Last Thursday, the Court of Appeal dismissed an appeal by the claimant against Holgate J’s decision to refuse an application for judicial review of Surrey County Council’s decision to grant planning permission for crude oil extraction. 

The central question, both in the High Court and on appeal, was whether it was unlawful for the council not to require the environmental impact assessment (“EIA”) for the project to include an assessment of the impacts of greenhouse gas (“GHG”) emissions resulting from the use of the extracted crude oil as fuel. 

Background

The development was intended to enable the production of crude oil from six wells for a period of 25 years. The total amount of crude oil to be extracted was said to amount to around 3.3 million tonnes. 

In October 2018, the Council adopted an EIA scoping opinion stating that the developer’s environmental statement (“ES”) should “consider…the global warming potential of the oil and gas that would be produced by the proposed well site”. 

The developer subsequently produced and submitted an ES which only assessed the GHG emissions arising within the boundary of the well site, i.e. those resulting from the construction, production, decommissioning and restoration of the site over its lifetime.  

The Council reviewed the ES, accepting the developer’s argument that the global warming potential of the crude oil itself did not need to be considered in the ES, because:
(1)    The essential character of the proposed development was the extraction and production of hydrocarbons, not their subsequent use, and 
(2)    National planning policy and guidance establishes that decision-makers should focus on whether a development is an acceptable use of land, rather than on the control of emissions which are subject to approval under separate pollution control regimes. 

The application for planning permission was granted in September 2019. 

The decision in the High Court

In the High Court, Holgate J held that: 

• Not everything “attributable” to a proposed development should be assessed in an ES. 
• The fact that environmental effects from consuming an end product would inevitably flow from a development does not provide a legal test for deciding whether they should be treated as effects of the development for EIA purposes. 
• The indirect effects which must be considered in an ES are those which the development itself has on the environment. 
• In this case, the assessment of GHG emissions from the future combustion of refined oil products are incapable, as a matter of law, of falling within the scope of the EIA required by the 2017 Regulations. 
• Even if these “downstream” or “scope 3” GHG emissions could lawfully be included in an ES, the decision whether to require their assessment was one for the Council, subject to scrutiny on Wednesbury grounds. 
• In this case, the ES and the Council’s review explained that the character of the development did not extent to the refinement, distribution, or end use of the extracted oil. This was not an unreasonable conclusion to reach.   

The appeal 

The claimant argued as follows:
(1)    Holgate J was wrong to conclude that the true legal test for whether an impact is an indirect likely significant effect of a development is whether it is an effect of the development for which planning permission is sought. The correct test is whether an effect is reasonably foreseeable given the nature and purpose of the proposed development, regardless of whether or not such an effect is within the developer’s control. 
(2)    In principle, indirect effects include the impacts of an “end product” resulting from the proposed development. 
(3)    The Council was legally obliged to assess scope 3 emissions arising from the combustion of the refined products of the oil which would be extracted by the development. Its decision not to do so was irrational. 
(4)    Even if the Council was not legally required to assess scope 3 emissions, its reasons for not requiring such an assessment were based on immaterial considerations, and were inconsistent as to the point of unlawfulness. 

The appeal was dismissed by a majority of 2-1. 

The leading judgment

Sir Keith Lindblom held that the impacts which must be assessed for EIA purposes are the effects of the proposed development. The process of EIA is not an end in itself. It is intended to inform the determination of applications for planning permission, rather than regulating the environmental effects of economic activity or land use generally. Here, the essential content and character of the project was the extraction of crude oil for commercial purposes. The distribution, refinement, sale and end use of the products were separate commercial activities.

Scope 3 emissions from the end use of crude oil were not legally incapable of falling within the scope of EIA. The essential question for the relevant planning authority will be whether there is a sufficient causal connection between the project under consideration and a particular impact on the environment, such that the impact constitutes an indirect significant effect of the proposed development. In some cases, the inevitability of the effects might make it more likely that they are effects of the development, but it does not compel the conclusion that they are. This question was one for the planning authority to answer, subject to scrutiny by the courts on public law grounds. 

In this case, the emissions from the combustion of refined crude oil were not so closely connected to the proposed development that they could only reasonably be regarded as part of its indirect significant environmental effects. As to the reasons given by the Council for excluding these emissions from the EIA, they were not legally inadequate: the Council’s review of the ES demonstrated that it concluded that the emissions arising from the use of refined crude oil were not sufficiently connected to the proposed development to be included in its indirect effects. This was a lawful conclusion to reach. 

Lewison LJ agreed with Sir Keith Lindblom that the appeal should be dismissed. He nonetheless set out his own comments on the lawfulness of the Council’s reasoning. Lewison LJ clearly had more difficulty accepting the lawfulness of those reasons, but ultimately his conclusion was that they “just about pass muster”. 

The dissenting judgment

Moylan LJ disagreed with the majority. His understanding of the development was that it was for the extraction of oil and its use for commercial purposes. The focus of any EIA must, therefore, be on the likely significant environmental effects of the extraction of oil for commercial purposes. 

On a purposive reading, the EIA Regulations – which expressly require ESs to describe the effects of a proposal (and associated GHG emissions) on climate change – strongly point towards the conclusion that in this case, the emissions which inevitably result from the commercial use of extracted oil are indirect effects of the development for EIA purposes. There is not necessarily a legal requirement always to include scope 3 emissions: there might be reasons why, in the circumstances of a case, such emissions do not have an impact on the climate. On the facts of this case, however, there would need to be cogent reasons for excluding the inevitable effects of the downstream use of the oil extracted from the site.  

The reasons given by the Council were legally flawed for the following reasons: 

There was no factual basis for its conclusion that non-planning regimes would operate to avoid or mitigate the scope for material environmental harm, as there was no way of knowing where the oil would be refined or used. 

The fact that scope 3 emissions were outwith the control of the developer did not bear on whether it was an impact of the development. 

The fact that the oil would be processed and used by others outside the site boundary did not mean that its use was not an effect of its extraction. It would be contrary to the wide scope and broad purpose of the EIA Directive to exclude an impact which flows inevitably from the use of the extracted oil, simply because that oil will be processed by others at a different location. 

Moylan LJ concluded that the EIA’s failure to identify and assess scope 3 GHG emissions from the commercial use of oil extracted from the well site rendered it legally inadequate. Planning permission could not lawfully be given. 

Comment

The Court of Appeal made an important departure from the decision of Holgate J, holding that scope 3 emissions are legally capable of falling within the scope of EIA. The effect of this is to reopen the door for objectors to planning applications to argue that such emissions should be assessed for relevant EIA development. In the absence of a legal requirement or prohibition on considering downstream emissions, this is a debate that will largely have to be resolved at the decision-making stage. Objectors and/or developers will only have an avenue of challenge if the decision has been Wednesbury unreasonable. 

In this particular case, the comments made by Lewison and Moylan LLJ are interesting in that regard. Although Lewison LJ ultimately agreed that the appeal should be dismissed, his conclusion that the Council’s reasons for excluding downstream emissions “just about pass muster” is hardly a ringing endorsement. Moylan LJ concluded that they were legally flawed. It seems that the court was very close to finding, by majority, that the Council’s reasons were legally inadequate. Councils faced with a decision whether or not to assess the environmental impacts associated with downstream emissions should, therefore, take care to ensure that their reasons are enunciated clearly and cogently. 

Flora Curtis is a barrister at Francis Taylor Building specialising in environmental, public and planning law.