Abstract
Energy law is still solidifying its presence as an area of law. This Blog Post aims to understand the concept of energy law as an emerging new legal field. Some of these changes stem from regulatory schemes, some legislative amendments, and others from judicial precedents. Across the globe, certain branches within the energy sector have garnered more attention and problems in recent years. Electricity Theft has faced many legal changes in the energy sector recently. Thus, this Blog Post primarily focuses on the violations and problems arising from criminal offences in the energy sector. Additionally, this Blog Post highlights the criminal liability for crimes in the energy sector with the help of comparative analysis in various jurisdictions worldwide.
Keywords: Energy Law, Criminal Liability, Energy Sector
Introduction to Energy Law
Energy law has transpired as a developing field due to the recent advancements in the area, which, apart from bringing progression, have also given rise to practical disputes and criminal violations, some of which are addressed within the legal framework of jurisdictions, and others are causing new issues. Some legal scholars have started a great initiative to enlarge the scope and role ofenergy law as an individual discourse. “Those who have recently participated most actively in this discoursehave called for a wider movement for developing and solidifying the foundations of energy law as a discipline.”
Traditionally, energy law functioned only on the national level because of the high risk to security it encompasses, and the only stakeholders involved were government organisations andgovernment-owned agencies to give sanctions on the energy sector. The ever-growing nature of the energy sector has brought structural amendments in the energy sector in two ways. Firstly, there is a shift from the national to the local level. Secondly, there is a shift from the national to the international level. The cost-efficiency of the system with technological developments has also led to the privatisation of the energy sector to a certain extent in this globalised economy. With the international players, new forms of legal sanctions are also required to regulate the energy sector, which goes well beyond the national level. For instance, this shift has given rise to cooperation between States in the European Union or the birth of international treaties like theEnergy Charter Treaty (signed in 1994) and laying of foundation for various international energy organisations such as the World Energy Council (founded in 1923), the Organisation of the Petroleum Exporting Countries (founded in 1960), the International Energy Agency (founded in 1974), and the International Renewable Energy Agency (founded in 2011).
One of the peculiar characteristics of energy law is thetiered command and administration systematic division of the parties controlling this sector. Liberalisation and climate change have triggered a significant sectoral change in energy law followed by multi-tiered commands. The organisations working on these tiers are not functioning based on a vertical hierarchy. The work, proficiency, and authority of these institutions cannot be compared; the systems are independent and interdependent simultaneously. These institutions do not just borrow and share from each other but also from other legal disciplines.
Another critical characteristic of energy law is its ability to absorb principles and concepts from other legal fields. While the integration and assimilation of law are more evident regarding areas closely associated with environmental law, it also actively engages withother legal fields. As such, it can be said that energy law is not completely an independent legal sphere like other legal disciplines. Further, the ambit and reach of energy law also shift according to the phenomenon that is taking place in the energy sector in general. Pragmatically speaking, energy law can be intertwined with any other legal discipline for the ideas and concepts it imbibesfrom everywhere. Hence, considering the earlier discussions, it is safe to interpret energy law as a“hybrid of legal disciplines.”
Risks Associated with Energy Sector
Apart from sharing the common risks and problems associated with other fields, the energy sector also has some peculiar problems arising from its fast-paced nature. The industry has a global presence with ever-changing markets and dynamic clientele relationships. Energy law often also coincides with trade and/or investment law. Political and financial factors also play a more crucial role in the energy sector for the production and distribution of raw materials for the growth of this sector. For instance, in many jurisdictions, for the extraction of the natural resources required for fuel and energy, privatisation has happened. Private companies have detailed contracts with government or government agencies; in some cases, these contracts are also cross jurisdictional. Further, in many nations, the energy sector contributes the most to the Gross Domestic Product (GDP) which increases the risk of corruption and bribery at multi-levels. It is also valuable and viable not just on a national level but with crucial partnerships and needs on an international level. With such intricate dimensions, a violation in the energy sector may give rise to “multi-agency” and “multi-jurisdictional investigations.” The prosecution can be undertaken in the country where the breach has occurred or in either country, depending on the nature of the violation.
Present Provisions
The expansive and developing nature of the energy sector is increasingly contributing to a country’s social and economic development. The greatest challenge in regulating the energy sector is the absence or unstructured framework of liability, particularly criminal liability arising from energy law. In this section, we will understand and analyse the international criminal laws regulating energy sectors in various countries such as the United Kingdom (UK), India, Germany, and Russia, particularly concerning Electricity Theft.
