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EAST AYRSHIRE COUNCIL

26 JUNE 2014

OPENCAST COAL MINING IN EAST AYRSHIRE: THE PAST, THE PRESENT AND THE FUTURE

Report by the Depute Chief Executive

1. PURPOSE OF REPORT 2. This report (a) reflects on the work undertaken in response to the liquidation of the

Scottish Coal Company Limited (SCCL) and of Aardvark TMC Limited (Aardvark) in April and May 2013 respectively; (b) sets out progress to date in respect of the Regulation of Opencast Coal Operations and associated matters and activities; and (c) recommends future arrangements for the continued delivery of operational activity currently being undertaken by the Council’s Coal Team.

3. THE PAST– THE COUNCIL’S RESPONSE TO THE LIQUIDATION OF SCOTTISH

COAL COMPANY LIMITED AND OF AARDVARK TMC LIMITED. 4. As Members will be aware, the Council’s Coal Team, established in June 2013, led by

the Depute Chief Executive and comprising officers from Planning, Legal and Democratic Services, was charged with responding to the implications of the liquidation of SCCL and of Aardvark. The Team, which has been until recently based at the Council Headquarters continues to undertake this important work and has been instrumental in delivering significant progress over the last year.

5. The principles which have provided the basis for all of the Team’s activity, which has since continued apace, was captured in the Steps to Recovery report approved by Council at its meeting on 19 September 2013. Steps to Recovery addressed the full range of matters relating to operational and non-operational opencast coal complexes within East Ayrshire and was followed by a comprehensive and consolidating report, approved by Council at its meeting on 28 January 2014.

6. At the same meeting of the Council on 28 January 2014, it will be recalled that the report

from the Independent Review of the Regulation of Opencast Coal Operations in East Ayrshire was also considered alongside the Council’s response to the recommendations contained therein. The Independent Review was commissioned to review all of the processes, procedures and internal controls around the management, determination, implementation, monitoring and review of planning processes in relation to opencast coal operations within East Ayrshire with the resulting recommendations being accepted in full by the Council. The Independent Review concluded that its key findings had at their core significant and ongoing individual, management and communication failings, particularly within the Planning Service. These are being considered in accordance with the Council’s established disciplinary procedures: An Assessment Panel of five Members concluded unanimously that there is no case to answer on the part of the Chief Executive, beyond which the disciplinary process is ongoing in accordance with set procedures.

7. Supporting the work of the Coal Team and ensuring a partnership approach to all of our activity, the Local Response Team chaired by the Chief Executive has continued to meet and has also responded to the work of the National Task Force chaired by Fergus Ewing MSP, Minister for Energy, Enterprise and Tourism. The Minister has indicated that the work of the National Task Force is reaching its conclusion, requiring only now to consider

in the Autumn, the outcomes of the deliberations of its two Working Groups on Compliance Monitoring and on Financial Guarantees (on which the Council is represented by the Depute Chief Executive and the Operations Manager – Building Standards and Development Management, and the Depute Chief Executive respectively). The Local Response Team will be stood down simultaneously, allowing for the in depth liaison among Partners represented to continue in accordance with normal business arrangements.

8. THE PRESENT: STEPS TO RECOVERY 9. Following the liquidation of SCCL and of Aardvark, the Steps to Recovery approved by

the Council on 19 September 2013 set out, in considerable detail, the economic, employment, environmental, financial and legal challenges that required to be addressed. It was recognised that many of these challenges would not be achievable in the short term and that longer-term strategies would require to be developed, particularly in respect of site masterplanning and environmental restoration. Much has been achieved in the year since the establishment of the Coal Team and whilst a great deal remains to be done, it is believed that the information set out below, albeit in a high level summary, supports that view.

10. Given previous reporting to Council, Cabinet and the Planning Committee, Members will be fully appreciative of the enormity of the task which is being addressed and that it had been necessary to prioritise activity and focus firstly on two key elements, namely:

• operational opencast coal sites which addressed the employment of a local

workforce and compliant operations, and • the calling of Bonds which would help facilitate the restoration of both operational

and non-operational sites. 11. As a result of certain milestones having been reached, much of which has been captured

within this report, it has been possible to shift our initial emphasis and to now address the wider issues of those sites not previously sold by KPMG, the Liquidators of SCCL and of Aardvark. Adjunct to the work of the Coal Team and led principally by the Council’s Economic Development Manager, a great deal has been done to support those 311 people made redundant as a result of the liquidations; this and the activity to address the negative impact on the wider economy is also referred to below.

12. In addition to the substantive reports of 19 September 2013 and 28 January 2014, a

series of further and supplementary reports addressing specific matters relating to opencast coal mines, quarries (and now including windfarms), compliance monitoring, financial guarantees and other procedural matters have been considered by the Council, Cabinet and the Planning Committee since the liquidation events of April and May 2013. For completeness, and as a reminder of some of the work that has been undertaken, these reports are listed in the following table: DATE MEETING SUBJECT 8 May 2013 Cabinet Scottish Coal Ministerial Taskforce and Local

Response Team – Update on the national and local response to the announcement on 19 April 2013 by Scottish Coal to wind up the company and appoint a liquidator.

24 May 2013 Cabinet Opencast Mining in East Ayrshire – Update report on the actions being progressed in response to emerging developments following the liquidation of Scottish Coal Company Limited and Aardvark TMC Limited.

27 June 2013 Council Opencast Coal Mining in East Ayrshire Independent Review – Report recommending the proposed terms of reference for the Independent Review of the processes and procedures around the management, determination, implementation, monitoring and review of the planning processes in relation to opencast coal operations within East Ayrshire. Opencast Mining and Scottish Mines Restoration Trust (SMRT) Limited – Update in relation to the SMRT and the Council’s membership thereof.

19 September 2013 Council Steps to Recovery – Comprehensive report on matters relating to the range of opencast coal complexes within East Ayrshire.

29 November 2013 Planning Committee Compliance Monitoring Update – Update in respect of Compliance Monitoring activity relating to opencast coal mining operations in East Ayrshire. 12/0837/PP Duncanziemere – Alteration to condition of planning consent to allow 24 hour working.

