Shale gas exploration is now featuring in the news headlines in the UK on an almost daily basis. The positions of those for and against extraction of unconventional gas through hydraulic fracturing (“fracking” as it is commonly known) are becoming increasingly polarised and entrenched.
The UK Government has made clear its strong support for the rapid development of the UK shale gas industry, hurrying through various legal and fiscal measures to support the industry and taking a hard line against attempts by European legislators to introduce new European-wide regulation of the sector.
The UK Government believes UK shale resources have the potential to create tens of thousands of jobs, drive down energy bills and improve security of supply.
Some, however, argue that the Government’s thinking is muddled and short-termist. They say that even assuming anticipated levels of shale gas production can be achieved (despite the UK’s population density, growing anti-shale sentiment and challenging regulatory environment, among other obstacles), energy prices will not be significantly reduced in the UK in the way that they have been in the United States, because of the way European gas and power markets are interconnected.
Moreover, opponents are concerned that large-scale shale production will add to, rather than displace, reliance on fossil fuels, delay decarbonisation and the uptake of renewables and therefore have a damaging effect on the UK’s ability to achieve vital climate change targets.
Notwithstanding mounting controversy, the appetite for investment in UK shale seems to be growing in reaction to the current Government’s unreservedly pro-shale stance. It has recently been announced that Total is investing in two licences in northern England due to be operated by Island Gas (iGas). This may be the first of many investments by major oil and gas companies in the nascent UK shale industry.
The Department for Energy and Climate Change’s (DECC) 14th round of onshore oil and gas licensing is currently underway, with results due in 2014. There is plenty of land under consideration:
The blue areas on the map opposite are all parts of Great Britain which are thought to have any kind of potential for oil or gas exploration and are under consideration for the 14th round, and the yellow shows land already licensed.
Against this backdrop, this client briefing reviews some of the main legal and policy developments of the past 12 months, and offers thoughts on some of the key legal issues facing shale sector developers and investors in 2014 and beyond.
What a difference a year makes It
is only a little more than a year ago
that the UK shale industry was still
subject to a complete moratorium on further fracking following tremors
induced by Cuadrilla’s activities near Blackpool (the moratorium was lifted on
13 December 2012).
Within the same timeframe, DECCs office for unconventional gas and oil
(OUGO) has been set up and the UK Onshore Operators Group (UKOOG) has
significantly expanded its scope and profile as the industry body representative
of the shale sector.
The year that followed has seen a flood of pro-shale regulatory and policy
developments, as described in detail below, culminating most recently in the
EU Commission’s “Shale Gas Initiative” published on 22 January 2014, in what
many in the industry will regard as a reassuringly watered-down form.
The developments summarised in this briefing are just some of the key
advances taking place. Public and political interest has never been higher,
and this is sure to be the case for the remainder of 2014 as the 14th licensing
From our perspective, whilst there are many widely accepted reasons why
the UK shale “revolution”, if it occurs, will follow a very different path from the
US experience, the single biggest stumbling block is likely to be the attitude,
in its many manifestations, of the “great British public” (and to some extent
the media that feed and so significantly influence their views), in particular the
approach taken by the anti-fracking community.
13 r e e d s m i t h . c o m Client Alert 14-047 February 2014
Early engagement with landowners will be crucial. Many of the developments
of 2013 outlined below reflect this, being primarily aimed at reassuring and
winning the support of local communities.
While shale gas belongs to the Crown and government licences are required
to explore and extract it, the licences do not deal with approvals that are
required from landowners to access the gas. As shale wells are drilled both
vertically and horizontally, consents will – under current law – be required
from multiple landowners for one operation. Ascertaining what rights will
be needed, and engaging with relevant landowners at an early stage, will
therefore be essential.
The importance of reform of trespass laws The law of trespass is critical
here. It requires either consent from landowners or potentially lengthy
application to court under the Mines (Working Facilities and Support) Act
1966 for the compulsory acquisition of such rights and the payment of
compensation. Throughout 2013 we saw speculation that anti-fracking groups
might try to buy up ”ransom strips” in an attempt to ‘block’ shale drilling or
otherwise rely on trespass laws to hold up development.
