Halite Energy Group Ltd v Secretary of State for Energy and Climate Change [2014] EWHC 17 (Admin)

Case No CO/6036/2013

[2014] EWHC 17 (Admin)

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

ADMINISTRATIVE COURT

Venue Royal Courts of Justice, Strand, London, WC2A 2LL

Date 17/01/2014

Before

MRS JUSTICE PATTERSON

Between

HALITE ENERGY GROUP LIMITEDClaimant

THE SECRETARY OF STATE FOR ENERGY AND CLIMATE CHANGEDefendant

Michael Humphries QC and Jeremy Pike (instructed by Berwin Leighton Paisner) for Claimant

Tim Mould QC (instructed by The Treasury Solicitor) for Defendant

Hearing Hearing dates: 10th-11th December 2013

Judgment

MRS JUSTICE PATTERSON :

Introduction

[1]This is a claim under Section 118 of the Planning Act 2008 for judicial review of a decision on the part of the Secretary of State for Energy and Climate Change (the defendant) dated the 9th April 2013. In that decision the defendant dismissed the claimant’s application under Section 37 of the Planning Act 2008 for development consent order (DCO) and certain other related consents to create an underground gas storage facility (UGS) at Preesall in Lancashire.

[2]The claimant, Halite Energy Group Limited, is the successor to Canatxx Gas Storage Group Limited which had promoted previous applications for planning permission for underground gas storage on the Preesall site.

[3]The claim for judicial review was lodged on the 17th of May 2013.

[4]Permission was refused on the papers by Collins J on 10th July 2013. After an oral renewal hearing on the 15th October 2013 Ouseley J granted permission on all grounds.

[5]The decision is challenged on five grounds as follows:- i. That the Secretary of State misunderstood national policy at paragraph 2.8.9 of NPS EN-4; ii. That the decision of the Secretary of State was taken on the basis of a material mistake of fact, was procedurally unfair and/or was irrational in concluding that he was “not persuaded” that Halite has complied with the requirements of EN-4 as regards provision of geological survey data; iii. That the decision was procedurally unfair in concluding that “there is a significant possibility that either no development would be possible or the project as ultimately constructed would have a much smaller storage working capacity than has been envisaged in the application before the Secretary of State.” iv. That the decision was procedurally unfair in concluding that a certain type and/or level of geological information was a “pre-requisite” for an application for an underground gas storage facility under the Planning Act 2008; v. That the decision was irrational in that the Secretary of State failed to set out adequate reasons for his conclusions including that he had “no convincing evidence in front of him as to the size of the project that might ultimately be constructed and hence is unable with any degree of certainty to consider the potential benefits, especially in respect of the need for infrastructure of this type, against the more clearly defined potential impacts.” Although the Examining Authority addressed that by proposing a minimum storage capacity of at least 300 million cubic metres the Secretary of State found that he could not reasonably rely upon that as a basis for decision making.

Background

[6]On the 30th November 2011 the claimant made an application under Section 37 of the Planning Act 2008 for a DCO to the Infrastructure Planning Commission (IPC) for the purpose of creating an underground gas storage facility at Preesall, Lancashire. The purpose of the application was to inject gas into, store gas in, and extract gas from underground caverns with a total storage capacity of up to 900 million cubic metres and a working capacity of up to 600 million cubic metres. The underground caverns were proposed to be constructed on the east side of the Wyre Estuary. Elements of surface infrastructure were proposed on both the east and west sides of the estuary.

[7]A parallel application was submitted for a deemed hazardous substances consent.

[8]Up to nineteen operational underground caverns were proposed on a site of 75ha. They were to be constructed by solution mining of the Preesall halite deposit. The caverns constituted a nationally significant infrastructure project (NSIP). The application contained a significant amount of surface infrastructure including well head compounds, a gas compressor compound, a sea water pump station, pipe lines and other associated developments.

[9]There had been two earlier planning applications of significance for UGS at Preesall in 2004 and 2008. They had involved the creation of up to 36 caverns over an area of nearly 500 hectares with the capacity to store in excess of 1200 million cubic metres of gas.

[10]The first application was submitted in 2004. It was recovered for determination by the Secretary of State and, following a public inquiry, was dismissed in April 2007. The main reason for the Secretary of State’s dismissal of the appeal related to lack of information and matters of detailed design. In particular, it was said that the information provided on the geological, hydrological and mining setting was insufficient to enable a decision to be made on the feasibility of the principle of the proposals and proposed land use.

[11]In 2009 a further planning application for UGS at Preesall of a similar scale with similar buildings and infrastructure was submitted which sought to overcome the Secretary of State’s concerns on the earlier application. To assist in the determination of that application Lancashire County Council (LCC), the determining authority, appointed consultants, WS Atkins, to assess and advise upon the geological information provided.

[12]The 2009 planning application was refused by LCC in January 2010. The reasons for refusal included one to the effect that the application contained insufficient information to:• properly assess and ensure the geology of the area was capable of accommodating the proposed development;

• demonstrate its relationship to former solution mining activities or surface development,

• establish that there was no opportunity of migrating gas through the geology or via former mining activities. It was refused also on the basis that the proposed development to the east of the estuary would result in the introduction of an industrial development which, by reason its scale, design and location would be detrimental to the quality of the open character of the countryside, coastal plane, estuary landscape and the Wyre way.

[13]The application for Hazardous Substances Consent was refused by LCC on the basis that it contained insufficient information to properly assess the geology of the area and its relationship to former workings.

[14]Each of the earlier applications was the subject of a significant number of objections concerning, in particular, the adequacy of the geology for development of UGS facilities, landscape and visual impact, risk and fear.

[15]Consequently, the current application was submitted for a considerably smaller development where gas would be stored within caverns created within the two polygonal areas (referred to as the north and south polygons respectively) over an area of 75 hectares.

[16]The application was accompanied by an environmental statement (ES) and a geological summary report (GSR). The GSR summarised the many geological studies which had been undertaken to support the application. Additional geological investigation had been undertaken since the earlier refusals. The result was a much reduced scheme which had been the subject of considerable discussion with LCC and Atkins, as their advisors. That discussion culminated in a Statement of Common Ground (SoCG1) on geology being submitted during the examination to the Examining Panel (ExA) on 1st June 2012.

[17]On 1st April 2012, as a result of changes made under the Localism Act 2011 the IPC was abolished. NSIPs were then the subject of an examination by the Major Infrastructure Planning Unit, now called the Major Applications and Plans Directorate, on the part of the planning inspectorate (PINS). A final decision on the application is made by the Secretary of State.

[18]The application was accepted for examination on 23rd December 2011. The examination of the application by the ExA took place between 24th April 2012 and 24th October 2012. The ExA comprised three inspectors led by Mr Paul Hudson. The others were Emrys Parry and Libby Gawith. They were assisted by Dr Ramues Gallois, a technical assessor with expertise in geology and geotechnical matters.

[19]The ExA reported to the Defendant on 21st January 2013 with a recommendation that consent be granted subject to various requirements. A requirement on a DCO is akin to a planning condition on a planning permission.

The Decision Letter

[20]On 9th April 2013 the Secretary of State issued his decision. He decided under Section 114 of the Planning Act 2008 to refuse the application and parallel hazardous substances consent direction.

[21]Under the case for making the development consent order he said, “9. The Secretary of State considers that, if the proposed Development were shown to be certainly capable of delivering a gas storage facility of the kind and scale which Halite hopes, it would be consistent with energy Overarching National Policy Statement EN-I (“EN-I”) to grant it development consent (in the absence of any adverse impacts which made it unacceptable in planning terms), given the need for this type of Development and the contribution such projects can make to ensuring the UK’s security of supply (Parts 3.8.8 -3.8.13 of EN-I refers).”

[22]In the case against granting development consent the decision letter continued “13. In respect of the Examining Authority’s findings and conclusions on the assessment of geological data (in particular ER 5.8-5.80) it is clear to the Secretary of State that there is significant uncertainty surrounding the two proposed potential cavern development areas, given the lack of hard geological data to demonstrate their suitability for underground gas storage.14. The geological information provided in support of the Application is recognised by the Examining Authority to be insufficient for the purposes of National Policy Statement for Gas Supply Infrastructure and Gas and Oil Pipelines (EN-4) stating at ER 5.65, that “we consider that the geological analysis submitted as part of the application falls short of that required by NPS EN-4 to prove beyond reasonable doubt that the geological structure, thickness and faulting of the halite are suitable for the construction of caverns of the particular sizes and shapes within the specified areas and in order to support the volume of gas storage proposed for the application.”

