Arctic Council, BLM Fracking Regs, Chinese Refinery Protests, Indonesian Logging Ban, Tesla Road Trip (by Bob Percival)

On Wednesday May 15 the eight nations that are members of the Arctic Council (Canada, Denmark, Finland, Iceland, Norway, Russia, Sweden and the United States) agreed to grant observer status to six other nations -- China, India, Italy, Japan, Singapore and South Korea.  The strong interest in the Arctic Council is a reflection of the growing interest in exploiting resources there as climate change renders the polar ice cap less of an obstacle to development.  The Council, which had been largely a symbolic organization when created in 1996, has now begun to play an important role in coordinating regulation of resource extraction in the Arctic.  Meeting in Sweden’s northernmost city of Kiruna, the Council reached a legally-binding agreement on preventing and responding to spills of oil and gas in Arctic regions. Steven Lee Myers, Arctic Council Adds 6 Nations as Observer States, Including China, N.Y. Times, May 15, 2013.

On Friday May 17 the U.S. Bureau of Land Management proposed regulations to control the use of hydraulic fracturing on 700 million acres of federal land and 56 million acres of tribal land.  Most of the estimated 13,000 wells on which fracking occurs are on private land, where regulation is left to the states, but the proposed federal rules will apply to the approximately 3,000 fracking wells that are located on federal land.  The proposed rules are somewhat weaker than environmentalists had hoped.  They require disclosure of the contents of fracking fluids only after drilling has been completed.  Industry groups criticized the rules by arguing that the federal government should not regulate fracking.

On May 16 hundred of residents of Kunming, China took to the streets to protest plans by China National Petroleum Co. to build a chemical plant to produce the chemical paraxylene (PX) from crude oil piped in from Myanmar.  Kiming’s mayor Li Wenrong met with the protesters and opened an online account on Sina Weibo to hear public opinion.  Approximately 4,000 comments from the public were posted online.  Li Chengpeng, a prominent Chinese social critic, has helped encourage the demonstrations, which are part of a growing trend by China’s middle class to oppose projects that may increase pollution in their neighborhoods. Brian Spegele, Behind Chinese Protests, Growing Dismay at Pollution, Wall St. J., May 18-19.  The protesters are not opposed to building the plant per se. They simply argue that it should be relocated to a less populated area and be subjected to advance environmental review. 

On May 15 the government of Indonesia announced that it was extending for two years its moratorium on logging virgin forests. The moratorium initially was imposed two years ago as part of a $1 billion conservation plan arranged with the government of Norway.  Some industry groups criticized the extension as prolonging a measure that hurt the Indonesian economy. Greenpeace argued that the Indonesian government should have gone further and strengthened the existing moratorium. 

On May 17 the University of Maryland Carey School of Law graduation ceremonies were held for  300 students in the Class of 2013. U.S. Senator Ben Cardin was the commencement speaker.  On May 16 the University of Maryland Environmental Law Program hosted a party in honor of the 24 students in the graduating class who qualified for the certificate of concentration in Environmental Law.

On Saturday my son and I made our first road trip in my new all-electric Tesla S.  We traveled to Atlantic City where we attended the Lamont Peterson/Lucas Mathysse boxing match at Boardwalk Hall.  We had no problem recharging the car during the 400-mile roundtrip, stopping at Tesla’s supercharger at the Delaware Welcome Center in Newark, Delaware.  In 45 minutes the car was fully charged.  While attending the fight, which was won by Argentinian Matthysse on a third-round knockout, we charged the car at a nearby municipal parking lot.  On the return trip today it took only 25 minutes to recharge at the Delaware supercharger.  I’ve now driven 900 miles in the ten days that I’ve had the car with absolutely no problems.

