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Where there’s muck there’s brass: a model for achieving Nutrient Neutrality

Taking agricultural land out of production to offset the impact of nitrate pollution from housing can generate income for its owner and benefit developers and local authorities.

The problem

Nitrogen and Phosphorus are essential nutrients for plants. Used as fertilisers they boost growth and increase crop yields.

They are also a pollutant. High concentrations entering the water system from agriculture, industry, and domestic sewage are harming some of the UK’s most important protected species and habitats.

The nutrients cause eutrophication, leading to algal blooms, which starve the water of oxygen causing fish to die and thereby removing a vital food source for birds and other animals.

Guidance from Natural England (first issued in 2019) advises that several Special Protection Areas (SPAs), Special Areas of Conservation (SACs) and Ramsar Sites in the Solent are in an “unfavourable condition due to existing levels of nutrients and are therefore at risk from additional nutrient inputs.”

The Guidance, which affects 12 local authority areas and large swathes of Hampshire, Wiltshire and West Sussex, advises that (in line with Regulation 63 of the Conservation of Habitats and Species Regulations 2017 and decisions by CJEU) no new residential development should be permitted unless the decision maker is certain that impact of the nutrients in waste water can be mitigated.

Under Regulation 63, the competent authority (the local planning authority or Secretary of State) must carry out an “appropriate assessment” before giving “any consent, permission or other authorisation for a plan or project which is likely to have a significant effect on a European site or a European offshore marine site (either alone or in combination with other plans or projects)”. The competent authority may only agree to a plan or project if the conclusions of the assessment are that “it will not adversely affect the integrity of the European site.” Under paragraph 181 of the National Planning Policy Framework (NPPF), local authorities must give the same protection to Ramsar sites.

The guidance issued by Natural England effectively halted residential development in the Solent area and its scope has impacted on the development of private houses and flats, affordable housing, care homes, sheltered accommodation, student accommodation and hotels alike.

In areas such as this, which already suffer from high levels of nitrate pollution, new homes have been built faster than the water treatment infrastructure needed to support them. Sewage that should be treated, is spilling into the rivers and streams that flow into the protected areas.

Similar rules have been adopted in Dorset to protect Poole Harbour (a designated SSSI, SPA and Ramsar site) from nitrate pollution and, earlier this year, planning permission was refused on appeal for new homes in Somerset because of the likely impact from phosphates on the Somerset Moors and Levels SPA and Ramsar site.

The solution

Until the sewage treatment system is sufficiently upgraded, development within the areas affected must achieve ‘nutrient neutrality’. This requires that the amount of nitrogen entering the water system as a result of any development is offset by the removal of an equivalent amount of nitrogen from the water system.

Natural England’s guidance for the Solent sets out detailed instructions for developers to calculate the nitrogen budget of their development and how nutrient neutrality can be achieved through mitigation.

In some cases, mitigation might be achieved on-site by creating water filtration systems or by the provision of new open spaces or habitats on land previously used for agriculture. However, in many cases, including small-scale developments with constrained sites, this is simply not practical. In those cases, mitigation can only be achieved by the developer reaching agreement with a third party to take other land out of agricultural production.

Two years on from when the advice was first issued, there is a burgeoning market for landowners to sell their commitment to keep land out of production, free from live-stock and fertilisers to off-set the impact of development.

A handful of schemes are already established and beginning to allow permissions to be granted once more. Shoosmiths acted on two front runners: Whitewool Farm (Meon Springs) in the South Downs National Park and Roke Manor Farm in Test Valley.

The scheme at Roke Manor operates as a mitigation bank whereby land is taken out of production in advance of any development. This creates a nitrate ‘credit’ equivalent to the amount of nitrogen that the land would ordinarily generate. That credit can then be sold to developers, as required, to satisfy the requirement for mitigation.

The scheme at Whitewool Farm involves the creation of new wetland to actively remove nitrates from water that flows into the Solent. This required planning permission, which was granted by the National Park Authority.

Roke Manor Farm is slightly different in that no development is involved and planning permission was not required. The land, previously used for pig farming, will be taken out of production and will be either seeded to grass or left to rewild.

Both schemes were the subject of detailed written proposals that were submitted to and approved by Natural England and the local planning authority. This included the calculation of the nitrate credit that the scheme would generate and how it would be established, administered and maintained. A key component of the schemes, from a legal perspective, is that they will be overseen and monitored by the local authority. This is critical in order for the local authority to be satisfied that the scheme will deliver the necessary level of mitigation in accordance with Natural England’s guidance and the Habitat Regulations.

The legal framework

In the absence of any specific statutory provisions, the power to enforce the scheme has to be conferred by agreement. In the model we developed, this is achieved by a planning obligation entered into by agreement (section 106 agreement) between the landowner and the local authority.

Ever versatile, section 106 agreements have proven a very effective means by which to establish the legal framework for nitrate mitigation. They can be used to create both positive and negative covenants regulating the use of the land and those are enforceable by the local authority against the landowner and its successors in title.

Obligations are placed on the landowner to submit regular monitoring reports to the local authority including details of the number of credits sold, the identity of the developers to whom they were sold and the details of the development to which credits are allocated. The Agreement also establishes a framework for the local authority to inspect the site and to take action, as required, to enforce any breach.

Standard form contracts for the sale of credit can also be prescribed within the section 106 agreement so that developers can buy credit with certainty that the contract will be accepted as evidence by the local authority that mitigation has been secured.

One limitation of the section 106 agreement, however, is that the covenants between the landowner and the local planning authority (the planning obligations) are only enforceable by the local planning authority itself. This presents an issue when developers seek to buy credit to benefit development in another authority’s area. In that situation, the planning authority for the development may be nervous about relying on the scheme if they cannot themselves enforce the obligations to ensure the necessary mitigation.

A solution is provided by section 33 of the Local Government (Miscellaneous Provisions) Act 1982. This allows a local authority to enter into agreements in relation to land outside its own area. Enforceable in a similar way to planning obligations, a section 33 agreement can be used to regulate the use of land. The only caveat is that it may not be used ‘for the purpose of facilitating nor being connected with the development of the land in question’, which is the preserve of the section 106 agreement. The agreements, therefore, require some careful drafting but, done correctly, can provide an authority with legal means to be certain of the mitigation agreed.

Conclusion

These schemes provide a simple, but very effective and immediate means by which development can achieve nitrate neutrality in the Solent area thereby allowing new homes to be built once more. Furthermore, the model developed has ready application to a host of other environmental impact concerns arising from new development. The lessons learned here can be applied to other issues arising in other areas.

The schemes developed have benefit for the landowner for whom the muck provides the brass but also, critically, for the developer that relies upon the mitigation scheme and the local authority in whose area development would otherwise be stalled.


This article was first published in EG magazine on 30 October 2021.

Disclaimer

This information is for educational purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given. © Shoosmiths LLP 2022.

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