Know what is at stake: the importance of the safety regulatory interface for the personal liability of executives

Abstract

The operations of a company involved in the Australian petroleum industry are subject to a range of health and safety regulatory regimes. Knowing what regulatory regime applies to each of the company’s operations is not only important to ensure the company’s compliance but also to determine the due diligence priorities and exposures of its executives. Different regulatory schemes can apply to a company’s exploration, drilling, construction, accommodation, transport, and administrative operations conducted onshore and offshore and in multiple jurisdictions. Additional complicating factors also exist when the operations overlap with other industries, for example when pipelines cross mining leases or agricultural land. Understanding the regulatory interface is crucial for corporate compliance, but is also necessary to help company officers and executives understand their personal liability for the company’s operations. Executive liability is intended to influence company decisions because of potential personal consequences for decision makers. Depending on the particular safety regime the company’s operations fall in at a particular time, executives could be at risk of five years of imprisonment. There are also limits on the financial support the company can provide, whether directly or through directors’ and officers’ liability insurance. The key action for companies is to be proactive in determining what regime applies and assessing what steps their executives need to take to comply with their duties to avoid penalties. This extended abstract provides a model for the development and discharge of effective governance frameworks in the complex petroleum industry.