Dark (nitrogen) clouds approaching; is construction at risk of stalling again?

After the Council of State swept the PAS off the table in 2019 came

construction ground to a halt. At that time, the government took several measures and made legislative changes to allow construction to regain some momentum under strict restrictions. However, a number of recent rulings and ongoing court cases are again putting pressure on the "solutions" created. As a result, it may soon be more difficult, and perhaps even impossible, to grant environmental building permits (hereafter referred to as building permit(s)).

This article first discusses the four 'solutions' most relevant to construction, and then outlines current developments for each solution.  

How construction got back on track

With the introduction of the Spoedwet Aanpak Stikstof (January 2020), the distinction between "projects" and "other acts" in the Nature Protection Act disappeared. This made it easier to balance internally (see, for example, this article). In addition, this law laid the legal basis for the creation of nitrogen banks.

On March 24, 2020, the Regulation Urgent Approach to Nitrogen came into force. This regulation introduced the Nitrogen Registration System (hereinafter referred to as the SRSS). The SRSS is a nitrogen bank that was filled with the nitrogen space created by the speed reduction on highways to 100 km/h (see, for example, this article). This nitrogen space is intended for housing construction and major infrastructure projects.

On July 1, 2021, the Nitrogen Reduction and Nature Improvement Act (July 2021) went into effect. An important part of this law is the "partial construction exemption" for projects. This exemption ensures that temporary effects in the form of nitrogen deposition during the construction phase do not have to be assessed during permit issuance. Although this exemption applies only to the construction phase of the project (and thus not to the use phase), it has led to a significant simplification of the permitting process.

Further reference can be made to the most recent update of the AERIUS Calculator dated January 20, 2022. The main change for construction is the 25 km "cut-off limit" for nitrogen deposition for all projects. Any deposition beyond this cut-off limit is not captured and not included in the assessment for a permit, making it easier to grant (see, for example, this article).

These four solution directions are under pressure. Recent developments in each solution direction are discussed below.

Internal netting

Internal netting is probably legally the most robust solution for granting construction permits. With internal netting, the increase in nitrogen deposition due to a particular (construction) project may be reduced by the decrease that is simultaneously realized at the same location, so that on balance no increase in nitrogen deposition occurs. To determine the extent of the decrease in nitrogen deposition, the reference situation is examined. Without going too deeply into all the legal nuances, it can be said that the reference situation is determined by the (nitrogen) effects of all activities legally allowed at a certain location. At present, the main focus is on what is allowed rather than on what activities are actually being carried out. Whether nitrogen deposition actually decreases or remains the same is therefore not always clear.

This premise has been under pressure since the East Brabant District Court's ruling on the Amer Power Plant's nature permit.[1] The Amer Power Plant is a coal and biomass-fired power plant. The Amer power plant would like to burn more biomass instead of coal and had applied for a nature permit to do so. In internal netting, the Amer power plant used a nature permit for the AC-8 combustion plant. The use of this combustion plant had ended in 2015. The court found that the nitrogen space from this combustion plant could not simply be used to grant a new permit and formulated its own new conditions for internal netting.

Because of the very specific and particular factual complex in this case, it cannot be said with certainty how these conditions will affect housing projects. Nevertheless, a somewhat more general rule does seem to follow from this ruling,[2] for it has been ruled that if new permits are required to use unused (but permitted) emission space, this unused space can no longer be used. An example might be a farmer who has a nature permit for 200 cows, but has a barn in which he can keep 120 cows. If the farmer first needs an environmental permit to build a new barn for these 80 extra cows, he can no longer use the nitrogen space of these 80 cows for (internal or external) offsetting.

It is not yet clear whether the Division will also apply these stricter conditions for internal offsetting. If the Division upholds or adopts this ruling, it may result in transformation and new construction projects becoming more difficult to get off the ground.

The SRSS and speed reduction

The SRSS is a nitrogen bank where (notional) nitrogen space is stored. The nitrogen space in the SRSS comes from the measure to reduce daytime speeds to 100 km/h on highways. The nitrogen space in the SRSS is used only for residential construction and major infrastructure projects. To date, the SRSS has provided nitrogen space for the construction of over 33,000 housing units,[3] thereby contributing significantly to solving the current housing crisis.

On April 22, 2022, the District Court of North Holland issued a ruling preventing the SRSS from being used (for the time being).[4] Before the speed reduction to 100 km/h was implemented, the effects of this speed reduction on various natural areas were studied. This was necessary to determine how much nitrogen space this speed reduction would provide. These studies also showed that it was very likely that the driving behavior of road users would change as a result of this speed reduction. On a limited number of routes, it would become more attractive, after the speed reduction, to take other routes that go closer to nature areas.[5] In other words: in a number of cases the speed reduction was therefore worse for nature. Thus, the court concluded that the space provided by the speed reduction should not be used because it meant that the speed reduction itself violated nature regulations.

Because the SRSS was only filled with the nitrogen space from the speed reduction, there is now a nitrogen bank with no balance. The SRSS itself is still standing.[6] In ongoing permitting procedures involving use of the SRSS, it is wise to identify risks and start thinking about a "plan B."

