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Oil Exploration - Judgement

Case No: CO/1336/1999 [extracts selected by GEF from web]

B e f o r e : THE HON MR JUSTICE MAURICE KAY THE QUEEN - v - THE SECRETARY OF STATE FOR TRADE AND INDUSTRY (Respondent) ex parte GREENPEACE LIMITED (Applicant)

The case is concerned with an area in the North East Atlantic which has become known as the Atlantic Frontier. In broad terms it lies to the North and the West of the Hebrides, Orkney and Shetland. The Secretary of State has the power to grant licences to companies who wish to search and bore for oil in the area. Licensing takes place through a series of "rounds" which commenced some time ago and which it is intended should continue in the years to come. Licences are generally granted in respect of "tranches", each tranche relating to a number of "blocks". A licence is granted for different stages. The first stage involves exploration which is a process of appraisal of the blocks in question. It involves seismic testing of the seabed and, where appropriate, the drilling of exploratory wells. The second stage involves extraction. The licences require the licensee to obtain the consent of the Secretary of State before proceeding from the first stage to the second stage.

The present case is concerned with the Nineteenth Round. On 30 July 1997 the Secretary of State publicised outline plans for "future oil and gas exploration opportunities around the United kingdom in a five year programme of offshore licensing rounds held under new environmental regulations". The plans referred to six rounds, from the Eighteenth to the Twenty-third, and indicated the general areas but not the precise locations of the blocks. As far as the Nineteenth Round is concerned the Secretary of State has not yet granted licences and the precise locations remain uncertain. Greenpeace issued the present application on 1 April 1999. The basis of the present application. In a nutshell Greenpeace's challenge may be described as follows. The areas to be licensed in the Nineteenth Round lie outside the twelve mile limit of United Kingdom Territorial waters but within the area of the United Kingdom Continental Shelf (UKCS). Council Directive 92/43/EEC on the conservation of natural habitats and of wild fauna and flora (the Habitats Directive) which was issued on 21 May 1992 obliged Member States to legislate. The domestic legislation which ensued, in particular the Conservation (National Habitats etc.) Regulations 1994, is expressly stated to apply only up to the twelve mile limit. The Secretary of State contends that the Regulations are a proper implementation of the Habitats Directive which did not impose obligations beyond the twelve mile limit. Accordingly, he does not consider the Regulations or the Habitats Directive in the course of his licensing function, although he does have due regard to various other environmental obligations. Greenpeace contends that the Secretary of State has fallen into fundamental legal error in that the Habitats Directive, properly construed, required the domestic legislation which implemented it to extend to the UKCS and the waters above; that the Secretary of State is obliged to carry out his licensing function in accordance with the Habitats Directive; and that, on that basis, he has particular responsibilities in the Nineteenth Round towards cetaceans (whales, porpoises and dolphins) and lophelia pertusa. There are many substantive issues in the case but at the forefront of them all is the issue as to the territorial scope of the Habitats Directive.

Thus it is common ground that the Nineteenth Round is concerned with areas outside the UK territorial sea but within the UKCS and its EFZ, and in respect of which the UK exercises sovereign rights. Article 174 (formerly 130r) of the EC Treaty defines the objectives of Community policy on the environment and states: "Community policy on the environment shall aim at a high level of protection taking into account the diversity of situations in the various regions of the Community. It shall be based on the precautionary principle and on the principles that preventive action should be taken, that environmental damage should as a priority be rectified at source and that the polluter should pay." .

"1. The aim of this Directive shall be to contribute towards ensuring biodiversity through the conservation of natural habitats and of wild fauna and flora in the European territory of the Member States to which the Treaty applies."

1.Does the geographical reach of Articles 4 and 12 of the Habitats Directive extend beyond a Member State's land, internal and territorial waters, to apply to areas over which a Member State exercises sovereign rights, viz. the continental shelf and superjacent waters? 2. If so, do those provisions of the Habitats Directive apply to the area of the UKCS which the Secretary of State intends to offer for oil exploration in the Nineteenth Round? 3. Is there evidence to show that natural habitats of Community interest (reefs of lophelia pertusa) are likely to be found in those areas of the UKCS which the Secretary of State intends to offer for oil exploration in the Nineteenth Round or to be affected by licensed activities in those areas? 4. Are there species of Community interest (cetaceans) within Annex IV(a) of the Habitats Directive which have their natural range within the area of the UKCS and superjacent waters which the Secretary of State intends to offer for oil exploration in the Nineteenth Round? 5. Are the natural habitats and species referred to in 3 and 4, above, likely to be adversely affected by the proposed activities (oil exploration) in the area of the UKCS covered by the Nineteenth Round? 6. In forming his proposals for the Nineteenth Round, has the Secretary of State complied with the requirements of the Habitats Directive?

