Paper given by Stephen Tromans QC at the IBA Annual Conference, Vienna, October 2015.

Shale gas in the UK

Given the decline of coal mining in the UK since the 1960s and similarly the decline in North Sea oil and gas production, attention has turned to onshore oil and gas and in particular unconventional (shale) gas. This has attracted both strong political support and vehement public opposition in some quarters.

The House of Lords Economic Affairs Committee in its report in 2014 suggested that the Government needed to be more forceful in public advocacy of the economic benefits of well-regulated shale gas development and as part of this should explicitly address the safety issues.

The response, in England and Wales (as opposed to Scotland, where the Scottish Government announced a moratorium on 28 January 2015 pending research and public consultation) has been to enact the Infrastructure Act 2015, which aims to provide a regime which will enable the exploitation of shale gas while taking account of public concerns.1 Reforms made by this Act include:

  • A statutory property right of access to allow fracking under private land at depths of more than 300m (“deep level land”.2
  • A ban on fracking in (but not under) National Parks, Sites of Special Scientific Interest and Areas of Outstanding Natural Beauty.
  • A new requirement of a Hydraulic Fracturing Consent (HFC) to be given by the Secretary of State before fracking can take place, and after all other necessary consents are in place. Prerequisites of the HFC will include that environmental impacts including cumulative effects have been assessed, arrangements for independent inspection of the well have been satisfied, necessary approval to substances used has been obtained, and restoration has been properly addressed.

In addition, the Government has become concerned by the reluctance of some local authorities to grant planning permission (in the face of strong local opposition) for shale gas exploration or production. It took Lancashire County Council a year to refuse applications by Cuadrilla for permission for exploratory drilling of 12 boreholes. The Government announced in August 2015 that it would “call in” planning applications from local authorities which repeatedly fail to determine oil and gas applications within 16 weeks, and determine them itself.

The Government is also considering the design of a possible new sovereign wealth fund to enable local communities to share in revenues from shale gas exploitation.

Environmental impact assessment

There will undoubtedly remain strong objections to fracking and the courts will no doubt have to consider these provisions at some point. The requirements of environmental impact assessment (EIA) will certainly figure large in such challenges.

“Neighbours” of proposed development which presents potential risks to them cannot be deprived by national law of their rights to be informed of and participate in permitting decisions and must be able to challenge, for example, whether EIA should have been undertaken: See Case C-570/13 Grüber.

Whilst exploratory drilling is not Annex I development under the EIA Directive for which EIA is mandatory (it is “commercial” but at that stage it is not known how much, if any, gas will be extracted) it is a form of “deep drilling” falling within Annex II so that EIA is required if it may have significant effects. In considering if EIA is required, cumulative effects with other projects (not simply other fracking projects) must be considered: See Case C-531/13 Marktgemeinde Straßwalchen v Bundesminister für Wirtschaft.

Broadly there are three types of case:

  1. Where no EIA has been carried out when it should have been.
  2. Where the EIA which has been carried out is allegedly defective..
  3. Where there has been some procedural error.

The approach of the UK courts is somewhat different to each of these. In case 1, this will be regarded as a serious defect which  makes  the  subsequent  grant of permission unlawful. In case 2, the adequacy or otherwise of the environmental statement is regarded as a question of judgment for the decision maker, and a pragmatic approach is taken that an ES does not have to achieve perfection in covering every conceivable effect – moreover, what it can cover will be limited by what information is available at the time.3 This may be particularly relevant if dealing with cumulative impacts by possible later projects.4 In case 3 the Court is likely to look at what effect the procedural failure had.

This has given rise to quite heated debate on what remedy the Court should give. Should it quash the permission, or simply declare there has been a breach of requirements, or order that the procedural flaw be rectified (e.g. by publication or by providing reasons)?

For many years, it was thought that the power of the UK courts to decline to quash was very limited in cases where a breach of EU law was involved. However, in recent years the Supreme Court has seriously questioned that orthodoxy: See Walton v Scottish Ministers [2012] UKSC 44 and R (Champion) v North Norfolk District Council [2015] UKSC 52. Despite this however, it remains the position that cases where there is a substantive defect, as opposed to a formal or “technical” one are likely to result in a quashing order.6

It may be observed that there are factors here pulling in different directions. The UK Government is frustrated with delays to major energy and other infrastructure projects caused by judicial review challenges, the large majority of which fail. It has sought to curtail such challenges by stricter time limits and most recently by the Criminal Justice and Courts Act 2015, s.84 it has required that the High Court must refuse to grant relief if it appears to be “highly likely” that the outcome would not have been substantively different if the conduct complained of had not occurred.7

On the other hand, EU law requires that in cases involving EIA, the UK should comply with the UNECE Aarhus Convention on access to justice. Among the requirements of the Convention are that access to the courts in such matters should not be “prohibitively expensive” (Article 9(4)). The Government has been forced to bring in cost capping rules in appropriate cases to respect this. It may also be noted that Article 9(4) also requires that these procedures must provide “adequate and effective remedies”.

Further, whilst the Court of Justice of the EU has accepted that judicial discretion applies in the granting of remedies, the burden of proving that the defect made a difference to the decision should not rest on the claimant, and that the court should look at the seriousness of the defect and whether it has deprived the public of the benefits of participation: See Case C-72/12 Gemeinde Altrip v Land Rheinland-Pfalz, paras. 52-54.

We can expect future battles on these issues in the courts, and natural resources cases such as energy, oil and gas are likely to find themselves on the front line.