An Introduction to Environmental Law and

Policy in Canada (Toronto: Edmond Montogomery Publications Limited, 2009) at 16. 31

Ibid. 32

Nicholas A Ashton & George Heaton, supra note 18 at 175. 33

Ibid. This is seen mostly in cases of heavily polluting firms, who have to restructure their production activities to

minimize pollution and incorporate the expenses incurred in doing so into their production costs.

29

significantly changed by environmental regulation as corporate bodies have to take cognizance

of environmental requirements during any decision-making process. The choice of product,

method of production and production cost are heavily affected by these regulations.34

The

restrictive nature of environmental regulations is also manifested in delays caused as a result of

the time spent in planning, implementing and meeting environmental standards and

requirements.35

A second type of effect occasioned by environmental regulation is witnessed in the area

of technological innovation. Regulated entities required to comply with environmental

obligations, often alter their production processes and consequently seek out new technologies

that make production faster and more efficient and reduce the cost of compliance.36

On the other

hand, when the regulation specifies the method of compliance or the kind of technology to be

employed, innovation is stifled and the regulated entities have no incentive to seek out new

means of achieving a higher level of efficiency through a different and more improved

technology.37

The third effect is directly expansive in nature and focuses on the products and processes

which control environmental pollution. As a result of regulation, a demand or market is created

for the production of existing technologies and development of new ones for industry.38

The overall effect of environmental regulation, as a result, is its protective nature. It plays

an important role in achieving the concept of sustainability, both as a process and an end in itself.

34

Ibid. 35

Ibid. Delay in production in recent times is attributable to adjudicative and quasi-adjudicative proceedings such as

administrative proceedings before regulatory agencies, court proceedings, etc. 36

Ibid. Large firms which have the financial wherewithal mostly fund research geared at developing new

technologies. 37

Ibid. 38

Ibid.

30

Its effect is felt economically as it is factored into the cost of production and creates a demand

for a market.

2.3 Prescriptive and Performance-Based Regulation

The literature reveals two means of improving environmental performance through

regulation. According to May, environmental regulation which has been accepted as a means of

improving behaviour may be based on the achievement of specified results, or in the alternative,

an adherence to particular technologies or prescribed means.39

For Coglianese, Nash &

Olmstead, performance can be improved either by prescribing exactly what actions firms must

take to improve their performance or agencies can incorporate the “regulation's goal into the

language of the rule, specifying the desired level of performance and allowing the targets of

regulation to decide how to achieve that level.”40

In other words, environmental regulation of the

offshore petroleum industry can either be prescriptive-based or performance-based.41

2.3.1 Prescriptive-Based Regulation

Prescriptive-based regulation, also known as design-based regulation, involves the exact

prescription of how to achieve a set objective.42

This type of regulation tells the regulated entities

what to do and how to do it.43

Prescriptive-based regulation is “highly particularistic in

39

Peter May, “Performance-Based Regulation and Regulatory Regimes: The Saga of Leaky Buildings” (2003) 25:4

Law and Policy 381. 40

Coglianese, Nash & Olmstead, supra note 5 at 706. 41

Petroleum Safety Authority, From Prescription to Performance in Petroleum Supervision, online: Petroleum

Safety Authority < http://www.ptil.no/news/from-prescription-to-performance-in-petroleum-supervision-

article6696-878.html>. 42

Stephen Breyer, Regulation and Its Reform (Cambridge: Harvard University Press, 1982) at 105. 43

Peter May, “Regulatory Regimes and Accountability” (2007) 1 Regulation & Governance 8 at 9.

31

specifying required actions and standards for adherence to them.”44

It sets “specific demands for

structures, technical equipment and operations in order to prevent accidents and hazards.”45

To

ensure compliance emphasis is placed on strict adherence to the prescribed rules and standards

which in turn is presumed to provide acceptable outcomes in meeting regulatory outcomes.46

Prescriptive-based regulation is both certain and straightforward, which most regulated

entities prefer, easily monitored by third parties, and easy to enforce.47

Its pitfall, which makes it

less suitable for offshore environmental regulation, lies in the fact that it is not flexible. By

specifying exactly what must be done, no room is left for discretion on how regulated entities

and regulators will go about fulfilling their obligations and achieving regulatory outcomes. It

rather places them in a straitjacket with little or no room for discretion.48

Technological

innovation is stifled as a result of the inflexibility.49

Regulated entities may discover new,

cheaper and efficient technologies that produce better outcomes than those specified in the

regulation. However, due to the mandatory nature of the regulation that prescribes a particular

technology, new technologies that are cost-effective and efficient are not used and consequently

the cost of production is increased.50

As the Petroleum Safety Authority (PSA) of Norway notes,

prescriptive based regulations are not appropriate for the offshore industry because they

encourage a passive and lackadaisical attitude among oil companies.51

The oil companies wait

for the regulator to inspect, identify deficiencies and prescribe solutions before they act.52

44

Ibid. 45

Peter May, supra note 39. 46

Peter May, supra 43 at 9. 47

Greg C Foliente, “Developments in Performance-based Building Codes and Standards” (2000) 50:7 Forest

Products Journal 12. 48

Coglianese, Nash & Olmstead, supra note 5 at 709. 49

Ibid. 50

Peter May, supra note 43. 51

Supra note 41. 52

Ibid.

32

Consequently there is a shift of responsibility from the regulated entities to the regulator in

guaranteeing compliance with regulatory requirements.53

2.3.2 Performance-Based Regulation

According to May, the understanding of performance-based regulation “is complicated

by the fact that the concept can be, and has been, applied in a variety of ways and with different

degrees of regulatory comprehensiveness.”54

Performance-based regulation is “easy to describe

in concept but hard to define in particulars.”55

To better understand performance-based

regulation one is required to think about the expectations of the regulatory regime and what it is

supposed to achieve.56

For May, performance-based regulation emphasizes regulating for results

rather than specifying specific actions or technologies.57

Blumenauer notes that the distinctive

feature of performance-based regulation is the focus on regulating the kind of results or

outcomes achieved.58

By focusing on outcomes, the rules give the regulated entities the

necessary flexibility to develop and determine solutions that are capable of achieving the

required results within a stipulated time.59

He emphasizes that “regulated businesses, individuals,

and communities are free to use a variety of solutions as long as they achieve the same required

results, such as the elimination or reduction of a pollutant, a reduction in workplace

accidents…”60

Hanson notes that performance-based (sometimes referred to as a "functional-

based") regulation “specifies a certain performance (or function) that the operator must achieve,

53

Ibid. 54

Peter May, supra note 39 at 382. 55

Ibid at 384. 56

Ibid at 382. 57

Peter May, supra note 43. 58

Earl Blumenauer, “Beyond the Backlash: Using performance-Based Regulations to Produce Results through

Innovation” (2011) 26 J Envt’l L & Litig 351 at 354. 59

Ibid at 354. 60

Ibid at 354.

33

but then gives the operator autonomy in how it wants to achieve it.”61

In the context of

environmental and safety regulations “the regulator will specify the official safety standards (as

defined by either the regulator or the industry as an acceptable rate of accidents or level of

pollution), but each operator would maintain the ability to choose how it would attain and

maintain those standards.”62

Coglianese, Nash & Olmstead identify a performance-based regulatory system as one

which uses performance standards as (1) the basis for legal commands, (2) criteria for allocating

enforcement and compliance resources, (3) trigger for application of differentiated (tiered)

regulated standards and (4) a basis for evaluating regulatory programs and agencies.63

The

authors further state that performance-based regulation is mostly used as the basis of legal

commands found in standards and this is supported by the plethora of the literature on this aspect

alone.64

They argue that to better understand the potential and limitations of performance-based

regulation, one has to be clear what is meant by this approach.65

A performance standard as a

basis for legal commands in regulation is one that “specifies the outcome required, but leaves the

specific measures to achieve that outcome up to the discretion of the regulated entity.”66

It “sets a

goal and lets each regulated entity decide how to meet it.”67

Performance-based regulation can

also be expressed in four ways based on (1) the precision of the regulation; (2) the basis for the

threshold in the performance standard; (3) scope of the regulation's ultimate objective; and (4)

61

Anne L Hanson, “Offshore Drilling in the United States and Norway: A Comparison of Prescriptive and

Performance Approaches to Safety and Environmental Protection” (2011) 23 Geo Int’l L Rev 555. 62

Ibid at 557. 63

Coglianese, Nash & Olmstead, supra note 5 at 709. 64

Ibid. The authors admit though that there exists other literature which discusses performance-based regulated

system in the other systems but these are few in number. 65

Ibid. 66

Ibid. 67

Ibid.

34

the type of problem the standard aims to solve.68

The standard for performance-based regulation

may be stated in precise or loose terms depending on the ultimate objective of the regulation.69

A

less precise standard gives the regulator more discretion and allows them to make qualitative

judgments. A more precise and definite standard on the other hand leaves little room for

discretion and allows for quantitative judgments instead to be made.70

Performance based

regulation is also distinguishable based on the problems it is designed to counter.71

Performance-

based regulation that deals with events of high-consequence, low-probability nature (e.g. pipeline

or nuclear plant blow outs) differ in several ways from those that deal with events of low-

consequence, high-probability nature (e.g., food-borne illnesses or traffic infractions).72

May also

notes that the performance-based regulation may be expressed in qualitative or quantitative

terms.73

Consequently, two main observations can be made about performance-based regulation.

First, the main focus of this type of regulation is regulating to achieve certain specific results or

outcomes. Secondly as a result of the focus on outcomes, a degree of discretion is given to the

regulated entity in how it achieves those specific outcomes.74

68

Ibid. On the regulation’s objective, the location of the rule in the causal chain of events leading to that ultimate

objective is very important. 69

Ibid; Chris Tollefson, Fred Gale & David Haley, Setting the Standard (Vancouver: UBC Press, 2008) at 249. 70

Ibid at 710. “For example a loosely specified performance standard could require that vegetation adjacent to

railroad track be controlled so that it ‘does not become a fire hazard or obstruct visibility’. Such a regulation

provides less guidance to the railroad (and gives more discretion to both the railroad and the regulator) than does a

tightly specified regulation requiring that vegetation be controlled so that it ‘remains at least three feet away’ from

railroad track.” 71

Ibid at 711, the characteristics of the problems include its severity and likelihood. 72

Ibid; Chris Tollefson, Fred Gale, David Haley, supra note 69 at 249. 73

Peter May, supra note 39 at 385. 74

Chris Tollefson, Fred Gale, David Haley, supra note 69 at 248. As indicated, the discretion may be wide or

narrow depending on whether the outcome stipulated to be achieved is more or less precise.

35

2.3.3 Essential elements of Performance-based Regulation

Blumenauer proposes that performance-based regulation that is focused on desired

outcomes to solve existing problems, or avoid creating new ones, must have six essential

elements. These elements, when present, enable us perform the regulatory function effectively.75

According to Blumenauer, the first essential element of performance-based regulation is

that it must be comprehensive in nature, rather than adopting a piecemeal approach to solving

problems. He states that successful performance-based regulation must clearly stipulate

standards that are at least strong and protective.76

Second, performance-based regulation should encourage responsible partnerships among

government agencies, businesses and industry partners.77

The idea of responsible partnerships

implies the notions of both accountability and cooperation. Accountability, in the context of

regulation, is relevant on three levels.78

The basic level of accountability, legal accountability,

must be found in the content of the regulatory provisions themselves. These provisions should be

seen to be fair and impose appropriate rules and reasonable standards.79

The regulation should be

designed in such a manner to erode all notions of regulatory capture where “some firms or

industries benefit from the regulations at the expense of a broader public interest.”80

The second

level of accountability occurs in the implementation of the regulatory provisions. This requires

accountability on the part of the regulator and the regulated entities.81

The regulator must not

75

Earl Blumenauer, supra note 58 at 362. 76

Ibid. 77

Ibid at 363. 78

Peter May, supra note 43 at 11. 79

Ibid. 80

Ibid. For more discussion on regulatory capture see Ayres I & Braithwaite J Responsive Regulation: Transcending

the Deregulation Debate (New York: Oxford University Press, 1992). 81

Ibid at 12.

36

abuse its power by enforcing regulations in a capricious manner and the regulated entities must

comply with all requirements and be held responsible for non-compliance. The third and final

level of accountability is the “responsiveness of elected officials to shortfalls in regulatory

regimes.”82

Feedback must be sought on the performance of the regulatory regime in order to

undertake adjustments or reform where necessary.83

The third essential element of performance-based regulation identified by Blumenauer is

cooperation, meaning “working together to the same ends.”84

Initial conceptions of cooperative

approaches in the environmental sector focused on partnerships between business and

government only, leaving out other parties such as environmentalist groups, who may have

reservations about agreements reached by government and businesses. However for cooperation

to be effective, it should involve all the parties who should together share a commonality of

objectives.85

Fourthly, according to Blumenauer, performance-based regulation should “stipulate

specific, quantifiable outcomes, transparent processes and measurements.”86

The success of the

performance-based regulation is highly dependent on the confidence of the public as well as the

regulated parties. The decision-making process must not be murky and subjective.87

Blumenauer’s fifth element is enforcement. Where regulated entities fail to meet required

standards, specific compliance measures should be enforced to ensure that “public health and

82

Ibid at 12. 83

Ibid at 12. 84

Kathryn Harrison, “Talking with the Donkey; Cooperative Approaches to Environmental Protection” (1998) 2:3

Journal of Industrial Ecology 1088. 85

Ibid. 86

Earl Blumenauer, supra note 58 at 363. 87

Ibid.

37

safety, taxpayer investments and the environment are protected.”88

Penalties for non-compliance

should serve as disincentives for the offender and others contemplating non-compliance.89

The final element of performance-based regulation identified by Blumenauer is voluntary

participation.90

There should at least be some level of participation in the initial stages of the

development of standards. Irrespective of the areas where the regulations apply, such as the

environment, regulated entities should have a myriad of ways to comply with the standards

required of them.91

For an effective performance-based regulation, these elements must be linked such that

the standards imposed are accepted by all interested parties. Comprehensive standards should

allow for cooperation among the regulators, regulated entities and affected/interested third

parties. The key thing is for the regulatory system to maintain a fine balance by intricately

linking these elements together.

2.3.4 Advantages & Disadvantages of Performance-Based Regulation

The most touted advantage of performance-based regulation, which makes it best suited

for offshore environmental regulation, is that it permits flexibility and change.92

The regulated

entity is not put in a straitjacket with prescriptive limitations but is at liberty to choose from a

variety of options how to achieve the set goals or outcomes.93

This flexibility is likely to ensure

easier compliance with the regulations because the regulated entity can formulate appropriate

88

Ibid. 89

Ibid. 90

Ibid. 91

Ibid. 92

Stephen Breyer, supra note 42. 93

Ibid.

38

solutions that meet the regulatory standard.94

The cost of compliance is reduced because the

regulated entity has the option to choose the least costly but effective means of ensuring

compliance in the light of its particular circumstances.95

As a result, performance-based

regulation “may be used to address a variety of risks from repeated and expected harms such as

emissions of industrial pollution, to rare and catastrophic events such as fires, oil tanker spills, or

nuclear power plant accidents.”96

This flexibility inherent in performance-based regulation also

creates “the opportunity to foster innovation and harness market force.”97

Consequently there is a

greater incentive for technological innovation to meet specified standards. Regulated entities are

likely to develop new technologies that will aid compliance. The inherent flexibility also enables

the regulators and regulated entities to adapt to the continuous changes that the environment

poses.98

Despite these advantages, performance-based regulation has a drawback. As stated

earlier, the pitfall of performance-based regulation is the inherent discretion that it is associated

with, which may create some uncertainty for the regulator.99

Coglianese, Nash & Olmstead note

that performance-based regulation, by definition, creates uncertainty for both regulators and

regulated entities with respect to enforcement and compliance issues.100

For regulated entities,

loosely specified performance-based regulation pose a difficult problem as they give regulators

too much discretion when deciding issues of enforcement.101

Regulators who are conversant with

straightforward prescriptive regulation find the discretion and uncertainty associated with

94

Peter May, supra note 39 at 388. 95

Ibid. 96

Coglianese, Nash & Olmstead, supra note 5 at 712. 97

Earl Blumenauer, supra note 58 at 363. 98

Jona Razzaque, Environmental Governance in Europe and Asia (Oxford: Routledge, 2013) at 40. 99

Coglianese, Nash & Olmstead, supra note 5 at 714. 100

Ibid at 714. 101

Ibid.