15. The Examining Authority provides some context to the lack of geological information regarding the proposed cavern areas, and the need for further geological surveys at ER 5.62 stating “Where detailed geological information is available, the Applicant has decided that the halite is too faulted or too close to existing workings to be suitable for safe construction and operation of UGS [Underground Gas Storage]. However, by the very nature of defining the proposed cavern development areas by avoiding known hazards, the polygons have been located in areas in which there is little geological data. The assumption that the polygon areas are therefore suitable for the cavern construction is based on extrapolation of data in the 3D model, and that the faulting does not extend into these areas. This may be entirely plausible, but in our view will only be confirmed beyond reasonable doubt as further geological surveys are carried out.” This is further echoed at ER 5.9:

“The two polygon areas are defined by the Applicant as areas that avoid known hazard zone of faults, boreholes and wet rock head and the mining hazards of solution brinewells and dry mining. This is the essential conundrum: these two areas do indeed avoid all known constraints, but are also areas where there is little hard geological data. 16. The Secretary of State notes the Examining Authority’s view in ER 5.64 that ‘The availability of geological data is nonetheless an improvement on that presented in the last planning application in 2009... ‘ However, the Examining Authority are also of the view in ER 5.65 that “the relatively small amount of additional geological data” consists largely of reinterpretation of geological information and, as indicated above, the geological analysis submitted as part of the application falls short of that required by NPS EN-4. Although the Secretary of State agrees the current application must be considered on its own merits, he also notes the Examining Authority’s view in ER 5.66 that ‘the technical assessor for the 2007 Public Inquiry recommended that at least two more seismic lines be undertaken and drilling and geophysical logging of boreholes on these lines to prove ground truth. In view of this and the subsequent failed planning application in January 2010, we are surprised that no seismic surveys were undertaken across the polygon areas to support this application...”. 17. The Examining Authority’s overall conclusion on the case for Development and recommendation that the Order be granted is therefore based on the proviso, that Halite “can demonstrate that the suitability of the salt in the two polygon areas is as high as it is assumed for the purposes of the application” (ER 7.27) and that development consent is made subject to “a major proviso concerning the procurement of more detailed geological data to confirm the ability of the two polygons to store substantial volumes of gas (ER 7.28). 18. The Examining Authority therefore sought to address the issue of geological uncertainty of the proposed storage areas by recommending inclusion in the draft Order of a requirement (on which commencement of the Development would be conditional) for Halite to carry out more comprehensive geological surveys post-approval (see ER 9.36 and draft Requirement 6(1) and (2) of Schedule 9 to the draft Order at Appendix D to the ER). The requirement would also make commencement of the Development conditional on the working capacity being shown by the assessment to be greater than “300 million standard cubic metres at the standard temperature and pressure” (which is half the working capacity envisaged by Halite).The Secretary of State notes that the Examining Authority considers that including such a condition “would meet the detailed assessment required under NPS EN-4 to confirm that the sites selected (i.e. the two polygons) are suitable, which in our view means they have sufficient thickness of un-faulted suitable halite to contain the proposed volumes of gas to be stored.” (ER 9.24). 19. The Secretary of State does not however consider this approach to sufficiently satisfy the policy to be applied under EN-4 on which he places considerable weight. The requirement in Part 2.8.9 of EN-4 provides for example that “Applicants should undertake and supply to the IPC [i.e. the Infrastructure Planning Commission; now the Planning Inspectorate acting on behalf of the Secretary of State], a detailed geological assessment to demonstrate the suitability of the geology at the site for the type of underground gas storage proposed.”

Part 2.8.9 of EN-4 also states:

“When considering storage in a salt cavity, the geological assessment should include depth below surface, salt thickness, salt purity and presence of shale bands which could affect cavern design. In addition, a study of the geological integrity of the overlying strata and potential for collapse, taking account of the proposed minimum and maximum working pressures, will need to be undertaken. The assessment should include the construction, operational and decommissioning phases and should cover the long term integrity of the affected strata after decommissioning or closure of the storage facility. The IPC will consider the geological assessment alongside the environmental assessment if the former does not form part of the [Environmental Statement]” 20. The Secretary of State is satisfied that, as stated in section 4.11 of NPS EN-I, an underground gas storage site would be subject to stringent safety standards covering the life cycle of a facility from design and build through to decommissioning under the Control of Major Accident Hazards (COMAH) Regulations 1999 and enforced by the Health and Safety Executive and Environment Agency jointly. However, in the absence of a pre application geological assessment as required by NPS EN-4, the suitability of the proposed underground gas storage project cannot be properly considered by the SoS - and may have also gone some way to contributing to local fears and opposition to the project.”

[23]Under the heading “the Secretary of State’s conclusions and decisions”, the Secretary of State said, “23. In his view, there is a clear gap in geological data contained in the application which means that Halite have failed to demonstrate the suitability of the geology at the site for salt cavern storage. The Secretary of State considers that the absence of such an essential element of the project bears heavily on his decision.24. Whilst the Secretary of State notes that the Examining Authority’s approach of including a requirement for further geological data would ensure that the suitability or otherwise of the proposed storage areas would be demonstrated prior to construction of the Development, he is mindful that, even if he were to make the Order on that basis, there is a significant possibility that either no development would be possible or the project as ultimately constructed could have a much smaller storage working capacity than has been envisaged in the Application before the Secretary of State.

25. It is not clear why Halite chose not to produce more detailed geological data for the site of the proposal but the Secretary of State considers that, in line with NPS EN-4, such information should be a prerequisite of an application for a gas storage facility made under the Planning Act 2008 and that failure to provide such information weighs significantly against the needs case for the project. The Secretary of State has no convincing evidence in front of him as to the size of the project that might ultimately be constructed and hence is unable with any degree of certainty to consider the potential benefits, especially in respect of the need for infrastructure of this type, against the more clearly defined potential impacts. Although the Examining Authority has attempted to redress this uncertainty by setting a minimum storage capacity which the project must meet before development would be allowed, they themselves admit that, despite their best efforts to offer a suitable minimum capacity figure, the proposed figure of 300 Mcm “is to some extent arbitrary” (ER 9.30). In the circumstances, the Secretary of State does not consider that he can reasonably rely on this assessment as a basis for decision-making.

26. In conclusion, the Secretary of State is not persuaded that Halite has complied with” the requirements of EN-4 as regards provision of geological survey data and considers that it would not be appropriate in this particular case to grant consent conditional on the provision of essential further evidence as to the suitability of the geology at the site after consent has been granted

27. He is unable to conclude that Halite has demonstrated that the geology of the site is suitable for this type of underground gas storage and has decided to refuse the Application and HSC Application accordingly.”

Legal Framework

[24]Part 6 of the Planning Act 2008 deals with the decision making process for DCOs. After an application has been made under Section 37 of the 2008 Act a period of 28 days is allowed during which the Secretary of State decides whether or not to accept the application. Once an application is accepted the applicant must give notice of the application to the persons set out in Section 56(2). That includes each local authority within which the land upon which the application is sited. Each local authority is then invited to submit a Local Impact Report (LIR) which will give details of the likely impact of the proposed development on the authority’s area: Section 60.

[25]An Examining Person or Panel is then appointed (known as the Examining Authority: ExA). After an initial assessment of the principal issues arising from the application a preliminary meeting is held: Section 88. That is to enable invitees to make representations about how the proposal should be examined. Normally, the last day of the preliminary meeting is the first day of the period of examination. The Panel makes procedural decisions after that meeting and informs the parties.

[26]The process of examination is essentially a written one with parties responding to questions raised by the ExA. The procedure allows though for issue specific hearings (ISH) under Section 91 or open floor hearings (OFH) under Section 92 if the ExA think that is an appropriate way of proceeding.

[27]Under Section 98 the ExA is under a duty to complete its examination of the proposal within 6 months from the start day.

[28]The ExA then report to the Secretary of State. Where a national policy statement (NPS) is in effect, Section 104 provides that, “(3) The Panel or Council must decide the application in accordance with any relevant national policy statement, except to the extent that one or more of subsections (4) to (8) applies. (4) This subsection applies if the Panel or Council is satisfied that deciding the application in accordance with any relevant national policy statement would lead to the United Kingdom being in breach of any of its international obligations. (5) This subsection applies if the Panel or Council is satisfied that deciding the application in accordance with any relevant national policy statement would lead to the Panel or Council, or the Commission, being in breach of any duty imposed on it by or under any enactment. (6) This subsection applies if the Panel or Council is satisfied that deciding the application in accordance with any relevant national policy statement would be unlawful by virtue of any enactment. (7) This subsection applies if the Panel or Council is satisfied that the adverse impact of the proposed development would outweigh its benefits. (8) This subsection applies if the Panel or Council is satisfied that any condition prescribed for deciding an application otherwise than in accordance with a national policy statement is met.”

[29]Section 107 of the Act sets the timetable for the Secretary of State’s decision. It is normally to be made within 3 months of the date of the panel report.

[30]A challenge to a refusal of a DCO is under Section 118 of the Planning Act 2008. It is by way of judicial review within a period of 6 weeks beginning with the day on which the statement of reasons for refusal was published.

[31]In dealing with the interpretation of planning policy there is no dispute between the parties as to the appropriate legal approach. That is set out in Tesco Stores v Dundee City Council [2012] UK SC 13 at [18] where Lord Reed said, “In this area of public administration… policy statements should interpreted objectively in accordance with the language used, read as always in its proper context.”

[32]An applicant for planning permission is not required to prove the case for his proposed development to a criminal standard: R (on the application of Bleaklow Industries Limited) v Secretary of State for Communities and Local Government

[2008] EWHC 606

at [92].

[33]Of relevance to the current case are the Control of Major Accidents Hazards Regulations 1999 (COMAH). They provide a regulatory safety regime that relates to the safe construction and operation of certain facilities that store or handle hazardous substances. The claimant is required to comply with the COMAH regime following any grant of DCO. It could not commence construction of any of the caverns before it had regulatory approval. The regime applies throughout the life cycle of the project, through design and build to decommissioning. The Competent Authority for that regime is the Health and Safety Executive (HSE) and Environment Agency (EA) acting jointly.

