We have previously written about the legislative status quo for developers operating in sensitive catchment areas (click here) – namely the requirement for developments to be ‘nutrient neutral’ under The Conservation of Habitats and Species Regulations 2017 (Habitats Regulations 2017) (the NN Route).
Under the new regime, where development is caught by an EDP boundary, (assuming that the EDP in question is voluntary) developers will now have a choice. Either, a developer may offset their development via the traditional NN Route, or they may opt to pay the NRL to Natural England.
Should developers opt to pay the NRL, legislative obligations under the NN Route will be disapplied (Schedule 3, Part III, PIA 2025). Developers will therefore have to weigh up the cost and time benefits of each regime once the detail of the secondary legislation is known.
Section 73 PIA 2025 makes it clear that the levy must not make ‘development economically unviable.’ What this means is difficult to assess as there is no detail at this stage as to the likely amount of the NRL or the basis of charging e.g. a per dwelling cost or some other metric. It remains to be seen how pricing might impact the private nutrient credit market.
What does seem likely is that the costs of the NN Route will adjust to track the NRL charging as the presence of a marketplace competitor has the usual effect. If NE apply a standard rate for the NRL then bespoke solutions from individual landowners under the NN Route may be able to undercut the NRL approach. However, it will be for developers to determine which route to take on a case-by-case basis, and the simplicity of a direct payment may well be attractive.
Of interest to developers will be the temporal and spatial benefits afforded to them under the new regime. Rather than engage in negotiations with landowners under the NN Route, developers can simply pay the levy and move forward in the planning process. Mitigation, unlike under the NN Route, need not be in place prior to planning permission being obtained. The levy will fund conservation measures to address the negative effects of development during the ten year lifespan of an EDP.
Furthermore, while conservation measures will be proximate to development (as per the NN Route), there is scope for less proximate measures where a greater contribution to the environmental feature in question can be achieved. These are known as ‘network measures’ (section 63(3) PIA 2025).
The Secretary of State may make an EDP only where it considers the EDP passes the Overall Improvement Test (Section 65(3)) (OIT). To pass the OIT, the suite of conservation measures must materially outweigh the negative effect (defined as the ‘maximum amount of development to which an EDP may apply’) of development on the conservation status of each identified environmental feature. Environmental features will either be ‘protected species’, or ‘protected features of a protected site’ (such as habitat at a European Site or SSSI, for example).
Satisfaction of the OIT is not a one-stop shop. Rather, EDPs are subject to continued assessment and reporting at both the mid and end point of an EDP’s lifespan. Monitoring the effectiveness of conservation measures is therefore required (section 82(1) PIA).
The new regime also makes a nod to the additionality principle. EDPs must include an overview of ‘other measures’ being taken by NE and public authorities targeting similar environmental goals in that area. This will ensure conservation measures do not fund measures that are already being funded – i.e. avoiding ‘double counting’.
While not set out in the legislation, it is anticipated this will be through land use agreements with landowners and other stakeholders such as environmental NGOs.
Helpfully, public authorities are under a regulatory duty to co-operate with NE under PIA 2025; this might be through the provision of information to NE, imposition of a condition of development, or assistance with the implementation of conservation measures.
Further detail on the inner workings of the NRL will be set out in the Nature Restoration Levy Regulations and we anticipate further guidance from NE on key issues.
