Clause
8
Offences
relating to
licences
Question
proposed, That the clause stand part of the
Bill.
Malcolm
Wicks:
To ensure that the Department, as the licensing
authority, can keep tight control of activities undertaken by licence
holders, the clause sets up penalties for breaching certain key licence
conditions. There are also penalties for misrepresentation and
non-disclosure in relation to licences. The offences attracting
criminal penalties under this clause include carrying out an activity,
such as a drilling operation, without first obtaining the prior consent
specified by the licence; breaching any conditions attached to a
consent; or failing to keep records, give notice, or make a return or
report, as required by the licence. Anyone found guilty of such
offences will be subject to a fine not exceeding the statutory maximum
on summary conviction or an unlimited fine on conviction on indictment.
The licensee, as the person responsible for the licence, will be liable
for all
offences under the licence even where they are not directly responsible,
for example, where the unauthorised activity is carried out by a
subcontractor.
However,
it is recognised that licence holders may not always be at fault.
Subsection (2) accordingly ensures that licence holders will have a
valid defence, if they can show that they exercised due diligence in
trying to comply with the licence conditions. In the case of a
contractor, due diligence could include appropriate monitoring and
supervision of a contractor who was acting on behalf of a licensee even
if the contractor subsequently still failed to comply with conditions.
Subsection (1) provides for the Secretary of State to specify, by
order, further kinds of breaches that will amount to an offence. That
will allow the Department to put in place new criminal sanctions for
conditions that may be needed in the licence in the future in response
to changes in the industry. The penalties for non-compliance with
licence conditions are, we believe, proportionate and sufficiently
strong to deter licence holders from committing the
offence.
Charles
Hendry:
In general we are happy with the clause but would
like a little clarification from the Minister on the phrase
“ought to know” in subsection (4), line 17 on page
5:
“It is an
offence for a person to fail to disclose information which the person
knows, or ought to know, to be relevant to an
application”.
That
sounds like the sort of language that I use towards my children, when I
say “you ought to have known that if you didn’t eat your
lunch, you wouldn’t be getting a chocolate bar in the
afternoon” or “you shouldn’t have got up in the
middle of the night and played on your PlayStation”. I do not
know the legal groundings of it; it sounds vaguely
Rumsfeldian—there are the things that we know that we know, the
things that we know that we do not know and the things that we do not
know that we know. When one introduces to that the things that we know
that we ought to know that we do not know and the things that we do not
know that we ought to know, it becomes a recipe for chaos. I will be
grateful if the Minister can give us further guidance and clarification
about the legal definition of those few
words.
Malcolm
Wicks:
I ought to know really, but I know someone who does
know. Would the hon. Gentleman seriously mind if I wrote to him on the
matter? That would be the best way of dealing with
it.
Martin
Horwood:
I am a little concerned about
subsection (2). It may be following standard legal wording, for all I
know, but I will be grateful for clarification on it. It says
that
“it is a defence
for the
person”—
which I
now understand can mean a body
corporate—
to prove that
due diligence was exercised to avoid committing the
offence.
That becomes
important because of the issue that I have raised before of the long
timescales over which this is operating. If we are talking about
decades, it is plausible that evidence of environmental damage or
public health risk may only emerge over time. We are talking about
serious issues: gasses that may prove very toxic to wildlife or
potentially or mixtures of methane, butane and propane, I am not a
chemist but if that was bubbling to the surface, I would not put a
match near it. If we had a serious explosion or another
environmental disaster resulting over long term from the operation of
these facilities, and the body corporate was able to say that 15 years
ago a completely different management operation had done due diligence
at the time, what is the consequence of that? Who picks up the tab? Who
picks up the liability for any damage done, for the clean up operation
or for whatever would be necessary? Would it be the taxpayer? Would
there be a giant loophole that allowed the company responsible to get
away with the environmental disaster, if it were to
happen? 2.15
pm
Malcolm
Wicks:
Of course, I agree with the hon. Gentleman that we
are talking about very serious matters, both substantively and also
because of the need to reassure the public, as he indicated earlier. I
will reiterate what we mean by due diligence. Due diligence will be
found where the licence holder has done everything it can reasonably be
expected to do to avoid a breach of the licence. Where a contractor is
used to carry out a particular operation, due diligence will be shown
where proper steps have been taken to select a competent contractor and
there has been an appropriate level of supervision of the
contractor’s operation. I am not a lawyer but it is common on
the one hand to specify penalties but to be sensible about what we mean
about responsibility through due diligence procedures of different
kinds.