Lophelia pertusa is not specifically referred to in the Directive, but the list of natural habitat types in Annex I includes "reefs" The case for Greenpeace is that lophelia pertusa is a reef-forming coral. They rely mainly on two affidavits of Dr. Alex Rogers. The Secretary of State does not dispute that it is a reef-forming coral, but the Oil Companies do. They rely on a report of Professor A.D. McIntyre which was originally prepared in connection with Greenpeace 1. He concluded that lophelia pertusa is "a colonial, non-reef-building coral which is found in deep water in many parts of the world". He was critical of the expert evidence submitted by Greenpeace at that time and also took issue with the meaning of the word "reef" in the context of cold deep-water corals. In the present case, Greenpeace has submitted a good deal of new material based on the latest researches of Dr. Rogers and Dr. Paul Johnston. It has made use of independent survey work which has taken place since Greenpeace 1. They have also relied on the recent published work of others. The Greenpeace evidence seeks to answer Professor Mc Intyre's 1997 Report with chapter and verse. The Oil Companies have enlisted the help of Professor Mc.Intyre again. However, all that has materialised from him is a three-line letter from a Paris hotel dated 28 June 1999 (over three months prior to the hearing). It simply confirms that "the information contained in that Report [i.e. the 1997 one] remains the same today". He does not specifically address the more recent field work or anything said by Dr. Rogers and Dr. Johnston. In view of that deficiency and in the light of the stance of the Secretary of State, I shall proceed on the basis that lophelia pertusa is a reef-forming coral. Indeed, the Commission has published an Interpretation Manual of European Union Habitats in connection with the Habitats Directive and it includes an interpretation of "reefs" which accords with and provides the basis for that adopted by Dr. Rogers. Dr. Rogers states that the North East Atlantic is a favoured habitat for lophelia pertusa. He refers to a number of factors supporting that view, probably the most important of which derive from recent surveys by the oil industry and the scientific community. He attaches particular significance to a survey known as AMES 98 which relates to seafloor sample areas located to the North and West of Hebrides. It detected hitherto unknown reef sites of deep-sea coral referred to as the Darwin Mounds. Further sites have been found by another survey which was financed by the European Union. They were in the Rockall Trough and the Porcupine Seabight. The Darwin Mounds are at least partly in the area covered by the Seventeenth Round. Mr. Tasker of the Joint Nature Conservation Committee (a statutory body) advised the Secretary of State in relation to the Eighteenth Round. In a letter dated 22 October 1997 he stated: "I think it would be reasonable to assume that the coral [i.e. lophelia pertusa] is occurring here within its typical depth range and on the shelf edge where water flow might be expected to be higher. [Three specific areas] seem the most likely to contain lophelia, though other areas cannot be ruled out." On 16 September 1999 the Treasury Solicitor, responding to a question posed by Greenpeace, stated: "The Government is advised by the JNCC that, if the Habitats Directive were held to apply beyond the territorial limit, then, on the basis of available evidence the Darwin Mounds would be likely to constitute reefs for the purposes of the Directive. The presence or absence of lophelia pertusa, although of interest, would not be critical to this decision."

Dr. Rogers and Dr. Johnston have set out a number of adverse effects likely to be consequent upon drilling and exploration in the same or a nearby area. Their evidence is reasoned and specific and, significantly, it has not been responded to on this issue by any expert evidence from the Secretary of State or the Oil Companies. In the circumstances, I shall proceed on the basis that their evidence is correct. Putting all this together, I conclude that the answer to the question posed at the beginning of this section is that oil exploration activities will be at least likely to have an adverse effect on lophelia pertusa in relation to the area included in or affected by the Nineteenth Round. It is also implicit in what I have said that, in my judgment, reefs of lophelia pertusa fall within the scope of "natural habitat types of Community interest"

It is also clear that harm can be caused to cetaceans by a variety of aspects of oil exploration and production. There is copious evidence before me to that effect in the affidavits of Mark Simmonds and the report of Anna Moscrop and Rene Swift provided for Greenpeace in March 1999. It is substantially uncontradicted.

Tthe evidence and materials provided by Greenpeace are to the effect that oil exploration, including seismic activity, is harmful to cetaceans and has serious implications for conservation. There is no real evidence to the contrary before me. I shall proceed on the basis that it is substantially correct.

I have concluded that it is not merely arguable but plain that Greenpeace are right about the central substantive issue in the case, the geographical scope of the Habitats Directive. I have also concluded that they are right about lophelia pertusa, albeit not about Article 12 in respect of cetaceans. In other words, they have not ended up in a factual vacuum. It is common ground that I should have regard to the merits when assessing the public interest. In my judgment, the finding that, in these circumstances, the 1994 Regulations were and are not a complete and lawful implementation of the Habitats |Directive is a matter of substantial public importance, as is the fact that the approach of the Secretary of State to the Habitats Directive, i.e. his failure to consider it in the licensing process, is legally erroneous.

Conclusions It follows from what I have said that I grant permission to apply for judicial review. To the extent that I have indicated, I find that the challenge succeeds. As to relief, I propose to make declaration in the form of the first one sought, namely a declaration that the Habitats Directive applies to the UKCS and to the superjacent waters up to a limit of 200 nautical miles from the baseline from which the territorial sea is measured.

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