[34]In force at the relevant time were two NPSs which were relevant to UGS - i. the National Policy Statement for Energy (EN-1) which is the overarching document; and ii. the National Policy Statement for Gas Supply Infrastructure and Gas and Oil Pipelines (EN-4).

[35]Where relevant I deal with the terms of the NPSs later in this judgement.

[36]The Defendant submitted that the Claimant’s case was, in fact, encapsulated in 3 grounds. I agree. There is some overlap between all of the grounds but grounds two, three and four overlap to a significant extent. At their heart though is the issue of fairness. I propose, therefore, to structure the rest of this judgment to deal with the following issues:- i. Was there a breach of natural justice in that the Claimant was treated unfairly? ii. What is the proper interpretation of paragraph 2.8.9 of the EN-4? iii. Was the decision of the Defendant irrational? Ground One: Was there a breach of natural justice in that the Claimant was treated unfairly in the decision making process?

[37]A central issue in the determination of the DCO was whether the benefit of the gas storage outweighed the visual impacts of the surface infrastructure. Whilst ultimately that is a decision of planning judgement for the decision maker, in this case the Secretary of State, the process by which he reaches that decision has to be conducted fairly.

[38]The case of Castleford Homes Limited v Secretary of State for the Environment, Transport and the Regions

[2001] EWHC 77

dealt with the issue of breach of natural justice in the context of three alternative developments for residential development. Mr Justice Ouseley dealt with the legal position at [52] and [53] where he said, “52. The relevant law, though not cited to me, is to be found in cases such as Fairmount Investment Ltd. -v- The Secretary of State for the Environment

[1976] 1 WLR 1255

at p.1266; and H. Sabey & Co. Ltd. -v- The Secretary of State for the Environment [1978] 1 All E.R. 586. Did the Claimant have a "fair crack of the whip?" Was the Claimant deprived of an opportunity to present material by an approach on the part of the Inspector which he did not and could not reasonably have anticipated? Or is he trying to improve his case subsequently, having been substantially aware of, or alerted to, the key issues at the Inquiry? Did he simply fail to realise that he might lose on an aspect which was fairly and squarely at issue and hence fail to put forward his fall-back case? Those are the sort of questions which can be used to guide a conclusion as to whether the manner in which a particular issue was dealt with at an Inquiry involved a breach of natural justice and was unfair. 53. It is always difficult for parties to an Inquiry to know how far it is necessary to go in order to deal with the contingent ramifications of the process yet to be undertaken by an Inspector of analysing the arguments, accepting some in whole or in part and rejecting others. It is obviously helpful if an Inspector does flag up issues which the parties do not appear to have fully appreciated or explored. The point at which a failure to do so, amounts to a breach of the rules of natural justice and becomes unfair, is a question of degree, there being no general requirement for an inspector to reveal any provisional thinking. It involves a judgment being made as to what is fair or unfair in a particular case.”

[39]The claimant submits that here the ExA was conducting an inquisitorial process. The applicant, therefore, had to be in a position where he could fairly meet their concerns. He was entitled to a “fair crack of the whip” which he did not get.

[40]To understand that properly one has to go into, in some detail, what happened during the process of the examination.

[41]The claimant makes the point that one of the challenges of the new system is that there are no reasons for refusal as on an ordinary planning application which an appellant can then address. Under the new arrangements under the 2008 Act the applicant puts in an application for a Development Consent Order which then proceeds to examination where the agenda is set by the ExA. I have attached to this judgment as appendix 1 what was appendix B to the ExA report setting out the steps which they took throughout the examination.

[42]The lead inspector, Mr Paul Hudson, has filed a witness statement in which he deals with the examination process. He describes the first item in the Panel’s initial assessment of principal issues as geology in the following terms,• “The feasibility, suitability and safety of the proposal to create up to 19 underground caverns for gas storage in the Preesall salt field by solution mining having regard to the previous uses of the area and the borehole and geological data presented with the application;

• The risk of gas migration and potential for subsidence arising from the specific construction technique proposed in the application and the potential concerns regarding seismic activity.”

[43]There was no proposal from the Panel for there to be an issue specific hearing on geology. No such request was received from any party, including the claimant, for such a hearing at the preliminary meeting.

[44]After the preliminary meeting Mr Hudson wrote to all parties setting out the procedural decisions on the timetable and processes for handling the application. He confirmed the Panel’s intention to hold issue specific hearings on the draft DCO only. Later, it was decided to have another issue specific hearing on the relationship between the DCO and the COMAH Regulations.

[45]The claimant agreed a SOCG with LCC on geological matters having reached agreement with Atkins, geological consultants to the County Council. That was submitted to the ExA as SOCG1. The claimant was always aware that more detailed work was required as each of the individual caverns needed to be designed and approved on an individual basis under the COMAH Regulations.

[46]Chapter 5 of the ExA report deals with geology. It sets out that because of the planning history, where one of the key reasons for refusal on each earlier occasion had been that insufficient information was available on the geology of the site, it required detailed assessment in the report.

[47]The chapter started off by looking at sources of geological data. In paragraph 5.14 it summarised the conclusions of SOCG1 as follows,• “the GSR presents an adequate representation of the geology which is sufficiently well defined to establish areas in which caverns can be constructed by solution mining

• an indicative layout of caverns within two polygon areas has been prepared to fit within the defined areas

• the geology has been sufficiently defined for an analysis of the risks from gas migration to be assessed and surface subsidence to be calculated subject to confirmation by further drilling as the development proceeds

• the risk of seismic activity has been assessed as negligible

• the risks from historic salt abstraction have been assessed and will not impact on the proposed project

• an indicative cavern layout has been defined within the two polygon areas which have a working gas capacity of 600 Mcm.”

[48]The report recorded that the panel had asked thirty eight questions about geology in their first round of questions followed by another 20 in their further round of questions. The applicant had provided additional information and BGS British Geological Survey papers in response to their questions but had not been able to provide more geological data from within the polygons themselves.

[49]The assessment of the halite was based on a 3D geological model. The model was then to be refined as additional data was obtained as part of the COMAH process.

[50]The report proceeded to consider the location of any faults as the identification of them was a critical element in understanding the suitability of the Preesall halite for UGS. Paragraph 5.47 says, “5.47 S0CG1 states that the two potential cavern development areas have been identified to avoid the hazard zones relative to the known geological hazards of faults, wet rack head and the mining hazards of solution brinewells and dry mining (SoCG1, paragraph 2.7.2). However, we note that although the polygons are located in areas which avoid known faults, at this stage in the development process there is no certainty that there are no faults within the polygons.”

[51]The chapter went on to consider the relationship between the order and the COMAH Regulations. The relevant parts read, “5.54 The COMAH process is not a filling out of the principles of development authorised by the Order but is a separate regulatory process. We note that it is not for the Competent Authority to assess whether the two polygons would be capable of storing the total volume of gas which would be granted by the Order. We also note that the Order would enable the Applicant to begin construction of the supporting infrastructure for cavern washing (sea outfall, seawater pump station, booster pump station, river crossings etc), before the ability of the caverns to contain gas safely has been fully established and approved by the Competent Authority. 5.55 The relationship between the development to be consented by the Order and the detailed approvals given under COMAH Regulations has been a matter of concern to us particularly as the Applicant lays great stress on the integrity of the COMAH process in satisfying outstanding information and data needed to confirm the salt thickness and safety. 5.56 We held an IS hearing on 19 September 2012 to question the Competent Authority and the Applicant on these matters. Unfortunately, the HSE were not able to attend, but submitted a written statement which answered some of our questions (REP242 and REP244). The Applicant submitted four detailed papers on the COMAH process (REP243) which confirmed our understanding that approval of the pre-construction safety report would include detailed design of the caverns. This would take into account the geology of the caverns on a cavern by cavern basis. 5.57 The Applicant’s view is that the data available regarding geology is suitable at this stage to enable development consent to be granted, and that further refinement of the geological model would be undertaken during the COMAH process (REP2O2, response to Q1/7(m)). At the IS hearing, the Applicant confirmed that additional geological investigations would be undertaken, which might include surface seismic surveys, prior to detailed design. These surveys might be undertaken on a cavern by cavern basis and the 3D model would be validated as the development progressed. Cavern development would start at the better geologically understood locations and proposals would be submitted for these to the Competent Authority for approval while the remaining caverns were being designed. 5.58 At the IS hearing, the Applicant also stated the intention to construct the outfall and the cavern washing facilities before starting construction of the caverns themselves. The decommissioning fund provided for in the s106 agreement is there to protect WBC in case the operator went into liquidation during construction. This reinforced the concern we have that the Applicant could construct the cavern washing infrastructure, brine outfall, etc, before the ability of the polygons to sustain the size of cavern development included in the Order is fully demonstrated. 5.59 We accept that there must be no duplication of the safety aspects which require approval under the COMAH Regulations. However, we consider that it is for us to determine, within the PA 2008, if there is a reasonable prospect on the basis of the data submitted that caverns could be constructed in the two polygons to retain the consented volume of gas, before the Competent Authority considers the safety issues.”