In early February 2014, the most high-profile example of this so far occurred.
Landowners in Fernhurst in West Sussex wrote to developer Celtique Energie
and the Energy Secretary denying permission for horizontal drilling by the
company on or under their land, effectively seeking to surround the well
head with hostile landowners and force a protracted legal battle to secure
compulsory acquisition rights. Greenpeace supports their stance.
How this situation develops will be of crucial importance to the future of UK
shale gas exploration. The government is currently reviewing existing trespass
laws, specifically in the context of fracking operations, and there is likely to be
more to report on this front in the months to come.
Dealing with protestor action Another manifestation of public distrust (illfounded or not) of shale fracking activities, is protestor action of the kind seen
at Balcombe in Sussex in 2013. Such action can go well beyond the valid
exercise of democratic rights to protest and may amount to illegal interference
in legitimate commercial operations, causing potentially substantial disruption
and economic loss.
However, it is possible to prevent or limit “direct action” and illegal protest
activity by using civil and criminal law, in particular the Protection From
Harassment Act 1997 (“PHA”).
The PHA provides that a civil court can issue an injunction against a person
who has committed, or is likely to commit, harassment. It is a criminal offence
to breach this injunction, with a maximum penalty of up to five years in prison.
The courts can also injunct to prevent anticipated trespass or other criminality,
although prison is not automatically the consequence of breach. It is well
established that such injunctions do not infringe the rights to free expression 4 r e e d s m i t h . c o m Client Alert 14-047 February 2014
and assembly as long as they are in support of a legitimate objective and are
Most of the recent cases involve animal-rights extremists, but there have
also been cases relating to airports, power-stations and oil companies. The
• Prohibit assaults, threats and harassing people at their homes;
• Prohibit publication of personal details (e.g. home addresses, phone
• Prohibit trespassing;
• Limit demonstrations to specific zones;
• Prohibit threatening behaviour, very loud noise, encroaching on the
• Permit demonstrations only if a certain notice period is given.
Injunction proceedings require detailed evidence and tenacity in the face of
counter-measures at protest sites and in the media. They should be used
appropriately and sensitively, since over-aggressive tactics risk backfiring.
However, we are told by clients benefitting from these injunctions and by
the police that, as a rule, injunctions have served to reduce the number of
demonstrations at the injuncting company’s premises, the numbers turning
up and the aggression of activists. They tend to increase the efficacy of
policing and reduce offending and even low-level harassment activity. They are
considered to be an important part of corporate strategy, not least by sending
a strong signal of the company’s determination to carry out its legal activities.
Summary of shale regulatory and policy
February 2013 – Best Practice Guidance for shale well operations
published In February 2013, UKOOG published industry guidelines covering
best practice for shale well operations in the UK for the first time. This is an
example of the extensive efforts being made by the industry to reassure the
public about the impacts of shale exploration.
The guidelines, which cover hydraulic fracturing and the public disclosure
of fracture fluid composition, were written by a high-level workgroup which
included operating and service companies with input from The DECC,
The Health and Safety Executive (HSE), The Environment Agency (EA) and
the Scottish Environment Protection Agency (SEPA). The first issue of the
guidelines relates to the exploration and appraisal phase of shale gas well
developments (i.e. it does not yet cover the production phase). 5 r e e d s m i t h . c o m Client Alert 14-047 February 2014
Critically, the guidelines stipulate that operators must publically disclose
all chemical additives to fracturing fluids on a well-by-well basis, including
regulatory authorisations, safety data and maximum concentrations and
volumes. These disclosures meet or exceed all known standards in the shale
The guidelines can be found at www.ukoog.org.uk/elements/pdfs/
June 2013 – Shale Community Engagement Charter In June 2013, in
a further demonstration of the importance the industry rightly attaches to
engaging in an open and honest dialogue with the public about what the
potential for shale gas in the UK means for communities, UKOOG launched
its Shale Community Engagement Charter, which outlines the steps that the
industry promises to take to mitigate concerns surrounding safety, noise, dust,
truck movements and other environmental issues. This can be found at http://
June 2013 – Local community financial benefits announcement Also in
June 2013, the shale gas industry announced through UKOOG that under its
community benefits scheme operators would pay:
£100,000 in community benefits at the exploration phase for each wellsite where hydraulic fracturing occurs; and
1 percent of revenues from production wells at sites where shale gas is
Further announcements on community benefits were made in early 2014, as
July 2013 – New planning practice guidance on onshore oil and gas
development (including shale gas) On 19 July 2013, the Department for
Communities and Local Government (DCLG) published new planning practice
guidance for industry, minerals planning authorities and local communities on
how onshore oil and gas (including shale gas) developments should be treated
by the planning system in England.