Whereas in recent years the cabinet has often been behind the times in the nitrogen file, this does not seem to be the case now. Three days after the ruling, the Cabinet put a new proposal online (on April 25, 2022). This proposal states that it was decided to no longer make the nitrogen space of the speed measure available for new permits and to cancel the nitrogen space of the speed measure. That the cabinet was prepared for this blow is also evident from the further content of the proposal. If this proposal is adopted, the SRSS will be filled with nitrogen space created as a result of the Subsidy Scheme for Cleaning Up Pig Farms. If this is all done in the legally correct way it means that the SRSS could possibly be used again for housing projects within a few months.

Partial construction exemption

When the partial construction exemption was introduced, its legal tenability was already being questioned by the State Council's Advisory Division,[7] but it took a while for its legal tenability to be submitted to judges, but that has now happened.

For example, on March 29, 2022, there was a hearing at the Division that looked at the Porthos project. The Porthos project is a project in the North Sea with the aim of building infrastructure that will allow captured CO2 to be stored underground. The expected duration of the realization phase of this project is 8 years. The permit for the construction of this infrastructure invoked the construction exemption. The Division indicated at this hearing that a ruling on this case is not expected before July 2022. As a result, the construction exemption can still be used in the coming months. However, the question is for how long that will be possible. On the one hand, the Division does not seem to rely on the legal tenability of the construction exemption when granting preliminary injunctions,[8] on the other hand, the Division does consider the construction exemption when ruling on the legality of nitrogen calculations.[9]

To mitigate risks, it is prudent for pending applications to consider whether nitrogen impacts during the construction phase can be mitigated by exploring the possibilities of internal balancing, leasing nitrogen space, or application of an ecological pre-assessment. If that is not possible, the SRSS, hopefully back in operation by then, could possibly be used for the construction phase.

Cut-off limit at 25 km

In the proceedings on the Tracébesluit Ring Utrecht A27/A12, the cut-off limit was called into question. The Division called in the STAB (independent expert) for this purpose. STAB's intervention shows that the Division is not convinced in advance of the legality of the demarcation boundary. Other judges also do not seem convinced in advance of the legality of this cut-off limit. In a case that dealt with the question of whether the Bio-energy Plant in Cuijk needed a nature permit, the operator argued that from the calculations, it appeared that the natural areas on which nitrogen, coming from the plant, would settle, were more than 25 km away from that plant. Because no nitrogen impacts could be calculated within 25 km, there would be no permit requirement. The court ignored this argument, citing[10]:

"Remarkable that because of a change in AERIUS Calculator, first there is a permit requirement and now there is not."

If the cut-off limit of 25 km does not stand up in court, permit granting will come to a halt. Article 2.1 of the Nature Conservation Regulations requires the use of the most recent version of the AERIUS Calculator when assessing projects that may cause nitrogen deposition. Because the law states that no other calculation methods may be used, there are no alternative ways to grant permits.

The government would be wise to develop a shadow version of the AERIUS Calculator without a distance limit which could be used immediately if a judge rules that the cut-off limit cannot be maintained. This would avoid an impasse.

Conclusion

Another nitrogen impasse is imminent if a judge rules that the 25 km cut-off limit may not be applied. The government can avoid this deadlock by preparing a new AERIUS Calculator without a cut-off limit on the shelf now. Without a legally sound AERIUS Calculator, no permits can be issued.

If the AERIUS Calculator is in order, internal balancing can continue. For now, internal balancing is legally the most robust way to tackle nitrogen problems. How tightly the Division tightens the reins will become clear in the coming months.

The SRSS will be out of service for the next few months, but it seems the government is prepared for this and the SRSS can be used again within a few months. The construction exemption is under severe pressure and it is questionable whether it will provide relief in the future. If the government has the SRSS up and running again before then, some of the pain of the possible elimination of the construction exemption will be alleviated.

[1] East Brabant District Court December 8, 2021, ECLI:NL:RBOBR:2021:6389

[2] In view of a later ruling by District Court of East Brabant, January 21, 2022, ECLI:NL:RBOBR:2022:192

[3] https://www.rijksoverheid.nl/actueel/nieuws/2022/04/01/versnelling-en-vergroting-stikstofaanpak-voor-sterke-natuur-en-gezonde-leefomgeving

[4] North Holland District Court April 22, 2022, ECLI:NL:RBNHO:2022:3375

[5] This involved only a few sections near the Natura 2000 areasVeluwe, Polder Westzaan, Sint Jansberg and the Brunssummerheide.

[6] ABRvS April 26, 2022, ECLI:NL:RVS:2022:1210

[7] https://www.raadvanstate.nl/@118504/w11-19-0355-iv/

[8] ABRvS April 15, 2022, ECLI:NL:RVS:2022:1110

[9] ABRvS 26 April 2022, ECLI:NL:RVS:2022:1210 r.o. 6.2

[10] East Brabant District Court ECLI:NL:RBOBR:2022:1652 r.o. 10-10.4.