Energy Bill (HL Bill 56)

A

BILL

TO

Make provision about the Oil and Gas Authority and its functions; to make
provision about fees in respect of activities relating to oil, gas, carbon dioxide
and pipelines; to make provision about wind power; and for connected
purposes.

Be it enacted by the Queen’s most Excellent Majesty, by and with the advice and
consent of the Lords Spiritual and Temporal, and Commons, in this present
Parliament assembled, and by the authority of the same, as follows:—

Part 1 The OGA

The OGA and its core functions

1 The OGA

(1) 5The company originally incorporated under the Companies Act 2006 as the Oil
and Gas Authority Limited is renamed as the Oil and Gas Authority.

(2) In relation to any of its functions—

(a) the Oil and Gas Authority is not to be regarded as acting on behalf of
the Crown, and

(b) 10its members, officers and staff are not to be regarded as Crown
servants.

(3) The Oil and Gas Authority is exempt from the requirements of the Companies
Act 2006 relating to the use of “limited” as part of its name.

(4) In this Act “the OGA” means the Oil and Gas Authority.

2 15Transfer of functions to the OGA

(1) The Schedule transfers certain functions of the Secretary of State to the OGA.

(2) The Secretary of State may by regulations provide—

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(a) for the transfer to the OGA of any relevant functions exercisable by a
Minister of the Crown, or

(b) for any such functions that are to be transferred to the Scottish
Ministers or the Welsh Ministers to be exercisable by the OGA until the
5transfer to those Ministers takes effect.

(3) The Secretary of State may by regulations make such provision as the Secretary
of State considers appropriate in consequence of, or in connection with, any
provision contained in—

(a) the Schedule, or

(b) 10regulations under subsection (2).

(4) The provision that may be made under subsection (3) includes provision—

(a) amending, repealing or revoking any enactment,

(b) amending any relevant authorisation (including any model clause
incorporated, or having effect as if incorporated, in it) granted or given
15before the date when the regulations take effect, and

(c) for the carrying on and completion by or under the authority of the
OGA of anything commenced by or under the authority of a Minister
of the Crown before the date when the regulations take effect.

(5) Regulations under this section may not provide for the transfer to, or exercise
20by, the OGA of any power to legislate by means of orders, rules, regulations or
other subordinate instrument.

(6) In this section—

  • “enactment” includes an enactment comprised in subordinate legislation,
    within the meaning of the Interpretation Act 1978;

  • 25“Minister of the Crown” has the same meaning as in the Ministers of the
    Crown Act 1975, and includes such Ministers acting jointly;

  • “relevant authorisation” means—

    (a)

    a licence, authorisation or notice granted or given by a Minister
    of the Crown in the exercise of a relevant function, or

    (b)

    30a licence granted under section 2 of the Petroleum (Production)
    Act 1934 (searching for and getting petroleum);

  • “relevant function” means a function conferred by or under—

    (a)

    the Petroleum Act 1998 (except Part 4),

    (b)

    Chapter 2 or 3 of Part 1 of the Energy Act 2008,

    (c)

    35Chapter 3 of Part 2 of the Energy Act 2011,

    (d)

    the Hydrocarbons Licensing Directive Regulations 1995 (S.I.
    1995/1434),

    (e)

    any regulations amended or modified by the Energy Act 2008
    (Consequential Modifications) (Offshore Environmental
    40Protection) Order 2010 (S.I. 2010/1513S.I. 2010/1513),

    (f)

    the Storage of Carbon Dioxide (Licensing etc) Regulations 2010
    (S.I. 2010/2221S.I. 2010/2221),

    (g)

    the Storage of Carbon Dioxide (Termination of Licences)
    Regulations 2011 (S.I. 2011/1483S.I. 2011/1483),

    (h)

    45the Storage of Carbon Dioxide (Access to Infrastructure)
    Regulations 2011 (S.I. 2011/2305S.I. 2011/2305), or

    (i)

    any other enactment that relates to matters similar to those to
    which an enactment mentioned in any of the preceding
    paragraphs relates.

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3 Contracting out of functions to the OGA

(1) This section applies if, under section 69 of the Deregulation and Contracting
Out Act 1994, the OGA is, or employees of the OGA are, authorised to exercise
a function to which that section applies.

(2) 5Subsection (5)(a) of that section applies in relation to the authorisation as if the
words “, not exceeding 10 years,” were omitted.