The onshore oil and gas guidance needs to be read alongside other planning
guidance and the National Planning Policy Framework (NPPF). The NPPF sets
out the national planning policy for England and is a material consideration
when local authorities determine a planning application.
The onshore oil and gas guidance aims to provide clarity on the role of the
local planning system and its interaction with the separate environmental and
health and safety regimes.
Other regulators, including the DECC, the EA and the HSE, will address
sub-surface issues to protect against seismic disturbance or pollution of
groundwater.6 r e e d s m i t h . c o m Client Alert 14-047 February 2014
There are usually three phases to onshore hydrocarbon extraction: exploration,
testing (appraisal) and production. The onshore oil and gas guidance confirms
that planning permission is required for each of these phases of hydrocarbon
extraction, although some initial seismic work may have deemed planning
consent under general permitted development rules.
Amongst other issues, the new guidance explains:
• How a planning application should be determined by the local planning
• The separate but complementary relationships between the planning and
other regulatory regimes;
• That the focus of the planning system should be on whether the
development itself is an acceptable use of the land, and the impacts of
such uses, rather than control of processes, health and safety issues or
emissions that are subject to approval under other regimes;
• How mineral planning authorities should plan for extraction;
• Critically, when an Environmental Impact Assessment (EIA) is required. It
states that the minerals planning authority should carry out a screening
exercise to determine whether any proposal needs an EIA and explains the
screening process. An EIA will only be necessary for the exploratory and
appraisal phases if the project is likely to have significant environmental
effects. Larger scale production operations, extracting more than
500,000 m3 of gas will require a mandatory EIA; and,
• Who is responsible for aftercare and restoration of sites.
The guidance can be found at https://www.gov.uk/government/publications/
July 2013 – New Environment Agency Technical Guidance On 31 July 2013
the EA published, for consultation, technical guidance to clarify:
• Which environmental regulations apply to the onshore oil and gas
exploration sector; and,
• What operators need to do to comply with those regulations
The consultation closed on 23 October 2013 and applied to England only. The
final version of the guidance has yet to be published.
The draft guidance only covers exploration (not extraction) and oil and gas
(not other minerals). Further permits not covered by this guidance would be
required to move from the exploration stage to the commercial exploitation of
oil and gas.7 r e e d s m i t h . c o m Client Alert 14-047 February 2014
The draft guidance applies to all oil and gas operations, and it appears
that the UK government does not plan to introduce a different regime for
extracting shale gas by hydraulic fracturing. This now seems even less likely
given that the European Commission has now backtracked from introducing
pan-European shale legislation (see further below).
The draft guidance includes a very helpful and detailed explanation of the
various legal requirements a developer must satisfy before it can begin
hydrocarbon exploration. It is our experience that pre-application discussions
on all the relevant permissions are usually advisable and the technical
guidance recommends this too.
The guidance can be found at http://www.environment-agency.gov.uk/
October 2013 – Public Health England draft Review In response to requests for
advice by national and local agencies, Public Health England (PHE) established
a working group to review the public health implications of fracking.
