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Energy Bill

I am grateful to the noble Baroness, Lady Wilcox, for raising these important issues and I hope that I can give her a satisfactory response so that she will feel confident in not pressing her amendments. First, on Amendments Nos. 4 and 5, Clauses 8 and 9 relate to the enforcement provisions of the new offshore gas storage and unloading regime. In particular, Clause 8 stipulates that it is an offence to undertake any of the activities set out in Clause 2, such as the unloading of gas to an installation or pipeline, without a licence granted under Clause 4. Meanwhile, Clause 9 specifically covers offences once a licence has been granted—for example the breach of certain specified licence conditions. The clauses form part of a suite of provisions designed to ensure that a licence is obtained for the activities listed in Clause 2 and that the terms and conditions governing the licence are adhered to. Adherence to the terms and conditions of licences will ensure that the necessary safety, environmental and other protections are in place for the offshore storage of gas and unloading of LNG. We believe that the proposed penalties for failing to obtain a licence, or for non-compliance with licence conditions, are proportionate and sufficiently strong to deter licence holders from committing the offence. The penalties for any person found guilty under either Clause 8 or 9 consist of a fine of up to the statutory maximum, which as the noble Baroness said is currently £5,000 in England, Wales and Northern Ireland and £10,000 in Scotland. The noble Baroness has suggested we add to the existing offences to provide a power for the Secretary of State to stipulate that a person guilty of an offence under the gas unloading and storage regime will be barred from applying for future licences for a period of time to be determined by him. We have given some thought to those issues, and I am grateful to the noble Baroness for her amendment, as it gives me the opportunity to give voice to these points. I am confident that we have the right penalties for these offences without the need for this particular amendment. The penalty provisions contained in Clauses 8 and 9 are based on an existing enforcement regime which has worked successfully to date—the penalty provisions of the submarine pipelines regime in the Petroleum Act 1998. If the noble Baroness thinks that we are leaning too much on past experience, that is a tremendously important Act that has governed an important development in our energy supplies. We have that experience to draw upon. The risk of a potentially unlimited fine will act as an effective and proportionate deterrent to operators engaged in offshore gas storage. However, if in future it was felt that a broader range of penalties were necessary—as the noble Baroness suggests with her amendment—including a bar on persons found guilty of an offence, the Bill already provides for that possibility. The power afforded to the Secretary of State by Clause 5(a) allows for regulations to be made detailing who may apply for such licences. These regulations could therefore adequately provide for such a measure of restriction if we deemed it necessary. Our intention is to consult on the regulations and the requirements for applying for a licence prior to their being adopted. This would be the subject of secondary legislation and full consultation will take place before any of that is proposed. I hope the noble Baroness will recognise that we have thought seriously about these issues and that we have already catered in the legislation for the specific points she picks up on in her amendment. She wondered whether a fine was sufficient to guarantee that companies did not break licence conditions. Companies will be subject—to answer the noble Lord, Lord Redesdale—to a maximum fine but may also be subject on conviction or indictment to an unlimited fine. You cannot have a greater financial deterrent. There was a question about whether the entity committing an offence may be a company rather than an individual. If it is a company, that company will be liable for the penalty. In certain circumstances, officers of the company would also be liable. We accept the noble Lord's point that an individual and the company may bear the responsibility. Certainly the penalties we envisage in these terms apply to both. I turn to the final set of amendments in this group, starting with an explanation of what Clauses 13 and 27 set out to do. I will then set out why we think the amendments to revoke a licence if an offence is committed against an inspector or other person acting on the directions of the Secretary of State, or Scottish Ministers in relation to carbon dioxide storage in Scottish territorial waters, is not necessary. Provisions under Clauses 13 and 27 give the Secretary of State, or Scottish Ministers, the power to appoint inspectors to inspect facilities used for gas or carbon dioxide storage under the seabed, offshore unloading of LNG or related activities. They also provide a power to make regulations setting out the powers and duties of inspectors. Examples of powers that might be set out in regulations include the right of entry to premises, powers to carry out an investigation, to require information or to take samples. The regulations may also specify the assistance that must be offered to the inspectors. To encourage compliance with these requirements, Clause 13(5) specifies that these regulations may also create offences relating to inspections. An example of an offence might be obstructing an inspector in exercise of his duties under the regulations. The clause lays down the penalties that may be imposed for such offences. Such offences would be punishable on summary conviction by a fine not exceeding the statutory maximum or a lesser amount specified in the regulations, and, on conviction on indictment, by an unlimited fine. As before, the maximum penalty provisions contained in Clauses 13 and 27 reflect the penalty provisions for offences against submarine pipeline inspectors in the Petroleum Act 1998. That enforcement regime has worked successfully to date. I believe that the threat of an unlimited fine will act as an effective and proportionate deterrent. However, if it is felt that financial penalties are insufficient in relation to offences committed against inspectors, revocation of a licence is also available as an additional sanction. Under Clauses 6 and 20, the licensing authority could include a provision in a licence that specified that the licence could be revoked if the licensee committed any offence as set out in the relevant regulations. Moreover, in the case of carbon dioxide storage, the appropriate sanction might not be revocation of the whole licence, but rather withdrawal of the rights of the operator to continue storage activities. That is because we may wish the operator to continue to be bound by the monitoring and remediation obligations under the licence, even if it no longer has the right to continue storage activities. I hope the noble Baroness will recognise that we have considered these issues very carefully and that the Bill and the Petroleum Act provide the necessary penalties and requirements that she identified in her amendment. I hope she will feel content to withdraw it.