R (on the application of Finch on behalf of the Weald Action Group) v Surrey County Council and others [2024] UKSC 20

On 20 June 2024, the UK Supreme Court, by a majority of 3 to 2, quashed the granting of planning permission in the case of R (on the application of Finch on behalf of the Weald Action Group) v Surrey County Council and others. This is a notable judgment regarding the scope of Environmental Impact Assessment ("EIA") in respect of considering "indirect effects".

The developer had sought planning permission from the Council to retain and expand an existing onshore oil well site and to drill four new wells, which would enable the production of hydrocarbons from six wells over a period of 25 years, a project for which EIA was mandatory. The issue the Court had to consider was whether the Council was required as part of the EIA to assess the impacts of "downstream" or scope 3 (categorised under the GHG Protocol as emissions that arise as a consequence of the activities of the entity but occur from sources not owned or controlled by the entity) greenhouse gas emissions which would arise from the end use of the refined crude oil.

The Council had not included the combustion emissions in the EIA for the proposed project. The High Court (Holgate J) had agreed with the Council's approach finding that downstream emissions could not as a matter of law be an effect of the development for the purposes of EIA. The Court of Appeal had disagreed with the High Court that it was legally incapable of being an effect requiring EIA assessment, and that ultimately whether any particular impact was a likely significant effect was a matter of fact and evaluative judgment for the competent authority.

The Supreme Court decision focused on the direct and indirect significant effects of a project. Under Article 3(1) of the EIA Directive the competent authority is required to “identify, describe and assess in an appropriate manner, in the light of each individual case, the direct and indirect significant effects of a project” on various factors, which include “climate.” The Court found that the assessment of the likely significant effects of a project extend not only to the construction of the project, but to the use and exploitation of the end product of those works. The downstream emissions of combusting oil were found to be an indirect effect of the development proposed.

In particular, the Supreme Court considered whether the effects of a project within the scope of the EIA Directive is a question of causation. In the case of oil production, the Court noted that the causal connection meets the "but for" legal test – i.e. whether X is a necessary condition for the occurrence of Y. Therefore, in this case, but for the extraction of oil, the oil would have stayed in the ground and so would not be burnt. In determining the required scope of an EIA, the Court found that the inquiry is forward-looking: on the assumption that the project goes ahead, what possible future effects on the environment will constitute “effects of the project” which (if significant) must therefore be assessed? The Court noted that EIA Directive answers that question by imposing the test of whether the effect is “likely”.

In considering the likelihood of a significant effect, the Court then compared the manufacture of oil to that of steel, in an instructive passage, as follows:

"121. Oil is a very different commodity from, say, iron or steel, which have many possible uses and can be incorporated into many different types of end product used for all sorts of different purposes. In the case of a facility to manufacture steel, it could reasonably be said that environmental effects of the use of products which the steel will be used to make are not effects of manufacturing the steel. That is because the manufacture of the steel is far from being sufficient to bring about those effects. Such effects will depend on innumerable decisions made “downstream” about how the steel is used and how products made from the steel are used. This indeterminacy regarding future use would also make it impossible to identify any such effects as “likely” or to make any meaningful assessment of them at the time of the decision whether to grant development consent for the construction and operation of the steel factory.

122. Similar considerations apply to Holgate J’s examples of manufacturing components for use in the construction of motor vehicles or aircraft. Where a component is manufactured which forms a small part of a much larger object, such as a motor vehicle or aircraft, the view might reasonably be taken that the contribution of the component is not material enough to justify attributing the impact on the environment of the end product to the activity of manufacturing the component part. In any event, the number of motor vehicles or aircraft in which such parts will be incorporated and the use which will subsequently be made of them may be so conjectural that no realistic estimate could be made of GHG emissions arising from such use on which a reasoned conclusion could be based. I have discussed above that the EIA process does not require that attempts be made to measure or assess putative effects which are incapable of such assessment.

123. But that is not the position here. The oil produced from the well site will not be used in the creation of a different type of object, in the way that a component part is incorporated - along with many other different and equally necessary components - in manufacturing a motor vehicle or aircraft. Refining the oil is simply a process that it inevitably undergoes on the pathway from extraction to combustion. Nor is there any element of conjecture or speculation about what will ultimately happen to the oil. It is agreed that it will inevitably be burnt as fuel. And a reasonable estimate can readily be made of the quantity of GHGs which will be released when that happens."

Therefore, the Supreme Court determined that the climate effects from drilling the oil wells is not only a likely possible effect but an inevitable one. As the extraction of oil is not just a necessary condition of burning the fuel. It is also sufficient to bring about that result because of the guarantee that it will be refined and burnt which is thereby the strongest causal connection.

This Judgment aligns with the approach of the Irish Supreme Court in An Taisce - The National trust for Ireland v An Bord Pleanala, Kilkenny Cheese Limited and Ors. Although the Supreme Court of Ireland had agreed with the UK High Court decision in this Finch case (i.e. Holgate J), that the indirect effects of a project must be effects which the project itself has on the environment, the Irish Supreme Court had left one caveat for special and unusual cases where the causal connection between certain off-site activities and the operation and construction of the project itself is demonstrably strong and unbreakable such that the significant indirect environmental effects of those activities would be required to be subject to an EIA. The UK Supreme Court agreed with the Irish Supreme Court's analysis as follows:

1. An alternative open-ended interpretation of Article 3(1) would mean that there were “hardly any limits but the sky” regarding the extent of indirect effects of a project which had to be brought into account in the EIA for that project;
2. The language of article 5(1) and in Annex IV, point 1, para (c) strongly suggests that the information to be supplied must be firmly tethered to the project itself, so that the indirect significant effects to be assessed must be intrinsic to the construction and operation of the project; and
3. The EIA Directive was ultimately designed to assist in identifying and assessing the direct and indirect significant environmental effects of a specific project, including (post-2014) the climate change effects of such a project, and its scope should not be artificially expanded beyond this remit and it should not be conscripted into the general fight against climate change.

Therefore, the overall finding in the two Courts were different but the reasoning is the same.

The UK decision is particularly important as it notes the limitations of the role the EIA Directive plays in relation to combating climate change. Whilst climate impacts are a factor to consider in assessing any given project, downstream greenhouse gas emissions should only be assessed where there is a clear causal connection with the project.

Although, the judgment is not binding in the Irish Courts it is of persuasive legal effect as Irish Courts often look to the UK Courts for guidance from another Common Law jurisdiction.

Written by: Jonathan Moore and Niamh McDonnell