Exercise of functions

4 Matters to which the OGA must have regard

(1) The matters to which the OGA must have regard when exercising its functions
10include the following, so far as relevant—

Minimising future public expenditure

The need to minimise public expenditure relating to, or arising from, relevant
activities.

Security of supply

15The need for the United Kingdom to have a secure supply of energy.

Collaboration

The need for the OGA to work collaboratively with the government of the
United Kingdom and with persons who carry on, or wish to carry on, relevant
activities.

20Innovation

The need to encourage innovation in technology and working practices in
relation to relevant activities.

System of regulation

The need to maintain a stable and predictable system of regulation which
25encourages investment in relevant activities.

(2) In this section and section 5—

  • “function” does not include any function which the OGA is authorised to
    exercise by virtue of an order under section 69 of the Deregulation and
    Contracting Out Act 1994;

  • 30“relevant activity” means any activity in relation to which the OGA has
    functions.

5 Directions: national security and public interest

(1) The Secretary of State may give directions to the OGA as to the exercise by it of
any of its functions if the Secretary of State considers that the directions—

(a) 35are necessary in the interests of national security, or

(b) are otherwise in the public interest.

(2) Directions may be given under subsection (1)(b) in relation to the exercise of a
regulatory function in a particular case only if the Secretary of State considers
that the circumstances are exceptional.

(3) 40Directions given under this section may be varied or revoked by further
directions given under this section.

(4) The Secretary of State must lay before Parliament a copy of any directions
given under this section.

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(5) The Secretary of State may exclude from any directions laid before Parliament
under subsection (4) any material the publication of which the Secretary of
State considers would—

(a) be contrary to the interests of national security, or

(b) 5otherwise not be in the public interest.

(6) If the Secretary of State considers that publication of the directions (whether
with or without the exclusion of material under subsection (5)) would fall
within paragraph (a) or (b) of that subsection, the Secretary of State may,
instead of laying the directions, lay before Parliament a memorandum
10stating—

(a) that the directions have been given, and

(b) the date on which they were given.

(7) The OGA must notify the Secretary of State of any cases, matters or
circumstances which have arisen, or which the OGA considers are likely to
15arise, in respect of which the OGA considers that the power to give directions
under this section should be exercised by the Secretary of State.

(8) In this section “regulatory function” means—

(a) a function of granting or revoking a licence or other authorisation in
relation to any relevant activity;

(b) 20a function of imposing conditions or requirements in relation to any
relevant activity;

(c) a function that relates to securing, monitoring or investigating
compliance with conditions or requirements in relation to any relevant
activity.

6 25Directions: requirements to notify Secretary of State

(1) The Secretary of State may give directions to the OGA specifying cases, matters
or circumstances of which the OGA must notify the Secretary of State—

(a) when they arise, or

(b) if the OGA considers that they are likely to arise.

(2) 30Directions given under this section may be varied or revoked by further
directions given under this section.

Information and samples

7 Power of Secretary of State to require information and samples

(1) The Secretary of State may require the OGA to provide the Secretary of State
35with such information or samples held by or on behalf of the OGA as the
Secretary of State may require for the purpose of—

(a) carrying out any function conferred by or under any Act,

(b) monitoring the OGA’s performance of its functions, or

(c) any Parliamentary proceedings.

(2) 40In this section—

(a) references to “protected material” are references to information or
samples acquired by the Secretary of State under subsection (1), and

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(b) references to disclosing protected material include references to
making the protected material available to other persons (in a case
where the protected material includes samples).

(3) The Secretary of State may—

(a) 5use protected material only for the purpose for which it is provided,
and

(b) disclose protected material only—

(i) so far as necessary for that purpose, or

(ii) in accordance with subsection (4).

(4) 10The Secretary of State may disclose protected material if—

(a) the disclosure is required by virtue of an obligation imposed by or
under any Act, or

(b) the OGA consents to the disclosure and, in a case where the protected
material in question was provided to the OGA by or on behalf of
15another person, confirms that that person also consents to the
disclosure.

Part 2 Further functions of the OGA relating to offshore petroleum

CHAPTER 1 Introduction

8 20Overview of Part 2

(1) This Part contains provision about functions of the OGA relating to offshore
petroleum.

(2) Chapter

2

25 makes provision for the OGA to consider disputes and make
recommendations for resolving them.