PHE is part of the Department of Health. As shale gas exploration and
fracking have not been undertaken in the UK before, the PHE review relied on
experience in other countries, particularly the US.
On 31 October 2013, PHE published a draft report which follows its review
of the scientific literature focused on the potential impact of chemicals and
radioactive material from all stages of shale gas extraction, including fracking.
The Draft Report concludes that:
• The risks to public health from exposure to emissions from shale gas
extraction are low if operations are properly run and regulated;
• Where potential risks have been identified in other countries, the reported
problems are typically due to operational failure;
• Good on-site management and appropriate regulation of all aspects of
exploratory drilling, gas capture, as well as the use and storage of fracking
fluid, are essential to minimise the risks to the environment and health;
• Any contamination of groundwater is likely to be caused by leakage
through the vertical borehole. Therefore good well construction
and maintenance are essential to reduce the risks of groundwater
• Contamination of groundwater from the underground fracking process itself
is unlikely because of the depth at which it will generally occur in the UK.
The draft report recommends, amongst other things:
• PHE should continue to work with regulators to ensure that all aspects of
shale gas extraction are properly risk assessed as part of the planning and
permitting process;8 r e e d s m i t h . c o m Client Alert 14-047 February 2014
• There should be prior environmental monitoring to provide a baseline for
assessment ahead of shale gas extraction;
• There should be effective environmental monitoring in the vicinity of
extraction sites during the development, production and post-production
stages of shale gas wells;
• Fracking chemicals should be publicly disclosed and risk assessed prior to
• Sites should be assessed on a case-by-case basis due to differences in
underlying geology; and,
• There should be an assessment of any natural contaminants that could
be mobilised by exploration and fracking (including dissolved radioactive
material, such as radon, and minerals).
The draft report can be found at www.hpa.org.uk/webc/HPAwebFile/
November 2013 – Water and shale gas industry bodies sign memorandum
of understanding On 27 November 2013, DECC announced that the industry
representative bodies, Water UK and UKOOG, had signed a memorandum of
understanding to ensure cooperation throughout the shale gas exploration and
A key aim of the agreement is to give the public greater confidence that both
bodies will ensure that the effects on water resources and the environment are
minimised during fracking.
Water UK’s position – echoing the conclusions of the PHE report discussed
above – is that, while there are potential risks to water and waste water
services, these can be mitigated by proper enforcement of the regulatory
December 2013 – Developments announced on shale gas tax regime The
UK Government has pledged to create the world’s most generous tax regime
for shale gas.
The Government recognises that shale gas is a new industry which will
require substantial expenditure before profits are made. Companies will bear
significant risk during the exploration phase and experience high ongoing well
intervention costs and longer payback periods than for conventional onshore
oil and gas developments. The Government has therefore proposed a tax
regime for shale gas which is broadly consistent with the approach taken by it
on the challenging oil and gas fields in the North Sea, which has been credited
with extending the economic life of those fields.
On 10 December 2013, the UK Government announced a new tax allowance
for companies incurring capital expenditure on onshore oil and gas (including
shale gas) projects, which will reduce their ring-fence profits which are subject 9 r e e d s m i t h . c o m Client Alert 14-047 February 2014
to the 32 percent supplementary charge to tax by an amount equal to 75
percent of that capital expenditure. This proposal will cut the tax on a portion
of the shale gas production income to 30 percent, compared with the 62
percent currently paid by most oil and gas operators in the UK. It is welcome
support for the early development of shale gas projects. The measure applies
to capital expenditures incurred on or after 5 December 2013.
On 10 December 2013, the UK Government also announced the extension
of the ring-fence expenditure supplement (RFES). The proposal is to extend,
from six to ten, the number of accounting periods for which a company can
claim RFES for onshore oil and gas activity (including shale gas exploration).
This is a reflection of the longer payback periods for these type of projects.