12 December 2013 Planning Committee Update on Operational Sites – Update on activity at the four operational opencast coal mines in East Ayrshire.

28 January 2014 Council Independent Review of the Regulation of Opencast Coal Operations in East Ayrshire – Presenting the report produced by the Independent Review Team. Independent Review of the Regulation of Opencast Coal Operations in East Ayrshire: The Council’s Response – Presenting the Council’s response to the recommendations arising from the Independent Review. Opencast Coal Mining in East Ayrshire Steps to Recovery Progress Report – Update in respect of each of the recommendations contained within the Steps to Recovery report of 19 September 2013.

31 January 2014 Planning Committee 13/0841/PP Braehead, Greenburn – Application to vary condition of planning consent to regularise the adjusted number and size of overburden storage areas. 12/0831/PP Townhead of Greenock Quarry – Application for the phased extraction of sand and gravel including the establishment and operation of associated processing plant, access road and ancillary site infrastructure.

5 February 2014 Cabinet Economic Impact Assessment of Opencast Closures in East Ayrshire – Presenting the key findings from the independent Economic Impact Assessment into the opencast mine closures undertaken by EKOS Limited on behalf of the Council.

19 February 2014 Cabinet Consultation on Opencast Coal Restoration: Effective Regulation – Presenting the Council’s proposed response to the Scottish Government’s consultation. Ponesk Restoration Bond – Update on the position in respect of the restoration bond relative to the Ponesk Opencast Coal site. Dunstonhill Restoration Bond – Update on the position in respect of the restoration bond relative to the Dunstonhill Opencast Coal site.

5 March 2014 Cabinet Powharnal Restoration and Mitigation Bonds – Update on the position in respect of the restoration and mitigation bonds relative to the Powharnal Opencast Coal site.

2 April 2014 Cabinet Powharnal Restoration and Mitigation Bonds – Update on the Bond Providers’ settlement proposals for the restoration and mitigation bonds relative to the Powharnal Opencast Coal site.

4 April 2014 Planning Committee Compliance Monitoring Update – Update in respect of Compliance Monitoring activity relating to opencast coal mining operations in East Ayrshire. 13/0856/PP Duncanziemere – Proposed alteration to the previously approved restoration scheme at Duncanziemere Opencast Coal Mine.

13/0939/S75 Burnston Remainder – Application to vary the Section 75 Legal Agreement relating to the restoration bond for the development. 13/0056/NMV Burnston Remainder – Application to re-phase the coaling operations

16 May 2014 Planning Committee 13/0775/PP Tappet Hill Quarry, House of Water – Application for the extraction, crushing and removal of rock.

21 May 2014 Cabinet Decommissioning, Restoration, Aftercare and Mitigation Financial Guarantees – Presenting proposed arrangements and supporting principles for the submission, agreement, implementation and monitoring of financial guarantees required in respect of specific developments.

23 May 2014 Planning Committee 03/0836/FL Quarry, North Drumboy Farm, by Fenwick – Application for the extraction of basalt rock at North Drumboy Farm.

4 June 2014 Cabinet Dunstonhill and Ponesk Opencast Coal Sites Restoration Bonds – Update in respect of the Bond Providers’ settlement proposals for the restoration bonds at Dunstonhill and Ponesk opencast coal sites.

13 June 2013 Planning Committee Dalricket Mill – Application to discharge a condition relating to restoration works of Planning Consent CD/79/50/LA 14/0269/PP Clawfin Quarry – Application to extend the quarrying operations at Clawfin Quarry, Dalmellington.

27 June 2014 Planning Committee Compliance Monitoring Update – Update in respect of Compliance Monitoring activity relating to opencast coal mining operations in East Ayrshire.

13. It should also be noted that five applications under Section 36 of the Electricity Act 1989

for the construction or extension, and operation, of electricity generating stations and five planning applications for onshore wind farms, are in the process of being finalised with the first of these (Whitelee Phase 3) having been considered by the Planning Committee on 13 June 2014. Section 36 Applications relate to any windfarm proposals with a capacity in excess of 50 megawatts and require Scottish Ministers’ consent. These applications are managed by the Scottish Government’s Energy Consents Unit and the Planning Authority is formally consulted in the process. Reports on these matters will continue to be presented to the Planning Committee over the coming weeks and months in accordance with the reporting schedule that was contained within the separate report to the meeting of Cabinet on 21 May 2014 relating to Financial Guarantees, as follows:

S36 Application Target Committee Date Whitelee 3 13 June 2014 Afton 27 June 2014 South Kyle 4 July 2014 Keirs Hill 8 August 2014 Glenmount 22 August 2014

14. In addition, a number of windfarm applications that fall to the Planning Authority to

determine have been received and are currently being processed with a view to these being presented to the Planning Committee in accordance with the following provisional reporting schedule:

Application Target Committee Date Harehill Extension 3 September 2014 Ashmark 12 September 2014 High Cumnock 10 October 2014 Garleffan 24 October 2014 Penbreck 7 November 2014

15. Supplementary to those applications detailed above, the Planning Committee can also

expect to receive specific reports on restoration proposals as plans are developed and finalised, along with further compliance monitoring update reports on a quarterly basis and an annual report on Opencast Coal Regulation. Those matters that relate to policy, such as the review of the Local Development Plan, or the settlement (and apportionment) of restoration bonds or other financial guarantees will be presented to future meetings of Cabinet, as appropriate.

16. The development of solutions to the challenges set and their achievement, whilst devised and driven forward by the Council’s Coal Team (and Economic Development colleagues), have only been possible with the commitment of the many key stakeholders who have worked in partnership with the Council to achieve our shared objectives. This report, therefore, takes the opportunity to note and record the valued and invaluable contributions by all stakeholders and partners who will have a continued and pivotal role to play into the future.

17. THE PRESENT: OPERATIONAL AND PROCEDURAL 18. Masterplanning and Environmental Restoration

19. The Steps to Recovery report provided a baseline assessment of all of the opencast coal

complexes and sites in East Ayrshire. This confirmed the full extent of disturbed and unrestored land across the nine former SCCL and Aardvark complexes as well as quantifying the notional cost of restoration thereby informing the process of calling-up restoration bonds.

