Risk regulatory regimes of the Norwegian
Petroleum Sector and the “Nordic model”
Professor Ole Andreas Engen,
University of Stavanger,
Norway
1
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
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: 2008 – 2012
New program announced from 2012 - 2017
3
The tripartite model
Authority
National (workinglife)
Employer
Tripartite collaboration
Safety
organisation
Individual
working contract
Unions
Industry
Workplace
Employee
1970-1990: 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
1900
1970
New regulation regime:
Pro-active with goal
setting and functional
requirements and “selfregulation”
1990
2000
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
Phases, major accidents and regulations
Time
19611970
19711980
19811990
Major
accident
Sea Gem
(1965)
Amoco Cadiz
(1969)
Bravo
(1977)
Alexander
Kielland
(1980)
Piper Alpha
(1988)
19912000
20012011
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)
NorwegianUS-regulations
regulations
Petroleum Act (1963) Outer Continental Shelf
Lands Act (1953)
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
Comparing NCS and US (I)
Area
Norwegian continental
shelf
Coherent integrated
Legal
performance based framework
framework with functional requirements.
A framework regulation with
four more detailed regulations
Costbenefit
analysis
Legal
standards
US outer continental shelf
Many laws and regulations with
prescriptive detailed rules with a
multitude of legally-enforceable
requirements.
Ambiguous and not doctrinal
Presidential directive with strong
emphasis on defending burden of
new regulations
Legal standards give flexibility
and a space of interpretation.
Companies follow industrial
standards and are
free to choose among these
standards
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
Comparing NCS and US (II)
Area
Norwegian
continental shelf
US outer continental shelf
Inspections
and
sanctions
One strong agency.
Inspections announced
and dialogue and trust
based. Soft helpful
approach.
More inspectorates.
Unannounced inspections based
on numerous checklists for
“Potential Incidents for NonCompliance” (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
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
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
Two logics of standard setting
Politics: Legislation,
Administration, Inspection
Legal
binding
norms
Civil society
third party
Scope of
regulation
Technology &
industry driven
Industrystandards
Best
practise
Value- and
policy-driven
Value creation
Industrial activities
Knowledgeproduction and science
11
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
Legal norms and standards
Norms
Main groups
Acts
Legal binding
norms
Regulations
Legal
standards
Non-legal
norms
Examples
Petroleum Act, Working Environment Act
The Framework Regulation (Royal Decree)
Regulations regarding (1) Management, Activity,
(2) Information and (3) Installation (Passed by
PSA)
Regulatory
guidelines
Guidelines to the regulation
Letters of interpretation
Industrial
standards
ISO, IEC and CEN standards
NORSOK-standards
Recognised industry standards
Company specific requirements and guidelines
Project specific requirements
Company
internal
13
Complex roles and mixed norms in a regime of
”Enforced self-regulation”
Inspectors roles
Controller
Asymetrical relation
Legal binding
norms
Legal
standards
Non-legal
norms and
standards
Service Provider
Symmetrical relation
1
Investigator of compliance:
2
Counseling on legal issues:
How to interprete functional
laws and regulation?
Confusing legal norms with nonlegal norms and professional
standards?
3
Enforcing compliance with
non-legal standards:
4
Aiming at improvement:
Mismatch with own
standards and ethic codes?
How to keep a necessary
distance to regulated?
14
Summing up (I)
• The UK and Norwegian regime has been developed during
30 – 40 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
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
Robust Regulation
Thanks for your attention.
See website for the project:
www.uis.no/robustregulation
www.seros.uis.no
17