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Environmental campaigners are increasingly taking formal steps through court proceedings to challenge oil & gas exploration and activity. One recent high profile example has been Greenpeace’s attempts to curtail future exploration for oil in the Vorlich field in the North Sea, using both judicial review applications and challenges under the relevant environmental regulations.
The Inner House has now refused Greenpeace’s appeal against the Secretary of State for Business Energy and Industrial Strategy (“BEIS”) and the Oil & Gas Authority (“OGA”) to grant consent to BP and Ithaca (the “Interested Parties”), to drill for oil in the Vorlich field in the North Sea. (BP had held a licence over the relevant area since 1981 – the challenge was in relation to the grant of consent to develop a field on that licence area.)
As part of the process of obtaining the necessary regulatory approvals to develop the Vorlich Field, under the Offshore Petroleum Production and Pipe-lines (Assessment of Environmental Effects) Regulations 1999 (the “Regulations”), BP was required to submit an Environmental Statement concerning the environmental effects of the proposed development to BEIS as a precondition to applying for development consent from the OGA. BP was also required to publish a notice to bring the Environmental Statement to the attention of the public, to inform them of their ability to make representations to BEIS, and to explain that any person aggrieved by a decision of BEIS could apply to the Court for that decision to be quashed on the basis of a failure to consider relevant information or procedural failures. BP published such notices on its website and in two newspapers. Greenpeace did not make any representations in response to the notice.
In accordance with its powers under regulation 5(A1), BEIS agreed that consent should be granted by the OGA. The OGA subsequently granted consent in respect of the Vorlich Field, in accordance with section 3(1) of the Petroleum Act 1998. After the consent had been published belatedly by the OGA, Greenpeace appealed to the Court using the process in the Regulations that permits aggrieved persons to apply to the Court to have consent reduced. A person is a “person aggrieved” under the Regulations if a consent is granted in contravention of regulation 5(4) or 5A(1)(a) or their interests have been “substantially prejudiced” by non-compliance with any other of the Regulations’ requirements.
The Court considered a number of arguments. These included whether the Interested Parties, BEIS, and the OGA had satisfied the procedural requirements concerning publicity of applications and environmental information under the Regulations, which Greenpeace contended had not been met.
Greenpeace also contended that the BEIS decision was invalid because BEIS was not fully informed of the environmental effects of the licence before agreeing that the OGA should consent. Greenpeace brought this argument on two grounds: that BP’s environmental statement contained arithmetical errors regarding greenhouse gas emissions; and that the environmental impact of the use of the oil after it had been extracted should have been considered.
Giving the unanimous decision of the Inner House, Lord Carloway described Greenpeace’s arguments based on a failure to comply with procedural requirements as “overwhelmingly technical and unconvincing” and concluded that the publicity requirements set out in the Regulations had been met.
Applying previous case law, the Court then accepted the argument made by the Interested Parties that Greenpeace was not an “aggrieved party” in terms of the Regulations. Greenpeace could have raised its substantive points during the initial process i.e., when the Environmental Statement was made public, but having failed to take that opportunity, it could not now be permitted to do so. The Court noted that, had Greenpeace been successful in its arguments on procedural failures, it would have been recognised as an aggrieved person under the Regulations, however, as discussed above, these arguments were unsuccessful.
The issue regarding BP’s arithmetical errors was dismissed as the overall figures were correct.
In terms of whether BEIS should have considered the environmental effects of the use of the oil and gas after it had been extracted, the Court rejected an argument from the Interested Parties that this was “res judicata” i.e., that the point had already been decided as a result of an earlier judicial review application arising out of the same facts. However, the Court then determined that these were not matters that BEIS ought to have considered. The Regulations required BEIS to consider the “direct or indirect significant effects of the relevant project”. The Court determined that the use of oil and gas once it has “been extracted from the wells, transported, refined and sold to consumers, and then used by them” is not such an effect.
The Court continued in its judgment that “It would not be practicable, in an assessment of the environmental effects of a project for the extraction of fossil fuels, for the decision maker to conduct a wide ranging examination into the effects, local or global, of the use of that fuel by the final consumer.”
Although Greenpeace was unsuccessful in this case, the Court did highlight that there is scope for future environmental challenges to succeed, particularly in relation to the reduction of consents, for example, where there is a failure to substantially fulfil the notification and consultation requirements under the Regulations.
Although many of the arguments that were made in this case were of a technical nature as they related to the detail of compliance with the Regulations, there were some broader issues in play, in particular as regards the extent of the environmental effects that BEIS should take into account as part of its assessment. Had that aspect been in favour of Greenpeace, it would have significantly impacted the industry.
Following the decision, Greenpeace has expressed an intention to appeal the Inner House’s judgment to the Supreme Court. It will be interesting to see the outcome of any further appeal.
In the meantime, it is clear that the UK continues to rely on oil and gas for its energy needs, a point which was noted by the Court in its judgment. It is also clear that environmental campaigners are monitoring compliance with all regulatory requirements increasingly closely, and in light of the decision in this case, may seek to intervene in those processes at an even earlier stage.
The Court’s decision can be read in full here.
Our previous publication on Greenpeace’s petition for a judicial review of the decision to grant consent for the Vorlich licence can be read here.