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Implementation of the new concept of state regulation of industrial safety matters in the oil industry

Ustinov Anton Alekseevich, Advisor to the President of the Russian Federation, Senior Lecturer of the Energy Law Sub-Department of O. E. Kutafi n Moscow State Law University, Candidate of Legal Sciences

In this article the author considers various issues of legal regulation in the sphere of industrial safety in the oil industry, studies trends of legislative development in the sphere of industrial safety regarding the legal regime of hazardous industrial facilities of the oil industry, additional requirements to owners and any other legal holders of these facilities, analyzes changes in the applicable law concerning state regulation in the sphere of industrial safety.

Safe operation of oil facilities that belong to hazardous industrial facilities is regulated by industrial safety legislation, namely by Federal Law dd. July 21, 1997 No. 116-ФЗ “On Industrial Safety of Hazardous Production Facilities”[1].

The need to update regulatory legal instruments applicable to industrial safety triggered the development of a new concept of state regulation of industrial safety matters. The new concept is based on division of hazardous industrial facilities into hazard classes, which helps differentiate both requirements to such facilities and forms of state control (supervision) of organizations operating these facilities.

On the thirteenth of February 2013 the Commission for Strategic Development of the Fuel and Energy Complex and Environmental Safety under the President of the Russian Federation (hereinafter referred to as the Commission) held the meeting, which approved the entire new concept of state regulation of industrial safety matters and gave a number of instructions to implement this concept[2].

Basic provisions of the new concept of state regulation of industrial safety matters were fixed in Federal Law dd. March 4, 2013 No. 22-ФЗ[3] (hereinafter referred to as Federal Law No. 22-ФЗ) and Federal Law dd. July 2, 2013 No. 186-ФЗ[4] (hereinafter referred to as Federal Law No. 186-ФЗ).

Thus, Federal Law No. 22-ФЗ divided all hazardous industrial facilities into hazard classes based on their level of potential breakdown hazard for vitally important interests of the individual and society:

Hazard class I — hazardous industrial facilities with extremely high hazard;

Hazard class II — hazardous industrial facilities with high hazard;

Hazard class III — hazardous industrial facilities with medium hazard;

Hazard class IV — hazardous industrial facilities with low hazard.

The criteria for counting oil facilities as hazardous industrial facilities are listed in Annex 1 to Federal Law dd. July 21, 1997 No. 116-ФЗ “On Industrial Safety of Hazardous Production Facilities”. According to the redrafted annex, the category of hazardous industrial facilities includes facilities, which, in particular:

1) obtain, use, process, generate, store, transport and destroy hazardous substances of the following types:

— flammable substances — gases that at normal pressure and when mixed with air become flammable and which boiling temperature at normal pressure is 20 degrees Celsius or less;

— combustibles — liquids and gases that can ignite spontaneously and from an ignition source and burn after removal of this source;

— explosives — substances that under certain external influences can make rapid self-spreading chemical transformation with heat release and gas generation.

2) use equipment that operates at the overpressure of more than 0.07 Megapascal: steam, gas (in its gaseous, liquefied state); water at the heating temperature of over 115 degrees Celsius; other liquids at a temperature exceeding their boiling temperature at the overpressure of 0.07 Megapascal;

3) use stationary lifters (except for elevators and lifting platforms for disabled people);

4) conduct mining (except for extraction of common minerals and open-cast mining of placer mineral deposits without shot operations) and mineral dressing.

Many oil facilities are identified as hazardous industrial facilities on several listed grounds.

For example, a refinery (workshop, platform, production) is identified on three grounds: obtaining, use, processing, generation, storage, transportation and destruction of hazardous substances; use of equipment that operates at the overpressure of more than 0.07 MPa or at the heating temperature of over 115°C; use of stationary lifters.

The criteria for division of hazardous industrial facilities into hazard classes are specified by Annex 2 to Federal Law dd. July 21, 1997 No. 116-ФЗ “On Industrial Safety of Hazardous Production Facilities”.

The hazard classes of hazardous industrial facilities identified by presence of hazardous substances are defined in view of the amount of a hazardous substance or hazardous substances, which are or can be found at a hazardous industrial facility at any one time according to tables 1 and 2 of the said annex.

