Procedure : 2015/2352(INI)
Document stages in plenary
Document selected : A8-0308/2016

Texts tabled :

A8-0308/2016

Debates :

PV 30/11/2016 - 18
CRE 30/11/2016 - 18

Votes :

PV 01/12/2016 - 6.23
Explanations of votes

Texts adopted :

P8_TA(2016)0478

REPORT     
PDF 403kWORD 70k
19.10.2016
PE 582.416v02-00 A8-0308/2016

on liability, compensation and financial security for offshore oil and gas operations

(2015/2352(INI))

Committee on Legal Affairs

Rapporteur: Kostas Chrysogonos

MOTION FOR A EUROPEAN PARLIAMENT RESOLUTION
 EXPLANATORY STATEMENT
 OPINION of the Committee on the Environment, Public Health and Food Safety
 RESULT OF FINAL VOTE IN COMMITTEE RESPONSIBLE

MOTION FOR A EUROPEAN PARLIAMENT RESOLUTION

on liability, compensation and financial security for offshore oil and gas operations

(2015/2352(INI))

The European Parliament,

  having regard to the Commission’s report to the European Parliament and the Council on liability, compensation and financial security for offshore oil and gas operations pursuant to Article 39 of Directive 2013/30/EU (COM(2015)0422),

–  having regard to the Commission staff working document entitled ‘Liability, Compensation and Financial Security for Offshore Accidents in the European Economic Area’ and accompanying the Commission report on this matter (SWD(2015)0167),

–  having regard to Directive 2013/30/EU of the European Parliament and of the Council of 21 June 2013 on safety of offshore oil and gas operations and amending Directive 2004/35/EC (Offshore Safety Directive – OSD)(1),

–  having regard to the impact assessment accompanying the document ‘Proposal for a regulation of the European Parliament and of the Council on safety of offshore oil and gas prospection, exploration and production activities’ (SEC(2011)1293),

–  having regard to Directive 2008/99/EC of the European Parliament and of the Council of 19 November 2008 on the protection of the environment through criminal law(2),

–  having regard to Directive 2004/35/EC of the European Parliament and of the Council of 21 April 2004 on environmental liability with regard to the prevention and remedying of environmental damage (Environmental Liability Directive – ELD)(3),

–  having regard to the international and regional acquis on claims for damages from an offshore oil or gas incident and in particular the International Convention on Civil Liability for Oil Pollution Damage (Civil Liability Convention) of 27 November 1992, the International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage (Fund Convention) of 27 November 1992, the International Convention on Civil Liability for Bunker Oil Pollution Damage (Bunker Oil Pollution Convention) of 23 March 2011, the Nordic Environmental Protection Convention between Denmark, Finland, Norway and Sweden and the Offshore Protocol to the Barcelona Convention for the protection of the marine environment and the coastal region of the Mediterranean (Offshore Protocol),

–  having regard to the decision of 13 September 2005 of the Court of Justice of the European Union(4),

–  having regard to Article 83(2) of the Treaty on the Functioning of the European Union (TFEU),

–  having regard to Regulation (EU) No 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (the recast Brussels I Regulation)(5),

–  having regard to the Convention on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (the 2007 Lugano Convention)(6),

–  having regard to Regulation (EC) No 864/2007 of the European Parliament and of the Council of 11 July 2007 on the law applicable to non-contractual obligations (the Rome II Regulation)(7),

–  having regard to the final report prepared for the Commission by the consultancy BIO by Deloitte on ‘Civil liability, financial security and compensation claims for offshore oil and gas activities in the European Economic Area’(8),

–  having regard to its resolution of 13 September 2011 on facing the challenges of the safety of offshore oil and gas activities(9),

–  having regard to the April 2010 Deepwater Horizon disaster in the Gulf of Mexico,

–  having regard to the incidents related to the castor platform off the coast of Castellón and Tarragona provinces in Spain, which include 500 earthquakes that have directly affected thousands of European citizens;

–  having regard to Rule 52 of its Rules of Procedure,

–  having regard to the report of the Committee on Legal Affairs and the opinion of the Committee on Environment, Public Health and Food Safety (A8-0308/2016),

A.  whereas Article 194 TFEU explicitly upholds Member States’ right to determine the conditions for the exploitation of their energy resources, while respecting solidarity and environmental protection;

B.  whereas indigenous sources of oil and gas can contribute significantly to Europe’s existing energy needs and are particularly important for energy security and energy diversity;

C.  whereas offshore oil and gas operations are progressively taking place in increasingly extreme environments and could potentially have major and devastating consequences for the environment and economy of the sea and coastal areas;

