Summary
On 6 April 2011, secondary legislation under the Marine and Coastal Access Act 2009 came into force, bringing into effect a new licensing system for offshore marine activities, including energy projects. Whilst the new regime has the potential to provide benefits to the energy industry (for example, a faster and simpler project consenting process) it also introduces the potential for higher costs and development restrictions in areas designated for habitat and species conservation.
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Introduction
The Marine and Coastal Access Act 2009 (MACAA) aims to achieve sustainable development in the UK marine area through: (1) creating a new independent regulatory public body (the Marine Management Organisation (MMO), (established on 1 April 2010); (2) introducing a new streamlined approach to licensing offshore activities; and (3) ensuring the protection of marine biodiversity through the creation of Marine Conservation Zones (MCZs).
This Briefing provides an overview of the key changes to the regulation of marine areas from 6 April 2011, and describes the potential opportunities and challenges for the offshore energy industry.
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Which energy projects does MACAA apply to?
MACAA applies to energy projects which are located in the “UK marine area” (i.e. the UK territorial seas, the UK continental shelf and the renewable energy zone). However, it will not apply to: (a) Nationally Significant Infrastructure Projects (NSIPs) (including offshore energy generating stations with a proposed capacity of above 100 megawatts, which will be dealt with under the Planning Act 2008; or (b) specifically excluded projects covered by other legislation, such as the undersea storage of carbon dioxide or oil and gas exploration activities.
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What changes does MACAA make to the offshore licensing regime?
Prior to the development and operation of an offshore energy generating facility, developers/operators will need to obtain: (1) a lease or licence from The Crown Estate; (2) development consent; and (3) consent to generate electricity from the Secretary of State.
Up to 6 April 2011, “development consent” consisted of a number of permits, consents and licences obtained from different regulatory bodies including: (a) consent to carry out works which may cause an obstruction to navigation; (b) consent to connect the facility to the shore; (c) consent to place materials in the marine environment; and (d) consent to place structures on the seabed and/or to pass cables over the seabed.
From 6 April 2011 onwards, a single consent will be issued by the MMO, to be known as a Marine Licence. A Marine Licence will cover all matters dealt with by the various pre-April 2011 consents described above. It is considered that this will make the process of applying for development consent significantly simpler and faster for energy project developers.
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What is the application procedure for a Marine Licence?
Applicants for Marine Licences relating to complex projects (e.g. projects which have the potential to cause significant environmental impacts) are encouraged to engage at an early stage with the MMO (and other relevant bodies e.g. the Environment Agency and Natural England) and to carry out relevant environmental assessments prior to submitting their applications.
Relevant environmental assessments include: (1) an Environmental Impact Assessment (EIA); and/or (2) a Habitat Regulation Appraisal (HRA) carried out for projects having the potential to adversely impact the conservation objectives of a site protected under the EU Habitats Directive.
Applications (and supporting documentation) can be submitted online and a fee will be payable to cover the MMO’s administrative costs. Once submitted, the application will need to be advertised in an appropriate manner (e.g. published in a relevant local newspaper).
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How will decisions to grant Marine Licences be made?
Project analysis
The MMO will consult with any person or body it deems fit (e.g. persons having a particular interest or expertise) and is required to have regard to any objections which are significant enough to materially change the decision-making regarding the Marine Licence application. In the event of challenges to an application, the MMO may hold a public inquiry in order to hear such challenges prior to making a decision on the application.
For complex projects requiring an EIA or HRA, the MMO will review the information on the development’s potential environmental impacts. Whilst the MMO is under a duty to consider such impacts before making its decisions to grant a Marine Licence, it will not be prevented from granting a Marine Licence on the condition that measures set out in the EIA and/or HRA are implemented to mitigate environmental risks.
The decision
Decisions will be made in line with:
- A Marine Policy Statement (MPS) - The MPS, published by HM Government on 18 March 2011, sets out strategic environmental, social and economic considerations that need to be taken into account in marine planning in addition to policy objectives for key activities taking place in the marine environment; and
- Marine Plans (MPs) - These plans set out how the MPS will be implemented at local level across eleven designated “marine planning areas”. The MPs will identify natural resources, features and processes and the impact of marine activities (including renewable energy projects) with the aim of securing sustainable harmonization of these activities, whilst considering social and economic impacts and returns. It is anticipated that the first two MPs (identified as the East Offshore and East Inshore areas) will be adopted by the UK Government in 2013 and that the last MPs will be adopted in 2021.
Marine Licences will generally be granted subject to conditions which may require mitigation of any adverse impacts to the environment, natural resources or other sea users. The MMO’s decisions will be published on a public register.
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Can decisions on Marine Licences be appealed?
According to the MMO’s guidance on the licensing process, applicants who are dissatisfied with a decision or with the conditions of a Marine Licence may submit a notice of appeal to the Planning Inspectorate (PINS) within six months of the date of the MMO’s decision. PINS will conduct the appeal through written representation, informal hearing or public inquiry as appropriate to the circumstances.
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How will the designation of MCZs affect the development of offshore energy projects?
MACAA enables MCZs to be designated in order to conserve rare and threatened habitats and species. Decisions to designate MCZs should have due regard to the social and economic consequences of a designation.
Each MCZ will be governed by a designating order which sets out specific conservation objectives for that site and the level of protection required (including whether to prohibit certain activities). Consequently, the MCZ designation will have the potential to restrict the development of energy projects, or to permit them subject to costly conditions (such as continued monitoring of environmental impacts).
MCZs are currently being identified with a view to their designation by 2013. On 12 January 2010, Lundy Island (which lies off the Devon coast) was designated by the Government as England’s first MCZ.
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Enforcement and penalties
In response to breaches of Marine Licences, the MMO may vary, revoke, suspend or transfer licences; issue stop and emergency safety notices; issue compliance and remediation notices (and/or carry out works if necessary); and/or issue monetary penalties.
For serious cases of non-compliance the MMO may opt to prosecute the offender. Where offenders are prosecuted, the following criminal penalties may be applied: (1) for less serious offences tried in a Magistrates’ Court, fines of up to £50,000; or (2) for serious offences tried in a Crown Court, unlimited fines and/or up to two years’ imprisonment. Where offences are found to have been committed by a body corporate with the consent or connivance of, or due to the negligence of, a director or officer of the company, that person may also be liable to be proceeded against and punished accordingly.
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What are the opportunities and risks for the energy sector?
Opportunities
“One project, one licence”: The new streamlined consenting process may reduce management time and costs attributable to the current licensing process.
One regulatory body: The appointment of the MMO is intended to assist uniformity in decision making.
Transparency: The publication of the MPS and MPs is intended to make the licensing process more transparent for applicants.
Appeals: There is a formal process for appealing Marine Licence decisions (in contrast to the old licensing regime where the appeals mechanism was either limited or non-existent).
Risks
Scope of the Marine Licence: Not all offshore energy projects are included under a Marine Licence. For example, oil and gas facilities and carbon capture and storage projects and NSIPs will be governed by different licensing regimes.
MCZs: The creation of MCZs may restrict development by limiting the number of projects in areas falling within its scope, or subjecting projects to strict (and costly) conditions which may make them uneconomical.
Timescales: There are no statutory timescales for the application process. Consequently applicants aggrieved by delays in the decision making process will not have a remedy in Court.
Costs: Currently fees for applying for offshore licences are based on a project’s size and are subsidised by the UK Government. However, under the new system, the MMO will charge an hourly rate for processing applications with the aim of recovering 90 per cent of its administrative costs in 2011/12 and 100 per cent in 2013.
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