Regulatory Context

CHAPTER EIGHT

Regulatory Context Howard Pike1 Centre for Risk, Integrity and Safety Engineering (C-RISE), Faculty of Engineering, Memorial University, St. John’s, NL, Canada 1 Corresponding author: e-mail address: [email protected]

Contents 1. The Development of International Conventions 1.1 International Convention for the SOLAS 1.2 International Convention for the Prevention of Pollution From Ships (MARPOL) 1.3 International Safety Management Code 1.4 International Convention on Standards of Training, Certification, and Watchkeeping for Seafarers 1.5 Code for the Construction and Equipment of Mobile Offshore Drilling Units (MODUs Code) 2. The Development of Coastal State Regulation 2.1 United Nations Convention on the Law of the Sea 2.2 Evolution of Coastal State Regulation 3. The Regulators’ Lot 4. Industry Initiatives 4.1 IADC Safety Case Guideline 4.2 International Association of Oil and Gas Producers—Global Industry Response Group 4.3 IOGP Standards Committee 5. Summary References Further Reading

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Regulators, under unprecedented pressure, face a range of demands, often contradictory in nature: be less intrusive—but more effective; be kinder and gentler—but don’t let the bastards get away with anything; focus your efforts—but be consistent; process things quicker—and be more careful next time; deal with important issues—but do not stray outside your statutory authority; be more responsive to the regulated community—but do not get captured by industry. Sparrow (2000)

Methods in Chemical Process Safety, Volume 2 ISSN 2468-6514 https://doi.org/10.1016/bs.mcps.2018.04.006

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The regulators’ lot is not a happy one. Over the past 50 years, the search for the causes of major accidents has spread steadily outward in scope and backward in time to uncover increasingly deeper root causes. Frequently featured in this extended causal fallout are the decisions and actions of the regulatory authority (Reason, 1997). Laws and regulations are major tools for protecting people and the environment, if they are understood and practiced as intended. In 1984, the Royal Commission on the Ocean Ranger Marine Disaster concluded that the Ocean Ranger had a valid Booklet of Operating Conditions. However, the document was deemed by the investigation to be of little use to onboard personnel. The manual was difficult to read, and the format did not reference important subjects. In fact, former crew members testified that the manual had been produced with the primary goal of fulfilling a regulatory requirement. The manual ignored user needs and capabilities thereby defeating the regulatory intent and providing little value (Royal Commission, 1984). There are two primary forms of offshore regulation, those involving flag State and those involving coastal State. A flag State establishes rules and regulations for vessels that fly its flag and implements enforcement measures to secure the observance of all applicable national and international regulations. A coastal State has sole jurisdiction to regulate the exploration and exploitation of resources in the coastal State’s waters. Therefore, such things as the design and drilling of subsea wells are subject to the exclusive control of the coastal State. The coastal State may also impose additional requirements on the marine operations of a vessel or unit operating in its waters. This chapter examines the difficult and complex role of the regulator in the offshore environment where the regulatory complexities of offshore activity exist, in part, because there are no simple answers to most legal questions. In the 21st century protecting people and the environment has become an ever more demanding task. How is a regulator to put laws and regulations in practice? Laws often do not include the details for compliance, and regulations alone will not decrease the risks involved in offshore activity. Greater understanding and responsibility for the risks involved in offshore activity by those who generate those activities is a path to increased offshore process safety. The first section will deal with the evolution of flag State regulation. Next the evolution of coastal State regulation will be discussed. The lot of the regulator will be examined. Then the contribution of those whose activity generates the risk in the offshore will be reviewed.

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1. THE DEVELOPMENT OF INTERNATIONAL CONVENTIONS Prior to the establishment of the International Marine Organization, most international conventions concerning maritime trade originated in a private organization of maritime lawyers known as the Comite Maritime International (International Maritime Committee or CMI). The CMI was formally established in 1897 to promote the establishment of national associations of maritime law and to ensure a structured relationship between these associations. The CMI pursued unification of principles extracted from various medieval maritime codes. CMI was responsible for the drafting of numerous international conventions including The Hague Rules (International Convention on Bills of Lading), the Visby Amendments (amending The Hague Rules), the Salvage Convention, and many others. The 1948 International Conference in Geneva adopted a convention formally establishing the Inter-Governmental Maritime Consultative Organization, or IMCO. The Convention entered into force in 1958 and the new Organization met for the first time the following year. IMCOs first task was to adopt a new version of the International Convention for the Safety of Life at Sea (SOLAS), the most important of all treaties dealing with maritime safety. In 1982, the IMCO name was changed to the International Maritime Organization, IMO. The IMO has prepared numerous additional international conventions concerning maritime safety including the Standards for Training, Certification, and Watchkeeping (STCW); the International Regulations for Preventing Collisions at Sea (Collision Regulations or COLREGS); Maritime Pollution Regulations (MARPOL); and others. The international conventions are enforced by the individual nations which are signatories, either through their maritime authority, or through their courts.

1.1 International Convention for the SOLAS SOLAS, in its successive forms, is generally regarded as the most important international treaty concerning the safety of merchant ships. The first version was adopted in 1914, in response to the Titanic disaster, the second in 1929, the third in 1948, and the fourth in 1960. The latest SOLAS Convention in force was adopted on November 1, 1974 and entered into force

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May 25, 1980. The latest amendment adopted safety measures for ships operating in polar waters which came into force on January 1, 2017. The main objective of SOLAS is to specify minimum safety standards for the construction, equipment, and operation of ships. Flag States are responsible for ensuring that ships under their flag comply with its requirements through inspections and surveys of ships, and a number of certificates are prescribed by SOLAS to be issued as proof of compliance. Governments that have signed onto the convention have the right to inspect ships of other nations calling at its ports; this is known as Port State control.

1.2 International Convention for the Prevention of Pollution From Ships (MARPOL) MARPOL is the main international convention regarding the prevention of pollution of the marine environment by ships from deliberate, negligent, or accidental causes and is applicable to ships entitled to fly the flag of a Party to the Convention, and ships not entitled to fly the flag of a Party, but which operate under the authority of a Party. A ship is defined as a vessel of any type whatsoever operating in the marine environment and includes hydrofoil boats, air-cushion vehicles, submersibles, floating craft, and fixed or floating platforms (International Maritime Organization (IMO), 2005). MARPOL incorporates the International Convention for the Prevention of Pollution of the Sea by Oil, which came into force in 1958 and the 1973 MARPOL Convention adopted after the Torrey Canyon ran aground in 1967, causing the largest oil spill ever recorded up to that time. The combined instrument is referred to as the International Convention for the Prevention of Marine Pollution from Ships, 1973, as modified by the Protocol of 1978, and entered into force on October 2, 1983 (Annexes I and II). In 1997, a Protocol was adopted to add a new Annex VI.

1.3 International Safety Management Code The International Safety Management (ISM) Code is made mandatory by Chapter IX, Management for the Safe Operation of Ships, of SOLAS for all self-propelled vessels, including mobile offshore drilling units (MODUs), over 500 gross registered tons. The ISM Code is an international standard for the safe management and operation of ships, developed and promulgated by the IMO to provide a vehicle for ship-owners to create their own programs individually tailored to meet international standards for safety and pollution

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prevention in the operation of vessels. Its primary goals include ensuring safety at sea, preventing injury or loss of life, and avoiding damage to the environment and property (IMO, 2015). The ISM Code does not create specific operating rules and regulations, but provides a broad framework for vessel owners and operators to ensure compliance with existing regulations and codes, to improve safety practices, and to establish safeguards against all identifiable risks. It also sets forth the safety management objectives that are recommended to be adopted by companies. Recognizing that ships and MODUs operate under a wide range of different conditions and environments, the ISM Code is based on general principles and objectives. Under flag State requirements vessels are required to have a safety management system that is designed to develop and implement practices and procedures for the safe operation of ships, protect against identified risks, ensure a safe working environment, foster continuous improvement of personnel safety management skills, and to prepare for emergencies related to safety and environmental protection. As a structured and documented system that enables company personnel to implement effectively the company safety and environmental protection policy, the safety management system is unique to each company and/or vessel.

1.4 International Convention on Standards of Training, Certification, and Watchkeeping for Seafarers The 1978 STCW Convention was adopted on July 7, 1978 and entered into force on April 28, 1984. It establishes basic requirements on training, certification, and watchkeeping for seafarers on an international level. Previously, such standards were established by individual governments, usually without reference to practices in other countries, which resulted in widely varied standards and procedures. The STCW Convention was significantly amended in 1995 and 2010, in response to a recognized need to clarify and bring the Convention up-to-date. The 1995 amendments entered into force on February 1, 1997. One of the major features of the revision was that it converted the technical annex into regulations and created a new STCW Code, to which many technical regulations were transferred. Another major change was the requirement under Chapter I, General Provisions, and Regulation 7 Communication of Information for Parties

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to provide detailed information to the IMO regarding administrative measures taken to ensure compliance with the STCW Convention, including education and training courses, certification procedures, and other factors relevant to implementation. This represented the first time that the IMO took measures to ensure compliance and implementation with a convention; generally, it had been the sole responsibility of the flag and coastal States to ensure implementation and compliance with IMO conventions. 1.4.1 The STCW Code The STCW Code expands upon the basic requirements contained in the STCW Convention and outlines the minimum standards of competence required for seagoing personnel. Part A of the STCW Code is mandatory, while Part B is recommended and contains guidance intended to help Parties implement the Convention and illustrates how to comply with certain STCW Convention requirements. The Manila amendments to the STCW Convention and STCW Code were adopted, with major revisions, on June 25, 2010. The 2010 amendments entered into force on January 1, 2012 and are aimed at bringing the STCW Convention and Code up-to-date with developments since they were initially adopted, and to address issues that are anticipated to emerge in the foreseeable future.