Nanjing Conference, Global CO2 Levels Hit 400ppm, Chinese Enforcement & Tesla Delivery (by Bob Percival)

On Monday and Tuesday May 6-7, I participated in a conference on “The Performance of Environmental Governance Systems: Comparing America and China.”  The conference was co-sponsored by the School of the Environment at Nanjing University and the Bren School of Environmental Science and Management at the University of California Santa Barbara.  The conference website is located at: http://hjxy.nju.edu.cn/en_wbe/news%5Cpegs%5Cpegs.htm. On Monday afternoon Professor Zhao Huiyu of Shanghai Jiaotong University Law School and I jointly presented our paper on “The Role of Civil Society in Environmental Governance.”  The paper compares how civil society influences the adoption, implementation and enforcement of environmental standards in China and the United States.  We argue that while it may be easier to pass environmental legislation in China, it may be harder to enforce such laws because they are not the product of hard-fought compromises with the regulated community.  The three types of NGOs in China - officially endorsed NGOs, international NGOs, and grassroots NGOs -- are playing an increasing role in Chinese environmental policy, though their greatest successes appear to be through transparency initiatives rather than litigation.  This may reflect the more limited opportunities open to NGOs in China compared to the U.S.

There were several excellent presentations at the conference by prominent political scientists and environmental lawyers from China and the U.S. A major conference theme was an effort to discern which environmental initiatives had worked best and why.  One of the most interesting commentaries was by China University of Political Science & Law Professor Wang Canfa who has been asked to help draft climate change legislation for the National People’s Congress.  The Chinese bureaucracy is pushing back against this project from several quarters with arguments questioning why China should control its greenhouse gas (GHG) emissions when it is not legally required to do so by any international agreement.  The answer to this question is because China’s GHG emissions are the highest in the world and still increasing rapidly.  Although U.S. GHG emissions remain much higher than China’s on a per capita basis, China’s per capita emissions have been increasing to the point where they now are approaching those of the European Union.

These emission increases are a major reason why scientists discovered on May 10 that concentrations of carbon dioxide in the atmosphere have passed 400 parts per million (ppm) for the first time since the Pliocene Epoch several millions of years ago.  This discovery was made by scientists at Hawaii’s Mauna Loa observatory.  The 400 ppm level is a dramatic increase from the level of 316 ppm measured at Mauna Loa in 1958.  At the dawn of the industrial revolution in the 1700s, it is estimated that global CO2 levels were approximately 260 ppm.  The last time levels of CO2 were above 400 ppm is believed to be in the Pliocene Epoch when the earth was 5 to 7 degrees warmer than today and sea levels tens of feet higher. Brian Vastag & Jason Samenow, Carbon Dioxide Levels Hit Troubling Milestone, Scientists Say, Wash. Post, May 10, 2013.  The group 350.org has been campaigning for measures that would dramatically reduce GHG emissions in order to reduce CO2 levels in the atmosphere to 350 ppm.

During my trip to China much of the discussion focused on whether the recent horrendous environmental conditions experienced there would force the Chinese government to strengthen environmental regulation in some dramatic fashion.  Yet the larger problem seems to be simply enforcing existing laws, as illustrated by an article in this morning’s Washington Post.   Steven Mufson, In China, Pollution Resists Change, Wash. Post, May 12, 2013, at A12.  The article reports that Huadian, one of China’s largest power companies, turned off the scrubbers at its Datong coal-fired power plants allowing its emissions of SO2 to soar to four times above legal limits.  It then falsified paperwork in order to be able to sell its electricity at higher rates given to plants with lower emissions.  While 80% of China’s coal-fired power plants have scrubbers, China continues to add one coal-fired power plant per week and the scrubbers are not always used.  Huaneng, another Chinese electric producer, was fined $13,000 for turning off its scrubbers in February 2012, but the fine did not recoup the economic benefit of the violation, which was repeated last November. In the U.S. intentional violations of the Clean Air Act would result in criminal prosecutions, but at present there is little prospect of such strict enforcement in China.  

After the Nanjing conference concluded on May 7, I took a very comfortable high-speed train from Nanjing to Shanghai.  On the morning of May 8 I presented a lecture on the law and politics of environmental protection to students in Professor Zhao’s class at Shanghai Jiaotong University Law School.  The students asked some terrific questions about China’s environmental prospects, U.S. public opinion about the environment, the constitutional basis for U.S. environmental regulation, and other matters.  It always is a great pleasure for me to be able to engage directly with Chinese law students who hopefully will one day be directly influencing their country’s policies.  After the lecture I flew from Shanghai to Beijing to catch my return flight to the U.S.