This measure effectively maintains the time value of companies’ losses for up
to 10 years, so that their value does not diminish before they can be offset
against future profits. It applies to pre-trading expenditures incurred on or after
5 December 2013.
January 2014 – Further financial benefits to local communities On
13 January 2014, the Prime Minister, David Cameron, announced that local
authorities in England will be able to keep 100 percent of business rates that
they collect from shale gas sites. This is an increase from the 50 percent
of business rates that they can currently keep. The government estimates
that this commitment could be worth up to £1.7 million a year to a local
authority hosting a typical shale gas site. It will be directly funded by central
government. However, the move has attracted fierce criticism from opponents
who have branded it as little more than a bribe.
On the same day, UKOOG announced that it had launched a pilot scheme in
partnership with UK Community Foundations (UKCF), at selected shale gas
exploration sites in the UK.
The aim of the scheme announced in June 2013 is to consult on how the
£100,000 community benefit and the 1 percent of revenue from production
wells could be shared with local communities. The options suggested by the
shale gas industry include direct cash payments to people living near a shale
gas site and setting up of local funds directly managed by local communities
December 2013 – Regulatory Roadmap published On 17 December 2013,
DECC published what it called a “Regulatory Roadmap” for onshore oil and
gas licensing (including shale gas), which sets out the permits and permissions
that developers need to obtain prior to drilling for onshore oil and gas. There
are separate documents for each of England, Scotland, Wales and Northern
Ireland, to reflect the regulatory differences between the jurisdictions.
The roadmap provides a basic, indicative overview of the process. It highlights
key legislation and identifies required actions and best practice at various
stages of the exploration and appraisal phases. It does not cover production
and decommissioning.1 0 r e e d s m i t h . c o m Client Alert 14-047 February 2014
It is fair to say that the roadmap does not create any new policies, but rather
recaps the various permits and permissions that will be required before
developers can start fracking.
A copy of the roadmap can be found at https://www.gov.uk/government/
December 2013 – Strategic environmental assessment (SEA) consultation
Also on 17 December 2013, DECC published a strategic environmental
assessment (SEA) on the government’s proposals for onshore oil and gas
licensing (including shale gas), for consultation.
The SEA is required under the EU’s SEA Directive. It sets out the potential
economic and environmental effects of further oil and gas activity, including
shale oil and gas production. The SEA commenced in 2010, but was
suspended during the moratorium on fracking which was imposed following
two seismic events in Lancashire. As the moratorium was lifted, the SEA has
The SEA was carried out in preparation for the launch of the next (14th) round
of licenses being made available for onshore oil and gas exploration and
production, which will include shale gas exploration. The consultation closes
on 28 March 2014.
After the consultation responses to the SEA have been considered, the
Minister will issue a post-adoption statement, which will summarise how the
government will proceed with the 14th onshore oil and gas licensing round.
The SEA identifies both positive and negative likely effects of unconventional
oil and gas exploration. Positive effects are said to include employment
benefits (echoed recently by David Cameron in a speech to the World
Economic Forum) and the community engagement charter recently published
by UKOOG. Another key advantage highlighted is energy security of supply.
The report also reviews the negative consequences, and ways that these could
be mitigated, including:
• volumes of wastewater and flowback which will need to be treated,
• increased greenhouse gas emissions, although the report notes this is
likely to have a negligible effect on overall national emissions;
• potential noise, dust and vibrations during construction and drilling which
could impact the population and health of local communities; and
• impact on the landscape.
The report considered that “scrutiny through the planning system (and other
regulatory regimes)” would address many of these concerns. The report 1 1 r e e d s m i t h . c o m Client Alert 14-047 February 2014
also recommends several monitoring indicators including noise levels, traffic
activitiy, seismic monitoring, volumes of water consumption, and air quality
January 2014 – Response to consultation on revised planning
requirements Planning laws represent one of the biggest potential hurdles to
the development of the shale industry in the UK. Under current law2
, the fact
that landowners technically own all of the air above their property and all of
the land below it to the centre of the earth, means that unconsented horizontal
drilling beneath an owner’s land (even though the well head itself may be on
other land far away) is an actionable trespass.