I think the
hon. Member for Cheltenham stepped into different but related territory
which we touched on earlier today, namely how to monitor these
facilities—geologically and so on—over a long time. The
proper responsibility will be with the company but our Department,
where necessary with technical experts, will also be in the business of
inspection. That is the major way we tackle the concern raised by the
hon.
Gentleman.
Martin
Horwood:
I do not think this quite
tackles the issue. Over a long time, with the way that companies shift,
change, merge and sell parts of themselves, it is almost inevitably
going to be a different company. Could companies exploit this clause or
regulations relating to it as a giant loophole to evade liability for
some environmental consequences which might genuinely not have been
foreseen but for which they should be responsible—or someone
should? There is a big question mark over who is liable 20 years down
the
line.
Malcolm
Wicks:
The best way I can deal with this
is to say that when we are drawing up appropriate regulations and when
we are consulting we should look at this issue. Obviously, in this
territory we are talking about the long term. I mentioned the period of
possibly 40 years to the hon. Member for Wealden when questioned about,
say, gas storage. It could be longer. When it comes to carbon capture
and storage, which we are coming to later, we are talking about
millennia, which raises interesting issues of different kinds. On the
other
hand, the issue about what to do 30 years on when a company at fault has
gone bust or been merged, is presumably familiar in law. I suspect it
is not unique to this circumstance. It is an important point and we
will consider it as we move forward in terms of
regulation.
Question
put and agreed to.
Clause 8 ordered to stand
part of the Bill.
Clause
9
Secretary
of state’s power of
direction
Question
proposed, That the clause stand part of the
Bill.
Malcolm
Wicks:
The purpose of this clause is to provide the
Secretary of State with a direction-making power.
I agree with the Liberal
Democrat spokesman that the Secretary of State is a pretty busy
character in this. Knowing Secretaries of State, they do occasionally
delegate. You appreciate the formal use of this term.
It is to
provide the Secretary of State with a direction-making power to direct
a licence holder to take appropriate steps in the event of a breach of
licence conditions. For example, if the licence requires equipment to
be maintained to a good standard, a direction may require the equipment
to be repaired or replaced. This provision is an important part of the
suite of enforcement provisions and enables the Secretary of State to
take a lighter-touch approach to remedy the breach before considering
criminal proceedings, if he considers such an approach would be
appropriate.
Moreover, it may not always be
sufficient simply to punish the licence holder for breaching a licence
provision. The Secretary of State may wish to direct the licence holder
to comply in a way that minimises any damage already caused. Before
issuing a direction, the Secretary of State must consult the licence
holder. This will provide the licence holder with an opportunity to
explain why the breach has occurred. If the licence holder fails to
comply with the direction, the Secretary of State will have the power
to ensure that the necessary action is taken and to recover the costs
with financial interest from the licence holder.
The Secretary of State may
also make arrangements for any person to comply with the direction on
the licence holder’s behalf. Subsection (9) ensures that this
clause does not affect any provision made by the licence itself. For
instance, the licence may already include a power of direction in
certain circumstances. Again, Mr. Amess, it touches on the
importance of regular inspection to see whether things are going badly
wrong in this respect, so that these directions can be
made.
Dr.
Brian Iddon (Bolton, South-East) (Lab):
I am sorry I have not raised this matter with the
Minister previously but it has only just occurred to me during this
session. I do not know whether the drafting agents have considered this
either, but I think it is worth raising.
In the
2002-2003 session of Parliament, I steered through a private
Member’s Bill which became the Marine Safety Act 2003. I had the
pleasure to work with the late Lord Donaldson and learned a lot about
safety at sea. My point is that, undoubtedly, some of these transfers of
gas will occur using shipping and could be transferred to an onshore
facility—it could even conceivably be transferred to an offshore
facility such as a spent oil rig or gas rig. Lord Donaldson’s two
major reports on safety at sea led to the setting-up of a person called
SOSREP—the Secretary of State’s Representative,
representing the Secretary of State for Transport. Together with my
legislation and Lord Donaldson’s legislation, that has given
SOSREP the powers to direct captains of ships to do whatever it is
intended they should do to avoid a catastrophe at sea. These are
enormous powers and we are further advanced in this country than any
other in the
world.