1.5 Code for the Construction and Equipment of Mobile Offshore Drilling Units (MODUs Code), 2009 1.5.1 Overview The MODU Code, in its successive forms, provides standards for operational and personnel safety aboard MODUs that are equivalent to standards required by the International Convention for the SOLAS for ships. The 1989 MODU Code was adopted by IMO Assembly Resolution A.649 (16) and is applicable to MODUs built since May 1, 1991. The 1989 MODU Code superseded the 1979 MODU Code adopted by Assembly Resolution A.414 (XI). Since its adoption in 1979, a number of amendments have been made to the MODU Code, the latest version of which was approved in 2009 and entered into force on January 1, 2012. These amendments were necessary as MODUs and their operations became more complex. Additionally, as lessons were learned from accidents, changes were made with respect to structural fire protection and lifesaving appliances.

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Internationally, the MODU Code is not mandatory, and SOLAS remains the principal governing convention of MODUs. The purpose of the 1989 MODU Code is “to recommend design criteria, construction standards and other safety measures for mobile offshore drilling units so as to minimize the risk to such units, to the personnel on board and to the environment.” The Code modifies, for units to which they apply, certain requirements of SOLAS, but do not regulate the drilling of subsea wells or procedures for their control. 1.5.2 IMO MODU Code Development In the late 1960s and early 1970s, as drilling technology advanced that enabled drilling further offshore and in deeper waters, floating units were developed. These units were often towed between sites within different coastal State jurisdictions. As technology progressed, propulsion began to be added to MODUs and they became capable of moving independently between locations. With this development, the units were considered ships and, thus, subject to SOLAS and the International Convention for the Prevention of Pollution From Ships 1973, as modified by the Protocol of 1978 (MARPOL). While SOLAS traditionally applied to self-propelled ships, the movement of these units internationally, often with personnel on board, caused the IMO to develop deliberate standards of safety for MODUs. The IMOs initial philosophy was that self-propelled MODUs should have sufficient and capable regular marine personnel to crew the MODU when moving between locations and that the life safety and fire protection provided should be sufficiently robust, to the extent possible, to protect against the hazards of the drill floor. As such, lifeboats, capsules, and other lifesaving gear were required to accommodate the total number of personnel on board. In addition, lifesaving equipment is required to be duplicated at widely separated embarkation areas and redundant lifesaving appliances are located on opposite sides of the MODU in order to account for the possibility that one embarkation area may be inaccessible due to an accident.

2. THE DEVELOPMENT OF COASTAL STATE REGULATION Admiralty law is distinguished from the Law of the Sea, which is a body of public international law dealing with navigational rights, mineral rights, jurisdiction over coastal waters, and international law governing

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relationships between nations. In 1945, President Harry S. Truman, responding in part to pressure from domestic oil interests, unilaterally extended United States jurisdiction over all natural resources on that nation’s continental shelf—oil, gas, minerals, etc. This was the first major challenge to the freedom-of-the-seas doctrine. Other nations soon followed suit.

2.1 United Nations Convention on the Law of the Sea The United Nations Convention on the Law of the Sea (UNCLOS) is a treaty regarding protection of the marine environment and various maritime boundaries. The 17th century principal of the freedom-of-the-seas doctrine limited national jurisdiction over the oceans to a narrow 3-mile belt of sea surrounding a nation’s coastline. This principal prevailed until the mid-20th century, when it became apparent that an international agreement was necessary to determine how ocean resources were to be regulated and partitioned. UNCLOS was adopted as an unprecedented attempt by the international community to regulate all aspects of the resources of the sea and uses of the ocean such as navigational rights, territorial sea limits, economic jurisdiction, legal status of resources on the seabed beyond the limits of national jurisdiction, passage of ships through narrow straits, conservation and management of living marine resources, protection of the marine environment, marine research, and procedures for settling disputes among nations (United Nations, n.d.). UNCLOS was opened for signature on December 10, 1982 in Montego Bay, Jamaica. This marked the culmination of more than 14 years of work involving participation by more than 150 countries representing all regions of the world, legal and political systems, and the spectrum of socioeconomic development. At the time of its adoption, UNCLOS embodied in one instrument traditional rules for the uses of the oceans and at the same time introduced new legal concepts and regimes, and addressed new concerns. UNCLOS also provided the framework for further development of specific areas of the law of the sea. UNCLOS entered into force on November 16, 1994, 12 months after the date of deposit of the 60th instrument of ratification or accession. Today, it is globally recognized as the overarching regime dealing with all matters relating to the law of the sea. As of June 2016, 168 members of the United Nations have signed and ratified UNCLOS. An additional 14 UN member states have signed the

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Convention but have not ratified it. There are 15 United Nations member and observer states which have neither signed nor acceded either the Convention or the Agreement. Although the United States helped shape the Convention and its subsequent revisions, and signed the 1994 Agreement on Implementation, it has not signed the Convention over objections to Part XI of the Convention. Under international law, one of the rights of a country is the right to control waters offshore. As reflected in the ULCLOS, international law recognizes four offshore zones that give rights to an adjacent country: the territorial sea, the contiguous sea, the exclusive economic zone (EEZ), and continental shelf. They are measured from a baseline either drawn using the coastline or the outermost points of archipelago islands. Fig. 1 is an illustration of the offshore zones. Archipelagic states are states that are composed of groups of islands forming a State as a single unit, with the islands and the waters within the baselines as internal waters. Under this concept (archipelagic doctrine), an archipelago shall be regarded as a single unit, so that the waters around, between, and connecting the islands of the archipelago, irrespective of their breadth and dimensions, form part of the internal waters of the State and are subject to its exclusive sovereignty. A baseline is drawn between the outermost points of the islands, provided that these islands are close to each other. All water inside this is called archipelago waters. The State has full sovereignty over these waters very much similar to the internal waterways, and foreign vessels are allowed innocent passage through archipelago waters. Originally, the territorial sea recognized as the water area seaward from the low water mark of a country to a limit of 3 nautical miles (the distance a cannonball could be fired from shore). In other words, 3 miles was the distance that could be protected effectively by a country from its shoreline. Today, the limit of territorial sea has been extended by international law to a distance not exceeding 12 nautical miles from the baseline. The law recognizes the territorial sea as part of the territory of the adjacent country, as if it were essentially land territory. The contiguous zone is a further offshore zone recognized under international law. The contiguous zone shall not exceed 24 nautical miles from the baseline. The contiguous zone includes the territorial sea, but the zone beyond 12 nautical miles is not considered part of the land territory of the adjacent country. International law does permit the country to enforce

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National airspace

International airspace High seas

Contiguous zone 24 nm Territorial sea 12 nm Exclusive economic zone 200 nm

Archipelagic baselines

Archipelagic waters Coastal baselines

Continental shelf (from 200 to 350 nm, depending on special conditions) International seabed

Islands of the archipelago May be enclosed in archipelago baseline, all bays and rivers considered internal waters. If archipelago baseline does not exist, then the coastal baseline is used.

Fig. 1 Marine zones as defined by UNCLOS. Recreated by authors from Batongbacal, J., & Baviera, A. S. P. (2013). The West Philippine Sea—The territorial and Maritime Jurisdiction Dispute from a Pilipino Perspective—A Primer. The Asian Center and Institute for Maritime Affairs and Law of the Sea, University of the Philippines.

certain laws in this zone, such as those pertaining to customs and excise, taxation, immigration, and sanitation. The EEZ is the third major offshore zone recognized under International Law. The EEZ extends to a distance of 200 nautical miles from the baseline of a country and includes both the territorial sea and the contiguous zone. Within the EEZ a country enjoys the exclusive right to explore and to exploit the natural resources of the seabed and subsoil of the ocean floor. The EEZ is tied to the continental shelf in an attempt to recognize the desire of countries that border on the ocean to benefit from exploiting the resources of the shelf. The continental shelf of a coastal State comprises the seabed and subsoil of the submarine areas that extend beyond its territorial sea throughout the natural prolongation of its land territory to the outer edge of the continental margin, or to a distance of 350 nautical miles from the baselines from which the breadth of the territorial sea is measured where the outer edge of the continental margin does not extend up to that distance (UNCLOS).