[52]The next sub heading of the report is ‘Sufficiency of geological data for decision?’ That includes paragraph 5.62 which says, “5.62 Where detailed geological information is available, the Applicant has decided that the halite is too faulted or too close to existing workings to be suitable for safe construction and operation of UGS. However, by the very nature of defining the two proposed cavern development areas by avoiding known hazards, the polygons have been located in areas in which there is little geological data. The assumption that the polygon areas are therefore suitable for the cavern construction is based on extrapolation of data in the 3D model, and that the faulting does not extend into these areas. This may be entirely plausible, but in our view will only be confirmed beyond reasonable doubt as further detailed geological surveys are carried out. ”

[53]The report notes that the availability of geological data is an improvement on that presented in the last planning application in 2009. It continues in paragraph 5.65, “5.65 However, the relatively small amount of additional geological data consists largely of the reinterpretation of Burrows Marsh and Hay Nook Boreholes, reinterpretation of the seismic-reflection lines and alterations to the digital geological model. We consider that the geological analysis submitted as part of the application falls short of that required by NPS EN-4 to prove beyond reasonable doubt that the geological structure, thickness and faulting of the halite are suitable for the construction of caverns of the particular sizes and shapes within the specified areas in order to support the volume of gas storage proposed in the application.”

[54]In dealing with cavern and gas volumes the report continued at paragraph 5.76, “5.76 As stated in paragraph 5.25 above, our view is that if the interpretation of Hackensall Hall El Borehole is incorrect, then the 3D model may overestimate the thickness of halite available for UGS in the northern polygon by up to 120m. The consequence of this would mean that the Applicant would not be able to construct caverns of the height, volumes, or the maximum working pressure indicated in the GSR (APP37, section 6) Our own rough order of magnitude calculations show that a reduction in cavern height of caverns I to 6 could reduce the working volume of these six caverns by up to 60%. However, these caverns only provide 26% of the total working volume, and therefore this reduction would reduce the total working volume by only 15%. We consider that even in this event, such a reduction would be consistent with the maximum volume indicated in the application. 5.77 PWG dispute the depths to the top of the halite in the areas of proposed caverns 8, 10 and 11 in the northern polygon (REP17O, page 35). If their interpretation happens to be correct and the halite deposit is shallower than the model predicts, then the maximum operating pressure of the caverns will be lower than that designed and the available working volume will be reduced by approx 1%. We do not consider that this would represent a material variation. 5.78 However, if any of the faults shown in Canatxx Seismic Line G (see paragraph 5.45 above) extend into the southern polygon, one or more of the caverns may have to be excluded. This polygon would hold the largest of the proposed caverns and therefore the inability to construct a number of these caverns safely would materially impact on the total working gas volume achievable. For example, the loss of four of the largest caverns (15, 17, 18 and 19) which are in alignment with potential fault extensions would reduce the total working capacity by 35% (see APP37, table 6.3 for indicative cavern volumes). If, in extreme circumstances, all three scenarios occurred together, the total capacity could be reduced by over 50%. We consider that this would be a material variation in what the application is seeking, and we return to this matter in Chapter 9”

[55]In chapter 7 the panel set out their conclusions on the case for development. “7.6 We commend the Applicant’s approach in drawing together all the existing geological material in the GSR which presents it in a comprehensive and intelligible manner. Adopting a sieve map technique of all known hazards to define two polygons free from such constraints where the construction of UGS caverns could take place is a logical methodology. However, the problem we kept coming back to is that the areas which are defined as a result of avoiding all known constraints are themselves areas where there is little hard data to confirm the Applicant’s contention that these are devoid of any major geological difficulties, particularly faulting, which would otherwise preclude cavern construction. To deal with this uncertainty the Applicant has taken the approach of developing an indicative design giving the number, location and shape of individual UGS caverns which could be authorised by the Order, and which could then be firmed up in detail as better information subsequently became available. 7.7 To our minds, the major difficulty with this approach arises if the subsequent detailed geological surveys show that (in contrast to the assumptions made in the 3D model) the two polygon area for cavern development are faulted, and the application of the separation distances in Requirement 6 preclude the construction of several caverns. In turn, this might lead to a situation where the volume of gas that could be physically stored is substantially less than that being applied for. In this eventuality the requirements for surface infrastructure, particularly the GCC, might be significantly less than contained in the application before us. Although we accept this is highly improbable, in extremis neither of the two polygons might be capable of cavern construction at all if faulting turned out to be a much more serious presence than that currently forecast. 7.8 We note that the project construction programme is over 8 years, the first three years for the supporting infrastructure and 8 years of cavern construction. Indeed, the brine pipeline, outfall and the two main pump stations would need to be constructed before starting the first cavern, because these are needed to dissolve the salt, form the caverns and dispose of the brine. The GCC and gas interconnector pipeline would be constructed by year 3, when the first caverns are put into operation, and while other caverns are still under construction. We are concerned that on this intended programme it is entirely feasible that all of the supporting infrastructure would be constructed before sufficient data was available to determine whether the design volumes for gas storage could be met in the polygons. Although there are provisions for decommissioning in such a situation of abandonment, the consequence would be unnecessary disruption for local people during construction and whilst the abortive surface infrastructure was being removed. 7.9 The main disbenefit of the proposal in our view is the visual impact of the GCC, despite the best endeavours of the Applicant to site it in a location where it would be screened to a substantial extent, coupled with the proposals for landscaping and mitigation in the LEMSP. If the volume of gas which could eventually be stored underground is substantially less than currently predicted, it could well be that a smaller GCC structure would be needed, and hence the impact of the current proposals on the landscape could have been reduced if not avoided entirely. 7.10 We have no direct evidence about the relationship of the facilities required at the GCC and the volume of gas stored. But it is unlikely to be a linear relationship, and certain fixed elements of the plant will be needed irrespective of how much actual gas is being transmitted. However, the ES and the Design and Access Statement suggest that the size of the GCC in the present application is considerably smaller than that proposed for previous applications which had a much larger volume of gas intended to be stored (APP17, paragraph 2.1.6 and APP29, paragraphs 3.55 and 5.4). For this reason, we think it reasonable to conclude that if the maximum volume of gas which could be stored was much lower than that proposed in the application, then it would be possible to reduce the size and scale of the GCC accordingly 7.11 Whilst recognising:• that the application is for storage of gas up to a maximum working capacity of 600 Mcm

• the flexibility sought by the Applicant

• the nature of the interface between the development proposed to be approved by this Order and the subsequent detailed approvals within the COMAH Regulations we conclude that reassurance is needed to put beyond reasonable doubt the suitability of the two polygons for construction of UGS caverns in the manner proposed to store at least a substantial proportion of the volume of gas for which the application is seeking approval. We consider that this is a step which should be taken immediately if the Order is confirmed as a prerequisite to construction of surface infrastructure. Our recommendation about how this could be achieved by a modification to the Order is set out in Chapter 9.”

• that the application is for storage of gas up to a maximum working capacity of 600 Mcm

• the flexibility sought by the Applicant

• the nature of the interface between the development proposed to be approved by this Order and the subsequent detailed approvals within the COMAH Regulations

[56]In chapter 9 dealing with the proposed order the ExA dealt with their proposed modification to requirement 6, “9.24 We do not accept the Applicant’s point of view and consider that as detailed geological investigations are needed as part of submissions to the Competent Authority for approval under COMAH Regulations it is not an additional burden to provide them earlier in the process. To our minds this would meet the detailed assessment required under NPS EN-4 to confirm that the sites selected (i.e. the two polygons) are suitable, which in our view means they have sufficient thickness of un-faulted suitable halite to contain the proposed volumes of gas to be stored. 9.25 We consider that such a modification to Requirement 6 is justified, but that its formulation needs to concentrate on the development aspects of the application, and avoid any overlap with the responsibilities of the Competent Authority under the COMAH Regulations, as the Applicant fairly points out In this development context, paragraph 4.1.1(v) of NPS EN-I also requires that we consider the balance of the adverse impacts (including any cumulative adverse impacts) against the benefits of the proposed development (taking into account the measures to avoid, reduce or compensate for the adverse impacts). 9.26 We propose therefore that the criterion to be met in the first instance is a minimum volume of gas storage on the basis that if the geology cannot support such a level, then it throws into question some elements of the surface infrastructure which the application contains, and particularly the size of the GCC. We consider this reflects the landscape disbenefits of the application on the eastern side of the Estuary concerning the impact of the GCC, together with the residual adverse impacts we noted in Chapters 5 and 6 such as disruption during construction, noise from extended working at the Wyre Estuary crossings and fears in the community of safety aspects.

