FRACK UK

For the purposes of this website, the paper on shale gas law is summarised below.

1. Environmental legislation

1.1 Environmental Permitting (England & Wales) Regulations 2010

These permitting regulations apply to shale gas operations and may require environmental permits for the following:

(i)                 Groundwater activity;

(ii)                Mining waste;

(iii)               Radioactive substances/materials; and

(iv)               Water discharge.

For matters involving the environment the primary regulatory authority is the Environment Agency.

1.2 Water Resources Act 1991

This Act details a number of consents and notifications required relating to water and shale gas activities.

1.3 Town and Country Planning (Environmental Impact Assessment) Regulations 2011 (“EIA Regulations”)

The EIA Regulations require an applicant to produce an ‘environmental statement’ for activities which are considered an ‘EIA development’.

There are complex provisions which determine which shale gas activities are considered an EIA development.

 1.4  Wildlife and Countryside Act 1981 and the Conservation (Natural Habitats) Regulations 1994

Consents under these pieces of legislation are required for sites of ‘special scientific interest’ and those designated ‘special areas of conservation'.

2. Health and Safety

2.1 Health and Safety at Work Act 1974 and the Management of Heath and Safety at Work Regulations 1999

The HSW Act 1974 details the responsibility of the operator to ensure the health and safety of workers, and may require a 'general policy' on health and safety to be completed by the employer. The regulator is the health and safety executive.

The MHSW Regulations require the employer to actively make assessments of the risks to the health and safety of its employees and third parties for the conduct of its operations.

2.2 The Borehole Site and Operations Regulations 1995 (“BSOR”)

These regulations govern the health and safety of workers involved in borehole operations.

2.3 Offshore Installations and Wells (Design and Construction etc) Regulations 1996

These regulations also apply to onshore wells. and regulate the health and safety risks posed by poor well design and operation.

2.4 Ionising Radiations Regulations 1999 (“IRR 1999”)

The IRR 1999 govern the safe control of radioactive substances returned to the surface during shale gas operations.

3. Land lease and planning permission

3.1 Land Lease

The licensee for shale gas operations will be required to secure a lease of the site from the landowner for the purposes of its operations.  Rights of way and trespass through horizontal drilling are material considerations.

Landowner compensation is usually in the form of rent and may include overriding royalty interests.

3.2         Planning Permission

Mining in the UK, including for shale gas, is subject to rigorous planning requirements.

The Town and Country Planning Act 1990 (England and Wales) as amended by the Planning Act 2008, requires planning permission for ‘mining or other operations….in, on, over and under land'. Other relevant planning legislation includes the Planning and Compensation Act 1991 (as amended) and the Environment Act 1995 (as amended).  Permission is granted by the local authority where shale gas activities are to take place.

The Government provides guidance to local planning authorities in the form of the National Planning Policy Framework, and the Planning Practice Guidance for Onshore Oil and Gas.  Both are available in the Library.

A key function of these documents is to assist the local authority in preparing their own “local plans’, and in particular to highlight 'material considerations' which the local authority should take into account, in order to lessen the likelihood of successful challenge by way of judicial review of the permission granted.

In December 2013 DECC also published a regulatory roadmap for onshore oil and gas activities throughout the UK. To read a copy please visit the Library section of this site.

At the same time, DECC also published a Strategic Environmental Assessment of onshore oil and gas activities, and again this can be found in the Library.

TAX AND INCENTIVES

In his Autumn Statement made on 5 December 2013 George Osbourne announced new tax incentives for the shale gas industry. Key components include roughly halving the profit tax rate for initial profits, saving companies an additional 24p for every pound spent in development.  Specifically, the tax rate applicable to initial profits will be 30%, down from 62%, and this rate will apply until such time as the company's taxable profits equate to 75% of the project development costs, at which point the 62% rate will apply. 

Local communities where fracking will take place are currently being offered 100,000 pounds per exploratory well plus a 1% share of revenue. The Local Government Association wants to see that share increased to 5-10% in line with other countries where fracking takes place. 

Relevant legislation applicable to shale gas exploitation in the UK includes:

UK, The Borehole Site and Operations Regulations 1995

UK, Offshore Installations and Wells (Design and Construction Etc) Regulations 1996

UK, Health and Safety at Work Act 1974

UK, Management of Health and Safety at Work Regulations 1999

UK, Town and Country Planning Act 1990 (as amended)

UK, Civil Procedure Rules 1998 (as amended)

UK, Town & Country Planning (Development Management Procedure) Order 2010

UK, Provision and Use of Work Equipment Regulations 1998 (SI 1998/2306)

UK, Petroleum Act 1998

UK, Hydrocarbons Licensing Directive Regulations 1995 (SI 1995/1434)

UK, Petroleum (Production) (Landward Areas) Regulations (SI 1995/1436)

UK, Radioactive Substances Act 1993

UK, Water Act 2003

UK, Environment Act 1995

UK, Water Resources Act 1991

UK, Land Drainage Act 1991

UK, Renewables Obligation Order 2009

UK, Carbon Budgets Order 2011

UK, Climate Change Act 2008 (Credit Limit) Order 2011

UK, Carbon Budgets Order 2009

UK, Climate Change Act 2008 (2020 Target, Credit Limit and Definitions) Order 2009

EU, Directive 2009/28/EC on the promotion of the use of energy from renewable sources and amending and subsequently repealing Directives 2001/77/EC and 2003/30/EC (2009) OJ L140/16

EU, The Maastricht Treaty 1992

EU, Council Directive 96/61/EC concerning integrated pollution prevention and control (1996) OJ L257/26

EU, Council Directive 85/337/EEC on the assessment of the effects of certain public and private projects on the environment (1985) OJ L175/40, as amended

EU, Directive 2006/21/EC of the European Parliament and of the Council on the management of waste from extractive industries and amending Directive 2004/35/EC(f)

EU, Directive 2009/28/EC on the promotion of the use of energy from renewable sources and amending and subsequently repealing Directives 2001/77/EC and 2003/30/EC (2009) OJ L140/16

EU, Council Directive 92/43/EEC on the conservation of natural habitats and of wild fauna (1992) OJ L206/7

EU, Council Directive 89/391/EEC on the introduction of measures to encourage improvements in the safety and health of workers at work (1989) OJ L183/1

EU, Council Directive 92/91/EEC concerning the minimum requirements for improving the safety and health protection of workers in the mineral-extracting industries through drilling (1992) OJ L348/9

Kyoto Protocol 1997

United Nations Framework Convention on Climate Change 1992