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2.1.1 South China Sea Arbitration As a result of overlapping territorial claims, the South China Sea is one of the most politically sensitive regions in the world. China is asserting sovereignty over a vast maritime area in the South China Sea but there are also claims by Vietnam, Taiwan, Malaysia, Brunei, and the Philippines. The United States has become involved, challenging China’s claim and has been conducting freedom of navigation exercises. Several tense standoffs have already threatened to throw the area into conflict, including in 2012 when the Philippines Navy intercepted several Chinese fishermen off Scarborough Shoal. During the 1970s and 1980s, China and Vietnam used force several times, resulting in dozens of deaths and several sunken ships (CNN, 2016). The South China Sea is a semienclosed sea in the western Pacific Ocean, spanning an area of almost 3.5 million square kilometers. The South China Sea lies to the south of China, to the west of the Philippines, to the east of Vietnam, and to the north of Malaysia, Brunei, Singapore, and Indonesia. The South China Sea is a crucial shipping lane, a rich fishing ground, home to a highly biodiverse coral reef ecosystem, and believed to hold substantial oil and gas resources. The southern portion of the South China Sea is also the location of the Spratly Islands, a constellation of small islands and coral reefs, existing just above or below water. Long known principally as a hazard to navigation and identified on nautical charts as the “dangerous ground,” the Spratly Islands are the site of longstanding territorial disputes among some of the States around the South China Sea (PCA Case No. 2013-19) (Permanent Court of Arbitration (or Registry), 2016). In January 2013, the Philippines launched an arbitration case against China pursuant to Part XV, and Annex VII of UNCLOS. Both the Philippines and China are parties to UNCLOS, the Philippines having ratified it on May 8, 1984, and China on June 7, 1996. UNCLOS addresses a wide range of issues and includes as an integral part a system for the peaceful settlement of disputes. This system is set out in Part XV, which provides for a variety of dispute settlement procedures, including compulsory arbitration in accordance with a procedure contained in Annex VII. China refused to take part in the case and, under the terms of the UNCLOS, was well within its legal right. China has rejected the tribunal’s authority to rule on the case. It is also important to note the tribunal had no jurisdiction to decide any issues over the sovereignty of islands and rocks in the South China Sea. UNCLOS only deals with control of the waters surrounding them (The Guardian, 2016).

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For the purposes of the South China Sea dispute, an important part of UNCLOS are the definitions of what constitutes land features. An island controlled by a country is entitled to a territorial sea of 12 nautical miles as well as an EEZ of up to 200 nautical miles (370 km). A rock owned by a State will also generate a 12-nautical mile territorial border but not an economic zone under UNCLOS, while a low-tide elevation grants no territorial benefits at all. It also explains why countries have laid claim to islands and reefs in the South China Sea to legitimize their claims. Although the case was raised by the Philippines, it will affect all the countries as it effectively questions China’s all-encompassing “nine-dash” demarcation line, a dotted marker in Chinese maps that stretches deep into the South China Sea. 2.1.1.1 The Philippine Submission

The Philippines made some 15 submissions to the Tribunal containing numerous claims against China. The Tribunal summarized those claims into the following four categories: First, the Philippines asked the Tribunal to resolve a dispute concerning the source of maritime rights and entitlements in the South China Sea. The Philippines sought a declaration that China’s rights and entitlements must be based on UNCLOS. The Philippines argued that China’s claim to rights within the “nine-dash line” marked on Chinese maps exceeded the entitlement that China would be permitted by UNCLOS. Second, the Philippines asked the Tribunal to resolve a dispute concerning the entitlements to maritime zones that would be generated under UNCLOS by Scarborough Shoal and certain features in the Spratly Islands claimed by both the Philippines and China. The Philippines sought a declaration that all of these features did not generate entitlement to an EEZ or to a continental shelf. Third, the Philippines asked the Tribunal to resolve a series of disputes concerning the actions of China in the South China Sea including: • Interfering with the exercise of the Philippines’ rights under UNCLOS; • Failing to protect and preserve the marine environment by promoting a harmful fishery; and • Inflicting severe harm on the marine environment by constructing artificial islands. Fourth, the Philippines asked the Tribunal to find that China had aggravated and extended the dispute during the arbitration by restricting access to

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Second Thomas Shoal and further engaging in construction of artificial islands in the Spratly Islands. 2.1.1.2 China’s Counter Arguments

China had consistently rejected the Philippines’ recourse to arbitration and had neither accepted nor participated in the proceedings. While China did not file formal statement, it had articulated its position in public statements and in diplomatic notes both to the Philippines and to the Permanent Court of Arbitration which served as the Registry for the arbitration. On December 7, 2014, China’s Foreign Ministry published a “Position Paper of the Government of the People’s Republic of China on the Matter of Jurisdiction in the South China Sea Arbitration Initiated by the Republic of the Philippines” (China, 2014). In its Position Paper, China argued that the Tribunal lacks jurisdiction because (a) “The essence of the subjectmatter of the arbitration is the territorial sovereignty over several maritime features in the South China Sea, which is beyond the scope of the Convention and does not concern the interpretation or application of the Convention”; (b) “China and the Philippines have agreed, through bilateral instruments and the Declaration on the Conduct of Parties in the South China Sea, to settle their relevant disputes through negotiations. By unilaterally initiating the present arbitration, the Philippines has breached its obligation under international law”; and (c) the disputes submitted by the Philippines, “that subject-matter would constitute an integral part of maritime delimitation between the two countries, thus falling within the scope of the declaration filed by China in 2006 in accordance with the Convention, which excludes, interalia, disputes concerning maritime delimitation from compulsory arbitration and other compulsory dispute settlement procedures” (China, 2014). As the verdict got closer, China spoke out, saying the case went beyond the jurisdiction of UNCLOS and insisted on multiple occasions that it would not acknowledge the court’s decision. Additionally, China ramped up its campaign to assert its historical rights in the region with state news agency Xinhua publishing almost daily articles outlining its views (The Guardian, 2016). 2.1.1.3 Decision

On October 29, 2015, the Tribunal issued its Award on Jurisdiction and Admissibility addressing the objections to jurisdiction set out in China’s

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Position Paper, as well as other questions concerning the scope of the Tribunal’s jurisdiction. In its Award, the Tribunal unanimously concluded that the Tribunal was properly constituted in accordance with Annex VII; that China’s nonappearance in the proceedings did not deprive the Tribunal of jurisdiction; that the Philippines’ initiation of the arbitration did not constitute an abuse of process; that there was no indispensable third party whose absence deprives the Tribunal of jurisdiction; that the 2002 China–ASEAN Declaration on Conduct of the Parties in the South China Sea, the joint statements of the Parties referred to in paragraphs 231–232 of this Award, the Treaty of Amity and Cooperation in Southeast Asia, and the Convention on Biological Diversity, do not preclude, under Articles 281 or 282 of UNCLOS, recourse to the compulsory dispute settlement procedures available under Section 7 of Part XV; and that the Parties exchanged views as required by Article 283. The Tribunal acknowledged that China did not accept the decisions in the Tribunal’s Award on Jurisdiction and had stated that the Award was null and void, and had no binding effect on China. The Tribunal also acknowledged that China continued to assert publicly that the Tribunal lacks jurisdiction for the same reasons set out in China’s Position Paper of December 7, 2014. On July 12, 2016, the Tribunal issued its South China Sea Arbitration Award. In its Award, the Tribunal unanimously concluded that China’s claims to historic rights, or other sovereign rights or jurisdiction, with respect to the maritime areas of the South China Sea encompassed by the relevant part of the “nine-dash line” exceed the geographic and substantive limits of China’s maritime entitlements under UNCLOS and were without lawful effect. In addition, it concluded: • That Mischief Reef and Second Thomas Shoal were low-tide elevations and did not generate entitlements to a territorial sea, EEZ, or continental shelf; • That Subi Reef, Gaven Reef (South), and Hughes Reef were low-tide elevations and did not generate entitlements to a territorial sea, EEZ, or continental shelf, but may be used as the baseline for measuring the breadth of the territorial sea; • That Scarborough Shoal, Gaven Reef (North), McKennan Reef, Johnson Reef, Cuarteron Reef, and Fiery Cross Reef were rocks that could not sustain human habitation or economic life of their own, within the meaning of Article 121(3) and accordingly they generated no entitlement to an EEZ or continental shelf;

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•

That Mischief Reef and Second Thomas Shoal were within the EEZ and continental shelf of the Philippines; and • That Scarborough Shoal had been a traditional fishing ground for fishermen of many nationalities and that China has, through the operation of its official vessels at Scarborough Shoal from May 2012 onward, unlawfully prevented fishermen from the Philippines from engaging in traditional fishing at Scarborough Shoal. Legally, the Permanent Court of Arbitration’s decision is binding and there may be implications diplomatically for China if they refuse to abide by it. However, there is no military option to enforce the ruling—United Nations troops will not be forcing China off the artificial islands on Fiery Cross or Mischief Reef (CNN, 2016).

