post

APPEAL FAILS FOR JUDICIAL REVIEW OF EARLY CLOSURE OF RENEWABLES OBLIGATION TO LARGE-SCALE SOLAR PV

Prospect Law Limited acted for the Appellants in Solar Century Holdings Ltd and Others v Secretary of State for Energy and Climate Change [2016] EWCA Civ 117

The Solar Century Holdings Ltd case concerned the legality of the decision by the Secretary of State for Energy and Climate Change to bring to a premature close a statutory scheme supporting the generation of electricity from renewable sources. Jonathan Green, senior solicitor at Prospect Law, examines the case in more detail and concludes that the judgment is likely to result in reduced investment in large-scale renewable energy projects as a consequence of ‘pipeline’ investments remaining vulnerable to policy changes.                                                                                                                                             

What is the background to the case?

The Renewables Obligation (RO) has been the main method by which the UK government has subsidised large-scale renewable energy generation since 2002.

On 13 May 2014, the Department of Energy and Climate Change (DECC) published a consultation announcing its intention to close the RO to solar photovoltaic (PV) projects over 5 megawatt peak (MWp) in size, with effect from 31 March 2015. The government confirmed the closure in October 2014 and the Renewables Obligation Closure (Amendment) Order 2015 was passed.

The claimants carry on business building solar PV systems (solar farms) and challenged the legality of the decision to bring forward the closure of the scheme. Many large-scale solar installations take over a year to go from inception to accreditation and developers working on projects over 5MWp stood little hope of completing their installations by 31 March 2015 once the consultation was published.

A judicial review of the decision was issued in the High Court on 1 August 2014. On 7 November 2014, Mr Justice Green dismissed the application. Permission to appeal was subsequently granted by Rt. Hon. Lord Justice Bean of the Court of Appeal.  

What were the key issues?

The decision to close the RO for 5MW+ projects was challenged on four grounds:

  • the decision to implement an early closure of the RO scheme by statutory instrument, as per the power granted by the Electricity Act 1989, ss 32LA and 32LB, was ultra vires because the statutory power was for the purpose of preserving the 2017 closure date and not for extending it;
  • the pre-legislative statements that the RO scheme would run until 2017 amounted to the type of assurance which would bind the executive, and early closure violated those assurances;
  • the statements made by the government from 2010 onwards that the scheme would not close before 2017 were clear and unequivocal representations giving rise to a legitimate expectation which was not thwarted by any policy consideration; and
  • the deadline imposed to fall within a one year Grace Period was retrospective in effect and therefore unfair in a public law sense.                                                     

What was the decision?

    • The Court of Appeal held that there was no reason to believe that Parliament had intended to stop the minister from closing the scheme before 1 April 2017. Under the Electricity Act 1989, s 32LA the minister had a power to close the scheme to ‘to electricity generated after a specified date’.
    • The government had not undertaken that the RO would be immune from the changes it underwent by way of the May 2014 announcement. The minister stated that the closure was planned for 31 March 2017, not that there were no circumstances in which the scheme could be closed earlier.
    • The Court of Appeal rejected the suggestions that the grace periods were the subject of retrospective legislation, and that the use of the legislation to enact them was unfair in a public law sense.                   

What are the implications of the case?

Together with some of DECC’s other decisions, this judgment is likely to result in reduced investment in large-scale renewable energy projects.

The ruling endorses DECC’s use of the Levy Control Framework (LCF) as a means through which to create inconsistent, unpredictable policy and will damage investor confidence in support mechanisms similar to the RO.

In July 2015 DECC announced its intention to extend the LCF past 2020, arguing it would continue to form ‘a basis for electricity investment into the next decade’. Nevertheless, the Court of Appeal has allowed DECC to go back on such promises, and the renewables market is unlikely to take much comfort from DECC’s announcements going forward.

This article is not intended to constitute legal advice and Prospect Law and Prospect Energy accepts no responsibility for loss or damage incurred as a result of reliance on its content. Specific legal advice should be taken in relation to any issues or concerns of readers which are raised by this article.

Prospect Law and Prospect Energy provide a unique combination of legal and technical advisory services for clients involved in energy, infrastructure and natural resource projects in the UK and internationally.

For a PDF of this blog click here

post

CASE CONCERNING RENEWABLES OBLIGATION SCHEME FOR LARGE SCALE SOLAR COMES INTO THE UK COURT OF APPEAL ON 2 FEBRUARY

This article is intended to provide a summary of the background to and issues at stake in the case of Solar Century Holdings Limited, Lark Energy & Others versus the Secretary of State for Energy and Climate Change in which Prospect Law represents the appellant solar companies. The case is due to be heard by the Court of Appeal on 2 February 2016 and, whichever way the judgment goes, it is likely to have implications for the conduct of UK government policy relating to subsidy schemes for renewable energy installations and for the future of the UK’s solar industry.