D.  whereas although North Sea oil and gas production has been in decline over the past years, the number of offshore facilities is likely to rise in Europe in the future, especially in the Mediterranean and the Black Sea;

E.  whereas accidents caused by offshore oil and gas rigs have damaging cross-border consequences, and EU action to prevent and mitigate and to seek to combat the consequences of such accidents is therefore necessary and proportionate;

F.  Remembers the tragic loss of 167 oil workers who died in the Piper Alpha disaster off the coast of Aberdeen (Scotland) on 6 July 1988;

G.  Points out that a number of studies, including one by the European Parliament Research Service and one by the Joint Research Centre, estimate in the thousands (more precisely, 9 700 between 1990 and 2007), the number of incidents in the EU oil and gas sector; points out, further, that the cumulative impact of these incidents, including those which are only small in scale, has serious and lasting repercussions for the marine environment and should be taken into account in the directive;

H.  whereas, in accordance with Article 191 TFEU, all EU action in this area must be underpinned by a high level of protection based inter alia on the precautionary, preventive action, ‘polluter pays’ and sustainability principles;

I.    Notes that there has not been a major offshore accident in the EU since 1988 and that 73 % of oil and gas production in the EU comes from the North Sea Member States, which are already recognised as having the world’s best performing offshore safety systems; underlines that the EU has roughly 68 000 kilometres of coastline and the number of offshore facilities is likely to rise significantly in the future, especially in the Mediterranean and the Black Sea, which makes it a matter of urgency to fully implement and enforce Directive 2013/30/EU and to ensure that a proper legal framework to govern all offshore activities is in place before a serious accident happens; points out that, as laid down in Article 191 TFEU, Union environmental policy has to be based on the precautionary principle and the principle of preventive action;

J.  whereas liability regimes constitute the principal means through which the ‘polluter pays’ principle is applied, ensuring that firms are held accountable for any damage caused in the course of business and incentivising them to adopt preventive measures, develop practices and carry out actions that minimise the risks of such damage;

K.  whereas, although the OSD makes offshore licensees strictly liable for the prevention and remediation of any environmental damage resulting from their operations (Article 7 read in conjunction with Article 38, extending the scope of the ELD to Member States’ continental shelves), it has not enabled a comprehensive EU framework for liability to be put in place;

L.  whereas it is of the utmost importance to have effective and adequate compensation mechanisms and prompt and adequate claims handling mechanisms for damage caused by offshore oil and gas operations to victims and to animals and the environment, and also to have sufficient recourses to restore major ecosystems;

M.  whereas the OSD has not provided for harmonisation with respect to civil damage from offshore accidents, and the existing international legal framework makes it difficult to make successful transboundary damage claims in civil matters;

N.  whereas the OSD sets out preconditions for licensing aimed at ensuring that licensees never find themselves technically or financially unable to deal with the consequences of their offshore operations, and also requiring Member States to establish procedures for the prompt and adequate handling of compensation claims, including for transboundary incidents, and to facilitate the use of sustainable financial instruments (Article 4);

1.  Welcomes the adoption of the Offshore Safety Directive 2013/30/EU (OSD), which complements the Environmental Liability Directive 2004/35/EC (ELD) and the Environmental Impact Assessment Directive 2011/92/EU (IEA), as well as the ratification of the Offshore Protocol of the Barcelona Convention by the Council, as first steps for the protection of the environment, human activities and the safety of workers; calls on those Member States which have not yet transposed the aforementioned directives into national law to do so as soon as possible; calls also on Member States to guarantee the independence of the competent authorities as provided in Article 8 of the OSD, and calls on the Commission to assess the appropriateness of introducing further harmonised rules on liability, compensation and financial security with a view to preventing any further accidents with cross-border implications;

2.  Deplores the fact that under Directives 2013/30/EU and 2004/35/EU, incidents are defined as ‘serious’ only if they give rise to deaths or serious injuries, with no reference to the consequences for the environment; emphasises that even if it does not give rise to deaths or serious injuries, an incident may have a serious impact on the environment, by virtue of its scale or because it affects, for example, protected areas, protected species or particularly vulnerable habitats;

