Consultation on Amending the Environmental Liability (Scotland) Regulations 2009 in Scotland to Transpose Article 38 of the Offshore Safety Directive 2013 - Consultation Analysis

6. Question 3

28. We asked, "What do you consider to be the potential costs to industry should damage to marine waters occur that triggers action under the amendment Regulations?"

29. You said;

30. Oil and Gas UK said, "Although we have stated above that it is unlikely that ELD requirements would be invoked, there are some uncertainties that could result in significant cost to industry.

Firstly, there is the requirement to establish whether environmental damage has occurred. Whilst this is the responsibility of the enforcing authority, the costs will fall to the operator. It is well known that surveys in the marine environment are very expensive, particularly when trying to assess change in multiple indicators. There is currently no indication of how much survey effort (and hence cost) an enforcing authority would expend, particularly where there could be stakeholder pressure to carry on surveying until some adverse effect was found. Such an open ended cost could be difficult to insure and as such, protocols should be developed and agreed to provide appropriate cost controls.

Should the ELD requirements for remediation and compensation be triggered, it is almost certain that in the offshore marine environment natural remediation would be the primary remediation option. This again will require significant survey effort to ascertain whether or not the damaged natural resources have returned to the baseline condition. Given the uncertainties around baseline conditions and natural variability, an operator could be forced to undertake a rapid post spill sampling programme to establish a baseline against which the natural remediation could be measured, at significant potential cost.

ELD requires complementary or compensatory remediation to be undertaken when the primary remediation does not result in full restoration or if it will take a long time. What this means in practice for the offshore marine environment is entirely unknown but could take the form of biodiversity offsetting i.e. the provision of another natural resource of some equivalence at another location. Without effective guidance on what this might entail, it is very difficult to cost or provide for in insurance."

31. Scottish Environment Protection Agency did not comment.

32. Scottish Environment Link said, "Experience from the terrestrial environment gives opportunities to improve what has come before. The issue of restoration bonds for open cast coal mines became highly politicised and controversial since the collapse of the industry in 2010. The concept of restoration or insurance bonds paid into by companies and used in the event of significant environmental damage is something to be explored if the proposed Regulations are to be adopted. There are lessons to be learned from the failures of restoration bonds but the principles can work in the marine environment.

A further test might be how much it would cost if the companies operating were legally obliged to insure against the costs of environmental damage and a calculation by insurance company brokers of the risk. Marine industries have an obligation to inflict as little environmental damage as is possible whilst carrying out their day-to-day operations; this is reflected in the Scottish Government's policy that marine industries must operate within environmental limits, as required by s.3 of the Marine (Scotland) Act 2010. In an event which triggers actions under the proposed Regulations, in the first instance, the costs of any immediate action required to limit the damage (for example, in the case of an oil spill) should be met by the individual, company or organisation responsible for the environmental damage.

Depending on the scale and impact of the environmental damage, and the effect the damage has on ecosystem function, habitats and species, an investigation into the causes of the damage and an indication of responsibility should take place. Pending this investigation, a suitable course of action should be taken in which an agreed outcome of how to repair the damage caused is agreed by marine stakeholders (including environmental NGOs) and reparations from those responsible to the Scottish Government should be agreed, along with a timeframe indicating when compensation should be paid and how long the restorative work is expected to take.

For this to work, it is imperative that data on the health of the marine environment is regularly collected and collated - especially in areas where marine industries operate. A collated record of assessments of marine industry operations and their potential to harm the environment should be published - this information should already be available through Appropriate Assessments and Environmental Impact Assessments."

33. The individual said, "Discharging of waste chemicals."

34. We did;

35. The Scottish Government notes the uncertainty regarding potential costs. We will seek to address some of these uncertainties through joint guidance with other enforcing authorities. This in turn should enable potential cost estimates to be made by Industry, and suitable insurance sought for this purpose.