Making sense of the decision in Finch

Introduction

The Supreme Court’s majority decision in Finch (on behalf of the Weald Action Group) v Surrey County Council and others [2024] UKSC 20 has certainly broken new ground and requires practitioners to take a fresh look at the requirements of environmental impact assessment (EIA). In essence, it posed the question: are the emissions occurring when petrol is used (combustion emissions) ‘effects’ of the development permitted by Surrey County Council, namely the extraction of crude oil?

The case brings an important question of statutory interpretation sharply into focus. The legislation at issue was the Town and Country Planning (EIA) Regulations 2017, which implement the EIA Directive (as amended in 2014). It was agreed they do so effectively, and that Brexit had made no difference to the task before the Court. I will, like the Court’s judgments, use the terminology of the Directive in this article.

The phrase at the heart of the case is found within Article 3 of the Directive, which requires an EIA to describe and to assess in an appropriate manner and on a case-by-case basis ‘the direct and indirect significant effects of’ a project on a list of factors, including the climate. An EIA is, of course, all about process. It is designed to improve environmental decision-making by ensuring decisions are made on the basis of full information and public participation.

The Court unanimously reversed the Court of Appeal’s approach to the question whether the combustion emissions are effects of the project requiring assessment (which it held was one of evaluative judgement for the planning authority). It has held, by a majority 3:2 in favour of the appellant, that an assessment of combustion emissions was necessary in this case.

In the UK, the extraction of oil is treated as a form of minerals development. Planning permission is needed for all three stages of this form of development: for exploration, for appraisal and for the production of oil for commercial purposes. The permission in this case was for the third such stage and its scale was such as to fall within §14 of Annex 1 to the Directive, ‘[…] where the amount extracted exceeds 500 tonnes per day […]’. Accordingly, an EIA was mandatory.

Surrey County Council, the minerals planning authority for the area, had asked for an assessment of the combustion emissions within its scoping opinion, but later accepted the developer’s reasons for refusing to do so. Planning permission was granted in September 2019.

Sarah Finch, on behalf of the Weald Action Group, applied for judicial review. Their case was, in essence, that the EIA had to assess the combustion emissions because they are indirect effects of the project and cannot be dismissed as insignificant. Holgate J (heard remotely in November 2020) held that combustion emissions were, as a matter of law, not effects of the development for which planning permission was sought and that, even if he was wrong, the Council’s reasons were sufficient to justify its decision not to require their assessment.

The Court of Appeal dismissed Ms Finch’s appeal, but on a slightly different basis. Sir Keith Lindblom SPT, Lewison and Moylan LLJ decided unanimously that the decision whether or not to require an EIA of the combustion emissions was a question of evaluative judgment for the Council as planning authority, and by a majority (2:1) that the reasons given by the Council for failing to insist on the assessment it had initially requested were adequate. Its decision was lawful.

The Supreme Court delivered two judgments. It unanimously reversed the Court of Appeal’s approach (evaluative judgment) and held, by a majority 3:2 in favour of the appellant, that an assessment of combustion emissions was necessary in this case.

Both judgments are detailed and powerful, although it is the majority judgment written by Lord Leggatt (with whom Lord Kitchin and Lady Rose agreed) which represents the Supreme Court’s decision and is now the law. As a result, the planning consent granted by Surrey County Council will be quashed and it will fall to that authority to redetermine the planning application in accordance with the law.

The decision

The Supreme Court has held that the question: ‘What are or are not ‘effects of a project’ is […] a question of causation’ (§65) and that to identify cause and/or effect in a given case one needs ‘to understand the purpose for which the question is being asked’ (§67). The majority judgment identified two such purposes: (1) to ensure that decisions are taken on the basis of full information and (2) to enable public participation in the decision-making process (§61-64).

After referring to the way the courts have settled questions of causation in the context of pollution of controlled waters and in insurance law, Lord Leggatt stated that – in this case – the extraction of oil was both necessary and sufficient for the combustion emissions to occur, since it was common ground that it was ‘inevitable’ that at least a substantial proportion of the extracted oil would be combusted in due course. This is, he concluded, ‘the strongest possible form of causal connection’ (§80). This inevitability was an important finding of fact made by Holgate J and an agreed fact in the appeal (§45).

In reaching their conclusion, the majority held that intermediate steps (such as the refining process) did not break the chain of causation (§118, §134) and that the concern expressed by Holgate J as to the ramifications of the argument were misplaced (§119-122). In addition, the finding that in this particular case ‘a reasonable estimate can readily be made’ of the quantity of the greenhouse gases released by combustion formed part of the ratio of the majority (§123 and §167-168).

As for the approach taken by the Court of Appeal, Lord Leggatt held that ‘it would be a recipe for unpredictable, inconsistent and arbitrary decision-making’ (§133). Moreover, this inconsistency ‘would be all the more regrettable when issues relating to climate change and the extent to which disclosure of information about GHG emissions should be required are becoming more and more salient in policy-making and public debate’ (§59-60).