1. Germany
Germany is actively working on the energy sector’s growth at both national and international levels. This also means there is a need for a higher level of scrutiny and policy for the protection of the energy sector. According to a 2017survey conducted, a total of 3,815 cases of Electricity Theft were reported in Germany, out of which 791 Electricity Theft cases were in Thuringia and Saxony alone.
A unique characteristic of German Criminal Law is the absence of the category of corpus delicti. Presently, the German Criminal Law doctrine, in general, differentiates between crime (“Verbrechen”) and criminal offences (“Vergehen”). The severity of punishment imposed upon the offender distinguishes between Verbrechen and Vergehen. For instance, the sentence for a felony would be more than one year of imprisonment while that of misdemeanour would be one year or less than a year. Additional liability for misdemeanour could also be pecuniary, i.e., fine instead of imprisonment.Sections 1, 2, 5, and 6 of the German Criminal Code dictate that crime should be perceived as a wrongful act done with a criminal mindset or as a consequence of negligence.
Acts that contribute to damaging the environment while utilising or installing infrastructural facilities constitute a category of crime in Germany. These provisions (crimes against the environment) are enshrined inChapter XXIX of the German Criminal Code.Section 87(2) criminalises the acts of sabotage done on the geographical area of Germany by an agent of a foreign government, institution or an association.Section 248c prohibits withdrawal of electrical energy from a conductor for personal or third-party benefit, thus dealing with electricity theft.Section 307 provides punishment for using nuclear energy to either cause an explosion or a similar threat.Section 308 criminalises explosions or threats caused by any non-nuclear power source as well, expanding the scope to other energy sources.Section 316b deals with the disruption of any public service by withdrawing power electrical power for that particular function, reinforcing the law on electricity theft.Section 317 prohibits causing disturbance to any telecommunication system by withdrawing the electrical power.Section 328 criminalises unauthorised use of radioactive substances and other dangerous sources of energy, with the aim of keeping energy in country under control and caution.Section 327 of the German Criminal Code prohibits unlawful operation of energy facilities, pipelines, and gas pipelines without permission.Section 329 of the German Criminal Code encapsulates violations of the environmental regime when using oil pipelines and fuel energy facilities.
2. United Kingdom
The uncodified legal system in the UK sets it apart from the other countries in the list of comparative studies. This lack of codification makes it impossible for the UK to have a concise list of crimes related to the energy sector. There are numerous sources regulating crime in the energy sector in the UK. For instance, Electricity Theft is the most common criminal offence in the energy sector in the UK, which is regulated by theTheft Act, 1968 (Section 13 creates a specific offence of dishonest abstraction of electricity) and theElectricity Act, 1989 (hereinafter referred to as “Act of 1989”). While the Theft Acts detail the general overview of energy offences, the Act of 1989, in particularSchedules 6 and7, deals with the two methods of stealing electricity: first, damaging electrical equipment, and second, tampering with the meter. Additionally, it should be intentional damage or must take the form of “culpable negligence.” Other laws also includeEnergy Act, 2013 and Energy Act, 2016, regulating the oil and gas branch within the energy sector.
Within the UK energy sector, the electricity market has been fully privatised. Illegal production, participation, and electricity transmission create criminal liability in the UK. The Act of 1989 is the cardinal law managing the laws of the energy sector in the UK. This Act describes the primary sanctions in the energy sector that includes the regulatory authority’s (hereinafter referred to as “GEMA”) licensing and statutory duties. Licensing is required for various activities in the UK, which include the production of electricity, the transmission of electricity, distribution and supply of electricity, and operating in any manner as an electrical interconnector. The duties specified in the Act of 1989 are through the Office of Gas and Electricity Markets (OFGEM) and the Secretary of State for Energy and Climate Change. Electricity Board of London’s November 1998 Code of Practice contains the followingwarning: “It is very dangerous to tamper with meters and steal electricity. These are also serious criminal offences. If you commit these offences or give false information to us, you are not protected by this Code of Practice.”