39

performance-based regulation uncomfortable. It therefore takes some considerable amount of

time before regulators become accustomed to the discretion available to them in enforcing new

standards if they are used to prescriptive regulation.102

This discretion is, however, a necessary

requirement for effective performance-based regulation and will inure to the benefit of the

regulator and enable it to perform its duties effectively. The regulator will have at its disposal

much flexibility in carrying out his duties and can employ several strategies to achieve the

regulatory goal.

Based on the strengths of performance-based regulation discussed above, many advocate

performance-based regulation as the better approach to offshore environment regulation. In a

paper to the United States (US) government after the Macondo oil spill disaster, the Det Norske

Veritas (DNV) noted that to ensure an effective offshore environmental regulatory regime, there

should be a preference for performance-based regulation in offshore environmental regulation

because it involves a comprehensive analysis that documents all the accidental and operational

risks that may occur and how these risks will be prevented or mitigated.103

The National

Commission on the British Petroleum (BP) Deepwater Horizon Oil Spill and Offshore Drilling,

in its report to the US president, recommends a switch to a performance-based regulatory system

similar to that of Norway because it requires “the operator and drilling rig owners to assess the

risks associated with a specific operation, develop a coordinated plan to manage those risks,

integrate all involved contractors in a safety management system, and take responsibility for

developing and managing the risk management process.”104

The PSA also notes that

102

Ibid. 103

Det Norske Veritas & Germanischer Lyold, An Effective US Offshore Safety Regime, online: Det Norske Veritas

& Germanischer Lyold < http://www.dnv.com/resources/position_papers/us_offshore_safety_regime.asp >. 104

National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling, Deep Water, The Gulf Oil

Disaster and the Future of Offshore Drilling (Washington: National Commission on the BP Deepwater Horizon Oil

Spill and Offshore Drilling, 2011).

40

performance-based regulation is best suited for offshore environmental regulation because it

encourages proactive behavior to predict and find solutions to anticipated problems.105

2.3.5 Implementing Performance-Based Regulation.

The implementation of performance-based regulation poses significant challenges,

especially when a transition is being made from a regime highly dependent on a prescriptive, or

design or technology-based regulation to a performance-based regime.106

According to

Coglianese, Nash & Olmstead, there are three main factors which inhibit the successful

implementation of performance-based regulation: “regulators comfort with the existing

prescriptive approach; measurement problems; and institutional path dependence due to existing

legislation oriented towards a prescriptive-based approach.”107

Regulators, generally resist moving from prescriptive standards, which they are

comfortable with, to performance standards which they consider ambiguous and uncertain.108

Regulators prefer dealing with “hardware oriented checklist inspections than inspections that call

for them to judge the quality and effectiveness of a facility’s performance.”109

Even though there

is a general preference among regulated entities for performance-based regulation due to the

inherent flexibility associated with them, they too are wary of the high level of ambiguity that

accompanies it and the corresponding increase in discretion of the regulator.110

Implementing

performance-based regulation in a system highly comprised of prescriptions will be very difficult

105

Supra note 41. 106

Supra note 5 at 719. Most regimes implementing performance based regulations are likely to be making a

transition from prescriptive based regime. 107

Ibid. 108

Ibid. 109

Ibid. 110

Ibid. Most regulated entities will therefore sacrifice the inherent flexibility in the performance approach and go

for prescriptive approaches in order to avoid a regulator with high discretionary power.

41

as one will be trying to “embed a new performance-based approach within a design-based

world.”111

Others have likened it to “the process of making a change in the design of a

skyscraper after construction has already been completed.”112

In cases where transition is being

made to a performance-based system, the speed at which it occurs may be affected by several

factors. These factors include the credibility of the regulators (sticking to their true mandate of

being a regulator), the readiness of the agency to embrace change (eagerness to transition to new

regulatory approaches measured by the dedication of resources by the regulator to the transition)

and the economic environment (the cost to be incurred as a result of considering safety as a

topmost priority).113

It is evident from the foregoing that there may be a general resistance, particularly on the

part of the regulator, towards the implementation of performance based regulations. Any regime

that seeks to effectively enforce performance regulations must overcome these impediments.

2.4 – Conclusion

As discussed above, performance-based regulation is essentially about specifying the

desired outcome to be achieved by regulated entities. The regulated entities and the regulator

have a wide discretion in how to achieve the respective goals. For performance-based regulation

to work effectively the regulation should be comprehensive in nature, encourage responsible

partnerships and cooperation among all the parties involved, promote accountability enforcement

and engender voluntary participation. These elements must be harmoniously linked together

before the right results can be achieved.

111

Ibid 719. 112

Ibid at 720. 113

Ibid.

42

Effective performance-based regulation depends largely on a complete understanding of

the nature of the problem that calls for some form of regulatory intervention including a clear

account of the factors that caused and contributed to the problem. Moreover, as noted,

performance standards themselves differ in the degree of specificity and the kind of

environmental harm they are meant to solve.114

The use of performance-based regulation in offshore environmental regulation holds

promise in achieving environmental goals at a lower cost for both regulated entities and the

regulator. This should be done in a way that encourages technological innovation on the part of

the regulated entities. The advantages of performance-based regulation do not necessarily mean

that it will always be the best form of regulation in all cases but due to the nature of the offshore

industry which has a fast changing technological environment; it is the best approach to employ.

In the next chapter, I discuss the international and Norwegian frameworks for regulating

operational pollution. I identify the key elements of the Norwegian regime underpinning their

effective regulatory regime.

114

Ibid at 723.

43

CHAPTER THREE

EXAMINATION OF THE INTERNATIONAL AND NORWEGIAN LEGAL

FRAMEWORKS FOR REGULATING OFFSHORE OPERATIONAL POLLUTION

3.1 Introduction

The main purpose of this chapter is to explore both the international and Norwegian

framework used in addressing the issue of operational pollution arising from offshore petroleum

exploration and production. This chapter analyzes how international law attempts, through

various treaty arrangements, to address the issue of operational pollution and concludes that

international law fails to do so but only places an obligation on states to address this issue at their

local level. Based on this, the chapter also discusses the framework put in place by the

Norwegian government to regulate operational pollution. The aim is to identify the key elements

underpinning the effective regulation of operational pollution in Norway’s offshore.

This chapter begins with a brief analysis of the international framework for regulating

operational pollution to highlight the fact that international law fails to adequately address the

issue. The chapter also gives a brief overview of the oil and gas industry in Norway and then

discusses of the ownership and control regime governing petroleum resources. The chapter then

examines Norway’s overall environmental governance structure. It discusses the previous and

current approaches to offshore regulation to highlight the transition made in order to perform a

better regulatory exercise. Finally, this chapter discusses the key features of the Norwegian

environmental regime which enable effective regulatory management of offshore operational

pollution. These features include a performance based regulatory approach, a comprehensive

legal arrangement and a clear institutional arrangement.

44

3.2 Examination of International Regime Regulating Offshore Operational Pollution

3.2.1 Introduction

Notwithstanding the fact that operational pollution has been recognized as a worrying

source of marine pollution, there are very few international regulations that attempt to address it.1

The major international and regional conventions to which Ghana is a party that attempt to

regulate operational pollution from offshore oil and gas exploration and production are: United

Nations Convention on the Law of the Sea (UNCLOS);2 Convention on the Prevention of Marine

Pollution by Dumping of Wastes and Other Matter (London Dumping Convention) and its

accompanying 1996 Protocol to Convention on the Prevention of Marine Pollution by Dumping

of Wastes and Other Matter 1972 (London Dumping Protocol );3 1973/1978 International

Convention for the Prevention of Pollution from Ships (MARPOL73/78);4 and the Convention for

Co-operation in the Protection and Development of the Marine and Coastal Environment of the

West and Central African Region (Abidjan Convention).5

1 Sergei V Vinogradov & Jay Paul Wagner, “International Legal Regime for the Protection of the Marine

Environment Against Operational Pollution from Offshore Petroleum Activities” in Zhiguo Gao, ed, Environmental

Regulation of Oil and Gas (London: Kluwer Law International, 2007) 98. 2 United Nations Convention on the Law of the Sea, 10 December 1982, 21 ILM 1261 (entered into force 14

November 1994) [UNCLOS]. 3 Convention on the Prevention of Marine Pollution by Dumping of Wastes and Other Matter, 29 December 1972 11

ILM 1294 (entered into force 30 August 1975) [London Dumping Convention]; 1996 Protocol to the Convention on

the Prevention of Marine Pollution by Dumping of Wastes and Other Matter 7 November 1996 36 ILM 1 (entered

into force 24 March 2006) [London Dumping Protocol]. 4 International Convention for the Prevention of Pollution from Ships, 2 November 1973 12 ILM 1319 as amended

by the 1978 Protocol relating to the International Convention for the Prevention of Pollution from Ships, 17

February 1978 17 ILM 546 (entered into force 2 October 1978) [MARPOL 73/78]. 5 Convention for Co-operation in the Protection and Development of the Marine and Coastal Environment of the

West and Central African Region 23 March 1981, 20 ILM 729 (entered into force 5 August 1984). [Abidjan

Convention]

45

3.3 Review of Conventions

3.3.1 United Nations Convention on the Law of the Sea (UNCLOS)

The UNCLOS seeks to provide a complete legal arrangement to govern the world’s seas.6

In addition to the sovereign right of States to exploit natural resources found within the

prescribed area of their maritime jurisdiction, UNCLOS also places a responsibility on the States

to protect their marine environment.7

With regards to petroleum exploration, states have a responsibility to prevent pollution

arising from the exploitation of these resources.8 States also have an obligation to enact laws and

regulations governing marine pollution arising from exploiting the resources in the seabed. These

laws are required to meet international standards and practices.9 States are required to harmonize

their laws and cooperate at regional levels to establish regional and international rules to control

marine pollution.10

States are further required by the Convention to set up contingency plans for

responding to marine pollutions and also assess the potential effects of offshore activities on the

marine environment.11

UNCLOS, from its provisions, only creates obligations that States are required to fulfill. It

serves as a framework for harmonizing international standards and encouraging international co-

operation.12

The weakness of the UNCLOS lies in the fact that it does not set definite standards to

6 UNCLOS, preamble; Vinogradov & Wagner, supra note 1.

7 UNCLOS, arts 56, 77, 193.

8 UNCLOS, arts 194, 208, 214.

9 UNCLOS, art 208.

10UNCLOS, arts 197, 208.

11UNCLOS, arts 199, 206.

12 Chester Brown, “International Environmental Law in the Regulation of Offshore Installations and Seabed

Activities: The Case for South Pacific Regional Protocol” (1998) 17 Australian Mining and Petroleum LJ 109 at

120.

46

be met by States and does not specifically address the issue of operational pollution; it only

requires States to develop national legislation on the matter.13

3.3.2 London Dumping Convention

The London Dumping Convention is one of the earliest international conventions to

protect the marine environment from human activities. Its objective is to control marine pollution

associated with the dumping of waste and pollutants in the sea.14

It prohibits the pollution of the

sea by preventing the dumping of waste and other matter that is harmful to human health and

marine life.15

Dumping in this context refers to “any deliberate disposal at sea of wastes or

other matter from vessels, aircraft, platforms or other man-made structures at sea; any

deliberate disposal at sea of vessels, aircraft, platforms or other manmade structures at

sea.”16 Dumping is only permitted in cases where permits to dumped have been issued.17

The London Dumping Protocol was negotiated in1996. It emphasizes the concept of

the precautionary principle and requires parties to adopt a precautionary approach in

relation to the dumping of wastes.18 It also encourages the adoption of the polluter pays

principle in relation to who should bear the cost of pollution.19

13

Shane Bosma, “The Regulation of Marine Pollution Arising from Offshore Oil and Gas Facilities – An Evaluation

of the Adequacy of the Current Regulatory Regimes and the Responsibility of States to Implement a New Liability

Regime” (2012) 26 A&NZ Mar LJ 89 at 92; Marissa Smith, “The Deepwater Horizon Disaster: An Examination of

the Spill’s Impact on the Gap in International Regulation of Oil Pollution from Fixed Platforms” (2011) 25 Emory

Int’l L Rev 1477 at 1483; Yee Huang, International Law Implications of the BP Oil Spill, online: Centre for

Progressive Reform <http://www.progressivereform.org/CPRBlog.cfm?idBlog=FBF393AA-EE0A-FF0C-

695B9BA163B50BDB >. 14

International Maritime Organization, Convention on the Prevention of Marine Pollution by Dumping Wastes and

Other Matter, online: International Maritime Organization <

http://www.imo.org/OurWork/Environment/LCLP/Pages/default.aspx >. 15

London Dumping Convention, art I. 16

London Dumping Convention, art III (1) (a). 17

London Dumping Convention, art IV. 18

London Dumping Protocol, art 3 (1). 19

London Dumping Protocol, art 3 (2).

47

The London Dumping Convention explicitly states that its provisions do not apply to

the dumping of waste arising from activities relating to the exploration and production of

petroleum.20 The London Dumping Protocol also reiterates that the dumping of waste

generated from exploration and production of petroleum is not covered by the provisions

of the protocol.21 Thus, under the two international instruments dumping, does not relate

to petroleum exploration and production. Consequently, operational pollution arising from

offshore petroleum activities is not regulated.

3.3.3 MARPOL 73/78

The primary objective of MARPOL 73/78 is the prevention and control of pollution of

the marine environment from shipping vessels.22 To achieve its purpose, MARPOL 73/78,

through its various annexes, regulates the discharge of harmful substances into the sea by:

making it mandatory for oil tankers to have double hulls to prevent operational

discharges;23 detailing the criteria for the discharge of noxious substances;24 issuing

standards to be met in the disposal of harmful substances;25 prohibiting the discharge of

sewage by ships;26 prevention of pollution by garbage especially plastics;27 and preventing

20

London Dumping Convention, art III (1) (c). It states that: “The disposal of wastes or other materials directly

arising from , or related to the exploration, exploitation and associated off-shore processing of sea-bed mineral

resources will not be covered by the provisions of this Convention” 21

London Dumping Protocol, art 1.4.2.4. It states that: “ ‘Dumping’ does not include … The disposal or storage of

waste or other matter directly arising from, or related to the exploration, exploitation and associated off-shore

processing of sea-bed mineral resources will not be covered by the provisions of this Protocol.” 22

Supra note 1 at 103. 23

MARPOL 73/78, Annex I. 24

MARPOL 73/78, Annex II. 25

MARPOL 73/78, Annex III. 26

MARPOL 73/78, Annex IV. 27

MARPOL 73/78, Annex V.

48

air pollution from ships by setting limits on sulphur oxide (SO) and nitrogen oxide (NO)

emissions.

MARPOL 73/78 does not apply to operational pollution from non-shipping sources.

It loosely defines the term “ships” to include “fixed and floating platforms.”28 It thus

appears to apply to fixed offshore installations but this is not the case. It is focused

exclusively on pollution from ships and does not apply to operational pollution from fixed

offshore installation.29 The term “discharge” means “any release however caused from a

ship and includes any escape, disposal, spilling, leaking, pumping, emitting or emptying.”30

This, however, does not cover the “release of harmful substances directly arising from the

exploration, exploitation and associated off-shore processing of sea-bed mineral

resources.”31 Therefore operational pollution from petroleum exploration and production

is not catered for under MARPOL 73/78.

3.3.4 Abidjan Convention

The Abidjan Convention is one of the few regional agreements that provide a

comprehensive legal arrangement for protection of marine and coastal areas.32

It covers the

marine environment and coastal zones falling within the jurisdiction of states in the West and

28

MARPOL 73/78 art 2 (4). 29

Supra note 1 at 103. 30

MARPOL 73/78, art 2 (3) (a). 31

MARPOL 73/78 art 2 (3) (b) (ii). 32

UNEP Abidjan Secretariat, The Convention, online: UNEP Abidjan Convention Secretariat <

http://abidjanconvention.org/index.php?option=com_content&view=article&id=90&Itemid=189 >.