3.  Stresses that the effective application of the ‘polluter pays’ principle to offshore oil and gas operations should extend not only to the costs of preventing and remedying environmental damage – as currently achieved to a certain extent via the OSD and ELD – but also to the costs of remedying traditional damage claims, in line with the precautionary principle and the principle of sustainable development; calls on the Commission, therefore, to consider the establishment of a legislative compensation mechanism for offshore accidents, along the lines of that provided for in the Petroleum Activities Act in Norway, at least for sectors that may be severely affected, like fisheries and coastal tourism and other sectors of the blue economy; recommends in this context that abuses or incidents that come about following activities carried out by companies should be quantitatively and qualitatively assessed, in such a way as to cover all the secondary effects for communities; also underlines, with regard to environmental liability, the divergences and shortcomings in the transposition and application of the ELD, as outlined also in the Commission’s second implementation report; calls on the Commission to ensure that the ELD is implemented in an effective manner and that liability for environmental damage from offshore accidents applies to an adequate extent throughout the EU;

4.  Regrets, in this context, that the OSD does not deal with liability for civil damage to either natural or legal persons, be it bodily injury, property damage or economic loss, whether direct or indirect;

5.  Also regrets the fact that the way civil liability is handled varies considerably from one Member State to another; stresses that there is no liability in many of the Member States with offshore and gas activities for most third-party claims for compensation for traditional damage caused by an accident, no regime in the vast majority of Member States for compensation payments, and no assurance in many Member States that operators or liable persons would have adequate financial assets to meet claims; stresses, moreover, that there is often uncertainty as to how Member States’ legal systems would deal with the diversity of civil claims that could result from offshore oil and gas incidents; believes, therefore, that an European framework is needed, which should be based on the legislation of the most advanced Member States, should cover not only bodily injury and property damage but also pure economic loss, and should ensure effective compensation mechanisms for victims and for sectors that may be severely affected (e.g. fisheries and coastal tourism); calls in this respect on the Commission to assess whether a horizontal European framework of collective redress would be a possible solution, and to pay particular attention to this when drawing up the OSD implementation report;

6.  Stresses, in this perspective, that compensatory and remedial claims for traditional damage are further obstructed by civil procedure rules on time limitations, financial costs, non-availability of public interest litigation and mass tort claims, as well as by provisions on evidence, which differ considerably from one Member State to another;

7.  Highlights that compensatory regimes must be able to address transboundary claims effectively, rapidly, within a reasonable timeframe and without discrimination between claimants from different EEA countries; recommends that they cover both primary and secondary damage caused in all the affected areas, given that such incidents affect wider areas and may have a long-term impact; stresses the need for neighbouring countries which are not members of the EEA to respect international law;

8.  Is of the opinion that strict civil liability rules should be established for offshore accidents in order to facilitate access to justice for victims (both legal and natural persons) of offshore accidents, as this can provide an incentive for the offshore operator to properly manage the risks of operations; believes that financial liability caps should be avoided;

9.  Invites the Member States and the Commission to consider the special situation of workers and employees in the offshore oil and gas industry, especially of small and medium-sized enterprises (SMEs); points out that offshore oil and gas incidents may have particularly serious implications for the fisheries and tourism industries, as well as for other sectors that rely on the good condition of the shared marine environment for doing business, since these sectors, which include many SMEs, could suffer significant economic loss in the event of a major offshore accident;

10.  Emphasises, therefore, that it is of the utmost importance to update existing liability systems in the Member States in order to ensure that should an incident occur in their waters it would not adversely affect the future of the offshore oil and gas operations of the state in question, nor that of the EU as a whole were it to occur in an area that is largely dependent on tourism for revenue; calls, therefore, on the Commission to revisit the need to introduce common EU standards for remedial and compensatory claim systems;

11.  Underlines the need to include the victims of collateral damage linked to prospecting, surveys and the operation of offshore facilities, as well as those likely to be eligible for the compensation envisaged;

12.    Notes that the Commission intends to undertake systematic data gathering through the EU Offshore Authorities Group (EUOAG), in order to carry out a more comprehensive analysis of the effectiveness and scope of national liability provisions;

13.  Stresses the need for the Commission to perform regular conformity checks both of national legal systems and of enterprises with the relevant liability and compensation provisions in the OSD, including verification of offshore companies’ financial statements, and to take action in the event of a breach of conformity, with the aim of preventing serious incidents and limiting their impact on persons and the environment; recommends creating a common mechanism at European level to deal with incidents and abuses;

14.  Underlines that a balance needs to be struck between the swift and adequate compensation of victims and the prevention of payouts of illegitimate claims (also known as the ‘floodgates’ problem), through increased certainty regarding the levels of financial responsibility of many offshore firms and the avoidance of lengthy and expensive proceedings before the courts;

