FACULTY OF LAW, UNIVERSITY OF OSLO

Safety Regulation

Petroleum law3. April 2008Hanne Sofie Logstein, Research fellow Scandinavian Institute of Maritime Law, Department of petroleum and Energy Law h.s.logstein@jus.uio.no

FACULTY OF LAW, UNIVERSITY OF OSLO

Scope of the lecture

• Introduction, historic development, accidents, jurisdiction• The legislation, Acts and regulations • The Bodies, Companies and the state • State safety management• Safety norms, functional requirements, supplied

interpretation and guidelines• Industry safety management system • The interaction between the systems• Reactions/sanctions

FACULTY OF LAW, UNIVERSITY OF OSLO

Introduction

• Young industry• Risky conditions• New technology• “Old” equipment• Vulnerable areas• Accidents

– Alexander Kielland, 1980– Piper Alpha, British Continental Shelf, 1988

FACULTY OF LAW, UNIVERSITY OF OSLO

Piper Alpha

FACULTY OF LAW, UNIVERSITY OF OSLO

Risk

• Risk– The product of probability of occurrence of an

undesirable event, times the probable consequences if it occurs

– Technology, economic, “soft issues” etc

FACULTY OF LAW, UNIVERSITY OF OSLO

Historical development

• The development– Concrete rules -more detailed – General problem:

• The industry have first hand experience• The legislation always lays behind

– Mid 70`s: • internal control • functional requirements

FACULTY OF LAW, UNIVERSITY OF OSLO

Jurisdiction

• Located at the continental shelf• UNCLOS art 77 • Fixed installations vs. mobile facilities (maritime law)• The costal states interests vs. flag state• PA § 1-4 ”This act applies to petroleum activities…”• Other Norwegian law ”shall also be applicable to

petroleum activities”, PA § 1-5– not mobile facilities under foreign flag

• If not permanent placed

• The King may decide §§ 1-4, 1-5

FACULTY OF LAW, UNIVERSITY OF OSLO

The relevant acts

• The Petroleum Activities Act (PA) • The Working Environment Act. • The Pollution Control Act • The Control of Products and Consumer Services Act• Applicable to the extent suitable to the scope FR § 2

– The Health Personnel Act– The Patients’ Rights Act– The Health and Social Preparedness Act.

• (The seaworthiness act 1903 repealed –a new ship safety act in force 1. July 2007)

FACULTY OF LAW, UNIVERSITY OF OSLO

The regulation

• The framework regulations (FW) (Royal Decree), • Subordinate regulations:

– The management regulations – The information duty regulations– The facilities regulations – The activities regulations.

FACULTY OF LAW, UNIVERSITY OF OSLO

Bodies I: The authorities

• The Norwegian Petroleum Directorate (NPD) until 2004

• Divided in 2004:– NPD Resource management – The Petroleum Safety Authority (PSA) established

dealing with safety issues

• Report No. 17(2002-2003) to The Storting (parliament) about public supervise (tilsynsmeldingen)

FACULTY OF LAW, UNIVERSITY OF OSLO

Bodies II: The authorities

Cooperation between• The Norwegian Pollution Control Authority (under

the Ministry of the Environment)• The Norwegian Social and Health Directorate –

NSHD (Ministry of Health and Care Services) • The Petroleum Safety Authority (PSA) (Ministry

of Labour and Social Inclusion)– PSA a coordinating role

FACULTY OF LAW, UNIVERSITY OF OSLO

Bodies III: The companies

• The licensee• The operator • “Other parties participating” –all parties without

being licensee or operator• ”The party responsible” –the operator and other

parties participating• Entrepreneurs• Employers; safety and the working environment:

The Working Environment Act

FACULTY OF LAW, UNIVERSITY OF OSLO

The bodies IIII: The employees

• Duty to contribute, Working Environment Act § 2-3, Framework reg. §§ 5 and 13

• Right to contribute Framework § 6• The three party cooperation

FACULTY OF LAW, UNIVERSITY OF OSLO

Types of safety norms

• Requirements with a direct affect on the risk• Requirements with an indirect affect on the risk

– The legal basis for safety control

FACULTY OF LAW, UNIVERSITY OF OSLO

The states involvement

Prescription of norms

+

Safety control

+

Enforcement

=

“State safety management”

FACULTY OF LAW, UNIVERSITY OF OSLO

Safety in the Petroleum Act

• Measures to:– Prevent harm to personnel, the environment and

financial values– Maintain production and transport regularity– Enable the probability of harm to be counteracted,

withstood or remedied

(Proposition to the Odelsting No 43 (1995-96), comments to the PA § 10-1, see Guidelines to the Framework regulation section 2)

FACULTY OF LAW, UNIVERSITY OF OSLO

Ways to prescribe safety norms

Stipulate results Stipulate methods

Specified requirements Unspecified requirements

FACULTY OF LAW, UNIVERSITY OF OSLO

“Functional requirements”

“The HSE regulations for the petroleum activities are normative and contain functional requirements.  This means that the regulations state the level of safety that must be achieved - but not how to achieve it.”