The History of the Case

1. This appeal concerns a Government subsidy scheme, the Renewables Obligation (“RO”) for incentivising large scale renewable electricity generation, including solar PV
(photovoltaic) projects, in the UK. Under this scheme qualifying projects are granted certificates (“ROCs”) which are sold to generate income in addition to the sale price of the electricity.

2. The appellants are all UK solar industry businesses developing solar PV projects in the UK that would ordinarily be supported by the RO Scheme.

3. On 13 May 2014 the Department of Energy and Climate Change (“DECC”) released a consultation paper which proposed to close the RO to solar PV projects over 5MW in size (“large-scale solar”) on 31 March 2015. Before this consultation the scheme was due to close to all projects on 31 March 2017 – i.e. the proposal was to close the scheme for large-scale solar 2 years early.

4. The main controversy of this consultation was that the notice given was unreasonably short (9 months from the consultation – where most large-scale solar projects have a longer development time than this), and that only projects that met certain arbitrary ‘grace period’criteria as of the date of the consultation would get extra time to deliver. Any new legislation introducing such a closure (following the Government decision on the issue, which came out on 2 October 2014 – 6 months before the closure) would have a back-dated effect on projects (i.e. would have a retrospective effect).

5. Owing to the potentially substantial investment at risk on projects already under development the appellants issued a claim for Judicial Review challenging the legality of the consultation.

The Decision of the High Court

6. The Judicial Review was heard before Mr Justice Green in the High Court in June 2014, with the decision of the Court released in November 2014 ([2014] EWHC 3677 (Admin)).

7. The Judge granted permission for the Judicial Review to be heard, but dismissed the application. The Judge acknowledged the “need for operators to have a secure and stable legal and investment environment in which to plan”, that “projects can involve a significant lead time from first investment to accreditation” and that “clear and repeated representations were made by Government to the effect that the scheme would remain in place until 2017”.

8. Nevertheless, the Judge also ruled that the Levy Control Framework (“LCF”), the Government’s self-imposed cap on funding for renewable energy schemes, “acts as an all pervasive proviso or caveat to any exercise of the statutory power” and that whilst the proposed changes included “a degree of retrospectivity” this was fair in the circumstances.

9. The over-arching rationale being, put simply, that the Government’s justification of defending the LCF cap levels was important enough to make the approach of the Government lawful.

10. The appellants do not agree with this, and have appealed this decision.

The Points on Appeal

11. Permission to appeal was granted by Lord Justice Bean of the Court of Appeal in early 2015.

12. The appellants’ main argument is that the LCF clearly states that investor confidence is paramount to the operating of renewables subsidy schemes and that retrospective changes will not be made to such schemes. With such statements and assurances clearly set out in the LCF it is difficult to believe that the LCF should be interpreted in the solar development and investment community as “an all pervasive proviso”.

13. There are also arguments in relation to the purpose of the legislation introduced to allow the closure of the RO and that the test for the lawfulness of retrospectivity in secondary legislation (i.e. a statutory instrument) is not whether such changes are ‘fair’, but whether the Secretary of State has the power to make such retrospective changes.

14. The appeal is due to be heard by the Court of Appeal on 2 February 2016.

The Wider Implications

15. We have already seen further DECC consultations with similar retrospectivity in relation to (1) further changes to support under the RO and (2) changes to the Feed-in Tariff (“FIT”) scheme, a sister scheme to the RO that support smaller renewables projects. In each changes are proposed, usually at short notice, with some aspects to take effect from the date of the consultation, not the date of the new legislation, all justified by seeking to protect the self-imposed LCF caps. These ‘consultations’ force those in the renewables sector to take action on the basis of these consultations as if they are final decisions. According to the latest Ernst and Young Renewable Energy Country Attractiveness Index reports, this is very damaging to investor confidence in the UK market.

16. If it is held that budgetary concerns override legitimate expectations, protection from retrospectivity and other such concepts that investors rely upon to allow them to make investment decisions, then the implications could extend even further than just the renewable energy industry.

This article is not intended to constitute legal advice and Prospect Law and Prospect Energy accepts no responsibility for loss or damage incurred as a result of reliance on its content. Specific legal advice should be taken in relation to any issues or concerns of readers which are raised by this article.

Prospect Law and Prospect Energy provide a unique combination of legal and technical advisory services for clients involved in energy, infrastructure and natural resource projects in the UK and internationally.

For a PDF of this blog click here

post

PROSPECT INSTRUCTED IN IMPORTANT COURT OF APPEAL CASE AFFECTING DEVELOPERS

Prospect Law’s Edmund Robb recently represented the Royal Borough of Windsor and Maidenhead in an important Court of Appeal planning case affecting the scope of developers’ actions to clear fell trees situated in woodland covered by a Tree Preservation Order (TPO).

