Large EU Member States Take National Divergent Measures on Shale Gas Extraction

Member States continue to adopt national and divergent rules on hydraulic fracturing across Europe.  Last week, the United Kingdom facilitated hydraulic fracturing operations by adopting its Infrastructure 2015 Act.  In contrast, Germany is considering the adoption of a legislative proposal that is intended to be more restrictive than the European Commission’s Recommendation on Hydraulic Fracturing.

EU legislation does not specifically regulate hydraulic fracturing.  Instead, hydraulic fracturing is subject to the general requirements of EU environmental and work safety legislation and to the non-binding Commission Recommendation, which essentially interprets the applicability of the EU general rules to hydraulic fracturing.  (On the interpretation of the Commission Recommendation see our blog post of April 30, 2014).  The legislative developments in the United Kingdom and Germany confirm that in the absence of EU binding specific legislation on hydraulic fracturing, European countries will adopt their own national divergent rules addressing country-specific sensitivities and reflecting national political priorities.

United Kingdom

The Infrastructure Act 2015 (the “Act”) significantly facilitates hydraulic fracturing operations in England.  In particular, the Act contains the following provisions on hydraulic fracturing:

• Provisions concerning the right to use deep-level land (at least 300 metres below surface level) for the exploitation of onshore petroleum and geothermal energy.
• Safeguards in relation to onshore fracking activities. Specifically, the Act: (i) provides that the Secretary of State may approve onshore fracking activities if he is satisfied that specific safety conditions are met; (ii) prohibits fracking in land at a depth of less than 1,000 meters; (iii) requires local planning authorities to take into account the environmental impact of the activities before approving them (instead of requiring a full environmental impact assessment); (iv) requires authorities to notify the public of any application for a planning permission relating to proposed fracking activities; and (v) imposes obligations and conditions to monitor methane emissions from fracking operations (but no other emissions).

Importantly,  in contrast to the original legislative proposal to prohibit fracking “within and under” protected areas (“protected groundwater source areas” and “other protected areas”), the Act only prohibits fracking “within” these protected areas. The Act therefore leaves open the possibility for fracking under protected areas, such as national parks, if the surface entry zone is outside their boundaries. The definitions of “protected groundwater source areas” and “other protected areas” will be set out in secondary legislation that will be drafted after the UK general election.

Despite the adoption of the Act, Scotland and Wales have used their devolved powers on planning to block hydraulic fracturing operations in their territories.

Germany

Current German legislation does not specifically regulate hydraulic fracturing technologies.  Under general energy legislation, operations to explore and exploit natural gas and oil resources, such as hydraulic fracturing operations, require an approval from the competent authorities of the German federal states (Länder).  Operations that exceed specific extraction volume thresholds also require an environmental impact assessment.

The German coalition government is now considering a specific legislative package on hydraulic fracturing presented by the German Federal Ministries of Environment and of Economy.  Once it considers different proposed amendments, the Government will present the legislative proposal to the Parliament for its adoption, which is expected in 2015.

The legislative package is intended to impose stricter and more specific rules on hydraulic fracturing operations that those set out in the European Commission’s Recommendation.  The package includes three different legislative proposals: (i) a draft act on the prohibition and risk minimisation of fracking technology processes; (ii) a draft act on the extension of liability for mining damages to borehole drilling and caverns; and (iii) a draft regulation introducing environmental impact assessment and mining requirements for the use of fracking technology and deep drilling.

If adopted, the legislative package would impose the following prohibitions and requirements on hydraulic fracturing:

• A prohibition on hydraulic fracturing of shale and coal bed gas at a depth of less than 3,000 m. There is one important exception to this rule: test drilling for environmental impact research purposes would be allowed, even when carried out at a depth of less than 3,000 m, provided that the fracking liquids used are not water-polluting.  Such test drilling would take place under scientific monitoring and evaluation of an independent expert committee, which would also publish annual assessment reports on the harmfulness of test drillings as of 2018. Importantly, the proposed legislation foresees that, as of 2018, the competent authorities of the federal states may issue an approval for the use of a fracking technology as an exemption from the general prohibition, even for commercial purposes, on the basis of the expert committee’s reports, among other things.
• A prohibition on hydraulic fracturing of conventional and unconventional fossil fuels in particularly sensitive areas (g., water conservation and mineral source protected areas).
• Strict approval requirements on hydraulic fracturing of both conventional and unconventional fossil fuels.
• A requirement to perform an environmental impact assessment for both conventional and unconventional fossil fuel fracking operations.

Catherine Karia, Angeliki Valsamidou and Charlotte Ryckman

Catherine Karia (ckaria@cov.com) is an associate in the dispute resolution practice group in the London office of Covington & Burling LLP, focusing in particular on energy disputes. Angeliki Valsamidou and Charlotte Ryckman are associates in the Brussels office of Covington’s. This article was originally posted on Covington’s Inside Energy and Environment blog