Viking Energy decision on legality of 'section 36' planning consent a 'departure from industry practice', says expert

Out-Law News | 26 Sep 2013 | 9:53 am | 3 min. read

A recent ruling in which the Court of Session upheld a challenge to a section 36 consent granted for a major wind farm in the Shetland Islands has cast doubt on the power of Scottish Ministers to grant consent to "non-licence holders" under the 1989 Electricity Act, an expert has said.

Gary McGovern of Pinsent Masons, the law firm behind, said that the Scottish Ministers and Viking Energy Partnership would be carefully considering their options following the court's ruling in favour of campaign group Sustainable Shetland  and may decide to appeal. However, some other projects subject to the section 36 consenting process and at a similar stage could be "facing a period of some uncertainty" in the interim, he said.

"This was a difficult case involving, amongst other things, the art of statutory interpretation and various different and conflicting interpretations of the relevant statutory provisions were argued," he said.

"The interpretation the judge ultimately preferred means we face, for the time being at least, a decision which suggests it is incompetent for a person who was not a licence holder in terms of the Electricity Act, or exempt person, to apply for and be granted a section 36 consent. On the basis of the judge's analysis, it would be necessary to hold a generation licence or to fall within a class of exemption as a pre-condition to seeking section 36 consent for a generating station under the Electricity Act," he said.

The decision was a "significant departure from perceived wisdom and practice", with many who are not licence holders or exempt applying for, and having been granted, section 36 consent, he said. Often, a generation licence is not obtained until nearer the point at which generation is to commence, which is typically some time after section 36 consent is granted, he said.

Lady Clark of Calton also found that the Scottish Government had not complied with its obligations under the EU's Wild Birds Directive when it granted planning permission to the 103-turbine Viking Energy wind farm in April 2012.

Section 36 of the 1989 Electricity Act deals with applications to construct and operate power stations of a certain generating capacity. In Scotland, consent must be granted by the Scottish Ministers. This regime operates separately to the licensing regime for the generation and supply of electricity to consumers, which is set out elsewhere in the Electricity Act. The licensing regime is controlled by the Gas and Electricity Markets Authority (GEMA), supported by market regulator Ofgem.

In her detailed ruling, Lady Clark of Calton considered the relationship between various provisions of Part 1 of the Electricity Act. She noted that although section 36 "says nothing about the status or qualification of a person who may apply" for consent, the Act as a whole "set up a detailed licensing system for the regulation of the industry and provided that the amenity provisions shall have effect in a way which is tied to the licensing system and only the licensing system".

"I am of the opinion that the Act, as originally enacted, and in its amended terms, has implemented the amenity obligations by placing them on the only two categories of persons contemplated in the legislation, namely licence holders or exempt persons," she said. "The Act has also constrained the decision making of the Secretary of State [or Scottish Ministers in Scotland] in relation to these two categories of person which are the only two categories of persons contemplated."

The judge acknowledged that GEMA, as licensing authority, could find it "burdensome to be involved at early stages of developments" and that general conditions imposed on a licence were often "not really relevant to such early development stages". However, she said it was "the Parliamentary intention and construction of the 1989 Act which must determine the operating policy" of GEMA.

Litigation and judicial review expert Jacqueline Harris of Pinsent Masons said that the decision was "unlikely to be the end of the matter", given the potential impact of the judge's decision.

"In general terms a decision of the Outer House of the Court of Session such as this can be appealed to the Inner House (the Scottish Appeal Court), and if the judge's decision has concluded the challenge then there will not be a need for leave," she said. "There may be a further right of appeal from there to the Supreme Court."

"Meantime, this will leave some projects recently consented under section 36, or which are the subject of applications, facing some uncertainty. In the short term at least, there is a potential for delay in some cases while the implications of this judgment are considered," she said.