U.S./Mexico Colorado River Agreement, California GHG Allowance Auction, EU Suspends Aviation GHG Emissions Fee, Wilson Center China PIL Program (by Bob Percival)

On November 20 the governments of the U.S. and Mexico signed an historic agreement governing how they will share water from the Colorado River during the next five years. Mexico agreed to reduce its share of the water during drought conditions in return for an increased share of water in times when it is more abundant. Mexican farmers will be paid to give up three percent of their water allotment with the loss to be made up through improvements that will reduce leakage from their irrigation canals. Regional water agencies in Arizona, Nevada and Southern California will be purchasing 100,000-acre feet of water from Mexico. The agreement also includes a pilot program of water releases that are designed to restore wetlands in Northern Mexico that once had been an important habitat for migratory birds.

On November 19 the California Air Resources Board reported the results of its first quarterly auction of greenhouse gas (GHG) allowances under the state’s cap-and-trade program to combat global warming and climate change. More than seventy entities were qualified as bidders to participate in the auction. All 23,126,110 metric tons of vintage 2013 allowances that were offered for sale were sold at the auction. The settlement price per allowance was $10.09 per metric ton, slightly above the minimum auction reserve price of $10.00. Details of the auction are available at CARB’s website at: http://www.arb.ca.gov/cc/capandtrade/auction/november_2012/auction1_results_2012q4nov.pdf. A last minute lawsuit filed by the California Chamber of Commerce that claimed that the auction was a tax CARB had not been authorized to levy failed to stop the auction.

Airlines continued to hail the EU’s decision to suspend the January 1, 2013 date when foreign airlines flying to and from the EU were to be required to pay GHG emissions charges. The suspension was undertaken in order to give the International Civil Aviation Organization (ICAO) an opportunity to negotiate a global agreement. The EU warned that if the ICAO fails to make progress toward reaching a global agreement it will reinstate the charges. Legislation giving the U.S. Secretary of Transportation the authority to prohibit U.S. airlines from paying the charges was signed into law by President Obama today.

On November 27 I participated in a panel on public interest environmental litigation in China at the Woodrow Wilson Center for International Scholars in Washington. The program was sponsored by the Wilson Center’s China Environment Forum. Also on the panel were Jingjing Liu from Vermont Law School and Jessica Scott from the U.S. Environmental Protection Agency, who spoke about current environmental litigation in China by public interest groups, including the All China Environment Federation. I focused on the amendments to Article 55 of China’s Civil Procedure Code which cryptically authorizes environmental public interest litigation by agencies and other related groups as authorized by law. A tape of the presentation and copies of the slides will be placed online by the Wilson Center. See http://www.wilsoncenter.org/event/the-people’s-interest-openings-for-pollution-public-interest-law-cases-china.

BP Settles Criminal Charges,Trafigura Settles Dumping Case with Dutch, Kiobel Conference (by Bob Percival)

On Thursday November 15 Attorney General Eric Holder announced that BP had agreed to plead guilty to 14 criminal charges and to pay the U.S. government more than $4 billion for the 2010 oil spill at the Macondo well in the Gulf of Mexico. BP agreed to plead guilty to 12 felonies - 11 cases of manslaughter for each of the workers killed in the explosion and one felony count of lying to Congress about the amount of oil spilled. The settlement includes a criminal fine of $1 billion, $525 million to settle civil securities fraud charges by the Securities and Exchange Commission, $2.4 billion for environmental restoration in the Gulf states, and $350 million for research to improve oil spill prevention and response efforts. The Justice Department statement announcing the settlement is available online at: http://www.justice.gov/opa/pr/2012/November/12-ag-1369.html. The government also is bringing manslaughter charges against BP’s two “well-site leaders” for having negligently caused the deaths of 11 men. BP still faces even larger civil liability under the Clean Water Act, ranging from $6 to $21 billion, which may come out on the high end of that range in light of the company’s admission about lying to Congress about the size of the spill. BP announced that it had added $3.8 billion to the $38.1 billion charge it already had taken to cover its liability for the spill. BP’s press release is available online at: http://www.bp.com/genericarticle.do?categoryId=2012968&contentId=7080497

