Delayed April 23 Blog Post: Apple Audit, BP Spill Anniversary, Earth Day (by Bob Percival)

[The following was my blog post for April 23 that I was unable to post because this blog is blocked in China where I was teaching at Shandong University. It was posted on my parallel blog at: www.globalenvironmentallaw.com]

Last week Apple Inc. agreed to an audit of environmental conditions in its Chinese supply chain with the audit to be jointly monitored by Apple and the Chinese public interest group Institute for Public and Environmental Affairs (IPE). Ma Jun, director of IPE, stated that Apple’s attitude toward transparency in its supply chain changed dramatically after IPE’s release last September of a report detailing environmental violations by Apple suppliers. Apple previously had engaged the Fair Labor Association to audit working conditions at its Chinese suppliers. IPE hopes that Apple’s decision will encourage other multinational corporations to improve environmental performance in their supply chains. Ma Jun stated that Taiwan’s HTC, Sweden’s Ericsson and Japan’s Canon remain laggards in responding to concerns about environmental compliance by their suppliers. Chris Nuttall, Apple Agrees to China Pollution Audit, Financial Times, April 16, 2012. Last week Ma Jun and five other environmental activists received the Goldman Prize for Environmental Excellence. Ma Jun’s work has been mentioned frequently in this blog. The other recipients included Ikal Angelei from Kenya (who is fighting against construction of the Gibe 3 Dam), Evgenia Chirikova of Russia (whose work to protect the Khimki Forest has been discussed in this blog), Edwin Gariguez of the Philippines (a Catholic priest fighting a nickel mine on Mindoro Island), Caroline Cannon from Alaska (a member of the Inupiat community who is seeking to protect Arctic waters from oil drilling), and Sofia Gatica of Argentina (who has organized local women to oppose indiscriminate spraying of pesticides in soy fields). For more information about the prize and it recipients see http://goldmanprize.org/recipients/current

. On April 19 China’s Friends of Nature released their 2012 Environmental Green Paper. Using data from China’s Ministry of Environmental Protection, the group ranked air quality in Beijing and the country’s 31 provincial capitals. The three most polluted of these cities were Lanzhou in Gansu province, which has long been among the world’s most polluted cities, Urumqi in Xinjiang Uyghur Autonomous Region, and Beijing. The three cities with the best air quality were Haikou, the capital of Hainan province (known for Hainan Island), Kunming, the capital of mountainous Yunan province, and Lhasa, the capital of Tibet. Tianjin, a direct-controlled municipality administered by the central government, showed the greatest improvement, moving from 25th to 17th on the list.

Last week marked the second anniversary of the BP Deepwater Horizon oil spill in the Gulf of Mexico. The anniversary was marked by several events. On April 17 members of the President’s Commission that investigated the spill lambasted Congress for failing to adopt any legislation to prevent future spills and for failing to provide adequate funding for regulatory oversight of offshore drilling. Former EPA Administrator William K. Reilly did praise the oil industry for establishing a safety institute, but argued that it should not be housed at the American Petroleum Institute. He also noted that recent oil spills off the coasts of China and Brazil and in the North Sea indicated that problems continue in the industry. John M. Broder, Panel Faults Congress for Inaction on Drilling, N.Y. Times, April 18, 2012, at A19. On April 18 lawyers for BP and the private parties suing the company jointly submitted their previously announced settlement agreement to the New Orleans federal district court hearing the lawsuits. BP continues to estimate that the settlement will cost it $7.8 billion though it includes no specific limit on the compensation to be paid. Plaintiffs will be paid for their demonstrated losses plus a “risk transfer premium” that reflects possible future losses, inconvenience, aggravation and emotional distress. Tourist businesses can collect premiums of 2.5 times demonstrated losses, while seafood processors can receive up to three times these losses, and fishing boat owners up to 8.75 times. Lawyers for the plaintiffs can receive up to $600 million in attorneys fees. Ed Crooks BP Agrees to $7.8bn Gulf Spill Payments, Financial Times, April 19, 2012.

April 22 was the 42nd anniversary of the first Earth Day in 1970. The Earth Day Network was hoping that one billion people around the world would participate in celebrations of this event with the theme “The Earth Won’t Wait” for action to protect the environment. The Network states that 800 million people have registered for its “Billion Acts of Green” Campaign (see http://www.earthday.org/2012). The event was marked by concerts and rallies around the world including one at the National Mall in Washington, D.C.