15.  Regrets the fact that none of the Member States explicitly sets out a broad range of financial security instruments concerning compensation for claims for traditional damage from offshore oil and gas incidents; underlines in this context that over-reliance on insurance could potentially result in a closed market for financial security instruments, with the corollary potential for a lack of competition and increased costs;

16.  Regrets the lack of uptake of financial security instruments in the EU to cover the damage caused by the most costly offshore accidents; notes that one of the reasons may be that the scope of liability for damages may not make such instruments necessary in certain Member States;

17.  Calls on the Member States to provide detailed data regarding the uptake of financial instruments and adequate coverage for offshore accidents, including the most costly ones;

18.  Considers that all cases of proven liability, as well as the details of penalties applied, should be made public in order to make the true cost of environmental damage transparent to all;

19.  Urges the Commission to encourage the Member States to develop financial security instruments concerning compensation for traditional damage claims resulting from incidents linked to general offshore oil and gas activities or to offshore oil and gas transport, including in cases of insolvency; believes that this could limit the externalisation of operators’ liability for accidental pollution to the public purse, which would otherwise be required to bear the compensation costs if the rules remain as they are; considers that in that context, the establishment of a fund based on fees paid by the offshore industry could also be assessed;

20.  Considers it necessary to analyse to what extent the introduction of criminal liability at EU level will add a layer of deterrence beyond civil penalties, which will improve protection of the environment and compliance with safety measures; welcomes, therefore, the EU’s introduction of the Environmental Crime Directive (ECD), harmonising criminal penalties for certain infringements of EU environmental legislation; regrets, however, that the scope of the ECD does not cover all the activities of the OSD; regrets also that the definitions of the criminal offences and of minimum sanctions when it comes to offshore safety breaches are not harmonised in the EU; calls on the Commission to add major oil accidents to the scope of the ECD and to submit to Parliament its first implementation report on the OSD in a timely fashion, and no later than 19 July 2019;

21.  Calls on the Commission to draw up the studies necessary to assess the economic risk to which individual Member States and their coastal regions might be exposed, taking into account the economic sectoral orientation of individual regions, the degree of concentration of offshore oil and gas operations in given areas, the operating conditions, climatic factors such as ocean currents and winds, and the environmental standards applied; recommends, therefore, introducing protection mechanisms and safety perimeters in the event that operations close down, and welcomes the building by the industry of four well capping stacks, which can reduce oil spill in case of an offshore accident;

22.  Calls for a tailor-made Arctic environmental impact assessment for all operations taking place in the Arctic region, where the ecosystems are especially fragile and are closely connected to the global biosphere;

23.  Asks the Commission and the Member States to consider the possibility of introducing further measures which would effectively safeguard offshore oil and gas operations before a severe accident takes place;

24.  Invites the Commission and the Member States, in this context, to continue examining the possibility of an international solution, considering that many oil and gas companies operating in the EU are active across the world and that a global solution would ensure a global level playing field by strengthening controls on extraction companies outside the EU’s borders; calls on the Member States to swiftly ratify the Paris Agreement on climate change of December 2015.

25.  Instructs its President to forward this resolution to the Council, the Commission and the governments and parliaments of the Member States.

(1)

OJ L 178, 28.6.2013, p. 66.

(2)

OJ L 328, 19.11.2008, p. 28.

(3)

OJ L 143, 30.4.2004, p. 56.

(4)

Case C-176/03, Commission v Council, ECLI:EU:C:2005:542.

(5)

OJ L 351, 20.12.2012, p. 1.

(6)

OJ L 339, 21.12.2007, p. 3.

(7)

OJ L 199, 31.7.2007, p. 40.

(8)

BIO by Deloitte (2014), Civil liability, financial security and compensation claims for offshore oil and gas activities in the European Economic Area, Final Report prepared for European Commission – DG Energy.

(9)

OJ C 51E, 22.2.2013, p. 43.


EXPLANATORY STATEMENT

Background

Offshore oil and gas operations are being carried out further from land and often in much deeper waters than has previously been the case. Some operations are taking place in harsh environments, such as the Arctic, and in locations that depend on tourism for a large part of their income, such as the Mediterranean Sea and the Aegean Sea. Over 90% of oil and 60% of gas produced in Europe (EU and Norway/Iceland) comes from offshore operations. Offshore operations (exploration and exploitation) are ongoing or planned to take place in the territorial waters of 18 Member States.