20. The framework underpinning the Steps to Recovery established 3 key principles for site masterplanning, namely: Make Safe, Make Good and Make New.

21. Contributing significantly to each of the foregoing principles (and the restoration of operational sites which has commenced) has been the continued active coaling of opencast coal sites. This has been reported regularly to, in particular, the Planning Committee, and a brief resume is set out below for Members’ information and reflects the positive impact which these operations have had on employment in the area.

Operational Opencast Coal Mines – Hargreaves Surface Mining There is currently active coal production at three sites within East Ayrshire operated by Hargreaves employing a total of 221 people: Duncanziemere: Revised Restoration Scheme approved by the Planning committee on 4 April 2014.

Netherton: Planning application for an alternative restoration proposal is pending subject to the calling of the Bond which is being finalised.

House of Water: Planning application for Burnston Remainder in relation to the modification of the Section 75 Agreement and re-phasing of works was consented on 29 April 2014. An application for a revised restoration Scheme for the entire complex is expected to be submitted within the next month.

In addition to the operational coaling sites listed above, Hargreaves also operates coal distribution centres at Crowbandsgate and Killoch.

Operational Opencast Coal Mines - Kier Mining

There are currently three active coal production areas within the Greenburn Complex operated by Kier Mining: Dalgig, Braehead and Wellhill.

Greenburn Complex: • 140 direct employees. • 43 on-site sub-contractors • Planning Consent for Carsgailoch Hill Extension approved by the Planning

Committee on 15 June 2012 and remains extant pending the satisfactory completion of the Section 75 Legal Agreement regarding the provision of an acceptable Financial Guarantee.

22. KPMG: Disclaimed Land and Land Previously Unsold 23. The Council has previously expressed a positive response to the favourable outcome of

the Court Action raised by the Council, namely, the Court of Session’s decision that a Liquidator of a Scottish Company cannot disclaim Scottish land. Further, in light of the terms of that judgement, the Council also continues to contest the purported disclaimer by the Liquidator of Aardvark of certain parts of sites at Garleffan, Grievehill and Skares Area D, and is liaising with SEPA as regards appropriate further action.

24. KPMG, as Liquidators of SCCL recently announced that agreement had been reached

for the sale of certain sites formerly owned by SCCL (in liquidation) to Mines Restoration Limited (MRL) (a wholly owned subsidiary of the Scottish Mines Restoration Trust - SMRT), subject to the successful transfer of the associated SEPA permits and CARs licences. A meeting was held with MRL/SMRT on 17 June 2014 and so the task of developing proposals for the restoration of the undernoted sites in East Ayrshire is now underway:-

o Dunstonhill; o Powharnal/Dalfad; and o Ponesk/Spireslack.

25. It is noted that there is no proposal to undertake development/restoration work at the

remaining site of Shiel Farm, Sorn given its original site condition. 26. Compliance Monitoring 27. As described in the Steps to Recovery report, the Council now has in place a

strengthened Compliance Monitoring Framework in respect of planning applications/consents for surface mine developments as well as applications/consents for quarries, landfill, onshore wind farms, electrical infrastructure projects and, should such proposals be forthcoming, fracking developments (or any other similar projects and developments). Detailed reports advising of the range of Compliance Monitoring activity are presented regularly to the Planning Committee with the meetings held on 29 November 2013 and 4 April 2014 having received progress update reports. A further update report will be presented to the Planning Committee on 27 June 2014 then on a quarterly basis thereafter and with an annual report also being provided.

28. The reports considered by the Planning Committee confirmed excellent progress in respect of compliance monitoring activity and demonstrated that the strengthened arrangements are now fully embedded and are contributing to the effective assessment,

scrutiny and review of opencast coal developments, quarries, landfill sites and windfarms. The information presented has been supplemented by Members’ visits to active sites.

29. The Council has in place contractual arrangements with two Independent Compliance Assessors; Ironside Farrar have responsibility for two quarry applications, SWS Interconnector Project and onshore wind projects and Dalgleish Associates have responsibility for mining operations at four active sites at Netherton, Duncanziemere, House of Water, Greenburn and future sites as they are developed. Dalgleish Associates also provide specialist advice and expertise in relation to the other opencast coal sites that are subject to bond calls and compliance monitoring of the active quarry at Tincornhill, Sorn.

30. An important element of our Compliance Monitoring regime is the effectiveness and governance of Technical Working Groups (TWGs) and Community Liaison Committees (CLCs) and updates on their activity will continue to be reported to the Planning Committee as part of the Compliance Monitoring regime. Assurance can be taken from the improved regularity, frequency, management and conduct of meetings and that stakeholders are maximising the opportunities that they present to engage with statutory agencies, voluntary organisations, mine operators and our local communities.

31. Consideration has been given to the combining of these two groups as recommended by

the Independent Review of the Regulation of Opencast Coal Mining in East Ayrshire. There has already been occasion where the Planning Authority has instigated a joint meeting of the Duncanziemere TWG and CLC which in the circumstances proved most productive. It is also noted that the formation of these groups is founded within the Section 75 Legal Agreements and decision notices of the relevant opencast coal sites and as such any change could not be imposed on the coal operators. Accordingly, it is recommended that these Groups meet jointly as and when required without the necessity of formally conjoining them.

32. Financial Guarantees and Restoration Bonds 33. As previously reported to the Council, there are a total of 24 restoration bonds which had

been sourced from 5 bond providers, namely:-

o Zurich o Euler Hermes o Coface o ACE o Aviva

34. The 24 bonds held by the Council are a mixture of bond types addressing restoration,

aftercare and mitigation issues arising from the former coaling operations within East Ayrshire. Of these 24 bonds, 12 have now been called formally; from those bonds called, five have now been settled by the Bond Providers. Those bonds are Powharnal (Restoration Bond), Powharnal (Aftercare Bond), Glenmuckloch (Restoration Bond), Dunstonhill (Restoration Bond) and Ponesk (Restoration Bond).

35. Ongoing discussions with the Bond Providers in relation to the remaining bonds which

have been called (seven) are continuing with a view to securing settlement without recourse to court action. In relation, however, to the Dalfad Bonds, an action has been raised at the Court of Session to seek to secure the monies under the Restoration Bond, with a Debate on the Council’s bond call having taken place on 17 May 2014, the outcome of which is awaited currently.

