The In-House Lawyer

The government is placing great faith in the new Infrastructure Planning Commission (IPC) to facilitate the delivery of three national imperatives:

• keeping the lights on in the face of a looming energy gap, caused by the ongoing de-commissioning of a series of nuclear power stations and the closure of coal-fired power stations due to emissions limits;
• meeting our legally binding renewable energy and carbon dioxide reduction targets, which require 15% of UK total energy (electricity, heat and transport fuel) to come from renewable energy sources by 2020, which in turn will require at least 30% of electricity to come from renewable sources, compared to approximately 5% today; and
• protecting us from excessive dependence on gas supplies from less stable countries and increasing the resilience of our short-term gas storage capacity, otherwise known as energy security.

Overview

The IPC was created by the Planning Act (PA) 2008. The essential concept of the IPC is that it will decide on the grant of development consent for certain categories of major infrastructure project, in accordance with the relevant National Policy Statement (NPS), instead of the decision being made by the relevant government minister, as is done now. Where an NPS is not in place, the IPC will make a recommendation to the relevant minister, who will make the decision. The IPC structure brings together several consenting regimes with the aim of a single development consent for each project and, with limited exceptions, applies only in England and Wales. The government is aiming for a consent to be issued within 12 months of an application being placed. The IPC process introduces a new legal requirement for extensive pre-application consultation and it seeks to substantially reduce the use of public inquiries. The projects covered fall into five ‘fields’: energy, transport, water, waste water and waste. This article focuses on energy projects covered by the IPC regime, which are:

• electricity generating stations(above 50MW onshore or above100MW offshore);
• overhead electric lines;
• underground gas storage facilities;
• gas or oil pipelines;
• gas reception facilities; and
• liquefied natural gas facilities.

PA 2008 sets out detailed thresholds forIPC applications. Where a scheme is belowthe threshold, the existing consenting regime applies.

Implementation timetable

The IPC is on track to receive its first applications from 1 March 2010, which has now been announced as the formal start date. The first applications will be restricted to energy and transport (airports, ports, roads) projects. At present there is a transition team led by the IPC’s prospective chairman, Sir Michael Pitt. Two deputy chairmen have been named and the first three commissioners will have been announced by the time this article is in print. The commission will become a legal entity in October 2009 and will be able to give formal advice to prospective applicants from that time. The implementation of the IPC regime is being led by the Department for Communities and Local Government (DCLG), with a team of senior DCLG officials and planning inspectors from the Planning Inspectorate. There is an extensive suite of regulations and guidance that needs to be put in place to operate the new regime and consultation on these is well advanced. Three tranches of consultation have taken place or are underway:

• the list of statutory consultees on draft NPSs, which has now been completed and the relevant regulations issued;
• regulations relating to pre-application procedures, and associated guidance, together with guidance on ‘associated development’, for which the consultation is closed and the final versions are intended to be put in place on 1 October 2009; and
• examination regulations and guidance, fees and compulsory acquisition matters, for which the consultation period ends on 5 October 2009 and which will come into force on 1 March 2010.

What’s new?

The IPC is a radical departure from the current consenting practice of major energy projects. The following key themes canbe identified:

• transferring decision-making to an independent body, to grant consent in accordance with NPSs and giving those NPSs a dominant role in decision-making;
• a dramatic ‘front-loading’ of the application process, requiring unprecedented and legalisticpre-application consultation;
• an entirely different approach to the formal ‘examination’ of the application;
• a very challenging target timetable for determining applications, which is laid down in statute; and
• a need to forge a new mindset and ‘equilibrium’ with all the main parties involved in a new process.

National policy statements

Like all major projects, energy projects have frequently suffered from the fact that their benefits are mostly at a national level, while their impact is at a local level. Ensuring that the national need for energy projects is given proper weight in decision-making has been a continuing issue. In relation to renewable energy, for example, the government first issued a formal statement of need in an energy white paper in 2006. In respect of gas storage, this took the form of a ministerial statement in parliament in relation to gas infrastructure. However, these statements have not been effective in preventing local authorities from objecting to electricity applications and have triggered public inquiries under the current Electricity Act 1989 regime, or the rejection of much needed underground gas storage schemes. The NPSs under the IPC regime take this statement of the ‘need approach’ to a new level by making them the central document by which the organisation makes its decision. At the time of writing, the consultation on the first tranche of NPSs is imminent and will include a suite of energy NPSs comprising nuclear power, renewable energy, electricity networks, fossil fuel generation, and oil and gas infrastructure. The precise wording of the NPSs will play a major part in the success or otherwise of the regime. In formulating and reviewing an NPS, the Secretary of State must do so with the objective of contributing to sustainable development. Under PA 2008 there is considerable scope for the content of an NPS, which may identify:

• in relation to a specified description of development, the amount, type or size of development of that description that is appropriate, nationally or for a specified area;
• criteria to be applied in deciding whether a location is suitable (or potentially suitable) for a specified description of development;
• the relative weight to be given to specified criteria;
• one or more locations as suitable, potentially suitable or unsuitable for specified description of development; and
• circumstances in which it is appropriate for a particular kind of action to be taken to mitigate the impact of a specified description of development.

