Sarah Finch challenged Surrey County Council's grant of planning permission for oil extraction at Horse Hill, arguing the environmental impact assessment unlawfully excluded greenhouse gas emissions from the eventual combustion of the extracted oil. The Supreme Court agreed (3-2), holding that combustion emissions were inevitable indirect effects of the project requiring assessment.
Background
Horse Hill Developments Ltd applied to Surrey County Council for planning permission to expand oil production from a well site near Horley in Surrey. The project involved extracting oil from six wells over approximately 20 years, with an estimated total output of some 3.3 million tonnes of crude oil. As a project for the extraction of petroleum for commercial purposes exceeding the applicable threshold, an environmental impact assessment (EIA) was mandatory under the Town and Country Planning (Environmental Impact Assessment) Regulations 2017, which implemented the EIA Directive (Directive 2011/92/EU as amended by Directive 2014/52/EU).
The Council initially issued a scoping opinion recommending that the EIA should assess the global warming potential of the oil to be produced. However, the developer’s environmental statement confined its assessment of greenhouse gas (GHG) emissions to direct releases from within the well site boundary. The developer justified this by arguing that the downstream use of the oil was beyond the control of the site operators and was regulated by other non-planning regimes. The Council accepted this approach and, on 11 September 2019, granted planning permission. The claimant, Sarah Finch, acting on behalf of the Weald Action Group, brought judicial review proceedings challenging the decision.
The Issue
The central question was whether, under the EIA Directive and the 2017 Regulations, the Council was required to include in the EIA an assessment of the GHG emissions that would inevitably occur when the extracted oil, after being refined, was burnt as fuel (so-called ‘scope 3’ or combustion emissions). This turned on whether those combustion emissions constituted ‘direct and indirect significant effects of [the] project’ on climate within the meaning of Article 3(1) of the EIA Directive.
It was common ground that it was inevitable that oil produced from the site would be refined and would eventually undergo combustion, producing GHG emissions. It was also agreed that these combustion emissions could be readily quantified.
The Parties’ Arguments
The Appellant (Finch)
The appellant contended that, on the proper interpretation of the legislation, the effects of the project on climate necessarily included the combustion emissions. The extraction of oil initiates a causal chain that inevitably results in combustion and GHG emissions. These were indirect effects of the project that the Council was obliged to assess.
The Respondents
The Council and Secretary of State argued that whether combustion emissions were effects of the project was a matter of evaluative judgment for the Council, reviewable only on Wednesbury rationality grounds. The developer (Horse Hill Developments Ltd) submitted, as its primary position, that the combustion emissions could not as a matter of law be regarded as effects of the project, because the crude oil required refinement at a separate facility before it could be used as fuel.
The Court’s Reasoning
Majority Judgment (Lord Leggatt, with Lord Kitchin and Lady Rose)
Lord Leggatt, delivering the majority judgment, held that the combustion emissions were plainly effects of the project which the EIA was required to assess. The reasoning proceeded on several grounds.
Causation
Lord Leggatt analysed the question as one of causation. On the agreed facts, the extraction of the oil was not merely a necessary condition (‘but for’ cause) of the combustion emissions; it was also a sufficient condition, because it was agreed that extraction would inevitably lead to refinement and combustion. Lord Leggatt stated:
On the agreed facts, the extraction of the oil is not just a necessary condition of burning it as fuel; it is also sufficient to bring about that result because it is agreed that extracting the oil from the ground guarantees that it will be refined and burnt as fuel.
Direct and Indirect Effects
Article 3(1) of the EIA Directive requires assessment of both ‘direct and indirect’ significant effects, and Annex IV, paragraph 5, stipulates that the description should cover ‘the direct effects and any indirect, secondary, cumulative, transboundary, short-term, medium-term and long-term, permanent and temporary, positive and negative effects of the project.’ Lord Leggatt observed:
It would be hard to devise broader wording than this.
The majority held that the combustion emissions were at least indirect effects of the project. The environmental statement had self-evidently confined its assessment to direct releases within the well site boundary, contrary to the express legislative requirement to include indirect effects.