On April 18 the U.S. Environmental Protection Agency (EPA) announced its first regulations to control air emissions from hydraulic fracturing (“fracking”) that produces natural gas. Although EPA is barred by a 2005 amendment to the Safe Drinking Water Act from regulating water emissions from the injection of fluids into the earth to fracture shale formations and release gas, the agency has authority under the Clean Air Act to regulate air emissions. The EPA regulations require companies to trap air emissions from fracking operations and to use special equipment to separate the gas and toxins in it. In the face of industry claims that it would not be possible to comply immediately with the regulations, EPA delayed the compliance deadline until January 2015. Prior to this deadline, companies will be required to burn off the air emissions through flaring gas releases. The regulations will reduce smog-forming emissions and control emissions of methane, a powerful greenhouse gas. Tennille Tracy, First Fracking Rules Unveiled, Wall St. J., April 18, 2012, at A3. The United Kingdom’s Department of Energy released a report last week giving cautious support for allowing fracking in the UK, despite small earthquakes it has caused in Lancashire. While France and Bulgaria have banned fracking, Poland already has approved it over vast areas of its country.

On April 18 the Brookings Institution, the World Resources Institute and the Breakthrough Institute released a joint report “Beyond Boom and Bust: Putting Clean Tech on a Path to Subsidy Independence,” calling for a more rational approach to providing and eventually phasing out subsidies for renewable energy projects. The report, which can be obtained online at: http://thebreakthrough.org/blog/Beyond_Boom_and_Bust.pdf, notes the dramatic drop in subsidies for such projects in the U.S. from $44.3 billion in 2009 after the surge in oil prices the year before, to $30.7 billion in 2011 and $16.1 billion in 2012.

On Wednesday I finished my final Global Environmental Law class of the spring semester at Maryland. On Thursday I flew to China. After a short stay in Beijing, yesterday I arrived in Jinan where I will be spending the week as a visiting professor teaching a course in Principles of Environmental Law at Shandong University. Shandong University has 60,000 students on four campuses, making it one of the largest universities in China. Approximately 2,000 of the students are enrolled in the Law School. This is my second trip to Shandong University where I gave a guest lecture last May as part of a whirlwind one-day visit. Several Chinese universities now are seeking foreign environmental law scholars to teach courses in their law schools. This will be my first teaching stint in China since my semester-long visit to the China University of Political Science and Law in Beijing during my sabbatical in 2008.

Japan Approves Restart of Two Reactors, GIELR Green Technology Symposium (by Bob Percival)

Last week Japanese authorities approved the restart of two reactors at the Ohi nuclear powerplant in Fukui prefecture. All but one of Japan’s 54 nuclear powerplants are currently shut down and the last one will go offline next month. Although full completion of safety upgrades to comply with lessons learned from the Fukushima Daiichi disaster will take a few years, it may be possible to restart some of the reactors in the interim. Public reaction to the March 2011 disaster heretofore has made it impossible to restart any reactors after they have been taken offline for previously scheduled maintenance. Thus, it is not clear when or whether the reactors at the Ohi complex actually will be go back online.

On Friday April 13 I participated in a Symposium on “Green Technology Law and Policy” at the Georgetown University Law Center. The Symposium was sponsored by the Georgetown International Environmental Law Review (GIELR). After opening remarks by Georgetown Professors Edie Brown Weiss and Peter Byrne, I was on the opening panel on how government regulations and incentives can promote greater use of green technology. Jim Connaughton, the former chair of the Council on Environmental Quality during the Bush administration discussed the factors that influence Exelon, his current employer, in choosing its generation mix. Sara Hayes from the American Council for an Energy Efficient Economy and Derek Dorn, a partner at Davis & Harmon compared the strength of different incentives offered to promote energy efficiency and different renewable technologies. I emphasized that fluctuations in petroleum prices had taken a toll on efforts to promote green technologies as oil prices fell throughout most of the decade of the 1980s. I advocated a petroleum price stabilization tax that would establish a predictable floor under oil prices without imposing any initial tax increases.

Elizabeth Littlefield, president and CEO of the Overseas Private Investment Corporation (OPIC), gave a luncheon keynote address that outlined OPIC’s push to promote the development of green energy technologies. She noted that OPIC will never fund any new coal-fired power plants, something that the Export-Import Bank has been taken to task for doing. Ms. Littlefield also explained how micro finance is helping promote small renewable energy projects in developing countries. In the afternoon I moderated a panel on the Role of Green Patents & Technology Transfer in Global Sustainability. Dr. Stuart Graham, the chief economist for the U.S. Patent and Trademark Office (PTO) presented data from a survey the PTO had done concerning the importance of patents to startup ventures.

My last class of the semester will be held on Wednesday. On Thursday I will be returning to China where I will be teaching a short course on Principles of Environmental Law at Shandong University Law School in Jinan.