36. In relation to the remainder of the bonds which have not to date been called formally, engagement with the Bond Providers has been ongoing to secure the agreement of the Bond Provider that they will meet their obligations when the Council is ready to call the respective bonds. Reports will be submitted to future meetings of Cabinet seeking authority to settle claims or initiate court action, as appropriate.

37. Whilst the above information confirms the current position in respect of existing bonds, the experience gained by the Coal Team in calling bonds, supplemented by the findings and recommendations from the Independent Review of the Regulation of Opencast Coal Operations in East Ayrshire, highlighted the need to strengthen the Council’s arrangements and supporting principles for the submission, agreement, implementation and monitoring of financial guarantees that are required in respect of the decommissioning, restoration, aftercare and mitigation of opencast coal mines, quarries, landfill, onshore windfarms, electrical infrastructure projects and, should they be forthcoming, fracking developments. Accordingly, at its meeting on 21 May 2014, Cabinet approved new strengthened arrangements in this regard. The Coal Team’s review has also considered the bonding and compliance monitoring arrangements of the existing quarries and landfill sites with a similar process being extended to current and proposed onshore windfarms.

38. THE PRESENT: STAKEHOLDER ENGAGEMENT

39. Stakeholder engagement remains at the heart of our work to deliver the objectives of the

Steps to Recovery and the achievements set out in this report are due, in no small part, to the extensive and valued involvement of the full range of external stakeholders. The following table provides a high level summary of the extent of the stakeholder engagement that has been achieved:

STAKEHOLDER SUMMARY OF ACTIVITY Scottish Government • Active participant in the Ministerial Task Force and related Sub-

Groups. • Positive response to proposal for financial assistance to enhance

the economy UK Government • 2 meetings held with Michael Fallon MP, Minister for Energy and

Climate Change. • Continued pursuit of requests for financial support through the

redistribution of the UK Coal Levy. SEPA • Continued positive engagement with SEPA both in terms of

regulatory functions and also in respect of future restoration solutions.

RSPB • Chief Executive and Depute Chief Executive met with the RSPB on 6 December 2013 and continue to have positive engagement with them in respect of their important role in the development of restoration plans.

Forestry Commission • The Forestry Commission has significant landowner interests across the Coalfield and the Council continues to engage with them of the full range of restoration proposals.

Liquidator (KPMG) • Paragraphs 22 – 25 refer to the current position in respect of the sale of assets to MRL/SMRT and the Council will continue to engage with both parties as part of the finalisation of any sale agreements.

Mines Restoration Limited (MRL)/Scottish Mines Restoration Trust (SMRT)

• The Council has commenced discussions with MRL (on behalf of SMRT) in respect of restoration proposals for specific sites and this engagement will continue as missives for the sites are concluded with the liquidator.

Land Trust • The Council has commenced discussions with the Land Trust, a charity that manages and remediates brownfield sites which include former opencast coal sites.

Mine Operators • Both active mine operators (Hargreaves Surface Mining and Kier Mining) are in regular contact with the Depute Chief Executive and the Coal Team in respect of their existing operational activities and also proposals for future developments including restoration plans.

Bond providers • Paragraphs 32 to 37 refer to the current position in respect of bond calls and related activity including the continued engagement with bond providers.

Potential developers • A number of meetings have taken place with a range of potential developers interested in the future restoration of the sites which include opportunities for renewable, farming, tourism and leisure activities. These developers have been referred to MRL/SMRT as potential owners of the sites to consider as part of their restoration plans and end use for each site and have formed an important element of our discussions with MRL/SMRT.

Local communities • Details of Technical Working Group and Community Liaison Committee meetings are available on the Council’s website and are included in the regular Compliance Monitoring update reports provided to the Planning Committee.

• Community Councils and local residents continue to be engaged through the Community Liaison Committees, the PAC process and the statutory notification process for specific applications.

• As specific restoration proposals are being developed, including where this involves the commitment of bond monies, the opportunity will continue to be taken to engage with relevant communities.

• Arrangements are made, as appropriate, for the Independent Review Team to present their report in public.

40. THE PRESENT: POLICY AND GOVERNANCE 41. The proposed review of the East Ayrshire Opencast Coal Subject Plan, which was

published in 2003, has commenced following the decision of Cabinet on 28 August 2013 to develop a Minerals Local Development Plan, thus retaining a separation from the wider proposed East Ayrshire Local Development Plan. It is anticipated that the new Minerals Local Development Plan will be in place by October 2017, as previously reported.

42. Recognising the extent of operational changes and procedural improvements that have

been implemented, and in implementation of the Council’s extant decision to review the Scheme of Delegation in respect of such matters, the separate report on the Agenda for this meeting refers.

43. The approach described earlier in this report in respect of the submission, agreement,

implementation and monitoring of financial guarantees that was approved by Cabinet on 21 May 2014 reflects emerging National Planning Policy that is expected following the assessment and publication of the outcomes from the Scottish Government’s Consultation on Opencast Coal Restoration: Effective Regulation, the Council’s response to which was approved by Cabinet on 19 February 2014 and will be considerably influential in the discussion on financial guarantees to be undertaken by the Scottish Government’s Working Group on this subject referred to above.

44. Planning and Enforcement Charters are currently subject to national review by the

Scottish Government as part of the remit of the Compliance and Monitoring Working Group and our local charters will be developed in line with national guidance on the revision to major developments.

45. The new arrangements for Compliance Monitoring activity described above, introduced a

strengthened reporting framework to Elected Members, particularly the Planning Committee. Members now receive, on a quarterly basis, update reports that detail the full range and extent of activity relevant to Compliance Monitoring at opencast sites and

other relevant developments. In addition, a site visit is arranged to one of the four operational opencast sites to coincide with the quarterly progress report, thereby ensuring that Members have the opportunity to visit all active sites within a 12 month period.

46. In accordance with the Council’s Risk Management Strategy, Corporate, Departmental,

Service and Community Planning Partnership Risk Registers are systematically reviewed at regular intervals to reflect current and potential future risk exposure related to opencast coal, wind farms and infrastructure developments.

