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Local authorities and fracking

This article was first published in The Local Government Lawyer on 18 July 2013

To its supporters fracking is a revolutionary method of extracting gas and oil which will help drive down fuel prices in the UK, lower CO2 emissions and reduce the country’s dependence on foreign energy supplies. To its opponents it is a dangerous distraction from investment in renewable fuels, which can lead to the escape of carcinogenic chemicals into water supplies and which can cause minor earthquakes.

Practically fracking involves drilling a bore hole into the earth’s crust up to 20,000 feet deep. Then water, proppants and chemical additives are pumped down at high pressure. Gas, petroleum and water in the substrata are released and travel back up the bore hole to the surface. Shale gas is the most common form of gas extracted by this method.

In December 2012 the Secretary of State for Energy and Climate Change announced a resumption of exploratory fracking on the basis that the acknowledged seismic impacts can be monitored and controlled. The US has been engaged in large-scale fracking for some years with 20% of its gas production being shale gas extracted via fracking. Extensive anti-fracking litigation in the US has focused primarily on challenging public decisions as unconstitutional and claims for trespass, nuisance and negligence. In contrast, this month the President of France has ruled out shale gas exploration in France for as long as he is President.

Given the controversy surrounding the environmental and other risks associated with fracking it is not surprising that many concerned individuals and local authorities are asking questions about the legal issues to which shale gas exploration gives rise.

In this article we explore some of the biggest issues which local authority lawyers will need to consider when plans to explore fracking begin in earnest: in particular we address the question of who owns shale gas and the legal means available to local authorities and homeowners to oppose fracking in their area.

Owning Hot Air? Ownership issues relating to shale gas and fracking

Under the Petroleum Act 1998 all natural gas, including shale gas, in Great Britain or the United Kingdom’s territorial seas belong to the Crown. Only the gas is vested in the Crown. Neither the land it is located in nor the land that must be drilled to access it are vested in the Crown.

The Supreme Court has recently confirmed that a landowner owns the surface of their land and the strata beneath including minerals unless by conveyance, common law or statute someone else owns them (Bocardo SA v Star Energy Weald Basin Limited [2010] UKSC 35). The starting point, therefore, is that although the landowner does not own the gas in its land, its property runs down to the core of the Earth and includes all the land the gas is located in and surrounded by. However, a note of caution: the extent of landownership upwards to which the same principle formerly applied has already been curtailed in recognition of the realities of modern life (air traffic) (Bernstein of Leigh (Baron) v Skyviews & General Ltd [1978] QC 479.) The Supreme Court in 2010 considered that curtailment was not relevant to the ownership of the sub-strata.

The consequences for a landowner who believes that shale gas is under their land are very significant. Under the 1998 Act the Secretary of State may grant licences to search or drill for shale gas and/or extract it. The compulsory purchase scheme enabling the acquisition of ancillary rights such as access, laying pipes or erecting buildings for the purpose of mining has been extended to support the practical exercise of licences to search for, or extract, shale gas.

Compensation is payable for the compulsory acquisition of rights. However, the compensation will only reflect the loss of value to the landowner ignoring the value of the potential gas extraction (which may well be minimal). The value of the shale gas or the profit to be made from its extraction are ignored (per Bocardo v Star Energy, above).

Trespass and fracking – Get off my land

Notwithstanding the vesting of the gas in the Crown, any activity that is not covered by a compulsorily-acquired ancillary right or expressly permitted by the landowner will be an actionable trespass.

Where a licence is granted and ancillary rights compulsorily acquired the fracking activity is not a trespass and the landowner, despite continued ownership of the land affected, has no lawful right to stop it. Nevertheless, a landowner may be able to intervene to prevent activity that will cause damage to their land not expressly permitted by the licence and rights acquired.

Landowners therefore (whether private individuals or local authorities) will only be able to bring claims for injunctions to stop fracking on or near their land if the operator has not got their licences and ancillary rights in place in advance and/or they can show that damage beyond that permitted by the licences and rights is likely to be caused to their surrounding land.

In the USA, many of the trespass, nuisance and negligence actions brought against fracking operators have been brought by landowners alleging their land or water supply has been contaminated by fracking operations. In circumstances where there has been physical damage to neighbouring land by a fracking operator, the scope for a trespass or nuisance action as well is clear.

Other ways of opposing fracking

The first tool in the armoury of opponents to fracking is the Town and Country Planning Act 1990: fracking operations will need planning permission and are therefore open to objection locally during the planning application process. Given the scale of some environmental groups and their organised hostility to fracking, local planning authorities should be prepared for substantial opposition when applications are made.

The Environment Agency will be a statutory consultee in the planning process, meaning that individuals or groups opposed to proposed fracking operations will want to consider lobbying the Agency in their efforts to prevent the grant of planning permission.

Judicial reviews of the granting of planning permission on the basis that the grant of planning permission for the fracking was either unlawful or otherwise irrational are to be expected.

The consent of the Department of Energy and Climate Change (DECC) is also needed before fracking can proceed. The DECC’s decision will provide fracking opponents with another opportunity for judicial review.

Challenges on the basis that fracking exposes those nearby or their property to danger or interferes with their legal and/or human rights are unlikely to succeed in the face of the relevant permissions and licences. Most of the American litigation has been aimed at securing financial compensation after fracking has caused harm to a neighbouring landowner. Given the opposition to fracking already being voiced in the UK, there are reasonable grounds to assume that the English courts will be confronted with fracking cases not just in the context of claimants seeking damages after damage is alleged to have been done, but also with claimants seeking injunctive relief to stop fracking from taking place at all.

The lesson from the US litigation is that it is unlikely claimants will succeed in obtaining injunctive relief to prevent fracking operations. Cases where fracking operations have caused damage to neighbouring land or water supplies are seen as the result of defects and out-of-the-ordinary rather than the consequence of an inherently dangerous process or a justification for inhibiting such activity generally.

If a claimant could prove that a particular fracking operation gave rise to a greater than usual risk of some harm being caused to neighbouring property, then the owner of the neighbouring property may have an arguable case for applying to court for an injunction to prevent that fracking operation from taking place.

However the arguments which are general criticisms of fracking and concern dangers and risks inherent in the fracking process as a whole, rather than concerning a special risk or danger present in one particular fracking operation, should not be expected to result in a successful application for an injunction.

Owners of property which might be adversely affected by fracking may wish to assert their rights under Article 8 of the European Convention on Human Rights (the right to respect for private and family life and home) and Article 1 of Protocol 1 (the right to peaceful enjoyment of one’s possessions). However, given the Government’s enthusiasm for shale gas extraction and its widespread use in the US (largely without major incident) it seems likely that any interference with a landowner’s Convention rights will be held to be justified under either of these two articles, both of which are qualified – rather than absolute – rights.

Ultimately anyone wishing to prevent fracking from taking place on a particular piece of land will need to act quickly in trying to prevent planning permission from being granted or to prevent the Department of Energy and Climate Change from giving its consent for shale extraction operations to proceed. The courts may end up having a role to play if the decision to grant planning permission or to give consent for shale extraction becomes the subject of a judicial review claim.

However, once planning permission and consent for shale extraction operations have been lawfully given, the landowner’s prospects of being able to prevent the extraction by going to court are small. At that point the landowner should rather focus their energies on ensuring that an appropriate level of compensation is paid to them for the loss of enjoyment of their land which results.