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The Operation and Effectiveness of National Planning Policy Guideline 16: Opencast Coal and Related Minerals

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THE OPERATION AND EFFECTIVENESS OF NATIONAL PLANNING POLICY GUIDELINE 16: OPENCAST COAL AND RELATED MINERALS

CHAPTER THREE TRENDS IN PRACTICE

3.1 This Chapter presents the study findings in relation to overall levels of opencast coal production throughout the UK between 1994 and 2003 and planning applications and decisions within Scotland during the same period.

PRODUCTION AND MARKETS

3.2 In examining trends in the levels of opencast coal production it is important to recognise that a complex relationship exists in relation to the principal market of electricity generation. As a consequence of UK Energy Policy and increasing deregulation of the electricity industry, the market for Scottish opencast coal is not simply confined to supply to the two coal fired power stations at Longannet and Cockenzie, nor in the supply of electricity to consumers are the generators constrained by the availability or otherwise of any particular fuel. Accordingly, it must be acknowledged that Scottish opencast coal producers do not operate in an environment of market security, but rather one, which is highly competitive, volatile and far from guaranteed.

3.3 There is no obligation on the power generators to use any Scottish produced coal, with coal imported from abroad freely available, and alternative fuels also available for generation purposes. Scottish coal is therefore used within the electricity industry as a matter of choice, not necessity.

3.4 Although no reliable information is available on the level of coal imports into Scotland from abroad, it is understood to be in the order of approximately 1 million tonnes per annum in recent years. This is in marked contrast to the position in England, where coal imports have steadily increased to replace lost production capacity particularly from within the deep mines sector. It must be recognised that potential over-reliance on imported coal can be problematic, insofar as internationally, coal is traded in dollars and can be significantly affected by fluctuations in exchange rates. Short term fluctuations in availability can also arise, but can largely be overcome through increasing levels of stockpiling. While it may be supposed that reductions in domestic coal production will have overall environmental benefits through corresponding reductions in coal-burn at power stations, experience in England clearly demonstrates this is not the case. Indeed, it may be considered that given national commitments to sustainability principles, it is contrary to such principles to encourage the use of coal transported over very lengthy distances from abroad in preference to local indigenous sources of supply.

3.5 Within the Scottish electricity market, there is an obligation on generators to use nuclear generated power, and power from renewable sources. The market proportion of the latter will continue to rise in the future. At periods of low electricity demand, base load requirements can be entirely met without any use of the coal-fired capacity. However, this capacity is of crucial importance insofar as it is necessary in meeting peak demands, and provides both flexibility and security in the event of any disruption to supply from other sources. This important role for coal-fired capacity has been amply demonstrated in the past two years, during which major disruptions affecting both of Scotland's main nuclear stations at Torness and Hunterston. A key feature of the coal-fired generation capacity is that it can be brought on-stream relatively quickly, and if necessary, the opencast industry can increase and maintain coal supplies to sustain generation output. This latter feature has become of importance in recent years, as the privatised generators hold much lower levels of coal stocks than was traditionally the case, and increased imported coal sources may not be available within the required timescale.

3.6 In addition to these current aspects of the Scottish requirements for domestic electricity supply, coal produced in Scotland has traditionally been exported to Northern Ireland. Historically, the level of export to serve the NI domestic and electricity markets was in the order of 1mt per annum. That market has changed significantly in recent years, primarily due to efforts to diversify power generation and fuel sources within NI. More importantly, the recent construction of an electricity inter-connector offers different opportunities. While a conventional view is that in the future part of the NI market will be served by electricity generated from Scotland, potentially increasing the annual Scottish coal burn, an alternative view is that the inter-connector offers prospects for electricity imports to Scotland in the longer term.

3.7 This position also exists in relation to the English market, which is served both by the export of coal for use by the power generators in England, and through the export of electricity generated by coal burn within the Scottish power stations. Again with the recent upgrading of the inter-connector to England, this facilitates imports of English generated power to Scotland, and should not be seen simply as a means of exporting Scottish power.

3.8 Given the relatively volatile nature of the electricity generation market, demand for Scottish coal from the Scottish power generators can fluctuate considerably. While historically this market was in the order of 3 to 6 million tonnes, part of the supply originated from the deep mines sector. That position has now changed with the closure of the last deep mine at Longannet, and as a consequence, all coal produced in Scotland originates from opencast sites.

