Risk regulatory regimes of the Norwegian Petroleum Sector and the Nordic model. Professor Ole Andreas Engen, University of Stavanger, Norway
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1 Risk regulatory regimes of the Norwegian Petroleum Sector and the Nordic model Professor Ole Andreas Engen, University of Stavanger, Norway 1
2 Outline The Norwegian offshore regime Context Values and culture: The Nordic model A history of development Comparing the Norwegian, US-, and UK-regimes Discussion Assessing regimes Bottom-up or top-down A robust EU-regulation? 2
3 The Robust Regulation Project Project goals: Understand and conceptualize the robustness of the Norwegian risk regulation regime Comparing the Norwegian regime with UK and US Assessing relation between regulation, Risk Management Systems and risk behaviour in the industry Partnership with industry, unions and regulators (PSA) Part of the Petromax research program Project periode: New program announced from
4 The tripartite model Authority National (workinglife) Employer Tripartite collaboration Unions Individual working contract Safety organisation Employee Industry Workplace
5 : A paradigm shift i risk regulation Social production of wealth with increasing technical, ecological, social and medical risk (Beck 1986) Old regulation regime: Reactive and prescriptive with technical requirements New regulation regime: Pro-active with goal setting and functional requirements and selfregulation Seveso (1976), Three Miles (1979), Alexander Kielland (1980), Bhopal (1984), Tjernobyl (1986) and Piper Alpha (1988) Robins report (1972), Nordic Work Environment Laws (1977+) and Framework Directive 89/391 (1989) 5
6 Phases, major accidents and regulations Time Norwegianregulations US-regulations Petroleum Act (1963) Outer Continental Shelf Lands Act (1953) Major accident Sea Gem (1965) Amoco Cadiz (1969) Bravo (1977) Alexander Kielland (1980) Piper Alpha (1988) BP Macondo (2010) UK-regulations Continental Shelf Act (1964) Mineral Working (Offshore Installation) Act (1971)Robens report (1972) HSWA (1974) Burgoyne Committee (1977) The Lord Cullen Report, 1990 Offshore Safety Act (1992) Offshore Installation (Safety Case) Regulations (2005) Regulations relating to safe practices (1975 and 1976). Work Environment Act (1977) Principles of internal control (1981), Petroleum Act (1985) Petroleum Act (1996) Revised regulations (2011) Separation of leasing function & creation of BOEMRE agency, new prescriptive rules & SEMS rule (2010, 2011) 6
7 Comparing NCS and US (I) Area Legal framework Costbenefit analysis Legal standards Norwegian continental shelf Coherent integrated performance based framework with functional requirements. A framework regulation with four more detailed regulations Ambiguous and not doctrinal Legal standards give flexibility and a space of interpretation. Companies follow industrial standards and are free to choose among these standards US outer continental shelf Many laws and regulations with prescriptive detailed rules with a multitude of legally-enforceable requirements. Presidential directive with strong emphasis on defending burden of new regulations Regulators adopt industrial standards for company implementation. Lindøe, Baram & Braut (2011): Empowered agents or empowered agencies? Assessing the Risk regulatory regimes in the Norwegian and US offshore oil and gas industry 7
8 Comparing NCS and US (II) Area Inspections and sanctions Norwegian continental shelf One strong agency. Inspections announced and dialogue and trust based. Soft helpful approach. US outer continental shelf More inspectorates. Unannounced inspections based on numerous checklists for Potential Incidents for Non- Compliance (PINC). Hard policing approach. Involvement of work force Strong involvement of unions in different arenas of cooperation; policy, industrial and company level Non-involvement of workers, unions and occupational safety agency. 8
9 Bottom-up or top-down? NCS delegates control and presumes willingness and capability among the actors to collaborate upon an accepted standards for good practice uses the legislation to establish a binding framework for mutual activities striving for consensus among the actors Regulator s role in enabling the process of continuous improvement US The regulator uses the legislation as a means for giving clear distinctions between right and wrong as defined through norms expressing the societal expectations The legislation aims to solve disputes and conflicts Regulator role becomes more like a judge 9
10 Different systems or a false dichotomy? Regulator Prescriptive rules and regulation including industrial standards (Command & Control) Performance based rules with functional requirements Legal standards Voluntary industrial standards in compliance with regulations Self-regulation with voluntary and accepted standards Industry 10
11 Two logics of standard setting Politics: Legislation, Administration, Inspection Civil society third party Technology & industry driven Legal binding norms Scope of regulation Industrystandards Best practise Value- and policy-driven Value creation Knowledge- production and science Industrial activities 11
12 Two different roles of the state State as protector of law and order where the primary task is, by the use of legitimate authority, forcing citizens/enterprises to follow laws and regulations The control role, anchored in this principle, creates an asymmetrical relationship between the regulator and the regulated State as service provider, stimulating towards growth in society (ref. welfare model in Scandinavia) This role works in a symmetrical way by developing mutual arenas for improvement, learning and building mutual confidence between state and public institutions, industrial sectors, etc. 12
13 Legal norms and standards Norms Main groups Examples Legal binding norms Legal standards Acts Regulations Regulatory guidelines Petroleum Act, Working Environment Act The Framework Regulation (Royal Decree) Regulations regarding (1) Management, Activity, (2) Information and (3) Installation (Passed by PSA) Guidelines to the regulation Letters of interpretation Non-legal norms Industrial standards Company internal ISO, IEC and CEN standards NORSOK-standards Recognised industry standards Company specific requirements and guidelines Project specific requirements 13
14 Complex roles and mixed norms in a regime of Enforced self-regulation Inspectors roles Legal binding norms Legal standards Non-legal norms and standards Controller Asymetrical relation 1 Investigator of compliance: How to interprete functional laws and regulation? 3 Enforcing compliance with non-legal standards: Mismatch with own standards and ethic codes? Service Provider Symmetrical relation 2 Counseling on legal issues: Confusing legal norms with nonlegal norms and professional standards? 4 Aiming at improvement: How to keep a necessary distance to regulated? 14
15 Summing up (I) The UK and Norwegian regime has been developed during years of experience, triggered by major accidents Risk- and purpose based with functional requirements Exchange of experience and ideas across the North Sea One strong coordinating regulatory body The US OCS-regimes has had almost the opposite characteristics American companies adaptet to the NCS-regime in the 1980s In US the opposed new regulation until 2010 The Macondo accident has vitalized a debate and reorientation of offshore risk regime: In US, UK and Norway and the EU commission 15
16 Summing up (II) The design and logics of the three regimes should be assessed in the perspectives of major accidents, industrial relations, legal and administrative practice and major as well as cultural values and norms. The NCS strategy may be chosen when one might expect the possibility to achieve consensus among actors with long lasting relations, but may fail if the main aim of the legislation is to define stable norms in an unambiguous way The proposed EU regulation combines elements from the Norwegian and UK (Safety case) regimes. Critics from Norway is that The tripartite system in not a part of the regulation An integrated and consistent regime in place, but mixed with a superior EU regulation will be complicated and burdensome 16
17 Robust Regulation Thanks for your attention. See website for the project:
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