49

Central and South African region.33

It was passed to provide for aspects and sources of marine

pollution that existing conventions do not cover.34

Pollution is defined as “the introduction by man, directly or indirectly, of substances or

energy into the marine environment, coastal zones, and related inland waters resulting in such

deleterious effects as harm to living resources, hazards to human health, hindrance to marine

activities, including fishing, impairment of quality for use of sea-water and reduction of

amenities.”35

States are obliged to ensure the prevention and control of pollution in marine areas

and practice sound environmental management of natural resources found within the areas

covered by the convention.36

States are specifically obliged to put in place appropriate measures

to prevent and reduce pollution caused by dumping from ships37

and land based sources.38

Of

particular relevance to this thesis, a duty is imposed on states to prevent pollution caused by

activities relating to exploitation and exploration of natural resources in the sea-bed.39

This

provision contemplates operational pollution caused during offshore petroleum production and

obligates states to put in place a regulatory regime to address it.

3.4 Conclusion on International Regime Regulating Offshore Operational Pollution

Two conclusions can be drawn from the discussion of international and regional

conventions. First, they do not address the specific issue of operational pollution arising from

offshore petroleum development. They are majorly concerned with pollution caused by the

33

Ibid. Twenty two (22) countries are signatories to the convention; Angola, Benin, Cameroon, Cape Verde, Congo

(DR), Congo (Republic), Ivory Coast, Equatorial Guinea, Gabon, The Gambia, Ghana, Guinea, Guinea-Bissau,

Liberia, Mauritania, Namibia, Nigeria, Sao Tome e Principe, Senegal, Sierra Leone, South Africa and Togo 34

Abidjan Convention, preamble. 35

Abidjan Convention, art 2. 36

Abidjan Convention, art 4. 37

Abidjan Convention, arts 5 and 6. 38

Abidjan Convention, art 7. 39

Abidjan Convention, art 8.

50

shipping industry. Secondly, they place a general obligation on states to develop local measures

to prevent and control pollution in their offshore environment.

3.5 Petroleum Resources in Norway: An Overview

Norway is one of the early oil producing nations in Western Europe. After initial doubts

of finding oil in the North Sea,40

gas discovery in the Dutch city of Groningen in 1959 brought a

wave of optimism about the potential of finding petroleum in the Norwegian Continental Shelf

(NCS).41

The NCS comprises the North Sea, the Norwegian Sea and the Barents Sea.42

Oil was

discovered first in the Ekofisk field in 1969 and production started on 15th

June, 1971.43

Several

major discoveries in subsequent years made Norway one of the world’s leading producers of

oil.44

Currently Norway is Europe’s leading producer of oil and the second largest supplier of

natural gas exporter in the world.45

In 2011, Norway was the world’s seventh largest oil exporter

and fourteenth largest oil producer.46

Exploration and production operations of various degrees are currently going on in

numerous fields across Norway including the Barents Sea and the Norwegian portion of the

40

Few people were of the opinion that the NCS held large levels of oil and gas deposits. Ministry of Petroleum and

Energy, Norway’s Oil History in 5 Minutes, online: Ministry of Petroleum and Energy

<http://www.regjeringen.no/en/dep/oed/Subject/oil-and-gas/norways-oil-history-in-5-minutes.html?id=440538>. 41

Lars-Jakob Alveberg & Eldbjørg Vaage Melberg, Facts 2013 The Norwegian Petroleum Sector, online:

Norwegian Petroleum Directorate <http://npd.no/en/Publications/Facts/Facts-2013/>at 10. 42

US Energy Information Administration, Country Information; Norway, online: US Energy Information

Administration <http://www.eia.gov/countries/analysisbriefs/Norway/norway.pdf> [Country Information]. 43

Norway’s Oil Histroy in 5 Minutes, supra note 40. The Ekofisk field which is more than 20years is located west

of Norway in the central part of the North Sea. 44

Ibid. Production started in the Statfjord, Gullfaks, Oseberg and Troll fields in 1979, 1986, 1988 and 1996

respectively. The three largest oil producing fields in Norway are the Grane, Ekofisk, and Troll fields which

produced 166,000 barrels per day (b/d), 162,000b/d and 118,000 b/d respectively in 2010, See Country Information,

supra note 42. 45

Country Information, ibid note 42. 46

Facts 2013, supra note 41 at 20.

51

North Sea.47

Petroleum has been produced from a total of eighty-eight (88) fields in the NCS

since production started in 197148

with about thirteen (13) fields currently under development

and numerous fields yet to be developed.49

There are currently over 50 companies with licenses

issued by the Norwegian government to engage in exploration and production in the offshore oil

industry.50

Norway’s petroleum resources are categorized into three (3) groups: reserves, contingent

resources and undiscovered resources.51

The reserves consist of all recoverable petroleum

resources in deposits for which a plan for development and operations has been approved or an

exemption has been granted.52

As of January 1, 2012 Norway had 5.32 billion barrels of proven

oil reserves, the largest in Western Europe.53

Contingent resources include those petroleum

volumes for which a decision on whether to produce or not has not been made.54

Undiscovered

resources on the other hand are those categories of petroleum volumes that are assumed to exist

but not yet proven through drilling.55

The petroleum sector is currently Norway’s largest industry

representing more than 23 per cent of the country’s total value creation in 2012.56

47

Ibid. 48

Ibid at 26, 2012 saw the commencement of production in the Atla, Gaupe, Islay, Oselvar and Visund Sor fields in

the North Sea and from the Marulk fields in the Norwegian Sea. 49

Ibid. 50

Ibid at 10. 51

Ibid at 26, resources per the NPD is a collective expression for recoverable petroleum resources. 52

Ibid. 53

Country Information, supra note 42. 54

Facts 2013, supra note 41 at 26. 55

Ibid at 26. 56

Ministry of Petroleum and Energy, Oil and Gas, online: Ministry of Petroleum and Energy <

http://www.regjeringen.no/en/dep/oed/Subject/oil-and-gas.html?id=1003>.

52

3.6 Ownership and Control of Petroleum Resources

The property rights to petroleum deposits in NCS vests in the State of Norway.57

Section

1(1) of the Petroleum Activities Act, 1996 provides that “The Norwegian State has the

proprietary right to subsea petroleum deposits and the exclusive right to resource

management.”58

The Act creates exclusive state ownership and control of petroleum resources,

as such, the right to engage in development, exploration and production of petroleum resources

can only be acquired from the state.59

An individual or company may acquire two different licenses from the government; an

exploration or a production license.60

The exploration license grants the right to explore for

petroleum, allowing the licensee to carry out activities such as geological and geophysical

preliminary work to identify the presence of petroleum in a specified area.61

It does not create an

exclusive, or a preferential right, when production licenses are being granted.62

The exploration

license is valid for three (3) calendar years unless a different duration is indicated.63

The

production license, on the other hand, “regulates the rights and obligations of the companies vis-

à-vis the Norwegian State.”64

The license grants exclusive rights to the production of petroleum

in areas covered by the license and ownership of the petroleum that is produced.65

The license is

57

Norwegian Petroleum Directorate, Framework and Organization, online: Norwegian Petroleum Directorate <

http://npd.no/Templates/OD/Article.aspx?id=4729&epslanguage=en>. 58

Petroleum Activities Act, 1996. 59

Petroleum Activities Act, section 1 (1). 60

Petroleum Activities Act, sections 2(1) and 3. 61

Petroleum Activities Act, sections 2(1) and 1(6) (e). 62

Petroleum Activities Act, section 2(1). 63

Petroleum Activities Act, section 2(1). 64

Facts 2013, supra note 41 at 14. 65

Petroleum Activities Act, section 3(3).

53

for an initial period of ten (10) years but may be extended once the work commitment and

conditions under the license have been fulfilled.66

3.7 Environmental Management in Norway

Environmental governance in Norway is organized in a hierarchical manner.67

The

Ministry of Climate and Environment (MCE) is the leading government institution responsible

for the environment with “particular responsibility for carrying out the environment policies of

the government.”68

It is also “responsible for initiating, developing, implementing and

monitoring measures to protect the environment.”69

The MCE consists of six departments and

four subordinate agencies that help it to fulfill its mandate.70

3.7.1 State of the Environment

Norway has always shown a strong commitment to tackling environmental issues being,

in 1992, the first country in the world to have a minister responsible for the environment at

cabinet level.71

Norway has ranked strongest among countries with excellent environmental

66

Petroleum Activities Act, section 3(9). 67

State of the Environment, Norway; Environmental Pressures, online: State of the Environment, Norway

<http://www.environment.no/Topics/Norway/>. 68

Ministry of Climate and Environment, About the Ministry, online: Ministry of Climate and Environment, <

http://www.regjeringen.no/en/dep/md/about-the-ministry.html?id=673>. 69

Organization for Economic Development, OECD Environmnetal Performance Reviews: Norway 2011, online:

Organization for Economic Co-operation and Development iLibrary < http://dx.doi.org/10.1787/9789264098473-en

>. 70

Ministry of Climate and Environment, Organization, online: Ministry of Climate and Environment, <

http://www.regjeringen.no/en/dep/md/about-the-ministry/organisation.html?id=692 >. 71

Organization for Economic Co-operation and Development, Environmental Policy Tools and Firm-Level

Management Practices in Norway, online: Organization for Economic Co-operation and Development

<http://www.oecd.org/norway/31684454.pdf>.

54

performance and it ranked third behind Switzerland and Latvia in the 2012 Yale environmental

performance index.72

Environmental pressure areas such as marine pollution are being regulated effectively.73

For example, the concentration of oil in produced water discharged during routine operations per

month in petroleum production is below the current maximum of 30 milligrams per litre (mg/l)

set in national legislation.74

Environmental Impact Assessment (EIA) requirements in Norway,

and by necessary implication in the offshore petroleum industry are some of the most stringent

worldwide.75

Environmental regulatory procedures are much simplified and enforcement is

better targeted.76

3.7.2 Environmental Policy

Due to its membership of the European Economic Area (EEA), most of Norway’s

environmental policies are either in tandem with, or influenced by, the requirements of European

Union (EU) legislations.77

The implementation of these policies is coordinated at a national level

by the MCE and by specific departments at a more decentralized level.78

72

Environmental Performance Index, EPI Rankings, online: Environmental Performance Index

<http://epi.yale.edu/epi2012/rankings>. 73

Ministry of Climate and Environment, The Government’s Environmental Policy and the State of the Environment

in Norway, online: Ministry of Climate and Environment <

http://www.regjeringen.no/pages/2094393/PDFS/STM200620070026000EN_PDFS.pdf >. 74

Regulations Relating to Conducting Petroleum Activities, 1997 [Activities Regulations], section 60. 75

OECD 2011, supra note 69 at 70. 76

Ibid. 77

OECD 2011, ibid. Norway joined the EEA in April 1984 after a national referendum in 1972 denied its bid to join

the EU. The bid to join the EU was again denied in 1994 by a national referendum. Failure to achieve the required

majority to join the EU has been attributed to the reluctance of the Norwegian citizenry to cede their sovereignty.

Nathan Johnson, “Why did Norway not join the European Union”, online: Nordic Notes <

http://diemperdidi.info/nordicnotes/vol06/articles/johnson2.html >. 78

Supra note 68.

55

Norway’s environmental policy has six (6) main priority areas: sustainable land-use &

transport policy, biodiversity & outdoor recreation, protection & use of cultural heritage, stable

climate & clean air and clean waters & a non-toxic environment.79

In the area of clean waters,

there is a marine policy which advocates the use of the precautionary approach in developments

likely to affect the marine environment. The use of this approach is therefore applied before

offshore petroleum production is started.80

3.8 REGULATING OPERATIONAL POLLUTION

3.8.1 Introduction

For fifty or more years, Norway has effectively managed its offshore oil and gas industry

and is seen as an industry leader in environmental protection.81

It has employed some key

regulatory measures which have been successful in regulating its offshore industry and, by so

doing, has carved a niche for itself.82

This part of the thesis discusses operational pollution in

Norway’s offshore and the legal and institutional framework adopted to regulate it. It identifies

the key elements that are used to effectively perform the task of regulation.

79

Supra note 73. 80

Ibid; OECD 2011, supra note 69 at 29. 81

Anne Hanson “Offshore Drilling in the United States and Norway: A Comparison of Prescriptive and

Performance Based Approaches to Safety and Environmental Regulation” (2010-2011) Geo Int’l Envtl L Rev 555 at

556. 82

Hanson, ibid at 556.

56

3.8.2 Operational Pollution in Norway’s Offshore

One of the main pressures on Norway’s offshore environment is operational discharges

from the oil and gas industry.83

These discharges include “crude oil and produced water, which

contains residues of oil, other organic and inorganic components and added chemicals”84

and

mud and waste.85

Norway is committed to eliminate the discharge of these substances and has successfully

eliminated some of them.86

As a party to the Convention for the Protection of the Marine

Environment of the North-East Atlantic (OSPAR Convention), “Norway committed (for 2020) to

reduce oil in produced water discharged into the sea to a level that presents no harm to the

marine environment, and to move towards eliminating discharges of hazardous substances.”87

In

1997, Norway established a zero-discharge target for the oil and gas industry on the NCS to

eliminate the discharge of environmentally hazardous substances by 2005.88

The goal for

chemical additives was achieved and also significantly lower discharges of chemicals on the

OSPAR Convention list have been recorded.89

The target for produced water has, however, not

been achieved due to the ageing nature of Norway’s offshore fields.90

Despite this minor setback,

Norway’s regulatory approach is working effectively.91

83

OECD 2011, supra note 69 at 102. 84

Ibid. 85

Reidunn Stokke, Management of Pollution from the Offshore Oil and Gas Industry in Norway, online: NORAD <

www.norad.no/_attachment/133258/binary/61131?download=true>. 86

OECD 2011, supra note 69 at 102 87

Ibid, the OSPAR Convention was open for signature at the Ministerial Meeting of the Oslo and Paris Commissions

on 22nd

September 1992. 88

Ibid. 89

Ibid. 90

Ibid. 91

Dag Erlend Henrisksen, Managing Environmental Risks in the Norwegian Oil and Gas Business, online: Red

Interamericana de Especialistas en Legislacion Ambiental (RIELA) < http://www.riela.org/pdfs/rio_2012/10-

Dag%20Henriksen.pdf>.

57

3.8.3 Features of the Regulatory Regime

3.8.3.1 Regulatory Approach

(A) Initial Regulatory Approach

Norway’s offshore petroleum industry started before a regulatory authority and

regulations were put in place.92

The first regulatory body with the purpose of regulating for

environmental safety was appointed in 1970 after exploratory activity had already began.93

In

1975, overarching regulations were introduced for exploration and drilling vessels and were

implemented by the Norwegian Maritime Directorate (NMD).94

The Norwegian Petroleum

Directorate (NPD) developed detailed and prescriptive rules for the production of underwater

petroleum deposits.95

The NPD faced an uphill challenge in keeping up with the rate of the

development of the oil and gas industry.96

There was some latent confusion in the relationship

between the regulator and the regulated companies.97

While the NPD, on one hand, expected the

companies to ensure that their activities were acceptable and in line with regulatory

requirements, the operating companies, on the other hand, felt the regulator should be

responsible for inspections and ensuring conformance with set rules and issuing corrective orders

in cases of non-compliance.98

92

Petroleum Safety Authority, From Prescription to Performance in Petroleum Supervision, online: Petroleum

Safety Authority <http://www.ptil.no/news/from-prescription-to-performance-in-petroleum-supervision-article6696-

878.html>. 93

Ibid, the first exploration well was drilled in the NCS 1966 and it wasn’t until four years later that a regulatory

body was set up. 94

Ibid. 95

Ibid 96

Ibid. 97

Ibid 98

Ibid.

58

As a result of the confusion in the relationship between the regulator and the regulated

companies, two disasters occurred which affected the development of a regulatory regime in the

NCS; the Ekofisk Bravo blowout in 1977 and the Alexander L Kielland in 1980.99

During its

operations on a well workover on the Ekofisk 2/4 Bravo installation, a downhole safety valve

failed which led to the spilling of over 9,000 tonnes of crude oil in the North Sea.100

Following

this spill, the NPD introduced new requirements and demanded a safe job analysis of risky

operations.

(B) Current Regulatory Approach.