Within the Act of 1989, there is an established criminal liability for offences such as illegal production, transmission, distribution of electricity, and other similar offences. Further, since 2012, smart metering in the UK has also required proper licensing, and a failure to do so gives rise to criminal liability.Section 6 of Schedule 6 of the Act of 1989 elucidates that “where an offence has been committed,” action could be taken against the offender. Explaining the onus of evidence and the standard of proof regarding the offence committed, in the 1998 case of “Regina v Minister of Energy and Director General of Electricity Supply ex parte Robert Guildford” where the alleged offender contended that the company could not disconnect his power supply for Electricity Theft since the Crown has not prosecuted him, the Court held that the conviction of the offender is not a prerequisite for the authorities to take civil actions such as disconnecting the power supply. The Court further held that the evidence submitted for civil actions are not needed to be of the same level as criminal prosecutions. The Court held that: “Tampering with an electricity meter falls to be treated as a breach of private law, as well as a criminal offence. Cutting off an electricity supply in consequence of such conduct is not properly to be treated as a criminal sanction, nor does the use of the procedure constitute a criminal conviction. The consequences of disconnection are purely civil, namely, an obligation to pay for the unrecorded electricity consumed.”
Even though there are sufficient provisions for criminal offences, the number of actual prosecutions undertaken by the Crown is relatively less. For instance, from 1996-97, there were no prosecutions for meter interference under the Act of 1989. Hence, from thedata available, it is evident that companies prefer making people accountable for the offences by imposing a civil liability than prosecuting them. The general practice followed by the UK authorities is that once the defaulter of the alleged crime agrees to pay for the stolen electricity and the cost of disconnection and reconnection, no criminal prosecution is undertaken.
3. Russia
Russia is one of the countries that has somewhat developed legal regulations regarding criminal offences in the energy sector. Chelyabinsk region hasseen the most crimes in the energy sector. The Ministry of Internal Affairs in the Russian Federation has come up with thestatistics that,as of 2018, about 387 crimes have been committed in the branch of energy in the North Caucasus.Every one-third of these crimes relate to the theft of energy resources, usually carried out through unauthorised access to gas and oil pipelines. These criminal actions’ estimated total financial damage is aroundRUB 1 billion. The period of incarceration of crimes in this arena varies from 5-12 years, depending upon the gravity of the crime. However, between 2013 and 2018, the sentences of defendants convicted of crimes in the energy sector were reduced. In the Russian Criminal Code, presently, there is no provision for criminal liability for Electricity Theft like in the other countries presented here for discussion.
Chapter 24 of the Criminal Code of the Russian Federation includes energy crimes as a part of crimes against public safety. Some key provisions for energy crimes from the Criminal Code of the Russian Federation are as follows.
- Article 215 – For the breach of safety rules at atomic power engineering facilities.
- Article 215.1 – For the termination or limitation of electricity supply or disconnection from other sources of life support.
- Article 215.2 – For rendering life support facilities unusable.
- Article 217 – For violation of industrial safety requirements for hazardous production facilities.
- Article 220 – For illegal handling of nuclear materials or radioactive substances.
- Article 221 – For stealing or possessing nuclear materials or radioactive substances.
- Article 226(1) and (2) – For stealing or possessing nuclear, radioactive substances, radiation sources, and nuclear materials.
- Article 247 – For violation of the Rules for dealing with environmentally hazardous substances and waste.
Apart from the provisions mentioned above, many other crimes can be committed in the energy sector. For instance,Chapter 22 of the Criminal Code details economic crimes such as tax evasion (under Article 199), andChapter 23 of the Criminal Code highlights crimes against the interests of service in commercial and other organisations, such as the abuse of authority (under Article 201) and commercial bribery (under Article 204).
4. India
India is an ordinary law jurisdiction. Where there is a crossover of the energy sector leading to environmental damages, one can file for negligence or nuisance under the Indian law. It is pertinent to understand the regulations on claims of nuisance that impede the development of the energy sector in India. In general, negligence and nuisance in India constitute civil offences, which lead to tortious liability. To seek relief for negligence in a civil matter, one must prove three key ingredients: a legal obligation of due care, a breach or omission of that legal duty, and injuries because of that breach or omission. Courts often grant injunctive relief and compensation for damages when negligence or nuisance is proven. However, in some instances, criminal liability can also be invoked for negligence under the provisions of theIndian Penal Code, 1860 (hereinafter referred to as “IPC”).