Table 3.1 Scottish Coal Market (Million Tonnes)

Market

1998

1999

2000

2001

2002

Electricity Generation

5.5

5.5

7.0

5.7

6.2

Other

0.5

0.4

0.4

0.3

0.3

TOTAL

6.0

5.9

7.4

6.0

6.5

Source: Confederation of UK Coal Producers, 2003

3.09 The future demand for coal in Scotland will be strongly influenced by the remaining life of the two power stations at Longannet and Cockenzie, although as noted above this does not represent the total demand for Scottish-won coal. It is understood that it is intended to continue operating Cockenzie until 2010, and Longannet until at least 2015. However, with restrictions relating to atmospheric emissions (EC 2001/80/EC Large Combustion Plant Directive) due to commence in January 2008, significant restrictions on the operation of both stations may arise unless flue gas desulphurisation plant is installed. There appears little prospect of this investment being made at Cockenzie in particular. As such, it is important to acknowledge that the greatest threat to the future of the Scottish coal industry probably arises from future changes in the market, and this places the difficulties in obtaining planning permission into a somewhat different perspective.

TRENDS IN COAL PRODUCTION

3.10 Table 3.2 below provides an over-view of coal production trends within the United Kingdom.

Table 3.2 UK Coal Production 1994 - 2002

Year

Scotland
(mt)

England
(mt)

Wales
(mt)

TOTAL

Scottish Contribution
%

1994

49.000

1995

6.745

39.532

3.310

49.587

13.6

1996

6.761

38.773

3.188

48.722

13.9

1997

8.376

35.453

2.655

46.484

18.0

1998

7.973

29.834

2.281

40.088

19.9

1999

8.248

25.784

2.171

36.203

22.8

2000

7.771

21.019

2.137

30.927

25.1

2001

8.927

20.827

1.982

31.736

28.1

2002

7.274

20.502

1.794

29.570

24.6

Source: Derived from The Coal Authority Production and Manpower Returns
Notes: (1) All figures are rounded to nearest thousand tonnes

(2) Figures relate to the calendar year

3.11 Table 3.2 illustrates the overall pattern of decline in UK coal production. It must however be noted that as overall UK won coal has declined, imports have steadily increased. It clearly illustrates the increasing importance of Scottish coal to overall production.

Table 3.3 UK Opencast Coal Production

Year

Scotland
(mt)

England
(mt)

Wales
(mt)

TOTAL

Scottish Contribution
%

1994*

4.947

15.554

31.5

1995

4.942

8.465

2.263

15.670

31.5

1996

5.149

8.799

2.194

16.142

31.9

1997

6.531

8.250

1.924

16.705

39.1

1998

6.204

7.330

1.497

15.031

41.3

1999

7.263

6.499

1.515

15.277

47.5

2000

7.003

4.974

1.439

13.416

52.2

2001

8.030

5.060

1.264

14.354

55.9

2002

7.143

4.966

1.040

13.149

54.3

Source and Notes: As for Table 3.2 above
* Figures relate to financial year 1994/ 95

Table 3.4 Opencast Coal Production in Scotland by Area (All figures expressed as '000 tonnes)

Planning Authority

1995

1996

1997

1998

1999

2000

2001

2002

Clackmannanshire

4.7

7.2

130.6

128.7

315.1

226.6

221.1

130.7

East Ayrshire

971.4

1532.1

2224.5

2201.4

2959.1

3273.1

4203.9

4250.8

East Lothian

442.4

33.4

142.6

212.6

513.8

167.8

0

0

Falkirk

123.7

140.9

142.7

13.8

0

0

0

0

Fife

874.3

540.1

880.9

488.9

631.0

738.3

822.6

716.0

Midlothian

445.9

611.2

297.5

227.8

225.8

175.8

293.5

271.4

North Lanarkshire

461.6

473.5

655.9

590.7

692.1

705.4

744.8

432.9

Perth & Kinross

307.4

136.9

29.1

16.8

0

0

0

0

South Lanarkshire

1201.4

1613.9

1966.3

2225.4

1905.8

1715.5

1744.6

1341.4

West Lothian

108.8

60.0

60.9

97.9

20.2

0

0

0

Source: Derived from The Coal Authority Production and Manpower Returns
Notes: (1) All figures are rounded to nearest thousand tonnes
(2) Figures relate to calendar year