Golden Tree Awards, Brazil Oil Spill Litigation, North Sea Gas Leak, Record Low EU Carbon Allowance Prices (By Bob Percival)

On April 4 Maryland’s Environmental Law Program held its “Golden Tree” awards ceremony for students who had made films in my Environmental Law class last fall. Since fall 2002 my students have been making short documentary films as an ungraded, small group assignment. The films have been remarkably creative and they have helped students appreciate the difficulty and importance of distilling complicated regulatory issues into a form the public can understand. A total of thirteen films were made by last fall’s class. Six won awards. The film winning the Golden Tree award as “Most Educational” was “The Great Pacific Garbage Patch” by Justin Noe, Amir Heyat and Justin Haas. The film that won the most awards was “Phil & Ned’s Excellent Adventure” by Colin Hood, Rebecca Maddox, Bridget Daly, Helen Wolf, James O'Donnell & Mario Medina. It won awards for Best Special Effects, Best Use of Humor, Best Screenplay, and Best Acting. The film that won the award for Best Picture was “Managing the Menhaden” by Alan Dunklow, Andrew Kraus, Gabe Scott and Joey Kroart. Receiving awards for Best Cinematography and Best Interviews was the film “Cherishing the Chesapeake” by Lena Beery, Ben Donoghue and Megan Ulrich. Golden trees for Best Sound and Best Animation went to “From Pollution to Solution: Alternative Fuel Vehicles” by Abigail Lubow & Jonathan Huber. The award for Best Narration went to “Ringwood - a CERCLA Case Study” by Tim Gilbert, Mike Kellerman, Beth Totman, Brittany Ditto and Will Harrington. The films will be available online in a few weeks on Maryland’s law school website.

Last week a federal prosecutor in Brazil filed another 20 billion real ($11 billion) lawsuit against the Chevron Corporation and Transocean Ltd. for a second offshore oil spill in the Frade field that occurred in March 2012. The two companies previously had been sued for $11 billion for the 3,000-barrel spill that occurred there in November 2011. Petrobras, Brazil’s state-controlled oil company, informed the U.S. Securities and Exchange Commission last week that it may be liable for up to 30 percent of any damages assessed against Chevron for the oil spill in the Frade field off the coast of Brazil. This is because Petrobras owns a 30 percent interest in the field, which is 52 percent owned by Chevron and 18 percent by a Japanese group led by Sojitz and Inpex. Civil and criminal charges have been filed by Brazilian authorities only against Chevron, the majority owner and the operator of the field, and Transocean, its drilling partner.

Total SA has been battling a natural gas leak in Elgin North Sea drilling platform for the last two weeks. The rig’s 240 workers were evacuated after the leak spewed mud and gas onto the drilling platform of the rig on March 25. Despite the risks of offshore drilling for gas, the U.K. is reacting cautiously to large onshore discoveries of gas that could be extracted through hydraulic fracturing due to environmental concerns about fracking. James Herron, Jitters Threaten Fracking in U.K., Wall Street Journal, April 4, 2012, at B9. In the U.S. conflicts are arising between state and local officials as several states seek to preempt local regulation of fracking operations. Daniel Gilbert & Russell Gold, Towns Fight Against Drilling, Wall St. J., April 3, 2012. Last week the U.S. EPA granted a two-week extension of the comment period on proposed regulations to control air pollution from fracking operations. Tennille Tracy, EPA Postpones Rules on Fracking Emissions, Wall St. J., April 2, 2012. Fracking is exempt from regulation under the U.S. Safe Drinking Water Act, which generally governs underground injection operations, but air emissions from its operations can be regulated under the Clean Air Act.

Prices of EU emissions allowances for carbon fell to a record low last week after data were released showing a larger than expected drop in emissions from EU factories and power plants. On Monday April 3 the European Commission released preliminary data showing that EU emissions of CO2 fell by 2.4 percent in 2011. In response, EU carbon allowance prices plunged 14 percent to €6.14 per ton, approximately $8 per ton. This represents a decline of more than 60 percent in carbon prices from levels a year ago. The decline in EU emissions of CO2 was attributed to a mild winter and the addition of 50GW of renewable energy capacity during the last two years, which more than offset increased demand for fossil fuels due to Germany’s decision to phase out nuclear power. Pilita Clark & Javier Blas, Carbon Prices Tumble to Record Low, Financial Times, April 3, 2012, at 22.