Even leaving aside the issues of trespass and compulsory purchase, it
would be a considerable burden for applicants for planning permission for
underground shale activities to have to notify all individual owners or tenants of
land through which underground activities might extend.
With this in mind, on 24 January 2014, the DCLG published the Government’s
response to its September 2013 consultation on revised requirements
for planning applications for onshore oil and gas (including shale gas)
This document summarises stakeholder responses to the consultations and
explains the government’s reasons for making the following changes:
• retain the requirement for applicants to serve notice on individual owners
and tenants of land above ground area where works are required;
• remove the requirement for applicants to serve notice on owners of land
where solely underground operations may take place;
• retain the requirement for applicants to publish the notice in a newspaper
circulating in the locality and site displays in parishes; and
• introduce a new requirement for a site display in every local authority ward
where no parish exists, or where the parish only covers part of the ward.
The Government has decided not to introduce requirements to serve notice on
individual land owners and tenants where development relates to land above a
The Government is also introducing a simplified standard application form for
onshore oil and gas development, to be published by the Secretary of State.
In response to some concerns raised by respondents to the consultation,
the response confirms that the new application form will not include
specific questions on the impacts of climate change or further questions
on groundwater pollution and seismic activity, beyond the questions in the
proposed application form in the consultation.1 2 r e e d s m i t h . c o m Client Alert 14-047 February 2014
As proposed in the consultation, the government is also amending relevant
planning regulations to clarify that the fee payable for applications for onshore
oil and gas should be calculated on the basis of the area of the above ground
works only. However, the government will also increase fees for planning
applications for onshore oil and gas development by 10 percent on the basis
of surface area works.
The changes to notice requirements and the requirement for a standard
application form to be used were brought into force by amending regulations
on 13 January 2014.
January 2014 – European Commission’s shale gas initiative
This is perhaps the most significant recent development, and certainly one of
the most welcome to the UK shale industry (and the Government).
Background In October 2012, the European Commission had alarmed many
when it announced that it would introduce a regulatory framework for shale
gas and other unconventional hydrocarbons, in its 2013 work programme.
This work was later rolled over into the Commission’s 2014 work programme.
In November 2012, the European Parliament called for the Commission to
conduct a thorough assessment of the European regulatory framework for
In December 2012, the Commission launched a consultation on shale gas
and other unconventional fossil fuels. The consultation sought views on the
risks and benefits associated with the exploitation of these types of fossil fuels
(including fracking of shale gas) and whether additional regulatory safeguards
The idea of new, shale-specific European legislation, overlapping and
potentially conflicting with existing UK legislation, which is seen by most as
already fit for purpose, was vigorously opposed by the UK Government and
others (most notably Poland).
It was therefore a considerable relief to the industry when on 22 January
2014, the Commission published its dramatically watered down “Shale Gas
Initiative”. It published three related documents simultaneously:
(i) A Recommendation on the minimum principles for the exploration and
production of hydrocarbons (such as shale gas) using high volume hydraulic
The Recommendation, which is not legally binding on member states, is
intended to complement existing EU legislation on issues such as SEAs,
planning, underground risk assessment, well integrity, baseline reporting and
operational monitoring, the capture of methane emissions and the disclosure
of chemicals used in wells. 1 3 r e e d s m i t h . c o m Client Alert 14-047 February 2014
By providing member states with a set of minimum principles to guide how
they apply existing EU legislation, the Commission hopes to improve the
consistency with which high volume fracking projects are regulated across the
(ii) A Communication on the exploration and production of hydrocarbons
(such as shale gas) using high volume hydraulic fracturing in the EU, which
outlines the Commission’s view of the opportunities (which include improving
energy security, competitiveness and public revenues) and challenges (which
include water and air pollution and land take) of shale gas extraction in the EU.
(iii) An Impact Assessment and an Executive Summary of the Impact
Assessment, which examines the impact of a range of possible actions that
the EU could take to regulate fracking for shale gas, including the option of a
Recommendation, amending existing EU legislation and new legislation.