As activity in the offshore increased in the mid-1970s, regulating the activities of the oil

companies proved difficult.101

The regulators were therefore faced with the challenge of

increasing inspection activity in the offshore.102

In response to this, the regulators developed and

implemented a self-regulatory regime which required fewer personnel than what was demanded

by the previous prescriptive regime.103

In 1985, the government, through its parliament,

augmented the transition from a prescriptive approach to one that was performance centered by

99

Ibid. 100

Ibid. The Ekofisk B blowout occurred on 22nd

April, 1977 during operations on the B 14 production well when

production tubing was being pulled. The production valve had been removed prior to the job and a blowout prevent

had not yet been installed. The well kicked in and the down hole safety valve failed. This led to a well blowout and

an uncontrollable release of oil. The NPD put the estimated amount of released oil as between 80,000 barrels (bbls)

to 120,000 bbls. On April 30th

the well was capped after seven days of spillage. No significant environmental

damage or shoreline pollution occurred. Official inquiry into the blowout blamed human error as a factor in addition

to a mechanical failure. See Oil Rig Disasters, Ekofisk Bravo, online: Oil Rig Disasters & Offshore Drilling

Accidents < http://home.versatel.nl/the_sims/rig/ekofiskb.htm>. 101

Derek Orth, “Administering America’s Oil Fields: How Fewer, Performance-Based Regulations Can Produce

Better Results.” (2011) 26:2 J Envtl & Litig 509 at 529. 102

Rob Grant, Will Moreira & David Henley, “Potential for performance-based regulation in the Canadian Offshore

Oil and Gas Industry” (2006-2007) 44 Alta L Rev 1 at 11. 103

Ibid

59

passing the Act relating to Petroleum Activities, 1985.104

This eventually did away with the

prescriptive-based regulatory regime that was in place.

The current regulatory approach in Norway “can best be described as predominantly

performance-based, although a measure of prescription remains in specific areas.”105

The

development of a performance-based approach was achieved over a couple of years and it now

forms the backbone of Norway’s offshore environmental regulatory regime.106

Norway’s

approach does not lay down “mandatory technical requirements”107

but rather specifies “the

performance or function which is to be attained or maintained by the industry.”108

The regulator

defines the safety standards and acceptance criteria which companies must meet.109

It sets out

specific safety goals to which each operator must set out plans and measures to achieve them110

thereby shifting the burden of ensuring a high level of environmental protection from the

regulator to the operator.111

The operator in turn, is given the freedom of choosing adequate

solutions that are suitable to specific projects and company philosophies while simultaneously

meeting regulatory expectations.112

This is in line with Blumenauer’s fourth element of

performance-based regulation which requires expressing the standards in specific terms.

The MCE’s goal with regards to operational discharges sets the tone for a performance-

based approach in Norway’s offshore oil and gas industry. The goal provides that “operational

104

Ibid. The 1985 Act Relating to Petroleum Activities has been repealed by The Petroleum Activities Act, Norway

1996. 105

Ibid. 106

Ibid. 107

Jennifer Dagg et al, “Comparing the Offshore Regulatory Regimes of the Canadian Artic, the U.S., the U.K.,

Greenland and Norway” at 38, online: Pembina Institute < http://www.pembina.org/pub/2227 >. 108

Norsk Olje & Gass, Summary of differences between Offshore Drilling Regulations Norway and the U.S. Gulf of

Mexico, online: Norsk Olje & Gass < http://www.norskoljeoggass.no/PageFiles/6754/Report%20no%202010-

1220%20Summary%20of%20differences%20REV%2002%202010-08-27%20signed.pdf >. 109

Ibid. 110

Orth, supra note 101 at 530. 111

Hanson, supra note 81 at 556; Grant, Moreira & Henley, supra note 102 at 12. 112

Ibid at 12.

60

discharges will not result in damage to health or the environment, or result in a rise in

background levels of oil or other environmentally hazardous substances in the long term.”113

Another example is the requirement that any license applicant/operator who intends to work with

the Norwegian government must submit a risk analysis which outlines the plans and measures to

achieve goals or standards set out in the relevant regulations.114

Evidently the success of Norway’s regulatory regime is directly hinged to the robust and

effective performance based approach to regulation that they have adopted. In doing so, they

have granted the operators the flexibility to adopt a whole range of means and measures to meet

regulatory standards.115

3.8.3.2 Institutional Arrangement

As stated earlier the MCE is primarily responsible for the environment with the duties of

developing and implementing environmental policies of the government and ensuring that

measures are in place to protect the various sections of the environment.116

In relation to offshore

pollution, the Norwegian Climate & Pollution Agency (NCPA)117

has the responsibility of

regulation.118

The NCPA is mostly concerned with regulatory issues associated with regular

petroleum discharges and recovery during normal operations.119

The NCPA has now been

113

State of the Environment, Seas and Coastal Environment, online: State of the Environment

<http://www.environment.no/Goals-and-indicators/Goals-and-indicators/Water-quality/?mid=6661#goto6661>. 114

Grant, Moreira & Henley, supra note 102 at 12. 115

In the next chapter the performance-based approach, its element and how it works is fully discussed. 116

OECD 2011, supra note 69 at 27. 117

Also sometimes referred to as the State Pollution Control Agency (SPCA) 118

Ingrid Arstad, “Regulations Concerning Risk Analysis and their Application in Environmental Safety Protection

in Norway” (1994) 29 Marine Pollution Bulletin 330; Orth, supra note 101 at 530. 119

Arstad, ibid at 330.

61

merged with the Norwegian Directorate for Nature Management (DN) to form the Norwegian

Environmental Agency (NEA).120

The NEA is a one of the four (4) subordinate agencies under the MoE and is chiefly

responsible for administering the Pollution Control Act 1981.121

In terms of functions, the NEA

differs from the NPD by being responsible for administering regulatory requirements concerning

discharge of pollutants in connection with normal offshore operations122

while the latter is

concerned with administering regulatory requirements that prevent or stop accidental oil

pollution.123

The functions of the NEA under the Act in relation to operational pollution in the

NCS are very vast and exhaustive. The NEA, by virtue of being the pollution control authority, is

responsible for applying the provisions of the Act to the “exploration for, production and

utilization of natural subsea resources on the Norwegian part of the continental shelf”124

and for

issuing regulations directed at the generation of waste or pollution arising from such activities.125

The NEA is responsible for indicating whether pollution is prohibited or allowed to certain

levels; how permanent and temporary installations should be set up and managed to prevent

pollution; the quality requirements for pollution control equipment, etc.126

The NEA also has the

onus of deciding whether an EIA should be performed under the Pollution Control Act, 1981 for

120

Norwegian Environment Agency, About Us, online: Norwegian Environment Agency

<http://www.miljødirektoratet.no/english/ >. Due to the merger of the NCPA and the DN to form the NEA, the new

body performs the functions of the two bodies. 121

Ministry of Climate and Environment, Norwegian Environment Agency, online: Ministry of Climate and

Environment < http://www.regjeringen.no/en/dep/md/about-the-ministry/Subordinate-agencies/norwegian-

environment-agency.html?id=85642 >; Arstad, supra note 118 at 331; European Network of Heads of Environment

Protection Agencies, Pollution and Climate Agency, online: European Network of Heads of Environment Protection

Agencies < http://epanet.ew.eea.europa.eu/european_epas/countries/no/norwegian-pollution-control-authority/ >. 122

Arstad, ibid at 331. 123

Ibid at 330; Norwegian Environment Agency, supra note 121. 124

Pollution Control Act, 1981(As amended on 20th

June, 2003), section 4.The natural subsea resources are the oil

and gas resources. 125

Ibid. 126

Ibid, section 9. The regulations may also require persons operating polluting equipment should have certain

qualifications and also set threshold limit values for the occurrence of certain substances.

62

any planned activity.127

If an EIA that is required, it must contain information on the kinds of

pollution that will be generated during the normal operations of the planned activity.128

In line with the second and third elements of performance-based regulation identified by

Blumenauer in Chapter Two above, another key feature of the NEA functions is its collaboration

and liaison with other regulatory bodies like the Petroleum Safety Authority (PSA) and the NPD

in order to fulfill its mandate.129

The PSA, which falls under the Ministry of Labour, has

“regulatory responsibility for safety, emergency preparedness and the working environment in

the petroleum sector.”130

The NEA, therefore, collaborates with other regulators who have

responsibility over issues of health and safety in the offshore oil and gas industry.131

3.8.3.3 Comprehensive Legislative Arrangement

An array of legislations governs the petroleum sector in Norway ranging from the

Petroleum Activities Act, 1996, and its associated regulations, to the Pollution Control Act, 1981

and its regulations.132

With regards to offshore regulation, the Pollution Control Act, 1981 is the

main statute for environmental governance with additional guidance from other subsidiary

legislations.

127

Ibid, section 13. 128

Ibid. 129

Arstad, supra note 118 at 330. 130

Dagg et al, supra note 107 at 37. 131

Ibid. 132

Ibid.

63

3.8.3.3.1 Pollution Control Act 1981

The Pollution Control Act, 1981 serves as a framework to protect the environment from

pollution, irrespective of the source.133

The purpose of the Act is to protect the “outdoor

environment against pollution and to reduce existing pollution, to reduce the quantity of waste

and to promote better waste management.”134

The Act also ensures that “the quality of the

environment is satisfactory, so that pollution and waste do not result in damage to human health

or adversely affect welfare, or damage the productivity of the natural environment.”135

The Act

applies to a host of pollution related activities, including petroleum exploration on the NCS,136

transportation,137

treatment of waste,138

and conduct of environment impact assessment.139

The Act imposes a duty on individuals to avoid pollution of any manner either by

possessing anything or initiating any activity that is likely to cause pollution unless the activity

causing pollution is exempted or authorized under the Act.140

The Act clearly establishes that “all

pollution is prohibited if it is not permitted by permit.”141

By virtue of the Act’s applicability to

the exploration and development of subsea natural resources on the NCS, operational pollution

likely to arise from offshore exploratory activities is prohibited unless undertaken in accordance

with a permit. The NEA may issue special regulations that lay down:

1. Emission limit values for types of pollution that shall be permitted or laying

down that pollution shall be prohibited completely or at certain times.

133

Henriksen, supra note 91. 134

Pollution Control Act, section 1. 135

Pollution Control Act, section 1. 136

Pollution Control Act, section 4. 137

Pollution Control Act, section 5. 138

Pollution Control Act, chapter 4. 139

Pollution Control Act, chapter 3. 140

Pollution Control Act, section 7. 141

Henrisken, supra note 91.

64

2. Threshold limit values for the occurrences of certain substances, noises,

vibrations, light and other radiation in the environment, and the measures that

shall be taken if these values are exceeded.

3. How permanent and temporary installations shall be set up and how an

enterprise shall be managed to prevent pollution.

4. Quality requirements for pollution control equipment and a requirement that

such equipment must not be sold without being approved by the pollution control

authority,

5. That personnel operating an enterprise that may involve pollution shall have

specific qualifications.142

The Act also makes provision for the issuance of special permits for any activity that may

lead to pollution.143

For the offshore exploration industry, the permits issued contain specific

provisions which are case specific and incorporate the polluter pays principles, the ideals of

using best available techniques and the precautionary principle.144

The permit defines the

activities covered, limitations on the release of chemicals and oil drilling fluids, provisions on the

release of produced water and drill cuttings, etc.145

The Act, in addition, stipulates the conduct

and content of the EIA process. The EIA should include a study of the types of pollution that will

be generated during the normal operations of the activity, the short and long term effects of the

pollution, etc.146

The Act also provides for the inspection of sources where pollution is likely to

occur,147

the use of internal control systems to ensure compliance with the Act,148

compensation

for damage caused by pollution,149

and the imposition of fines for contravention of the provisions

of the Act.150

142

Pollution Control Act, section 9. 143

Ibid, section 11. 144

Henriksen, supra note 91. 145

Ibid. 146

Pollution Control Act, section 13 147

Pollution Control Act, section 50. 148

Pollution Control Act, section 52 (b). 149

Pollution Control Act, section 55. 150

Pollution Control Act, section 73.

65

In addition to the Pollution Control Act, 1981 there are further applicable regulations

governing the offshore industry: the Framework Regulations, the Management Regulations, the

Facilities Regulation and the Activities Regulation passed under the Petroleum Activities Act.151

Of these four, the Facilities and Activities Regulations apply specifically to the offshore

sector.152

The Facilities Regulation provides guidelines on the design and outfitting of facilities

for workplace health and safety, pollution prevention and emergency preparedness.153

Facilities

used in offshore recovery of petroleum must be designed to meet certain performance-based

standards stipulated in the regulation including a requirement that: the failure in one component

or a simple mistake will not result in unacceptable consequences; the lowest possible risk of

pollution is adopted; and prudent maintenance of these facilities.154

Facilities used offshore must

be equipped with the necessary safety functions that can detect abnormal conditions, prevent

those conditions from developing into hazardous situations and limit any damage caused.155

The

development and use of new technology in petroleum activities must be carried out in a manner

that meets the best criteria.156

Also all installations, systems and equipment must be designed in a

manner that limits human error and operates with the lowest risk of pollution.157

The need for the

use of chemical and technical solutions must be reduced and in cases when used the solutions

chosen must prevent harmful influences and have low risk of pollution the environment.158

Facilities attached to processing facilities should have a process safety system which must be

151

Dagg et al, supra note 107 at 37. 152

Ibid at 38. 153

Ibid. 154

Regulations Relating to Design and Outfitting of Facilites, etc in the Petroleum Activities, 2010 (Facilities

Regulation), section 5. Other standards to be met include; efficient and prudent handling and transport of materials,

prudent operational assumptions and restrictions, very low risks of accidents and establishing barriers that detect

abnormal conditions and reduce the potential for failures and hazards. 155

Facilities Regulation, section 8. 156

Facilities Regulation, section 9. 157

Facilities Regulation, section 10. They should also be suitable and able to withstand pressures they are exposed

to during operations. 158

Facilities Regulation, section 15. The solutions should also health and safety of personnel, fire and explosion

hazards,

66

designed in such a manner that safe conditions are maintained even if the processing facilities

become faulty.159

Open drainage systems that are capable of collecting and diverting oil and

chemicals must be fitted so that they reduce the risk of pollution.160

Drilling and well systems

used in petroleum recovery per the regulations must meet specified performance-based

requirements that are geared at preventing pollution.161

As is apparent, the regulatory

requirements are largely performance-based, designed to achieve specific environmental goals

and outcomes.

The Activities Regulation applies to activities related to facilities and equipment used in

offshore petroleum recovery.162

It requires preliminary surveys to be carried out to ensure

prudent installation and use of facilities in the offshore.163

All blowout preventers and pressure

valves used must both be pressure and function tested.164

Baseline surveys should be performed

to meet the guidelines for petroleum activities in the NCS before exploration and production

drilling in new and unsurveyed areas.165

The regulation also indicates the manner in which oily

water should be treated. It requires an environmentally friendly treatment of oily water before its

discharge to sea.166

In this regard, the regulation has set a weighted average of 30 milligram of

oil per litre of water as the maximum concentration of oil in oily water discharged for a month.167

Chemicals used and discharged during petroleum activities in the NCS must be tested to ensure

159

Facilities Regulation, section 34. 160

Facilities Regulation, section 40. 161

Facilities Regulation, Chapter VIII. Section 48 requires that well barriers are designed in such a manner that the

well’s integrity is ensured and the well barrier functions are safeguarded during the lifetime of the well. Drilling

fluid systems per section 51 are to be designed in a manner that it performs its functions without causing any form of

pollution. 162

Activities Regulation, section 1. 163

Activities Regulation, section 15. 164

Activities Regulation, section 51. 165

Activities Regulation, section 53. 166

Activities Regulation, section 60. 167

Ibid.

67

they meet the required performance-based standards.168

They are also required to undergo

environmental assessment to ensure that they pose the lowest risk of damage to the

environment.169

Cuttings from drilling activities and other solid particles must not be discharged

to sea if the content of oil in the drilling fluid exceeds ten grams of kilo per dry mass.170

Finally,

oil or oily water from well testing and clean up should not be discharged to sea unless cleaned.171

Again, analysis of these regulations indicates that they specify performance-based standards, in

keeping with the theme of a performance based regulatory approach to regulation.

In conclusion it is important to note that a key principle behind environmental regulation

of petroleum activities in Norway is the internal control principle which places the onus on

operating companies to ensure compliance with rules and regulations in place.172

As such the

regulations are not prescriptive but performance-based requirements.173

These requirements

ensure that measures put in place meet the specific risks posed by each activity so that the

desired levels of performance are achieved.174

In this regard, the operating company is required

to implement a risk analysis program to “identify the specific risks inherent to an activity, thus

identifying the challenging the safety challenges that require dedicated measures in order to

comply with safety regulations.”175

Also, the legislations in the Norwegian regime are

comprehensive and specific, requiring transparent processes and quantifiable outcomes thus,

satisfying Blumenauer’s first and fourth elements of an effective performance-based regulation.