2.2 Evolution of Coastal State Regulation The evolution of the coastal State regulation can be traced by following the development of the petroleum resources in the Gulf of Mexico and offshore California. Unfortunately, it is an account of learning by accident. As accidents occurred and the industrial technology evolved, so too did the regulatory system. The account of this development has been taken principally from the National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling Report to the President (National Commission, 2011). It highlights the regulatory challenges of managing the risks associated with the activities of a dynamic industry that is constantly testing the bounds of technology. As with many things associated with the offshore there are no easy answers to the question of the start of offshore oil and gas development. In 1896 wells were first drilled from piers off Summerland, California. By 1900 beaches in the Summerland area displayed clusters of piers up to 1200 ft. in length from which exploration wells were successfully drilled. The state of Louisiana began issuing leases in the Gulf of Mexico in 1936. The first free-standing platform in the ocean was built in 1937 by Brown and Root for two independent firms, Pure Oil and Superior Oil, in 14 ft. of water a mile and a half from shore on Gulf of Mexico State lease No. 1. In March 1938, a well drilled from the platform discovered what would be called the Creole Field. With almost no guidelines on the wind and wave forces that a hurricane might exert on the platform, designers used onshore design standards to estimate wind forces on this offshore structure (Pratt, 2014). These discoveries were still within what was known at the time as the 3-mile territorial sea. Notwithstanding there were no

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international agreements that addressed the rights to the various minerals on areas outside the 3 mile territorial limit, exploration continued further from shore and in deeper water. By 1945 the Federal government took an interest in the resources offshore and President Harry Truman proclaimed federal authority over the subsoil of the US continental shelf. California, Texas, and Louisiana ignored the proclamation and continued to lease offshore land. The federal government took those States to court and the Supreme Court ruled against California in 1947 and against Louisiana and Texas in 1950, declaring that the federal government had paramount rights over the individual States’ rights of ownership. After significant congressional and Presidential debate, the Submerged Lands Act, passed in 1953. Two months later the Outer Continental Shelf Lands Act was passed which gave states control 3 nautical miles out from the shoreline, except for Texas and western Florida which were given 9 nautical miles due to historic claims. The outer continental shelf seaward of state lands was claimed by the federal government (National Commission, 2011). The Outer Continental Shelf Lands Act states that the Secretary of the Department of Interior, the Secretary of the Department that includes the Coast Guard, and the Secretary of the Army shall enforce safety and environmental regulations promulgated pursuant to the Act. Each federal department may, by agreement, utilize, with or without reimbursement, the services, personnel, or facilities of other federal departments and agencies for the enforcement of their respective regulations. This has resulted in a series of agreements between the various departments. The primary safety regulator is the Department of the Interior. The agency within this department has changed over time, but during the early period was the Conservation Division of the US Geological Survey (USGS). The USGS between 1958 and 1960 issued OCS Orders 1–5, requiring procedures for drilling, plugging, and abandoning wells, determining well producibility, and the installation of subsurface safety devices. The early orders did not specify design criteria or detailed technical standards. While they did not have any explicit testing requirements, the equipment was required to be installed and operational. Companies had interpreted the requirement for the equipment, but they believed that they did not have to test any to see if it worked. The United States Coast Guard is responsible for enforcing regulations relating to the safety of life for offshore oil and gas operations. For fixed

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platforms the focus is on fire fighting, emergency lighting, escape, and abandonment. For floating structures, it also includes hull integrity, ballast control, marine systems, and crewing. A step change in offshore drilling came in January 1962, when the Blue Water 1 under lease to Shell Oil, spudded a record-setting offshore well in 297 ft. of water in the Gulf of Mexico. This was at least three times deeper than wells drilled by other mobile drilling units, such as submersibles and jack-ups which used more conventional land-based drilling techniques. It was the first use of what came to be known as a semisubmersible drilling unit (Priest, 2014). On December 27, 1965, the jack-up drilling rig, Sea Gem, capsized approximately 36 nautical miles (67 km; 42 mi) off the coast of Lincolnshire, United Kingdom. The crew had finished drilling a well and were in the process of moving the rig to another drill site approximately 2 nautical miles (3.7 km; 2.3 mi) away. When the rig was lowered, two of the legs collapsed causing the equipment and people to slide off and into the frigid North Sea. The Sea Gem was originally a 5600-ton steel barge, converted to function as a drilling unit by British Petroleum in 1964. The barge consisted of 10 steel legs which would raise the barge 15 m (49 ft.) above the sea level. It also included a helipad, living quarters for the crew of 34 and a drilling derrick with associated drilling equipment. The industry tends to evolve their standards on the basis of experience. The loss of the Sea Gem focused concern on the structural integrity of MODUs and led to the development of classification rules. It was not until 1968 that a ship classification society developed rules to govern the design and construction of MODUs. On January 28, 1969, Union Oil Company of California (Unocal) experienced a blowout on Platform A in the Dos Cuadras Offshore Oil Field 6 miles off Santa Barbara County, California. The blowout released an 800-square-mile slick of oil that blackened an estimated 30 miles of California beaches and soaked sea birds in oil. Unocal had obtained a waiver from the OCS Order 2 from the USGS with their field drilling rules that governed casing requirements. The well was drilled to its total depth of 3479 ft. with only 239 ft. of conductor casing installed with the rest being open hole. When the drill pipe was pulled out of the well a suction was created and the well began to flow. The crew was able to shut-in the well with blind rams on the blowout preventer (BOP). However, the pressure at the bottom of the conductor casing was sufficient to breakdown the

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formation in the open-hole section and cause a flow outside of the conductor casing to the surface (Arnold, 2015). The 11-day blowout spilled an estimated 80,000 barrels of oil. It generated intense opposition to offshore oil activity in California setting the stage for the passage of the National Environmental Policy Act (National Commission, 2011). The initial investigation after the Santa Barbara blowout showed that the OCS Orders for drilling were not adequate. In August 1969, USGS issued revised Orders 1–5 and a new Order 6 and 7. Order 6, Completion of Oil and Gas Wells, required that wellhead equipment be rated and pressure tested for shut-in pressures and that casing pressure between the production casing and the next casing should be tested and repaired if there is sustained pressure. Order 7, Pollution and Waste Disposal, required that spills of a substantial size or spills where the size cannot be determined be reported immediately and established that the leasee had the obligation to pay for any cleanup operations (Arnold, 2015). The industry protested the new outer continental shelf regulations, but further accidents in the Gulf undermined its case. In February 1970, Chevron’s Platform C in Main Pass Block 41 blew out and caught fire. Chevron was fined $1-million for failing to maintain subsurface safety valves and other required safety devices. This was the first prosecution under the 1953 Outer Continental Shelf Lands Act. In December, Shell suffered a major blowout on its Platform B in the Bay Marchand area, killing four workers and seriously burning and injuring 37 others. Investigators attributed the accident to human error resulting from several simultaneous operations being performed without clear directions about responsibility. It took 136 days to bring 11 wells under control, at a cost of $30 million. The failure or leaking of subsurface safety valves contributed to the size of the conflagration. On October 30, 1970, USGS issued new Orders 8, Platforms and Structures, and Order 9, Pipelines, specified requirements for pipeline design, shut-in valves, and check valves. In June 1972, Order 5 was revised to require the installation of surface controlled subsurface safety valves (SCSSVs) on all new wells and any old wells when the tubing had to be pulled. Industry felt that existing SCSSV designs were not reliable and the frequency of testing and maintenance of these downhole valves would cause production disruptions and potential safety problems. In response, the industry began drafting a new set of American Petroleum Institute (API) “recommended practice” guidance documents for the selection, installation, and testing of safety devices, as well as for platform

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design. API formed the Offshore Safety and Anti-Pollution Equipment Committee to write specifications and recommended practices for the 14 series of API documents. Prior to 1975, the subjects covered were SCSSVs (14A&B), process safety sensors and controls (14C), piping systems (14E), electrical systems (14F), and firefighting systems (14G). When the OCS Orders were replaced by regulations, the API-recommended practices were adopted into and incorporated by reference in 30 CFR 250, the section of the Code of Federal Regulations. In 1969, the industry initiated the annual Offshore Technology Conference in Houston, Texas, which became an important forum for publishing and sharing technical information that led to safer designs and operations. Design and equipment problems were steadily being solved. The industry’s safety record in the Gulf improved significantly after the new regulations and practices were introduced; the reported incidence and rate of fatalities and injuries decreased, as did the rate of fires and explosions. During the 1970s and 1980s, the frequency of blowouts did not decline significantly, but there was a drop in the number of catastrophic blowouts, and fewer casualties and fatalities were associated with them. In March 1980, the Alexander Kielland capsized killing 123 of the 212 people on board. It was built as a drilling rig but was being used to house offshore workers at the Ekofisk Field in the Norwegian North Sea. The Norwegian government responded to the loss of the Alexander Kielland by transforming its approach to industry operations. Under the new regime, rather than relying solely on prescribed operational and safety standards, the government required the industry to demonstrate thorough consideration of the risks associated with the structures and operations that sufficient safety and risk management systems were in place. By shifting the burden of demonstrating safety to the operator, the regulator would instead “consent” to development activity (National Commission, 2011). Meanwhile back in the United States, a Commission on Fiscal Accountability of the Nation’s Energy Resources concluded in July 1981 that the oil and gas industry was not paying all the royalties it rightly owed, and the government’s royalty recordkeeping was in disarray. It called for a complete overhaul, including a wholesale reorganization of Interior Department responsibility for overseeing royalty collection from federal and Indian lands (National Commission, 2011). In January 1982, the US Secretary of the Interior created the Mineral Management Service (MMS), aiming from the outset to promote domestic energy supplies by expanding drilling on the outer continental shelf. The