Thus, for example, any facilities belonging to hazardous industrial facilities on the ground of availability of combustible liquids used in the technological process or transported through main pipelines are treated as facilities of hazard class I with more than 2,000 tons of hazardous substances, as hazard class II — from 200 to 2,000 tons, as hazard class III — from 20 to 200 tons, as hazard class IV — 1 ton and more, but less than 20.

Facilities with less than one ton of this hazardous substance are not considered hazardous industrial facilities, if there are no other grounds stipulated by Federal Law dd. July 21, 1997 No. 116-ФЗ “On Industrial Safety of Hazardous Production Facilities”.

Definition of hazard classes for hazardous industrial facilities engaged in drilling and extraction of oil, gas and gas condensate is quite specific. With regard to the said facilities, hazard class II is assigned to hazardous industrial facilities emitting products with sulphur dioxide of over 6 percent of such products volume; hazard class III — to facilities emitting products with sulphur dioxide from 1 to 6 percent of such products volume; hazard class IV — to any other hazardous industrial facilities (cl. 3 of Annex 2 to Federal Law dd. July 21, 1997 No. 116-ФЗ “On Industrial Safety of Hazardous Production Facilities”).

Oil facilities may be referred to hazard class III or IV on the grounds of using equipment operating at the overpressure of more than 0.07 Megapascal and using stationary lifters.

If a hazardous industrial facility is identified by several criteria and may be referred to various hazard classes, the highest hazard class shall be assigned.

Assignment of hazard classes to hazardous industrial facilities required re-registration of the facilities that were already registered in the register of hazardous industrial facilities.

Pursuant to cl. 1, Art. 10 of Federal Law No. 22-ФЗ any hazardous industrial facilities registered in the state register of hazardous industrial facilities prior to the date of entry of this Federal Law into force shall be subject to re-registration with assignment of the relevant hazard class till January 1, 2014. The effective date of the said provision is March 15, 2013.

Thus, the hazardous industrial facilities shall be re-registered from March 15, 2013 to January 1, 2014.

A hazard class shall be assigned to a hazardous industrial facility during its registration in the state register. In this regard, the hazardous industrial facilities are subject to registration in the state register in the manner stipulated by the Government of the Russian Federation.

The amendments related to assignment of hazard classes to hazardous industrial facilities were introduced to the Rules of Registration of Facilities in the State Register of Hazardous Industrial Facilities by Resolution dd. June 10, 2013 No. 486. However, neither RF Government Resolution dd. June 10, 2013 No. 486 nor any other regulatory legal instruments contain any provisions establishing the manner of re-registration of the hazardous industrial facilities. The hazardous industrial facilities were re-registered by the Federal Environmental, Industrial and Nuclear Supervision Service of Russia’s bodies based on the Temporary Procedure for Maintenance of the State Register of Hazardous Industrial Facilities approved by the Federal Environmental, Industrial and Nuclear Supervision Service of Russia’s order dd. March 19, 2013 No. 31-рп[5].

From our point of view based on tasks of the new concept of state regulation of industrial safety matters, re-registration should result in an “inspection” of the hazardous industrial facilities entered in the register of hazardous industrial facilities, and their structuring in the prescribed manner.

Provisions of Federal Law No. 22-ФЗ imply that re-registration of hazardous industrial facilities is application-based, i.e. it should be made only upon application of an operating company or owner of a hazardous industrial facility. The applicant shall at the same time submit the hazardous industrial facility’s registry sheet with the assigned hazard class and any data that characterize the hazardous industrial facility.

Nowadays, the current regulatory legal instruments have no provisions stipulating inspections by the Federal Environmental, Industrial and Nuclear Supervision Service of Russia’s bodies of the data submitted by the applicant, including validation of accuracy of the hazard class assigned to the facility.

Considering the above, the reliability of the data on assignment of the relevant hazard classes to the hazardous industrial facilities entered into the register of hazardous industrial facilities may be validated during inspections (scheduled and unscheduled) of operating companies and owners of hazardous industrial facilities conducted by the Federal Environmental, Industrial and Nuclear Supervision Service of Russia’s bodies.