I returned to the U.S. from China on the evening of May 8.  On Thursday May 9 I took delivery of my new all-electric, Tesla S Performance car at Tesla’s Rockville Service Center.  Tesla’s service rep showed me the car’s cool features and we downloaded Tesla’s iPhone app that lets me remotely monitor the car’s charging status and location. I then drove the car from Rockville to Baltimore and plugged it in at one of the University of Maryland’s electric vehicle (EV) charging stations.  I have now driven my Tesla nearly 200 miles and it is truly amazing.  It is hard to believe that an automobile can have such incredible performance capabilities.  The car became a traffic stopper on Saturday as I drove to Nationals Stadium in D.C.  A policeman directing traffic started to wave me along and then suddenly stopped me in the middle of an intersection to ask about the car.  Next weekend I will take my Tesla on its first trip outside of the Baltimore/Washington area when my son and I go to Atlantic City to see the welterweight championship boxing match between Lamont Peterson and Lucas Matthysse.  In July when I teach the Comparative China/U.S. Environmental Law course at Vermont Law School (VLS), I am hoping to drive my Tesla to South Royalton since VLS has its own EV charging station.

Delayed May 4th Blog Post: China Trip, Is China Really a Green Leader? BP Spill

I posted this on my parallel blog at www.globalenvironmentallaw.com on May 4th.  I was unable to post on blogspot because I was in mainland China where the site is blocked.  Here is the post: I have been in China during the last week.  I left D.C. last Sunday, arriving in Beijing on Monday afternoon.  On Monday night I had a wonderful dinner in downtown Beijing with my former student Huang Jing and her new husband.  I then spent three days in Hong Kong.  It is always refreshing to read the Hong Kong press, which is not subject to the same censorship as the mainland media.  A dock workers’s strike in Hong Kong and Wednesday’s May 1 celebration of International Labor Day, drew considerable commentary about the abysmal state of worker’s rights in Hong Kong. 

Tom Holland, a columnist for the South China Morning Post wrote a column challenging recent reports by Australia’s Climate Commission and the Pew Charitable Trusts that had lauded China as a green energy leader.  Holland does not dispute that China now has 152 gigawatts of renewable energy capacity, more than the U.S.’s 133 gigawatts and the EU’s 128 gigawatts.  But, he notes, China’s emissions of greenhouse gases are “climbing at a truly spectacular rate.” Tom Holland, China a Green Leader? Don’t Make Me Laugh, South China Morning Post, May 1, 2013, at B8.  In 2011 China’s carbon dioxide emissions rose by 820 million tons, more than total emissions that year by Germany and Romania combined. Holland notes that during the first three months of 2013, coal-fired power plants were the source of 81% of China’s electricity generation, followed by hydropower (11%), natural gas (4%), wind energy (2%) and nuclear (2%).

The reason for my trip to China is to present a paper on “The Role of Civil Society in Environmental Governance in the United States and China” at a conference on comparative environmental governance at the University of Nanjing. I have co-authored the paper with Professor Zhao Huiyu from Shanghai Jiaotong University School of Law.  Civil society in China has been very active in protesting environmental conditions and opposing the siting of chemical plants.  The Hong Kong press reported that provincial authorities in Chengdu, capital of Sichuan province, have temporarily halted a controversial $6 billion PetroChina chemical plant project in Pengzhou because of concerns over its proximity to an earthquake fault.  On April 25 a 33-year old Chinese woman posted on a microblog a call for demonstration on April 27 to oppose the plant, a protest she said had been approved by the authorities. The following day she was arrested by local authorities and her blog post was removed, generating considerable public anger. Patrick Boehler, Chengdu Halts Plant Work Amid Quake Fears, South China Morning Post, May 1, 2013, at A6.