The Shale Gas Initiative documents were published alongside the
Commission’s 2030 climate and energy framework.
Shale Gas Recommendation The Recommendation sets out voluntary
minimum principles for member states to apply if they intend to permit the
exploration and production of hydrocarbons (such as shale gas) using high
High volume fracking is defined in the Recommendation as operations that
inject 1,000 m3 or more of water per fracturing stage or 10,000 m3 or more of
water during the entire fracking process.
The main suggestions made in the Recommendation are for member states to
• An SEA and EIA are undertaken before granting licences for exploration of
hydrocarbons that may lead to high volume fracking. The public should be
given early and effective opportunities to engage in these processes.
• The conditions and procedures for obtaining permits are coordinated
where, more than one competent authority is responsible for issuing the
permit(s), more than one operator is involved; or multiple permits are
required for the same project phase or under EU and national legislation.
• Sites to be drilled should be geologically suitable for fracking by carrying
out a characterisation and risk assessment of the site and the surrounding
• Operators conduct a baseline study of the environmental status (including
the air and water quality, seismicity and biodiversity) of the site prior to the
start of fracking operations.
• Installations are constructed in a way to prevent possible surface leaks and
spills to soil, water or air.1 4 r e e d s m i t h . c o m Client Alert 14-047 February 2014
• Operators manage and reduce the impacts and risk associated with these
projects, by using best available techniques (BAT) that take account of:
• BAT reference documents to be developed by the Commission
with member states, the industry and non-governmental
• industry good practice.
• Operators are required to:
• develop project-specific water management plans and transport
management plans; and
• capture gases for subsequent use, to minimise flaring (that is,
burning of gases) and to avoid venting (that is, the release of gases to
atmosphere) in all but exceptional safety cases.
• Manufacturers, importers and downstream users refer to fracking when
complying with their obligations under the EU’s REACH chemicals
• Operators are encouraged to minimise water consumption and the
use of hazardous chemicals wherever technically feasible, and where
improvements will result to human health, the environment and the climate.
• Operators are required to publish information on the chemical substances
and volumes of water used at each well.
• Operators are required to monitor regularly the installation and the
surrounding area against the baseline study, including before, during and
after fracking. The resulting data should be reported to the competent
• Operators are required to compare the environmental status of the site and
surrounding area to the baseline study following closure of an installation.
The Commission also suggests in the Recommendation that EU laws
on environmental liability should apply to all activities taking place at an
installation, including those that do not currently fall under the scope of the
Environmental Liability Directives and REACH Regulation and that operators
should be required to provide a financial guarantee or equivalent covering the
permit and the potential liabilities for environmental damage.
The Commission states that it opted for a recommendation, rather than the
other policy options that it considered in its Impact Assessment, as it had
been asked to act urgently and a recommendation has the advantage of being
applied faster.r e e d s m i t h . c o m Client Alert 14-047 February 2014
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© Reed Smith LLP 2014
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Next steps The Recommendation proposes (rather than requires, because it is
• Member states should apply the principles in the Recommendation within
six months of its publication in the Official Journal (OJ) and should inform
the Commission of the measures that they have taken by December 2014
and annually thereafter.
• The Commission will monitor its application by member states and publish
a scoreboard comparing the approaches taken in different member states.
• Within 18 months, the Commission will review how effective this voluntary
approach has been, including:
• how the Recommendation has been applied;
• how the BAT reference documents have been applied;
• whether the Recommendation needs to be updated; and
• whether legislative proposals on the exploration and production of
hydrocarbons using fracking are needed.
* * * * *
Future Reed Smith shale related client alerts in 2014 will focus further on
some of these key issues and other significant developments, in the context of
continuing announcements from the UK government and the EU.
With its HQ in Pittsburgh, and extensive experience of legal work for the US
shale industry, particularly in relation to the Marcellus and Utica shales, and
with our largest global office of nearly 350 lawyers in London, Reed Smith is
uniquely placed to advise companies throughout the UK shale gas delivery
chain. To learn more, click here.