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new agency combined, in one entity, authority for regulatory oversight with responsibility for collecting revenues obtained from lease sales and royalty payments. In July 1988, the Piper Alpha production platform operating 120 miles northeast of Aberdeen, Scotland, exploded and collapsed, killing 167 people including two rescuers. As in Norway after the Alexander Kielland, the Piper Alpha accident and the subsequent investigation led by Lord Cullen had an impact on United Kingdom regulation. The previous prescriptive regulatory approach evolved into one with a requirement for companies to demonstrate to the regulator that they had undertaken a thorough assessment of risks associated with an activity and they had adequate safety and risk management systems to manage those risks. On March 19, 1989, a platform operating in the South Pass Block 60 off the Louisiana coast caught fire, destroying the platform and killing seven people. An MMS investigation concluded that the uncontrolled release of liquid hydrocarbons resulted from poor management of a repair operation saying that not only was there an absence of detailed and coordinated planning for the project, there was a lack of oversight over contractor activities. After South Pass Block 60, MMS convened an internal task force to review its offshore drilling inspection and enforcement program. That same year, they also commissioned the Marine Board of the National Research Council to make recommendations for overhauling MMSs regulatory program to best fulfill its safety mission at current levels of staffing and budget (NRC, 1990). In January 1990, the Marine Board issued its report “Inspection Alternatives for Outer Continental Shelf Operations.” This report pointed out that both industry and the MMS had been concentrating their efforts on compliance to the regulations which focused on equipment and safety systems. Industry was developing an “attitude of compliance.” As long as they were in compliance with the regulations and passed an MMS inspection they were by their definition safe. Yet the accident history showed that the causes of deaths, fires and explosions, and spills had little to do with failure of safety systems to operate as designed or failure to have the proper equipment in place. The “majority of accident events occurring on the OCS in a representative year (1982) were related to operational and maintenance procedures or human error that are not addressed directly by the hardwareoriented PINC list.” The PINC list was a list of Potential Incident of Noncompliance which was used by MMS inspectors to test compliance

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to a specific regulation. The report concluded the MMS should “place its primary emphasis on detection of potential accident-producing situations—particularly those involving human factors, operational procedures, and modifications of equipment and facilities.” Five days after the South Pass Block tragedy in March 1989, the Exxon Valdez ran aground in Prince William Sound, spilling an estimated 11 million gallons of crude oil on the Alaskan shore. The government was still preoccupied with cleanup duties in Prince William Sound and to a nation attuned to demands for requiring double-hulled tankers when the Marine Board delivered its report. Congress enacted the Oil Pollution Act of 1990, but failed to implement any of the regulatory recommendations identified by the Marine Board. However, the MMS continue to work to improve regulatory oversight. Under the new Act and a supplementary Presidential Executive Order, the MMS was given the added charge of overseeing offshore pipelines and oil-spill response planning and prevention (National Commission, 2011). In 1990, the Occupational Safety and Health Administration (OSHA) published its intention to establish a proposed standard, “Process Safety Management of Highly Hazardous Chemicals” (PSM). This was a result of accidents in chemical process plants and refineries including the 1984 Bhopal, India, incident resulting in more than 2000 deaths and the 1989 Phillips Petroleum Company, Pasadena, TX, incident resulting in 23 deaths and 132 injuries. A final rule was published in 1992. However, OSHA had no jurisdiction offshore in OCS waters (Arnold, 2015). After OSHA adopted PSM, API then Published Recommended Practice 750 which defined the elements required for refineries to meet the intent of PSM. In 1993, API RP 75 “Safety and Environmental Management Programs on the Outer Continental Shelf (OCS) Operations and Facilities” (SEMP) was published in the hope that MMS would adopt it rather than a version of OSHA’s PSM. In 1993, a companion document to SEMP was also created by API, RP 14J Recommended Practice for Design and Hazards Analysis for Offshore Production Facilities. This was referenced in SEMP as a guideline for addressing the specifics of the Hazards Analysis element and the proper use of HAZOPs. For a more complete chronology of the development of SEMS see Chapter 4, “U.S. Offshore Safety Regulation Pertaining to Safety Culture” of the Transportation Research Board of the National Academics special report 321, Strengthening the Safety Culture of the Offshore Oil and Gas Industry (TRB, 2016).

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On April 20, 2010, a blowout occurred on the Transocean Deepwater Horizon rig. It was in the process of temporarily abandoning the Macondo well for BP in Mississippi Canyon 252 in 5100 ft. of water. The ensuing explosion and fire led to the loss of 11 lives, the sinking of the rig and the worst oil spill in US history. Approximately 4 million barrels of oil flowed from the well during a period of 87 days until the well was finally capped on July 15. Production casing had been set and cemented. The negative pressure test showed that the cement job was not adequate but the results had been misinterpreted by the crew. The first indications that the well was flowing were available 50 min before the blowout but were overlooked or ignored. The blind shear rams on the BOP were activated after the explosion but did not totally close. Those simply tracking the statistics could point to a better record in the offshore area. Between 1992 and 2006, 39 blowouts had occurred compared with 87 from 1971 to 1991. There was a significant decrease in fatalities and injuries with only one fatality and two injuries from 1992 to 2006, compared with 25 fatalities and 65 injuries during the previous period, 1971–91. Most of the blowouts during 1992–2006 had occurred in water depths of less than 500 ft. with only six occurring in water depths greater than 500 ft. Of the 39 blowouts during the period between 1992 and 2006, 5 occurred on platform rigs, 22 occurred on jack-ups, and only 6 were on semisubmersible rigs. Cementing had been a contributing factor in 18 of the 39 blowouts between 1992 and 2006 (Izon, Danenberger, & Mayes, 2007). For further analysis of the cementing problems see case study in Box 4-1 Chapter 4, U.S. Offshore Safety Regulation Pertaining to Safety Culture, of the Transportation Research Board of the National Academics special report 321, Strengthening the Safety Culture of the Offshore Oil and Gas Industry (TRB, 2016). The industry had focused on personnel protection metrics and had convinced themselves they were doing what needed to be done. Just as with Piper Alpha, the Macondo well blowout was a high consequence rare event which no one thought could ever happen. However, on the Macondo well, there were mistakes made in the planning and implementation of the abandonment operation in the days prior to the accident and there were mistakes made on the rig the day of the accident (Arnold, 2015). Not long after the tragedy, its repercussions shifted to the MMS. Nineteen days after the rig sank, the Secretary of the Interior announced his intention to strip MMSs safety and environmental enforcement responsibilities away from its leasing, revenue collection, and permitting functions, and

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to place the former within a “separate and independent” entity. The consequences of the Macondo well blowout had extended all the way back to the regulator with the fallout a fundamental change in the regulatory structure (National Commission, 2011).

3. THE REGULATORS’ LOT The regulators lot is not a happy one. Not only are they rarely loved by those they regulate, they are now more likely to carry some of the blame for catastrophic accidents. As illustrated by the Macondo well blowout in the Gulf of Mexico, the search for the causes of a major catastrophe has spread steadily outward in scope and backward in time to uncover increasingly deeper contributions. Frequently featured in this extended cause search are the decisions and actions of the regulatory authority. Increasingly the public is demanding a proactive approach to safety performance where safety is not learned by accident. The difficult and complex role of the regulator in risk management is examined. Legislators have long regulated the safety of industries engaged in hazardous activities to protect the health and safety of people, preserve the environment, and secure the conditions for an innovative and prosperous economy. A number of regulatory tools, offering various advantages and disadvantages depending on circumstances, can be used to achieve that purpose. While safety regulation cannot prevent all harmful incidents, regulators need to have confidence that the regulatory tools chosen are well suited to the specific circumstances. They must also be able to explain their actions to those legislators and to the public (TRB, 2012). Past experience has traditionally played a large part in improvements in safety and in regulatory development. A clear perception and understanding of what that experience has been is required to learn from it. The offshore industry has become increasing complex with organizational arrangements that can foster a dilution and diffusion of responsibility and of accountability of all the participants, designers, builders, owners, operators, contractors, and regulators. However, any measure that shifts the onus for maintaining safe work practices to the company directly concerned represents an enormous plus in the struggle to limit the occurrence of catastrophic accidents. The responsibility is then upon the company to take close, continuing, and proactive interest in all the varied factors affecting the safety of their activities. The challenge has always been for industry to accept that responsibility.

