Indirect effects and environmental impact assessment

In Finch the Court of Appeal has declined to define significant indirect effects for environmental impact assessment (EIA). Barristers at Cornerstone Barristers consider the ruling.

This note is prepared jointly by counsel for the Appellant and for the Respondent: Estelle Dehon, Harriet Townsend and Alex Williams, all of Cornerstone Barristers.

On 17 February 2022, and by a majority, the Court of Appeal held in Finch On Behalf of the Weald Action Group, R (On the Application Of) v Surrey County Council & Ors [2022] EWCA Civ 187 that the County Council's decision to grant planning permission for the commercial extraction of oil at Horse Hill in Surrey was lawful.

The main issue in the case concerned the adequacy of the environmental impact assessment ("EIA"), and focused on the requirement to include within the EIA an assessment of the significant indirect effects of the development on the climate. Since the development's very purpose is the extraction of oil; and since it is inevitable that, following refinement, distribution and sale, it will one day be used in a way that will generate GHG emissions, Sarah Finch and the Weald Action Group she represented argued that the EIA had to include an assessment of those GHG emissions (known as "scope 3 emissions").

Holgate J dismissed the application for judicial review against the Council's decision in December 2020, finding 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 the [requisite] EIA" (para 126). Holgate J also held that the "true legal test" of whether an effect constitutes an indirect likely significant effect of the development on the environment "is whether an effect on the environment is an effect of the development for which planning permission is sought" (para 101).

Sarah Finch appealed. She argued that Holgate J's interpretation of the EIA Regulations was incorrect, and the EIA had to include an assessment of the GHG emissions caused by the combustion of fuel for which the extracted crude oil is a raw material. The Council's Scoping Opinion had initially recommended that the Environmental Statement address this matter but had subsequently accepted the developer's rationale for not doing so.

In his leading judgment, Sir Keith Lindblom (Senior President of Tribunals) examined relevant domestic and European case-law, including oft-cited passages from Abraham v Wallonia. At paragraph 15 of the judgment, he identified the following seven relevant principles:

1. While a broad and purposive approach to the interpretation of the European Union legislation is appropriate, it must always respect the words actually used;
2. The legislation for EIA is directed at a project of development. The concept of a "project" is one to which a broad interpretation should be applied;
3. An assessment of the "likely significant effects of the project on the environment" under the EIA Directive extends to the effects of the use of the works as well as their construction;
4. Crucially, an EIA must address the particular development under consideration, not some further or different project;
5. The existence and nature of "indirect", "secondary" or "cumulative" effects will always depend on the particular facts and circumstances of the development under consideration;
6. Where an EIA has to address the "indirect" effects of a proposed development, it must include a sufficient assessment of such effects;
7. Establishing what information should be included in an environmental statement, and whether that information is adequate, is for the relevant planning authority, subject to the court's jurisdiction on conventional public law grounds. The applicable standard of review has consistently been held to be the Wednesbury standard which, in its modern application has been elucidated by the Divisional Court in R (o.a.o. the Law Society) v The Lord Chancellor [2018] EWHC 2094 (Admin); [2019] 1 WLR 1649 at paragraph 98.

He held that the legislative words "likely significant effects of the proposed development" do not need any paraphrase or gloss (para 39).

All three Lord Justices held that the question of whether an environmental impact was an effect of the development for which planning permission was sought was not a "true legal test" (para 41, with paras 95 and 141). Rather, consideration needs to be given to the degree of connection between the development and its putative effects. They also disagreed with Holgate J 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 EIA (para 43). Rather, the question of whether the scope 3 emissions of the oil extraction needed to be assessed was one of fact and evaluative judgment for the planning authority (para 57). The downstream emissions of hydrocarbon development might properly be regarded as indirect environmental effects, depending on the specifics of the project (para 67).

In the particular circumstances of this case, the Senior President held, the Council's decision to exclude downstream GHG emissions from the EIA was lawful. Lewison LJ agreed.

Dissenting, Moylan LJ held, applying the same principles, that the Council's decision was unlawful: in the circumstances, he said, the EIA should have included an assessment of downstream GHG emissions as the inevitable impact of a project that involved the extraction of petroleum for commercial purposes (paras 127-129); and the Council's reasons for excluding them were legally flawed (paras 134-139).

The Appellant was represented by Estelle Dehon, led by Marc Willers QC; the Defendant planning authority was represented by Harriet Townsend, leading Alex Williams. Other parties were represented by David Elvin QC, Matthew Fraser, Richard Moules, Paul Brown QC and Nina Pindham.