Will the SC decision in Finch open the floodgates?

On 20 June the Supreme Court confirmed that Surrey County Council’s grant of planning permission to an oil developer was unlawful because it failed to assess the downstream greenhouse gas (GHG) emissions of the proposed expansion of the Horse Hill oil well. The decision has garnered global attention because of its potentially significant implications.

Sarah Finch brought a judicial review of the council’s 2019 decision to grant planning permission to retain and expand an existing oil well. The question for the High Court was whether the environmental statement describing the likely significant effects of the development, both direct and indirect (as required by the Town and Country Planning (Environmental Impact Assessment) Regulations 2017 (the EIA Regulations)), should have extended to the assessment of the GHG emissions resulting from the end use of products said to originate from the development – the ultimate combustion of fuel in vehicles which was derived from the crude oil extracted on site.  

The High Court dismissed the appeal holding that, inter alia, ‘indirect effects’ included less immediate consequences but nonetheless had to be effects of the development itself. When oil left the site, it became part of an international market and future emissions could not be attributed to any one particular well or site. Therefore, the assessment of GHG emissions from the future combustion of refined oil products said to emanate from the development site was incapable of falling within the scope of environmental assessment under the EIA Regulations.

Finch sought permission to appeal and on 17 February 2023 the Court of Appeal issued its judgment upholding the High Court’s decision (with some disagreement of the High Court’s rationale). The Court of Appeal held that consideration must be given to the degree of connection between the development and its alleged effects, and disagreed that the GHG emissions from future combustion of the refined oil products were, as a matter of law, incapable of falling within the scope of environmental assessment. Rather, the question of whether emissions of the oil extraction needed to be assessed was one of fact and evaluative judgement for the planning authority. Relevantly, in Moylan LJ’s dissenting judgment, he stated that the environmental assessment should have included an assessment of downstream emissions as the inevitable impact of the extraction of oil for commercial purposes and the council’s reasons for excluding them were legally flawed. Finch subsequently sought permission to appeal to the Supreme Court.

In a 3:2 decision, the Supreme Court upheld the appeal and made the following findings:

• The downstream GHG emissions from the future end product, which would have a significant impact on climate, were ‘inevitable’ ([79]).
• The Court of Appeal’s view that whether emissions were an ‘effect of the project’ required an evaluative judgement of a sufficient causal connection between the product and its eventual end use was rejected on the basis that it could result in differing views being reached by different authorities across the country ([133]). Rather, the question was one of causation ([67]-[69]).  
• The EIA Regulations require an assessment of ‘likely’ effects based on evidence ([72]-[75]). The court did not consider what is meant by ‘likely’, as the effects on climate if the project went ahead were ‘inevitable’. The estimated amount of emissions was over 140,000 tonnes of CO₂ and could not be dismissed as ‘negligible’ ([82]).  
• The express reference to indirect effects (alongside ‘secondary, cumulative, transboundary, short-term, medium-term and long-term, permanent and temporary’ effects) in the EIA Regulations is ‘clearly intended to emphasise the wide causal reach of the required assessment’ ([83]).
• Reference was made to the European Commission’s Guidelines for the Assessment of Indirect and Cumulative Impacts as well as Impact Interactions, noting that those guidelines correctly state that if the quarrying of aggregates used in building a new road would be likely to generate significant GHG emissions, those emissions would be indirect effects of the project which must be assessed; the combustion emissions from oil should not be treated differently ([90]).
• The EIA Regulations do not impose any geographical limit on the scope of effects to be assessed ([93]).
• The requirement for an intermediate step to refine the crude oil is not sufficient to break the causal connection between the extraction of the oil and its subsequent end use ([102] and [118]).
• National Planning Policy Framework paragraph 194 (planning decisions should assume other regimes (for example, pollution control) will operate effectively) does not justify limiting the scope of environmental assessment ([108]). In the present case, there was no other separate regime that could be relied on to avoid or reduce combustion emissions ([110]).

A key concern arising from this decision is whether it will open the floodgates to more challenges (or existing challenges being refined) on similar grounds. The majority judgment considered those concerns ‘misplaced’, stating that many other raw materials may have any number of potential end uses (for example, steel), such that it may be impossible to identify any ‘likely’ downstream effects or to make a meaningful assessment of those ([119]-[123]). Notably, Lord Sales’ dissenting judgment disagreed with this position.

The dissenting judgment is almost as long as the majority judgment and we anticipate continued litigation in this area while the exact scope and implication of the judgment are determined. In the meantime, as a matter of practice, any developer seeking to scope out particular downstream effects will need to provide robust reasoning for doing so.

Rachael Davidson is an environmental lawyer at Charles Russell Speechlys