A new procedure for scheduled inspections is applied to the re-registered hazardous industrial facilities — scheduled inspections shall be conducted at the following intervals:

— For hazardous industrial facilities of hazard class I or II — no more than once a year;

— For hazardous industrial facilities of hazard class III — no more than once in three years.

In relation to hazardous industrial facilities of hazard class IV no planned inspections are conducted.

If a legal entity or individual entrepreneur operating a hazardous industrial facility did not re-register such facility in the state register of hazardous industrial facilities with assignment of the relevant hazard class, scheduled inspections of this legal entity or individual entrepreneur related to the said hazardous industrial facility shall not be conducted more than once a year (Art. 10 of Federal Law No. 22-ФЗ).

The results of re-registration of the hazardous industrial facilities showed that the largest number of hazardous industrial facilities belongs to facilities of the oil and gas complex. In this regard, legislative amendments to implementation of the new concept of regulation of industrial safety matters are of major relevance for the oil and gas industries.

Federal Law No. 22-ФЗ changed the procedure for drafting industrial safety declarations. Thus, it established mandatory drafting of industrial safety declarations of hazardous industrial facilities of hazard class I and II, which obtain, use, process, generate, store, transport and destroy hazardous substances in the quantities specified in Annex 2 to Federal Law dd. July 21, 1997 No. 116-ФЗ “On Industrial Safety of Hazardous Production Facilities” (except for any explosives used in shot operations).

It also established the list of cases for re-drafting of industrial safety declarations of operating hazardous industrial facilities:

in case of expiration of ten years from the date of entry into the register of industrial safety declarations of the latest industrial safety declaration;

in case of any changes in technological processes at hazardous industrial facilities or an increase of over twenty percent in the quantity of hazardous substances, which are or can be found at a hazardous industrial facility;

in case of any changes of industrial safety requirements;

pursuant to any instruction of the Federal Environmental, Industrial and Nuclear Supervision Service of Russia or its territorial body, in case of any inconsistency of the industrial safety declaration data with the data obtained in performing federal state supervision in the sphere of industrial safety[6].

Lastly, redrafted Art. 14 of Federal Law dd. July 21, 1997 No. 116-ФЗ “On Industrial Safety of Hazardous Production Facilities” prescribes maintaining the register of industrial safety declarations pursuant to the administrative regulations[7].

A major innovation of the approved concept of state regulation of industrial safety matters is the possibility to apply a safety substantiation report of a hazardous industrial facility in construction of new hazardous industrial facilities or reconstruction of the existing facilities.

Pursuant to redrafted Art. 1 of Federal Law dd. July 21, 1997 No. 116-ФЗ “On Industrial Safety of Hazardous Production Facilities” the safety substantiation report of the hazardous industrial facility is a document that contains data on the results of accident risk assessment at the hazardous industrial facility and the related threat, terms of safe operation of the hazardous industrial facility, requirements to operation, complete overhaul, closedown and removal of the hazardous industrial facility.

Safety substantiation reports of hazardous industrial facilities can be drafted by any person, who prepares project documentation for construction and reconstruction of hazardous industrial facilities, if during operation, complete overhaul, closedown or removal of hazardous industrial facilities there is a need to deviate from any industrial safety requirements stipulated by the federal rules and regulations applicable to industrial safety or if such requirements are insufficient and (or) they are not set.

The application of safety substantiation reports of hazardous industrial facilities can ensure construction of new oil facilities or reconstruction of the existing facilities according to individual industrial safety requirements based on the results of risk assessment and taking into account all specific features of these facilities.

Mandatory requirements to safety substantiation reports of hazardous industrial facilities are specified by the federal rules and regulations applicable to industrial safety (cl. 4, Art. 3 and cl. 3, Art. 4 of Federal Law dd. July 21, 1997 No. 116-ФЗ “On Industrial Safety of Hazardous Production Facilities” as reworded by Federal Law No. 22-ФЗ).

The federal rules and regulations applicable to industrial safety “General Requirements to Safety Substantiation Reports of Hazardous Industrial Facilities” were approved by the Federal Environmental, Industrial and Nuclear Supervision Service of Russia’s order dd. July 15, 2013 No. 306[8].