• What to be achieved rather than provide concrete solutions

• Fragmented• Flexibility• Freedom of choice• Ex: Prudent petroleum activities

FACULTY OF LAW, UNIVERSITY OF OSLO

Example; Prudent petroleum activity

“Petroleum activities according to this Act shall be conducted in a prudent manner” PA § 10-1

“Petroleum activities shall be safe and prudent, both in relation to an individual and an overall con sideration of all the factors of importance to planning and implementation of petroleum activities as regards health, environment and safety” Framework regulation § 8

“Encourage and promote a sound health, environment and safety culture” Framework § 11

FACULTY OF LAW, UNIVERSITY OF OSLO

The regulation; Specified trough

• Consents to certain petroleum activities, Information duty regulations § 5

• Administrative decisions/individual decisions • No legally binding sources

– Guidelines – Standards– Statutory interpretation

• From the authorities• From co –operative bodies

• Penalty reactions/sanctions

FACULTY OF LAW, UNIVERSITY OF OSLO

Example – Consents: Application rejected

“ DNO's application for consent for exploration drilling is rejected 15.1.2007”

“The assessment is based on the application for consent and other information received from DNO. We find that the operator has not been in possession of the required competence and capacity in their preparations for the upcoming activities. Nor does DNO have the necessary competence and capacity required to run a prudent drilling operation.”

FACULTY OF LAW, UNIVERSITY OF OSLO

Interpretation

• Statutory interpretation• Interpretation by joint delegations.

– Third party –co-operation

• Freedom to choose?• The authority gives no guarantee for that the

chosen solution fulfils the requirements of the regulation

• The responsibility lies by the party responsible

FACULTY OF LAW, UNIVERSITY OF OSLO

Guidelines

• Given at the same time as the regulation• Not legally binding• 2 functions

– Suggestion of how to meet the requirements“makes use of a standard recommended” … “may as a rule take it that the regulation requirements have

been met” FW § 18

– States a level• “Harm or danger”… “shall be prevented or limited in

accordance with the legislation…including internal requirements and acceptance criteria” FW § 9

FACULTY OF LAW, UNIVERSITY OF OSLO

A dynamic requirement

• The level is developing“Over and above this level the risk shall be further

reduced to the extent possible”

“shall choose the technical, operational or organisational solutions which according to an individual as well as an overall evaluation of the potential harm and present and future use offer the best results” FR § 9

• The limit -narrow“provided the associated costs are not significantly

disproportionate to the risk reduction achieved”

FACULTY OF LAW, UNIVERSITY OF OSLO

The industry safety management system

• Internal regulations“The party responsible shall set internal requirements

which put the regulatory requirements in concrete terms” The management regulations § 5

FACULTY OF LAW, UNIVERSITY OF OSLO

The industry safety management system

• Internal control– “The licensee and other persons engaged…are

obliged to comply with the Act, regulations and individual administrative decisions… through the implementation of necessary systematic measures” PA § 10-6

– See to it -duty, (The licensee; PA § 10-6. 2nd paragraph and the operator; FW § 5)

FACULTY OF LAW, UNIVERSITY OF OSLO

The industry safety management system

• Internal control -continued“shall establish, follow up and further develop a

management system in order to ensure compliance with requirements contained in the legislation relating to health, environment and safety” FR §13

“shall decide on the extent of verifications, the method to be used in and the degree of independence of the verification in order to document that the requirements …have been met” FW § 18

FACULTY OF LAW, UNIVERSITY OF OSLO

The industry safety management system

• Internal control –continued“shall ensure that documentation demonstrating

compliance with requirements stipulated in or pursuant to these regulations, can be provided”

“When other solutions than those recommended in the guidelines to a provision of the regulations are used, the party responsible shall be able to document that the chosen solution fulfils the requirements of the regulations” FW § 18

FACULTY OF LAW, UNIVERSITY OF OSLO

Industry safety management

Internal regulation

+

Internal control

=

“Industry safety management”

FACULTY OF LAW, UNIVERSITY OF OSLO

Affects the states supervision

“The Petroleum Safety Authority carries out supervision of the management system which is established pursuant to these regulations and makes the decisions necessary to fulfil provisions on requirements to the administrative parts of the management systems, stipulated by or pursuant to these regulations. This is done in co-operation with the Norwegian Pollution Control Authority and the Norwegian Board of Health…” FR § 13

“The Petroleum Safety Authority may order the operator to have verifications carried out, or alternatively carry out verifications itself.” FR § 15

FACULTY OF LAW, UNIVERSITY OF OSLO

The interaction between state and industry safety management

Prescribing norms Safety control

State safety management

Safety requirements•Legislation•Administrative decisions

State safety control

Industry safety management

Choice within the framework

Internal safety control

FACULTY OF LAW, UNIVERSITY OF OSLO

Sanctions/penalty reactions

• Reactions not laid down by the law• Revoke a license granted PA § 10-13• Administrative sanctions -orders PA §§ 10-3, 10-

16• Suspension of the petroleum activities §§ 9-5,

10-16• Penalty sanctions PA § 10-17

FACULTY OF LAW, UNIVERSITY OF OSLO

Example incidents, Enforcement measures - orders

Report following investigation of fire in the HVAC unit on Songa Dee

2008-03-26 On 4 December 2007, a fire broke out on the mobile facility

Songa Dee during drilling activity for StatoilHydro on the Troll field. The Petroleum Safety Authority Norway (PSA) has investigated the incident and, among other things, identified four nonconformities in relation to regulatory requirements.

The report also includes 12 observations of items where there is a potential for improvement.

FACULTY OF LAW, UNIVERSITY OF OSLO

Prosecution and decisions by the court

• Prosecution: – After accidents and other incidents

• Decisions by the court– Two after The Alexander Kielland –disaster

• Suffisient training, The working environment act

FACULTY OF LAW, UNIVERSITY OF OSLO

Latest development

• From 2004: Some facilities at land (changed the geographical scope of the regulations