[57]The ExA then recommended that two new subparagraphs were inserted at the beginning of requirement 6 in schedule 9 of the DCO so that it read as follows, “(1) No stage of the authorised development shall commence until(a) a geological survey of the “area for cavern development” shown on the approved development plan with reference A1000-030 Rev B has been carried out to confirm the top and bottom levels of the halite deposit and the presence of any faulting to a confidence limit of ±5 m;

(b) the working capacity of Work No 1A has been calculated taking account of the results of the geological survey and sub-paragraph 4 (a) to (h) of this requirement; and

(c) the results of the geological survey and the working capacity calculation have been submitted to and agreed by Lancashire County Council. (2) No authorised development shall be carried out if the working capacity of Work No 1A as agreed by Lancashire County Council pursuant to sub-paragraph 1 (c) is less than 300 million standard cubic metres at the standard temperature and pressure. (3) No more than 19 operational caverns with a total storage capacity of up to continue requirement 6 as drafted.” (a) a geological survey of the “area for cavern development” shown on the approved development plan with reference A1000-030 Rev B has been carried out to confirm the top and bottom levels of the halite deposit and the presence of any faulting to a confidence limit of ±5 m; (b) the working capacity of Work No 1A has been calculated taking account of the results of the geological survey and sub-paragraph 4 (a) to (h) of this requirement; and (c) the results of the geological survey and the working capacity calculation have been submitted to and agreed by Lancashire County Council.

[58]The ExA then concluded that, against the test set in Section 104 of the Planning Act 2008, the adverse impacts of the proposed development did not outweigh its benefits.

[59]As part of the examination the ExA had received SOCG1 on geology signed by Mott McDonald Limited on behalf of the claimant, and LCC after they had taken advice from their expert advisors, Atkins. It concluded as follows, “The GSR presents an adequate representation of the geology which is sufficiently well defined to establish areas in which caverns can be constructed by solution mining. An indicative layout of caverns within the two polygon areas has been prepared to fit within the defined areas. The geology has been sufficiently defined for an analysis of the risk from gas migration to be assessed and surface substance to be calculated subject to confirmation by further drilling as the development proceeds. The risk of seismic activity has been assessed as negligible. The risk from historic salt abstraction have been assessed and will not impact on the proposed project. An indicative cavern layout has been defined within the polygon areas which have a working gas capacity of 600 million cubic metres.”

[60]Earlier in the SOCG it was explained that the indicative cavern layout had been identified taking into account the geology, anthropogenic and natural hazards and associated impacts. A probabilistic analysis of volumes had been undertaken to account for the impacts of water cavern shape, insoluble content and insoluble sweeping. The total gas storage volume was calculated to be about 900 million cubic metres with a corresponding working gas volume of about 600 million cubic metres using an upper credible probability of 30%.

[61]On 19th September 2012 the examining authority held an ISH on the relationship between the DCO and the COMAH Regulations. Mr Hudson’s witness statement says that the purpose of the hearing was to explore how the applicant intended to develop the detailed design of the proposed caverns. The ISH was attended by Leading Counsel and consultants on behalf of the claimant, representatives of the Environment Agency, Protect Wyre Group (PWG) and LCC.

[62]Extracts from the transcript of the hearing show that Mr Humphries QC explained to the ExA that, “For land use planning, the applicant thought it was necessary to be able to demonstrate that 19 operational caverns, with a capacity of up 600 million standard cubic metres could be accommodated within the area that is to be granted consent through the development consent order. For that purpose they have identified a series of very conservative design separation parameters to demonstrate that even with those very conservation parameters you can, within the two polygons, get 19 caverns with 600 million standard cubic metres of gas because it seems to be that is a land use planning issue.”

[63]The ExA was interested to understand the programme for further geological investigation. Mr Hudson asked whether the first step after the granting of the order was to produce a more refined and better developed version of the geological model. The claimant’s consultant confirmed that was the position. That was to be done by carrying out sufficient surveys to bring the model up to a consistent uniform standard across the whole of the area that the order covered, as a prior stage to detailed cavern design. The design then progressed to consider the precise calculation for all 19 caverns.

[64]Later in the hearing the following exchange took place between the ExA member Libby Gawith and Mr Harding, consultant with Mott McDonald, “LG: Okay, so if therefore the polygon in the north was substantially thinner which is one of the areas of debate as I am sure you know, than that actually has been assumed in the model- would that not affect the capability of getting the full volume that is required under the DCO? CH: It would yes. LG: It would. So it is feasible that if you started constructing caverns in areas where you are more confident that you may not be able to achieve the full volume? CH: Yes, which is why it is probable that there will be further seismic surveys. I just didn’t want to be too prescriptive now in saying that it will follow this way.”

[65]At the hearing Mr Philips on behalf of PWG sought clarification about the extent of surface infrastructure work that would be carried out before the refinement of the geological model. He was concerned that if, for some reason, considerable areas did not match the geological model the whole scheme might have to be abandoned in which case there was a considerable amount of redundant infrastructure. It was explained to him by Mr Humphries QC that was why there was a series of decommissioning conditions backed by a fund. However, it was possible to refine the model whilst separate assessments for the individual caverns were being submitted to the competent authority.

[66]As a result of the discussion at the issue specific hearing the ExA suggested a modification to requirement 6 of the DCO. A letter was sent to the parties on 28th September with a proposed amendment to draft requirement 6. The proposed amendment was in the following terms, “Prior to the submission of the safety reports to the competent authority (pursuant to Regulation 7(1), 7(5) and 7(8) of the 1999 Regulations) such geological investigations as may be necessary shall be undertaken across the area for cavern development shown on the approved Development Plan with reference A-1000-030 REV B, and shall be submitted for approval by Lancashire County Council to confirm the top and bottom levels of the Halite bed to a confidence limit of plus or minus 5 metres, and that no faults of such size as may affect the integrity of the proposed caverns penetrate the Halite bed.”

[67]The claimant responded that the proposed amendment was unnecessary and inappropriate as it would duplicate the COMAH regime, LCC was not a specialist safety regulator, did not have the necessary in-house expertise and the purpose of the requirement was not clear as LCC had signed the SOCG. The claimant understood the issue being raised in the letter to relate to concern about safety following on from the ISH and the wording of the draft amended requirement.

[68]The claimant’s case is that it had addressed the relevant matters in the application. Firstly, it said, “In the GSR the proposed development of new caverns had been analysed with regard to the known geological mining hazards applying the industry acknowledged conservative Rokahr design recommendations. Three dimensional hazard mapping across the Preesall basin had been undertaken and detailed drawings produced to present areas suitable for safe cavern development. An indicative cavern field design comprising 19 caverns of varying diameter and height as determined from the three dimensional geological model with due regard to the minimum design recommendations that have been produced. A detailed volumetric and sensitivity analysis had been undertaken to determine potential cavern field working gas volumes. An average working class volume of about 560 million cubic metres was determined for the indicative cavern scheme. That had been calculated on a probability analysis. Cross sections had been produced through the proposed caverns indicating how capacity would be about 600 million cubic metres. ”

[69]Secondly, the original draft requirement 6 submitted by the applicant was worded as follows, “No more than 19 operational caverns, with total storage capacity of up to 900 million standard cubic metres and working capacity of up to 600 million standard cubic metres, both specified at the standard temperature and pressure, shall be constructed within the “area for cavern development” shown on the approved Development Plan with reference A-1000-030 Rev B.”

[70]Thirdly, capacity was confirmed in the SOCG concluded by expert geological advisors to the main parties.

[71]The claimant submits that the problem was that the ExA applied too high a standard. The repeated wording on their part that they needed to “be satisfied beyond reasonable doubt” illustrated the error that they had fallen into.

[72]As part of that approach when the ExA came up with the three scenarios set out in paragraphs 5.76-5.78 inclusive of their report not only did they think that they had to apply that standard but that it had to be applied also to the situation that they described as “in extreme circumstances”. If all of their three scenarios occurred together the total capacity would be reduced by over 50% which they regarded as a material variation to the application. None of the panel’s hypotheses either individually or in combination was raised with the claimant either in terms of likelihood or in terms of their effect. As a result the claimant had no opportunity to respond to what it submits is a flawed approach on behalf of the examining authority.

[73]The flaws were adopted by the Secretary of State who quoted from the Panel report at paragraph 5.65 with its reference to proving beyond reasonable doubt in [14] of his decision letter. In [23] the Secretary of State identified a clear gap in geological data again derived from the Panel’s report.

[74]In the following paragraph [24] of his decision letter the Secretary of State considered the ExA’s approach but was mindful that if he were to make the order on that basis there was a significant possibility that either no development would be possible or the project ultimately constructed would have a much smaller storage working capacity.

[75]The claimant submits that there has never been a position where no development would be possible, and the degree to which there might be a much smaller storage working capacity was something never canvassed during the examination. In [25] of his decision letter the defendant records that he had no convincing evidence in front of him as to the size of the project that might ultimately be constructed and so was unable with any degree of certainty to consider the potential benefits against the more clearly defined potential impacts. The claimant submits that that conclusion was clearly based upon or was infected by the three scenarios produced by the ExA which were not raised with the claimant.

[76]The defendant submits that whilst the ExA is performing an inquisitorial role another aspect of the process is that the inquisitor is engaged in a learning process. Part of the procedure is to enable the panel to be able to inform themselves and to be able to identify and refine issues of importance in reporting to the Secretary of State.

[77]Here, the evidence is that geology was identified as a main issue. The ExA came to realise that the inter relationship between the planning process and COMAH was such that an ISH was required. Further, the ExA’s letter of 28th September 2012 written in accordance with Rule 17 of the Infrastructure Planning (Examination Procedure) Rules 2010 was part of the lawful process of gathering information “at any time before the completion of its examination”.