168

Activities Regulation, section 62. 169

Activities Regulation, section 64. 170

Activities Regulation, section 68. 171

Activities Regulation, section 69. 172

Arstad, supra note 118 at 331. 173

Ibid. 174

Ibid. 175

Ibid. Safety is defined broadly by Ingrid Arstad to include the environment and not restricted to the working

environment.

68

3.8.3.3.2 Environmental Impact Assessment under the Pollution Control Act

One of the key components of Norway’s environmental regulatory regime in relation to

the offshore oil and gas industry is the EIA process.176

An EIA basically consists of “the analysis

and evaluation of possible environmental impacts of proposed decisions or activities likely to

cause significant effects on the environment.”177

The EIA process serves as “a tool to integrate

environmental concerns and considerations into the decision-making processes of government at

all levels.”178

It also helps arrive at informed decisions and serve as a concrete basis for follow-

up and monitoring.179

An EIA process is a mandatory requirement that must be met before offshore petroleum

production is carried out.180

Site specific environmental assessments included in a Plan for

Development and Operation (PDO) must be carried out by companies wishing to operate in an

offshore area.181

The assessment process per legal requirements must include a study of:

1. which types of pollution the activity will generate during normal operations

and in the event of all conceivable types of accidents, and the likelihood of

such accidents,

2. what short- and long-term effects the pollution may have. If necessary, studies

shall be made of natural conditions in the areas that may be affected by

pollution. In particular, it shall be ascertained how pollution will affect

people’s use of the environment and who will suffer particular nuisance as a

result of pollution,

3. alternative locations, production processes, purification measures and ways of

recovering waste that have been evaluated, and reasons for the solutions chosen

by the applicant,

176

Henriksen, supra note 91. 177

Ministry of Climate and Environment, Environmental Impact Assessment, online: Ministry of Climate and

Environment <http://www.regjeringen.no/upload/kilde/md/bro/2003/0001/ddd/pdfv/182783-t-1428_e.pdf>. 178

Ibid. 179

Ibid. 180

Courtney Fidler & Bram Noble, “Advancing Strategic Environmental Assessment in the Offshore Oil and gas

sector: Lessons from Norway, Canada and the United Kingdom” (2012) 34 Environmental Impact Assessment

Review 12 at 13. The Petroleum Activities Act required that general regional environmental assessment should be

conducted in the NCS. 181

Ibid.

69

4. how the activity will be integrated into the general and local development

plans for the area, and if relevant, how it will restrict future planning.182

One key component of the EIA process is substantive public participation which brings

on board relevant stakeholders while satisfying “the principles of democracy and stakeholder

engagement.”183

In cases where the contemplated activity is likely to generate pollution in its

normal operations, the EIA must provide viable alternatives to the manner the activity would be

carried out in other to reduce or prevent the contemplated pollution.184

The EIA plays a critical role in predicting the possible pollution likely to occur from an

activity and providing better alternatives for carrying out the activity. As such it is indispensable

in the overall framework for regulating operational pollution.

3.8.3.3.3 Compliance Monitoring and Enforcement under the Pollution Control Act.

The onus of proving compliance with performance-based regulations lies with the

operator with the regulator being responsible for monitoring through inspection.185

The purposes

of compliance monitoring in Norway’s offshore oil and gas industry are: to check whether the oil

companies are in compliance with the regulations; to collect evidence of non-compliance and

ensure that right and adequate enforcements measures are taken; to check the quality of self-

reported data; to check the establishment and functioning of an internal control system; to

improve environmental quality; and to ensure that there is a level playing field for all

182

Pollution Control Act, section 13. 183

Fidler & Noble, supra note 180 at 15. Public Participation is modeled on the requirements of the Aarhus

Convention on Access to Information, Public Participation in Decision and Access to Justice in Environmental

Matters. 184

Ibid at 16. 185

Dagg et al, supra note 107 at 38.

70

stakeholders.186

In checking for compliance with the Act, the NEA uses several mechanisms

including inspections, with the NEA granted unfettered access to inspect all activities causing or

likely to cause pollution.187

In carrying out inspections, the areas commonly scrutinized include

the operators’ managements system, discharges to sea, use and discharge of chemicals, risk

assessment;188

annual reports and environmental monitoring programs.189

In cases where

pollution has occurred, the NEA may carry out investigations to ascertain the cause of the

pollution, its impact and how the pollution generated can be combatted to ensure that a state of

compliance with the Act is maintained.190

Once non-compliance with the Act has been identified, enforcement measures are

implemented to ensure compliance. In line with Blumenaeur’s fifth element of an effective

performance-based system, enforcement mechanisms in Norway’s regime include the use of

“warning letters, recommendations for frequent inspections, fines and withdrawal of permits.”191

Other mechanisms include the requirement to provide further information, make corrections

within a certain time frame or prosecution by police.192

Where the Pollution Control Act 1981 or

any regulations made there under the authority of the act are violated, the NEA can impose

“Pollution Fines” to ensure compliance.193

The pollution fines can be issued for contravention of

the Act or failing to meet a deadline for remedying a polluting situation.194

Criminal sanctions, in

the form of fines and imprisonment, can also be used to ensure compliance in cases where there

186

Reidunn Stokke, supra note 85. 187

Pollution Control Act, section 50. 188

Pollution Control Act, section 50; Reidunn Stokke, supra note 88. 189

Henriksen, supra note 91. 190

Pollution Control Act, section 51. 191

OECD 2011, supra note 69 at 76. 192

Reidunn Stokke, supra note 85. 193

Pollution Control Act, section 73. 194

Pollution Control Act, section 73.

71

is willful or negligent cause of pollution contrary to the Act or failing to remedy a situation as

directed by the NEA.195

3.9 Conclusion

In the first part of this chapter, the discussion centers on the international regime for

regulating operational pollution. The various international conventions discussed do not set

prescriptive or performance-based standards for regulating operational pollution. Rather, they

place an obligation on states to put in place measures to address the issue. Based on this, the rest

of the discussion in this chapter focuses on the Norwegian regime for regulating operational

pollution. The protection of the marine environment is a key component of Norway’s

environmental policy and, as such, the relevant legislation is directed at achieving this goal.

After an initial prescriptive approach to regulation, the Norwegian legislation has shifted to the

current performance-based approach which is flexible and allows companies conducting

petroleum activities in the offshore to adopt several solutions in order to meet regulatory

standards. A clear institutional arrangement forms the foundation of Norway’s regulatory

regime. The NEA has a well-defined role in order to fulfill its mandate. Comprehensive

legislations and regulations governing the offshore sector establish performance-based standards

which tackle the issue of operational pollution. These standards set limits on the discharge of key

operational pollutants such as the oil content in produced water, drill cuttings, but are not

prescriptive on how these standards are to be met. There is an EIA process that requires oil

companies to predict the potential impacts of their activities and provide potential ways to

remedy this situation. A compliance and enforcement mechanism that employs both adversarial

195

Pollution Control Act, section 78.

72

and non-adversarial means to achieve compliance with regulations makes up the final part of the

regulatory regime.

The essential elements of performance-based regulation identified by Blumenauer are

reflected in the Norwegian regime. Legislations including the Pollution Control Act, Activities

Regulation and Framework Regulation, are comprehensive in nature and they stipulate

transparent processes and quantifiable outcomes. The NEA as the principal regulatory body

cooperates effectively and partners well with other regulatory bodies in order to fulfill its

mandate. Finally, compliance and enforcement mechanisms are comprehensive and targeted at

protecting the environment.

In the next chapter I discuss the regulation of operational pollution from offshore oil and

gas activities in Ghana. I identify the features of the regime including the regulatory approach,

the conduct of environment impact assessment and compliance monitoring and enforcement. I

conclude by highlighting the defects in Ghana’s regime.

73

CHAPTER FOUR

EXAMINATION OF THE GHANAIAN LEGAL AND REGULATORY FRAMEWORK

FOR REGULATING OFFSHORE OPERATIONAL POLLUTION

4.1 Introduction

In this chapter, the discussion centers on the legal and regulatory framework used in

dealing with offshore operational pollution in Ghana. The chapter analyses the Ghanaian regime

with reference to the same key features examined in the previous Chapter relating to the

Norwegian regime, concluding that the current Ghanaian regime does not effectively regulate

operational pollution from offshore oil and gas activities and therefore, does not achieve its

intended purpose.

4.2 Structure of Chapter

This chapter begins with a discussion of the history of petroleum exploration in Ghana by

highlighting the initial efforts undertaken to discover oil in commercial quantities. The chapter

then discusses the ownership and control of petroleum resources in the Ghanaian offshore to

establish that ownership resides with government and as the owner, it is responsible for ensuring

that an effective regulatory regime exists to protect the environment during exploitation of its

resource. The chapter concludes with a discussion of the regime for regulating operational

pollution, highlighting the key features of the regime and the shortfalls therein.

74

4.3 Ghana: History and Overview of the Petroleum Industry

Although exploration for petroleum began in Ghana over one hundred years ago, until

very recently this exploration did not result in any significant discovery.1 In 2007, commercial

quantities of oil were discovered offshore in Ghana’s Jubilee field and large scale production

started in 2010.2 Exploratory efforts in the run up to this major oil discovery involved acquisition

of seismic data and the drilling of several wells.3 From 1896 to 1957 about seventeen exploratory

wells were drilled by various international oil companies (IOC) which yielded little or no barrels

of oil.4 The period around the 1970’s witnessed the drilling of the first offshore well in the

Saltpond basin.5 Exploratory activities intensified and Agric-Petco secured a petroleum license in

1977 to produce oil from the Saltpond field between 1978 and 1985.6 Phillips Petroleum

Company in 1974 began exploration in the Tano-Cape Three Points basin and drilled one deep

water well and six shallow water wells. Phillips Petroleum later relinquished the Tano-Cape

1 Osei Bonsu Dickson, A Concise History of Oil and Gas Exploration In Ghana, online : Ghana Oil Watch

<http://ghanaoilwatch.org/index.php/ghana-oil-and-gas-news/1007-a-concise-history-of-oil-and-gas-exploration-in-

ghana> 2 Ibid; George Agyei et al, “Oil Industry Activities in Ghana: Community Perceptions and Sustainable Solutions”

(2012) 4:5 Research Journal of Environmental and Earth Sciences 583 at 584. The Jubilee Oil Field is located

between the Deep Water Tano and West Cape Three Points blocks, about 60 km offshore Ghana and 130 km south-

west of Takoradi, the regional capital of the Western Region and is operated by the Jubilee partners which comprise

of the Ghana National Petroleum Corporation (GNPC), Anadarko Petroleum, Tullow Oil Plc and the E O Group. 3 G.O Kesse, The Mineral and Rock Resources of Ghana (Netherlands: AA Belkama, 1985) 518-519 [Kesse

“Mineral and Rock Resources”]; G.O Kesse, Oil and Gas Possibilities on and Offshore Ghana, online: AAPG

Databses/Archiveshttp://archives.datapages.com/data/specpubs/basinar2/data/a131/a131/0001/0400/0427.htm> at

430 [Kesse, “Oil and Gas Possibilities”]; Dorothy Afriyie-Ansah, Reforming Ghana’s National Oil Company:

Possible Lessons from Norway and Brazil (LL.M Thesis, University of Calgary, 2010) [Unpublished] at 55[Afriyie-

Ansah]. 4 Kesse “Oil and Gas Possibilities”, Ibid at 430 – 431. The West Africa Oil and Fuel Company (WAOFCO) sunk

five wells from 1896 to 1903. Of these five, the second was the only productive well producing a disappointing five

barrels of oil per day. From 1909 to 1913, a French company Sociètè Française de Petrole sank six wells near a town

called Bonkare. The first well yielded seven barrels of oil per day while the rest produced minute traces of oil and

gas. In 1923 and 1925, the African and Eastern Trade Corporation sunk two wells which revealed traces of light and

heavy oil. From 1956 to 1957, the Gulf Oil Company of Ghana sunk four wells near Half Assini which led to the

discovery of small quantities of oil in some wells and traces in other wells; Afriyie-Ansah, Ibid. 5 Afriyie-Ansah, Ibid; Initial tests on the well by Signal Oil Company revealed the well could produce about 3,600

barrels of oil per day, Kesse “Mineral and Rock Resources”, supra note 3 at 530. 6 Afriyie-Ansah, ibid.

75

Three Points block in 1981 citing reasons of the uncommercial nature of the discoveries.7 The

Ghana National Petroleum Company (GNPC) was established as a result to take over the

exploration and production activities. This led to a number of agreements being entered into

between the GNPC and a number of IOC’s for exploration activities in Ghana’s coast.8

At this point, there was a shift from shallow water to deep water exploration and this led,

in 2003, to the discovery of petrologically significant structures in the offshore.9 In 2007, the

Jubilee partners announced the first major oil discovery in the Mahogany well (renamed the

Jubilee Field) in Cape Three Points block.10

Since then, oil in commercial quantities has also

been discovered in other fields, although none have yet commenced production.11

As such, the

Jubilee field is the only producing field so far and has produced about seventy-four million

barrels with a daily production of about 110,000 barrels per day.12

With the advent of the petroleum industry in Ghana’s pre-independence era, two pieces

of legislation were introduced to govern the industry. The Mining Rights Regulation Ordinance,

Cap 153 was passed in 1905 but it did not significantly affect the petroleum industry save

defining “minerals” to include oil.13

The Minerals Pre-emption Ordinance, Cap 155 was passed

two years later by the colonial government which retained in the government “all oil, raised,

7 GNPC, Oil Discovery!!!!, online: GNPC <http://www.gnpcghana.com/aboutus/newsdetails.asp?arcnwsiD=13>.

8 Afriyie-Ansah, supra note 3 at 56. Companies such as the US based Amoco and the Atlantic Richfield Company

Limited in 1989 were granted licenses to explore for oil and gas. Other companies such as Hunt Oil, Dana Petroleum

Plc, Diamond Shamrock, Nuevo Energy Resources, etc were also granted licenses to undertake exploration activities

in Ghana’s coast. 9 Bright Simmons, Ghana: On the Cusp of Oil Boom, online: Modern

Ghana<http://www.modernghana.com/news/214153/1/ghana-on-the-cusp-of-an-oil-boom.html> 10

Ian Gary, Ghana’s Big Test: Oil’s Challenge to Democratic Development, online: Oxfam<

http://www.oxfamamerica.org/publications/ghanas-big-test > at 18. 11

GNPC, New Oil and Gas Discovery – Tweneboa 1 Press Release, online: GNPC

<http://www.gnpcghana.com/aboutus/newsdetails.asp?arcnwsiD=28>. The Odum field is currently being developed

as well. 12

GhanaWeb, Jubilee Fields produce 74m barrels of crude oil, online: Ghana Web

<http://www.ghanaweb.com/GhanaHomePage/business/artikel.php?ID=287897>. 13

Afriyie-Ansah, supra note 3 at 59.

76

won, or gotten in the Gold Coast, and of all products of the refining or treatment of such oil.”14

Post-independence, new legislations which affected oil and gas operations were enacted. The

Minerals Act (Act 126), passed in June 1962, maintained ownership and control of all minerals

throughout Ghana in the President on behalf of the people of Ghana.15

In 1983 the first

legislation that focused exclusively on the petroleum industry, the Ghana National Petroleum

Corporation Act, 1983 (PNDCL 64), was enacted.16

The law set up a state oil company, the

Ghana National Petroleum Corporation (GNPC), which leads government efforts in exploring for

oil.17

The following year, the Petroleum (Exploration and Production) Law, 1984 (PNDCL 84)

was promulgated to regulate several matters including the acquisition of petroleum exploration

and development rights;18

the conduct of petroleum operations;19

payment of compensation for

lands compulsory acquired by the government;20

assignation of rights;21

duration of petroleum

agreements22

and issues of taxation and royalties.23

4.4 Ownership and Control of Petroleum Resources

All petroleum resources are property of the Republic of Ghana and the president holds it

in trust for and on behalf of the citizens of the country. Article 257(6) of the Constitution of the

Republic of Ghana, 1992 states that:

Every mineral in its natural state in, under or upon any lands in Ghana, rivers,

streams, water courses throughout Ghana, the exclusive economic zone and any

14

Afriyie Ansah , ibid. 15

Minerals Act, 1962 [Act 126], section 1. Act 162 has since been repealed; Afriyie-Ansah, ibid. 16

Afriyie-Ansah, ibid. 17

Ibid; Ghana National Petroleum Corporation Act 1983 [PNDCL 64], section 1. 18

Petroleum (Exploration & Production) Law 1984 [PNDCL 84]. 19

PNDCL 84, section 3. 20

PNDCL 84, section 7. 21

PNDCL 84, section 8. 22

PNDCL 84, section 12. 23

PNDCL 84, sections 19 and 20.

