In Short
The Situation: On June 20, 2024, the UK Supreme Court handed down a landmark decision in R (on the application of Finch on behalf of the Weald Action Group) (Appellant) v Surrey County Council and others (Respondents) [2024] UKSC 20.
The Result: The Supreme Court ruled that the decision to grant planning permission to retain and expand an oil production site in Surrey in South East England was unlawful as it failed to assess the downstream or "scope 3" greenhouse gas ("GHG") emissions that will inevitably arise from the burning of the oil produced.
Looking Ahead: The case is expected to have significant implications for future fossil fuel developments in the United Kingdom, and it may have wider implications for major developments generally.
The Law
Before planning permission can be granted for a development which is likely to have significant effects on the environment, legislation in the United Kingdom requires an environmental impact assessment ("EIA") to be carried out. (The legislation applicable in this case is contained in the Town and Country Planning (Environmental Impact Assessment) Regulations 2017, which implemented European Union Directive 92/11/EU in the United Kingdom.) The EIA must identify, describe, and assess the likely"direct and indirect significant effects"of the project on the environment, including the impact on climate. The law does not prevent the planning authority from granting planning permission for a development that is likely to cause significant harm to the environment; however, it does require the planning authority to make an informed decision on the associated environmental impact and to consider this impact in making its decision on whether to grant planning permission.
The Background
The developer applied to Surrey County Council ("the Council") for planning permission to retain and expand oil production for a wellsite at Horse Hill in Surrey. The proposed development, for which an EIA is compulsory, would involve the extraction of oil from six wells over a period of 20 years. The developer argued that the assessment of the impact on the climate should be confined to direct GHG emissions from the wellsite, rather than considering an assessment of the indirect downstream GHG emissions caused by the burning of the oil elsewhere. The Council accepted this approach and granted planning permission for the project in September 2019 without considering the downstream GHG emissions.
The Claim
The claimant, a local resident called Sarah Finch, applied for judicial review of the Council's decision in 2020, arguing that it was unlawful because the EIA was required to, but did not, include an assessment of the downstream GHG emissions. The High Court rejected the claim, and its decision was upheld by the Court of Appeal. However, by a three-to-two majority, the Supreme Court justices held that the Council's decision was unlawful for failing to consider the downstream GHG emissions. Accordingly, the Council's decision to grant planning permission was quashed.
The Judgment
The EIA Directive expressly requires an assessment of both the"direct and indirect"effects of a major development and the indirect effects include"indirect, secondary, cumulative, transboundary, short-term, medium-term and long-term, permanent and temporary, positive and negative effects of the project. "(Annex IV, para 5, Directive 2011/92/EU of the European Parliament and of the Council.) The judgment states that it"would be hard to devise broader wording than this."
The judgment makes it clear that downstream GHG emissions can constitute an indirect significant environmental impact if causation can be established. In this case, it was clear on the agreed facts that the oil extracted at the site would initiate a causal chain that would lead to the inevitable combustion of the oil and the release of greenhouse gases into the atmosphere. It was also common ground that the GHG emissions can be easily quantified using established methodologies, and therefore an assessment of the impact of the development on global warming could be easily carried out.
For these reasons, the potential global warming effect of the proposed development should have been properly assessed"so that public debate could take place on an informed basis. This is a key democratic function of the EIA process."
The judgment concludes:"The council's decision to grant planning permission for this project to extract petroleum was unlawful because (i) the EIA for the project failed to assess the effect on climate of the combustion of the oil to be produced, and (ii) the reasons for disregarding this effect were flawed."
An application for judicial review of a decision to grant planning permission must typically be made within six weeks of the date of the decision, unless exceptional circumstances exist. As such, it is unlikely that Finch will impact those developments that have already been granted planning permission and are now under construction or have been built.
Three Key Takeaways
- This case is likely to have significant implications for future fossil fuel projects across the United Kingdom, as planning authorities will have to consider the downstream GHG emissions when deciding whether to grant planning permission. It may also have wider implications for major developments more generally, as planning authorities may give greater consideration to the possible "indirect" effects of the development on the climate. A failure to do so may lead to legal challenges such as this.
- In Finch, it was clear that the oil would be burned, giving a very strong causal link between the proposed development and the indirect or downstream impact. Such a strong causal chain may not be present in other cases.
- Although this judgment is only binding in the United Kingdom, the Supreme Court's decision may have an impact in the European Union ("EU"), as the requirement to undertake an EIA for major development projects is borne from the EU Directive 92/11/EU, which is transposed into national law across the EU. That said the European Court of Justice, if and when presented with a similar case, may take a different view.
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