(3) Chapter

3

makes provision about—

(a) 30the retention of information and samples by relevant persons,

(b) the preparation of plans for dealing with information and samples held
by an offshore licensee when rights under a licence are terminated,

(c) powers of the OGA to require information and samples, and

(d) the disclosure of information, and provision of samples, which have
35been acquired by the OGA.

(4) Chapter

4

makes provision—

(a) for the OGA to be informed of meetings,

(b) 40for persons authorised by the OGA to be entitled to participate in
meetings, and

(c) for the OGA to be provided with information relating to meetings in
which such persons do not participate.

(5) Chapter

455

makes provision about sanctions which may be imposed on persons
for failures to comply with requirements.

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9 Interpretation of Part 2

(1) In this Part—

  • “items subject to legal privilege”—

    (a)

    in England and Wales, has the same meaning as in the Police
    5and Criminal Evidence Act 1984 (see section 10 of that Act);

    (b)

    in Scotland, has the meaning given by section 412 of the
    Proceeds of Crime Act 2002;

    (c)

    in Northern Ireland, has the same meaning as in the Police and
    Criminal Evidence (Northern Ireland) Order 1989 (S.I. 1989/
    101341 (NI 12));

  • “licensee” means a person holding a petroleum licence;

  • “offshore licence” means a petroleum licence which confers on the holder
    of that licence rights in respect of offshore waters;

  • “offshore licensee” means a person holding an offshore licence;

  • 15“offshore waters” means—

    (a)

    the waters comprising the territorial sea of the United Kingdom,
    and

    (b)

    the sea in any area for the time being designated under section
    1(7) of the Continental Shelf Act 1964;

  • 20“petroleum licence” means a licence granted under—

    (a)

    section 3 of the Petroleum Act 1998 (searching for, boring for
    and getting petroleum), or

    (b)

    section 2 of the Petroleum (Production) Act 1934 (licences to
    search for and get petroleum);

  • 25“the principal objective” means the objective set out in section 9A(1) of the
    Petroleum Act 1998;

  • “relevant person” means a person listed in section 9A(1)(b) of the
    Petroleum Act 1998;

  • “statutory function” means a function conferred or imposed by or under
    30any Act;

  • “Tribunal” means the First-tier tribunal.

(2) In this Part a reference to a term or condition of a petroleum licence includes a
reference to a condition imposed under a petroleum licence.

CHAPTER 2 Disputes

10 35Qualifying disputes and relevant parties

(1) For the purposes of this Chapter, a dispute is a qualifying dispute if—

(a) the dispute relates to qualifying issues, and

(b) the parties to the dispute include at least one relevant party.

(2) In this Chapter, “qualifying issues” means issues which—

(a) 40are relevant to the fulfilment of the principal objective, or

(b) relate to activities carried out under an offshore licence,

and are not the subject of a section 82 application.

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(3) If a dispute relates in part to qualifying issues and in part to other issues, the
dispute is a qualifying dispute only to the extent that it relates to the qualifying
issues.

(4) For the purposes of subsection (2), an issue is the subject of a section 82
5application if—

(a) an application has been made under section 82(4) of the Energy Act
2011 (acquisition of rights to use upstream petroleum infrastructure) in
connection with the issue, and

(b) the OGA has made a decision under section 82(6)(a)(iii) of that Act to
10consider the application further.

(5) In this Chapter “relevant party” to a dispute means a party to the dispute who
is a relevant person.

11 Reference of disputes to the OGA

(1) A relevant party to a qualifying dispute may refer it to the OGA.

(2) 15A reference under this section is to be made in such manner as the OGA may
require.

(3) Requirements under subsection (2) as to the manner in which a reference is to
be made—

(a) may make different provision for different cases;

(b) 20are to be imposed, withdrawn or modified by notice published in such
manner as the OGA considers appropriate for bringing the
requirement, withdrawal or modification to the attention of the persons
who, in the OGA’s opinion, are likely to be affected by it.

12 Action by the OGA on a dispute reference

(1) 25On a reference of a dispute made under section 11, the OGA must decide
whether the reference is to be—

(a) rejected,

(b) adjourned to enable further negotiation between the parties to the
dispute, or

(c) 30accepted (see section 14).

(2) The OGA must issue guidance about the matters to which it will have regard
when making a decision under subsection (1).