Following the explosion and oil spill from Deepwater Horizon on 20 April 2010, the Offshore Safety Directive was adopted with the aim of establishing minimum requirements for preventing major accidents in offshore oil and gas operations in the EU and to limit the consequences of such accidents. Member States had until 19 July to update their national legislative frameworks for offshore oil and gas operations to be in line with the Offshore Safety Directive. Since this deadline has long passed, the basic elements of a comprehensive EU-wide framework for preventing major accidents and limiting their consequences should be in place.

Article 7 of the OSD, read together with Article 38 makes offshore licensees strictly liable for the prevention and remediation of any environmental damage resulting from their operations. The relevant public authorities in the Member States entrusted with the representation of the environmental protection interest shall ensure that the liable operator is identified; the causal link established, the remediation plan established and approved, the necessary preventive action or remedial action is taken, etc. Article 4 of the OSD puts forward preconditions on licensing aimed at ensuring that licensees never find themselves technically or financially unable to deal with the consequences of their offshore operations. It also requires Member States to establish procedures for the prompt and adequate handling of compensation claims including for transboundary incidents and to facilitate the use of sustainable financial instruments.

Civil and Criminal Liability

However, the Directive does not deal with liability for civil damage to either natural or legal persons, be it bodily injury, property damage or economic loss – consequential or pure. Neither does it deal with criminal liability for offshore accidents, potential penalties and other non-custodial punishments. Although offshore safety breaches fall under the criminal code of many States(1), neither the definition of the criminal offences nor the minimum type and level of sanctions are harmonised in the EU. Introduction of criminal liability at EU level could add a layer of deterrence beyond civil penalties, which could improve protection of the environment and compliance with safety measures. This would be in line with EU law to the extent that criminal law measures are adopted to ensure the efficient implementation of the EU environmental policy(2). Additionally, according to Article 83(2) TFEU minimum rules in the form of definitions of criminal offences and sanctions may be adopted at EU level if they are essential to ensure effective implementation of a Union policy. This in turn implies that for breaches of the OSD to be considered as criminal offences a necessity and proportionality test needs to be undertaken.

Civil liability can be broken up into three categories: bodily harm, property damage and economic loss. According to the Bio by Deloitte final report of the European Commission on civil liability, financial security and compensation claims for offshore oil and gas activities in the European Economic Area, all Target States provide for claims for bodily injury and property damage from offshore accidents. This liability is almost always financially uncapped in the EEA.(3) However, States handle civil liability for such accidents very differently. Civil liability for offshore accidents in most Focal States is limited by legal proof of negligence, requirements on the directness of economic loss suffered and/or an outright bar on the payment of compensation for economic loss in the absence of bodily injury or property damage (“the exclusionary rules”).

Commercial fisheries and people involved in acqua-/mari-culture may suffer pure economic loss from a spill of oil or chemicals from offshore oil and gas operations or the inappropriate use of dispersants if they cannot continue carrying out their commercial activities due to prohibitions on fishing and the sale of shellfish, or due to a reduction in or the loss of markets. Businesses in the tourism industry could also suffer pure economic loss due to lost profits from the reduction or absence of customers as a result of oil and chemical spills washed up on beaches. Affected tourism businesses could vary from hotels, restaurants and cruise ships to coffee and souvenir shops. Finally, other coastal industries could be similarly affected, such as power stations and desalination facilities using large quantities of sea water and which may malfunction if oily water is drawn into these facilities.

The only EEA state that has legislation imposing liability for compensation specifically in the event of pollution from an offshore oil and gas incident is Norway in respect of the fisheries industry. Denmark imposes strict liability for bodily injury, property damage and economic loss caused by the exploration for and production of hydrocarbons. Greece and Cyprus appear to impose liability for pure economic loss on licensees/lessees under their Model Production Sharing Contract and Draft Model Lease Agreement, respectively, in addition to their general tort law. Due to the inclusion of obligations for compensating persons harmed by offshore oil and gas operations in contractual agreements, however, only the State has the right to require the licensee/lessee to carry out its obligations under the contract. Claimants would thus need to persuade the State to act on their behalf.

Although Brussels I and Rome II Regulations contribute to the safeguarding of claimant’s interests for accidents originating in jurisdictions with less stringent civil liability rules than in their own jurisdiction, the extent to which this situation is sufficient from an access to justice perspective as well as from a competitive level playing field for businesses should be further examined. The differences between the liability systems raise the potential for forum shopping if a release of oil, gas or other dangerous substances caused by an offshore oil and gas accident was to occur.