[78]Secondly, the court should look at the process as a whole and should not approach the exercise with the benefit of hindsight. Indeed, one should attribute a degree of foresight to the parties. It was reasonable to expect that a party, although putting forward its case, would consider what the position might be if the ExA took a different view. That was particularly pertinent here as the letter of 28th September asking for comment on a revised requirement 6 specifically raised the prospect of the claimant failing on the principal argument. Furthermore, the reply of LCC, dated 12th October, recognised that the proposed modification required a greater demonstration of geological information before the provisions of COMAH took effect. As such the revised requirement filled a gap in the geological information and would demonstrate the ability of the caverns to accommodate the gas. The fact that the letter followed a similar thought process to that expressed by Mr Philips at the ISH meant that the claimant was clearly on notice that this was something that it had to address. Discussion

[79]I agree with the general submissions made by the defendant, namely, that the examination process is to be looked at as a whole and not with the benefit of hindsight. The still relatively new examination process is both inquisitorial, iterative and learning. The purpose of the examination process is to enable the ExA to be able to compile a fully informed report with a recommendation to the Secretary of State on the NSIP before it. The ExA decide on and lead the examination process to be followed. The Infrastructure Planning (Examination Procedure) Rules 2010 provide the legal framework whereby that can happen. Further information can be sought by the ExA at any time before the completion of its examination. It is critical, though, that the examination process is undertaken in a way that achieves the objective of the ExA but is fair to all parties throughout.

[80]In the case of LB Croydon v Secretary of State for the Environment

[1999] EWHC Admin 748

Keene J held [43] “I return to a submission about need for the inspector to have adopted an inquisitorial role. No one suggests that an inspector is required to search for material not put before him. What the Dyason case establishes is that, when there is an informal hearing which, as a matter of procedure, normally excludes cross-examination, the inspector has to play an enhanced role in order to resolve conflicts of evidence. In addition, such an inspector must not arrive at a finding adverse to a party without having put the point to the party in question or his witness, and that is what happened in the Dyason case.”

[81]Although that was dealing with an informal hearing the enhanced role which the Inspector has to play in an informal hearing is not dissimilar to the role of the ExA carrying out an examination under the 2008 Act. As a rule there is no cross-examination at the hearings or on the written documents submitted in response to the Panel’s questions. The onus is, therefore, on the ExA to ensure that material matters of concern, which may or may not, have been raised by others who have made representations on the planning application are raised with all parties in a fair and transparent way. In particular, where matters raised or of concern relate to the principal controversial issues, there is a duty upon the ExA to provide all parties with the opportunity to comment upon them before reaching their final conclusions.

[82]The questions which Ouseley J set out in Castleford Homes on the sort of issues which could be used to guide a conclusion as to whether the manner in which a particular issue was dealt with at an inquiry involved a breach of natural justice and was unfair, are just as apposite to a process of examination by an ExA as they are to parties at an inquiry. The fundamental issue here is whether there was a fair process in the particular circumstances of this examination? If there was not, the supplemental question is, what are the consequences?

[83]The following questions arise:-(i) Should the claimant have recognised that deficiencies in the geological data and its interplay with the COMAH regime had become an issue?

(ii) Did the ExA mislead themselves on the geological issues by requiring the claimant to demonstrate its position to too high a standard – beyond reasonable doubt – and act in a way that was unfair?

(iii) To what extent, if at all, did any deficiencies in the examination affect the defendant’s ultimate decision?

Should the claimant have recognised the issue?

[84]At the preliminary meeting held by the Panel geology was identified as a main issue in the terms which I have set out above. At that stage the claimant knew that there would be a series of questions from the examining authority upon geology, but knew also that it was working with consultants and the County Council to agree a SOCG. I can see no reason why, in those circumstances, the claimant should have sought an ISH for further consideration on the issue of geology at the preliminary meeting.

[85]On 6th June 2012 the SOCG on geology was concluded and submitted to the ExA as SOCG1. That meant that agreement had been reached between the geological experts for the claimant and those advising the County Council. The findings were also signed up to by the Local Planning Authority, Wyre Borough Council. The main conclusions I have set out above, but were that there had been adequate investigations of geology to establish areas in which caverns could be constructed and that an indicative lay out had been defined within two polygon areas which had a working capacity of 600 million cubic metres.

[86]A SOCG has been described by PINS as a crucial component of the inquiry process. As part of the highly focussed modern inquiry regime parties are entitled to rely upon the content of the SOCG as determinative, as between themselves, of the issues contained within it. Although an examination is not an inquiry I can see no basis for any lesser weight to attach to a SOCG in an examination process. Of course, an ExA is not bound by the SOCG. In this case with their own expert advisor on geological issues it was entirely foreseeable that they would examine its contents critically. However, if there was to be a fundamental disagreement with the contents of the SOCG it was reasonable to expect that would be raised with the parties in a transparent manner. If an ISH was not considered necessary by the ExA then, at the very least, further questions should have been raised which made clear the areas of concern to the ExA and which gave the claimant the opportunity to rebut the various scenarios and “extreme circumstances” which were postulated in the Panel Report. In the absence of either of those events as the examination progressed it was not unreasonable for the claimant to expect that geological issues were no longer a main controversial issue.

[87]What was held was an ISH on 19th September 2012 at the North Euston Hotel in Fleetwood on the relationship between the DCO and COMAH Regulations. The expectation would be that that would focus on the interface between the planning and safety regimes.

[88]Mr Hudson drew up an agenda for the ISH, the items of which were: 1. “Discussion and understanding of the powers to be provided by the order to govern the design of underground storage caverns: Article 3, the authorised developments work No 1A, approved development plans and R6(1). 2. Discussion and understanding of the constraints imposed by R6 as minimum standards and that no subsequent approvals concerned in cavern design are required from WBC pursuant to the order. 3. The intended design process for the caverns; 4. The programme of geological studies and surveys subsequent to the order and whether they were required by/approved by the HSE”

[89]The extract from the transcript which I have set out above containing Mr Humphries response to a question from Mr Hudson was during the session dealing with requirement 6 (R6) of Schedule 1 of the proposed DCO. The session went on to consider whether the claimant could construct 28 caverns which would be in breach of requirements on the DCO. Libby Gawith, another inspector, asked the following, “Can I pick up on something you said? How would Wyre Borough Council actually know that you had exceeded the working gas volume? 19 caverns one could envisage because you could count the number of well heads, but the working gas volume was actually the parameter that is based on the gas pressure in the caverns. How would Wyre know? Is it something that COMAH would review and feedback to them?”

[90]The ExA was clearly concerned with how any excess over the maximum working gas storage capacity was to be enforced against; whether by the local planning authority or under the COMAH Regulations.

[91]The questions asked by Libby Gawith about a lesser volumetric capacity were, on the basis of the transcript of the ISH, the only ones raised. Beyond those there was nothing to indicate that the panel were evaluating the geological data to enable them to be certain of the geological position or that they were approaching matters so that they were satisfied beyond reasonable doubt. Nothing was raised about alternative scenarios or calculations of potential reduction in working gas storage capacity such as contained in paragraph 5.76 to 5.78 inclusive of the panel’s report.

[92]Mr Phillips from PWG raised a concern about the consequence if areas within the polygons did not match the geological model which meant that the large amount of surface infrastructure was unnecessary. However, that was raised by a lay person and was not developed by the ExA.

[93]The letter of 28th September 2012 was a request for written comment as to whether requirement 6 of the DCO could be expanded to provide for geological surveys and studies as a preparatory step before the submission of safety reports to the competent authority. The proposed wording of the amendment with its focus on confidence limits of plus or minus 5 metres for the top and bottom levels of the halite bed and that no faults were present at such a size to affect the integrity of the proposed caverns was a sharing of a thought process of the ExA with the main parties. It was seeking further information of the sort envisaged under the Rules governing the examination process and was a perfectly valid request.

[94]The response from the County Council recognised that the requirement for such information could be seen to overlap with HSE’s domain but indicated that it may be reasonable to require that information for land use planning purposes and for it to be a matter for the DCO in advance of COMAH. At no stage did LCC say that they were departing from or were no longer bound by the SOCG.

[95]There was nothing, therefore, to indicate to the claimant that the agreed joint expert view set out in the SOCG was being challenged or upturned in the way that it eventually transpired in the Panel Report. The ExA clearly had concerns about the boundaries of the planning system and its overlap with the COMAH process which was understandable. It did not, however, explore its concerns about the prospect of reduced working gas storage or the likelihood or consequences thereof save in the sole question by Ms Gawith. In those circumstances it is putting it too high to say that the claimant should have recognised the full extent or significance of the issue that was finally taken against it. Did the ExA err and mislead itself on geological issues by requiring the Claimant to demonstrate the geological data to too high a standard and generally act unfairly?

[96]The failure on the part of the ExA to explore with the claimant, or any of the parties, the three scenarios referred to in their report and/or the calculations contained in paragraphs 5.76 to 5.78 in conjunction with examining the geological issues so that they were “certain” or that the geology was proved beyond “reasonable doubt”, in my judgment, demonstrates a lack of transparent and fair process. Those were matters which bore directly upon the conclusions reached not only by the claimant’s consultants, Mott McDonald, but also by Atkins and LCC, generally, and in the SOCG.

