R (oao Cox & Others) v Oil and Gas Authority & Others (“Paid to Pollute case”)

Summary:

On May 12, 2021, three climate activists, Jeremy Cox, Mikaela Loach and Karin Van Sweeden (the “Claimants”) have brought a legal challenge in relation to the adoption of the Government’s new Oil and Gas Strategy (the “Strategy”). Their claim was defended by the Oil and Gas Authority (“OGA”) and the Secretary of State for Business Energy and Industrial Strategy (“SoS”; Kwasi Kwarteng). The strategy was laid before Parliament in December 2020, came into force in February 2021, and gives the OGA a dual mandate to both “secure that the maximum value of economically recoverable petroleum is recovered from the strata beneath relevant UK waters” and, in doing so, “to take appropriate steps to assist the Secretary of State in meeting the net zero target.” The strategy sets out plans to support ongoing efforts to exploit North Sea oil and gas reserves. Under the Petroleum Act 1998, the Strategy needs to ensure the maximization of the “economic recovery of UK petroleum."

On January 18, 2022 the High Court gave judgment, rejecting the Claimants’ two grounds of challenge and dismissing their claim.
The first of the two grounds alleged error of law and/or frustration of statutory purpose. The Claimants argued that by ignoring the effect of government-backed financial support, the Strategy has stretched the definition of "economically recoverable" too wide, such that activities that are not truly "economic" for the UK are nonetheless still sought to be maximized through the Strategy. According to the claimants, this endangers the UK’s ability to meet Net Zero, as required under the Climate Change Act 2008. The main issue was therefore whether the OGA's definition of "economically recoverable" in its Strategy was consistent with the statutory term "maximizing the economic recovery of UK petroleum” or whether it frustrates the statutory purpose.

The High Court began its consideration of this ground by considering the court’s role, concluding that the court will afford ‘considerable deference’ to the OGA’s expert view as regulator, and that Parliament, when enacting the legislation, did not intend for the court (rather than the expert regulator) to determine the best method of economic assessment. In any event the High Court agreed with the OGA’s interpretation of the legislative provisions. (Judgment, paragraphs 55 to 114.)

The second ground alleged the OGA’s approach was irrational given the UK Government’s net zero target under the Climate Change Act 2008 and statements made by the OGA in relation to that target. The High Court rejected the Claimants’ arguments. The OGA’s approach to the legislation was permissible, as per the Court’s findings under ground one. The question of how to balance various objectives is a matter for the regulator, not the court. The OGA, in consulting on and adopting the Strategy, ‘manifestly had considerable regard to UK domestic action on climate change’. The Claimants’ arguments had ‘no basis in the statute’ and ‘[contradicted] the whole concept of maximizing economic recovery’. (Judgment, paragraphs 115 to 138.)

It is not known whether the Claimants are pursuing an appeal.

At Issue: Whether the UK Oil and Gas Authority's new strategy is unlawful