The UK Government’s “Infrastructure Bill” – amended draft published on 14 October 2014. Key highlights: CO2-reduction, extraction-tax, piercing commercial veils in upstream petroleum, levies on CO2 storage/gas storage or unloading/exploiting UK petroleum, and deep petroleum/geothermal energy prospecting.

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The UK Government’s “Infrastructure Bill”1 – amended draft published on 14 October 2014. Key highlights: CO2-reduction, extraction-tax, piercing commercial veils in upstream petroleum, levies on CO2 storage/gas storage or unloading/exploiting UK petroleum, and deep petroleum/geothermal energy prospecting.
General disclaimer: the following constitutes the written view of the author and in no way constitutes actual legal advice or a legal opinion and so no reliance may be placed upon the content hereinafter contained by any reader of this document in any way whatsoever. In the event that legal advice or opinion is sought, please contact the author of this opinion at the contact details below. The view below is expressly confined to matters as they stand at 2 July 2014.
We reported on progress of the second reading of the Infrastructure Bill before the summer recess in the Houses of Parliament in London2 and now their Lordships in the committee stage of going through amendments of the June version of the Bill have published a further amendment of the bill on 14 October 20143 as amended in Grand Committee.
In summary the principal amendments at this stage are as follows:-
(a) Off-Site carbon abatement measures4:
Where a building in England contributes to or has an effect on CO2 emissions (from the building or not), then Building Regulations teams (e.g. in the planning department of a local authority local to the building emitting/causing CO2 to be emitted) can order relevant persons to whom a requirement to meet Building Regulations applies to carry out actions to rectify the position (“CO2-actions”):
(i) reduce CO2 emissions; or (ii) remove CO2 from the atmosphere (as caused by the building).
The relevant planning authority team can also require the same person to agree with another person (or persons) to carry out the same actions in (a)(i) and (a)(ii) above. Another possible requirement is for the relevant local planning authority team to require that payment(s) be made to a fund administered by/for the Secretary of State and that such funds are used to pay for (a)(i) & (a)(ii).
The Bill under section 26 also allows for building regulations to make provision for a register, for administration of the fund mentioned, or calculations to be made of payments to be made as well as stipulation on the maximum payment that may be made in respect of the CO2-actions.
(b) Extractive Industries Transparency Initiative5:
1 See: http://www.mybusinesscounsel.com/infrastructure-bill-2014-uk-analysis/
2 http://www.mybusinesscounsel.com/dinghies-passing-dinghies-night-drill-baby-drill-andprogression/; http://www.mybusinesscounsel.com/infrastructure-bill-2014-uk-analysis/
3 http://www.publications.parliament.uk/pa/bills/lbill/2014-2015/0045/15045.pdf
4 New section 26 of the Bill (ibid. at FN3).

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This is a new section 29 in the Bill. In effect it allows the UK tax authority, Her Majesty’s Revenue and Customs, to make rules or regulations in terms of taxing matters arising from the work of companies to individuals in the UK working under the remit of the Extractive Industries Transparency Initiative, and presumably its 2013 published standard6.
(c) Recovery of UK petroleum and deep geothermal energy7:
This new section in the Infrastructure Bill relates to the following relevant persons for the purposes of the proposed new legislation:
(a) a holder of a petroleum licence; (b) an operator under the remit of a petroleum licence; (c) an owner of a upstream petroleum infrastructure; or, (d) a person planning (e.g. developers) and carrying out the commissioning (e.g. contractor/engineering companies) of upstream petroleum infrastructure8.
As drafted in the Bill the provisions permit the Secretary of State to impose obligations upon the persons narrated above under a “strategy” (relating to the “principal objective” of maximising economic recovery of UK petroleum through the development, construction, deployment and use of equipment in the petroleum industry – including upstream petroleum infrastructure9) relating to their commercial obligations provided their strategy relates to any of the relevant persons mentioned above, the strategy is designed to nullify or reduce the perceived nugatory effect that a commercial arrangement may have upon the principal objective (presumably from the perspective of the Department for Energy and Climate Change – “DECC”). In effect this means that DECC will have State-level power to pierce the “commercial-veil” of a commercial deal in an upstream petroleum infrastructure project and if in its/Her Majesty’s Treasury’s eyes advising DECC the recovery of UK petroleum by a commercial deal is somehow either limited or in a nugatory way affected within a relevant bi-annual reporting period. Each strategy is capable of being reviewed within a four year period (with the periods entering into force when the relevant draft legislation enters into force). Strategies must pass both Houses before being revised. Under section 31 of the Infrastructure Bill10, provision is made to allow DECC to impose levies on persons that hold licences to: (a) exploit UK petroleum; (b) can unload and store gas (under section 4 of the Energy Act 2008); (c) store carbon dioxide.
The Secretary of State has to exercise their powers under the Bill if it comes into force under the relevant section11 to impose a licensing levy for a charging period except for relevant functions for which a charge would be payable under the Gas and Petroleum (Consents)
5 New section 28 of the Bill (ibid. at FN3).
6 https://eiti.org/files/English_EITI%20STANDARD_11July_0.pdf
7 Ss.30-37 of the Infrastructure Bill (ibid. at FN3).
8 New section 9A(1)(b)(i)-(iv) in Part 1A suggested for insertion by section 30 of the Infrastructure Bill (ibid. at FN3) into the Petroleum Act 1998.
9 New section 9A(1)(a) in Part 1A suggested for insertion by section 30 of the Infrastructure Bill (ibid. at FN3) into the Petroleum Act 1998.
10 Ibid. at FN7.
11 S.31(4) of the Infrastructure Bill (ibid. at FN3).