3.12 The key feature shown in Table 3.4 is the increasing concentration of opencast production within specific areas. This further reinforces the findings of previous research undertaken in Scotland by RSK Environmental Ltd. (Scottish Office, 1997). The most striking feature is the steady increase of output from East Ayrshire to a level of 4.250mt in 2002. This output compares with a total opencast output for the whole of England of 4.965mt in the same year.

Table 3.5 Distribution of Opencast Coal Working Sites in Scotland

Planning Authority

1995

1996

1997

1998

1999

2000

2001

2002

Clackmannanshire

0

1

1

1

3

3

1

1

East Ayrshire

5

10

13

15

17

13

13

11

East Lothian

1

1

2

2

1

1

1

0

Falkirk

6

3

3

2

0

0

0

0

Fife

4

7

8

8

9

6

8

6

Midlothian

4

4

4

4

2

2

2

2

North Lanarkshire

11

10

10

9

6

5

4

3

Perth & Kinross

3

4

1

1

0

0

0

0

South Lanarkshire

5

5

6

5

6

5

6

5

West Lothian

2

2

2

2

1

0

0

0

Source: Derived from The Coal Authority Production and Manpower Returns

PLANNING APPLICATIONS AND DECISIONS

Table 3.6 Opencast Coal Planning Applications Submitted throughout Scotland

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003*

18

26

21

17

25

10

6

6

7

2

Note: * 2003 figure refers to period January to June only
Source: Questionnaire Survey of Planning Authorities; Coalpro and Scottish Executive (RSK Study)

3.13 Although the number of planning applications has clearly declined in the period since the publication of NPPG16, it cannot simply be presumed that this is a consequence of the more rigorous requirements associated with this national guidance. By comparison with previous research (Scottish Office, 1997) it is evident that these figures may be viewed as part of a generally declining trend found throughout the 1990's. Although the number of applications may have reduced, a distinguishing feature also found in the previous research, has been a significant increase in the scale of individual developments. The effect of this trend, primarily driven by economies of scale in production, has been that the market can be served by a smaller number of sites. This trend is also found within the aggregates sector of the minerals industry.

3.14 The trend in application numbers has also been influenced by a number of other factors. These include the removal of the legislative restriction on the size of privately operated sites previously licensed by NCB/ British Coal, and changes associated with privatisation and deregulation of the coal and electricity industries. With a number of the major coal supply contracts up for renewal in the late 1990's, there is little doubt that most coal companies were seeking to secure their potential sources of future supply in order to be able to bid for the new contracts. This was reflected in the increase in application numbers in the mid-1990's. Given delays in decision-making and lead-in periods prior to coaling commencing on site, many sites currently being worked were the subjects of applications originally submitted at that time. This time lapse in bringing sites into production may have also contributed to the apparent decline in application numbers from 1999. It is of particular importance to recognise that as a consequence of these trends, the effects of NPPG16 are not yet seen in levels of production (Table 3.3 & 3.4), but with declining application numbers (Table 3.6) will not be fully evident for at least 2 or 3 years.

3.15 In addition, there is no doubt that the costs of developing proposals for the working of a site have also dramatically increased in recent years. This is a product of not simply more rigorous requirements of the planning system and the environmental impact assessment process, but has been affected by other legislative regimes including those intended to protect the environment. Given that this expenditure is regarded as carrying a high risk with the outcome far from guaranteed, companies have become somewhat more cautious in approach. The financial cost of a failed application is high, not simply in terms of lost potential profits, but in real terms.