While waiting to fly to Shanghai on May 3 I was able to watch part of the Washington Nationals/Atlanta Braves baseball game in high definition on my laptop due to the superb free wifi in the Hong Kong airport.  On Friday night I had dinner in Shanghai with my co-author Professor Zhao, who is one of the very top environmental law scholars in China.  Tomorrow we will be traveling by train to Nanjing for the conference.

Other environmental news items from China include the following.  The Guangzhou Daily reported that beginning next month water quality reports for 50 rivers in China will be posted online on a monthly basis.  Guangzhou officials also announced plans to build three waste treatment facilities to enable the city to treat 94 percent of its sewage.  A construction site in the Pudong area of Shanghai is under investigation for illegally discharging polluted wastewater into a stream that turned the stream black and resulted in a fish kill.  Residents posted pictures of the polluted water online, which helped spur the investigation.  The Fujian provincial government announced that it had ordered 392 mineral mines to shut down by 2015 because of safety and environmental concerns.  Not all of the mines were not found to be violating existing regulations, but they all were deemed to be using substandard safety technology and some were found to be causing pollution of soil and rivers.

In a financial report last week BP revealed that as of March 6 it was facing 2,200 lawsuits over its 2010 Deepwater Horizon oil spill.  As the deadline for avoiding a three-year statute of limitations approaches, BP expects to face more lawsuits.  BP disclosed that it increased the amount it set aside to pay for claims by private parties pursuant to a settlement it reached last year from $7.8 billion to $8.2 billion. Guy Chazan, BP Hit by Flood of Fresh Lawsuits As Gulf Disaster Claims Deadline Nears, Financial Times, May 1, 2013, at 11.  The oil services company Halliburton had revealed the previous week that it increased its reserve to settle Deepwater Horizon claims from $363 million to $1 billion, perhaps a reflection that it has not fared well in the trial that commenced in federal court in New Orleans in February.

A report published last week by the group Climate Central estimates that Hurricane Sandy resulted in nearly 11 billion gallons of raw sewage being released into U.S. waters in October 2012.  Storm surges, heavy rain, and electrical outages caused by the storm overwhelmed sewage collection and treatment systems, causing the releases.  The report illustrates a serious infrastructure problem.  As sea levels rise due to climate change, sewage systems in coastal areas are at increasing risk of being overwhelmed by storms.  A copy of the report, Sewage Overflows from Hurricane Sandy, is available online at: http://www.climatecentral.org/pdfs/Sewage.pdf

Tesla now has a dealership in Hong Kong and there are a fair number of electric vehicle charging stations in the city.   I will be taking delivery of my all-electric Tesla car on May 9, the day after

I return from China.

Parallel Blogs and the "Great Firewall of China"

The reason I run parallel blogs at this site and at www.globalenvironmentallaw.com is because sometimes one site or the other is blocked when I am on the Chinese mainland due to the government's "Great Firewall of China."  Earlier this week when I was having dinner with friends in Beijing one complained that she cannot view my website from China.  She was referring to this site because apparently blogspot is currently blocked on the mainland.  I told her to use www.globalenvironmentallaw.com instead, which is not currently blocked.  I am currently in Hong Kong, which is outside the government firewall so I am able to make this post.  But I am flying to Shanghai later today and I will be in China until Wednesday May 8.  If you do not see my regular Sunday post this week, go to my parallel site at www.globalenvironmentallaw.com, which I am confident I will be able to use even when I am inside the Chinese firewall.

EPA Criticizes Keystone XL SEIS, BP Trial, Student Blog Posts, TTIPS Conference (by Bob Percival)

As the comment period closed on the State Department’s Supplement Environmental Impact Statement (SEIS) for the Keystone XL pipeline project on April 22, the U.S. Environmental Protection Agency (EPA) submitted comments arguing that the SEIS contained insufficient information to enable the agency fully to assess the impact of the project.  The EPA comments question the SEIS’s central assumption that the oil sands crude will find its way to market whether or not the pipeline is built, noting that alternative transportation options could be more costly and congested.  They note that the 2010 Enbridge spill of oil sands crude in Michigan demonstrated that it is more difficult to remediate spills of such oil than it is to clean up conventional oil spills because oil sands crude does not appreciably bidegrade.  The EPA comments recommend that additional oil spill response measures be required and they suggest further exploration of an alternative route that would parallel the existing pipeline.  A copy of EPA’s comments is available online at: http://www.epa.gov/compliance/nepa/keystone-xl-project-epa-comment-letter-20130056.pdfWhile EPA’s comments are a significant development, they would not preclude a decision by the State Department to approve the project.  A decision may be reached by the end of the year.