The Facts:

The appellant is a developer and the freehold owner of land in Berkshire. Much of the land was covered by a woodland TPO which had been issued by the Local Planning Authority under section 198 of the Town and Country Planning Act 1990 (the 1990 Act). Woodland TPOs are intended to prevent the cutting down of any trees without the consent of the local planning inspector.

In the Spring of 2012, the developer instructed contractors to clear fell some of the protected woodland. This action was contrary to the TPO then in force. A Tree Replacement Notice (TRN) was issued by the Local Planning Authority according to the provisions of sections 206 and 207 of the 1990 Act. The TRN required the replanting of some 1280 trees, in order to compensate for those which had been cut down or otherwise destroyed.

Appeal to the Secretary of State:

The developer submitted an appeal to the Secretary of State under the provisions of section 208 of the 1990 Act. Expert evidence from arboriculturalists was heard on behalf of both the developer and the Local Planning Authority. The developer, citing the mere 27 tree stumps which could be evidenced photographically as having been cut down in the felling operation, argued that the number of trees required by the Authority to be replanted under the terms of the TRN was clearly excessive.

The Council argued that the TRN fairly sought the replacement not only of the woodland’s more mature trees, but also of young and small trees which, although not evidenced by the presence of stumps or other physical material, would clearly have been present as seedlings or saplings within the TPO protected woodland site. The Council relied on Cranston J’s 2010 judgment in the High Court in Palm Developments Limited v Secretary of State for Communities and Local Government [2009] EWHC 220 (Admin), to argue that, for the purposes of a woodland TPO, no limitations exist to the proper definition of what constitutes a “tree”.

The Secretary of State sided with the Local Authority, upholding the TRN on the grounds that the provisions of the 1990 Act are intended to preserve woodland and, therefore, the calculation of the number of replacement trees used by the Authority when compiling the TRN was not unreasonable.

Court of Appeal:

In the High Court, Holgate J had sided with the Secretary of State and the Local Planning Authority and had upheld the Inspector’s Decision Letter which dismissed the developer’s appeal against the TRN. An appeal was subsequently lodged at the Court of Appeal. There were three central questions:

• Can a woodland TRN require the planting of a greater number of trees than the number removed or otherwise destroyed?

It was argued on behalf of the developer that the section 206 duty to replant trees according to a TRN mandated the replacement of any trees that had been destroyed only with “the same number” of trees. In the leading judgment, Sir David Keene accepted, as had the Secretary of State and the Council, that a Local Planning Authority must, in serving a TRN, provide an estimate of the number of trees which had been cut down. It was not lawful to insist through a TRN on the replacement of large numbers of trees that could not have been present in the TPO protected woodland before the clearance works took place.

• Did the Inspector approach the question of how many trees previously existed in a legally acceptable way?

The developer criticised the inclusion of “saplings” in Holgate J’s reasoning in support of the Decision Letter upholding the TRN, arguing that a sapling should not properly be counted as a tree, but rather as a “potential tree” as it had been in paragraph 9 of the Inspector’s Decision Letter. There was also criticism of the Inspector’s use of the term ‘reinstating woodland’. It was argued that this term exposed the Inspectors failure to understand a TRN’s true purpose which is to replace trees that had been unlawfully destroyed.

Keene J rejected this argument, stating that although the Inspector had considered the standard planting density of trees which the Council had used when it had compiled the TRN in the first place, this was not to say that he had failed to consider the number of trees that had actually existed prior to the removal works. It was held that the Inspector had heard and clearly commented on some of the evidence which had been deployed by the Authority’s arboriculturalist to (conservatively) calculate the number of trees that may have been present on the site before the clearance works took place and thus the number of trees that needed replanting.

The meaning of ‘trees’:

The final issue was the 1990 Act’s interpretation of what properly constitutes a “tree” and “trees”. The 1990 Act does not offer a definition, and the developer argued that the Inspector’s willingness to count “seedlings” and “saplings” when estimating the number of trees that had been present on the land prior to the clear felling was an error of law.

In reaching his decision, Keene endorsed the judgment of Cranston J in the Palm Developments, case. Cranston J had concluded that, in general, a tree should be regarded as a tree for the purposes of a TPO throughout all the stages of its life cycle. Counting seedlings, saplings and young trees in general as “trees” that benefited from the protection afforded by a woodland TPO (and thus which could be required to be replanted through the service of a TRN), would assist in upholding a woodland TPO’s purpose which was, not least, the natural growth and regeneration of protected woodland over long periods of time.

Conclusion:

The Court of Appeal dismissed the developer’s appeal.

The case has obvious implications for Local Planning Authorities when considering the number of trees to require developers to replant through the service of a TRN.