Table 3.7 Planning Applications Submitted by Planning Authority Area

Planning Authority

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

Clackmannanshire

1

2

1

0

3

3

0

0

0

0

Dumfries and Galloway

0

0

0

0

0

1

0

0

0

0

East Ayrshire

4

8

7

3

7

3

2

3

2

0

North Ayrshire

0

0

0

0

0

0

0

0

0

0

South Ayrshire

0

0

0

1

1

0

0

0

0

0

Falkirk

1

1

0

3

3

1

0

1

1

0

Fife

5

6

1

5

5

1

2

1

2

1

East Lothian

0

2

2

1

0

0

1

0

0

0

Midlothian

2

0

0

2

0

0

0

0

1

0

West Lothian

0

0

2

1

2

0

0

0

0

1

North Lanarkshire

2

3

3

0

1

1

1

1

1

0

South Lanarkshire

1

4

5

1

2

0

0

0

0

0

Perth and Kinross

2

0

0

0

1

0

0

0

0

0

Scottish Borders

0

0

0

0

0

0

0

0

0

0

Note: Years refer to year of submission of the planning application, not the year of decision
Source: Questionnaire Survey of Planning Authorities; Coalpro, Scottish Coal and Scottish Office (1997)

3.16 The figures shown in Table 3.7 above must be treated with very considerable caution. While in general terms they further confirm the trend towards the concentration of opencast development within certain geographic areas, they do not give an accurate in-sight to where opencast production can be anticipated in the future.

3.17 This is perhaps best illustrated by reference to the above figures relating to Clackmannanshire and South Lanarkshire. In both of these areas, no new planning applications have been submitted since 1999 and 1998 respectively, which might superficially suggest that future interest in working in these areas is low. In reality, this is not the case, indeed both areas are likely to remain significant centres of production. For Clackmannanshire, at least three sites have been the subject of recent interest with at least one significant application likely to be lodged. For South Lanarkshire, which is the second largest centre of production in Scotland, relatively recent consents have been granted for two major sites. The time scale and scale of these sites is such that it will remain a significant centre of production for the next 8 years at least, even without any further applications.

3.18 The distribution of applications does however suggest that while proposals for working have tended become concentrated in particular areas, it should not simply be assumed that the likelihood of applications elsewhere can be ignored. The case of Dumfries and Galloway illustrates the point that any planning authority with coal reserves within its area should anticipate the prospect of proposals for working. In this case, having not dealt with an opencast coal development proposal for at least 9 years, an application for a 2mt proposal was submitted in 1999.

Table 3.8 Planning Applications Determined by Planning Authorities throughout Scotland

Decision

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

Approved

2

9

19

11

8

7

4

7

11

2

Refused

2

6

4

2

5

4

6

1

0

0

Withdrawn/ Not Determined

3

0

0

2

7

1

2

0

1

12

Source: Questionnaire survey
Note: This Table does not include appeal decisions.

3.19 Broad trends in decision-making can be identified from Table 3.8, which can be related to the publication of NPPG16. In particular, it is evident that the publication of NPPG4 Annex A in 1998, and NPPG16 in 1999 had the effect of slowing down the issue of decisions. Indeed a notable feature of the apparent increase in the numbers of applications approved in 2001 and 2002 is that many of these decisions relate to applications originally submitted in 1997 and 1998. There is some evidence to suggest that amendments to original schemes in order to comply with NPPG16 requirements were relatively common. Further evidence of the effect of the emerging new national guidance is found in the unusually high number of applications withdrawn in 1998. Again, there is evidence that this was to revise proposals in accord with the new requirements.

Table 3.9 Planning Permissions Granted by Planning Authorities

Planning Authority

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

Clackmannanshire

0

0

1

0

1

1

0

1

0

0

Dumfries and Galloway

0

0

0

0

0

0

0

0

1

0

East Ayrshire

0

1

8

3

5

3

1

3

3

1

North Ayrshire

0

0

0

0

0

0

0

0

0

0

South Ayrshire

0

0

0

0

0

0

0

0

0

0

Falkirk

0

0

1

0

0

0

1

0

0

0

Fife

0

2

3

3

1

2

1

1

3

1

East Lothian

0

0

1

1

0

0

0

0

0

0

Midlothian

1

1

0

0

0

0

0

0

0

0

West Lothian

0

0

1

1

0

0

0

0

1

0

North Lanarkshire

1

1

3

0

0

0

0

1

2

0

South Lanarkshire

0

2

1

3

0

1

1

1

1

0

Perth and Kinross

0

2

0

0

1

0

0

0

0

0

Scottish Borders

0

0

0

0

0

0

0

0

0

0

TOTALS

2

9

19

11

8

7

4

7

11

2

Source: Questionnaire survey
Notes: This Table refers only to those applications determined by the planning authority and excludes those applications granted planning permission on appeal. It also excludes cases where the planning authority has resolved to grant planning permission but is awaiting conclusion of a Section 75 Agreement prior to the issue of a decision.

