INFRASTRUCTURE BILL
Supplementary Memorandum to the Delegated Powers and Regulatory Reform
Select Committee – Underground Access
INTRODUCTION
1.
This Supplementary Memorandum concerns the measures in Part 5 of the Bill
concerning Underground Access, and is submitted further to the Supplementary
Memorandum which the Government submitted on 3 October 2014 when these
measures were introduced at Lords Committee stage.
2.
The amendments to Commons Amendment 20 deal with new subject matter
added to the Bill in the House of Commons. The amendments in lieu of
Commons Amendment 21 insert additional safeguards in respect of onshore
hydraulic fracturing. As such, this Memorandum does not alter the analysis
contained within the earlier Memorandum.
Amendment of Commons Amendment 20
Introduction to the package of amendments in lieu
3.
Commons Amendment 20 was tabled by the Government at Report stage in the
House of Commons, and the Minister made a commitment in debates to make
amendments when the provisions reached the House of Lords. The
amendments to Commons Amendment 20 are designed to give effect to that
commitment. In its un-amended form, Commons Amendment 20 does not
contain a delegated power.
4.
Commons Amendment 20 imposes a duty on the Secretary of State to seek
advice, every 5 years, from the Committee on Climate Change (“the
Committee”) established by Part 2 of the Climate Change Act 2008 (“the 2008
Act”). The Committee already has a duty to provide advice to the Secretary of
State when requested to do so – see section 38 of the 2008 Act. Under
subsection (1) of Commons Amendment 20, the Committee will advise on the
impact of onshore petroleum production on the ability of the Secretary of State to
meet his obligations in relation to the carbon targets and carbon budgets in and
under the 2008 Act.
5.
In its un-amended form, Commons Amendment 20 would place a duty on the
Secretary of State to respond to the advice in a report to be laid before
Parliament. This is the part of the arrangement that is changed by the
amendments.
Amendment 20B to Commons Amendment 20: subsection (2), as amended
Power conferred on:
The Secretary of State
Power exercised by:
Regulations
Parliamentary procedure: Affirmative Resolution
6.
The amendment begins by making changes to subsection (2) of Commons
Amendment 20. In its amended form, subsection (2) places a duty on the
Secretary of State, after receiving the Committee’s advice, either to make
regulations which provide for the right of use of deep-level land to cease to have
effect (see subsection (3)), or to make a report to Parliament saying why he has
not done so (see subsection (5)). This constitutes an enabling power to make
regulations. By virtue of amendment 20C the regulations are subject to the
affirmative resolution procedure.
7.
Subsection (4) provides that the regulations cannot have effect in relation to
anything which has already been done in exercise of the right of use. This is an
important safeguard to prevent any impacts with a retrospective quality. A well
casing that has already been installed underground cannot be removed; if no
trespass was committed when it was installed, the continued presence of the
well casing should not become a trespass simply because the right of use has
ceased to have effect.
8.
Subsection (6) provides a Henry VIII power to make consequential amendments
to the right of use clauses, and the new clause in Commons Amendment 20,
when making regulations. In addition, clause 45 of the Bill has effect to extend
the power to allow additional consequential, etc, amendments to be made.
Justification for the delegation
9.
At the moment, based partly on existing advice given by the Committee on
Climate Change, the Government considers that it is right to introduce the right
of use of deep-level land as described in the Bill. But the Government also
recognises that many people are concerned that an increase in onshore
petroleum extraction may be incompatible with the need to reduce emissions of
greenhouse gases.
10. Any decision should be guided by the evidence, and the Committee on Climate
Change was established to provide advice on issues of this sort. If the
Committee provides advice that onshore activity is incompatible with the targets
and other duties in the Climate Change Act 2008, then the Secretary of State
ought to have the power to take consequential action. The mechanism in the
amendments provides a framework for this, with a decision to be taken at least
every five years on whether the right of use (which is an important factor to
enable the industry to operate) should cease to have effect.