47. THE PRESENT: RESOURCES, SKILLS AND CAPACITY

48. Later in the report there are set out, in detail, the proposals for future operational resources and the consolidation of the Coal Team’s work within the mainstream Planning and Economic Development Service. Since the establishment of the Coal Team in June 2013 a great deal of sector specific knowledge and experience in respect of opencast coal matters has been accumulated and will provide a strengthened skills base for the Council forthwith. The wider resource capacity of the Service has also been enhanced by additional employee resources comprising three planning officers following the completion of a detailed review of work volumes and complexity.

49. In accordance with the decisions of Council on 28 January 2014, Members have had the

opportunity to enhance their awareness of opencast coal operations through the range of reports presented and the opportunities for site visits.

50. Employee training will continue to be a focus, in particular, for the Planning Service over

the coming months with proposals being developed to further enhance the level of understanding of the Council’s Complaints Handling Procedures and the new strengthened procedures recently introduced in respect of Financial Guarantees.

51. Following the Scottish Government Consultation on Opencast Coal Regulation, two

Working Groups on Compliance Monitoring and Financial Guarantees have been established. The Compliance Monitoring Working Group had its first meeting on 12 June 2014 with terms of reference being agreed and a work programme over a four month period introduced. The Scottish Government is scheduling further meetings to progress arrangements for the Financial Guarantees Working Group.

52. THE PRESENT: ECONOMIC DEVELOPMENT 53. One of the Council’s key priorities at the point of the liquidations of SCCL and Aardvark

was to support the respective workforces into employment or training. The establishment of the Local Response Team (LRT) as referred to above enabled local and national stakeholders to bring their collective efforts to bear in addressing some of the inherent challenges for the area, with the objective of identifying and delivering actions that would help transform the local economy and create jobs in the longer term. Specifically, the Scottish Government, East Ayrshire Council and Scottish Enterprise continue to work together on the following priorities:-

• Strengthening the Business Base; • Attracting Investment, and • Promoting East Ayrshire.

54. The Council will continue to work with other agencies such as PACE, Job Centre Plus,

Skills Development Scotland and the Business Gateway to promote employment opportunities for those individuals who have not secured employment following the collapse of SCCL and Aardvark and who wish to do so.

55. As a result of the work of the Council in partnership with national and local agencies, it

has been possible to maintain a viable and sustainable opencast coal industry in East Ayrshire and it is encouraging that of the 311 redundancies that resulted from the collapse of SCCL and Aardvark, 131 training opportunities were completed and 147 job outcomes were secured. The current total workforce across both Kier and Hargreaves operated sites is 404 employees (including 43 sub-contractor employees).

56. In addition, the future operational plans at active sites that are being pursued by Hargreaves and Kier anticipate a period of sustained coal production, alongside the restoration works, thereby securing the short to medium term viability of the industry in East Ayrshire which will have economic and social benefits for local businesses and the wider community.

People

• Of the 311 redundancies, 147 people have signed-off from Job Centre Plus. • The total workforce across the four operational opencast sites is 404 employees,

consisting of: o Hargreaves Surface Mining 221 employees. o Kier Mining 140 direct employees with a further 43 sub-contractors.

Place

• Positive response from Scottish Government to proposal for financial assistance to enhance the economy – proposal under refinement.

• UK Government’s consideration of proposal for assistance remains active.

57. THE FUTURE: 2014/15 PRIORITIES 58. Whilst it is reassuring to note the good progress over the last year, it is important to

recognise that much remains to be done; the following is a summary, drawn from the Implementation Plan attached at Appendix 1 to this report, of the key priorities for the Council over the forthcoming year:

• Continued pursuit of our requests for financial support for restoration to both the

Scottish and the UK Governments. • Continued pursuit of our request for redistribution of the UK Coal Levy. • Continued work with Partners to strengthen our proposal for support which would

provide a springboard for private sector growth. • Seek to position ourselves to respond to any decision of the UK Government in

respect of potential financial support resulting from the recent announcement of deep mine closures in England.

• Continued work to find solutions at a local level to maintain a viable and compliant industry whilst at the same time seeking to address restoration of vacant and disclaimed sites.

• Continued engagement with potential developers for the restoration and recovery of the coalfield landscape, particularly those sites outwith the ownership and control of existing operators.

• Working with Mines Restoration Limited, the Forestry Commission and other land owners to deliver solutions at the former and disused SCCL opencast coal mines.

• Continued engagement with local communities on proposed restoration schemes. • Continued work in respect of the calling up of remaining Restoration Bonds. • Continued focus on employability, economic development and business support.

59. THE FUTURE: OPERATIONAL AND MANAGEMENT ARRANGEMENTS 60. As demonstrated by the range of activity described in this report, significant positive

progress has been made in responding to the challenges presented by the liquidation events of April and May 2013.The establishment of the Coal Team in June 2013 was instrumental in delivering a number of key achievements and its work has now ensured that the Council is in a strong position with the firm foundations and building blocks now in place for the effective management, oversight and delivery of the remaining priorities for the Council in respect of opencast coal mining (and related developments). Accordingly, and while recognising the remaining priorities and associated workload, the remainder of this section sets out arrangements which have commenced for the incremental integration and consolidation of the Coal Team and its related activity into the mainstream work of the Council and, in particular, the Planning and Economic Development Service.

61. The Coal Team, led by the Depute Chief Executive and with a core group of officers seconded from Planning, Legal and Democratic Services, has been supplemented in recent months by additional officer support from Legal Services to assist with conveyancing activity and the Planning Service for the processing and scrutiny of planning applications. In parallel to these arrangements, the wider Planning Service employee resource has also been enhanced by the appointment of three additional planning officers to respond to the increase in applications for mineral and opencast coal applications and onshore wind farm developments alongside mainstream domestic and commercial planning applications. These arrangements have strengthened all aspects of the Development Management function across all of its component parts. The strengthened procedural arrangements and accumulated experience and knowledge within the Coal Team, coupled with the enhanced employee resource within Development Management, means that it has been possible to commence that integration and consolidation of activity.