Last week marked the 43rd anniversary of Earth Day and, a few days before, the third anniversary of the Deepwater Horizon oil spill.  The first phase of the trial of the civil lawsuits against BP and its partners concluded in federal court in New Orleans the week before.  The trial is scheduled to resume on September 16.  On April 24, federal district judge Carl Barbier, who is conducting the trial, issued an order directing the parties to brief several issues.  The questions surround what the appropriate legal standard should be for finding “gross negligence” or “willful misconduct” under the Clean Water Act and the Oil Pollution Act of 1990, what acts or omissions are necessary to support such findings, and the impact of compliance with regulations or “industry standards.”  

Today I am posting the final two blog posts from students in my Global Environmental Law Seminar on my parallel blog at www.globalenvironmentallaw,com.  They include Melissa Timbers reporting on Chile’s HidroAysén hydroelectric project and Paul Kolster analyzing compliance with the Espoo Convention. To view the student blog entries click on the “Students” link at the top of this page.

On April 23 I spoke on a panel at a conference on “The New Transatlantic Trade and Investment Partnership: Aligning Investment, Patents, and Privacy.”  The conference, which was held at the Cosmos Club in Washington, D.C., was cosponsored by the American Institute for Contemporary German Studies and the Ecologic Institute.  It focused on the implications of the new Transatlantic Trade and Investment Partnership (TTIP) that President Obama emphasized in his State of the Union Address.  The TTIP negotiations between the U.S. and the EU will represent a further effort to lower trade barriers and harmonize regulatory standards between the U.S. and the EU.  Carolina Atkinson, special assistant to President Obama, opened the conference by discussing the prospects for the TTIP negotiations.  In my presentation I argued that regulatory harmonization should not lead to a reduction in health, safety and environmental protection standards, citing the conclusions of the EU-US High Level Working Group on Jobs and Growth, published on February 11, 2013 (http://ec.europa.eu/enterprise/policies/international/cooperating-governments/usa/jobs-growth/index_en.htm).  I also noted that any “race to the bottom” concerns that surrounded other trade agreements should not pose as big an obstacle to the TTIP negotiations because the EU already has standards that generally very high.

While waiting to speak at the conference I was briefly embarrassed when my cellphone rang.  I immediately turned the phone off and waited until the conference ended to listen to the voicemail.  It was from Tesla telling me that my all-electric Model S had just come off their California assembly line.  I can’t wait to relegate my weekly trip to a gas station to a distant memory.

Kiobel Decision Guts Alien Tort Statute, European Parliament Rejects ETS Plan, Arctic Fishing Negotiations & Uganda Oil Agreement (by Bob Percival)

By a 5-4 majority the U.S. Supreme Court on April 17 finally decided the Kiobel case, which initially was argued in February 2012 (see blog post of March 4, 2012) and reargued in October 2012 (see blog post of October 1, 2012).  The case was brought by survivors of environmental activists killed by the Nigerian military in Nigeria.  They sued Royal Dutch Shell, a Dutch corporation, in federal district court in New York. The plaintiffs alleged that the company conspired with the Nigerian military to kill their relatives to silence their complaints about Shell’s oil pollution in Nigeria.  The case involved review of a September 2010 decision by the U.S. Court of Appeals for the Second Circuit holding that corporations cannot be held liable under the Alien Tort Statute because corporations cannot violate international law (see blog post of October 4, 2010).