11. A decision to provide that the right of use should cease to have effect may have
significant impacts on operators and investors. The impact can best be managed
if the exact position can be assessed at the time the decision is taken, so that
any appropriate action can be taken to mitigate problems. Problems, here,
include potential interferences with the right to the peaceful enjoyment of
property under Article 1 of the First Protocol to the European Convention on
Human Rights.
12. Depending on the precise decision taken on the manner in which, and extent to
which, the right of use might cease to have effect, different consequential
amendments may be required to the right of use clauses and other legislation.
The Department considers that the most appropriate way of dealing with this
would be for the Secretary of State to be able to put forward a package of
changes in a single piece of legislation.
Justification for the choice of legislative procedure
13. Any decision to provide that the right of use should cease to have effect would
be important and potentially controversial. In addition, this is a Henry VIII power.
The Department therefore considers that the affirmative resolution procedure is
appropriate.
Amendments in lieu of Commons Amendment 21
Introduction to the package of amendments in lieu
14. Commons Amendment 21 was tabled by the Opposition in the House of
Commons and was accepted by the Government at Report Stage, subject to
certain caveats. It describes a prohibition on hydraulic fracturing activities unless
certain conditions are met. If enacted, Commons Amendment 21 would be an
unusual law; its relationship with the existing law in the many areas it deals with
is unclear, and many terms contained in it are ambiguous.
15. The package of amendments in lieu of Commons Amendment 21 is designed to
put in place a more regime which provides greater clarity and certainty to
members of the public, the public bodies which regulate onshore petroleum
activities and to the onshore petroleum industry.
16. Anybody wishing to extract petroleum must, in practice, hold a petroleum licence
granted by the Secretary of State, obtain planning permission in relation to
development at the site where the activities will take place, hold an
environmental permit in respect of those activities and meet health and safety
requirements associated with drilling and related operations.
17. The package of amendments uses the petroleum licensing regime as its
regulatory vehicle. The legal vehicle is the addition of two new sections –
sections 4A and 4B – to the Petroleum Act 1998 (“the 1998 Act”). It is
convenient from this point on to refer to those sections in describing the issues
the Committee is concerned with.
Legal context of the new provisions
18. Section 2 of the 1998 Act provides that Her Majesty has the exclusive right of
searching for and boring and getting petroleum which exists in its natural
condition in strata in Great Britain. Her Majesty has similar rights in respect of
petroleum in areas of the UK which are outside territorial waters, by virtue of
section 1(1) of the Continental Shelf Act 1964.
19. Section 3 of the 1998 Act authorises the Secretary of State, acting on behalf of
Her Majesty, to grant licences to others to bore for and get the petroleum
referred to in both Acts.
20. Section 4 of the 1998 Act places a duty on the Secretary of State to make
regulations concerning, among other things, the model clauses to be
incorporated in licences.
21. The model clauses of petroleum licences have, for a long time, contained
requirements for licensees to obtain the consent of the Secretary of State before
drilling wells. They also provide that licensees must comply with conditions
imposed by the Secretary of State when granting consent to drill wells.
22. New sections 4A and 4B operate by imposing a duty on the Secretary of State to
include two new conditions when granting consent to drill a well (in the new
sections this is called a “well consent” – see new section 4B(8)). The first
condition is that no “associated hydraulic fracturing” (defined in new section
4B(1)) may take place at depths of less than 1000m. The second condition is
that no associated hydraulic fracturing at depths of 1000m or more may take
place unless the Secretary of State has granted a further “hydraulic fracturing
consent”.
23. The final stage, to make the system robust, is that the Secretary of State is
prohibited from granting a hydraulic fracturing consent unless certain conditions
are met. These conditions are set out in column 1 of the table found beneath
subsection (5), and in subsection (6). Together, the prohibition on associated
hydraulic fracturing at depths of less than 1000m, and the conditions, reflect the
vast majority of the conditions listed in Commons Amendment 21.