The Flawed Reasoning of the Council
Lord Leggatt identified three flaws in the reasons accepted by the Council for excluding combustion emissions:
First, the argument that the emissions occurred beyond the well site boundary was irrelevant, since indirect effects by their nature may occur away from the project site. Second, the claim that combustion emissions were ‘outwith the control of the site operators’ was plainly wrong:
The combustion emissions are manifestly not outwith the control of the site operators. They are entirely within their control. If no oil is extracted, no combustion emissions will occur.
Third, reliance on non-planning regimes to mitigate downstream emissions was a clear legal error. An assumption that other regimes will operate effectively does not remove the obligation to identify and assess the effects being assumed away. No such regimes had been identified that could prevent or reduce the combustion emissions.
Rejection of the Judge’s Approach
The majority rejected Holgate J’s conclusion that the need for the oil to undergo refinement at a separate facility before combustion broke the causal chain. Lord Leggatt held that the process of refining crude oil does not alter the basic nature and intended use of the commodity and does not break the causal connection between extraction and use. He distinguished cases involving raw materials with many possible uses (such as steel) from oil, which has essentially one end use — combustion as fuel. He stated:
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.
Rejection of the Court of Appeal’s Approach
The majority also rejected the approach of the Court of Appeal majority, which treated the question as one of evaluative judgment for the Council. Lord Leggatt held that a ‘sufficient causal connection’ test was intolerably vague, would lead to inconsistent and arbitrary decision-making, and was not supported by the legislation. He stated:
If there is a clear and inexorable causal path from event X to event Y, then Y is an effect of X. The number of intermediate steps along the way, the nature of those steps and the fact that Y occurs far away from X does not alter or affect that conclusion.
National Policy Arguments
The majority rejected the argument that local planning authorities were unsuited to consider combustion emissions, holding that this misconceived the procedural nature of the EIA process. The EIA Directive requires full information disclosure regardless of whether it would change the substantive decision. Lord Leggatt emphasised:
The fact (if it be the fact) that information will have no influence on whether the project is permitted to proceed does not make it pointless to obtain and assess the information. It remains essential to ensure that a project which is likely to have significant adverse effects on the environment is authorised with full knowledge of these consequences.
Dissenting Judgment (Lord Sales, with Lord Richards)
Lord Sales, dissenting, held that on the proper interpretation of the EIA Directive, downstream combustion emissions were not ‘indirect significant effects of the project’. He emphasised the purpose and scheme of the Directive as directed towards furnishing local planning authorities with information relevant to their practical decision-making, not generating a general databank about remote downstream effects. He relied on the principle of proportionality, the legislative history of the 2014 amendments, European Commission guidance, and the decision of the Irish Supreme Court in Kilkenny Cheese. He considered that requiring assessment of all scope 3 emissions would impose disproportionate burdens, undermine the harmonisation objective of the Directive, and inappropriately involve local authorities in matters of national climate policy. Lord Sales agreed with Holgate J that the answer was determined as a matter of law, not evaluative judgment, but reached the opposite conclusion.
Practical Significance
This decision is of major significance for environmental law and climate change litigation. By a 3-2 majority, the Supreme Court established that where combustion of extracted fossil fuels is an inevitable consequence of extraction, the resulting GHG emissions must be assessed as effects of the extraction project in an EIA. The decision has broad implications for planning decisions concerning fossil fuel extraction projects throughout the United Kingdom, requiring that decision-makers and the public are presented with full information about the climate impact of such projects before development consent is granted. The ruling affirms the procedural and democratic functions of the EIA process, including public participation in environmental decision-making, and rejects attempts to limit EIA scope by reference to the existence of intermediate processing steps or other regulatory regimes. It aligns with the Oslo District Court’s decision in Greenpeace Nordic but departs from the approach of the Irish Supreme Court in Kilkenny Cheese.
Verdict: The appeal was allowed by a majority of 3-2 (Lord Leggatt, Lord Kitchin and Lady Rose; Lord Sales and Lord Richards dissenting). The Supreme Court held that Surrey County Council’s decision to grant planning permission was unlawful because the EIA failed to assess the greenhouse gas emissions from the combustion of the oil to be produced, and the reasons given for disregarding those emissions were flawed.
Source: R (Finch) v Surrey County Council and others [2024] UKSC 20