The rapporteur thus believes that it is of utmost importance to update the existing liability systems in the Member States to ensure that if an incident occurs in the waters of these states, it would not adversely affect the future of offshore oil and gas operations nor that of the entire EU – were the incident to occur in an area that was largely dependent on tourism for revenue. In view of the economic recession and the link between the promotion of offshore oil and gas operations as a means to repair States’ debt deficits, the absence of an effective liability and financial security system to cover claims poses a major risks to such states.

Financial Securities

According to recital 63 of the OSD, the European Commission should submit a report to the European Parliament and to the Council on “the appropriate measures to ensure an adequately robust liability regime for damages relating to offshore oil and gas operations, requirements on financial capacity including availability of appropriated financial security instruments or other arrangements. This may include an examination of the feasibility of a mutual compensation scheme.”

Currently, the majority of States prescribe only one mechanism for compensation, namely insurance. This is in sharp contrast to the mechanisms that may be selected by a licensee of offshore oil and gas operations to meet the obligations of a licence or a contractual agreement and which most commonly include bank guarantees, performance bonds, insurance and if appropriate, parent company guarantees. Finally, it is not clear whether the insurance policies accepted by competent authorities in the states include covers for pure economic loss – it would arguably make little sense for a licensee of offshore oil and gas operations to take financial security for a liability that does not exist in the jurisdiction in which he/she is carrying out operations.

The rapporteur thus believes that a balancing solution needs to be promoted with regard to the requirements for mandatory financial security so that oil companies are not driven out of the offshore oil and gas industry. This should be done in a fashion that the effectiveness of the polluter-pays principles is not compromised by setting too low the minimum security amounts, but also by limiting mandatory security to insurance products only.

Conclusion

The effectiveness of the liability systems in the States for traditional damage caused by pollution from offshore oil and gas operations, the regimes to handle compensation claims for the damage, the availability of financial security instruments, and the requirements for financial security are closely linked. Arguably, the vast majority of claims for traditional damage from pollution from an offshore oil and gas incident are for pure economic loss. If the liability system in a Member State does not recognise this type of loss, or has adopted a conservative approach to claims for pure economic loss, it is irrelevant whether there is an effective regime to handle compensation claims, or whether such claims are covered by financial security instruments.

In view of the liability systems available in Member States, it appears there is a crucial issue as to whether the majority of civil claims from accidents resulting in widespread pollution damage will be met by the current legislative or non-legislative and ad hoc or judicial regimes in place in these States. With the exception of France, the Netherlands and Denmark, claimants are unlikely to obtain redress in many Member States and especially so businesses suffering indirect damages, such as ferries, fish processing businesses etc. Such claims have been raised in the EU, mainly in the case of oil spills from vessels and the international regime established in the Civil Liability and Fund Conventions, covering lost income, where the loss is direct. However, such Conventions do not exist for compensation from harm from offshore oil and gas operations and the said Conventions would most likely not cover such accidents, since offshore oil and gas facilities would most likely not be considered ‘ships’ for the purposes of these Conventions.

The rapporteur is thus of the opinion that the Commission needs to work closely with the Member States and ensure that the compensation and financial security systems for offshore oil and gas operations in the EU are brought up to speed and more specifically, i) provide for compensation of third party claims for traditional damage caused by offshore oil and gas operations accidents; ii) establish an effective compensation regime for the handling of relevant payments; and iii) assure that operators or other liable parties would have adequate financial assets to meet compensation claims.

(1)

Such as Denmark, the United Kingdom and Norway.

(2)

Case C-176/03, Commission v. Council, judgment of 13 September 2005.

(3)

Germany may impose a limit of liability under a tort cause of action to which strict liability applies.


OPINION of the Committee on the Environment, Public Health and Food Safety (12.7.2016)

for the Committee on Legal Affairs

on liability, compensation and financial security for offshore and gas operations

(2015/2352(INI))

Rapporteur: Nikos Androulakis

SUGGESTIONS

The Committee on the Environment, Public Health and Food Safety calls on the Committee on Legal Affairs, as the committee responsible, to incorporate the following suggestions into its motion for a resolution:

1.  Recalls the environmental damage caused by the Deepwater Horizon accident; also draws attention to the fact that the Castor project caused about 500 earthquakes off the coast of Tarragona and Castellon in 2013 and that these directly affected thousands of European citizens;

2.  Remembers the tragic loss of 167 oil workers who died in the Piper Alpha disaster off the coast of Aberdeen, Scotland on 6 July 1988;