24. While the Secretary of State has to be satisfied that all of the conditions are met,
in many cases the expertise and evidence associated with the conditions lies
with others in the regulatory regime. Section 4A(4) therefore provides that the
Secretary of State is entitled to be satisfied that a condition is met if the regulator
or decision-maker elsewhere in the regulatory regime provides suitable evidence
that the condition has been met. Column 2 of the table found beneath
subsection (5) describes the evidence required to satisfy each condition.
25. The conditions in section 4A(6) do not have corresponding evidence. The
Secretary of State will have to satisfy himself or herself that they are met.
26. Section 4B contains supplementary material relating to section 4A, primarily
definitions and powers. It contains three delegated powers.
New Section 4B(4)
Power conferred on:
The Secretary of State
Power exercised by:
Regulations
Parliamentary procedure: Affirmative Resolution
27. Condition 5 in the table found beneath section 4A(5) is that associated hydraulic
fracturing will not take place within “protected groundwater source areas”.
Condition 6 in the table is that associated hydraulic fracturing will not take place
within “other protected areas”. Section 4B(4) places a duty on the Secretary of
State to define both of those terms in regulations subject to the affirmative
resolution procedure. The first regulations must be laid before Parliament in draft
on or before 31st July 2015.
28. The application of sections 13 and 14 of the Interpretation Act 1978 has the
effect that the duty contains an inherent power to amend or re-enact the
regulations from time to time.
Justification for the delegation: protected groundwater source areas
29. Commons Amendment 21(e) refers to “a groundwater source protection zone”.
This refers to a classification system applicable to aquifers.
30. The Department considers that the views of the Environment Agency and the
Natural Resources body for Wales should be sought before a decision is taken
on which groundwater areas should be classified for this as protected
groundwater source areas. Those bodies have the expertise to provide
scientifically robust advice, and knowledge of the impacts that different activities
may have on groundwater sources. A provision requiring consultation with those
bodies is included in section 4B(7).
31. In the future, it may be necessary to make amendments to the definition, for
example to cater for changes in the systems of groundwater designation used in
England and Wales. In particular, this is an area which is devolved in relation to
Wales, and the legislation in a reserved area must be flexible enough to adapt to
any changes to the law applicable in Wales.
Justification for the delegation: other protected areas
32. Commons Amendment 21(f) refers to “protected areas” without a definition. It is
not a term with a natural or ordinary meaning, or a meaning that a lawyer could
draw from other sources. Many areas are protected in some way or other, for
different reasons, within our tapestry of regulation. The Department considers
that great care is required to ensure that the new hydraulic fracturing consent
conditions are clear, and can be adjusted over time to reflect changes in land
designation systems.
33. The Minister in the Commons made a commitment to ensure that some areas
that will be protected areas (National Parks, Areas of Outstanding Natural
Beauty and Sites of Special Scientific Interest). Taking a power to define the
term later should not be taken as any indication that the commitment will not be
met. The Department considers that more time is required before the final
decision should be taken on whether other areas should be protected as well.
For instance, some other areas (World Heritage Sites and the Broads) were
mentioned specifically when the 14th onshore petroleum licensing round was
launched in July 2014.
34. In the future, it may be necessary to make amendments to the definition, for
example to cater for changes in the systems of land designation used in England
and Wales. In particular, many land designation systems are devolved in relation
to Wales, and the legislation in a reserved area must be flexible enough to adapt
to any changes to the law applicable to Wales.
Justification for the choice of legislative procedure
35. The definitions to be contained in the regulations are a significant element of this
new regime and are likely to be of interest to members of both Houses of
Parliament. Therefore the Department considers that the affirmative resolution
procedure is appropriate.