77

area covered by the territorial sea or continental shelf is property of the Republic

of Ghana and shall be vested in the President on behalf of, and in trust for the

people of Ghana.24

Though the term “mineral” is not defined in article 257(6) or in article 295 (the definition

section) of the 1992 Constitution, it is generally assumed, based on definitions in past legislation,

that the term is to be construed widely to include petroleum as well.25

Section 1(1) PNDCL 84

provides that:

Without prejudice to any right granted, conferred, acquired, recognised or saved

in this Law to explore for or produce petroleum, all petroleum existing in its

natural state within the jurisdiction of Ghana is the property of the Republic of

Ghana (hereafter referred to as "the Republic") and shall be vested in the

Provisional National Defence Council (hereafter referred to as "the Council") on

behalf of the people.26

Section 1(1) implies that the government of Ghana is the owner of all petroleum

resources in the country27

. There is no private ownership of petroleum resources, even where the

resource is found in a private property.28

By virtue of this exclusive ownership no individual can

carry on any petroleum activity without a license. Any person who wishes to carry out a

petroleum activity must enter into an agreement and partner with the GNPC in this endeavour.29

A Model Petroleum Agreement (MPA) contains the standard terms which are commonly found

24

Constitution of the Republic of Ghana, 1992 [1992 Constitution]. 25

Cap 155 defines mineral to include oil, see above page 4. 26

PNDCL 84, section 1(1). On the entering into force of the 1992 Constitution, all laws enacted by military regimes

were ratified and the government of Ghana was substituted for military regimes in legislations where responsibility

is placed on the military regimes. In furtherance of the trust created in the President on behalf of the people Ghana,

article 268(1) of the 1992 constitution makes it compulsory for parliamentary approval to be granted before any

agreement for the exploitation and production of petroleum is entered into by the government. Parliamentary

approval is important because parliament is seen as a gathering of the representatives of the citizen hence any

approval given is similar to approval by the citizens. Also parliamentary approval guarantees transparency and

stability of the agreement irrespective of the political regime in power. 27

Petroleum is defined to mean “crude oil or natural gas or a combination of both”, PNDCL 84, section 33. 28

Theodore Nsoe Adimazoya, Governance of Petroleum Revenues in Ghana’s Mineral and Petroleum Sectors.

(LL.M, University of Calgary, 2012) [unpublished] at 74; A holder of a private property on which petroleum

resources are found is only paid compensation once the property is acquired by the government, PNDCL 84, ibid

section 7. 29

PNDCL 84, ibid section 2(1)

78

in almost all the agreements entered into with the GNPC.30

The MPA covers a wide range of

issues including an extendable seven year exploration period,31

the obligations of the GNPC and

the contractor,32

taxation and royalty payments33

and title and ownership of goods and

equipment.34

4.5 Environmental Management in Ghana

The government of Ghana has a constitutional responsibility to protect the environment.

Article 36(9) of the 1992 Constitution states “[t]he State shall take appropriate measures needed

to protect and safeguard the national environment for posterity; and shall seek co-operation with

other states and bodies for the purposes of protecting the wider international environment for

mankind.”35

The Ministry of Environment, Science, Technology and Innovation (MESTI) leads,

at a ministerial level, all efforts geared at environmental protection and ensuring a quality

environment in Ghana.36

The MESTI’s mandate is broad and includes: the development and

implementation of science and technology policies, promotion of research and the intensification

of the application of safe and sound environmental practices.37

MESTI works through a

30

Revenue Watch Institute, Model Petroleum Agreement of Ghana, online: Revenue Watch Institute <

http://www.revenuewatch.org/training/resource_center/model-petroleum-agreement-ghana >. [MPA] 31

MPA, ibid article 3. The exploration period is made up of an initial exploration period and two extension periods.

At the end of the extension periods, an extension may be granted by the GNPC if the contractor is involved in an on-

going well drilling or well appraisal. 32

Ibid, article 7. The contractor is responsible for the conduct of operations and taking steps to ensure compliance

with regulations. GNPC is mandated to help the contractor to ensure smooth operations. 33

Ibid, article 12. 34

Ibid, article 19. Title to all equipment except those leased and imported into the country lie with the government. 35

1992 constitution, supra note 22. 36

Government of Ghana, Ministry of Environment, Science, Technology and Innovation, online: Government of

Ghana <http://www.ghana.gov.gh/index.php/2012-02-08-08-18-09/ministries/250-ministry-of-environment-science-

technology-and-innovation>. 37

Ibid.

79

subordinate agency, the Environmental Protection Agency (EPA), in order to fulfill the

environmental aspect of its mandate.38

4.5.1 State of the Environment

The state of Ghana’s environment has been described to be in dire need of

improvement.39

The National Environmental Policy (NEP) identifies the current challenges

facing the environment to include: (1) land degradation which has resulted in deforestation,

accelerated erosion, destruction of watershed, etc. (2) loss of biodiversity40

(3) climate change

(4) marine and coastal degradation and (4) air and water pollution caused by activities in the oil

and gas industry, construction, waste management and mining.41

With the recent discovery and

production of oil and gas in Ghana’s offshore, the MESTI has identified serious challenges

facing the marine environment such as dealing with oil spills caused either by accident or during

the normal course of operations.42

Some of the challenges are also institutional in nature. They

include: (1) inadequate institutional ability (in terms of laws, skills, resources) to ensure

environmental governance (2) ineffective coordination among institutions responsible for the

environment (3) bad decision making processes and (4) weak enforcement capacity.43

These

factors have culminated in the poor state of Ghana’s environment.

38

Ibid. 39

Statement attributed to the Minister for Environment, Dr. Joe Oteng-Adjei when he paid a visit to the EPA. EPA,

Work Hard to Improve the Environment, online: Environmental Protection Agency <

http://epa.gov.gh/index.php?option=com_content&view=article&id=274:work-hard-to-improve-the-environment-

dr-oteng-adjei-advises-epa-staff&catid=60:latest-news&Itemid=113 >. 40

Changes in climate conditions, drought and bush fires are proximate drivers of biodiversity loss in Ghana. Plant

species such as the Afromosia, Gacina kola and Calcamus have become very rare. Animal species such as Red and

White-Thighed Colobus and Diana Monkey are now on the endangered species list. 41

Ministry of Environment, Science, Technology and Innovation National Environmental Policy (Accra: Ministry

of Environment, Science, Technology and Innovation). [NEP] 42

NEP, Ibid at 24. 43

Ibid at 27.

80

4.5.2 National Environmental Policy (NEP)

Recognizing that the lives of Ghanaians are intimately connected to a healthy

environment, the government of Ghana launched the NEP in order to provide an action plan that

ensures that the environment is managed in a manner that sustains the society, especially in the

wake of oil and gas production.44

The main purpose of the NEP is to guide environmental

governance and encourage development along a sustainable path.45

The NEP acknowledges the existence of key environmental challenges such as pollution,

loss of biodiversity and climate change; with operational priority to these challenges forming the

foundations of the policy.46

The policy operates on several principles. Notable among these

principles are accountability, equity, environmental justice, allocation of functions and

coordination, capacity building and pollution prevention.47

One of the key policy strategies is to

improve institutional and legal effectiveness by allocating adequate resources, building

institutional capacity, revising existing legislation and introducing new legislation to deal with

emerging environmental challenges.48

The NEP also states objectives for various resource sectors. For the marine and coastal

sector in particular, policies and strategies put in place must ensure the protection of the coastal

wetlands, and ensure the strict compliance with regulations concerning the discharge of ballast

44

Ghana Web, National Environmental Policy Launched, online : Ghana Web <

http://www.ghanaweb.com/GhanaHomePage/regional/artikel.php?ID=255694 > 45

NEP, supra note 39 at 7. It also serves as a reference material for research and ensure the country’s commitment

to fulfilling and meeting international agreements. 46

Ibid at 30. 47

Ibid at 31. Other principles include conflict of interest, due process, global and international cooperation, goo

environmental governance, inclusivity, integration, access to environmental information, research and development,

etc. 48

Ibid at 37.

81

water into the marine environment.49

Due to the serious challenges the petroleum sector poses,

the strategies must ensure that hydrocarbon resources are used in line with sustainable

environmental practices. They must also ensure the maximum exploitation of the petroleum

resources while meeting the best environmental practices.50

Clearly, the NEP identifies the

impact that petroleum exploration and production will have on the marine environment and

therefore advocates effective environmental regulation of that sector.

4.6 Regulating Operational Pollution

4.6.1 Introduction

With the advent of the oil industry, concerns were expressed about Ghana’s inability to

undertake an effective environmental regulation of the industry.51

These concerns are buttressed

by the country’s poor past record regulating the environmental impacts of the mining industry.52

Based on this, and the commitment in the NEP to revising the regulatory framework on

operational pollution, the discussion in the remainder of this chapter draws on the elements

identified by Blumenauer and analyses the Ghanaian regime based on the key features identified

from the Norwegian regime.

49

Ibid at 43. 50

Ibid at 45. Other areas include energy use where there is a plan to encourage the use of renewable energy

resources to reduce the reliance on fossil fuels. In the water sector, policies and strategies should encourage the

employment of environmental sensitive methods of disposing waste water. They should also subject all major water

development projects to environmental impact assessment. 51

Ghana Oil Watch, Communiqué Issued by Christian Council of Ghana and Ghana Pentecostal Council, online:

Ghana Oil Watch < http://ghanaoilwatch.org/images/Articles/communique.pdf > especially paragraph 7 and 10;

Christiane Bagdley, Ghana Community Fears Oil Spills, online: Pipe Line Dreams

<http://www.pipelinedreams.org/2012/01/ghanas-fishing-communities-fear-oil-spills>. 52

Samuel Marful-Sau, Is Ghana Prepared to Manage the Potential Environmental Challenges of an Oil and Gas

Industry? (LL.M University of Dundee, 2008) [unpublished] at 7. As a result of poor environmental regulation,

numerous water bodies relied on by citizens for bathing, washing and other household chores have been polluted

resulting in skin infections and other diseases. Cyanide has also been spilled by mining companies during their

operations which resulted in the death of fish and other phytoplankton. The United Nations Conference on Trade

and Development (UNCTAD) 2007 World Investment Report on Transnational Corporation, Extractive Industries

and Development identifies foreign mining companies as being responsible for various water and air pollution.

82

4.7 Features of the Regulatory Regime

4.7.1 Regulatory Approach

As discussed in the previous chapter, prescriptive-based regulation details exactly how

processes should be done in order to achieve a set objective.53

This type of regulation sets

“specific demands for structures, technical equipment and operations in order to prevent

accidents and hazards.”54

This brings about inflexibility which stifles technological innovation.55

Because of the non-existence of specific regulations governing offshore oil and gas activities in

Ghana and the reactive approach of regulatory agencies to environmental issues concerning the

oil and gas industry, a particular regulatory approach has not yet been adopted.56

However, in the

few instances where the regulatory agencies have been proactive, a prescriptive-based approach

has been adopted. This is evidenced by the standards imposed by the Ghana Standards Board

(GSB) on the conduct of operations in Ghana’s offshore. The catalogue of standards issued by

the GSB in 2012 provides specific requirements for the design of drilling and production

equipment57

and the design and operation of subsea production systems.58

The stipulation of the

specific requirements for designs of subsea production systems and drilling equipment used by

offshore petroleum companies is indicative of a prescriptive-based approach which inhibits

technological innovation. This is contrary to the approach adopted by Norway and unsuitable for

the offshore oil and gas industry which has a rapid changing technological environment.

53

Stephen Breyer, Regulation and Its Reform (Cambridge: Harvard University Press, 1982) at 105. 54

Petroleum Safety Authority, From Prescription to Performance In Petroleum Supervision, online: Petroleum

Safety Authority < http://www.ptil.no/news/from-prescription-to-performance-in-petroleum-supervision-

article6696-878.html>. 55

Cary Coglianese, Jennifer Nash & Todd Olmstead, “Performance-Based Regulation: Prospects and Limitations in

Health, Safety and Environmental Protection” (2003) 55 Admin L Rev 705 at 706 56

P A Sakyi et al, “Ghana’s Quest for Oil and Gas: Ecological Risks and Management Frameworks” (2012)20:1

West African Journal of Applied Ecology 57 at 67. 57

Ghana Standards Authority, Catalogue of Ghana Standards 2012 (Accra: Ghana Standards Authority, 2012) at

273. 58

Ibid at 274.

83

4.7.2 Institutional Arrangement and Capacity

The EPA and the Petroleum Commission are involved in environmental regulation of

Ghana’s offshore industry. It is, however, not clear from the legislation which of these bodies

plays the lead role in offshore environmental regulation.

(A) Environmental Protection Agency

The EPA, established by the Environmental Protection Agency Act 1994 (Act 490),59

is

responsible for environmental regulation in Ghana.60

The objectives of the EPA are to:

Create awareness to mainstream environment into the development process at the

national, regional, district and community levels;

Ensure that the implementation of environmental policy and planning are

integrated and consistent with the country’s desire for effective, long-term

maintenance of environmental quality;

Ensure environmentally sound and efficient use of both renewable and

nonrenewable resources in the process of national development;

Guide development to prevent, reduce, and as far as possible, eliminate pollution

and actions that lower the quality of life;

Apply the legal processes in a fair, equitable manner to ensure responsible

environmental behaviour in the country;

59

Environmental Protection Agency Act 1994 (Act 490). 60

Environmental Protection Agency, About Us, online: Environmental Protection Agency

<http://epa.gov.gh/index.php?option=com_content&view=article&id=46&Itemid=53>.

84

Continuously improve EPA’s performance to meet changing environmental trends

and community aspirations;61

In order to fulfill its objectives, the EPA has numerous functions under Act 490 including:

to formulate policies on the environment and in particular to make recommendations for

the protection of the environment

to secure by itself or in collaboration with any other person or body the control and

prevention of discharge of waste into the environment and the protection and

improvement of the quality of the environment

to issue environmental permits and pollution abatement notices for controlling the

volume, types, constituents and effects of waste discharges, emissions, deposits or any

other source of pollutants and of substances which are hazardous or potentially dangerous

to the quality of the environment or a segment of the environment

to prescribe standards and guidelines relating to the pollution of air, water, land and any

other forms of environmental pollution including the discharge of waste and control of

toxic substances

to ensure compliance with the laid down environmental impact assessment procedures in

the planning and execution of development projects, including compliance in respect of

existing projects.62

The functions of the EPA under Act 490 affect a multitude of sectors and are very broad

in nature. It therefore becomes difficult to regulate the offshore industry in particular because the

EPA must spread its resources across all sectors that interact with the environment. To address

61

Ibid. 62

Act 490, section 2.

85

this problem, the EPA set up an oil and gas department to specifically meet the needs of this

sector.63

This department is responsible to ensure that players in the oil and gas industry adhere

to prescribed environmental rules.64

It is also responsible for ensuring that during the various

stages of the development of petroleum resources, adverse environmental impacts are prevented

or minimized.65

(B) Petroleum Commission

The Petroleum Commission established under the Petroleum Commission Act, 2011 (Act

821) also has offshore regulatory responsibilities.66

It was formed to take over regulatory

functions formerly held by the GNPC so that the GNPC could focus exclusively on partnering

with IOC’s in the exploration and development of petroleum resources.67

The many functions of

the Petroleum Commission include:

promoting planned, well executed, sustainable and cost efficient petroleum activities to

achieve optimal levels of resource exploitation;

monitoring and ensuring compliance with national laws, regulations and agreements

related to petroleum activities;

ensuring compliance with health, safety and environmental standards in petroleum

activities in accordance with national laws, regulations and agreements

63

Environmental Protection Agency, The Head of Departments Statement, online: Environmental Protection

Agency < http://epaoilandgas.org/content/head-departments-statement> 64

Ibid. 65

Ibid. 66

Petroleum Commission Act, 2011 [Act 821] 67

Afriyie-Ansah, supra note 3 at 69. The Ghana National Petroleum Company [GNPC] formerly had dual

responsibilities in the offshore regime. It acted as a partner in the exploration activities and also as a regulator

creating a situation of conflict of interest; Integrated Social Development Centre, Ghana’s New Government to

Review Draft Oil Law, online: Integrated Social Development Centre <

http://isodec.org.gh/articlepage.php?idnews=39>.