Apart from the general nuisance discussed above, Electricity Theft in India has emerged as a significant economic issue causing many problems in the country. It is also adversely affecting India’s GDP by reducing it byaround 1.5 per cent, the financial lossbeing approximately INR 3000 crores. India is losing more money in the world than any other nation. According to a 2018report, the estimated loss due to power thefts in India has reached INR 150 crores annually.
India has taken legal measures to handle the menace caused by Electricity Theft and to reduce the economic loss. TheElectricity Act, 2003 (hereinafter referred to as “Act of 2003”) deals separately with the Electricity Theft issues in the country. Since the offences of electricity come under the purview of this Act, the general provisions of criminal law as enshrined underSection 379 of IPC do not apply to the same. Power has been conferred to Special Court underSection 153 of the Act of 2003 to try the offences of Electricity Theft exclusively. Further,Section 154(5) of the Act of 2003 also divests the power to the Special Court to examine the civil disputes about fines and accountability in the cases of theft. According to the2020 Statistics by the National Crime Records Bureau (Ministry of Home Affairs), in 2018-20, there were a total of 4,24,644 criminal cases (1,83,873 in 2018, 1,28,970 in 2019, and 1,11,801 in 2020) filed under the Act of 2003, thereby making the Act of 2003’s contribution to the total share of crimes as 4.8%. The Act of 2003 describes Electricity Theft as an offence underSection 135(1).
According toSection 135(1A) of the Act of 2003, the electrical connection can be disconnected, and the person or institution at default is liable to pay the fine assessed. A complaint in writing can be lodged in the police station within 24 hours regarding the commission of the offence. When the payment is made, the supplier is supposed to restore the electrical supply within 48 hours.Section 138(3) of the Act of 2003 highlights the criminal liability for an offence committed by interfering with electrical meters or licenses. TheNational Electricity Policy, 2005 emphasises Electricity Theft and highlights the importance of ensuring that the states properly implement the measures mentioned in the Act of 2003.
InSuresh Ganpati Halvankar v. State of Maharashtra, the Supreme Court held that a maximum of three years imprisonment can be imposed for Electricity Theft underSections 135 and138 of the Act of 2003. Both these provisions deal with Electricity Theft and are compoundable offences underSection 152 of the Act of 2003. While there are criminal sanctions enshrined in the Act of 2003 for any person committing Electricity Theft, practically, it is used as a secondary resort, and preference is given to civil accountability for gathering fines after the assessment is done regarding the personal gain that has been earned from the said offence. InFebruary 2021, Central Power Distribution Company Limited (CPDCL) in the Guntur District of Andhra Pradesh also gave a severe warning for taking criminal action against power theft since the issue is at an all-time high.
Conclusion
Criminal liability for crimes committed in the energy sector is not peculiar in developed or developing nations but is most certainly a recent concept worldwide. The law enforcement in the countries described above highlights a need for elaborate and more structured legal regulations to better comprehend criminal liability for crimes in the energy sector for those committing criminal acts. There needs to be a sustainable system for criminal liability for crimes in the energy sector so that the standard attacks and issues are easily handled without wasting the resources and time of law enforcement on repeated crimes. A comprehensive reconstruction of energy law in this aspect is needed, and the full potential has not even been undertaken internationally. What is contrasting is the difference in how criminal prosecution is handled in the energy sector where there are fundamental environmental damages, as can be perceived from the infamousBhopal Gas Tragedy of Indian Jurisdiction or theSea Empress of the UK or theExxon Valdez oil spill of the United States. Many fundamental questions regarding criminal liability for crimes in the energy sector remain unasked or unanswered globally. There is still so much to do in the domain, and it is still a developing field of law; much improvement is needed regarding complex relations of criminal regulations in the energy sector.
About the Authors
Ms. Prerna Deep is a British Council GREAT Scholar and Law Clerk-cum-Research Assistant at the Supreme Court of India.
Editorial Team
Managing Editor: Naman Anand
Editors-in-Chief: Hamna Viriyam and Muskaan Singh
Senior Editor: Pushpit Singh
Associate Editor: Vedant Bisht
Junior Editor: Intisar Aslam
Preferred Method of Citation
Prerna Deep, “Legislative Regulation of Criminal Liability for Offences in the Energy Sector” (IJPIEL, 23 September 2022)
<https://ijpiel.com/index.php/2022/09/23/legislative-regulation-of-criminal-liability-for-offences-in-the-energy-sector/>
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