3.  Notes that there has not been a major offshore accident in the EU since 1988 and that 73 % of oil and gas production in the EU comes from North Sea Member States, which are already recognised as having the world’s best performing offshore safety systems; underlines that the EU has roughly 68 000 kilometres of coastline and the number of offshore facilities is likely to rise significantly in the future, especially in the Mediterranean and the Black Sea, which makes it a matter of urgency to fully implement and enforce Directive 2013/30/EU and to ensure a proper legal framework to govern all offshore activities is in place before a serious accident happens; points out that, as laid down in Article 191 of the Treaty on the Functioning of the European Union, Union environmental policy has to be based on the precautionary principle and the principle of preventive action;

4.  Deplores the fact that under Directives 2013/30/EU and 2004/35/EU, incidents are defined as ‘serious’ only if they give rise to deaths or serious injuries, with no reference to the consequences for the environment; emphasises that even if it does not give rise to deaths or serious injuries, an incident may have a serious impact on the environment, by virtue of its scale or because it affects, for example, protected areas, protected species or particularly vulnerable habitats;

5.  Points out that a number of studies, including one by the European Parliament Research Service and one by the Joint Research Centre, put at several thousand, and more precisely 9 700 between 1990 and 2007, the number of incidents in the EU oil and gas sector; points out, further, that the cumulative impact of these incidents, including those which are only small in scale, has serious and lasting repercussions for the marine environment and should be taken into account in the directive;

6.  Welcomes the adoption of the Offshore Safety Directive 2013/30/EU (OSD) which complements the Environmental Liability Directive 2004/35/EC (ELD) and the Environmental Impact Assessment Directive 2011/92/EU (IEA), as well as the ratification of the Offshore Protocol of the Barcelona Convention by the Council as a first step for the protection of the environment and the health and safety of workers; recalls that the deadline for the transposition of the directive was 19 July 2015; notes that most Member States have not yet implemented the pertinent provisions of the OSD; calls on the Commission to ensure the close monitoring of its implementation with a view to assessing the appropriateness of introducing further harmonised rules on liability, compensation and financial security to improve compliance with the Offshore Safety Directive as soon as possible in order to effectively prevent any future accidents from happening;

7.  Reiterates the need to carry out and publish regular risk analysis and environmental impact assessment of every offshore operation, in line with other EU legislation and policy areas, such as biodiversity, climate change, sustainable soil use, protection of the marine environment and vulnerability to, and resilience against, incidents and natural disasters, and for the appropriate training of staff prior to any licensing of operations; calls on the European Maritime Safety Agency to assist the Commission and the Member States on the drafting of emergency response plans; welcomes the building by the industry of four well capping stacks, which can reduce the oil spill in the event of an accident;

8.  Calls for a tailor-made Arctic environmental impact assessment for all operations taking place in the Arctic region, where the ecosystems are especially fragile and connected to the global biosphere;

9.  Underlines the need to ensure rapid and effective remedial action including adequate compensation for all victims of pollution and any environmental damage caused by offshore accidents, in accordance with the polluter pays principle;

10.  Emphasises the need to ensure that offshore operations are subject to constant, expert monitoring by the Member States in respect of compliance with EU law, in order to guarantee that effective checks are carried out with the aim of preventing serious incidents and limiting their impact on persons and the environment;

11.  Notes that although the OSD contains some specific provisions on liability and compensation-related issues, it does not establish a comprehensive EU framework for liability; stresses the need to ensure equal access to justice and compensation for damage in the event of any accidents with cross-border consequences, taking into account that under Article 41(3) and (5) of the OSD some Member States are partially exempt;

12.  Regrets that criminal liability rules related to offshore safety breaches are not harmonised in the EU; calls on the Commission to come forward with a proposal to add the offences under the OSD to the scope of the Environmental Crime Directive 2008/99/EC as this would add a separate layer of deterrence;

13.  Notes that the Commission intends to undertake systematic data gathering through the EU Offshore Authorities Group (EUOAG) in order to carry out a more comprehensive analysis of the effectiveness and scope of national liability provisions;

14.  Deplores the fact that the scope of liability for damages and economic loss that will be an essential instrument to ensure effective offshore safety in the Union, differs among Member States; asks the Commission to assess the need to harmonise liability at Union level noting the transboundary character of these operations;

15.  Is of the opinion that strict civil liability rules should be established for offshore accidents in order to facilitate access to justice for victims (both legal and natural persons) affected by offshore accidents, as it can provide an incentive for the offshore operator to properly manage the risk of operations; believes that financial liability caps should be avoided;

16.  Considers that all cases of proven liability, as well as the details of penalties applied, should be made public in order to make the true cost of environmental damage transparent to all;

