Two events last week placed the activities of multinational oil companies back in the global environmental spotlight. Wednesday was the scheduled start of a trial in federal district court in New York of a lawsuit alleging that Royal Dutch Shell collaborated with the Nigerian military to execute environmental activist Ken Saro-wiwa in 1995. The lawsuit is being brought under the Alien Tort Statute (ATS), enacted by the first U.S. Congress in 1789 to enable foreigners to recover for harm caused to them by U.S. citizens. Wednesday also was the day on which the annual meeting of shareholders of the Chevron Corporation was held and environmental protesters were expected. When it took over Texaco eight years ago, Chevron acquired a long-standing lawsuit against Texaco by residents of the Oriente region of Ecuador. These plaintiffs claim that Texaco’s oil development activities in Ecuador during the 1970s and 1980s created an environmental disaster that persists today and they were expected to protest at Chevron’s annual meeting.
Litigation under the Alien Tort Statute is almost impossible for environmental plaintiffs to win because the Supreme Court set the bar so high when it decided Sosa v. Alvarez-Machain in 2004. The Court held that the Alien Tort Statute can only be used to seek redress for actions that violate “specific, universal, and obligatory” norms recognized as part of the “law of nations” at the time the law was enacted. Both the Second Circuit (in Flores v. Southern Peru Copper Corp. in 2003) and the Fifth Circuit (in Beanal v. Freeport-McMoran in 1999) have held that allegations of severe environmental harm were not enough to give rise to liability under the statute. However, plaintiffs who claimed that the Unocal Corporation had collaborated with the Burmese military’s activities of forced labor, murder, and rape in connection with construction of an oil pipeline won a favorable settlement following an en banc oral argument in the Ninth Circuit (Doe v. Unocal Corp.) that did not go well for the company.
Ironically, the litigation against Texaco began as a claim under the Alien Tort Statute, but the company insisted that the litigation should not be heard by the U.S. courts. As a result, it was dismissed by the Second Circuit on the condition that Texaco agree to let the case be heard by an Ecuadoran court. After years of trial, the court in Ecuador may rule before the end of the year and Chevron is facing potentially $27 billion in cleanup costs. Chevron’s defense is that everything it did in Ecuador was legal and that it spent $40 million on environmental cleanup and was released from further liability by the government of Ecuador in 1992 when Texaco left the country. The plaintiffs claim that this settlement with an over-friendly government does not absolve Texaco of responsibility for the harm their activities caused to individuals. I previously predicted that as foreign courts become more aggressive in handling claims for environmental harm, companies will abandon their former strategy of seeking dismissals on forum non conveniens grounds of lawsuits brought against them in U.S. courts by foreigners. In hindsight Texaco would have been better off litigating the merits of the claims in U.S. courts than appearing before what appears to be an increasingly hostile court in Ecuador.
The start of the Saro-wiwa v. Shell trial has now been delayed until this week. Last December Chevron won a high profile ATS case when a jury in San Francisco ruled in Bowoto v. Chevron Corp. that it was not responsible for human rights abuses when the Nigerian military suppressed an environmental protest against its drilling practices. But win or lose, these cases expose to the glare of international publicity environmental practices that fall short of the standards oil companies use when operating in developed countries. Plaintiffs are making full use of the internet to communicate their point of view. See www.shellguilty.com and www.truecostofchevron.com.
This week House Speaker Nancy Pelosi traveled to China to engage Chinese officials on why it is important that they agree to control their emissions of greenhouse gases (GHG) at the upcoming global Copenhagen conference in December. This is a similar mission to the one that I was on last month when the State Department arranged for me to give two weeks of lectures on environmental law in six Chinese cities. Amusingly, an editorial in this morning’s Wall Street Journal piously declares that “what Beijing actually wants is for developed nations to hobble their own economies with a cap-and-tax regime that would send jobs and billions of dollars a year in transfer payments to China the way Kyoto has.” “Pelosi’s Chinese Climate Change,” Wall St. J., June 1, 2009. After hearing a similar argument in reverse from many Chinese during my trip last month, I realize that this is how the “tragedy of the global commons” occurs when each side accuses the other of wanting to be the free rider. To date, the U.S. is the only developed country that has taken a pass on Kyoto. Hopefully, when the Copenhagen conference takes place in December both the U.S. and China will be global environmental leaders on this issue.
On Friday night I hosted the students in the Southwestern University School of Law Vancouver summer program for a wine and cheese party at my apartment in the Yaletown neighborhood of downtown Vancouver. The party coincided with Game 6 of the NBA playoff semifinals and the students, most of whom are from Los Angeles, were delighted to watch their Lakers eliminate the Denver Nuggets and advance to the Championship round.