62. Given all of the foregoing, the Coal Team and the work that it has been undertaking, is being subsumed into its respective Services; this will continue on a managed incremental basis over the coming months. As a result, planning, compliance monitoring and information management activity previously undertaken by the Coal Team will be fully integrated into the Planning Service. In relation to the legal work, both in respect of the calling of restoration bonds and the preparation and finalisation of legal agreements, that continuity can be achieved by those officers also reverting to their substantive positions within their own Service at the appropriate time during that transitional period. The corporate business, policy and administrative support that was provided by Democratic Services, had reduced over recent months in any event and those officers have, therefore, already reverted back to substantive roles within that Service, while continuing to provide support at a reduced level.

63. The timing of the managed transition process has seen the Coal Team in its current

composition revert to the Planning and Economic Development Service based in the Johnnie Walker Bond from mid-June. On this basis, it is expected that over an approximate four month period, the transition will be complete with Officers, in the main, having been fully integrated into their substantive roles.

64. By end December 2014, as Members are aware, the Chief Executive will have reported on the outcomes of the Management Review. Until then, it is proposed that the current interim Chief Officer and other Officer management arrangements would continue with the Depute Chief Executive maintaining operational oversight of Coal Team activity and the present incumbents in the posts of Executive Director of Neighbourhood Services, Head of Housing and Environment Services and Housing Support Manager & Neighbourhood Co-ordinator, remaining on an acting basis.

65. Future strategic direction, work planning and performance management for opencast

coal and other similar activities will be consolidated and mainstreamed in the Planning Service through established corporate governance arrangements including Service Planning, the Electronic Performance Management System (EPMS), EFQM, Best Value Service Reviews and the National Planning Performance Framework with all of this work to be reviewed by the Executive Director during the course of 2014/15.

66. LEGAL IMPLICATIONS

67. The legal implications of the various issues referred to within this report have been appropriately addressed in the previous reports to Cabinet and Council as detailed throughout this report. In essence, the Council continues to fulfil its statutory responsibilities as both Planning and Environmental Health authority in respect of both operational and former opencast sites in East Ayrshire. For the operational sites, this is being achieved through the enhanced Compliance Monitoring arrangements described in this and previous reports. As regards the former sites, whilst the Council is under no absolute legal obligation to restore these, it does continue to fulfil its statutory responsibilities in respect of any health and safety or contamination issues which might arise, whilst endeavouring to work with relevant others to develop and deliver alternative restoration schemes, with, in some cases at least, associated alternative development proposals, fully utilising the funds which can be recovered from the bonds together with any other additional external, public or private funding which might be available, on a site by site basis. 68. HUMAN RESOURCE IMPLICATIONS

69. Human Resource implications are contained within the relevant sections of this report

and indicate a strengthened resource within Development Management as well as the steps that have been taken to integrate the Coal Team back into mainstream service delivery arrangements and organisational structures with the continued interim management arrangements also described.

70. FINANCIAL AND RISK IMPLICATIONS

71. The actual costs to date for works directly related to issues in this report are shown in the

following table:

Item

Approved Funding

£m

Spend to

date £m Source

Survey Costs 0.100 0.072 Neighbourhood Services Balances Legal Costs 0.065 0.133 General Fund Balance Economic and Social Impact reports 0.020 0.020 Neighbourhood Services Balances Independent Review 0.050 0.034 General Fund Balance Media Support - Open cast 0.018 0.018 Finance & Corporate Support Balance HR Support 0.050 0.014 General Fund Balance

0.303 0.291

72. Survey Costs

73. The figure in the table above represents the actual payment to date. Any future costs will

be met from the budgets available within Planning and Economic development.

74. Legal Costs 75. The spend to date is in excess of the approved funding, however, the Council is seeking

to recover from the Liquidator its legal costs for both rounds of proceedings at the Court of Session which should bring the actual spend back in line with the previous approval.

76. Economic and Social Impact Report

77. This has been completed and a report was presented to Cabinet on 5 February 2014. 78. Independent Review 79. The independent review is complete and the final report has been received by the

Council. 80. Media Support 81. The media support in respect of opencast coal has been completed and costs are within

the approved funding. 82. HR Support 83 Assistance and support to the Head of Human Resources to ensure sufficient

organisational capacity continues. 84. Audit Scotland 85. The Audit Scotland – Shared Risk Assessment: Assurance and Improvement Plan 2014-

2017 was presented to the Governance and Scrutiny Committee on 19 June 2014 and commented that the Local Area Network (LAN), is of the view that Council is taking appropriate steps to respond to the issues arising from the liquidation of the opencast coal mining operators including the impact on local communities. The LAN comprises representatives of all scrutiny bodies who engage with the Council.

86. COMMUNITY PLANNING IMPLICATIONS

87. Consistent with the position previously reported to Elected Members, the impact of the

liquidation of SCCL and Aardvark was significant in relation to Delivering Community Regeneration and, to a lesser extent, the other themes of the Community Plan, namely, Improving Community Safety, Promoting Lifelong Learning and Improving Health and Wellbeing. The Community Planning Partnership Board has been monitoring progress made against the Steps to Recovery and impact of the liquidations features as a priority within the Partnership Board’s Risk Register which is considered at its quarterly meetings.

88. CONCLUSION

89. The Council’s response to the liquidation of SCCL and of Aardvark in 2013 has been led

by the Depute Chief Executive and the Coal Team. This has seen (a) the Council agree and implement Steps to Recovery; (b) a consolidation and enhancement of key policies and procedures, and (c) importantly, significant improvement in the Regulation of Opencast Coal Mining in our area. Further, there has been a continued focus on the recovery of the economy and assisting those who were made redundant back into work.

90. In all of the foregoing, and as set out within this report, there has been notable progress and improvements secured which will continue to influence, in particular, governance arrangements across the Council.

91. Given the achievements, the resources and arrangements now in place, there has been

the opportunity to commence the integration and consolidation of the activity of the Coal Team into mainstream service provision and governance arrangements and which will continue on an incremental basis over an approximate four month period.