The case is important for developers because it demonstrates that the Courts are likely to take a robust approach to the requirements of TRNs and, provided an estimate is given by the Local Planning Authority when the TRN is compiled of the number of trees that may have been present within a TPO protected woodland site, these can fairly be said to have included young trees. Since these are generally present in considerable numbers throughout, developers are likely to end up being required to replant large numbers of young trees that (they may feel) may never have been physically “felled”, but which may have been removed in other ways.

Prospect Law and Prospect Energy provide a unique combination of legal and technical advisory services for clients involved in energy, infrastructure and natural resources projects in the UK and internationally.

For more information, please contact Edward de la Billiere on 07930 397531, or by email on: info@prospectlaw.co.uk.

(see Distinctive Properties (Ascot) Ltd v Secretary of State for Communities and Local Government and the Royal Borough of Windsor and Maidenhead [2015] EWCA Civ 1250).

For a PDF of this blog click here

post

CUADRILLA’S FRACKING APPLICATIONS REFUSED BY LANCASHIRE COUNTY COUNCIL

Ashley Bowes, Prospect Law

For nearly a year and a half Lancashire County Council Development Control Committee heard extensive evidence from its own officers, the public and the applicant at a series of public hearings concerning two planning applications. Cuadrilla had sought permission for the construction and operation of four wells, drilled from a single large well-pad, with each well being subjected to hydraulic fracturing (fracking). The operation was expected to run 24 hours a day with fracking occurring for two months, followed by a three month initial period to test the flow of hydrocarbons (gas) and then 18-24 months of extended flow testing. They represented the largest appraisal of fracking in the UK.

The first site, at Roseacre Wood, was recommended for refusal on the grounds of its transport impact. The second site, at Preston New Road, although initially also recommended for refusal, was subsequently recommended for approval following further noise evidence from the applicant.

The scene was therefore set for a tense development control meeting on 23-24 June. On 24 June a motion to refuse the application was moved and seconded but, following an adjournment, was defeated on the Chairman’s casting vote. It emerged that in the adjournment the Council received telephone advice from David Manley QC to the effect that the Council would be acting unreasonably to refuse the application and would expose itself to costs at appeal. A subsequent motion was passed to make that legal advice public.

In response to which, Friends of the Earth sought advice from Richard Harwood QC and the Preston New Road Action Group sought advice from Ashley Bowes. Both barristers’ advice concluded that there were grounds to refuse the application on the evidence before the Committee.

At its reconvened meeting on 29 June, a motion to refuse the application was passed on Ashley Bowes’ suggested reasons, which read as follows:

“The development would cause an unacceptable adverse impact on the landscape, arising from the drilling equipment, noise mitigation equipment, storage plant, flare stacks and other associated development. The combined effect would result in an adverse urbanising effect on the open and rural character of the landscape and visual amenity of local residents contrary to policies DM2 Lancashire Waste and Minerals Plan and Policy EP11 Fylde Local Plan.”

“The development would cause an unacceptable noise impact resulting in a detrimental impact on the amenity of local residents which could not be adequately controlled by condition contrary to policies DM2 Lancashire Waste and Minerals Plan and Policy EP27 Fylde Local Plan.”

Cuadrilla has six months in which to decide whether to appeal. If Cuadrilla does choose to appeal against the refusals a public inquiry is highly likely, at which the Inspector will have to grapple with the competing expert evidence (especially on noise impact).

It is also likely that any appeal will be recovered by the Secretary of State for determination, in order to give a determinative policy steer for future applications.

Reacting to the decision the UK Onshore Oil and Gas urged the Government to take a “strategic review” of how the planning system deals with these applications. However, the Prime Minister appeared not to signal any imminent change to the system, responding at Prime Minister’s Questions on 1 July that: “those decisions must be made by local authorities in the proper way, under the planning regime we have”.

 

Introduction to Prospect Law and Ashley Bowes

Prospect Law Ltd is an energy specialist UK law firm which is based in London and the Midlands. Prospect Energy Ltd is its sister company providing technical expertise. The two firms provide advice on energy development projects and energy related litigation concerning shale gas, nuclear and renewable energy schemes for clients in the UK and internationally.

Ashley Bowes is a barrister who specialises in planning and environmental law matters at planning appeals and in statutory challenges and judicial review cases in the High Court. He is involved in energy related development projects around the UK.

 

For a PDF of this article click here

For more information, please contact Edmund Robb on 07930 397531, or by email on: er@prospectlaw.co.uk.

Prospect represented the Respondent Local Authority in the Court of Appeal concerning the case of Hussain v Brent Council [2014] EWCA Crim. 2344, a challenge to a Proceeds of Crime Act 2002 award of £500,000 made in connection with environmental offences in North London

For an article on the case, published by Planning Resource, please click the link below:
London Borough of Brent – Confiscation order for planning breaches under POCA 2002.