[97]Those matters went to the heart of the likelihood of being able to construct the development as proposed in the application. They provided a vital step in the ExA’s reasoning. If the ExA were prepared to share their thinking on possible amendments to requirement 6 as they were in their letter of the 28th September I can see no reason why they did not share their thinking on what were calculations and possible options that struck at an area that the claimant would think had been otherwise the subject of agreement. The claimant needed to have the opportunity to deal with those matters to have a fair hearing.

[98]I accept entirely that there is no obligation on the ExA to share its provisional conclusions, as Mr Hudson says in his witness statement. In my judgment, however, there is an obligation on the ExA to share the route to such conclusions where they relate to a main issue at the examination and the route and thinking is based on options that have not been in the public domain.

[99]As to the standard of proof, the defendant submits that the ExA were using “beyond reasonable doubt” as a synonym for ‘demonstrate’. If the phrase was used on only one occasion, and bearing in mind that one must read the decision letter as a whole, I would be more sympathetic to that submission. Unfortunately, the several references to “beyond reasonable doubt” [5.62], [5.65], [7.11], the expression of the need for “certainty”[5.47] and for “full demonstration” [5.58], have led me somewhat reluctantly to the conclusion that the panel applied or are likely to have applied the wrong standard of proof to this material issue. Not only is that an error of law, it is unfair to the claimant. Do the flaws on the part of the ExA affect the decision on the part of the defendant?

[100]The fundamental issue is what difference the approach of the Panel makes in terms of the Secretary of State’s decision letter. The defendant summarised the case against granting development consent and included within that [5.65] of the ExA’s report. At no stage did the defendant disassociate himself with the ExA’s approach of having to be satisfied beyond all reasonable doubt. It was on the basis of the ExA’s findings and conclusions that the Secretary of State found that there was significant uncertainty in the geological information. In his conclusions he expressed the view that there was a clear gap in the geological data. That may well have been based upon what the panel regarded as the unlikely combination of their three scenarios. At the very least it could have been influenced by that.

[101]In [24] the defendant concluded that there was a significant possibility that either no development would be possible or the project as ultimately constructed could have a much smaller storage working capacity than was envisaged in the application before him. The defendant’s conclusion as to significant possibility, in the absence of any other reasoning, can only have been based upon the ExA’s evaluation of beyond reasonable doubt. But even the ExA’s approach did not conclude that no development would be possible or that there would be a much smaller gas storage working capacity save in what it described as extreme circumstances. In respect of those extreme circumstances, though, no exploration as to their likelihood had been made with the claimant.

[102]For those reasons, in my judgment, there was a distinct lack of fairness both in terms of the process of the ExA and in the decision of the Secretary of State. The claimant was shut out from having the opportunity to respond on certain matters which might have made a difference to the ultimate decision.

[103]In conclusion, there was a lack of fair and transparent process in certain parts of the examination on the part of the ExA. Because the defendant adopted the approach of the Panel to the evaluation of the geological evidence that lack of fair process infected his decision. His decision letter, therefore, cannot stand. The challenge on the basis of fairness succeeds

Ground Two: What is the proper interpretation of paragraph 2.8.9 of EN-4 ?

[104]NPS EN-4 starts with recognising that the efficient import, storage and transmission of natural gas and oil products is crucial to meeting energy needs during the transition to a low carbon economy. The NPS together with NPS-EN1 provides the primary basis for decisions on applications for gas supply infrastructure and gas and oil pipelines.

[105]Paragraph 2.8 of NPS EN-4 deals with underground natural gas storage. In the introduction 2.8.1 reads “Underground natural gas storage can take place in porous rock and in salt caverns, both on and offshore. The IPC is responsible for the consent of onshore natural gas storage facilities …”

[106]Paragraph 2.8.4 sets out that applicants should submit an Environmental Statement (ES) including an assessment of the impact of the project.

[107]From paragraph 2.8.5 the NPS deals with factors influencing site selection by the applicant. 2.8.7 reads, “Natural gas can also be stored in manmade salt caverns. In some areas Britain has salt present in strata which are, or could be, suitable for gas storage. The most extensive areas, where suitable thick natural layers of salt are found, are in Northern England and in smaller areas further south.”

[108]The other areas where natural gas can be stored are recognised in the NPS to be porous rock in a depleted or partially depleted oil or gas field and aquifer storage.

[109]Paragraph 2.8.9 reads, “Applicants should undertake and supply to the IPC, a detailed geological assessment to demonstrate the suitability of the geology at the site for the type of underground gas proposed. When considering storage in porous rock, in a depleted or partially depleted oil or gas field or aquifer applicants should undertake a detailed geological assessment to determine suitability of the rocks for underground gas storage. When considering storage in a salt cavity, the geological assessment should include depth below surface, salt thickness, salt purity and presence of shale bands which could affect cavern design. In addition, a study of the geological integrity of the overlying strata and potential for collapse, taking account of the proposed minimum and maximum working pressures will need to be undertaken. The assessment should include construction, operational and decommissioning phases and should cover the long term integrity of the affected strata after decommissioning or closure of the storage facility. The IPC will consider the geological assessment alongside the environmental assessment if the former does not form part of the ES.”

[110]2.8.10 continues, “The siting of gas storage facilities will also be influenced by safety considerations. Sections 4.12 and Section 2.5 of this NPS set out how the hazardous substances regime is applied to gas storage infrastructure.”

[111]Paragraph 2.5 of EN-4 is entitled Control of Major Accident Hazards. It refers to gas storage sites being subject to stringent safety standards under the COMAH Regulations and, in turn, refers to paragraph 4.11 of EN-1 for further information and the assessment that should be carried out by applicants.

[112]EN-1 section 4.11 makes it clear that the COMAH regime operates in the same way as the pollution control regime does in relation to the planning system, namely, that the two systems are complementary. In dealing with a particular project, paragraph 4.11.4 says, “Applicants seeking to develop infrastructure subject to the COMAH regulations should make early contact with the Competent Authority. If a safety report is required it is important to discuss with the Competent Authority the type of information that should be provided at the design and development stage, and what form this should take. This will enable the Competent Authority to review as much information as possible before construction begins, in order to assess whether the inherent features of the design are sufficient to prevent, control and mitigate major accidents. The IPC should be satisfied that an assessment has been done where required and that the Competent Authority has assessed that it meets the safety objectives described above.”

[113]Section 4.12 of EN -1 refers to Hazardous Substances Consents and how the HSE will assess the risk and advise the IPC whether or not to grant consent.

[114]The claimant submits that the references in section 2.8.9 of NPS EN-4 are to the suitability of the type of storage medium for the underground natural gas proposal. That is deduced from the earlier references in NPS EN-4 to the 3 types of storage medium. The claimant’s geological appraisal did precisely that; it established that the halite deposit was suitable for the type of UGS proposed. It looked at and provided evidence about the indicative layout of the 19 proposed caverns within the 2 polygonal areas so that the ExA could be satisfied as a matter of principle that the caverns could be accommodated. That was shown through conservative design principles, cross sections and a Monte Carlo Probability Analysis all contained within a chapter of the GSR entitled “Workable Area and Cavern Placement”. In terms of detailed design, however, that was for the COMAH regime which would have to approve each cavern on an individual basis before construction could commence.

[115]The defendant agrees that there is a requirement under paragraph 2.8.9 to demonstrate that the storage medium proposed was of a type that was suitable to accommodate the UGS. It is further agreed that the geological assessment submitted by the claimant did that. But, it is submitted, the requirement under 2.8.9 is more than a requirement to establish the suitability of the medium for storage; it is a requirement to demonstrate that the site has the capacity to accommodate all of the development proposed.

[116]The difference between the parties is thus a narrow one albeit one with apparently critical consequences.

[117]The defendant submits further that the DCO contemplated that a significant part of the surface infrastructure required would be built before the UGS was established due to the need to obtain approval for the cavern construction under COMAH. The concern, therefore, was of the visual impact of the surface infrastructure development. The amount of surface infrastructure involved was uncertain until one knew the actual capacity of the caverns proposed within the polygonal areas. That being the case the requirement under paragraph 2.8.9 was to establish that the type of storage medium was sufficient to deliver the infrastructure. It was the inter-relationship between the extent of the surface infrastructure and its visual impact that made the issue one of concern to the development consent regime and appropriately within the realm of the planning decision maker.

[118]As to context, the defendant refers to 2.8.10 in EN-4 to demonstrate that the requirement in the preceding paragraph is not limited to safety requirements. The siting decision will involve a bringing together of different factors.

[119]The defendant makes reference also to EN-1 paragraphs 3.1.3 and 3.1.4. That is the section dealing with need for new NSIPs and the part which deals with IPC decision making. The text is to the effect that the need for the type of energy infrastructure has been established, together with the scale and urgency of that need to which the IPC should give substantial weight in determining any application for consent.

[120]The defendant places reliance, in addition, upon paragraph 4.1.3 of EN-4. That says, “In considering any proposed development, and in particular when weighing adverse impacts against its benefits, the IPC should take into account:• Its potential benefits including its contribution to meeting the need for energy infrastructure, job creation and any long term or wider benefits; and

• Its potential adverse impacts, including any long term and cumulative adverse impacts, as well as measures to avoid, reduce or compensate for any adverse impacts.”