(3) As soon as reasonably practicable after the OGA has made a decision under
subsection (1), it must give notice in writing stating—

(a) 35its decision,

(b) the reasons for the decision, and

(c) the date of the decision,

to each relevant party to the dispute, and to any other parties to the dispute
who have contributed (whether by providing information or attending
40meetings) to the OGA’s decision-making process.

(4) The grounds on which the OGA may reject a reference include, but are not
limited to, grounds that—

(a) the dispute is not a qualifying dispute;

(b) the party that referred the dispute is not a relevant party;

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(c) the reference is frivolous or vexatious;

(d) there are more appropriate means available for resolving the dispute;

(e) the dispute is not sufficiently material to the fulfilment of the principal
objective to warrant, in the circumstances, its consideration by the
5OGA;

(f) the OGA considers it unlikely that, in the circumstances, it would be
able to make a satisfactory recommendation in respect of the dispute.

(5) Where the OGA adjourns a reference of a dispute—

(a) it must set a timetable in accordance with which relevant parties to the
10dispute are to conduct further negotiations and revert to the OGA,

(b) it may give directions with which relevant parties to the dispute are to
comply during the adjournment, and

(c) it must, when the relevant parties revert to it following the
adjournment, make a further decision under subsection (1) in respect of
15the reference.

(6) Requirements imposed by the OGA on relevant parties under subsection (5)(a),
and directions given by the OGA under subsection (5)(b), are sanctionable in
accordance with Chapter

5

20.

13 Power of the OGA to consider disputes on its own initiative

(1) The OGA may decide, on its own initiative, to consider a qualifying dispute
(see section 14).

(2) If the OGA decides to consider a qualifying dispute under this section, it must
25notify all parties to the dispute.

14 Procedure for consideration of disputes

(1) This section applies where the OGA—

(a) accepts a reference of a dispute under section 12(1), or

(b) decides to consider a dispute under section 13(1).

(2) 30The OGA must—

(a) consider the dispute, and

(b) make a recommendation for resolving it.

(3) The OGA—

(a) must draw up a timetable for performing its duties under subsection
35(2), and

(b) may give directions with which the relevant parties to the dispute are
to comply in order to enable the OGA to carry out those duties.

(4) The OGA’s recommendation must be one which it considers will enable the
dispute to be resolved in a way which best contributes to the fulfilment of the
40principal objective whilst having regard to the need to achieve an economically
viable position for the parties to the dispute.

(5) The procedure for considering the dispute and making a recommendation is
the procedure that the OGA considers most appropriate.

(6) Where the OGA makes a recommendation under this section, the OGA may
45publish—

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(a) the recommendation or any part of it;

(b) a summary of the recommendation or of any part of it.

(7) Before publishing anything under subsection (6), the OGA must give an
opportunity to be heard to each relevant party to the dispute.

(8) 5The OGA must issue guidance about the matters to which it will have regard
when performing its duties under this section.

(9) Directions given by the OGA to relevant parties under subsection (3)(b) are
sanctionable in accordance with Chapter

5

10.

15 Power of the OGA to acquire information

(1) The OGA may require a relevant party to a dispute to provide it with such
information as may be required by the OGA for the purposes of—

(a) deciding whether to reject, adjourn or accept a reference of the dispute
15under section 12(1),

(b) setting a timetable in respect of an adjournment of a reference of the
dispute under section 12(5),

(c) assessing progress of further negotiations during such an adjournment,

(d) making a decision under section 13(1) to consider the dispute on its
20own initiative, or

(e) considering the dispute and making a recommendation under section
14(2),

subject to subsection (3).

(2) A person required to provide information under subsection (1) must provide
25it in such manner and within such reasonable period as may be specified by the
OGA in the request for information.

(3) Information requested under subsection (1) may not include items subject to
legal privilege.

(4) Requirements imposed under this section are sanctionable in accordance with
30Chapter

5

.

16 Power of the OGA to require attendance at meetings

(1) The OGA may require a relevant party to a dispute to send an individual to act
35as its representative at a meeting with the OGA for the purpose of participating
in proceedings relating to—

(a) whether a reference of the dispute is to be rejected, adjourned or
accepted under section 12(1),

(b) whether the OGA is to make a decision to consider the dispute under
40section 13(1), or

(c) the consideration of the dispute and the making of a recommendation
under section 14(2).

(2) The OGA may require that the individual sent to attend the meeting has the
necessary knowledge and expertise for the purpose of participating in the
45proceedings in question.

(3) The OGA must give reasonable notice of any meeting at which attendance is
required under this section.