An NPS must give reasons for the policiesit contains. While the NPS can belocation-specific, the only energy NPS that is expected to be so is the nuclear NPS. A bespoke site assessment procedure has been followed for prospective nuclear power sites. Under this, procedure 11 sites have been put forward for assessment, all of which have a nuclear heritage. One crucial feature of the NPS approach is that any objections to the merits of the NPS, with very limited exceptions, are to be disregarded by the IPC in its decision-making. Each NPS will have to go through a major public consultation exercise and scrutiny in parliament. Once the NPS has been finalised, there is a six-week period for any legal challenge that is the last opportunity to question its appropriateness before it is applied in decision-making. This approach is intended to prevent a repeat of, for example, the Sizewell ‘B’ and Hinkley ‘C’ nuclear power station public inquiries, in which many months were spent on evidence clarifying or challenging government policy.

Pre-application consultation

The biggest single change for promoters of energy projects will be the detailed and legalistic requirements for pre-application consultation. These go well beyond what is currently regarded as best practice. From the government’s perspective, the emphasis on consultation is the corollary of the fact that the decision will be made by an independent body rather than an elected minister. It is clear from the emerging guidance and regulations just how demanding these requirements will be. This is reinforced by the message from the IPC transition team in informal discussions with prospective developers as to the central importance that will be given to this stage. The formal requirements include:

• a promoter must consult with the local authority on the form the pre-application will take and then publicise what this process will be;
• an extensive number of minimum requirements laid down in the regulations must be followed;
• a draft application with a draft consent, including a full draft environmental statement, must be published for comment; and
• the promoter’s consultation report must formally set out how the consultation was carried out, what representations were received and what regard was given to those representations.

The IPC is expecting that the most intensive engagement with statutory consultees and major non-statutory consultees (eg the Royal Society for the Protection of Birds (RSPB)) will be at the pre-application stage, rather than at the post-application stage, as commonly takes place now. The IPC has the power to refuse to accept an application if the pre-application consultation has been inadequate. The transition team andSir Michael Pitt, the chair of the IPC, are emphasising that this power is real and will be used. The intended front-loading of applications in this way involves a complete change in approach and mindset for all involved. It also has resourcing implications for consultees. The IPC wants the issues that come before it to be as narrow and well-developed as possible, on the basis that this is the only way in which it can hope to keep to the target timetable laid down by PA 2008. It also sees this as a way of ensuring that only schemes that are formulated and designed well come before it.

‘examination’ of applications

Once an application has been formally accepted, there is a post-application consultation period. At this stage, theidea is that those commenting havewell-developed views because of thepre-application consultation process. The IPC will then consider the range and nature of the issues raised before deciding by what method it will ‘examine’ the application. The IPC has a range of examination methods available to it, comprising: ‘rounds’ of written representations, issue-specific hearings and open forum hearings. Once the IPC has considered the post-application written representations, it will call a preliminary meeting at which the parties will discuss the detailed approach to the examination. Following this the IPC will issue its decision on the examination and a timetable. The IPC has a wide measure of discretion on its approach to the examination. However, a variety of statutory bodies have the power to insist on a topic hearing. Where the compulsory purchase of land is proposed, then an affected landowner has the right to be heard in a compulsory hearing. There is a broad category of consultees and those making representations, including members of the public, who can insist on an open-forum hearing. Issue-specific hearings are likely to involve expert witnesses and are at the discretion of the IPC. The normal approach will be for the commissioners, or an advocate they appoint, to ask the questions and cross examination will be limited. This is a huge departure from current practice on major projects that currently proceed on the basis of formal cross examination by opposing advocates, in front of an inspector, who then makes a recommendation to the minister.

timetable

The period from submission of the application to the examination hearing is expected to take about three months, though this is not laid down in the PA 2008 or elsewhere. Once the preliminary meeting has been completed, PA 2008 requires the examination to be completed within six months and the decision issued within a further three months. Where this timetable is not met, the IPC is required to write to the government to explain why, and to include this information in an annual report. This timetable is extremely challenging and again emphasises the importance of the pre-application phase in resolving as many issues as possible. Given the complexity of the projects involved, this timeline arguably makes some simplistic assumptions:

• There will be a total ‘design freeze’ once the application has been submitted. While there has to be a form of design freeze for the environmental statement to be finalised, in practice there are often design changes post-application that a promoter will want to deal with by way of amendment to the application.
• There will be no need for formally advertised supplementary environmental information as a result of new information and the delay that the required consultation period causes.
• Everyone involved will act in the spirit of the new system to make it work and keep to time, whereas objectors to projects are increasingly implacable and sophisticated in the tactics of delay.

A new mindset

Achieving a change in the collective mindset of those involved in consenting major projects is essential to the successful delivery of the IPC regime. Promoters will need to embrace pre-application consultation to extract the maximum benefit in terms of seeking to win over local communities by proving they have a voice and demonstrating how their designs and plans have changed to accommodate comments made. The front-loading of the resolution of issues at the pre-application stage will be driven by a fear that an IPC hearing will be a relatively rough and ready affair and it is far better to resolve things in advance if possible. Promoters will need to think much more carefully about the information they prepare and present in their applications to ensure that it will make the project’s case in a streamlined system, without the current safety net of an extensive public inquiry, as the full opportunity to present a case. The challenges presented by the new IPC system are many and varied, but there is a clear prize to be won in terms of better presented projects, a more engaged public and more certainty in the delivery of much-needed energy infrastructure.

Julian Boswall, partner, Burges Salmon LLP.

E-mail:julian.boswall@burges-salmon.com.