Top 10 Developments of 2011, Setbacks for California & EPA Rules, China Dam & Steel Industry (by Bob Percival)

Happy New Year! In keeping with tradition on this first day of 2012 here are what I consider to have been the top ten developments in global environmental law in 2011 (in no particular order).

(1) The March 2011 Japanese earthquake and tsunami that caused the world’s most catastrophic nuclear accident since Chernobyl at the Fukushima Daiichi powerplant fundamentally changed attitudes toward nuclear power around the world. It spurred a renewed phaseout of nuclear power in Germany, caused many countries to rethink their nuclear safety standards, and stalled plans for construction of new nuclear powerplants. It is now estimated that it will take at least 40 years to clean up the damaged Japanese reactors.

(2) The February 2011 $18 billion judgment against Chevron by a court in Lago Agrio, Ecuador for oil contamination of the Oriente region by Texaco during the 1970s spurred what has become a truly epic legal battle over collection of the judgment. Alleging fraud, Chevron filed a RICO lawsuit against the plaintiffs and their lawyers in federal district court in New York and obtained an injunction against enforcement of the judgment that was later dissolved by the U.S. Court of Appeals for the Second Circuit. The plaintiffs countered by receiving hedge fund financing to enable them to hire additional legal counsel to combat the ever-expanding litigation. Ironically, the plaintiffs first brought the case in federal court in New York in the early 1990s, but it was transferred to Ecuador at the behest of the oil company on the grounds of foreign non conveniens.

(3) The rapid deployment of hydraulic fracturing (“fracking”) to release natural gas deposits trapped in underground rock formations has greatly expanded U.S. natural gas production. Despite concerns that the practice may pollute underground sources of drinking water it was exempted from the U.S. Safe Drinking Water Act by an amendment pushed by Vice President Cheney in 2005 energy legislation. The huge increase in domestic natural gas production has made the U.S. a net exporter of energy for the first time in more than half a century. France banned fracking while the state of New York imposed a moratorium on the practice until its risks can be better understood. Fracking controversies are now spreading to other countries. See Ian Urbina, Hunt for Gas Hits Fragile Soil, And South Africans Fear Risks, N.Y. Times, Dec. 30, 2011, at A1.

(4) The Republican Party’s “War on EPA” and fierce opposition to virtually any form of environmental regulation was on display in the party’s presidential primary debates and nearly 200 votes by the U.S House of Representatives to roll back environmental regulations. The Obama administration helped ensure that few of these initiatives became law, but it made a horrendous decision to postpone EPA’s revision of national ozone regulations in a misguided effort to defuse political controversy. Climate change denial became an article of faith among Republican presidential candidates even though some previously had recognized it as a serious problem. Expensive advertising campaigns by fossil fuel industries may help explain how this could occur even in a year that featured a dozen extreme weather-related disasters in the U.S. Extreme drought, heat waves, floods, unprecedented tornado outbreaks, hurricanes and wildfires caused at least $54 billion in damage in the U.S. and cost at least 620 lives. See http://www.noaa.gov/extreme2011/

(5) Efforts to forge a global agreement to control GHG emissions to combat climate change resulted in December in the Durban Platform for Enhanced Action, an agreement to agree on such limits in the future. Australia, the last developed country aside from the U.S. to ratify the Kyoto Protocol, enacted legislation imposing a carbon tax, while Canada announced its withdrawal from Kyoto. Perhaps the most significant development in Durban’s COP-17 was the insistence for the first time by many poor developing nations that China and India agree to curb their GHG emissions.

(6) The EU hung tough in its efforts to include foreign airlines in the EU-wide cap-and-trade program to limit GHG emissions. In December the European Court of Justice rejected legal challenges against the program brought by non-EU airlines and 26 non-EU governments. This decision could spur new initiatives by non-EU countries to include EU airlines in non-EU cap-and-trade or carbon tax programs.

(7) Transparency initiatives gained momentum including efforts to “green” the supply chains of multinational corporations and to monitor suppliers’ compliance with environmental and labor laws. Ma Jun of China’s Institute of Public and Environmental Affairs played a particularly important role in these developments in China.

(8) Indigenous peoples and the governments of developing countries became more aggressive in seeking to combat environmental harm from projects promoted by developed countries in Asia, South America and Africa. The military government of Myanmar (Burma) stunned the world when it canceled China Power Investments’s construction of the Myistone Dam on the Irrawaddy River. Environmentalists and indigenous people fiercely opposed the project, which was intended to provide China with more electricity. Brazil and China responded to oil spills in their waters caused by offshore drilling by foreign oil companies even more aggressively than the U.S. responded to the BP oil spill.

(9) Many wind and solar energy companies faced hard financial times due to intensifying global competition and pressure to reduce government subsidies. This reinforced the case for policies to tax fossil fuels instead of trying to pick winners to subsidize from among emerging renewable technologies.

(10) In June the U.S. Supreme Court held that use of the federal common law of nuisance to combat climate change had been displaced by the Clean Air Act and EPA’s efforts to use it to regulate GHG emissions. This decision actually gava a boost to EPA’s GHG regulations, which are being challenged in the U.S. Court of Appeals for the D.C. Circuit.

Last week two decisions by federal courts dealt setbacks to important environmental rules. On December 29 a federal district judge in Fresno, California barred enforcement of provisions of California’s statewide program to reduce GHG emissions that require importers of crude oil or ethanol to buy emissions credits. Judge Lawrence J. O’Neill ruled that the regulations discriminate against fuel from other states in violation of the U.S. constitution’s dormant commerce clause. The decision effects at most 9% of the total emission reductions California seeks to achieve. On December 30 the U.S. Court of Appeals for the D.C. Circuit stayed the January 1 effective date of EPA’s Cross-State Air Pollution Rule that would have required 26 states to reduce emissions of sulfur dioxide and nitrogen oxide from powerplants. The court indicated that it would hear legal challenges to the rule, promulgated in July 2011, by April 2012. EPA had estimated that the rule would save between 13,000 and 34,000 lives annually by 2014.

Chinese environmentalists have been stunned by a decision by the country’s State Council to reduce the size of a Yangtze River nature preserve in order to allow the $3.8 billion Xiaonanhai Dam project to be built. The project had been suspended in 2009 after objections from environmentalists. A special panel of 15 certified experts and 15 representatives of government agencies was assembled to review the project, but before they could receive input from environmental groups, they were recorded as unanimously approving the project. The dam is expected to wipe out many rare aquatic species. Michael Wines, China Proceeds on Plan for Disputed Yangtze Dam, N.Y. Times, Dec. 30, 2011, at A8.

China’s steel industry, which accounts for 40% of global steel production, has refused to join the World Steel Association’s global initiative to reduce emissions of GHGs from steel plants, imperiling the project. The decision is not viewed as surprising because the Chinese cement and aluminum industries also have refused to join similar global initiatives, perhaps due to fears of disclosing technical information about their production processes to foreign competitors. Peter Marsh, Financial Times, Dec. 30, 2011, at 2.