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II. The granting of licences and the protection of species and habitats are governed by the following Statutes, Regulations and European Directives. III. Section 1 of this Act vests the property of petroleum which exists in its natural condition in strata in Great Britain or beneath the territorial waters of the United Kingdom adjacent to Great Britain in the Queen, subject to certain exceptions. The Geneva Convention on the Continental Shelf extended the United Kingdom's rights to exploitation of the natural resources of, inter alia, the sea bed and subsoil up to the limits of the continental shelf. IV. By section 2 of the Act the SOS is empowered to grant to such persons as he thinks fit licences to search and bore for and get petroleum which is subject to section 1. This power is extended by section 1(3) of the Continental Shelf Act 1964 to petroleum in areas of the UK Continental Shelf designated in accordance with section 1(7) of the 1964 Act.
V. By section 6 of the Act, the SOS is required to make Regulations concerning the application for and granting of licences, licence conditions and other matters. VI. The Regulations are made under section 6 of the 1934 Act. They apply to applications for and model clauses to be included in licences, inter alia, to search and bore for and get petroleum in strata in the islands in the seaward side of lines drawn in accordance with Schedule 1 of the Regulations, in the sea bed and subsoil beneath waters which lie on the seaward side of the lines, and within the outward limit of UK territorial waters, within that limit, and in the sea bed and subsoil within any area designated under section 1(7) of the Continental Shelf Act 1964. VII. Applications for licences must relate to a block or a tranche (or to a number of blocks or tranches) described by notice in the Official Journal. That notice must describe or specify the blocks or tranches by reference to a map deposited at the DTI. A block is an area to which a reference number has been assigned on the map. A tranche is a group of contiguous blocks (Regulation 7, as amended). VIII. These areas include the areas which have been licensed under the 17th Round. IX. The Regulations prescribe the manner in which and persons by whom applications for licences under the 1934 Act may be made, the fees to be paid, the conditions as to size and shape of licensed areas, and the model clauses which shall be incorporated into the licenses. The model clauses relevant to the licences in respect of seaward areas are set out in Schedule 4 of the Regulations. X. The following paragraphs of Schedule 4 are to be noted:
c) The Habitats Directive (92/43/EEC) XI. The scheme of the Directive, in so far as it is relevant, is as follows: A. Article 2 sets out the aim of the Directive: "(1)…to contribute towards ensuring biodiversity through the conservation of natural habitats and of wild fauna and flora in the European territory of the Member States to which the Treaty applies." It further states: "(2) Measures taken pursuant to this Directive shall be designed to maintain or restore, at favourable conservation status, natural habitats and species of wild fauna and flora of Community interest" (3) Measures taken pursuant to this Directive shall take account of economic, social and cultural requirements and regional and local characteristics". B. Article 3 establishes Natura 2000, a coherent European ecological network of special areas of conservation ("SAC"s) and special protection areas ("SPA"s) classified pursuant to the Wild Birds Directive (79/409/EEC). C. Article 4 sets out the process for designating SACs. It is as follows: 1. Each member state must propose a list of sites on the basis of criteria set out in Stage 1 of Annex III of the Directive.