• Its potential benefits including its contribution to meeting the need for energy infrastructure, job creation and any long term or wider benefits; and

• Its potential adverse impacts, including any long term and cumulative adverse impacts, as well as measures to avoid, reduce or compensate for any adverse impacts.”

[121]The defendant’s submission is that to be able to make the necessary planning judgement balancing the various factors that entails one needs to have the full details in the planning application so that there can be a proper evaluation of the visual impact, on the one hand, as against the benefits of the proposal on the other. Discussion

[122]The natural meaning of the words in paragraph 2.8.9 is, in my judgement, clear. They are seeking a detailed geological appraisal to demonstrate the suitability of the site for the development proposed. It is no more than that. The ordinary meaning of “suitability” would not necessarily include capacity. The geological assessment is to show that the type of medium is appropriate or fit for the purpose for which it is proposed. The fact that the paragraph appears under the section entitled “factors influencing site selection” endorses that view. The paragraph is advising applicants to establish whether the site is geologically fit for the intended purpose. That is why the subsequent paragraph refers to safety as an additional factor to be considered when considering where to site gas storage facilities. If capacity was a necessary part of the geological assessment then I would have expected it to be mentioned expressly. It is not. Other aspects which have to be taken into account as part of the detailed geological study are. Doubtless on many occasions capacity will be taken into account as part of the geological assessment but, in my judgement, the wording of paragraph 2.8.9 does not make it an absolute requirement that it has to be.

[123]The next sentence of 2.8.10 is a general cross reference as to how the hazardous substances regime is to be taken into account in gas storage infrastructure. Paragraph 2.8.10, therefore, establishes a further material consideration, namely safety, as one that will influence site decisions.

[124]Paragraphs 2.8.5 to 2.8.10 taken as a whole, and so providing the immediate context, are advising applicants on potential locational choices for the development. Having set out the 3 types of storage medium in 2.8.6 to 2.8.8 that are potentially suitable for gas storage the next paragraph provides greater detail about what should be contained within the geological assessment. It is silent on capacity issues. It follows, in my judgement, that evidence on capacity can be included as part of the geological assessment but it does not have to be.

[125]The last sentence of 2.8.9 makes it clear that the geological assessment will be considered alongside the environmental assessment if the geological assessment does not form part of the ES. That is the answer to the defendant’s concerns. It is the combination of the geological assessment and the ES that provides the full environmental information that is necessary to take the decision on whether to grant a DCO. Within the ES (if the evidence is not within the geological assessment), to enable the parameters of the development design to be considered there will have to be consideration of capacity as that impinges, or can do, on other aspects of whether the development is acceptable. Here, that relates to the visual impact of the surface infrastructure. But capacity in itself is not an absolute requirement of the geological assessment. To hold that it was would be to stretch the language of the NPS.

[126]The claimant has not argued that capacity is not a land use planning issue. Rather, it is accepted that it can be. It submits that the consideration of capacity, however, does not need to be pursued through a geological assessment.

[127]It is entirely right that the application for a DCO will have to contain sufficient details, including of geology and capacity, for the decision maker to be satisfied that what is proposed is acceptable so as to be able to grant the DCO. But that does not mean that all of the detail on capacity has to be within the geological assessment; it can be in the ES. Here, the totality of the evidence submitted by the applicant was directed to demonstrating that the site could accommodate the development proposed.

[128]Site capacity was dealt with also in the draft submitted DCO where requirement 6 related to operational details of cavern layout and design. Paragraph 6(1) limited development authorised by the draft DCO to the number of operational caverns (19) and total storage and working capacity of up to 900 million standard cubic metres and up to 600 million cubic metres respectively. Paragraph 6(2) specified a number of criteria for the design and construction of the caverns, principally to ensure their structural integrity. The requirement thus set the upper parameter for the visual assessment, in other words, the worst case for the impact of surface infrastructure. If the impact of that was acceptable then it follows that any lesser amount of surface infrastructure would be also. Provision was made also for the decommissioning of the surface infrastructure if the detailed design failed the COMAH regime and generally under requirements 32 and 33 of the draft DCO.

[129]Judgement in the broader context was thus perfectly possible. If the Panel wanted further information they could request it under Rule 17 at any time or through an ISH, or both, if required to assist their understanding. It may be that an ISH on the geological issues would have assisted the Panel’s understanding but that was entirely a matter for them to judge.

[130]The broader contextual references within NPS EN-1 relied upon by the defendant are met by taking the overall environmental information into account. That, together with the geological assessment, if separate, is the source of the material to enable the decision maker to be able to carry out the balancing exercise to reach his planning judgement on the acceptability of the proposal.

[131]It follows that, whilst detailed geological data for the site of the proposals is required under NPS EN-4 that does not necessarily have to include capacity. To so hold would be to place too absolute a requirement on the contents of the geological assessment that is not supported by language or meaning of paragraph 2.8.9 of EN-4. In the circumstances ground two succeeds.

Ground Three: Was the decision of the Secretary of State rational?

[132]I can deal with this ground very shortly in view of what I have set out above.

[133]It is clear that there were real deficiencies in the reasoning of the Secretary of State in his decision letter. He was rejecting the recommendation of the ExA but, because he adopted their approach to the geological assessment, including the standard to which they had to be satisfied, was flawed in his approach. He failed to express any reasons for so doing. Further, he failed to consider that whereas the approach of the Panel was to recommend approval of the project subject to an amended R6 because he took a different view whether that involved different considerations. Those deficiencies are such, as in my judgment, as to make his decision irrational. Conclusions

[134]It follows that this claim for judicial review succeeds. I invite submissions on the final order and costs. APPENDIX - THE EXAMINATION 135. The table below lists the main 'events' occurring during the examination and the main procedural decisions taken by the Panel. DATE EXAMINATION EVENT 24 April 2012 Preliminary Meeting 2 May 2012 Notice of procedural decision including confirmation of the examination timetable and first round of written questions from the Examining authority (ExA) 3 May 2012 Accompanied site visit to the application site 6 June 2012 Deadline for receipt of:• Written representations

• Responses to written questions

• Local Impact Report (s) (LIRs)

• Statements of common ground (SoCG) 4 July 2012 Deadline for receipt of comments on:

• Relevant and written representations

• Responses to the ExA's questions

• LIRs 18 July 2012 Issue of the ExA's second round of written questions 24 July 2012 Issue specific (IS) hearing to consider the drafting aspects of the draft Development Consent Order, and the proposed agreement between the Applicant and local planning authorities under sl06 of the Town and Country Planning Act 1990 15 August 2012 Deadline for

(i) responses to the ExA's second round of written questions and

(ii) for interested parties to make representations to the ExA of the need for issue specific hearings DATE EXAMINATION EVENT 24 August 2012 Letter (Rule 17) from ExA to the Applicant and other specified IPs concerning the Conservation of Habitats and Species (Amendment) Regulations 2010

24 August 2012

Letter (Rule 17 Rule 17 of The Infrastructure Planning (Examination Procedure) Rules 2010 ) from ExA to the Applicant and other specified interested parties concerning the Conservation of Habitats and Species (Amendment) Regulations 2010 24 August 2012 ExA notification of the programme for further IS hearings 24 August 2012 Deadline for the receipt of comments on responses to the ExA's second round of written questions 24 August 2012 Deadline for i) interested parties to notify the ExA of their intention to be heard at an open floor (OF) hearing and ii) affected persons to notify the ExA of their wish to be heard at a compulsory acquisition (CA) hearing 31 August 2012 Letter from the ExA confirming dates and arrangements for the CA hearing 6 September 2012 Letter from the ExA confirming dates and arrangements for the OF hearing 6 September 2012 Letter from the ExA confirming the arrangements and agenda for the IS hearings on 18 and 19 September 18 September 2012 IS hearing on drafting of the DCO and requirements, the draft deemed marine licence and proposed sl06 agreement 19 September 2012 IS hearing on the relationship between the Order and the COMAH Regulations 26 September 2012 Letter (Rule 17) from the ExA to the Applicant concerning Crown Land 26 September 2012 Further letter from the ExA setting out the agenda and arrangements for the CA hearing 28 September 2012 Letter (Rule 17) from the ExA to the Applicant and specified IPs inviting written representations about a proposed addition to Requirement 6 of the Order DATE EXAMINATION EVENT 2 October 2012 Letter from the ExA to the Applicant concerning proposed amendments to plans relating to the brine discharge outfall 3 October 2012 Letter (Rule 17) from ExA to the Applicant concerning Part 5 of the Book of Reference 3 October 2012 Letter (Rule 17) from the ExA to the Applicant concerning the draft Hazardous Substances Direction, preparation of the final draft DCO and a list of minor corrections to the Order 8 October 2012 Deadline for the submission of the final draft of the DCO and proposed sl06 agreement 9-10 October 2012 CA hearing (one session only held on 9 October) 11 October 2012 Letter (Rule 17) from the ExA to the Applicant concerning information requested at the CA hearing on 9 October, and further to the final draft DCO 17 - 18 October 2012 OF hearing (six sessions held over two days) 19 October 2012 Accompanied site visit to the application site 26 October 2012 Notification from the ExA of the completion of the examination.