3.20 Table 3.9 provides a good indicator of the increased concentration of working within particular geographic areas. Although it is inappropriate to examine and compare "success" rates between different planning authorities, it very clearly highlights those areas of Scotland in which appropriately located and designed proposals will continue to be granted planning permission. The converse position cannot be readily distinguished, insofar as where no or so few applications have been submitted, no clear pattern of decision trends can be identified.

Table 3.10 Planning Permissions Refused by Planning Authorities

Planning Authority

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

Clackmannanshire

0

1

0

0

1

1

2

0

0

0

Dumfries and Galloway

0

0

0

0

0

0

0

0

0

0

East Ayrshire

1

2

0

0

0

1

0

0

0

0

North Ayrshire

0

0

0

0

0

0

0

0

0

0

South Ayrshire

0

0

0

0

1

1

0

0

0

0

Falkirk

0

0

0

0

0

0

2

0

0

0

Fife

1

1

1

0

1

1

0

1

0

0

East Lothian

0

0

1

1

1

0

1

0

0

0

Midlothian

0

0

0

0

0

0

0

0

0

0

West Lothian

0

0

0

0

0

0

0

0

0

0

North Lanarkshire

0

1

0

1

1

1

0

0

0

0

South Lanarkshire

0

1

2

0

0

0

0

0

0

0

Perth and Kinross

0

0

0

0

0

0

0

0

0

0

Scottish Borders

0

0

0

0

0

0

0

0

0

0

TOTALS

2

6

4

2

5

5

5

1

0

0

Source: Questionnaire survey
Note: This Table refers only to those applications determined by the planning authority

3.21 In common with the previous Table, some caution must be exercised in seeking to place interpretations or explanations on the figures shown in Table 3.10. The key feature highlighted is the apparent reduction in the numbers of refusals issued since publication of NPPG16. There are two potential explanations for this trend. The first is that planning authorities are simply approving most applications in front of them for decision. This is clearly not the case as reflected in increasingly lengthy periods for determination and claims by the industry that it is being more harshly treated within the planning system than other sectors of industry. The second and more likely explanation is that NPPG16 is proving to be highly effective in practice. In particular, as a consequence of the costs of an unsuccessful planning application, most companies are apparently only submitting applications that accord with the criteria of NPPG16 and associated development plan policies, and in such circumstances, permissions are likely to be forthcoming.

DELAYS WITHIN THE DECISION MAKING PROCESS

3.22 Although the statutory period for determination of planning applications is 2 months, that period is increased to 4 months for those developments subject to EIA. It is generally accepted that these statutory periods are quite inadequate in relation to opencast coal developments, given the complexity of the issues typically raised. Notwithstanding that position, the timescale for the determination of such applications may be regarded as excessive in many cases.

3.23 It is also evident that delays within the decision-making process have increased in recent years. Bearing in mind that the typical scale of development has increased, and increasing use of EIA during the study period such delays may be seen as inevitable. Recognising the relatively small number of cases involved some caution must be exercised in both quoting average times for the consideration and determination of applications, and in seeking to draw general conclusions. However, while acknowledging these limitations, it was found that during the study period the average time taken to determine a "typical" opencast coal application had increased from 6 - 10 months in 1994, to in excess of 2 years by 2002. It must be noted that there are some significant variations from these figures. For cases also subject to appeal, time scales in the order of 4 years from the date of the original application to issue of final decision, are not uncommon. Where such time scales are involved, considerable changes in circumstances can arise, including revised policy issues, which require re-evaluation within the decision-making process.