92. RECOMMENDATIONS 93. It is recommended that Council:

1. Notes the summary of the actions and the work undertaken in response to the liquidation of the Scottish Coal Company Limited and of Aardvark TMC Limited in April and May 2013;

2. Notes the good progress to date in respect of the Regulation of Opencast Coal Operations and associated matters;

3. Notes the future work programme in relation to the Regulation of Opencast Coal Mining; the restoration of legacy sites and complexes; and supporting the economy of the area, all as summarised within the report and in the Implementation Plan attached at Appendix1 to the report;

4. Agrees to take every opportunity to press Scottish and UK Governments for support in the development and delivery of restoration solutions across the coalfield and in support of our local economy;

5. Agrees to retain both Community Liaison Committees and Technical Working Groups while recognising that these can meet jointly when considered appropriate and convenient to do so;

6. Notes the future management and governance arrangements for addressing all matters set out in the report following the completion of the integration and consolidation of the activity of the Coal Team and its officers which is intended to be achieved by the end of October 2014;

7. Notes the continued management arrangements with the Depute Chief Executive maintaining operational oversight of Coal Team activity and the present incumbents in the posts of Executive Director of Neighbourhood Services, Head of Housing and Environment Services and Housing Support Manager & Neighbourhood Co-ordinator, on an acting basis, pending the completion of the Management Review by end December 2014;

8. Notes that further reports relating to the Regulation of Opencast Coal Operations and associated matters will be presented to future meetings of Cabinet and the Planning Committee, as appropriate; and

9. Otherwise notes the contents of the report. Elizabeth Morton Depute Chief Executive 17 June 2014

LIST OF BACKGROUND PAPERS

None

Members wishing further information should contact Elizabeth Morton, Depute Chief Executive, Tel: (01563) 576518 Email: [email protected]

IMPLEMENTATION OFFICER: Elizabeth Morton, Depute Chief Executive

REGULATION OF OPENCAST COAL MINING IN EAST AYRSHIRE

IMPLEMENTATION PLAN

June 2014

Appendix 1


REGULATION OF OPENCAST COAL MINING – IMPLEMENTATION PLAN

TASK RESPONSIBLE TIMESCALE STATUS

1. OPERATIONAL AND PROCEDURAL 1.a Masterplanning and Related Planning Applications

(i) Continue to consider applications for operational activity, development opportunities and restoration and present reports to the Planning Committee as required.

Team Leader Immediate In progress

(ii) Discontinue Personal Permissions to operators and rigorously monitor conditions attached to permissions (Recommendation 6).

Team Leader Immediate Good progress

(iii) Develop a reporting schedule setting out expected dates when reports relating to current relevant planning applications, as well as for any future applications that are anticipated (Recommendation 9).

Team Leader Immediate Completed

1.b Compliance Monitoring (i) Ensure the availability of two knowledge sets to the Council, firstly to ensure

authoritative advice is provided on methods of working and restoration, and secondly to assess the financial viability of proposals (Recommendation 4).

Operations Manager Immediate Completed

(ii) Further strengthen the Council’s new compliance monitoring arrangements to ensure Mining Progress Plans and Environmental Audits are subject to consultation with key stakeholders with associated procedures to be updated to reflect this practice (Recommendation 11).


(iii) Extend compliance monitoring arrangements to non-operational sites (Recommendation 6/response).

Operations Manager Immediate Good progress

(iv) Conclude the review of the Council’s operational arrangements in respect of the procedures relating to the monitoring of noise from operational sites.


1.c. Section 75 Legal Agreements and Financial Guarantees (i) Develop a policy and procedure whereby any current or future development proposals

that require financial guarantees are considered corporately, led by the Depute Chief Executive, taking into account assessments by: • Independent mining engineers • Finance Services • Legal Services • Planning and Economic Development Services, and • External advice, as required. (Recommendation 7)

Depute Chief Executive

Immediate Completed



(ii) Continue to call up Restoration Bonds, all with a view to supporting and implementing the restoration of sites, reporting to Cabinet and Planning Committee, as required.

Head of Legal Services

Immediate Good Progress

1.d Systems Improvements (i) Develop a rigorous approach to filing, maximising the use of the new e-planning system

and incorporating the facility to alert officers when planning conditions should be discharged or Mining Progress Plans and associated documentation should be submitted (Recommendation 9).

Operations Manager September 2014

Completed

(ii) Complete the installation and roll-out, including training for staff, of the Compliance Monitoring module within the uniform Planning back-office system to accommodate the recording, tracking and reporting of all planning conditions and legal agreements (Recommendation 9/response).


Good progress

(iii) Complete the development of a robust reporting system in line with the implementation of the Compliance Monitoring module to deliver proactive monitoring (Recommendation 9/response).


In progress

(iv) Review existing complaint handling procedures and Uniform back office IT system within the planning service as necessary to deliver a more robust reporting mechanism for consideration by management on a weekly basis (Recommendation 13/response).


In progress

(v) Consideration, on a weekly basis, of outstanding planning conditions and legal agreements, with appropriate action being taken thereafter (Recommendation 9/response).

Team Leaders Immediate Completed

1e. Website Content (i) Make arrangements to publish on the Council’s website all compliance monitoring

reports, subject to completion of required assessment and subsequent action necessary to be taken by the Council in respect of any breach of planning.

Operations Manger Immediate Completed

(ii) Update the Council’s website to provide a central location for hosting all reports in relation to compliance monitoring, Technical Working Groups and Community Liaison Groups to simplify access for the public.

Operations Manger August 2014

Good progress

2. STAKEHOLDER ENGAGEMENT

2.a Continue engagement with all stakeholders, including potential developers, in accordance with

Steps to Recovery approved by Council on 19 September 2013, to develop restoration solutions for all sites/complexes.

Depute Chief Executive/Operations Manager

Immediate Good progress



3. POLICY AND GOVERNANCE

3.a Review of the Minerals and Opencast Coal Subject Plan: As agreed by Cabinet (28

August 2013) in considering the Local Development Plan Main Issues Report, undertake a review of the Minerals and Opencast Coal Subject Plan, engaging with key stakeholders as appropriate, resulting in the preparation of Minerals MIR and accompanying Environmental Report (Recommendation 1).