86

monitoring petroleum activities and carrying out the necessary inspections and audit

related to the activities;

receiving applications and issue permits for specific petroleum activities as required

under petroleum laws and regulations.68

As is evident from the discussion above, the duties of the EPA and the Petroleum

Commission overlap and it is not clear who has ultimate responsibility for environmental

regulation of the offshore industry. This lack of clarity in terms of responsibility is one of the

weaknesses of the Ghanaian regulatory regime as opposed to the Norwegian regime where

responsibilities are clearly laid out and indicated for each body involved in offshore regulation.69

It also falls short of Blumenauer’s elements of responsible partnerships and cooperation.

In addition, unlike the custom of offshore petroleum producing countries like Norway,

neither the EPA nor the Petroleum Commission has specific responsibility for dealing with

operational pollution.70

In a study commissioned by the World Bank and the Norwegian

government, lack of institutional capacity (in terms of skilled staff resources and unavailability

of monetary and physical resources) by both the EPA and Petroleum Commission was identified

as one of the key weaknesses in Ghana’s offshore regulation regime.71

68

Act 821, section 3. 69

Andrew Buchman, Dean Slocum & Kwame Boakye-Agyei, “Environmental Governance and Regulation of the

Oil Industry in Ghana: A Multi-Stakeholder Capacity Building Needs Assessment” (Paper delivered at the Society

of Petroleum Engineers/Australian Petroleum Production & Exploration Association Limited conference on Health,

Safety and Environment in Oil and Gas Exploration and Production in Perth, Australia, 11th

September, 2012)

[unpublished]. 70

See Chapter Two above, text accompanying note 88. The Norwegian Environmental Agency (formerly the

National Climate and Pollution Agency) has specific responsibility for dealing with issues of operational pollution. 71

Supra note 69, the study also identified that the ten offices of the EPA scattered across the country lack the

necessary infrastructure and equipment. Apart from infrastructure problems, the EPA also lacks the necessary funds

to fulfill its mandate. In the 2014 Government of Ghana budgetary estimates for ministries and departments, the

EPA received a meagre 17.79% of the total monetary allocations to the MESTI. The amount available to the

Petroleum Commission is at the discretion of the Ministry of Energy who approves funding for the Commission.

Ministry of Finance and Economic Planning, 2014 Budget Estimates of Ministries, Departments and Agencies,

87

4.7.3 Legal Arrangement

A plethora of laws governs petroleum exploration and production in Ghana. For the

purpose of this thesis, the key legislations that will be discussed in connection with

environmental regulation of Ghana’s offshore are: the PNDCL 84, the Act 490, the

Environmental Impact Assessment Regulations (Legislative Instrument 1652), the Oil in

Navigable Waters Act (Act 235) and the proposed Marine Pollution Bill.72

4.7.3.1 Petroleum Exploration and Production Law (PNDCL 84)

The PNDCL 84, promulgated before any significant oil discovery in Ghana, is primarily

concerned with “petroleum prospecting; the vesting of petroleum rights and good and safe oil

exploration practices in accordance with applicable standards.”73

The PNDCL 84 identifies the

GNPC as the only body allowed by law to explore for oil and requires any other person or IOC’s,

as is mostly the case, interested in engaging in petroleum exploration and development to first

apply for and receive a permit to do so by partnering with the GNPC.74

The PNDCL 84 also

regulates the rights and responsibilities of persons granted permits to prospect for oil. In

particular, PNDCL 84 prohibits IOC’s from assigning their rights and responsibilities under a

permit to a third party without the consent of the government.75

IOC’s are also obligated to

online: Ministry of Finance and Economic Planning < http://www.mofep.gov.gh/?q=budget-

statements/100214/2014-budget-estimates-ministries-departments-and-agencies>. 72

Act 821 does not apply in this case because it primarily deals with the constitution of the board of the

Commission, their tenure of office, the functions of the Commission, etc. The only part of the Act which may

indirectly apply to the legislative arrangement governing operational pollution is section 22 which provides that

“The Minister may, on the advice of the Board, by legislative instrument make regulations (a) for the exploration,

development and appraisal of petroleum and related operation; (b) for the production of petroleum and related

operations and; (c) to provide for any other matter necessary for the effective implementation of this Act.” Till date,

no regulation has been passed under section 22 of this Act. 73

Afriyie-Ansah, supra note 3 at 60. 74

PNDCL 84, section 2. 75

PNDCL 84, section 22.

88

conduct their operations in accordance with advanced technologies as prescribed by regulations

passed under PNDCL 84.76

Arguably, section 3 of PNDCL 84, from its wording, is intended to provide some form of

environmental regulation in relating to operational pollution. Section 3 provides:

Any operations undertaken under a petroleum agreement or other authority

granted under this Law shall be carried out in accordance with such Regulations

as may be prescribed and with the best international practices in comparable

circumstances relating to exploration and production of petroleum, including

secondary recovery and the prevention of and waste of petroleum, so as to

maximize the ultimate recovery of petroleum from a petroleum field …77

This section therefore requires IOC’s undertaking offshore petroleum operations to

conduct their activities in accordance with any regulations passed under PNDCL 84 and in

accordance with international best practices. Currently, there are no regulations passed under this

Law and IOC’s operations are not constrained by local regulations.78

The other compulsory

requirement is therefore to conduct activities that meet the standards of international best

practices in terms of environmental goals. The question then becomes what constitutes

international best practices? The term is vague and there are no definitive statements of what

these standards of international best practices are, thus they cannot be said to be performance-

based standards.79

Also international best practices may not meet the specific requirements of

Ghana’s offshore industry.80

Consequently section 3, which is intended to regulate the

environmental aspect of oil exploration and production, does not achieve its purpose.

76

PNDCL 84, section 23. 77

PNDCL 84, section 3. 78

Clara Kasser- Tee, Section 3 of PNDCL 84 and Environmental Regulation of Oil Exploration, online:

MyJoyOnline < http://opinion.myjoyonline.com/pages/feature/201109/72429.php >. 79

Ibid. 80

Ibid.

89

4.7.3.2 Environmental Protection Agency Act 1994 (Act 490)

In keeping with the functions of the EPA discussed above, the provisions of Act 490 are

focused on all activities that are likely to have adverse environmental impacts; only some of

which are relevant to the offshore petroleum industry. Specifically, the provisions regulating the

use of hazardous chemicals apply to operations in the offshore industry. The Hazardous

Chemical Committee of the EPA established under Act 490 monitors the importation, sale, use

and disposal of hazardous chemicals that are likely to have adverse effects on the environment.81

In this regard, IOC’s that use these chemicals in their exploration and production activities must

report on how they use and dispose these chemicals in accordance with standard environmental

practices.82

These standard environmental practices are unknown, and not stated, and hence

again cannot be said to be either prescriptive or performance-based. Beyond the regulation of

chemicals, Act 490 does not specifically address the challenges posed by operational pollution.

4.7.3.3 Environmental Impact Assessment under Act 490

The EIA process is provided for in the Environmental Assessment Regulations, (LI

1652)83

enacted under the authority of Act 490. Petroleum exploration and production activities

can only be undertaken after the issuance of an environmental permit issued by the EPA.84

In

81

Act 490, section 10 (2). 82

The partners currently producing oil from Ghana’s Jubilee Field had to obtain permits from the EPA to allow

them to use certain chemicals in their operations because these chemicals do not have adverse effect on the

environment, Tullow Oil Ghana Limited, Ghana Jubilee Field Phase One Development Environmental Impact

Statement, online: Tullow Oil Ghana Limited

<http://www.tullowoil.com/files/pdf/Jubilee_Field_EIA_Chapter_2_22Nov09.pdf> specifically paragraph 2.3.2. 83

Environmental Assessment Regulations (Legislative Instrument 1652) [LI 1652]. 84

Act 490, section 12; LI 1652, regulation 1.

90

accordance with LI 1652, petroleum production is listed as an activity that requires completion of

a mandatory EIA before an environmental permit will be issued.85

The EIA process is outlined in terms of a scoping report86

which sets out the scope or

extent of the EIA to be carried out and includes a draft terms of reference indicating the exact

issues to be addressed in the EIA.87

The matters to be dealt with in the EIA include:

a description of the undertaking;

an analysis of the need for the undertaking;

alternatives to the undertaking including alternative situations where the undertaking is

not proceeded with;

matters on site selection including a statement of the reasons for the choice of the

proposed site and whether any other alternative site was considered;

an identification of existing environmental conditions including social, economic and

other aspects of major environmental concerns;

information on potential, positive and negative impacts of the proposed undertaking from

the environmental, social, economic and cultural aspect in relation to the different phases

of the development of the undertaking;

the potential impact on the health of the people

proposals to mitigate any potential negative socio-economic, cultural and public health

impacts on the environments;

proposals to be developed to monitor predictable environmental impact and proposed

mitigating measures;

85

LI 1652, second schedule. 86

LI 1652, regulation 10. 87

LI 1652, regulation 11.

91

contingency plans existing or to be evolved to address any unpredicted negative

environmental impact and proposed mitigating measures;

consultation with members of the public likely to be affected by the operations of the

undertaking;

maps, plans, tables, graphs, diagrams and other illustrative material that will assist with

comprehension of the contents of the environment impact statement;

a provisional environmental management plan;

proposals for payment of compensation for possible damage to land or property arising

from the operation of the undertaking; and

an indication whether any area outside Ghana is likely to be affected by the activities of

the undertaking.88

One of the essential issues addressed in the EIA is the environmental impacts during each

phase of the undertaking.89

This necessarily includes all of the environmental impacts occasioned

during the operational phase of the petroleum production. The partners in the Ghana’s Jubilee

Field project described in their EIA report several environmental impacts that would be caused

during the operational phase of the project from routine activities.90

Black and grey water, deck

drainage contaminated with traces of hydrocarbon, hydraulic fluid and produced water were all

identified as possible sources of operational pollution that could be generated during the

production of oil.91

The Jubilee Field partners instituted measures to tackle the possible sources

of operational pollution which included; treating black and grey water before they are discharged

88

LI 1652, regulation 12. 89

Ibid. 90

Tullow Oil Ghana Limited, Ghana Jubilee Field Phase 1 Development, Non-Technical Executive Summary of

Environmental Impact Statement, online: Tullow Oil Ghana Limited <

http://www.tullowoil.com/ghana/index.asp?pageid=14 > at paragraph 6.3. 91

Ibid at paragraph 6.3.1.

92

to sea, using water-based and biodegradable hydraulic fluid, setting a maximum of 49 milligram

per litre (mg/l) per month as the concentration of oil that can be found in produced water.92

Unlike Norway which provides performance-based standards in legislation on how to address the

possible sources of operational pollution, legislations in Ghana do not provide either prescriptive

or performance-based standards to address these issues.

On a positive note, the EIA process requires a consideration of operational pollution that

may be generated by the offshore petroleum production and requires measures be put in place to

address that problem. However due to the absence of local regulations detailing either

prescriptive or performance-based standards, the IOC’s are not required in the EIA process to

meet the best possible standards. A clear example is the concentration of oil in produced water.

The Jubilee partners set a maximum of 49mg/l which fits their worst case scenario of the

concentration of oil in produced water to be released in the Jubilee Field. This however does not

meet practices required in jurisdictions such as Norway which has a much lower level of 30mg/l

as the maximum concentration of oil allowed in produced water.93

Clearly, the absence of either

prescriptive or performance-based standards in the area of produced water is being exploited by

the IOC’s.

4.7.3.4 Oil in Navigable Waters Act, 1964 (Act 235)

The Oil in Navigable Waters Act (Act 235) was passed in 1964 to implement Ghana’s

treaty obligations under the International Convention for the Prevention of Pollution of the Sea

92

Ibid. 93

Ibid; Regulations relating to the conduct of Petroleum Activities, section 60.

93

by Oil.94

It is the law which comes closest to directly regulating oil pollution in the offshore.95

It

prohibits the discharge of oil by ships into the territorial waters of Ghana and makes it a crime to

do so.96

Every ship that uses oil as a fuel for either its engines or boilers is required to be fitted

with machines so that the oil does not leak into the sea.97

Every master of a ship is also required

to keep a record of times when oil was discharged from a ship to secure its safety and when oil

leaks from a ship.98

However Act 235 is not concerned with oil pollution arising from petroleum

exploration activities. It is rather focused on oil pollution caused by ships and therefore affords

little help in regulating offshore operational pollution caused by petroleum activities.99

4.7.3.5 Marine Pollution Bill

In the wake of commercial oil production, the Marine Pollution Bill (MPB) was laid

before parliament to ensure the protection of the country’s marine environment.100

The Bill seeks

to repeal Act 235 and incorporates a number of international conventions, notable among them:

the International Convention on the Prevention of Marine Pollution by Dumping of Wastes and

Other Matter and the accompanying 1996 Protocol to Convention on the Prevention of Marine

Pollution by Dumping of Wastes and Other Matter, 1972;101

the International Convention for the

Prevention of Pollution from Ships;102

the International Convention Relating to Intervention on

94

Oil in Navigable Waters Act 1964 (Act 235) [Act 235]. 95

Tullow Oil Ghana, Environmental Impact Assessment for Jubilee Field Phase 1 Development Project, online: <

http://www.tullowoil.com/ghana/index.asp?pageid=14 > at paragraph 2.3.7. 96

Act 235, section 1. 97

Act 235, section 5. 98

Act 235, section 7. 99

Ghana Maritime Authority, Marine Pollution Actl Before House, online: <

http://www.ghanamaritime.org/en/posts/marine-pollution-act-before-house26.php> 100

Ibid. 101

International Convention on the Prevention of Marine Pollution by Dumping of Wastes and Other Matter, 29

December 1972 11 ILM 1294. 102

International Convention for the Prevention of Pollution from Ships, 2 November 1973 12 ILM 1319.

94

the High Seas in Case of Oil Pollution, 1958;103

the International Convention on Oil Pollution

Preparedness, Response and Cooperation 1990;104

the International Convention on Civil

Liability for Oil Pollution Damage; and the International Convention on the Establishment of an

International Fund for Oil Pollution Damage and the accompanying Protocol of 2003 to the

International Convention on the Establishment of an International Fund for Compensation for

Oil Pollution Damage.105

If passed into law, several provisions of the MPB will affect Ghana’s offshore

environment including the imposition of strict liability on owners of oil tankers and ships that

cause pollution and the prompt payment of compensation,106

prevention of pollution by sewage

from ships,107

prevention of air pollution by ships,108

and prevention of pollution by noxious

liquid substances.109

The salient provisions of the MPB that are beneficial to the discussion in

this thesis are those found in Chapter Two of Part Four of the MPB relating to the prevention of

pollution by oil. The discharge of oil or oily mixture by oil tankers or foreign ships is

prohibited.110

Chemical discharges such as ballast water, tank washing water, etc. produced by

ships are also prohibited.111

However, the main purpose of the MPB is “to provide for the prevention, regulation and

control of marine pollution within the territorial waters of Ghana and other maritime zones under

103

International Convention on Oil Pollution Preparedness, Response and Cooperation, 30 November 1990, 30

ILM 735. 104

International Convention on Civil Liability for Oil Pollution Damage, 29 November 1969, 9 ILM 45. 105

International Convention on the Establishment of an International Fund for Compensation for Oil Pollution

Damage, 18 December 1971, 11 ILM 284. 106

Marine Pollution Bill [MPB], sections 195 and 196. 107

MPB, section 128. 108

MPB, section 166. 109

MPB, sections 75 and 76. 110

MPB section 58. The Bill makes a distinction between oil tankers and ships 111

MPB, section 62.