17.  Calls on the Member States to provide detailed data regarding the uptake of financial instruments and adequate coverage for offshore accidents, including the most costly ones;

18.  Regrets the lack of uptake of financial security instruments in the EU to cover the damage caused by the most costly offshore accidents; notes that one of the reasons may be that the scope of liability for damages may not make such instruments necessary in certain Member States;

19.  Notes the lack of regulatory requirements for specific levels of coverage in many Member States; while it could be unproductive to have specific amounts on an EU-wide basis, stresses the need for an EU methodology for calculating the amounts to be required by the national authorities that respects the specificities of the activities, the local operating conditions and the surrounding area of the installation, in order to provide adequate coverage for accidents with cross-border impact;

20.  While recognising the need to allow sufficient flexibility with regard to financial security instruments, underlines the need for more harmonised rules on verifying that the form and amount of the financial security offered would be adequate to cover the potential damage and that financial security entities can meet the demand for cover, thereby encouraging the uptake of such instruments in a proportionate manner; calls for the Commission to come forward with proposals as it is particularly essential given the cross-border nature of these type of accidents;

21.  Notes that a variety of financial security products can be used to hedge the risks for the most costly and infrequent offshore accidents; calls on Member States to widen the scope of financial security mechanisms accepted for offshore licensing and operations while ensuring an equivalent level of coverage;

22.  Calls on the Commission and the Member States to consider the establishment of a legislative compensation mechanism for offshore accidents, along the lines of the one provided for in the Petroleum Activities Act in Norway, at least for sectors that may be severely affected like fisheries and coastal tourism and other sectors of the blue economy;

23.  Calls on the Commission, whenever infringement proceedings have been instituted against a Member State, to appear before Parliament’s Committee on the Environment, Public Health and Food Safety for the purpose of reporting on the case and on the measures to be taken to remedy the actions of the Member State concerned.

RESULT OF FINAL VOTE IN COMMITTEE ASKED FOR OPINION

Date adopted

12.7.2016

 

 

 

Result of final vote

+:

–:

0:

58

7

0

Members present for the final vote

Marco Affronte, Margrete Auken, Pilar Ayuso, Zoltán Balczó, Catherine Bearder, Ivo Belet, Simona Bonafè, Biljana Borzan, Lynn Boylan, Cristian-Silviu Buşoi, Soledad Cabezón Ruiz, Nessa Childers, Alberto Cirio, Birgit Collin-Langen, Mireille D’Ornano, Miriam Dalli, Seb Dance, Jørn Dohrmann, Ian Duncan, Stefan Eck, Bas Eickhout, Eleonora Evi, José Inácio Faria, Karl-Heinz Florenz, Francesc Gambús, Elisabetta Gardini, Gerben-Jan Gerbrandy, Jens Gieseke, Julie Girling, Sylvie Goddyn, Françoise Grossetête, Andrzej Grzyb, György Hölvényi, Anneli Jäätteenmäki, Jean-François Jalkh, Karin Kadenbach, Kateřina Konečná, Giovanni La Via, Peter Liese, Norbert Lins, Valentinas Mazuronis, Susanne Melior, Miroslav Mikolášik, Massimo Paolucci, Gilles Pargneaux, Piernicola Pedicini, Pavel Poc, Frédérique Ries, Michèle Rivasi, Annie Schreijer-Pierik, Renate Sommer, Dubravka Šuica, Tibor Szanyi, Nils Torvalds, Jadwiga Wiśniewska, Damiano Zoffoli

Substitutes present for the final vote

Nikos Androulakis, Paul Brannen, Nicola Caputo, Martin Häusling, Merja Kyllönen, Christel Schaldemose, Keith Taylor

Substitutes under Rule 200(2) present for the final vote

Jiří Maštálka, Maurice Ponga


RESULT OF FINAL VOTE IN COMMITTEE RESPONSIBLE

Date adopted

13.10.2016

 

 

 

Result of final vote

+:

–:

0:

18

2

0

Members present for the final vote

Max Andersson, Joëlle Bergeron, Marie-Christine Boutonnet, Jean-Marie Cavada, Kostas Chrysogonos, Therese Comodini Cachia, Mady Delvaux, Rosa Estaràs Ferragut, Enrico Gasbarra, Gilles Lebreton, António Marinho e Pinto, Julia Reda, Evelyn Regner, Pavel Svoboda, József Szájer, Tadeusz Zwiefka

Substitutes present for the final vote

Daniel Buda, Sergio Gaetano Cofferati, Pascal Durand, Evelyne Gebhardt, Constance Le Grip, Virginie Rozière

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