On Thursday I was interviewed about the settlement by Lv Xiao Hong on China Radio International (see http://gb.cri.cn/27824/2012/11/16/2625s3927789.htm (in Mandarin)). Her report was reprinted in the China Daily (http://www.chinadaily.com.cn/micro-reading/dzh/2012-11-16/content_7526200.html) and on the China Network web portal (http://news.china.com.cn/live/2012-11/16/content_17194212.htm) (both in Chinese). I argued that the reason BP was willing to pay such large sums to settle the charges was because of the strength of U.S. environmental laws. I emphasized that China needs to upgrade its oil spill liability laws so that victims of spills in Chinese waters, such as the 2011 Bohai Bay spill by Conoco Phillips, can be properly compensated. My colleague Jane Barrett, who is an expert on the use of criminal law in environmental cases, explained the importance of prosecuting those responsible for environmental crimes in several interviews that were quoted in the New York Times, Washington Post and other media.

On Friday November 16 Dutch prosecutors announced a settlement of criminal charges against the British commodity trading firm Trafigura for illegally exporting hazardous waste to the Ivory Coast in 2006. The company had been convicted of the charges in 2010 and fined 1 million Euros ($1.3 million), but both the company and the Dutch prosecutors appealed the penalty. Trafigura dumped hundreds of tons of toxic waste in the Ivory Coast after it attempted unsuccessfully to offload it in the port of Amsterdam. In the settlement, Trafigura agreed to pay not only the 1 million Euro fine, but also to pay Dutch authorities 300,000 Euros, the amount that the company had earned by the illegal export. It also agreed to pay a 67,000 Euro fine in exchange for the Dutch agreeing to drop efforts to prosecute Claude Dauphin, the chairman of Trafigura. Dutch prosecutors issued a statement saying that the settlement “brings the matter to an end in a manner which makes it clear that violations of international rules on dangerous waste will not be tolerated." The company welcomed the settlement and stated: “There is little doubt that mistakes were made and everyone involved would have wanted to see things handled differently." It added: "The company deeply regrets the impact the Probo Koala incident had - both real and perceived." In 2007 Trafigura agreed to a $198 million settlement with the government of the Ivory Coast. Reuters, Trafigura Reaches Toxic Waste Settlement with Dutch, Nov. 16, 2012 (http://www.reuters.com/article/2012/11/16/trafigura-court-idUSL5E8MGDZC20121116?feedType=RSS&feedName=industrialsSector). In September 2009 the company agreed to pay $48.7 million to settle private litigation brought in London by victims of the dumping.

Last week I participated in a terrific conference on the Kiobel Alien Tort Statute case that was reargued in the U.S. Supreme Court last month (see October 2, 2012 post on this blog). The case involves efforts by the survivors of environmental activists who were murdered by the Nigerian military to recover damages in U.S. federal court from Shell Oil for allegedly aiding and abetting their executions. The conference on ”Extra-territoriality Post-Kiobel: International and Comparative Legal Perspectives” was held at the University of Maryland School of Law on November 15 & 16 (see http://www.law.umaryland.edu/faculty/conferences/detail.html?conf=130). It featured an opening keynote address by Professor Ralph Steinhardt of George Washington University, who has helped represent the plaintiffs before the Supreme Court and a luncheon keynote by Marco Simons, Legal Director of Earthrights International. Participants in the symposium were cautiously optimistic that whatever the Supreme Court does with Kiobel it will preserve the important Filartiga precedent that made the Alien Tort Statute a significant vehicle for bringing human rights litigation in U.S. courts.

U.S. Election & the Environment, Argentine Court Freezes Chevron Assets, Xayaburi Dam in Laos, ELI Annual DInner (by Bob Percival)

Proponents of environmental protection in the U.S. breathed a sign of relief last Tuesday November 6 when President Barack Obama was reelected by an electoral vote margin of 332 to 206. Obama swept all the “swing states” and received nearly 51% of the popular vote. Obama received 3.3 million more votes than Republican Mitt Romney, who had sought to blame slow economic growth on environmental regulation. Democrats increased their majority in the U.S. Senate by two votes, despite having to defend far more seats than Republicans. Even though Democrats gained seats in the U.S. House, Republicans retained control of the chamber. Democrats in the aggregate received more votes in House races than Republicans did, but widespread gerrymandering in redistricting helped Republicans retain their majority.