Development Planning and Regeneration Manger

October 2017

In progress

3.b Consolidation of Technical Working Groups (TWGs) and Community Liaison Committees (CLCs)

(i) Consider combining TWGs and CLCs with the Council taking over lead responsibility for meetings (Recommendation 12). This matter is addressed in the report to Council of 27 June of which this Appendix forms part.

Operations Manger Immediate Completed

(ii) Develop guidance on effective Operating Arrangements for meetings of TWGs and CLCs meetings (Recommendation 12/response).

Team Leader August 2014

Good progress

3.c Review of Planning and Enforcement Charters: Review and revise the Council’s Enforcement Charter to include specific reference to the regulation of opencast coal mining operations along with other mineral and on-shore wind developments (Recommendation 10).

Operations Manager August 2014

Good progress

3.d Planning Guidance and Advice: Develop guidance to assist communities and other stakeholders to better understand the process for consultation, determination and monitoring of planning applications relating to surface mining, including the purpose and significance of related Environmental Statements (Recommendation 2).

Team Leader August 2014

Good progress

3.e Reporting framework to Elected Members (i) Develop a Quarterly reporting schedule to the Planning Committee on compliance

monitoring activity with the Planning Committee undertaking site visits to all opencast coal mines that are the subject of planning applications that come before the Committee (Recommendation 14).

Team Leader Immediate Completed

(ii) Review and update internal procedures to define roles and responsibilities in respect of the preparation and sign-off of planning reports where there are potential financial, legal and risk implications (Recommendation 7)

Team Leader June 2014 Completed

(iii) Review and amend the format of Planning Committee reports for the extension to minerals and opencast coal sites to reflect the restoration implications of the proposed development against the original consented site and detail clear conditions managing the extent of restoration of the new works against the original development (Recommendation 4/response).

Team Leader June 2014 Completed



3.f Review of Risk Registers: Continue to ensure that Corporate, Departmental, Service and Community Planning Partnership Board Risk Registers are regularly reviewed and updated to reflect current and potential risk exposure related to opencast coal, wind energy and infrastructure developments (Recommendation 5).

CMT/Head of Finance Immediate In progress

3.g Emerging National Policy: Continue to contribute to the development of emerging national policy in respect of the opencast coal mining, restoration and regulation.

Head of Planning and Economic Development

Immediate In progress

3.h UK Government Engagement: Seek support from UK Government in relation to funding for restoration of legacy sites.

Chief Executive/Depute Chief Executive


3.i Corporate Governance: On completion of the integration of the Coal Team into mainstream services, Senior Management will remain actively engaged in opencast coal and related matters through existing corporate governance arrangements, thereby providing strategic direction (Recommendation 5/response)

Corporate Management Team/Head of Planning and Economic Development

October 2014

Good progress

4. RESOURCES, SKILLS AND CAPACITY

4.a Review of staff resources

(i) Consider the adequacy of staff resources – numbers and knowledge – for dealing with opencast coal developments, including monitoring compliance with planning conditions and Section 75 Legal Agreements (Recommendation 3).

Depute Chief Executive/Operations Manager

Immediate Completed

(ii) Undertake a detailed staffing review to assess the current total and anticipated future workload of the Planning Service covering all types of planning development applications, taking account of the requirements for specialist sectors such as opencast mining, other mineral developments (quarries) and on-shore wind developments, electrical infrastructure, fracking and landfill developments. This review should also take account of the role, skills and capacity of Enforcement Officers to help support compliance monitoring activities and the assessment of planning applications where appropriate (Recommendation 3/response).

Acting Executive Director of Neighbourhood Services/Head of Planning and Economic Development/Operations Manager

August 2014

Good progress

(iii) As part of this further review, consider the recruitment of permanent staff, as appropriate, to fulfil future work demands and to reflect the requirement for specialist sectors identified above (Recommendation 3/response).

Acting Executive Director of Neighbourhood Services/Head of Planning and Economic

August 2014

Good progress



Development/Operations Manager

4.b Employee Resources and Development (i) Review staff training and development requirements in accordance with the Council’s

established EAGER arrangements, including consideration of specific training for planning staff (including Enforcement Officers) involved in the minerals and opencast coal applications in relation to mining and quarry techniques to raise awareness of industry related matters (Recommendation 3/response).

Team Leaders Immediate In progress

(ii) All Planning Enforcement Officers are engaged in Compliance Monitoring arrangements, supported by an ICT system to record, monitor and manage activity including Planning obligations and legal agreements (Recommendations 3 and 9 responses).

Operations Manager Immediate In progress

(iii) Undertake a full review of training requirements within the Planning Service in particularly in relation to minerals and opencast coal applications; the Council’s Complaints Handling Procedure and its Customer First Commitment (Recommendations 3, 4 and 13/responses).

Heads of Planning and Economic Development and of Democratic Services


4.c Elected Member Development (i) Provide further training for members of the Planning Committee on matters relating

to opencast coal to supplement the training already provided as part of the induction and ongoing personal development programme for Elected Members, including consideration of provision for those who chair or may be called upon to chair such meetings (Recommendation 8/response).

Head of Democratic Services


(ii) Make arrangements for members of the Planning Committee to visit opencast coal sites. (Recommendation 14).

Team Leader February 2014

Completed

(iii) Extend this opportunity to all Elected Members thereafter (Recommendation 14/response).

Team Leader April 2014 Completed

(iv) Make arrangements for a Members’ Seminar on the Council’s Complaints Handling Procedure (Recommendation 13).

Head of Democratic Services/Policy and Planning Team Leader

March 2014

Completed

(v) Make arrangements for a Members’ Seminar on Financial Guarantees. (Cabinet: 21 May 2014)

Depute Chief Executive October 2014

In progress



5. ECONOMIC DEVELOPMENT

5.a Economic Impact Assessment: Implement outcomes of the ECOS Report as approved by

Cabinet on 5 February 2014. Economic Development Manager


5.b Supporting Transformational Change: Seek support from Scottish Government, for strengthening our Business Base, Attracting Investment; and Promoting East Ayrshire

Economic Development Manager


5.c Supporting Employment: Continue to work with partner agencies to promote employment opportunities and to support the supply chain.

Economic Development Manager

Immediate Good progress

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