New Section 4B(9)
Power conferred on:
The Secretary of State
Power exercised by:
Regulations
Parliamentary procedure: Negative Resolution
36. New section 4B(9) acts to modify the scope of the enabling power that already
exists in section 4 of the 1998 Act. It has the effect of enlarging the scope of
section 4, but only narrowly, and only to make consequential amendments.
Regulations made under section 4 are subject to the negative resolution
procedure.
37. Section 4 of the 1998 Act places a duty on the Secretary of State to make
regulations concerning various aspects of petroleum licences, such as the
content and procedure for licence applications, licence fees, the areas in respect
of which applications can be made and model clauses to be incorporated in
licences.
38. The modification made by new section 4B(9) enables the power in section 4 to
be used to amend the definition of “onshore licence for England or Wales” in
new section 4B(8). It is therefore a narrow “Henry VIII” power; it is narrower still
because it may only be used as a consequence of a different exercise of the
power in section 4.
Justification for the delegation
39. The definition of “onshore licence for England or Wales” incorporates a
reference to the definition of a “landward area” which is contained in regulations
which are themselves made under section 4 of the 1998 Act. The definition of
“landward area” is important in petroleum licensing law, because it defines the
boundary of the area of land in which onshore petroleum licences are issued.
Most licences are issued fully inside the area, and are not affected by the finer
details.
40. It is likely that the definition (contained, as it is, in subordinate legislation) will
change or be re-stated in successor legislation in due course. If such a change
is made, then it may be important to change the reference to it in the definition of
“onshore licence for England or Wales” at the same time in order to maintain a
coherent legal regime for petroleum licensing.
Justification for the choice of legislative procedure
41. The Department considers that this is an area where the negative resolution
procedure is justified, contrary to the convention that Henry VIII powers should
normally use the affirmative resolution procedure.
42. In this case, the definition of “landward area” is already contained in secondary
legislation made under section 4 of the 1998 Act, the new consequential Henry
VIII power is also effectively contained in the power under that section, and the
power in that section is already subject to the negative resolution procedure.
This is a symmetrical arrangement.
43. It would be unusual if the definition of “landward area” could be amended by
regulations made under the negative resolution procedure but a single
consequential amendment would require the affirmative resolution procedure,
requiring separate instruments and the use of debating time for the
consequential amendment rather than the substantive one.
44. Given that the power is both narrow and consequential, the department
considers that this is an exceptional case which justifies a departure from the
usual rule.
New Section 4B(10)
Power conferred on:
The Secretary of State
Power exercised by:
Regulations
Parliamentary procedure: Affirmative Resolution
45. New section 4B(10) gives the Secretary of State the power to change the
evidence criteria in column 2 of the table found under new section 4A(5), and to
make other amendments to new sections 4A and 4B in consequence of those
changes.
46. This is therefore a Henry VIII power.
Justification for the delegation
47. The evidence criteria in column 2 of the table are important. Where the relevant
evidence is produced, the Secretary of State is entitled to treat a condition as
being satisfied.
48. The Department has liaised with all other relevant departments in preparing this
amendments, and is confident that the evidence criteria work under the current
framework of legislation. However, many of the systems which are the source of
the evidence are subject to change. Many are set out in subordinate legislation.
In addition, some of those systems are devolved to the Welsh Assembly and
Welsh Ministers. It is almost certain that the systems will change at some point
in the future.
49. For those reasons, the Department considers it prudent to be able to amend the
conditions.
50. The power to make consequential amendments to both new sections 4A and 4B
allows the Secretary of State, in particular, to put any definitions associated with
an amended evidence criterion in the right place – new section 4B(8) – in
accordance with Good Law principles. It might also be appropriate to amend
other definitions.
Justification for the choice of legislative procedure
51. The evidence criteria are a significant element of this new regime, and this is a
Henry VIII power. The power is restricted to amendments to the evidence
criteria, and to consequential amendments. Therefore the Department considers
that the affirmative resolution procedure (rather than any form of superaffirmative procedure) is appropriate.