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Without a firm legislative requirement for accountability for their actions and responsibility to maintain safe work practices, the regulator will continue to carry far too much of the burden for safe workplaces. The safety of any facility is not determined just by the quality of its operating manuals and the reliability of its equipment. Other major factors include management’s safety policy, and the training and attitudes of personnel who manage and operate the facility. In companies that are subject to inspection by government or other authorities, the company can gradually drift to the point of view that the responsibility for safety lies with the government and its inspectors. An attitude develops that the company’s responsibility and objective is simply to pass the inspection, an attitude referred to as a compliance mentality but compliance does not equal safety. Legislation and rulemaking related to safety have over time evolved to produce a mix of regulatory designs. Among those regulatory design choices are prescriptive regulations which contain technical specifications for design, construction, maintenance, and operations that are highly detailed and narrowly targeted. Other regulations mandate certain capabilities and give operators discretion on how to meet them, such as in the training of their personnel. Even broader-based regulations call on companies to establish comprehensive risk management programs, most notably to identify, assess, and manage the risk of the hazards associated with their activities. The varied collection of regulatory designs governing safety can create challenges for regulatory enforcement. The regulator may monitor a company’s compliance with well-defined requirements by reviewing documents and conducting field inspections. However, conformity with standards that are more generalized can require judgment on the part of the regulator’s enforcement personnel and trust in the operator’s ability and willingness to comply. Regulations that require safety management programs are referred to as performance-based or goal-oriented, because they give operators flexibility to customize their programs to circumstances and to concentrate on enhancing the performance of their internal risk management actions, as opposed to “checklist” compliance with specifications having industry-wide application. However, goal-oriented regulations do not include details for compliance. Leaving little guidance as to how the regulations are to be put into practice. Regulators are increasingly being called upon to make decisions on potential hazards and their risks in an environment characterized by complexity, uncertainty, and imperfect information. This challenge is

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compounded by the fact that the hazards that form those risks can often have both beneficial and harmful consequences. The public is demanding ever-greater levels of protection against an expanding range of potential hazards, while the industry is asking for a predictable business environment. Regulators therefore need a process for resolving problems and making decisions in a principled, consistent, and transparent manner (Smart Regulation, 2004). Risk management can be a systematic approach to setting the best course of action under uncertainty by identifying, understanding, assessing, prioritizing, acting on, and communicating about potential threats. Risk management is based on a rational- and evidence-based approach to decision-making that can deliver better results over time. It should be recognized that risk cannot be eliminated totally, but it can be managed in such a way as to mitigate or reduce harm to the greatest extent possible and practical. The activities of a dynamic industry that is constantly testing the bounds of technology, combined with rapidly and widely disseminated information about real and perceived risks, means that the function of risk management has become more important for regulators, particularly those working in offshore regulatory regimes. The assessment of risk was effective captured by Kaplan and Garrick when they proposed answering three questions (Kaplan & Garrick, 1981): • What can go wrong? • How likely is it? • What are the consequences? The risk management framework for regulation includes the following steps: identification of the issue, what can go wrong; assessment of the level, how likely is it, and severity of risk, what are the consequences; development of the options; the decision; implementation of the decision; and an evaluation and review of the decision. At each step of the process, communications and consultation activities, legal considerations need to be considered in effective risk management strategies. Decisions made behind closed doors of what is in the best public interest are no longer acceptable. The need to be transparent in the decision-making and involve the public in a meaningful way is of paramount importance. The regulator’s ability to communicate with and engage the public and other parties is a critical success factor in sustaining trust in the regulatory system (Smart Regulation, 2004). The regulatory process can be constrained by the relations existing between the regulatory body and the regulated company. These in turn can lead to relationships based more upon bargaining and compromise than

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threats and sanctions. Companies tend to be highly selective in their transactions with external organizations, and especially with regulators. The information they pass outward gets filtered (Reason, 1997). Regulators, for their part, attempt to penetrate the boundaries of those they regulate by requesting certain kinds of information and by making periodic site visits. But these strategies can only provide isolated glimpses of the company’s activities. Size, complexity, the peculiarities of organizational jargon, the rapid development of technology, and, on occasions, deliberate obfuscation all combine to make it difficult for the regulator to gain a comprehensive and in-depth view of the way in which the company really conducts its business. In an effort to work around these obstacles, regulators tend to become dependent upon the regulated company to help them acquire and interpret information. Such interdependencies can undermine the regulatory process if they are not managed. The regulator’s knowledge of the nature and severity of a safety problem can be manipulated by what the regulated company chooses to communicate and how material is presented. However, regulators have found that engagement with the industry is more productive than threat of punishment, although they need to maintain the threat of punishment if needed. Bad relations consume limited resources, take up valuable time and are often counterproductive, particularly when the internal sources of information dry up. Most technological operations, even very complex ones, are relatively simple in comparison to the task of maintaining safe working conditions. Safety is a dynamic nonevent that depends crucially upon a clear understanding of the interactions between many different underlying processes. The long-term safety benefits of being forced to grapple with these enormously difficult issues are undoubtedly greater than any number of purely technical fixes. In this regard, the process of dealing with these difficult issues is more valuable than the result. While there can be little doubt that this legislative drive toward goaloriented regulation definitely has the right objective when it comes to reducing the likelihood of catastrophic accidents, its benefits for the regulator are less certain. Traditionally, regulators worked to ensure compliance with safety rules laid down by its legislative authority. No matter how fragmented, obsolescent, or externalized those rules were, they nonetheless represented an agreed standard, at least at that time, against which to determine whether or not a particular work practice or hazardous activity was in violation of a regulation.

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In the new goal-oriented climate, regulators are still required to look out for deviations, but of a different kind. They must inspect for departures from a safety management plan that can be expressed in far more general terms, that can vary widely from company to company, and for which they must take some direct responsibility. Since it would not exist as a frame of reference had the regulator not accepted it in the first place. Spotting, monitoring, and sanctioning violations were difficult enough in the past, not only do they have to police compliance with a variety of safety management plans, they also need a very clear idea of what constitutes an adequate safety management plan. In order to judge the adequacy of a safety management plan in something other than a cursory checklist fashion, regulators are now required to have a comprehensive appreciation of all the factors contributing to both individual and process accidents. While the physical origins of the individual accident were largely enshrined in prescriptive legislation, the various ways in which human, technical, and organizational factors can combine to produce the process accident are still not fully understood since each catastrophic accident seems to throw up a fresh set of causes. The situation for the regulatory authority would become even more difficult should one of its regulated companies suffer a catastrophic accident. The subsequent investigation could turn up one of two things; either that the company’s performance was in compliance with its safety management plan, or that the accident was due in part to failure to follow the safety management plan. The former could be judged as stemming from shortcomings in the regulator’s evaluation of the safety management plan and it should not have been accepted in the first place. While the latter is likely to be viewed as a failure of regulatory surveillance (Reason, 1997). Damned if they do and damned if they do not.

4. INDUSTRY INITIATIVES Most regulatory regimes place the responsibility on the company for the safety of its activity. That creates an onus for the company to take close, continuing and proactive interest in the hazards associated with their activities. However, many companies have been content simply to satisfy the regulator rather than conduct rigorous internal assessments. For the most part, industry has typically chosen to react to government actions rather than identify and address emerging safety issues proactively. While traditionally industry has been too passive in assessing risks and cooperating on safety issues, some progress has been made through their

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industry associations. With the long history of oil and gas industry in the United States, it is not surprising that the first industry associations were established there. The API was established on March 20, 1919. API is an advocate for the oil and natural gas industry to the public, the various levels of government and the media. It negotiates with regulatory agencies, represents the industry in legal proceedings, participates in coalitions, and works in partnership with other industry associations. One of its first efforts was to develop a program for collecting industry statistics. As early as 1920, API began to issue weekly statistics, beginning first with crude oil production. The report was shared with both the government and the media and later expanded to include crude oil and product stocks, refinery runs, and other data. Its second effort was the standardization of oil field equipment. During World War I, drilling delays resulted from shortages of equipment at the drill site, and the industry attempted to overcome that problem by pooling equipment. The program reportedly failed because there was no uniformity of pipe sizes, threads, and coupling. API began developing industry-wide standards, and the first standards were published in 1924. API maintains nearly 700 standards and recommended practices covering all segments of the oil and gas industry. Much of this work has been the foundation of ISO standards for the oil and gas industry. The International Association of Drilling Contractors (IADC) was founded in 1940 to work for improvements in drilling and completions technology, for health, safety, and environmental practice and training, and to advocate for drilling contractors in the regulatory and legislative process. IADC’s key operational activities, include KSA (knowledge, skills, and abilities), well-controlled training, Health, Safety, and Environment (HSE) Case Guidelines, IMO, and ISO Jack-up Site Assessment Standard. IADC’s HSE Case Guideline is of particular interest and is discussed later. The International Association of Oil and Gas Producers (IOGP) was established in 1974 at the E&P Forum, in London, UK to develop effective communications between the upstream industry and an increasing network of international regulators. In 1986, IOGP began to address the internationalization of upstream engineering standards (discussed later). In July 2010, IOGP established the Global Industry Response Group (GIRG) to identify, learn from, and apply the lessons of Macondo and similar well accidents. The work of GIRG is summarized later.

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4.1 IADC Safety Case Guideline Drilling contractors were finding it challenging to satisfy the diverse requirements in the offshore landscape with differing operating and business environments, coastal State regulations, and numerous regulatory authorities impacting their activities. IADC developed the Guideline to assist drilling contractors prepare and review their Health Safety and Environment management system (IADC, 2015). While many coastal State regimes use different terminology, the IADC for consistency refers to it as the HSE Case Guideline. The Guideline reflects the • Trend toward integrating the management of Health Safety and Environment (HSE), and • Requirements of the ISM Code and those of many coastal States which address environment in the same way as health and safety The Guideline identifies and addresses specific coastal State regulatory requirements but is not an authoritative interpretation of each coastal State’s regulatory requirements. Where questions of regulatory requirements are identified, the drilling contractor is directed to confirm their application with the relevant Regulator. It is important to note that while the HSE Case is a stand-alone document for the drilling contractor. It is intended to also provide a foundation for bridging or interfacing documents from all parties involved with the drilling project. These bridging arrangements should address site-specific and project-specific conditions and requirements, such as: • Potential environmental effects resulting from loss of containment; • Client’s oil spill response planning and assessments of effectiveness; • Well intervention and response planning—capping stacks, relief wells, etc.; • Allowable persons-on-board (POB); • Seabed limitations; and • Combined operations. The Guideline is divided into six Parts which may be used by the drilling contractor to develop an effective HSE Case for HSE Management Assurance: Part 1—Introduction/External Stakeholder Expectations. Part 2—Describes the drilling contractor’s Management System and presents the HSE management objectives that demonstrate assurance that HSE risks are reduced to a tolerable level. The methods of achieving the HSE management objectives are considered in Part 4.