The Alien Tort Statute (ATS) was enacted in 1789 by the first U.S. Congress.  The ATS gives U.S. federal courts jurisdiction over “any civil action by an alien for tort only, committed in violation of the law of nations.”  For further background on ATS cases see the blog posts of September 2, 2007 and May 31, 2009. The five-Justice majority applied the presumption against extraterritorial application of U.S. law to the ATS to find that the Kiobel litigation could not be brought because it alleged torts occurring entirely outside the U.S.  In his majority opinion Chief Justice Roberts concludes that “all the relevant conduct took place outside the United States.  And even where the claims touch and concern the territory of the United States, they must do so with sufficient force to displace the presumption against extraterritorial application.”   But the Chief Justice had a difficult time explaining why the presumption against extra-territorial application of U.S. law, a doctrine that had not even been developed at the time the ATS was enacted, should apply.  He notes that the doctrine is designed to avoid conflicts with foreign sovereigns by not applying U.S. norms to foreign conduct unless Congress so specifies. But the ATS does not seek to apply U.S. norms abroad, but rather only to create jurisdiction to redress egregious violations of international law. The Chief Justice concedes that the ATS permits actions against those who commit piracy on the high seas, but he concludes that the presumption against extra-territorial application bars suits for other international law violations committed within the territory of another country.

It was widely expected that the decisive vote in the case would come from Justice Kennedy.  Kennedy joined the Court’s four most conservative members in providing the fifth vote for the Chief Justice’s majority opinion.  In a truly classic example of a Kennedy concurring opinion, he tried to soften the harsh implications of the decision for human rights litigation.  Kennedy noted that in future cases alleging “serious violations of international law principles protecting persons, the proper implementation of the presumption against extraterritorial application [of the ATS] may require some further elaboration and explanation.”

In 2004 the Supreme Court had limited the reach of the Alien Tort Statute (ATS) by holding in Sosa v. Alvarez-Machain that the ATS provides federal courts with jurisdiction to hear only cases alleging violations of international norms that are “specific, universal, and obligatory.”  This effectively ruled out most environmental cases unless they also involved conduct that constituted egregious human rights violations.   In the Unocal and Saro-wiwa cases oil company defendants paid large sums to settle post-Sosa ATS litigation alleging that they had conspired with the Myanmar and Nigeria militaries to torture and kill their opponents.  See the June 12, 2009 blog post on the $15 million settlement Shell paid the survivors of Ken Saro-wiwa.  Despite Justice Kennedy’s concurrence, the Kiobel decision now apparently would rule out such litigation in the future because the conduct occurred abroad.  

The four liberal Justices rejected Chief Justice Roberts’s view that the ATS cannot apply to conduct that occurs in another country.  In an opinion by Justice Breyer they concurred in the judgment on other grounds, which may have represented an unsuccessful attempt to attract Justice Kennedy’s vote.  These four Justices argue that the majority’s use of the presumption against extraterritoriality is particularly inappropriate because the ATS was enacted to deal with foreign matters.  The four interpret the ATS to provide jurisdiction if any of the three following conditions are met: “(1) the alleged tort occurs on American soil, (2) the defendant is an American national, or (3) the defendant’s conduct substantially and adversely affects an important American national interest.”  Justice Breyer noted that the third condition could be met to prevent the U.S. “from becoming a safe harbor (free of civil as well as criminal liability) for a torturer or other common enemy of mankind.”  The four agreed that Kiobel should be dismissed because it involves the acts of a foreign corporation (Shell) that occurred outside the U.S. without affecting an important U.S. interest. 

What impact will the Kiobel decision have on environmental cases? No environmental plaintiff ever has successfully litigated an ATS case to judgment, though some cases have been settled on terms favorable to plaintiffs (see the Unocal and Saro-wiwa cases discussed above). Ironically the decision means that Chevron would have prevailed in the litigation against it for polluting Ecuador had it not fought and won dismissal from the U.S. courts on the grounds that Ecuador was a more convenient forum.  Chevron now is asking the U.S. courts to block enforcement of what it claims is a fraudulently obtained $18 billion judgment rendered by the Ecuadoran courts. By closing U.S. courts to such suits, plaintiffs will have to rely on foreign courts, as they have been doing in some cases (see, e.g., the litigation brought against the British trading firm Trafigura in London for dumping wastes on a beach in Cote D’Ivoire, discussed in the Sept. 20, 2009 blog post). 

