APPENDIX 1: ENERGY BILL [HL]: GOVERNMENT
1. The Government is grateful to the Committee
for its report on the Energy Bill, which forms a valuable part
of the scrutiny of the Bill. The Government wishes to respond
to the points raised by the Committee before the Bill is considered
at Committee stage, in order to inform that debate.
2. The Committee Report makes three recommendations
which relate to the following clauses and subsections (clause
numbers used relate to the Bill print at the time of Introduction
into the House of Lords):
27(8) - Disclosure of information
and provision of samples.
40(2) - OGA guidance on determining the
amount of financial penalty.
57(3) - Powers to charge fees.
3. For clause 27(8) the Committee considered
that the power was inappropriate without the inclusion of a list
of factors governing its exercise. The Committee further recommended
that the power be subject to the affirmative procedure. The types
of information to which the regulation will apply are diverse
and the Government agrees that some of the information at issue
here is potentially of high commercial value, so accept your advice
in full. The Government will look at amending the Bill to provide
for a list of considerations the Secretary of State must have
regard to before laying the regulations. The Government also agrees
that the regulations should be subject to the affirmative procedure.
4. For clause 40(2) the Committee considered
that the OGA's powers to issue guidance as to the matters to which
it will have regard when determining the amount of a financial
penalty were not suitable for a new institution with a nascent
enforcement framework, and concluded that the guidance should
be subject to Parliamentary oversight. The Committee recommended
that the guidance should be laid in draft before Parliament and
the affirmative procedure should apply to an Order bringing the
initial or any revised guidance into force.
5. The Government accepts the recommendation
that the guidance, and any revised guidance, should be laid before
Parliament. The Bill does not contain any Parliamentary procedure
for the guidance and, whilst the Government accepts that Parliament
should have oversight over the maximum financial penalty that
may be imposed - which it will do via Regulations made under the
affirmative procedure - the Government considers that the guidance
itself should sit wholly within the operational remit of the OGA.
6. The power in clause 40(2) is intended to provide
the OGA with appropriate autonomy to set out the matters to which
it will have regard in determining the amount of a financial penalty
in any particular case. We believe that the OGA will be best placed
to determine such matters in line with its operational framework
and the requirements of the UK Continental Shelf, subject to the
statutory cap on a financial penalty set out in this Bill (or
changed via affirmative regulations). An approach requiring guidance
of this nature to be subject to Parliamentary procedure would
be difficult to align with the OGA's role as an independent regulator.
7. There is a precedent for this approach, particularly
in cases where a regulator, not the Secretary of State directly,
imposes penalties. As the Committee noted, section 55C of the
Data Protection Act 1998, inserted by section 144 of the Criminal
Justice and Immigration Act 2008, requires the Information Commissioner
to issue guidance about the monetary penalties that the Commissioner
may impose for breaches of the former Act. The guidance has to
be laid before Parliament, although it is not subject to any Parliamentary
procedure. By way of further precedent, section 12(1) of the Groceries
Code Adjudicator Act 2013 requires the Adjudicator to publish
guidance about the criteria that the Adjudicator intends to adopt
in deciding the amount of any financial penalty that the Adjudicator
may impose under that Act. The guidance is not subject to any
8. In conclusion, the Government acknowledges
the Committee's concern but hopes that these are alleviated by
the commitment given to make provision for the guidance, and any
revised guidance, to be laid before Parliament.
9. For clause 57(3) the Committee questioned
the reason for subsection (3) in both of the new sections the
function of which is to allow Regulations to confer a power on
the Secretary of State to determine the levels of fees via a separate
charging scheme, which is not a part of the Regulations themselves.
This would allow the Secretary of State to set the level of fees,
with no Parliamentary oversight.
10. The Committee advised that the government
should provide further justification for this sub-delegation or
else remove it from the Bill. The government considers that there
are good reasons for keeping the power as it is currently drafted.
It is an established practice to allow the Secretary of State
to create a charging scheme, see for example regulation 8 of the
Offshore Chemicals Regulations 2002 (SI 2002/1355), regulation
18 of the Greenhouse Gas Emissions Trading Scheme Regulations
2012 (SI 2012/3038) and regulation 22 of the Offshore Combustion
Installations (Pollution Prevention and Control) Regulations 2013
11. There are also a number of precedents for
Acts in this field which specifically confer such powers, such
as the powers conferred by paragraph 9 of Schedule 1 to the Pollution,
Prevention and Control Act 1999, section 41 of the Environment
Act 1995 and section 72 of the Energy Act 2004.
12. There are also a number of enactments where
a power to charge a fee is conferred
13. The government considers that there are a
number of benefits to the approach set out in the Bill:
(a) It is more transparent than an approach where
the Act confers a power to charge a fee other than by delegated
powers, for example s.27(1) and s.67(5) of the Marine and Coastal
Access Act 2009;
(b) There is Parliamentary oversight, in the
form of the regulations made under the power. At this stage, if
Parliament objects to the setting of fees by the scheme it could
pray against the regulations;
(c) Having a separate scheme of charges which
can apply to multiple regulations avoid the need to amend all
those Regulations when charges are up-rated, for example, to account
for inflation or other cost changes.
(d) It supports industry engagement in the setting
of the charges, for example, the routine discussions with the
trade association - Oil and Gas UK - and operators.
(e) It gives better certainty to the industry
as it allows for prior notice. The scheme will be published on
the DECC website, with clear evidence for how hourly charges are
calculated and gives industry the opportunity to engage if it
disagrees with the level of the fees.
14. The Government, therefore, believes that
the approach taken in clause 57(3) is justified.
15. The Government will keep the Committee informed
about delegated powers in the Bill, including those that arise
from the amendments set out above, and any that arise from other
amendments to the Bill.
Lord Bourne of Aberystwyth
Parliamentary Under Secretary of State
Department of Energy & Climate Change
26 August 2015