Program Approach Nitrogen
For construction projects in the vicinity of "Natura 2000" areas, the degree of nitrogen deposition must be calculated in advance. Depending on that outcome, it is determined whether the construction project may be realized, with or without a permit under the Nature Protection Act (Wnb). The government created the Program Approach to Nitrogen (PAS) in 2015 for this assessment. In late May 2019, however, the Council of State ruled that the PAS violates the European Habitat Directive and may therefore no longer be used for said assessment. This has significant consequences for all stakeholders including project developers, construction companies and end users.
The nitrogen ruling by the Council of State has led to great uncertainty. After all, irrevocable permits that have already been granted have been called into question, the government does not yet know how to deal with new permit applications, and certain activities that were notification and/or permit-free according to the PAS will still require a permit. It is even uncertain whether irrevocable permits will stand.
ABN Amro has estimated that the construction sector will suffer 14 billion in damages over the next 5 years as a result of the Council of State's nitrogen ruling. In addition, an initial estimate shows that 1,500 projects already initiated will be negatively affected by the nitrogen ruling. Much of the damage relates to road construction, but residential and non-residential construction will also be hit hard.
Solutions are being diligently sought by the market and government, and the industry association for property developers NEPROM is even calling for emergency legislation to minimize frustration of housing projects given increasing demand for housing.
Possible solutions
Depending on the stage of plan development, it first makes sense to consider alternatives to reduce nitrogen deposition. Newly built homes are already subject to many sustainability measures. So there will be little 'gain' in adapting the design of homes. In non-residential construction, however, more alternatives are often possible through the use of other materials or alternative production methods.
The logistical organization of the construction site can also be considered for large construction projects. After all, for the assessment of nitrogen deposition during a construction project, nitrogen deposition during the construction phase is also involved. For example, by using cleaner equipment, combining deliveries and structurally reducing traffic movements for labor by means of a 'hub', nitrogen deposition can be drastically reduced.
Once the building plan is concrete and final, a so-called preliminary assessment must take place in which the nitrogen deposition of the building project is assessed and it is determined whether a Wnb permit is required. If that is the case, a so-called appropriate assessment will have to take place to ensure that a permit can be granted. This may involve instruments such as mitigation and external netting. If the appropriate assessment does not lead to a permit, the only remaining way to obtain a Wnb permit is the so-called ADC test. It would go too far to detail the appropriate assessment and ADC test in this article, but it is relevant to keep these possibilities in mind.
Legal position
Unfortunately, for a large number of projects these solutions do not always have the necessary effect. For example, plan modification is no longer possible because plan development is already too far advanced or because no sensible alternatives are possible at all. Examples of stalled projects appear in the media every day. Moreover, the Council of State recently annulled some zoning plans based on the PAS, bringing project development in those areas to a halt as well.
In standard construction projects to which the UAV 2012 applies, the developer/client is responsible for the public law permissions required for the project. Professional building contracts almost always provide that the building contract is concluded under the suspensive or resolutory condition that an irrevocable permit is obtained. If no irrevocable permit is subsequently obtained, either no contract comes into being or the contract is dissolved whereby the contractor is not entitled to costs and/or damages.
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Financial problem
For contractors, developers and end users alike, project shutdowns create a financial problem. For example, the developer has made investments (land, plan development, procurement, etc.) that will not be recouped in the short term. Moreover, the developer runs the risk that the project will no longer be feasible at a later date because of interim cost increases, changed regulations or because the executing party or end user is no longer available at the agreed conditions.
The financial consequences for contractors are also difficult to oversee. For example, a contractor has taken into account the construction of the halted project in his multi-year budget and order book, the preparations have usually already started and agreements have often already been made with third parties to enable realization within the agreed frameworks. On top of that, in practice, clear agreements are not always made about the latest start date, making it contractually not always possible/responsible to take on alternative construction projects pending the start of the halted project.
End users are also affected by the nitrogen ruling. Depending on the phase a project is in when it is shut down, end users may have already made investments in anticipation of the project's realization. Examples include temporarily renting or buying properties or design and consulting costs during plan development.
The additional costs and/or damages described above for those involved can often not be recovered from another party because developers usually bear the risk of obtaining irrevocable permits and therefore include suspensive or resolutive conditions in contracts with contractors and end users from which it follows that the contractor or end user is not entitled to compensation for damages and/or costs if the project runs aground in the permit phase. Of course, in practice, this conclusion depends on the exact wording of the contracts. If, for example, it is contractually stipulated that the client/project developer is solely responsible for the environmental permit, then possibly the failure to obtain a Wnb permit, or to do so in a timely manner, could lead to a different division of costs.
Conclusion
The Council of State's nitrogen ruling creates great uncertainty and significant financial consequences for developers, contractors and end users. This is expected to lead to stagnation of construction production. Extra sour now that the construction sector is finally showing a positive trend again after years of recession.
The government would therefore do well to come up with adequate legislation and/or regulations in the very near future to ensure that building plans near Natura 2000 areas can be assessed to allow for economic development as well.
Alternatives
In the meantime, it is expected that market players will not sit idle and will develop creative alternatives to reduce nitrogen deposition due to construction projects as much as possible in line with the Habitats Directive and government-developed conservation objectives for Natura 2000 sites. This may lead to accelerated innovation and this may have a positive impact on European and national sustainability goals. In addition, there always remain opportunities to still obtain a permit through the appropriate assessment or ADC test.