His judgment also emphasises the importance of public participation in environmental decision-making, which is an objective not only of the EIA Directive but also central to the UN Aarhus Convention (obligations under which have been codified by subsequent amendments to the EIA Directive). The Court identified two issues in relation to public participation, namely: increasing the democratic legitimacy of environmental decision and serving an educational function. As Lord Leggatt summarised: ‘You can only care about what you know about’ (§21).

Discussion

Lawyers involved in EIA development, as well as those advising environmental campaigners have awaited the Supreme Court’s judgment with some considerable anticipation. Its arrival has prompted some extreme views on both sides of the argument, as a split decision of this kind was bound to do. However, as I will explain, in my view the outcome has a way to go before its full impact can be reliably appreciated. Meanwhile, the reasoning of the majority itself, particularly when read alongside that of the minority dissenting judgment, suggests that the implications of this case for other development projects may be less extreme than some might expect.

I will take the reasoning of majority judgment first: looked at as a whole, this was a heavily fact-dependent decision. The majority do not say what the test of causation is, just that this case satisfied any test of causation we might throw at it. Woven into the analysis, too, and part of the ratio of the decision in my opinion is the finding that ‘[…] only effects which evidence shows are likely to occur and which are capable of meaningful assessment must be assessed’ (§167).

Some will say the majority appear unaware of the authorities on whether an effect is ‘likely to occur’, since the precautionary approach is never mentioned. But perhaps even more significant is the introduction into the question of law (‘Is the potential effect an effect caught by the EIA Directive?’), a consideration which suggests that there is room for differences of judgment (‘whether this effect is capable of meaningful assessment’). While this consideration has always played a part in a planning authority’s overall judgment as to the contents of an ES and reflects the proportionality principle, it is of some interest that it has been imported into the legal meaning of an effect of the project by the majority judgment. Perhaps others will disagree that this was part of the ratio of the decision and I will read such views with interest.

Second, I suggest the strength of the dissenting judgment will prove significant: Lord Sales’ minority judgment is at least as long as that of the majority. It contains a detailed review of the purpose and scheme of the EIA Directive, its text and relevant case law. Like the majority, it did not support the ‘evaluative judgment’ approach to the question at issue, which had been taken by all three members of the Court of Appeal, and §§322-326 contain a useful rationale for this key conclusion. However, taking that approach, Lord Sales concluded that Holgate J had been correct in his first instance judgment, and that the Council had acted lawfully when granting planning permission without the EIA having assessed the downstream greenhouse gas impacts. In support of this conclusion, the minority note the absence of any guidance with the 2014 changes to the Directive, which they say belies the idea that it was intended to have such a wide-ranging effect (§272 and §295). That the effects are those ‘of the project’, they say, imports the idea that effects have to be relatively closely connected with the project in question (§275-6).

Of particular note, in my view, is the minority’s analysis of the Irish Supreme Court’s decision in An Taisce – The National Trust for Ireland v An Bord Pleanala (Kilkenny Cheese Ltd, notice Party) [2022] IESC 8; [2022] 2 IR 173 (§§305-312). Among the references they draw attention to, this one not mentioned by the majority judgment, is this: Annex IV point 1 para (c) of the EIA Directive ‘strongly suggests that the information to be supplied must be firmly tethered to the project itself so that the indirect significant effects to be assessed must be intrinsic to the construction and operation of the project’ (§106 of Kilkenny Cheese). I mention this not to cast doubt on the current state of the law in the UK, which is found within the majority judgment, but because it is arguable that it is inconsistent with that of the Irish Supreme Court. Given the forthcoming appeal in Greenpeace Nordic v The State of Norway (represented by the Ministry of Petroleum and Energy), Case No 23-099330TVI-TOSL/05 (a first instance decision by the Oslo District Court also referred to by both majority and minority judgments in Finch), the Norwegian Supreme Court may find itself having to choose between them, and in those circumstances might even make a reference to the Court of Justice of the European Union.

Conclusions

The Supreme Court has resolved the specific case before it in Finch: the planning permission granted by Surrey County Council in 2019 for the commercial extraction of oil at Horse Hill will be quashed. The essential reasoning of the majority was that ‘downstream’ combustion emissions have to be assessed as part of an EIA to the extent that they are caused by the project and capable of meaningful assessment.

It is also clear that much remains unchanged by the decision in Finch. It leaves to the decision-maker the task of judging the likelihood of effect and the significance of effect and of integrating the assessment (and the fruits of consultation and public participation) into its ultimate decision whether or not to grant development consent. It is much less clear how far-reaching this Supreme Court decision will be, and for how long, and what will be made of the powerful dissenting judgment by the Planning Court when dealing with the other cases, which are surely coming its way.

The author was lead counsel for Surrey.