There is a special procedure for federal state supervision in the sphere of industrial safety established for persons applying safety substantiation reports of hazardous industrial facilities. Thus, if any legal entity or individual entrepreneur conducts industrial safety activities using safety substantiation reports of hazardous industrial facilities, the inspection shall concern compliance with the requirements of such safety substantiation report rather than with all mandatory requirements applicable to industrial safety as in any other cases (cl. 4, Art. 16 of Federal Law dd. July 21, 1997 No. 116-ФЗ “On Industrial Safety of Hazardous Production Facilities” as reworded by Federal Law No. 22-ФЗ).

Safety substantiation reports of hazardous industrial facilities are subject to industrial safety expert reviews. Such expert reviews shall be made by an organization having the Federal Environmental, Industrial and Nuclear Supervision Service of Russia’s license for industrial safety expert reviews.

The amendments to the Provision on Licensing Industrial Safety Expert Review Activities[9] that supplement the list of works and services performed in implementation of licensed activities with the instruction to perform industrial safety expert reviews of safety substantiation reports of hazardous industrial facilities were introduced by Resolution of the Government of the Russian Federation dd. May 21, 2014 No. 471[10].

However, it appears that the rules for safety substantiation reports of hazardous industrial facilities can be fully implemented, if amendments are made to urban development legislation, technical regulation legislation and industrial safety legislation meant to approve the rules of these legislative branches enabling establishment of individual requirements in designing, construction and operation of oil facilities.

A number of procedures were cancelled in implementation of the new concept of state regulation of industrial safety matters. In particular, Federal Law No. 22-ФЗ cancelled permits to use technical devices. Pursuant to redrafted Art. 7 of Federal Law dd. July 21, 1997 No. 116-ФЗ “On Industrial Safety of Hazardous Production facilities” mandatory requirements to any technical devices used at a hazardous industrial facility and forms of assessment of their compliance with the said mandatory requirements shall be established in accordance with technical regulation legislation of the Russian Federation. If the technical regulations define no other form of assessment of compliance of the technical device used at a hazardous industrial facility with the mandatory requirements to such technical device, then it should be subject to industrial safety expert reviews.

These changes apply to all organizations operating hazardous industrial facilities; however, they are particularly relevant to oil companies due to a considerable number of hazardous industrial facilities in this industry.

Changes in the regulation of industrial safety expert review procedure also matter for the oil industry. Federal Law No.186-ФЗ cancelled the procedure for the Federal Environmental, Industrial and Nuclear Supervision Service of Russia’s consideration and approval of expert reports on industrial safety. Pursuant to redrafted Art. 13 of Federal Law dd. July 21, 1997 No. 116-ФЗ “On Industrial Safety of Hazardous Production Facilities” an expert report on industrial safety shall be submitted by its requestor to the Federal Environmental, Industrial and Nuclear Supervision Service of Russia or its territorial body, which enters this expert report on industrial safety to the register of expert reports on industrial safety within five working days from the date of its receipt.

Industrial safety expert reviews shall cover:

• documentation for closedown and removal of hazardous industrial facilities;

• documentation for technical upgrade of hazardous industrial facilities, if the said documentation does not belong to such facility’s project documentation subject to expert reviews according to urban development legislation;

• technical devices used at hazardous industrial facilities in the established cases;

• buildings and structures at hazardous industrial facilities meant for implementation of technological processes, storage of raw material or products, movement of people and freights, localization and management of accidents;

• industrial safety declarations drafted as part of documentation for technical upgrade (if the said documentation does not belong to hazardous industrial facilities’ project documentation subject to expert reviews according to urban development legislation), closedown and removal of hazardous industrial facilities, or industrial safety declarations drafted anew;

• safety substantiation reports of hazardous industrial facilities and amendments thereto.

Amendments to Art. 13 of Federal Law dd. July 21, 1997 No. 116-ФЗ “On Industrial Safety of Hazardous Production Facilities” established industrial safety expert review principles. In this regard, industrial safety expert reviews shall adhere to the principles of independence, objectivity, comprehensiveness and completeness of researches conducted using modern scientific and technical discoveries.

In order to develop the principle of independence, the expert in industrial safety is prohibited from participation in industrial safety expert reviews of hazardous industrial facilities that are owned or otherwise legally belong to any organization, which employs him.