On April 16 the European Parliament by a vote of 334-315 rejected a plan to reduce the supply of allowances issued under the EU’s Emissions Trading System to reduce greenhouse gas emissions. The plan was designed to boost the prices of the allowances, which have plunged below $4/ton, reducing incentives to reduce emissions. The plan was rejected out of concern that it would cause economic harm by increasing energy prices in Europe.  Stanley Reed, Europe Vote Sets Back Carbon Plan, N.Y. Times, April 17, 2013, ar B1.

The five countries that border on the Arctic -- the U.S., Russia, Denmark, Norway, and Canada --have agreed to negotiate an agreement to regulate commercial fishing near the North Pole.  The agreement reflects a recognition that global warming has thinned the Arctic icecap to the point where such fishing is becoming commercially feasible.  The negotiations will commence in Washington on April 29.  Andrew E. Kramer, Accord Would Regulate Fishing in Arctic Waters, N.Y. Times, April 17, 2013 at A9.

Last week the government of Uganda reached agreement with three international oil companies -- Tullow Oil, Total and Cnoc -- to construct an oil pipeline and 30,000 barrel/day refinery in Uganda.  The agreement is part of negotiations on how to develop Uganda’s newfound oil resources.  It is expected eventually to result in the first significant oil exports from the east coast of sub-Saharan Africa.  Nicholas Bariyo, Uganda Reaches Refinery Deal, Wall St. J., April 16, 2013, at B2.

Conoco Suspends Arctic Drilling Plans, BP Trial, Chevron Ecuador Case, MTBE Verdict, New FMC Chairman (by Bob Percival)

On April 10 ConocoPhillips announced that it was suspending plans to drill for oil in 2014 off the north shore of Alaska.  ConocoPhillips, which owns 98 oil exploration leases in the Chukchi Sea, had spent $650 million through the end of last year to prepare for Arctic drilling.  The company cited regulatory uncertainties in the U.S. as a reason for suspending its drilling plans.  After several mishaps last year, Royal Dutch Shell abandoned plans to drill in the Arctic in 2013 and Statoil ASA has delayed its planned Arctic drilling from 2014 to 2015.  Two of Shell’s drilling rigs were damaged last year in the harsh Arctic environment, which features rough seas, high winds, and extreme cold that make drilling there particularly difficult.  Ben Lefebvre & Tom Fowler, Conoco Halts Arctic Drilling Plans, Wall St. J., April 11, 2013, at B7.

Last week BP opened its defense in the trial of the federal government’s civil claims against it for the 2010 Deepwater Horizon oil spill.  After six weeks of testimony by the government and other parties that BP had ignored warnings of problems with the drilling rig and had sought to reduce costs while speeding up the drilling process, BP offered testimony that it had followed standard drilling procedures in the industry.  The crucial issue in the case is whether BP was gulity of “gross negligence,” which would result in the civil fines being three times larger than for simple negligence.

