Briefing Paper: Renewable Energy Renewables and Crofting: A Perspective on the Challenges for Developers Wright, Johnston & Mackenzie LLP - The Place for Practical Advice ClientCentric Service © Wright, Johnston & Mackenzie LLP 2014 E: [email protected] W: www.wjm.co.uk Renewables and Crofting: A Perspective on the Challenges for Developers Crofting land is often ideally situated for renewable energy generation, in particular, small-scale wind. Developing on crofting land, though, adds an additional layer of complexity. With crofting experts in our Renewable Energy team, WJM can help you navigate through this additional layer. In this Briefing Paper we give you a general overview of this complex topic although, as you would expect us to say, if you have a particular issue or concern, please contact us. Summary o Statutory provisions relating to crofting law are generally politically motivated, overly complicated and may lack legal certainty. o Projects on croft land or common grazings require further action to comply with crofting legislation. o The route to compliance depends on the development’s size and scale. o The wishes of crofters, and other interested parties, may also affect the route to compliance. Wind Farm Development on Croft Land and Common Grazings As we said earlier, crofting land is often ideally situated for renewable energy developments yet there are issues that add layers of complexity to developing on such land. Like all specialist areas, crofting has its own particular language and you’ll find a glossary of crofting terms at the back of this Briefing Paper. We hope they will help de-mystify some of the language used. The words in the glossary are coloured brown at first time of use. Stage 1: Is it croft or common grazing land? This might seem a simple question but it is a key one. Long before the first documentation starts, it’s essential that you find out whether the land you are looking at is crofting or common grazing land. They may also have a plan of their land – somewhat surprisingly Crofting Commission records don’t usually include plans. Crofting or common grazing land is only found in the Crofting Counties, so if you’re outside them, it’s likely that the land is not a croft or common grazing. If you’re inside the Crofting Counties, the easiest way to find out is by asking the landowner or the occupier. If it is a croft or common grazing land, the chances are that they’ll know. The land’s status can be verified by consulting the Register of Crofts kept by the Crofting Commission. Stage 2: Can you use the land for renewable energy generation? Under crofting law, the crofter is required to use all croft land either to cultivate the croft or for some other “purposeful use”. Cultivation is self-explanatory. “Purposeful use” is defined as any other activity that would not adversely affect the croft, the public interest, the interests of the landlord (if any), and the use of the adjacent land. © Wright, Johnston & Mackenzie LLP 2014 E: [email protected] W: www.wjm.co.uk Based on that definition, developing a renewable energy project could certainly be considered to be a purposeful use. However, the fact that the land is crofting land means you’ll need to take actions that wouldn’t be necessary if the land were not crofting land. Stage 3: What action do you need to take? The type of action you need to take hinges on whether the crofter is an owner or a tenant. A. If the Crofter owns the land Where a crofter owns his land there is, of course, no third party landowner. However, the land is still designated croft land and must be cultivated or put to a purposeful use by the crofter. If an Option and Lease were entered into, to give a developer rights in respect of a renewable energy development on the land, it would be the developer and not the crofter who was using the land for the purposeful use. This is not allowed under crofting law. To be allowed, either (a) the land will have to be de-crofted, or b) an application will have to be made to the Land Court, by both the developer and the crofter, for consent to develop the land under S19A of the 1993 Act in a Scheme of Development specific to that land. (a) How is land de-crofted? De-crofting applications are made to the Crofting Commission by the Crofter. Application forms are available from the Crofting Commission’s website. Currently it takes approximately 12-16 weeks for a decision on whether to approve an application to de-croft. Once a decision has been issued, there is a 42-day appeal period when any party “with an interest” can challenge the decision. Challenges may result in the Commission reversing their decision The definition of a person “with an interest” means there may be many people who are permitted to challenge an application. All the challenger has to do is demonstrate that de-crofting could have a detrimental effect on them. Accordingly, any challenger is likely to come from the local community. Regardless of challenges, the decision whether or not to de-croft rests with the Crofting Commission. If the application is successful, the land is taken entirely out of crofting law, which means the owner is now free to enter an agreement for a renewable energy project. (b) How do Schemes for Development work? Schemes for Development were intended to facilitate large scale developments but are increasingly used for smaller wind farms. Whereas Resumption is likely to be restricted to the footprint of the turbine(s) and supporting infrastructure, a Scheme for Development can cover larger areas such as a Wind Protection Zone or Habitat Management Area. The key piece of legislation is Section 19A of the 1993 Act. Under S19A, an application can be made by the crofter to the Land Court for consent to develop croft land or common grazing in accordance with a specific scheme attached to that particular application. © Wright, Johnston & Mackenzie LLP 2014 E: [email protected] W: www.wjm.co.uk The Land Court will need detailed information on the proposed development to make an informed decision. A well prepared application supported by the community is likely to meet with the approval of the Land Court. A Scheme for Development does not require the support of all affected crofters only a majority. A copy of the application must also be sent to the Crofting Commission and, like applications for planning permission, will need to be made public. Within 28 days after the application has been made public, the Commission or any other interested party may submit written objections to the Land Court. In granting consent, the Land Court must be satisfied that: (1) The development is for a reasonable purpose, which includes energy generation; (2) To carry it out would not be unfair; (3) Fair recompense is to be provided to each member of the crofting community in the area affected by the development; and (4) The community would not be financially disadvantaged by the development proceeding under the S19A route, compared to any other route such as resumption or de-crofting. Any objectors would require to show that the proposed development does not fulfil the above criteria. The Land Court may choose to make their decisions on written submissions or they may call a hearing prior to making their decision. A degree of flexibility can be built into a S19A application but approval only approves the development exactly as detailed in the application. If material changes need to be made to the development an entirely fresh application may be required. Certain lenders have, in the past, expressed doubts about lending in a S19A situation. Whilst all developments are judged on their own merits, lenders have historically favoured de-crofting or resumption, as these remove the land entirely from the constrictions of crofting law. As S19A schemes have become more common, they have become more acceptable to lenders. S19A applications were originally introduced for larger developments involving numerous interested parties, rather than smaller projects involving only a developer and an owner-occupier. Nevertheless, a S19A application can be made for smaller projects with each application being considered by the Land Court on its own merits. © Wright, Johnston & Mackenzie LLP 2014 E: [email protected] W: www.wjm.co.uk B. If the Crofter is a Tenant. If the crofter is a tenant, the developer needs to factor in the landowner and the crofting tenant. If the development affects only one croft and the tenant has the means and inclination to do so, the tenant crofter may choose to buy the croft from the landowner. This removes one party from the negotiations. If the Tenant is buying the Croft Under crofting law, all tenant crofters have a legal right to buy their croft. To reduce the length of this Briefing Paper, we have omitted details governing crofters’ right to buy but advice is available if required. Once the croft has been purchased, the now owner-occupier crofter can enter into a project with a developer as outlined in Section A of this Paper. If the landowner is still to be involved If a crofter does not intend to buy his croft, then the landowner is integral to the project. To take projects forward, an agreement must be reached between the landowner and the developer, which also takes account of the tenant crofter’s rights. De-crofting is not possible with a crofting tenant in occupation, however a S19A application can be made, as described above.