The Telegraph’s leaked fracking letter: would a foray into DCOs help shale anyway?

February 2, 2016

Summary Authors/Presenters

This blog considers the revelation in Sunday’s Telegraph that Ministers have been considering including shale oil and gas projects in the DCO regime, and whether it is

worthwhile doing so. Sheridan Treger

Senior Associate An "exclusive"… London [email protected] Last Sunday the Telegraph published "an exclusive" that, in July 2015, three Secretaries of State had written to George Osborne, the Chancellor, stating that they were minded by early 2016 to bring commercial shale production within the "DCO regime". This is the Government’s bespoke fast-track development consent process for nationally significant infrastructure projects (NSIPs) under the Planning Act 2008.

The letter from Energy Secretary Amber Rudd, Communities Secretary Greg Clark and Environment Secretary Liz Truss has in fact been an open secret almost since it was sent. This is no surprise. Government is not only desperate to unlock shale gas because of growing concerns about energy security. Tax revenues from North Sea oil and gas continue to plummet, leaving dangerous gaps for a Government that wants both to balance the books and cut taxes. Planning, as is so often the case, is seen as an obstacle.

Localism versus tax receipts

Page 1 of 5 The Conservative Government remains torn. As a generality, the Conservatives have always been keen for local planning authorities (LPAs) to have a first go at determining planning applications under the principle of Localism, particularly extremely controversial decisions. On the other hand, they are also mindful of the urgent commercial and security imperatives for certain decisions to be determined centrally. Who knows whether those imperatives, Localism or pure politics will ultimately prevail for fracking, particularly as we slowly edge towards another potentially close election in 2020. Of course Mr Osborne, the recipient of the July 2015 letter, may well then be contending for Prime Minister.

What’s the difference?

The Telegraph’s headline was 'Ministers plot to foil anti-frackers'. In this blog, however, we explore briefly whether from the promoter's perspective it would make any practical difference to the current consenting process to bring fracking into the DCO regime.

Fracking and the Town and Country Planning regime

In September 2015, Amber Rudd, the Energy Secretary, issued a Written Statement to Parliament. Between the lines there is clear frustration at Lancashire County Council’s earlier rejection in June 2015 of Cuadrilla's application to drill for shale gas at Preston New Road. LPAs are seen as being too slow in progressing applications for shale planning permissions. They are also perceived not to be according enough weight to the national need for shale oil and gas.

However, all the points made in the Statement, a material consideration for LPAs, are about speeding up planning applications through the Town and Country Planning system. No mention is made of the DCO regime:

Ms Rudd reminds LPAs that they have a sixteen week statutory timescale for determining EIA fracking applications. LPAs are told to use the £1.2m shale support programme and planning performance agreements to help them with resourcing. So, they are told, Local Government cuts are no excuse for slow determination. Promoters are told that appeals will be “treated as a priority for urgent resolution”, i.e. any public local inquiries and subsequent decisions will be fast-tracked. Some might see this as an open encouragement to promoters to appeal to the Secretary of State for non-determination, if the sixteen weeks pass without a decision.

Page 2 of 5 In the Statement, Ms Rudd says she will "actively consider" calling in shale planning applications for her own determination, after an LPA has indicated how it is minded to decide them, and will give those applications priority. Presumably she is more likely to do this where the LPA proposes refusal. This also opens the door to promoters just making the application to the LPA and then writing to the Secretary of State on day one, asking for the application to be called in without letting the LPA consider it at all (though this is risky if it is not called in and remains with the LPA).

Fracking and the DCO regime

Under the Planning Act, it is compulsory for many types of NSIPs to obtain development consent rather than conventional planning permission. As noted by the leaked July 2015 letter, fracking is not one of them. However, what seems to have been missed is that the Secretary of State already has a power, at the request of a promoter, to direct that any project within the "field" of "energy" should be determined under the DCO regime. Fracking could count. So, why has nobody asked?

Still politically controversial

The first part of the answer is that no promoter likes uncertainty or "going first". The decision to allow fracking into the DCO regime, even on a project by project basis, could be as politically controversial as making fracking projects above certain thresholds compulsory NSIPs. Some of the procedural routes to do this have never even been used, for any kind of project.

Is there a point?

The second part is that with the September 2015 Statement, some promoters may wonder what the point would be.

No policy advantage

With 45 of the 47 DCO applications made (but not withdrawn) having been approved, the DCO regime enjoys an extremely high success rate. Partially this is because the decision is made by the Secretary of State rather than LPAs. In the face of the DCO regime’s predominantly written consultation and examination process, and the inquisitorial approach of the Examining Authority, the role of local politics is much reduced against a dispassionate analysis of the facts and policy. And yet many would say that the certainty of the DCO

Page 3 of 5 regime resides in the Planning Act’s in-built presumption in favour of a scheme which complies with the relevant National Policy Statement (NPS). But there is no NPS for fracking. So, policy-wise fracking is no better off under DCOs than planning permissions.

Potentially no quicker

And, following the Statement promoters are reminded that within sixteen weeks (plus some administration time with the Planning Inspectorate's schedulers), they can be in front of a Planning Inspector and en route to a centralised, Secretary of State decision in any case (all of which the Statement tells them will be treated with urgent priority).

Additionally, the DCO regime has extensive pre-application consultation requirements when compared with the relatively limited requirements for fracking applications under the Town and Country Planning Act.

Multi-stage projects

Also, fracking in any given location is a multi-stage project, in the sense that there is only a point in carrying out the exploitation phase if the exploratory phase indicates it is worthwhile. Both involve operations needing planning permission. It is only worthwhile carrying out the second phase if the first indicates it is viable to do so.

The preparation time for a DCO submission, between eighteen months and, for enormous NSIP projects, more than five years might not be worthwhile for the exploratory phase alone. The analysis may differ for fracking projects in need of compulsory acquisition powers, which can be authorised under a DCO without having to promote a separate order.

How Cuadrilla fares…

The Planning Inspectorate is due to hear Cuadrilla’s appeal of Lancashire’s decision in the next fortnight.

How long the Secretary of State takes to decide that appeal, and how long its public inquiry lasts, will make it clear how much force is given to the Statement of September 2015.

Most fracking applications under the DCO regime would probably still take longer overall than under the Town and Country Planning Act. Nevertheless, if all does not go well for Cuadrilla, it could reinforce views that fracking does need to be included in the DCO

Page 4 of 5 process, with a bespoke NPS, to provide the certainties of outcome and process required for consenting shale and gas projects.

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This document provides a general summary and is for information/educational purposes only. It is not intended to be comprehensive, nor does it constitute legal advice. Specific legal advice should always be sought before taking or refraining from taking any action.

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