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Charges Regulations 2013 (as such Regulations stand when this section comes into force), namely for12: (a) cross-country pipe-lines, (b) exploitation of petroleum, (c) maximising economic recovery of UK petroleum, (d) submarine pipelines, (e) insofar at the Petroleum Act applies in the reduction of costs of abandonment of offshore installations and submarine pipelines, (f) importation and storage of combustible gas, (g) storage of carbon dioxide, (h) upstream petroleum infrastructure, (i) carrying out of policy work relating to UK petroleum, (j) giving advice/assistance to the petroleum industry on the UK petroleum industry/petroleum- recovery, (k) collaborating with the petroleum industry on matters as they relate to UK petroleum and its recovery, (l) acquiring/using/supplying information on matters relating to UK petroleum and its recovery, (m) encouraging development of the UK petroleum industry relating to UK petroleum-recovery, (n) carrying out/giving advice/assistance to those carrying out R&D relating to technology/products relevant to recovery of UK petroleum, (o) functions relating to security of petroleum supplies/resilience of petroleum industry, (p) international co-operation on matters relating to UK petroleum and its recovery including dispute resolution and openness/accountability in managing petroleum resources.
Geothermal energy
The new section 32 inserted into the Bill allows anyone the right to use deep-level land (i.e. greater than or equal to 300m from the Earth’s surface) to exploit petroleum/deep geothermal energy, and in Scotland this is limited to exploiting deep geothermal energy only where the sole/main use of the energy is to be/is electricity generation.
The right to use13, includes matters such as from searching for such geothermal energy to passing through substances/removing substances to input infrastructure below the Earth’s surface to exploit the deep geothermal energy/deep petroleum, subject to any legal constraints already in place and that would prevent such rights being engaged e.g. trespass or affecting the right of neighbour’s to use and enjoy their land due to works carried out by a deep petroleum/geothermal energy prospector subject most probably to a relevant neighbour being able to demonstrate that such deep engagement of rights actually does affect their rights.
Payment regulations relating to the right to use, notices relating to the right to use, and a penalty payment regime relating to payments or notices are laid out in sections 34-36 of the Bill and really augur the onset of regulations to allow imposition of payments on energy undertakings (companies/persons that may want to exercise a right to use) and notification of exploited land so that such works will be able to be accurately mapped by future Government.
The next line by line examination of the Bill takes place on 3 November during this Report Stage.
London, 21 October 2014. To find out more on how My Business Counsel can assist you on planning, energy, real estate, corporate, commercial or project agreements on infrastructure projects, please contact the Infrastructure Projects Team today on info@mybusinesscounsel.com or by calling +44 (0) 203 507 0152.
12 S.31(5) of the Infrastructure Bill (ibid. at FN3).
13 S.33 of the Infrastructure Bill (ibid. at FN3).