Even though climate change had rarely been mentioned in his presidential campaign, President Obama referred to it in his victory speech. “We want our children to live in an America that isn't burdened by debt, that isn't weakened by inequality, that isn't threatened by the destructive power of a warming planet,” Obama said. Despite pouring hundreds of millions of dollars into campaign ads blaming regulation for a weak economy, the U.S. Chamber of Commerce and other industry groups saw nearly every candidate they supported go down to defeat. By contrast, the League of Conservation Voters saw nearly every candidate they supported win election. Some are now arguing that the election results prove that Super PAC money and the Citizens United decision that freed corporations to become directly involved in campaigns makes little difference. I think this is an overstatement. The substantial funds the Obama campaign was able to raise for its own campaign were vital to the electoral outcome. However, much of the corporate money was spent on ads that were so implausible that they had little effect. One example is the numerous ads that Karl Rove’s group American Crossroads ran in Virginia accusing Democratic Senate candidate Tim Kaine of all manner of evils including being more hostile to funding education than Republican candidate George Allen. Kaine won by five percentage points in the final vote.

Voter initiatives approved gay marriage in three states and recreational use of marijuana in two, but the most hard fought environmental initiative did not fare as well. California voters defeated Proposition 37, a measure to require labeling of food products containing genetically modified material, by six percentage points. The measure had led by a wide margin in early polls, but public support faded after $46 million was spent in opposition to it, about five times the spending of its proponents. While I did not see these ads, my former students in California informed me that they were convincing in making the case that the measure was poorly drafted. Voters in Idaho, Kentucky, Nebraska and Wyoming added a right to hunt, fish and trap to their state constitutions. Idaho voters also approved a constitutional “right of farmers and ranchers to employ agricultural technology, modern livestock production and ranching practices.”

Last week a court in Argentina froze the assets of local subsidiaries of the Chevron Corporation in response to efforts by plaintiffs to enforce the $18 billion judgment against the company for oil pollution in Ecuador (see February 14, 2011 blog post). The court cited the Inter-American Convention on the Execution of Preventive Measures, which authorizes an asset freeze when a company fails to pay a final judgment. The treaty has been ratified by Argentina, Colombia, Ecuador, Guatemala, Paraguay, Peru, and Uruguay. On November 9 Chevron subsidiaries Chevron Argentina and Ing. Norberto Priu appealed the ruling, arguing that their assets should not be frozen because they are not directly owned by the Chevron. Plaintiffs also are trying to enforce the judgment in the courts of Brazil, Canada and Ecuador.

Last Wednesday Laotion officials reportedly were about to hold an official ceremony to launch construction of the controversial Xayaburi dam on the lower portion of the Mekong River. The 1,260 MW dam is designed to supply electricity to Thailand. Although the dam would be built entirely inside Laos, the countries of Cambodia and Vietnam have objected to the project, fearing that it will harm a rich river ecosystem that is the source of livelihood for millions of their citizens who live downstream. The U.S. State Department criticized Laos for rushing to begin construction without conducting an adequate environmental impact assessment. Thai environmental activist Pianporn Deetes noted that a Thai dam on the Mun River has contributed to the disappearance of nearly two-thirds of the 265 species that previously had been found in the river. Thomas Fuller & Poypiti Amatatham, Laos to Proceed with Dam Project on Mekong River, N.Y. Times, Nov. 7, 2012, at A3. Denying these news report, Laotian Prime Minister Thongsing Thammavong told the Wall Street Journal that the Xayaburi project was still on hold pending “further study.” Ben Otto, Prime Minister Says Dam Project Is on Hold, Wall St. J., Nov. 7, 2012, at A21.

On Thursday November 8 I was one of the nearly 800 people who attended the Environmental Law Institute’s annual dinner at the Omni Shoreham Hotel in Washington, D.C. EPA Administrator Lisa P. Jackson introduced Carter Strickland, Commissioner of the New York City Department of Environmental Protection. Strickland accepted ELI’s annual Award for Achievement in Environmental Law, Policy and Management on behalf of the City of New York for its “PlaNYC” to green the city’s infrastructure. Jackson, who is rumored to be leaving EPA during the next presidential term, joked that some of her potential successors might be in the audience for the event, which is widely attended by D.C. environmental lawyers. Mentioning a prominent Republican by name she added, “sorry about that.” But she then quickly admitted that she “really wasn’t sorry” that the election had now ruled him out.

