U.S. Supreme Court 2010-2011 Term, 2nd Circuit ATS Decision, Indian Smelter Shutdown & U.S. Fuel Economy Targets (by Bob Percival)

Today is the first Monday of October and the U.S. Supreme Court begins its 2010-2011 Term with a new Justice (Elena Kagan) and no environmental case on its argument calendar. Despite the Court’s bare environmental docket, the importance of the judiciary in the development of environmental law has been illustrated by recent cases. For example, on September 17, a panel of the U.S. Court of Appeals for the Second Circuit ruled 2-1 that corporations cannot be held liable for violations of the Alien Tort Statute (ATS) because international law does not hold corporations civilly liable for torts in violation of the law of nations. The majority opinion in the case of Kiobel v. Royal Dutch Petroleum was authored by Judge Jose Cabranes over a vociferous dissent from Judge Pierre Leval. The decision would wipe out many existing ATS suits, while still allowing individuals to be sued under the ATS. It would have barred the lawsuits that led to large settlements by Unocal in the Burma litigation and by Shell Oil with the survivors of Ken Saro-wiwa in Nigeria. In his strong dissent Judge Leval argues that there is no authority supporting the majority’s position which would allow corporations to profit from egregious violations of universal norms of behavior with impunity from civil liability. Plaintiffs are likely to seek a rehearing en banc and the issue ultimately could be decided by the U.S. Supreme Court, which narrowly avoided neutering the ATS six years ago in the Sosa v. Alvarez-Machain case.

Last week the Madras High Court in India ordered Sterlite Industries, a subsidiary of Vedanta Resources, to close its Tuticorin copper smelter for violating environmental regulations in a sensitive coastal area of Tamil Nadu state. The smelter, which was built in 1996, is located 15 kilometers from the Gulf of Mannar, a national marine park, despite a requirement that it be no closer than 25 kilometers. The company also had failed to develop a 250 meter green belt around the plant. The decision sent shock waves through the Bombay Stock Exchange. The head of research for JPMorgan India, Jahangir Aziz, stated that “Somebody has to be made an example of. They ran into some judges who said: ‘Enough is enough. Nobody is doing anything [to enforce environmental laws] so we are’.” Amy Kazmin, Fresh Blow to Vedanta’s Battered Green Credentials, Financial Times, Sept. 29, 2010. On Friday October 1 the Supreme Court of India granted a temporary stay of the lower court’s order to close the smelter until a hearing on October 18.

Last week the U.S. Environmental Protection Agency (EPA) and the Department of Transportation (DOT) proposed a dramatic increase in U.S. fuel economy standards to require vehicles to average as much as 62 miles per gallon by the year 2025. The agencies are seeking public comment on this proposal. Regulations they issued in April require vehicles to average 35 mpg by model year 2016. The Wall Street Journal reported that General Motors Company, which is now 61% controlled by the U.S. government, is accelerating plans for a new, more fuel-efficient, line of large sport utility vehicles. Siobhan Hughes & Sharon Terlep, GM Plans New SUVs Ahead of Fuel Goals, Wall Street J., Oct. 2-3, 2010, at 1.