Do Environmental Impact Assessments apply to products derived from a development?

23 December 2020 by

horse hill uk oil gas investments

R (Finch) v. Surrey County Council et al [2020] EWHC 3559 (QB) – read judgment

Environmental Impact Assessment or EIA is the process by which a developer and a planning authority look at whether a particular project is likely to have significant direct or indirect effects on the environment. And an EIA must address a factors such as human health, biodiversity, land, water and climate as well as cultural heritage and landscape.

But how far does the enquiry have to go? This is the very stark question raised by this planning case.

The developer wanted to drill oil from the Horse Hill site in Surrey (see pic) for a production period of 20 years. The crude oil thus won would be tankered offsite for refining by others. The refined product would probably be used for transportation, but also for heat, manufacturing and in the petrochemical industry.

The issue was whether the local authority could stop its EIA lines of enquiry when it had considered the setting up works and the oil production processes, or whether it had to assess the wider climate change implications of long-term use of the oil so produced.

The judge, Holgate J was firmly of the view that the assessment process was limited to the first. Surrey’s EIA process was thus sufficient.

Holgate J said that the answer was to be found in the language of the EIA Directive and the domestic regulations. In response to the submission that an environmental effect should be assessed by the process if the effect inevitably flowed from the process, he said that [101]

The extraction of a mineral from a site may have environmental consequences remote from that development but which are nevertheless inevitable.

Instead, the true legal test is whether an effect on the environment is an effect of the development for which planning permission is sought. 

So the focus, he said, was on the effects of the development, the phrase used in both Directive and domestic regulations.

Linguistically, it might be thought that this wording does not take you much further. The “development” includes the production of oil, up to 20 years worth, and assessment of the use of the oil thus produced might involve looking at the effect of its use on the environment.

But the more powerful reasons for constraining the scope of EIA lies in the consequences of accepting the claimant’s argument. Wider EIA of this site in Surrey would involve analysis of the implications of (a) the offsite refining process; and (b) the use of the refined product in transport or otherwise, potentially anywhere in the world, including the greenhouse gases (GHGs) so generated. The logic of the argument would mean that the environmental effects of the extraction of minerals would need to be assessed against all the uses to which those minerals might be put – cars, vans and HGVs, for instance. And, as the judge pointed out, you couldn’t just stop at GHG emissions from vehicles; what about air quality via particulates and NOx? [99].

Assessments of GHGs emitted from domestic combustion of oil on e.g. the roads are done at a national level annually. Annual statistics show emissions of GHGs sector by sector, and these statistics feed into government policy, whether it be taxation, regulation, policy or investment in innovation. Many of the higher energy-using industrial sites (chemicals, metals and minerals, oil refineries) are subject to the Emissions Trading Scheme (a cap-and-trade system), very recently domesticated in a UK replacement for the EU ETS.

But oil extraction or production is not caught by the ETS, and it will be seen that all the other information operates at the sectoral level – none of it asks: what are the carbon implications of this particular site?

Another issue is the extent to which such environmental effects might be assessed if not via the planning process. Hence, there is discussion of the Climate Change Act 2008, with its system of carbon budgets, and its current target of net zero carbon by 2050. But the Claimant said that there was no other mechanism, other than through the EIA process, by which emissions from the use of the end product (refined oil) could be controlled as a contribution to achieving net zero by 2050.

The judge disagreed, pointing to the CCA and its implementation, and the way in which data on GHGs feed into all manner of government policy: [105]

The judge also identified the planning policies (in the National Planning Policy Framework) which would tend to support the continued extraction of mineral resources (defined as including hydrocarbons), in parallel with measures supportive of renewable energy: [55]-[60]

For such an important point of law thrown up by this case, there is remarkably little authority. The high point of the Claimant’s case was a passage in the 2008 CJEU case of Abrahams (cited by the judge at [114]), an airports expansion case – at [43] of Abrahams:

” It would be simplistic and contrary to that approach to take account, when assessing the environmental impact of a project or of its modification, only of the direct effects of the works envisaged themselves, and not of the environmental impact liable to result from the use and exploitation of the end product of those works.

But the judge pointed out that in Abrahams

“…..the environmental effects [of the airport improvement works] requiring assessment were not limited to the direct effects of the works to be carried out but also had to include the environmental impact resulting from the use of the improved airport. These overall effects could properly be regarded as effects of the development, namely the increased usage of the airport enabled by the works to improve the existing infrastructure. The phrase “end product” was simply used by the Court to describe the outcome of the project. 

Hence his conclusion that

Abraham cannot be taken as laying down any principle that an EIA should assess the environmental effects of the use by consumers of an “end product”, that is an article or item sold or distributed from a processing facility using a raw material produced on the development site.

…. the CJEU was simply dealing with the impact of the increased use of infrastructure which would be enabled by works modifying that infrastructure. That impact was an environmental effect of the development. The opinion of Advocate General Kokott was to the same effect ([AG31]).

Consideration of this and later cases led the judge to his conclusion at [126]

The upshot is that the case law confirms that EIA must address the environmental effects, both direct and indirect, of the development for which planning permission is sought, (and also any larger project of which that development forms a part), but there is no requirement to assess matters which are not environmental effects of the development or project. In my judgment the scope of that obligation does not include the environmental effects of consumers using (in locations which are unknown and unrelated to the development site) an end product which will be made in a separate facility from materials to be supplied from the development being assessed. I therefore conclude that, in the circumstances of this case, the assessment of GHG emissions from the future combustion of refined oil products said to emanate from the development site was, as a matter of law, incapable of falling within the scope of the EIA required by the 2017 Regulations for the planning application.

It will be seen that the judge attached some importance to the fact that the oil was refined into a product only after it had left the extraction site. What then would be relevant in a case where a new or expanded oil refinery were undergoing EIA? Would this also be excluded because the oil product would actually be used by consumers offsite? Or would it be closer to one of the other cases considered by the judge (Squire) where the court ruled that an environmental statement (ES) in respect of an intensive poultry site was defective. The defect related to the manure produced by the site, because the ES only addressed the 50% of the manure to be spread by the farmer on his own land, and ignored the environmental effects of the 50% which would be spread on third party land.

The judge also reached a belt-and-braces conclusion. Even if it were open in law for the County Council to seek this wider information, it was not irrational for it not to do so on the facts: see [127]-[132].

Conclusion

We are now so used to considering environmental benefits and detriments in, dare I say it, a holistic way, particularly in the climate change context. So when we come up against the problem in this case, we are surprised to find that no-one is required to assess the total impact of a particular development, including the effect of what it produces. According to Holgate J, that is not required by the planning system, and he articulates policy reasons why the EIA wording should not be read too widely. But there is no other system generally applicable to hydrocarbon extraction which does so on a site by site basis. One can readily see the complexities of so requiring, and the assumptions and counterfactuals which would need to be built into the predictions of total impact, but does all that negate the benefits of at least trying to do so?

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