Any organization licensed to conduct industrial safety expert reviews is prohibited from the said expert reviews of hazardous industrial facilities that are owned or otherwise legally belong to it or any persons forming part of the same group of persons according to antimonopoly legislation of the Russian Federation. An expert report on industrial safety prepared in violation of these requirements shall not be used for the purposes specified by Federal Law dd. July 21, 1997 No. 116-ФЗ “On Industrial Safety of Hazardous Production Facilities”.

Lastly, an important novelty is the establishment of administrative and criminal responsibility for knowingly giving false expert reports on industrial safety, which mean an export report drafted without the said expert review or after it and explicitly contradicting the content of materials provided to the expert or experts in industrial safety and considered during industrial safety expert reviews, or the actual state of technical devices used at hazardous industrial facilities, buildings and structures at hazardous production facilities that were under industrial safety expert reviews.

The introduction of rules aimed at raising responsibility of experts in industrial safety is meant to increase quality of expert reviews and prevent abuses during their conduction, which is the necessary means to ensure safe operation of oil facilities.

Legislative changes in industrial safety, introduction of necessary regulatory legal instruments and exclusion of any rules contradicting instruments with supreme legal force are necessary to make reliable and transparent arrangements for safe operation of hazardous industrial facilities, inter alia, in the oil industry. Thus, it appears that gaps in legal regulation of industrial safety matters can frustrate legitimate enforcement of rights and discharge of duties by both state bodies and operating organizations.



[1] Collection of Legislative Acts of the Russian Federation, 1997, No. 30, Art. 3588 (in Russian).

[2] Transcript of the meeting of the Commission for Strategic Development of the Fuel and Energy Complex and Environmental Safety. URL: http://state.kremlin.ru/commission/29/news/17511 (in Russian)

[3] Federal Law dd. March 4, 2013 No. 22-ФЗ “On Amendments to Federal Law “On Industrial Safety of Hazardous Production Facilities”, to Certain Legislative Acts of the Russian Federation and on Termination of Subcl. 114, Cl. 1, Art. 333.33, Part Two of the Tax Code of the Russian Federations” // Collection of Legislative Acts of the Russian Federation, 2013, No. 9, Art. 874 (in Russian).

[4] Federal Law dd. July 2, 2013 No. 186-ФЗ “On Amendments to Certain Legislative Acts of the Russian Federation Regarding Industrial Safety Expert Reviews and Specification of Certain Powers of State Supervision Bodies in Administrative Proceedings” // Collection of Legislative Acts of the Russian Federation, 2013, No. 27, Art. 3478 (in Russian).

[5] Order of  the Federal Environmental, Industrial and Nuclear Supervision Service of Russia dd. March 19, 2013 No. 31-рп “On Approval of the Temporary Procedure for Maintenance of the State Register of Hazardous Industrial Facilities” // Journal for Managers and Chief Accountants, 2013, No. 5, Part II (in Russian).

[6] Art. 14 of Federal Law dd. July 21, 1997 No. 116-ФЗ “On Industrial Safety of Hazardous Production Facilities” as reworded by Federal Law No. 22-ФЗ (in Russian).

[7] No administrative regulations guiding the maintenance of the register of industrial safety declarations have been currently accepted.

[8] Order of the Federal Environmental, Industrial and Nuclear Supervision Service of Russia dd. July 15, 2013 No. 306 “On Approval of the Federal Rules and Regulations Applicable to Industrial Safety “General Requirements to Safety Substantiation Reports of Hazardous Industrial Facilities” // Rossiyskaya Gazeta, September 4, 2013 (in Russian)

[9] Resolution of the Government of the Russian Federation dd. July 4, 2012 No. 682 “On Licensing Industrial Safety Expert Review Activities” // Collection of Legislative Acts of the Russian Federation, 2012, No. 28, Art. 3912 (in Russian)

[10] Resolution of the Government of the Russian Federation dd. May 21, 2014 No. 471 “On Amendments to Cl. 3 of the Provision on Licensing Industrial Safety Expert Review Activities” // Collection of Legislative Acts of the Russian Federation, 2014, No. 22, Art. 2879 (in Russian)