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

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

Finch, on behalf of the Weald Action Group, sought judicial review of the Surrey County Council’s decision granting planning permission for a project to expand oil development and extraction for commercial purposes at a well site at Horse Hill in Surrey, England. Four new wells would be added, with oil extraction planned for a period of 20 years. Id. at paras. 7 and 31.

The Supreme Court of the United Kingdom reviewed the decision of the Court of Appeal. The issue on appeal was “whether, under the EIA Directive and the 2017 Regulations, it was lawful for the council not to include combustion emissions in the EIA for the proposed project”. Id. at para. 52. By a three-two majority, the Court held that the Council’s decision was unlawful. 

The 2017 Regulations are the UK statutory instrument implementing Directive 2011/92/EU, the European Union’s EIA Directive. Id. at para. 9. The Council granted consent for the project in September 2019, before the United Kingdom left the EU. The Court therefore clarified that it restricted its analysis to the law as it stood at the time of the Council’s decision, when the United Kingdom was still a member of the EU. Id. at para. 10. (The Court noted that it was not suggesting “that the analysis of this case is affected by any changes made to English law as a result of Brexit.” Id.)

The EIA Directive requires that projects likely to have a significant effect on the environment must conduct an assessment of the significant effects and seek development consent in order to proceed. Id. at para. 12. Projects involving extraction of petroleum in an amount exceeding 500 tonnes/day are included in a list of projects considered inherently likely to have a significant effect on the environment. Id. at para. 14 (citing to Annex I of the EIA Directive). The Court acknowledges that “it is agreed” the project here falls within this category. Id. Under the Directive, the EIA must “‘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.’” Id. at para. 16 (quoting Article 3(1) of the EIA Directive).

The Council issued a scoping opinion on the project, which recommended that because the project concerned fossil fuels, the assessment “should consider, in particular, the global warming potential of the oil and gas that would be produced by the proposed well site.” Id. at para. 33. The developer did not comply with this recommendation, and stated in the EIA that the assessment was confined to direct releases of greenhouse gasses because the “essential character” of the development does not extend to the subsequent use of hydrocarbons outside the control of the site operators, and that downstream emissions are regulated by other planning regimes. Id. at paras. 34-35. The Council accepted the developer’s arguments for failing to comply with the scoping opinion, and granted planning permission for the project. Id. at paras. 37-38.

In reviewing the decision before it, the Court used recognized terminology to classify GHG emissions into three categories, referencing Scope 1, 2 and 3 emissions. The Court explained that the Council accepted the developer’s EIA, which restricted its assessment to Scope 1 emissions (direct emissions “from within the well site boundary”). Id. at 43.

The Court noted that it is an agreed fact on appeal that “it is inevitable that oil produced from the site will be refined and, as an end product, will eventually undergo combustion, and that that combustion will produce GHG emissions.” Id. at para. 45. The Court’s analysis thus centered on whether the Scope 3 emissions (indirect, downstream emissions) should have been considered in the EIA under the EIA Directive’s requirement to assess “direct and indirect” effects of a project. Id. at para. 83.

The Court noted that the EIA Directive imposes no geographical limit on the extent of the environmental effects of a project that must be assessed, stating that “there is no principle that, if environmental harm is exported, it may be ignored.” Id. at para. 93. The Council was therefore incorrect in failing to take into account emission effects occurring outside of the project site, whether those effects were inside or outside the territorial jurisdiction of the UK. Id. at 94.

After reviewing the EIA legislation, the Court found that the reasoning given by the developer and accepted by the Council to limit the scope of the assessment was flawed. The Court addressed the developer’s first line of reasoning: “The fact that the combustion emissions would emanate from activities beyond the well site boundary which were not themselves part of the project was not a valid reason to exclude them.” Id. at para. 102. The Court rejects the developer’s argument that GHG emissions from burning the extracted oil are beyond the control of the site operator. Instead the Court finds a clear connection, “If no oil is extracted, no combustion emissions will occur. Conversely, any extraction of oil by the site operators will in due course result in GHG emissions upon its inevitable combustion.” Id. at para. 103.