3.24 The reasons for delay within the decision-making process are numerous and varied depending on the circumstances of individual cases, and do not fall within the remit of this study. However, it is evident that the most significant delays are associated with those cases where the need for further study of potential impacts arise during course of consideration of the application, and the need to conclude Section 75 Agreements. In relation to the former, the need for further study often arises as a consequence of issues raised by bodies consulted by the planning authority. In relation to the latter, it is common practice that a planning authority will intimate that it is minded to grant planning permission, but will withhold the issue of a decision until such time as the necessary legal agreements are concluded.

Table 3.11 Planning Appeals Lodged

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2

1

3

2

4

2

3

1

1

0

Source: Questionnaire survey
Note: Includes appeals subsequently withdrawn by the appellant

Table 3.12 Planning Appeals - Cases Upheld (Approved)

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

0

0

1

1

0

0

0

1

0

0

Source: Questionnaire survey

3.25 Some considerable caution must exercised in drawing conclusions from the figures in Tables 3.11 and 3.12 above, given the small number of cases involved. Superficially, it might appear that the success rate on appeal is unusually low, with 3 appeals having being upheld from a total of 19 appeals lodged during the study period. The success rate on appeal for all forms of development is consistently in the order of approximately 30%. However, a distinctive feature of these opencast coal cases has been an unusually high number of appeals withdrawn - at least 6. In some cases it is known that an appeal was lodged simply to protect the developers position, while discussions proceeded with the planning authority on revised proposals.

3.26 The low number of cases proceeding through the appeals system serves to illustrate that, bearing in mind the high costs of failure to obtain consent, companies are adopting a more cautious approach not only at the initial application stage, but in exercising their right of appeal.

3.27 Some appeal cases, notably since publication of NPPG16, are further examined in Chapter 5 of this report.

CONSENTED RESERVES

3.28 The issue of consented reserves has been of particular concern to the coal industry in recent years, reflected in its petition to the Scottish Parliament. The concerns focussed on the rate at which planning permissions were forthcoming in the period since the publication of Annex A to NPPG4 and subsequently NPPG16. In terms of tonnage, a situation had been created in which reserves were being depleted through extraction at a faster rate than new reserves were being permitted through the granting of planning permissions. A study commissioned by Coalpro and completed in April 2001 suggested that likely problems of supply would arise around 2004 (optimistic assumptions) or by 2003 based on a pessimistic scenario. This study was based on analysis of planning decisions between October 1998 and December 2000.

3.29 With the full co-operation of Coalpro, this study rolled forward the earlier work adopting the same methodology. Data supplied by the industry was verified by information supplied by the planning authorities through the questionnaire survey.

3.30 This study suggests that in the period from January 2001 to June 2003 the position regarding working and consented reserves has increased from 32.4mt to 36.1mt. In addition, a further 13mt (approx.) has been approved, but the issue of a decision notice has been delayed awaiting the conclusion of legal agreements. On the basis of the most recent annual rate of extraction taken as 7mt, this represents a reserve of 5.2 years of working, or taking into account those consents awaiting issue, a reserve of 7.0 years. On the basis of the requirements of the Scottish coal market only, with an average consumption of 6.36mt over the past 5 years, the reserves will maintain supply for 5.7 years, or taking account of awaited consents, 7.7 years. This would suggest that existing reserves are adequate in the short to medium term, and even without further consents, take supply beyond the critical date of January 2008 at which time significant reduction in Scottish coal burn in the power stations might be anticipated.

3.31 However, it must be recognised that these figures must be treated with considerable caution, insofar as they potentially mask problems within the industry. In particular, it must be acknowledged that a disproportionately high percentage of the reserves are held by Scottish Coal, as the dominant company operating within Scotland and producing over 70% of Scotland's coal. The terms of conditional licences received by that company at privatisation required conversion into operating licences (for which planning permission is required) by December 2004, after which they would revert back to the Coal Authority. As such, the actual rates of future depletion of reserves will be strongly influenced, not on the assumptions made above, but on the commercial decisions of that company. In contrast, there is evidence to suggest that other Scottish coal companies are in a less fortunate position.

3.32 However, while this may represent a significant issue for the industry, it is not a concern of the planning system. Indeed, a notable feature of NPPG16 reflecting national energy policy, is that power generators are at liberty to choose their sources of supply as they see fit. The implication of that position is that it is not for planning authorities or the planning system in general to intervene in any way with the operation of the market, or seek to influence supply.