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Part 3—MODU Description and Supporting Information—describes the equipment and systems necessary to meet the HSE management objectives described in Part 2 and to fulfill the requirements of the drilling contractor’s Scope of Operations. Part 4—Risk Management—describes the Risk Management Process for assuring that the risks associated with a drilling contractor’s Scope of Operations are reduced to a level that is tolerable to the drilling contractor and other stakeholders. The Risk Management Process considers the HSE management objectives described in Part 2 and the systems and equipment described in Part 3. Any gaps related to the HSE Management Objectives in Parts 2 and 3 that are identified in Part 4 must be addressed in the drilling contractor’s Management System. Controlling the level of risk includes the role Part 5 (Emergency Response) and Part 6 (Performance Monitoring) play. In addition, the Risk Management Process needs to comply with requirements of the IMO’s ISM Code. Part 5—Emergency Response—describes the HSE management objectives for emergency response to incidents and to mitigate the consequences (severity) identified in Part 4 and the measures to recover. Part 6—Performance Monitoring—describes arrangements for monitoring to ensure that the risk management measures identified in Part 4 are implemented, maintained, and effective at the workplace.

4.2 International Association of Oil and Gas Producers—Global Industry Response Group The IOGP established the GIRG to improve the industry’s well incident prevention, intervention, and response capabilities. They formed three teams to focus specifically on prevention, intervention, and response: • To provide recommendations on how to improve well engineering design and well operations management therefore reducing the likelihood and impact of future well incidents; • To study how to improve capping response and readiness in the event of an incident and the need for and feasibility of global containment solutions; and • To study more effective and fit-for-purpose oil spill response preparedness and capability. In May 2011, the GIRG reported its recommendations for each of these teams.

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Prevention improving well safety relied on renewed efforts in four key areas: • Creation of an industry-wide well control incident database; • Assessment of blow-out-preventer reliability and potential improvements to this equipment; • Improved training and competence and more focus on human factors; and • The development and implementation of key international standards pertaining to well design and well operations management. To drive these improvements, IOGP established a new Wells Expert Committee (WEC), which set up a dedicated task force for each of these priorities (IOGP WEC, 2016). Intervention; the Macondo well blowout reinforced the necessity of being prepared. It led to the creation of the Subsea Well Response Project (SWRP). SWRP, a consortium founded by nine upstream companies, designed and built a comprehensive capping system—complete with subsea dispersant capability—designed for use in waters as deep as 3000 m. Four capping and dispersant capabilities systems are now available to the global industry via subscription to Oil Spill Response Limited (OSRL). The intervention system capabilities consist of four capping stack toolboxes and two subsea dispersant hardware toolboxes. The four capping systems, including two 18 3/400 10k stacks with ancillary equipment, are designed to a standard configuration, with common pipework, valves, chokes, and spools. This ensures maximum adaptability to every situation, wherever and whenever the system might be needed. The subsea dispersant hardware toolboxes contain equipment for clearing debris, closing existing BOPs, and subsea application of dispersant at a flowing subsea BOP. Subsea dispersant capabilities create safer surface working conditions for response personnel, allowing a well to be shut-in while at the same time accelerating dispersion of oil in the water column. The entire system is designed to be readily transportable by sea and/or air from one of four OSRL operated strategic base locations in Europe, Africa, South America, and Asia Pacific. Oil Spill Response, the Macondo well blowout taught the industry a great deal not the least about improved ways to deal with a major oil spill. To consolidate this learning and to stimulate new research, the GIRG recommended the formation of an Oil Spill Response Joint Industry Project (OSR-JIP). The GIRG identified 19 recommendations, which were

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addressed via the OSR-JIP which is managed by IPIECA on behalf of IOGP in recognition of its long-standing experience with oil spill response matters. When IPIECA was set up in 1974 the acronym stood for the International Petroleum Industry Environmental Conservation association. In 2002, recognizing that this no longer accurately reflected the breath and scope of the association’s work, IPIECA stopped using the full title. The association is now known simply as IPIECA, the global oil and gas industry association for environmental and social issues. Together, the two organizations are cooperating with key stakeholders in Europe and around the world. These include the European Maritime Safety Agency, SWRP, the API, the Marine Spill Response Corporation, and a number of IOGP and IPECA standing committees and related JIPs. The OSR-JIP has prepared 12 research reports, 10 technical reports, and 24 good practice guidelines under 5 categories: strategy, planning, people, response, and impacts. These reports are all available on www. oilspillresponseproject.org website. Strategy • OSPR: An Introduction to Oil Spill Response (Good Practice) • Tiered Preparedness and Response (Good Practice) • Response Strategy Development Using NEBA (Net Environmental Benefit Analysis) (Good Practice) • Incident management System for the Oil and Gas Industry (Good Practice) • The Global Distribution and Assessment of Major Oil Spill Response Resources (Technical Report) Planning • Guidelines on Oil Characterization to Inform Spill Response and Decision-making (Technical Report) • Oil Spill Risk Assessment and Response Planning of Offshore Operations (Technical Report) • Regulatory Approval of Dispersant Products and Authorization for Their Use (Technical Report) • Contingency Planning for Oil Spill on Water (Good Practice) • Sensitivity Mapping for Oil Spill Response (Good Practice) People • Volunteer Management (Technical Report) • Oil Spill Training (Good Practice) • Oil Spill Exercises (Good Practices) • Oil Spill Responder Health and Safety (Good Practice) • Mutual Aid Indemnification and Liability (Technical Report)

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Response At Sea Containment and Recovery • The Use of Decanting during Offshore Spill Recovery Operations (Technical Report) • At Sea Containment and Recovery (Good Practice) Dispersants • At Sea Monitoring for Surface Dispersants (Technical Report) • Dispersant Supply and Logistics (Technical Report) • Dispersants: Surface Applicants (Good Practice) • Dispersants: Subsea Applications (Good Practice) • CEDRA: Testing Subsea Dispersant Injection at Laboratory Scale (Research Report) • SINTIF: Subsea Dispersant Effectiveness Bench Scale—Protocol (Research Report) In Situ Burning • Guidelines for the Selection of In-Situ Burning Equipment (Technical Report) • CEDRE/INERIS: Preparation of an Information Document of In-Situ Burning Residues (Research Report) • In-Situ Burning of Oil Spills (Good Practice) Oiled Wildlife • Wildlife Response Preparedness (Good Practice) • Global Oiled Wildlife Project: Final Report (Research Report) Shoreline and Inland Cleanup • A Guide to Shoreline Cleanup Techniques (Good Practice) • A Guide to Oiled Shoreline Assessment (SCAT) Surveys (Good Practice) • Oil Spills: Inland Response (Good Practice) Surveillance, Modeling, and Visualization • ACTIMAR: A Review of Models and Metocean Databases (Research Report) • ACTIMAR: Recommendations on Validations Techniques (Research Report) • Battelle: Capabilities and Uses of Sensor-Equipped Ocean Vehicles for Subsea and Surface Detection and Tracking of Oil Spills (Research Report) • Oceaneering: Capabilities and Uses of Sensor and Video-Equipped Water Borne Surveillance ROVs for Subsea Detection and Tracking of Oil Spills (Research Report)

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OGC and RDI: Recommended Practice for Common Operating Picture Architecture for Oil Spill Response (Research Report) Impacts • Impacts of Oil Spills on Marine Ecology (Good Practice) • Impacts of Oil Spills on Shorelines (Good Practice) • Economic Assessment and Compensation for Marine Oil Spills (Good Practice)

4.3 IOGP Standards Committee IOGP (International Association of Oil and Gas Producers) has supported the internationalization of key standards used by the petroleum and natural gas industries since 1986 (IOGP STDS, 2010). IOGP publishes an annual update on the progress of standards development and adoption on its website. IOGP’s position on standards has been to: • promote development and use of ISO and IEC International Standards; • ensure standards are simple and fit for purpose; • use International Standards without modification wherever possible; • ensure visibility of the international standard’s identification number, whatever the method of publication; • base development of standards on a consensus of need; • avoid duplication of effort; • minimize company specifications which should be written, where possible, as functional requirements; and • promote “users” on standards work groups. The adoption of this approach is expected to minimize technical barriers to trade, enable more efficient worldwide operations, and improve the technical integrity of equipment, materials, and offshore structures used by the petroleum and natural gas industries.

5. SUMMARY In summary there are no simple answers to the regulation of the offshore. Each party in offshore activities have their own duties and responsibilities. Whether operating under flag State or coastal State regulations, operators of offshore installations are required to have a safety management system that identifies the risks the activity will be exposed to and how those risks are to be managed.