My point is
that, if this Bill is giving this Secretary of State powers of
direction, is there going to be any conflict with the powers of
direction that SOSREP has—who is currently Robin Middleton,
based in Southampton. I can conceive of situations where these powers
of direction may, indeed, conflict with the powers of direction of
SOSREP. I realise the Minister may have difficulty giving me an answer
today, but I think this matter should be considered seriously before
the Bill becomes an Act of
Parliament.
Mr.
Swire:
May I just second what the hon.
Member for Bolton, South-East has just said? In my own constituency in
East Devon, there has been tremendous concern about ship-to-ship
transfers of heavy oil, particularly from Russian ships. More recently,
we have had a marine tragedy which could have been a lot
worse—that of the ship the MSC Napoli, which the Minister and
other members of the Committee will be familiar with. That experience
was very interesting, because I first encountered the SOSREP, Robin
Middleton, in that capacity, and he did an extremely good
job.
At
the beginning of that situation, members of the Committee may remember
the almost 19th or 18th century wrecking scenes on the beach. There was
confusion at the time as to who the lead agency was. In the aftermath
of the Napoli having been grounded, there was a misunderstanding or a
lack of clarification as to which was the lead agency—whether it
was the Devon and Cornwall Constabulary or whether it was SOSREP, in
the form of Robin Middleton. On clarification, it was SOSREP who then
really took the lead in all
this.
I think it is
important; I agree with the hon. Member for Bolton, South-East that it
does need to be clarified as to the respective roles so that in the
event of an emergency, such as the one I have just alluded to, the
emergency services—and indeed, all those agencies
involved—know who takes the lead
position.
Malcolm
Wicks:
I must confess that, until recently, although I
knew about the Secretary of State regulations, in my ignorance I had
never heard the term SOSREP before—although, come to think of
it, I often feel that I am a SOSREP in various work that I have done in
a number of different
departments.
The
short answer to the questions raised is one that I hope will content
the hon. Members, as the SOSREP regulations will apply in the offshore
gas
regime.
Question
put and agreed
to.
Clause 9
ordered to stand part of the Bill.
Clause
10
Question
proposed, That the clause stand part of the Bill.
Failure
to comply with a direction under section
9
Malcolm
Wicks:
This clause will ensure
directions issued by the Secretary of State will, if they are not
complied with, attract the same maximum penalties as would an
infringement of a licence, which leads to criminal sanctions under
clause 8. It is therefore a central part of the regulatory enforcement
arrangements proposed by this Bill. As with clause 8, it will be a
valid defence if the licence holder proves that due diligence was
exercised in trying to avoid committing the offence, and we have had a
useful discussion about due diligence. In the case of a contractor, due
diligence could include appropriate monitoring and supervision of a
contractor acting on behalf of a licensee, even if the contractor
subsequently still failed to comply with conditions. I move that this
clause stand part of the
Bill.
Question
put and agreed to.
Clause 10 ordered to
stand part of the Bill.
Clause
11
Question
proposed, That the clause stand part of the Bill.
Offence
to carry on unlicensed activities (Offshore Gas
Storage)
Malcolm
Wicks:
I think I will take this one on.
This clause gives the Secretary of State the power to apply to the
court for an injunction to prevent, or require the cessation of,
activities prohibited under clause 2. For example, if there is evidence
that a gas-unloading activity is taking place, or is about to take
place, without a licence, the Secretary of State may apply for an
injunction requiring the operator to cease the activity immediately.
This is a further safeguard to ensure the integrity of the licensing
regime. Given that such unlicensed activity would be a criminal offence
under clause 7, we expect this power to have to be used only rarely.
However, it is a useful power to have in reserve. I therefore move that
this clause stand part of the
Bill.
Question
put and agreed to.
Clause 11 ordered to stand
part of the
Bill.
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