The Court also rejected lack of available mitigating measures as an excuse not to include downstream emissions in an EIA:

Identifying mitigating measures, where they are available, may be a valuable result of the EIA process. But it is not its sole – or even its main – purpose. If there are no measures which could be taken to mitigate adverse environmental effects of a project, then this is itself something the decision-maker and the public need to know. The EIA process would not fulfill its essential purpose of ensuring that decisions likely to affect the environment are made on the basis of full information if the fact that significant adverse effects are unavoidable were treated as a reason not to identify and assess them.

Id. at para. 105.

The Court then turned to the developer’s second excuse for limiting the EIA, which is that downstream emissions can be excluded on the justification that other environmental or pollution regimes will operate effectively to reduce or mitigate environmental harm. The Court considers this “clear legal error.” Id. at paras. 106-108. 

An assumption made for planning purposes that nonplanning regimes will operate effectively to avoid or mitigate significant environmental effects does not remove the obligation to identify and assess in the EIA the effects which the planning authority is assuming will be avoided or mitigated. 

Id. at para. 108.

The Court affirmed the importance of the EIA and EIA process, noting that the global warming effects of a project must be properly assessed so that public debate can take place on an informed basis – “a key democratic function of the EIA process” that was not fulfilled in this case. Id. at para. 154. The Court therefore rejected the argument that climate change is an issue of national policy and should not be considered by local planning councils as part of an EIA.

In turning to case law on the issue, the Court noted that there is no previous decision of the Court or the Court of Justice of the European Union on this question. The Court looked at four cases, one of which was Norway’s Greenpeace Nordic case. This case addressed the same issue on appeal here and made the finding that combustion emissions from petroleum extraction must be considered an indirect effect on the climate under the EIA Directive. Id. at para. 172. As a judgment of a foreign court this decision was not authoritative, but the Court found its reasoning persuasive. Id. at 173.

The Court concluded that the Council’s decision to grant planning permission for the oil development project at Horse Hill was unlawful because 1) the EIA did not assess the climate effect of combustion of the oil to be produced, and 2) the developer and Council’s reasons for not doing so were flawed.

Other aspects of the decision worth highlighting:

The Court rejected the developer’s argument that combustion emissions cannot be regarded as effects of the project because the crude oil produced from the well could not itself be used as fuel. “The process of refining crude oil does not alter the basic nature and intended use of the commodity. Given that the process of refining the oil is one which it is always expected and intended that the oil will undergo …it is unreasonable to regard it as breaking the causal connection between the extraction of the oil and its use.” Id. at para. 118. The Court argues that oil is inherently different from commodities like steel or iron, which have many different potential downstream uses and purposes. Id. at para. 121.

Two justices dissented, arguing that the question of scope 3 emissions was an issue of national policy and not for a county council to decide. See Id. at paras. 253-55. Furthermore, the dissent asserts that the text of the EIA Directive indicates that “indirect effects of a project” do not extend to scope 3 emissions, arguing:

[T]he formula used in the Directive indicates that, even in relation to “indirect” environmental effects, they still have to be effects “of the project”. This imports the idea that the effects have to be relatively closely connected with the project and do not qualify if they are remote from it. On a natural reading of this phrase, downstream or scope 3 greenhouse gas emissions of the kind in issue in this case could not be said to be “of the project”.

Id. at para. 276. 

In the introduction of the majority opinion, the Court writes: “The whole purpose of extracting fossil fuels is to make hydrocarbons available for combustion. It can therefore be said with virtual certainty that, once oil has been extracted from the ground, the carbon contained within it will sooner or later be released into the atmosphere as carbon dioxide and so will contribute to global warming. This is true even if only the net increase in greenhouse gas emissions is considered. Leaving oil in the ground in one place does not result in a corresponding increase in production elsewhere” Id., at para. 2 (referencing UNEP’s 2019 Production Gap Report).