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The history of accidents and spills in the Gulf of Mexico and elsewhere in the world highlights the need for proactive approach to the control of risks. This need is further highlighted by the introduction of new technologies offshore, which bring their own sets of challenges, require specific training and expertise, and often require greater collaboration among all workers on the same installation or vessel. To protect workers, the environment, the public, and the equipment, the industry and regulators need to work together to define minimum standards for compliance and to facilitate the exchange of information necessary to maintaining a strong safety performance. It should be remembered that regulations themselves do not ensure safety and maybe counterproductive in their consequence. Responsibility for safety may become a complacent acceptance of rules and regulations, and the evolving technology that is applied may be only as good as the rule and the rule formulators. It can be argued there has been a great increase in regulatory control without comparable discernible benefit. In activities that are subject to checklist-style compliance inspections by government authorities, passing the inspection comes to be seen as equaling safety. This compliance mentality does not necessarily correlate with an increase in the level of safety attitudes and actions on the part of the companies and individuals involved in the actual operations. Safety professionals have long understood that to increase safety in complex industrial installations, organizations must manage safety with the same principles of planning, organization, implementation, and investigation that they use to carry out any other business function. Safety failures in high-hazard industries can be catastrophic and lead to deaths and injuries, environmental damage, and property loss. To prevent such failures, governments have begun to regulate the safety performance of these industries. These safety regulations are often scrutinized after an incident, but their effectiveness is inherently difficult to assess when their purpose is to reduce catastrophic failures that are rare to begin with. Nevertheless, regulators of high-hazard industries must have an informed and reasoned basis for making their regulatory choices. Safety regulators in high-hazard industries use different combinations of regulatory designs. They need to determine whether their regulations are well suited to the hazards associated with the activities and address relevant safety risks. Trends in incident reports may not inform that determination if the main concern is prevention of catastrophic incidents, which are inherently rare. Certainly, there are statistics such as fatality rates, injury rates, and

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lost-time incidents that correlate with the level of what is often referred to as “personal safety” or “worker safety” incidents. It is much harder to identify similar statistics that correlate with “process safety.” Offshore operations, equipment, and workplaces, as well as the workforce and the relationships among operators, contractors, and subcontractors, are complex. There can be no simple description of the “workplace” offshore. Rather, workplaces offshore vary according to many factors, some of which raise significant safety challenges. Regulators are increasingly being called upon to make decisions on potential hazards and their risks in an environment characterized by complexity, uncertainty, and imperfect information. This challenge is compounded by the fact that the hazards that form those risks can often have both beneficial and harmful consequences. The public is demanding ever-greater levels of protection against an expanding range of potential hazards, while the industry is asking for a predictable business environment. Regulators therefore need a process for resolving problems and making decisions in a principled, consistent, and transparent manner. Risk management is a systematic approach to setting the best course of action under uncertainty by identifying, understanding, assessing, prioritizing, acting on, and communicating about potential threats. Managing the related risk involves allocating limited regulatory resources. Risk management is based on a rational-, deliberative-, and evidence-based approach to decision-making that will deliver better results over time. It should be recognized that risk cannot be eliminated totally, but it can be managed in such a way as to mitigate or reduce harm to the greatest extent possible and practical. Expanding knowledge and technical competence, combined with rapidly and widely disseminated information about real and perceived risks, means that the function of risk management has become more important for regulators, particularly those working in offshore regulatory regimes. If all parties work together then workable solutions can be found to these complex problems with the commensurate reduction in risk and therefore increase in offshore process safety. Let’s not continue to learn safety by accident.

REFERENCES Arnold, K. E. (2015). First-hand: History of operational safety awareness in the US Gulf of Mexico 1964 to 2014: A personal recollection by Kenneth E. Arnold. http://ethw.org/w/index. php?title¼First-Hand:History_of_Operational_Safety_Awareness_in_the_US_Gulf_of_ Mexico_1964_to_2014:_A_personal_recollection.

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CNN. (2016). Philippines vs China: Why the South China Sea ruling may change Asia. http:// www.cnn.com/2016/07/04/asia/south-china-sea-un-case-explainer/index.html. External Advisory Committee on Smart Regulation (Smart Regulation). (2004). Smart regulation—A regulatory strategy for Canada—Report to the Government of Canada. http:// publications.gc.ca/collections/Collection/CP22-78-2004E.pdf. Government of the People’s Republic of China. (2014). Position paper of the government of the People’s Republic of China on the matter of jurisdiction in the South China Sea arbitration initiated by the Republic of the Philippines (7 December 2014). available at www.fmprc.gov.cn/mfa_ eng/zxxx_662805/t1217147.shtml. International Association of Drilling Contractors, (IADC). (2015). Health, safety and environmental case guidelines for mobile offshore drilling units. http://www.iadc.org/iadc-hse-caseguidelines/. International Association of Oil and Gas Producers, (IOGP STDS, 2010). (2010). Position paper on the development and use of International Standards. Report No. 381. International Association of Oil and Gas Producers, (IOGP WEC, 2016). (2016). Wells expert committee bulletin. Issue No. 2. http://www.iogp.org/bookstore/product/wells-expertcommittee-bulletin-issue-2/. International Maritime Organization (IMO). (1978). International convention on standards of training, certification and watchkeeping for seafarers (STCW). http://www.imo.org/en/ About/Conventions/ListOfConventions/Pages/International-Convention-onStandards-of-Training,-Certification-and-Watchkeeping-for-Seafarers-(STCW).aspx. International Maritime Organization (IMO). (2005). International convention for the prevention of pollution from ships (MARPOL), http://www.imo.org/en/About/Conventions/ ListOfConventions/Pages/International-Convention-for-the-Prevention-of-Pollutionfrom-Ships-(MARPOL).aspx. International Maritime Organization (IMO). (2009). Code for the construction and equipment of mobile offshore drilling units (MODU CODE). International Maritime Organization (IMO). (2015). International safety management (ISM) code. Izon, D., Danenberger, E. P., & Mayes, M. (2007). Absence of fatalities in blowouts encouraging in MMS study of OCS incidents 1992–2006. Drilling Contractor July/August. Kaplan, S., & Garrick, B. J. (1981). On the quantitative definition of risk. Risk Analysis, 1(1), 11–27. National Commission. (2011). National commission on the BP deepwater horizon oil spill and offshore drilling report to the President. In Deepwater—The gulf oil disaster and the future of offshore drilling: Government Publishing Office (US). https://www.gpo.gov/ fdsys/pkg/GPO-OILCOMMISSION/pdf/GPO-OILCOMMISSION.pdf. NRC. (1990). Marine board of the national research council committee on alternatives for inspection of outer continental shelf operations. Washington, DC: National Academy Press. Permanent Court of Arbitration (or Registry). (12 July 2016). PCA Case No. 2013-19, In the matter of the South China Sea Arbitration—Before an Arbitral Tribunal Constituted under Annex VII to the 1982 United Nations convention of the law of the sea. Between the Republic of the Philippines and the Peoples Republic of China. https://pca-cpa.org/wp-content/uploads/ sites/175/2016/07/PH-CN-20160712-Award.pdf. Pratt, J. A. (2014). Offshore at 60: Remembering the Creole field. Offshore. http://www. offshore-mag.com/articles/print/volume-74/issue-4/60-years-of-offshore/offshoreat-60-remembering-the creole-field-p1.html. Priest, T. (2014). Offshore at 60: The blue water breakthrough. Offshore. http://www.offshore-mag. com/1/volume-74/issue-10/offshore-at-60/offshore-at-60-the-blue-water-breakthroughfull.html. Reason, J. (1997). Managing the risk of organizational accidents. Hants, England: Ashgate Publishing Limited.

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Royal Commission on the Ocean Ranger Marine Disaster. (1984). Royal Commission on the ‘ocean ranger’ marine disaster report one: The loss of the semisubmersible drill rig ocean ranger and its crew. Ottawa, Canada: Minister of Supply and Services. Sparrow, M. K. (2000). Regulatory craft. Washington, DC: Brookings Institute Press. The Guardian. (2016). South China Sea dispute: What you need to know about the Hague court ruling. https://www.theguardian.com/news/2016/jul/12/south-china-sea-dispute-whatyou-needto-know-about-the-hague-court-ruling. TRB. (2012). Transportation research board of the national academy evaluating the effectiveness of offshore safety and environmental management systems. Washington, DC: National Academy Press. TRB. (2016). Strengthening the safety culture of the offshore oil and gas industry. Washington, DC: Transportation Research Board of the National Academies. Special Report 321. United Nations, n.d., Division for ocean affairs and the law of the sea (UNCLOS). A historical perspective. http://www.un.org/depts/los/convention_agreements/ convention_historical_perspective.htm.

FURTHER READING Frawley, N. H. (2011). A brief history of the CMI and its relationship with IMO, the IOPC funds and other UN Organizations. http://www.comitemaritime.org/Relationshipwith-UN-organisations/0,27114,111432,00.html. Healy, N.J., n.d., Historical development of maritime law. https://www.britannica.com/ topic/maritime-law. International Maritime Organization (IMO). (1974). International convention for the safety of life at sea (SOLAS). http://www.imo.org/en/About/Conventions/ListOfConventions/ Pages/International-Convention-for-the-Safety-of-Life-at-Sea-(SOLAS),-1974.aspx. Wiswall, F.L., n.d., A brief history—Comite maritime international/maritime law. http:// www.comitemaritime.org/A-Brief-History/0,27139,113932,00.html.