COMMISSION DECISION of 14 July 1993 establishing that the exploitation of geographical areas for the purpose of exploring for or extracting oil or gas does not constitute in the United Kingdom an activity defined in Article 2 (2) (b) (i) of Council Directive 90/531/EEC of 17 September 1990 and that entities carrying on such an activity are not to be considered in the United Kingdom as operating under special or exclusive rights within the meaning of Article 2 (3) (b) of the Directive (Only the English text is authentic)
(93/425/EEC)THE COMMISSION OF THE EUROPEAN COMMUNITIES,
Having regard to the Treaty establishing the European Economic Community,
Having regard to Council Directive 90/531/EEC of 17 September 1990 on the procurement procedures of entities operating in the water, energy, transport and telecommunications sectors (1), and in particular Articles 3 (4) and 32 (4) to (7) thereof,
Whereas, under Article 3 of Directive 90/531/EEC, a Member State may request the Commission to provide that exploitation of geographical areas for the purpose of exploring for or extracting oil, gas, coal or other solid fuels is not to be considered to be an activity defined in Article 2 (2) (b) (i) of of the Directive and that entities are not to be considered as operating under special or exclusive rights wihtin the meaning of Article 2 (3) (b) by virtue of carrying on one or more of those activities, provided that a number of precise conditions are satisfied with respect to the relevant national provisions concerning such activities and that any Member State requesting such a decision ensures that entities observe the principles of non-discrimination and competitive procurement in awarding contracts and communicates to the Commission information relating to the award of such contracts;
Whereas, by letter dated 7 May 1992, the Office of the United Kingdom Permanent Representative to the European Communities requested the Commission to provide that exploitation of geographical areas for the purpose of exploring for or extracting oil or gas should not be considered in the United Kingdom to be an activity defined in Article 2 (2) (b) (i) of Directive 90/531/EEC and the entities carrying on such an activity are not to be considered in the United Kingdom as operating under special or exclusive rights wihtin the meaning of Article 2 (3) (b) of the Directive; whereas that request did not cover the exploitation of geographical areas for the purpose of exploring for or extracting coal or other solid fuels;
Whereas that request was accompanied by a copy of the legislative and regulatory provisions in force and a statement of how the five criteria listed in Article 3 (1) could be satisfied with respect to those provisions;
Whereas additional information and supplementary documentation relating to regulatory or administrative measures in force, have been supplied in compliance with the provisions of Article 3 (1) and (2) of the Directive in letters from the Office of the Permanent Representative dated 26 June 1992 and 26 February 1993, and in letters dated 4 August and 18 September 1992 from the Department of Trade and Industry;
Whereas, as regards compliance with the conditions laid down in Article 3 (1) of the Directive, the Commission's services have carried out a detailed analysis of the provisions in force in the United Kingdom (the Petroleum Production Act 1934; the Continental Shelf Act 1964, the Petroleum (Production) (Seaward Areas) Regulations 1988 and Amendments 1990 and 1992; the Petroleum (Production) (Landward Areas) Regulations 1991) as well as documents containing supplementary information used during the procedure of granting authorizations supplementary for exploration or extraction (such as notices in the Gazette, Guidance Notes, form for licence requests, model licences, guidance notes in relation to the development plan), which was communicated in full to the British authorities by letter dated 6 November 1992 and the main findings of which are set out below:
- for the offshore regime, the provisions of Regulation 6 of the Petroleum (Production) (Seaward Areas) Regulations 1992 satisfies the requirements of Article 3 (1) (a) relating to freedom of access; on the other hand, with regard to the onshore regime, Regulation 6 of the Petroleum (Production) (Landward Areas) Regulations 1991, which limits the theoretical possibilities for the presentation of requests for authorizations, must be modified and brought into line with the text of the Petroleum (Production) (Seaward Areas) Regulations 1992,
- the requirement laid down in Article 3 (1) (b) relating to the prior establishment of technical and financial capacity by candidates, is not met by the legislative, regulatory or administrative provisions currently in force in the United Kingdom; use of guidance notes peculiar to every authorization round, which are not binding on the administration, and which are made available on the application of the candidates to help them to prepare their application for authorization, and to give details on the type of technical or financial information which should be supplied, does not meet the requirement of legal certainty which is generally implied by the implementation of the provisions of the Community Directives, by reason of the specific nature of the guidance notes which are simply information documents,
- the requirements laid down in Article 3 (1) (c) relating to the prior establishment and publication for the criteria for assessing the ways in which it is intended to carry out the exploration or extraction are not satisfied by the legislative, regulatory or administrative provisions currently in force in the United Kingdom; instructions relating to the applicable criteria have been put into the Gazette notices published for each round but the content of these publications, which is not binding on the administration, can vary considerably from one round to another, and like the guidance notes, they do not, because of their specific nature, provide the legal certainty which is essential for the implementation of the Community Directives; finally the definition of the criteria is not complete and places great discretionary power in the hands of the Secretary of State for Energy,
- the requirements laid down in Article 3 (1) (d) relating to the prior establishment and communication of the conditions for carrying out exploration or extraction are not satisfied by the legislative regulatory and administrative provisions currently in force in the United Kingdom in so far as some of the typical clauses which appear in the regulatory provisions (Petroleum (Production) (Seaward Areas) Regulations 1988 and Petroleum (Production) (Landward Areas) Regulations 1991) are either of a discriminatory nature, or are non-transparent and non-binding in the way in which they give the Minister a discrrtionary power to determine certain conditions as to the way the system works, in detail:
1. schedule 4, clause 30 - 1988 Regulations (offshore): which could lead to discriminatory treatment as it imposes restrictions on disposal of oil and gas;
2. schedule 4, clauses 17 (1) and (4), clause 18 - 1988 Regulations (offshore): which are not transparent as the criteria concerned are to established prior to the issue of licences;
3. schedule 4, clause 5 - 1988 Regulations (offshore): which is not transparent as it is not clear which procedure will be used;
4. schedule 6, clause 13 and 14 - 1991 Regulations (onshore): - which are not transparent as it is not possible to determine which type of procedure will be applied and the nature of the criteria for consent to future development;
5. schedule 4, clause 13 - 1988 Regulations (offshore); schedule 6, clause 10 - 1991 Regulations (onshore): which are not transparent as the determinatiion of conditions relates to the exercise of discretion;
6. schedule 4, clause 42 (2) (g) - 1988 Regulations - offshore,
schedule 3, clause 28 (e) - 1991 Regulations - onshore,
schedule 5, clause 33 (f) - 1991 Regulations - onshore,
schedule 6, clause 35 (g) - 1991 Regulations - onshore:
which are all discriminatory as they require licences to have central management in United Kingdom;
7. schedule 4, clauses 5 and 6 - 1988 Regulations - offshore,
schedule 6, clause 4 - 1991 Regulations - onshore:
which are not transparent as no criteria relating to requests for extension of a licence are fixed,
- none of the general provisions examined lay down any obligations, as referred to in Article 3 (1) (e), to provide information on sources of procurement, but additional information about the new role of the Offshore Supplies Office and the nature of its relationship with the sector concerned has been judged necessary in order to allay the concerns caused by its previous interference;
Whereas, in response to the comments addressed to them, the British authorities in letters form the Office of their Permanent Representative dated 19 November, 3, 14, 22 December 1992, 26 February 1993 and 9 June 1993 and following the meeting of 14 May 1993 with the Commission's services have given assurances and information on the new devolved role of the Offshore Supplies Office, which will no longer be in conflict with Article 3 (1) (e), have agreed to make the necessary adjustments by submitting to the Commission the text of the amendments they propose to make to the legislative regulatory and administrative provisions; whereas these adjustments, the details of which are set out in the Annex to this Decision, are aimed:
- initially, at removing all the provisions judged by the Commission's services not to conform,
- secondly, at introducing into a new statutory instrument the required definition of technical and financial capacities, and the essential and permanent evaluation criteria of the application fo authorization,
- only complementary requirements justified by technical reasons specific to each round are to be defined in the Gazette notices;
Whereas, by a notice published in the Official Journal of the European Communities on 5 August 1992 (2) the Commission invited interested parties to comment on British provisions and practices; whereas no reply alleging discrimination in the treatment of requests of authorization to carry out exploration or extraction has been received by the Commission;
Whereas the amendments to be made to the provisions in force in the United Kingdom in order to comply with Article 3 (1) of Directive 90/531/EEC have to pass through the legislative process and cannot therefore be adopted before the adoption of the present decision; whereas the British authorities have nevertheless undertaken to strive to complete the process as quickly as possible, whereas this commitment is contained in a Ministerial Statement; whereas British authorities have committed themselves to respect all the aforementioned provisions in practice;
Whereas 'the utilities supply and works contracts Regulations 1992' adopted on 23 December 1992 transpose Directive 90/531/EEC into British law; whereas paragraph 8 is made up of a series of implementing provisions conforming to Article 3 (2); whereas paragraph 8 refers to the principles of non-discrimination and competitive procurement, in particular as regards the informations made available to enterprises; whereas these provisions entered into force on 13 January 1993;
Whereas compliance with the principles of non-discrimination and competitive procurement by entities carrying out exploration or extraction, in particular as regards the information they make available to enterprises concerning their intentions with respect to the award of contracts, as provided for in Article 3 (2) of Directive 90/531/EEC, corresponds to the aim pursued by the Directive; whereas, since such compliance with those conditions is guaranteed as of 13 January 1993 by the provisions of a binding legal instrument, the benefit of the arrangemets introduced by Article 3 of the Directive can be authorized on a temporary basis until the amendments to be made to the national provisions corresponding to Article 3 (1) have been adopted in full;
Whereas, in accordance with Article 32 (4) to (7) of Directive 90/531/EEC, the Advisory Committee for Public Contracts has delivered its opinion on this Decision,
HAS ADOPTED THIS DECISION:
Article 1
From 15 July 1993 and for not more than one year, the United Kingdom is authorized to consider that the exploitation of geographical areas for the purpose of exploring for or extracting oil or gas is not considered as an activity defined in
Article 2
(2) (b) (i) of Council Directive 90/531/EEC, and entities carrying on such an activity shall not be considered in the United Kingdom as operating under special or exclusive rights within the meaning of Article 2 (3) (b) of the Directive.
Article 2
Until the adoption of each of the legislative, regulatory or administrative provisions required for the application of Article 3 (1), the United Kingdom respects the principles of non-discrimination, transparency and competition which are fundamental to the current Decision.
Article 3
The current Decision will be reviewed on the basis of an examination of all the legislative, regulatory and administrative provisions enacted in the United Kingdom for the the purpose of applying Article 3 of Directive 90/531/EEC.
To that end, all such provisions adopted by the United Kingdom must be communicated to the Commission on the date of their adoption and not later than 15 April 1994.
Article 4
The current Decision expires on 15 July 1994.
Article 5
This Decision is addressed to the United Kingdom.
Done at Brussels, 14 July 1993.