The battle between Chevron and Ecuadoran plaintiffs seeking to enforce an $18 billion judgment against the oil company for pollution in the Oriente region of Ecuador continues on several fronts.  The U.S. Court of Appeals for the Second Circuit has scheduled oral arguments for next month on a petition by the plaintiffs for a writ of mandamus to force removal for bias of the judge hearing Chevron’s RICO suit against the plaintiffs.  The judge, Lewis Kaplan of the federal district court for the southern district of New York, previously sought to block enforcement of the judgment anywhere in the world, but his injunction was reversed on appeal by the Second Circuit.  Last week the environmental consulting firm Stratus, which had provided consulting services to the plaintiffs, settled a lawsuit brought against it by Chevron by agreeing to disavow its assessment of oil contamination that had been submitted to the Ecuadoran judge.  Stratus reportedly was facing bankruptcy due to the cost of Chevron’s litigation against it.   The Ecuadoran plaintiffs allege that the Stratus settlement represents another example of Chevron seeking to intimidate its critics.  For example, on April 3 a federal magistrate in San Francisco quashed subpeonas Chevron had issued to the environmental group Amazon Watch on First Amendment grounds.  It is unclear what effect the Stratus settlement will have on the case because the judgment issued by Ecuadoran Judge Nicolas Zambrano was based on evidence other than that provided by Stratus.  In a bizarre twist, Chevron has filed an affidavit from Judge Alberto Guerra, who heard the case in 2003 and 2004, claiming that Judge Zambrano accepted a $500,000 bribe from the plaintiffs.  Judge Zambrano denies the allegation but claims that Guerra previously informed him that Chevron would pay $1 million if he recanted his judgment.  Clifford Krauss, Consultant Recants in Chevron Pollution Case in Ecuador, N.Y. Times, April 13, 2013, at B6.  Plaintiffs allege that Chevron has paid Guerra several hundred thousand dollars. Guerra admits that he was paid $38,000 by Chevron for his affidavit and $12,000 a month to support his family who have relocated to the U.S.

After a three-month trial, a state court jury in New Hampshire found on April 9 that ExxonMobil had been negligent in supplying gasoline that contained MTBE, a possible human carcinogen, that widely contaminated drinking water in the state. The jury ordered ExxonMobil to pay the state of New Hampshire $236 million, the company’s 28.94% in-state market share applied to total damages of $816 million. The state sued 26 oil companies over MTBE contamination in 2003 and all the defendants except for ExxonMobil settled the cases.  Testimony at trial showed that ExxonMobil’s own experts had warned it against using MTBE as an oxygenate for gasoline because it makes it easier for gasoline to travel in groundwater and is resistant to biodegradation. More than 40,000 drinking water wells in New Hampshire are contaminated with MTBE with 5,590 of these at levels exceeding the state’s standard for safe drinking water.

On Wednesday April 10, Mario Cordero, the newly-appointed chairman of the Federal Maritime Commission (FMC), spoke to my Global Environmental Law seminar about efforts to reduce the environmental impact of maritime shipping.  Chairman Cordero gave an inspirational talk that started with a description of his own background as a child of Mexican immigrants who did not have the benefit of the education he was able to receive in the U.S.  After graduating from the University of Santa Clara Law School he practiced law in California and was appointed to the Board of Harbor Commissioners for the Port of Long Beach.  In that position he championed a Green Port Policy to reduce pollution from vessels and the trucks that load and unload their cargoes.  Cordero became the first Latino member of the FMC when appointed by President Obama in 2010 and confirmed by the Senate in 2011.  He has continued to champion the greening of shipping as a member of the FMC and on April 2 he was designated by the President to be the FMC’s new chairman.

On April 10 I made a presentation on “The Role of Civil Society in Environmental Governance in the U.S. and China” at an environmental workshop at the University of Maryland Department of Government and Politics in College Park.  My presentation reviewed how U.S. environmental laws have emphasized public participation in the process of developing, implementing and enforcing the environmental laws, while civil society has played a much more limited, but growing, role in this process in China.  I argued that one of the reasons why China has had more difficulty enforcing its environmental laws is precisely because they are not the product of hard-fought compromises between business and environmental interests.  China’s highly decentralized enforcement structure and its lack of an independent judiciary are other contributing factors to the country’s enforcement problems.  I will be jointly presenting a more detailed version of this talk with Professor Zhao Huiyu of Shanghai Jiaotong University School of Law, who is co-authoring a paper on the subject with me, at a conference in Nanjing, China on May 6-7. 

As announced in last week’s blog posting, blog entries from students in my Global Environmental Law seminar are being posted daily in the “Students” section of my parallel blog at: www.globalenvironmentallaw.com.  A total of 21 such entries now have been posted.  They cover such diverse topics as opposition to building a new coal-fired power plant in Kosovo, bee colony collapse disorder, pollution from cruise ships, land tenure and the Amazon environment, the politics of Australia’s carbon tax, and comparative environmental standing.  More student blog entries will be posted during the next week.