In Memoriam - John Quarles, Hurricane Sandy & Climate Change, Doubts on Canadian Tar Sands Production (by Bob Percival)

The U.S. environmental law community lost a giant in the field last Monday October 29 when John R. Quarles, Jr. passed away. Quarles was the first general counsel of the U.S. Environmental Protection Agency (EPA) from 1970 to 1973. He then served as Deputy Administrator of the agency under both William Ruckelhaus and Russell Train until 1977. Quarles’s book Cleaning Up America, which was published in 1976, provides invaluable information about the early days of EPA. In my work on presidential oversight of agencies, I have extensively cited his tales about how he and Ruckelshaus resisted pressure from the Nixon White House and the Commerce Department, which led Nixon’s Quality of Life review program (the precursor of OMB review), to weaken EPA regulations and enforcement initiatives. His story about EPA’s resistance to pressure to weaken the agency’s initial limits on the amount of lead additives in gasoline is particularly enlightening. In 2005 Quarles received the Environmental Law Institute’s annual award for Achievement in Environmental Law, Policy and Management and he also received the Award for Distinguished Achievement in Environmental Law and Policy from the American Bar Association’s Section on Environment, Energy and Resources.

Much of Washington, D.C., where I live, was shut down last Monday and Tuesday due to Hurricane Sandy. Classes at the law school also were canceled, but the Baltimore/Washington area escaped the enormous damage the hurricane caused to the north. Several of my friends and colleagues in Baltimore lost power, but on Capital Hill it was mostly lots of rain and downed tree branches. Because the hurricane made landfall further north in New Jersey, its winds, which were revolving counter-clockwise, blew the storm surge seaward in the Chesapeake Bay area. However, had the storm made landfall in Virginia, the storm surge would have flooded much of D.C. around the tidal basin, including the national mall, the National Archives, the National Gallery of Art, the Department of Justice and the FBI. Jason Samenow, If Hurricane Sandy Had Come South: the Dramatic Storm Surge Scenario for Washington, D.C., Washington Post, Nov. 1, 2012 (http://www.washingtonpost.com/blogs/capital-weather-gang/post/if-hurricane-sandy-had-come-south-worst-case-storm-surge-scenario-for-washington-dc/2012/11/01/d1381248-2434-11e2-ac85-e669876c6a24_blog.html).

The scenes of flooding and devastation in New Jersey and New York are horrifying, though scientists had long predicted that this could happen due to climate change and sea level rise intensifying the power of hurricanes and increasing the scope of coastal flooding. One of my former students from China emailed me to express her concern about the hurricane. Noting that President Obama has received favorable reviews for his quick response to this tragedy just a week before the election, she observed: “I think the hurricane Sandy seems helping Obama. Maybe the climate want to choose a president more environmental friendly, so Sandy vote in its own way.” As I noted in my September 2 blog post, near the conclusion of his acceptance speech at the Republican National Convention, Mitt Romney stated: “President Obama promised to begin to slow the rise of the oceans and heal the planet,” which produced widespread laughter from the delegates. Romney then declared that: “MY promise is to help you and your family.” I commented then that now that the deleterious effects of global warming and climate change already have become manifest, it is hard to see why beginning to slow the rise of the oceans and healing the planet does not also help families. This sentiment has now been echoed by several commentators in the wake of the disastrous flooding and coastal destruction wrought by Hurricane Sandy.

There are increasing signs that the surge in U.S. domestic oil production and uncertainty concerning future global oil prices is diminishing interest in extraction of oil from Canadian tar sands. On November 1 Canada’s largest producer of tar sands oil, Suncor Energy, Inc., said it would delay a decision about pursuing three multi-billion dollar projects to expand tar sands oil production. The most expensive tar sands extraction techniques, involving extraction of bitumen to produce synthetic crude, require oil prices above $100/barrel to guarantee profitability. West Texas Intermediate crude is currently selling for less than $85/barrel. The Canadian Association of Petroleum Producers continues to forecast that oil production from Canadian tar sands will more than double by 2020 from 2011’s 1.6 million barrels/day. Chip Cummins, Mining Canada’s Oil Sands: Suddenly, Not a Sure Thing, Wall St. J., Nov. 2, 2012, at B1.

On Thursday I was in San Francisco for a reception for alumni and prospective students of the University of Maryland Carey School of Law. It was wonderful to get to see so many of my former students at the reception. On Friday I made a quick trip to Napa Valley before returning to D.C. on Saturday.