AEP Decision, UN Climate Summit, G-20 Meeting, Chevron Ecuador Arbitration Claim & ABA SEER Conference

On Monday the U.S. Court of Appeals for the Second Circuit finally released its decision in Connecticut v. American Electric Power, a case that had been argued in June 2006. The court by a vote of 2-0 reversed a district court’s decision that had dismissed a common law nuisance action by states and land trusts against six utilties operating powerplants who contribute 10 percent of U.S. greenhouse gas (GHG) emissions. The court held that the claim that the utilities had caused a public nuisance by contributing to global warming and climate change did not raise a nonjusticiable political question and was not preempted by the federal Clean Air Act. The third judge who had been on the panel was Sonya Sotomayor, now a Justice of the U.S. Supreme Court. I had previously noted that her elevation to the court could require the case to be reargued if the other two judges did not agree. While the decision was 137 pages long, given the agreement on the outcome by the other two judges (one appointed by President George H.W. Bush and the other by President George W. Bush), it is hard to see why it took them so long to decide the case, which raises the interesting question whether Judge Sotomayor agreed with them. One certainly can understand why she would not have wanted the decision to come out before her confirmation, regardless of which way she would have voted, because it would make climate change a flashpoint issue at her confirmation hearings.

The court’s holding that the case did not raise a nonjusticiable political question was widely expected because the district court’s decision seemed to use this doctrine as an excuse to avoid deciding a difficult case. By holding also that the Clean Air Act does not preempt the federal common law of nuisance for GHG emissions by stationary sources because EPA has not regulated them yet, the decision is likely to increase pressure on both EPA and Congress to act to do so.

The United Nations General Assembly held a Climate Summit on Tuesday September 22.  Nearly 100 world leaders attended the Summit whose objective was “to mobilize the political will and vision needed to reach an ambitious agreed outcome based on science at the UN climate talks in Copenhagen.”  While there was broad agreement on the importance of the Copenhagen negotiations, there were no significant breakthroughs in terms of new commitments to reduce GHG emissions or to provide financial assistance to help developing countries do so.  President Obama and Chinese President Hu Jintao joined other leaders in summarizing the many things their countries are doing to reduce the growth of GHG emissions with Hu pledging to reduce the carbon intensity of Chinese economic growth, but not committing to any limits on total Chinese emissions. EU leaders expressed frustration with the failure of the U.S. Senate to act more quickly on cap-and-trade legislation that has passed the House.
 
On Thursday and Friday leaders of the G-20 countries met in Pittsburgh.  While the revelation of the secret Iranian nuclear facility stole much of the show, the leaders did consider a U.S. proposal to phase out subsidies for fossil fuel use.  It is estimated that elimination of such subsidies, which are estimated to cost the largest developing countries such as China, India, Russia, South Africa and Iran $310 billion per year, could reduce GHG emissions by 10 to 12 percent. While some of these subsidies are viewed as politically necessary to help the poor meet their energy needs, Indonesia is being held up as a model for replacing the subsidies with direct cash payments to the poor to eliminate their tilt toward fossil fuel use.  The final conference communiqué, which can be viewed at http://www.pittsburghsummit.gov/mediacenter/129639.htm calls for further investigation of this initiative and a report at the next G-20 summit.
 
On Wednesday September 23, the Chevron Corporation announced that it had filed an international arbitration claim against the government of Ecuador in the Permanent Court of Arbitration in the Hague.  Chevron bases its claim on what it calls the Ecuadoran government’s “exploitation” of the lawsuit filed by residents of the Oriente region f or environmental damage caused by oil drilling. Chevron is asking the tribunal to enforce its 1998 cleanup agreement with Petroecuador and a bilateral U.S.-Ecuador investment treaty.  While Chevron’s move was widely expected, most observers thought it would not occur until after the litigation against the company was concluded in the Ecuadoran courts.  Chevron, which initially fought to remove the case from the U.S. courts, now claims that it has no choice because “Ecuador’s judicial system is incapable of functioning independently of political influence.”  Ecuadoran attorney general Diego Garcia rejected Chevron’s effort to impugn the integrity of the Ecuadoran judiciary and noted that the plaintiffs in the lawsuit before the Ecuadoran court are not parties to the arbitration proceeding Chevron has initiated in the Hague.

On Friday I moderated a panel on “Climate Change and Other Hot Clean Air Act Issues” at the American Bar Association’s annual fall conference of the Section on Environment, Energy and Resources (SEER) Law. Former EPA general counsel Roger Martella introduced me and I then introduced the panel consisting of former EPA Deputy Administrator Bob Sussman, Bill Becker (president of the National Association of Clean Air Agencies), Environmental Defense Fund General Counsel Jim Tripp and ExxonMobil environmental counsel Clara Poffenberger. Rather than having lengthy presentations from each panelist, we used a roundtable format where I raised a set of issues and asked each panelist to respond. Bob Sussman, who is now a senior policy adviser to EPA Administrator Lisa Jackson, gave EPA’s position, then Bill explained the views of state regulators, while Jim represented the environmental community and Clara reflected the views of an oil company that has been one of the leading skeptics on climate change issues. It made for a lively discussion as we did three rounds focusing on EPA’s actions to regulate GHG emissions, the cap-and-trade legislation in Congress, and EPA’s efforts to control mercury emissions, interstate air pollution and ground level ozone. The panelists then responded to written questions submitted by the audience.