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Energy Law Exchange

September 15, 2015

UK Government Implements Fast-Track Planning Process for Fracking Applications in Time for Latest Onshore Licensing Round Announcement

Planning applications for fracking well-sites will be fast-tracked through the UKs planning system under new plans announced by the UK Government in August. The move supports the UKs Conservative-led Government policy to promote shale gas development for energy security and economic growth.

The past few months have been turbulent for the UKs nascent shale gas industry. Good news came in early June when Lancashire County Council's senior legal and planning advisers announced it had recommended the approval of an application by Cuadrilla Resources to carry out test fracking at a site in the county. But, later that month, Lancashire County Councillors unexpectedly defied their own advisers recommendations, rejecting Cuadrillas application amid concerns about noise and impact on the landscape. Cuadrilla has confirmed it will appeal the decision, but the decision nevertheless came as a blow to the 95 bidders vying for exploration and development licenses in the UKs latest 14 th onshore licensing round, the first tranche of awards for which were announced in August.

UK oil and gas regulation is now overseen by the Oil and Gas Authority, an executive agency of the Department for Energy and Climate Change ( DECC ), formed in April this year. The results of the latest onshore round, which closed in October 2014, will be announced in two tranches. The first tranche of awards was announced on 18 August. Twenty-seven blocks were screened out as not requiring further environmental assessment under the UK Conservation of Habitats and Species Regulations 2010. For blocks which do require assessment under the Regulations, a consultation will be initiated and, subject to its outcome, a second tranche of awards will be announced later in the year.

Successful bidders will want assurance that planning authorities will support shale in line with the Government objective so that shale companies can maximize the potential in the licenses awarded. The recent decision on Cuadrillas well-site application will have heightened concern and the Government has now taken steps to divest ultimate control of shale development planning decisions away from local authorities if they are obstructing or unduly delaying the decision-making process.

Safe development of shale gas was a core part of the Conservative partys manifesto in the run up to this Mays general election. Since coming to power the Government has made it clear that shale gas development is a national priority. On 13 August, Amber Rudd, Secretary of State for Energy and Climate Change, announced that shale gas planning applications will be fast-tracked through a new, dedicated planning process. The move has been perceived as a direct response to Lancashire Councils adverse decision on Cuadrillas application. The measures will permit the Government to intervene in planning decisions if a local council fails to meet statutory timeframes.

The new policy measures will surely be welcomed by shale gas companies, and include:*The Secretary of State for Communities and Local Government actively considering calling-in on a case by case basis shale planning applications and considering recovering appeals. Calling-in of a planning application refers to the power of the Secretary to take the decision-making power on a particular planning application out of the hands of the local planning authority for his/her own determination. This can be done at any time during the planning application process, up to the point at which the local planning authority actually makes the decision. If a planning application is called-in, there will be a public inquiry chaired by a planning inspector, or lawyer, who will make a recommendation to the Secretary. The Secretary can choose to reject these recommendations if he/she wishes and will make the final decision;

*Identifying councils that repeatedly fail to determine oil and gas applications within the 16-week statutory timeframe requirement (unless the applicant agrees to an extension). Underperforming councils oil and gas planning applications could be determined by the Secretary;

*Adding shale applications as a specific criterion for recovery of appeals, to ensure no application can fall through the cracks. The Secretary has a power to recover a planning appeal which has been submitted to the planning inspectorate. A recovered inquiry is a planning appeal (against a local authoritys decision) which the Secretary can decide to determine him/herself, rather than allowing a planning inspector to take the final decision, as is the normal process;

*Ensuring planning call-ins and appeals involving shale applications are prioritized by the planning inspectorate; and

*Taking forward work on revising permitted development rights for drilling boreholes for groundwater monitoring.Rudds announcement was accompanied by a shale gas and oil policy paper issued jointly by Rudd and her counterpart for the Department of Communities and Local Government (which has oversight for the national planning system). The paper set out 5 key policy statements for shale gas:

*The Government has also stressed the need to focus decision making on planning matters and for local authorities to make full use of the funding available to enable timely decision making in 2015/16 by utilizing its 1.2m shale support programme.

**Energy security and economy:* There is a national need to explore the UKs shale gas an oil resources. Exploration and the development of these resources will help meet Government objectives for secure energy supplies, economic growth and lower carbon emissions.

**Regulation:* Safety and environmental protection will be ensured through responsible development and robust regulation by the Health & Safety Executive, the Environment Agency and the UKs oil and gas regulator, DECC (acting by the Oil and Gas Authority). Shale gas development must be carried out whilst maintaining the highest safety and environmental standards within a rigorous framework of regulation.

**Transparency:* Transparency and the provision of objective information on shale development to the public is important. Communities affected by shale development must be properly engaged with the opportunity to hear from expert regulators at the Health & Safety Executive and the Environment Agency.

**Planning:* The Government is committed to ensuring that local communities are involved in planning decisions that affect them and that the planning system is made faster and fairer. Local planning authorities are expected to ensure that decisions on planning applications are made within the 16-week statutory timeframe and, going forward:

*Appeals against planning refusals for shale gas exploration and development, or against non-determination, are to be treated as a priority for urgent resolution. The Government will revise recovery criteria for recovery appeals for shale exploration and development.

*The Government will also consider calling in shale applications, which will be considered on individual merit in line with policy. These applications will be prioritized.

*Where local authorities are identified as repeatedly underperforming by failing to meet statutory timeframes, the Government will consider whether to step in and determine the application itself.

*The Government will progress amending permitted development rights to allow drilling of boreholes for groundwater monitoring, and will invite views on proposal for further rights, as permitted development, the drilling of boreholes for seismic investigation and to appraise shallow mine workings for health, safety and environmental protection purposes.

**Community Benefit:* Communities hosting shale gas developments should share in the financial returns generated. This will come in part from the existing requirement that shale gas companies contribute 100,000 per well-site to local communities and also from ring fencing a proportion of the tax revenues recouped from shale gas production for local community benefit.Details of the first tranche of 14 th round winners are available here:

*It will be some time before the new Government policy is put to the test, but the move will be welcomed by shale companies with interests in existing onshore licenses and successful bidders in the latest round. We will monitor with interest how the new policy directions appear to influence the planning process, and how eagerly the Government is willing to call in applications.