a) The list must indicate which natural habitat types in Annex I and which species In Annex II that are native to its territory each site hosts. For aquatic species that range over wide areas, such sites will be proposed only where there is a clearly identifiable area representing the physical and biological factors essential to their life and reproduction. 2. On the basis of the criteria set out in Stage 2 of Annex III and the framework of relevant territories or Regions, the Commission shall establish in agreement with the Member State a draft list of sites of Community importance drawn from the Member States' list. The Commission must adopt this list in accordance with the procedure laid down in Article 21 (which provides for a Committee procedure prior to Commission adoption of the measures). 3. The list (the Directive is not clear whether this means the draft list or the Commission adopted list, but it probably means the draft list) shall be established within 6 years of notification, which is June 5 1998. 4. Once the Commission has adopted the list, the Member State must designate the site a SAC as soon as possible and within 6 years at the most. The member state must establish priorities in the light of the importance of the sites for the maintenance and restoration, at a favourable conservation status, of a natural habitat type or a species and for the coherence of Natura 2000, and in the light of the threats of degradation or destruction to which those sites are exposed. 5. As soon as a site is placed on the list adopted by the Commission referred to in (ii) it becomes subject to the provisions of Article 6(2), (3) and (4). D. Article 5 enables the Council, in exceptional cases on a reference by the Commission, to require a site to be included on the list of a member state. E. Article 6 sets out the duties of a Member State in relation to SACs and (as far as (2) (3 ) and (4) are concerned) in relation to sites placed on the Article 4 list. These include: 1. Establishing necessary conservation measures including, if need be, appropriate management plans and statutory, administrative or contractual measures which correspond to the needs of the natural habitat types or the species present on the sites. 2. Taking appropriate steps to avoid the deterioration of natural habitats and habitats of species as well as disturbance of species for which the areas have been designated, in so far as such disturbance could be significant in relation to the objectives of the Directive. 3. Subjecting any plan or project not directly connected with or necessary to the management of the site but likely to have a significant effect thereon to appropriate assessment of its implications for the site in view of the sites conservation objectives. In the light of the conclusions of the assessment, the competent national authority shall agree to the plan or the project only after having ascertained that it will not adversely affect the integrity of the site concerned and, if appropriate, having obtained the opinion of the general public (subject to paragraph (4)). 4. This last provision is subject to the power to carry out a plan or project for imperative reasons of overriding public interest, including those of a social or economic nature, but subject to compensatory measures.
F. Article 7 applies the provisions of article 6(2), (3) and (4) to Special Protection Areas designated under the Wild Birds Directive (79/409/EEC). XII. The 1994 Regulations implement the Habitats Directive. Part II concerns the conservation of natural habitats and habitats of species. Part IV is about application of planning and other controls. The relevant Regulations provide as follows: A. The Regulations apply to European sites, as defined in Regulation 10. Regulation 2(1) provides that a European marine site means a "European site which consists of, or so far as it consists of, marine areas". "marine area" means "any land covered (continuously or intermittently) by tidal waters or any part of the sea in or adjacent to Great Britain up to the seaward limit of territorial waters". B. Regulation 7 sets out the duty of the SOS to propose a list of sites in accordance with Article 4(1) of the Directive. C. Regulation 8 requires the SOS to designate a SAC, once a site of Community importance has been adopted by the Commission, in accordance with Article 4(4). D. Regulation 10 defines a "European Site" in the Regulations, including an SAC, and a site of Community importance which has been placed on the list of sites of Community importance. E. Regulation 11 provides for a register of European sites. F. Regulation 16 provides for the appropriate nature conservation body (the Nature Conservancy Council, the Countryside Council for Wales or Scottish Natural Heritage - Regulation 4) to enter into a management agreement with every owner, lessee and occupier or land forming part of a European site or land adjacent to such site, for the management, conservation, restoration or protection of the site or any part of it. G. Regulations 18 - 27 give powers to the appropriate nature conservation body to take steps to comply with the provisions of Article 6, including making assessments of the implications for the site of a plan or project (Regulation 20 and 24). H. Regulations 33 - 36 apply to European marine sites. They provide for a management scheme for marine sites by the relevant authority as defined by Regulation 5 in order to secure compliance with the Habitats Directive. I. Regulation 48 concerns the pre-conditions for giving consent, permission or authorisation to a plan or project by, inter alia, a Minister or government department ("competent authority"). It effectively implements the requirements of Article 6(3), requiring an assessment of the implications for the site where the plan or project is likely to have a significant effect on a European site. J. Under Regulation 48(3) the authority shall consult the appropriate nature conservation body. Under Regulation 48(4), they may take opinion of the general public. K. Regulation 49 implements Article 6(4). L. Regulation 50 is effectively a transitional provision. If, before a site became a European site or the commencement of the Regulations, there has been a decision to undertake, or a consent, permission or authorisation for, a plan or project which would have been within Regulation 48(1) if it had applied at the time, then the authority shall as soon as reasonably practicable (here it seems that one has to read in the words "after the site becomes a European site or the commencement of the Regulations") review the decision, consent, permission or authorisation. Regulations 48(2) - (6) and 49 apply to the review. M. The provisions of Regulations 48 to 51 also apply to the grant of planning permission under the Town and Country Planning Act 1990 (see Regulations 54 et seq).