Chevron Brazil Spill Fallout, Foxconn Pledges Reform, EPA Carbon NSPS, FDA & BPA, Hopkins/Nanjing Class (by Bob Percival)

Chevron continues to be subject to harsh criticism in the wake of last November’s 3,000 barrel oil spill off the coast of Brazil. Last week Brazil’s largest oil workers union sued Chevron and its contractor Transocean in a Brazilian court to seek the expulsion of Chevron from drilling off the coast of Brazil. Samantha Pearson, Backlash Increase Pressure on Chevron in Brazil, Financial Times, April 2, 2012. Chevron is being sued for $11 billion by the government of Brazil and prosecutors are seeking to hold 17 executives of the two companies criminally liable. Brazilian prosecutors are seeking a 31-year prison term for George Buck, head of Chevron’s operations in the country. Most Brazilian legal observers do not believe the 17 executives will serve lengthy prison terms, but it seems clear that the government is intent on sending a message that corners must not be cut in developing Brazil’s oil reserves. Chevron’s criminal lawyer has denounced the criminal charges, arguing that little environmental damage was done and that the spill, which occurred nearly 200 miles off the coast, did not reach the coastline. Brazil is preparing to host the Rio+20 Earth Summit in two months with businesses set to play a more significant role than in past such events. “Bigger Role for Business at Next Rio Conference,” April 2, 2012.

Apple Inc. announced that it would correct labor abuses discovered in an audit by the Fair Labor Association of Apple supplier Hon Hai Precision Industry, known as Foxconn. Foxconn, Apple’s largest supplier who manufactures 40 percent of the world’s electronics, has pledged that by July 2013 no worker will work more overtime than the maximum 36 hours per week provided under Chinese law. Workers also have been promised that their incomes will not be reduced, signaling that they will receive substantial wage increases. Because Foxconn is China’s largest employer with 1.3 million workers, the changes could have far-reaching effects. Charles Duhigg & Steven Greenhouse, Electronic Giant owing Reforms in China Plants, N.Y. Times, March 30, 2012, at A1.

On March 26 the U.S. Court of Appeals for the Fifth Circuit ruled that EPA had acted arbitrarily and capriciously in rejecting Clean Air Act permit regulations adopted by the state of Texas for pollution control projects. In Luminant Generation Co. v. EPA, the Court noted that EPA had disapproved the Texas regulations years after the statutory deadline and had failed to explain adequately which portions of the Clean Air Act the regulations violated. EPA had voluntarily agreed to a remand of two of the three regulations it had disapproved, but the court found that the agency had not adequately explained its disapproval of the third.

Last week EPA proposed a new source performance standard (NSPS) for power plants that effectively would prohibit new coal-fired power plants in the U.S. The proposed rule would prohibit new power plants from emitting more than 1,000 pounds of carbon dioxide per megawatt-hour of electricity produced. The average coal plant emits 1,600 pounds of CO2 per megawatt-hour. The proposal generated less ferocious opposition from industry groups than one might otherwise have expected because the dramatic plunge in U.S. natural gas prices already has made new natural gas-fired plants, which emit roughly 800 pounds of CO2 per megawatt-hour, far cheaper than coal plants. Critics in the environmental community noted that the proposed rules do not cover existing plants, a subject that EPA promises to address at some date in the future. By grandfathering in existing plants for now the regulations could have the effect of encouraging companies to continue operating old coal-fired power plants for longer periods of time.

On March 30 the U.S. Food and Drug Administration (FDA) responded to a court-ordered deadline by announcing that it had insufficient scientific information to enable it to ban bisphenol-A (BPA), a chemical used to harden plastics, from use in food containers. The FDA acknowledged that there is research associating BPA with health risks, but it indicated that there are still too many uncertainties to justify a ban. The American Medical Association has concluded that BPA is an “endocrine-disrupting agent” and that products that contain it should be clearly identified. Bill Tomson & Thomas M. Burton, U.S. Says Too Little Data to Ban Plastics Additive, Wall St. J., March 31-April 1, 2012, at A3.

Violent protests spread across Indonesia in response to the government’s plan to increase fuel prices by one-third. The Indonesian government has been subsidizing oil prices to the point that gasoline in the country averages roughly $2 per gallon. Reduction of the fuel subsidy has been repeatedly proposed, but delayed, for more than a year. As global oil prices have soared, the subsidy has risen to more than $15 billion per year, consuming more than 15% of the government’s budget. Eric Bellman, Fuel Fight in Indonesia, Wall St. J., March 30, 2012, at A9.

Last Thursday evening Maryland visiting scholar Professor Zhao Huiyu and I went to Johns Hopkins University where we lectured to a class on “Comparative Environmental Challenges and Governance in China and the U.S.” The class consisted of 21 students from Hopkins Department of Geography and Environmental Engineering and 38 students from Nanjing University in China participating by video conference. The Polycom videoconferencing technology worked flawlessly in allowing students on opposite sides of the world to hear and see each other in high definition. The class took place from 7:30-10:00pm on Thursday evening in Baltimore and 7:30-10:00am on Friday morning in Nanjing given the 12-hour time difference.