95

the control of Ghana.”112

As the provisions noted above indicate, the MPB is solely concerned

with pollution arising from oil tankers and ships. It does not make specific provision for issues of

operational pollution generated by offshore petroleum activities although it does make it an

offence to cause pollution from the exploitation of a natural resource.113

The discussion above has shown that there are several pieces of legislation which apply

to the offshore sector. However, these legislations do not regulate the issue of operational

pollution. Unlike Norway, which has a comprehensive pollution legislation focusing on offshore

operational pollution in line with Blumenauer’s first element, there is no comprehensive

pollution legislation and associated regulations in Ghana focusing on offshore operational

pollution to ensure effective regulation. As the Jubilee Field partners identified before offshore

oil exploration and production, the non-regulation of operational pollution is problematic and the

absence of legislative standards or requirements to be met by the IOC’s in this regard causes a

dilemma in ascertaining the standards required by the regulator.114

4.7.4 Compliance and Enforcement

Ensuring effective regulation is not only dependent on the quality of the regulation but

also on the measures put in place to enforce and ensure compliance.115

Compliance refers to

measures put in place to ensure conformity with the law.116

Such measures may involve “written

and verbal communication, consultation, monitoring, inspection, data review and

112

MPB, see the preamble. 113

MPB, section 228. 114

Supra note 90. 115

Neil Gunningham, “Enforcing Environmental Regulation” (2011) 23:2 Journal of Envtl Law 171. 116

Joseph Castrilli, “Canadian Policy and Practice with Indicators of Effective Environmental Enforcement” (Paper

delivered at the North American Dialogue on Indicators for Effective Environmental Performance, Puebla, Mexico,

1 May, 1998) [unpublished].

96

enforcement.”117

Enforcement is a means of ensuring compliance and includes all actions

initiated to compel offenders [regulated bodies] who are in a state of non-compliance to comply

with legislative requirements.118

Enforcement actions are mostly initiated by the regulator on

behalf of the government and include “investigations of alleged violations, imposition of

corrective measures, administrative responses to compel compliance and prosecution.”119

Enforcement actions are provided for under Act 490 and LI 1652. Under the Act 490, the

means of ensuring compliance is through inspections and enforcement notices. Inspectors

appointed by the EPA have the power to enter any premises to ensure that there is compliance

with environmental regulations.120

To wit, the inspectors have authority to enter offshore

platforms to ensure that all exploration and production activities are conducted in a manner that

conforms to legislative requirements. Where the inspectors are of the opinion that there is non-

compliance with regulations, a series of enforcement actions may be initiated. Two major actions

are provided for as means of enforcement under the Act 490. First, an enforcement notice may be

issued to a person flouting the law requiring that (1) the offending activity be stopped, (2) steps

be taken to remedy the situation and (3) a return to compliance with Act 490.121

Hence in cases

where pollution arises in the offshore, an enforcement notice may be issued requiring a cessation

of the pollution and a full compliance with Act 490. The other means of enforcement is through

criminal prosecution where a fine or a term of imprisonment or a combination of both is

imposed.122

This second means of enforcement, however, applies only to offences related to

117

Ibid. 118

Ibid. 119

Ibid. 120

Act 490, section 15. 121

Act 490, section 13 122

Act 490, section 57.

97

pesticide use and hence cannot be applied to the offshore industry to ensure compliance.123

Therefore the only means of enforcement action provided for under Act 490 is applicable to the

offshore industry is the use of the enforcement notice. This is problematic because the absence of

criminal penalties (either fines or imprisonment or both) creates a situation where there is

minimal material incentive to avoid non-compliance.124

Criminal offences may also be committed under LI 1652 for acts such as failing to

acquire an environmental permit before commencing a project and failing to conduct an EIA

when it is required.125

The sanctions for these offences may be in the form of criminal fines or

terms of imprisonment or both.126

The use of criminal measures as enforcement mechanisms to

exact compliance serves as deterrence and is an expression of public disapproval of the polluting

activity.127

However the exclusive use of criminal sanctions under the LI 1652 which are

adversarial in nature may affect the relationship between the regulator and the regulated entities

which is needed for effective regulation.128

Unlike Norway which employs other cooperative

means of enforcement, the use of inspections and enforcement notices as the only means of

ensuring enforcement under Act 490 are not adequate. The enforcement measures under Act 490

do not meet Blumenauer’s fifth element and therefore it is incapable of ensuring effective

performance-based regulation. In order to ensure effective compliance, other cooperative

enforcement measures such as mechanisms that support partnerships with the IOC’s and

123

The provisions related to criminal prosecution are found in Part Two of the EPA titled Pesticide Control and

Management Registration of Pesticides. 124

Matthew D Zinn, “Policing Environmental Regulatory Enforcement: Cooperation, Capture and Citizen Suits”

(2002) 21 Stan Envtl L J 81. 125

LI 1652, section 29; Offences that could be committed under LI 1652 include failing to acquire an environmental

permit before commencing a project, failing to conduct an EIA before the commencement of any project, failing to

submit an annual environmental report. LI 1652, regulation 29. 126

Oil in Navigable Waters Act, sections 6, 13, 15 and 16. 127

Zinn, supra note 124. 128

Zinn, ibid.

98

voluntary agreements must be employed as well.129

Cooperative enforcement encourages

engenders flexibility which may aid “remove barriers to investment in environmentally

beneficial new technologies.”130

4.8 Conclusion

This chapter has established that there is limited regulation of offshore operational

pollution in Ghana and in the few instances of regulation; it is prescriptive in nature which puts

the regulated entities in a straitjacket prohibiting flexibility needed to encourage technological

innovation in the offshore industry. The chapter has also demonstrated that the Ghanaian regime

fails to meet the Norway’s standards and the elements identified by Blumenauer. There is a lack

of clarity in terms of which body, the EPA or the Petroleum Commission, plays the lead role in

the regulatory process. A lack of capacity is also an identified factor inhibiting effective

regulation. While a myriad of pieces of legislations have been enacted to regulate pollution in the

offshore, they fail to adequately regulate operational pollution. Unlike Norway which has a

comprehensive pollution legislation, there is no single piece of integrated offshore pollution

legislation in Ghana. The MPB, which is intended to remedy the situation, does not achieve this

purpose as it only regulates marine pollution and does not address the specific issue of

operational pollution from offshore oil and gas activities. The compliance and enforcement

mechanisms employed under the regulatory regime are adversarial in nature, rather than being an

amalgamation of both adversarial and cooperative measures. As such, this is likely to affect the

relationship between the regulator and the IOC’s. As a result of these deficiencies the Ghanaian

129

Kathryn Harrison, “Talking with the Donkey: Cooperative Approaches to Environmental Protection” (1999)2

Journal of Industrial Ecology 51 at 56. 130

Zinn, supra note 124.

99

regulatory regime is ineffective and does a poor job of addressing the issue of operational

pollution. In the next chapter recommendations are put forth which when implemented will

likely succeed in ensuring an effective regulatory regime.

100

CHAPTER FIVE

OVERVIEW, RECOMMENDATIONS AND CONCLUSION

(TOWARDS AN EFFECTIVE REGULATORY REGIME)

5.1 Introduction

In addition to its potential to provide economic benefits for a country, offshore petroleum

exploration and production also poses serious environmental pollution issues. As such, an

effective regulatory regime is needed to ensure that the economic benefit does not come at a cost

to the marine environment. As demonstrated in the review of the Ghanaian regulatory regime for

operational pollution in the previous chapter, the current regime lacks of targeted legislation,

clear institutional arrangements and effective enforcement and compliance mechanism seen in

the Norwegian regime. To the extent there is relevant regulation, a prescriptive-based approach

is adopted.

This chapter, which concludes the thesis, answers the research question posed at the

beginning of this thesis: drawing lessons from Norway, what legal and regulatory actions should

Ghana undertake to effectively regulate operational pollution arising from offshore oil and gas

activities? It begins with an over view of the discussions in the previous chapters by highlighting

the essential issues discussed and the conclusions reached. The chapter then offers some

recommendations directed at ensuring an effective Ghanaian regulatory regime for managing and

makes recommendations for further research.

101

5.2 Overview of Thesis

Chapter One provided a background to the thesis by describing the peculiar nature of the

environmental problem associated with offshore oil and gas exploration. Operational pollution

from offshore petroleum activities was identified as a key environmental problem which remains

unregulated in Ghana’s offshore. To address this problem, the thesis identified the two regulatory

approaches used to address offshore operational pollution: prescriptive and performance-based

regulation. The discussion then posed a research question which drove the discussion in this

thesis: drawing lessons from Norway, what regulatory measures should Ghana implement to

effectively regulate operational pollution arising from offshore oil and gas activities?

To provide a better understanding of the discussion in subsequent chapters, the chapter

explained that the analysis is comparative in nature by drawing on Norway as a comparator, a

country ranked highly for its experience in effective environmental regulation of offshore

petroleum activities. A discussion on the justification of the choice of Norway as a comparator

was carried out in order to support the fact that the Norwegian regime was the best to look at for

a supply of solutions. The chapter ended with a discussion of the legal transplant theory as a

means through which the supply of solutions from Norway can be transferred to Ghana by

highlighting the two major schools of thought and arguing that legal transplant is possible in

Ghana.

In Chapter Two, the discussion centered on the preference for performance-based

regulation as opposed to prescriptive regulation in offshore environmental regulation.

Prescriptive-based regulation is clear and definitive in nature; however this type of regulation

places regulated entities in a straitjacket limiting their flexibility and stifling technological

102

innovation making it unsuitable for the offshore environment. Performance-based regulation, on

the other hand, allows regulated entities a greater degree of flexibility in achieving regulatory

goals and promotes technological innovation. Though there is some degree of uncertainty, this

inures to the benefit of the regulated entity and ultimately helps achieve environmental goals.

The discussion in Chapter Three examined the international and Norwegian regulatory

regime used in regulating operational pollution. It concluded that international law only imposes

a mere obligation on states to enact legislation to protect their marine environment and provides

no adequate regime for addressing operational pollution. To this end the Norwegian regulatory

regime for operational pollution was discussed and several key elements were identified which

reflected Blumenauer’s essential elements of performance-based regulation identified in Chapter

Two. These included the use of performance-based regulation which forms the bedrock of the

Norwegian regulatory regime. An effective regulatory body with the requisite capacity which

cooperates effectively with other state bodies also forms an essential part of the regime. In

addition, a clear and focused legislative arrangement, a thorough EIA process and an

enforcement and monitoring system, which employs both adversarial and cooperative

approaches, were identified as the other key components of the Norwegian regime.

Chapter Four discussed the Ghanaian regulatory regime used in regulating operational

pollution in offshore petroleum exploration and production. The regulatory approach is

prescriptive in nature and inflexible. The legal arrangement is unclear and there is the absence of

much needed supporting regulations. Most importantly for the purposes of this thesis, the

existing legislation does not address the issue of operational pollution. It is also unclear which

institution is primarily responsible for environmental regulation in the offshore, as both the

Environmental Protection Agency (EPA) and the Petroleum Commission have similar and

103

overlapping responsibilities in the environmental regulation of the offshore. Compliance and

enforcement mechanisms are adversarial in nature and engender the quality of the relationship

between the regulator and the regulated entities which is essential for effective regulation.

5.3 Recommendations from the Norwegian Regulatory Regime

Based on the deficiencies identified in the Ghanaian regime and the success of the

Norwegian regime in regulating operational pollution, it is recommended that the key elements

and concepts from the Norwegian regime be transferred to Ghana.

First, Ghana should adopt, as a matter of urgency, performance-based regulation to

regulate operational pollution offshore oil and gas activities. Performance-based regulation will

allow the regulated entities the flexibility or discretion to choose the most appropriate and cost-

effective measures to meet the standards set by the regulator. It will also provide the regulator

with the much needed discretion when deciding on issues of compliance and enforcement. Given

that Ghana has very little existing regulation in relation to operational pollution, by adopting a

performance-based approach at the outset, Ghana will avoid the problems Norway faced by

implementing a performance-based regulatory regime after an initial adoption of prescriptive-

based regulation. Just as the Ministry of Climate and Environment (MCE) in Norway did with

their National Environmental Policy (NEP), the Ministry of Environment, Science, Technology

and Innovation (MESTI) of Ghana, being at the apex of environmental governance structure,

should set the tone for the adoption of the performance-based approach in regulation of

operational pollution by incorporating this approach in the environmental policy of Ghana. This

is likely to influence decisions and actions of regulatory agencies, under the MESTI, that work

with the policy.

104

Secondly, as in Norway with the Norwegian Environmental Agency (NEA) there should

be a clear indication of which institution has the lead responsibilities for environmental

regulation of the offshore oil and gas activities in Ghana. In line with the idea of responsible

partnerships and cooperation identified by Blumenauer as an essential element of performance-

based regulation, the Petroleum Commission should preferably play the lead role in the offshore

regime but should coordinate and collaborate effectively with the EPA, the state environmental

regulatory body. The Petroleum Commission, unlike the EPA, is better suited to take on this role

because it is possesses more specialized expertise and is in a better position to understand the

environmental issues posed by the offshore petroleum exploration and production. Both

institutions must also be equipped with the necessary resources, in terms of skilled labour,

monetary and physical resources to carry out their responsibilities. The Petroleum Commission

and the EPA should be independent and free from both political interference and industry

pressure. They should, however, be accountable to the legislature on their activities through

reporting mechanisms such as the issuance of half/annual reports. This is a necessary prerequisite

for effective compliance and enforcement.

Thirdly, in line with Blumenauer’s first element of adopting a comprehensive approach,

there should be a streamlining of the various pieces of legislations that currently attempt to

regulate the environmental impacts associated with offshore petroleum activity. In this regard,

and again in keeping with the approach in Norway, a single piece of pollution legislation,

focused at least in part, on regulating operational pollution should be passed. The Marine

Pollution Bill (MPB) intended as the comprehensive pollution legislation fails to achieve this

purpose. The MPB should therefore be amended to regulate pollution, specifically operational

pollution arising from offshore oil and gas activities before being passed. The MPB should also

105

set environmental standards to be met by the IOC’s during petroleum exploration and production

and should provide for the following; (1) performance-based requirements on limits for

operational discharges particularly the concentration of oil in produced water and oily water, (2)

standards that chemical discharges should meet before being discharged into the marine

environment, and (3) performance-based standards to be met by subsea, exploration and drilling

systems in terms of their functionality. Also like Norway did, the much needed supporting

regulations should be passed.

Finally, as in the case of Norway, compliance and enforcement mechanisms should not

be limited to criminal prosecutions and fines alone. They should also incorporate other

cooperative mechanisms such as warnings, discussions and self-initiatives as practiced in the

Norwegian regime. This will provide an option of choosing between adversarial and cooperative

means depending on the severity of the non-compliance. Criminal prosecutions should also be

provided under the MPB for violations of performance-based standards set for the offshore

industry.

5.4 Conclusion

The key contribution of this thesis is to reveal the defects in Ghana’s regulatory regime

governing operational pollution arising from offshore oil and gas activities and make

recommendations for its improvement. These recommendations were based on a review of the

Norwegian regime regulating offshore operational pollution which revealed the key elements in

their regime that has led to effective regulation. For Ghana to achieve effective regulation of

operational pollution from offshore oil and gas activities, it must implement these

recommendations without delay.

106

5.5 Recommendations for Further Research

As indicated from the literature, performance-based standards may be expressed in either

qualitative or quantitative terms.1 Further research is required to ascertain what factors should

inform the choice of a qualitative or quantitative performance-based standard bearing in mind the

nature of the industry that is to be regulated with these standards.2

Secondly, as demonstrated above, performance-based regulation is best suited to achieve

environmental regulatory goals during offshore petroleum exploration and production. To this

end, research is required to determine whether this type of regulation can be extended to achieve

environmental goals in downstream petroleum production as well.

In the absence of an international legal regime regulating operational pollution, research

should be carried out to explore the probability of developing a broad international convention

for the environmental regulation of offshore petroleum activities.3 This convention should move

a step further than imposing mere obligation on states to enact legislation to protect their marine

environment and prevent pollution arising from offshore petroleum activities.

1 Peter May, “Performance-Based Regulation and Regulatory Regimes: The Saga of Leaky Buildings” (2003) 25:4

Law and Policy 381 at 385. 2 Chris Tollefson, Fred Gale, David Haley Setting the Standard (Vacncouver: UBC Press, 2008) at 249; Peter May,

“Performance-Based Regulation and Regulatory Regimes: The Saga of Leaky Buildings” (2003) 25:4 Law and

Policy 381 3 Two main reasons have been provided for the absence of an international convention on the regulation of offshore

petroleum activities. Iveta Stefankova notes that the strong opposition by states like the United States and the fact

that every maritime region has its peculiar “environmental s

pecifications which require a unique approach to address them” have hindered the adoption of an international

convention. Iveta Stefankova, “International Regulation v National Regulation on Offshore Oil Exploitation – The

USA as an Example” (2013) 3 Elsa Matla Law Review 126 at 138.

107

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