N. By Regulation 68, Regulations 54 - 67 are to be construed as one with the Town and Country Planning Act 1990. XIII. The Directive requires member states to adopt all measures necessary to ensure that, before development consent is given to projects (within the scope of the Directive) likely to have significant effects on the environment, they are made subject to an assessment with regard to their effects. The projects covered by this article are set out in Article 4. This assessment is referred to in the Directive as the environmental impact assessment ("EIA"). Specific provisions of the Directive include: A. Article 4 sets out mandatory requirements for an EIA in relation to projects falling within Annex I of the Directive and, in relation to Annex II projects, requires an EIA "where Member States consider that their characteristics so require". Deep drillings and petroleum extraction are included within Annex II. B. Article 3 describes what an EIA should do: "identify, describe and assess in an appropriate manner, in the light of each individual case and in accordance with articles 4 to 11 the direct and indirect effects of a project on the following factors:
C. Article 5 and Annex III set out the information that must be obtained from a developer. D. There are provisions as to consultation, including with the public, and provision of reasons for any development consent given. V. TERRITORIAL SCOPE OF THE HABITATS DIRECTIVE XIV. The Habitats Directive is applicable to the UK continental shelf. Accordingly its provisions extend to reefs of Lophelia pertusa located on the UK continental shelf. The following paragraphs summarise the basis upon which it is submitted that this is the correct interpretation of the Directive. XV. Article 2(1) of the Directive provides that its aim of is to contribute to ensuring biodiversity "in the European territory of the Member States to which the [EC] Treaty applies". The EC Treaty does not define the term "European territory". However: A. The European Court of Justice has confirmed that the Community has authority to act in areas over which Member States exercise sovereignty beyond their territorial waters: see Joined cases 3, 4 and 6/76, Officier van Justitie v. Kramer [1976] ECR 1279 at 1309; Case 61/77, Commission v Ireland, [1978] ECR 417 at 445. B. The European Commission considers that Community law in general and the Habitats Directive in particular apply to the continental shelf of Members States: as to the former see Commission Memorandum of September 1970, SEC(7)3095, 1974 OJ C49/3; as to the latter see Answer by Commissioner Bjerregaard on behalf of the Commission to Written Question E-3529/96 (1997 OJ C 138/74). C. Relevant Community legislation on oil exploration and environmental protection generally treats the term "European territory" as including the continental shelf and applies to activities on the continental shelf: see eg:
(i) Directive 94/22/EC of the European Parliament and Council on the conditions for granting and using authorizations for the prosecution, exploration and production of hydrocarbons (1994 OJ L 164, Preamble); D. When Community legislation is intended to apply only to the territorial waters it expressly so provides: see Regulation 2913/92 establishing the Community Customs Code (1992 OJL 302) at Art. 3(3), applying only to territorial seas, internal waters and airspace. The Habitats Directive provides for no such exclusion. E. The application of the Directive to the continental shelf is consistent with international conventions to which the United Kingdom and the Community are parties and/or signatories: see eg. 1992 Convention on Biological Diversity (1993 OJL 309 at Art. 4(b)); 1992 OSPAR Convention for the Protection of the Marine Environment of the North-East Atlantic (1995 OJL 172, at Art. 1(a)). XVI. The 1994 Regulations apply to "marine areas" up to the "seaward limit of the territorial waters", in other words up to 12 miles from the baseline around the coast (regulation 2(1)) . This is incompatible with Article 2(1) of the Habitats Directive. The Applicants are entitled to rely on the Habitats Directive, and the English court is required to interpret the 1994 Regulations to achieve the result pursued by the Directive: see Case C-106/89, Marleasing SA v. La Comerical International de Alimentacion SA [1990] ECR I - 4135 at para 8; Webb v. Emo Air Cargo (UK) Ltd [1993] 1 WLR 49, per Lord Keith at 59G.
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