Issues with Markets, Distributive Justice & Agency Problems in International Environmental Law (Hidden Economics & Environmental Justice)

1/5 In Unit 7 we shall cover some hidden economics you might otherwise encounter in the condensed version of an undergraduate environmental and natural resource economics course. But to be clear, there are essentially three technical take-aways. The first technical take-away is that most environmental economics exercises cast outputs as services rather than goods in neo-classical economics terms. For example, domestic farmers often criticize regulations that require wetlands on their farms be left in place (because they would prefer to fill them in and grow crops on the filled-in land). Meanwhile, environmental engineers might view the wetland itself as a filtering system for fertilizer run-off and the like, which cleanses the polluted water (too many nitrates) before it seeps down into the water table from which the local community draws its water via wells. It is also possible that there might be recreational uses, such as transit points for migratory waterfowl (so Ducks Unlimited hunters would be excited too). So the insight is that you are more often dealing with environmental assets in terms of services drawn from them, rather than goods or assets per se. And jumping ahead, at the borderline between economics and the environment on a systems engineering basis scientists are working on links between biodiversity and “ecosystem services” as essential for human life and well-being.

At least two out of the three competing uses above are better conceptualized as “services” rather than “goods,” and ecosystem services would encompass all three. The environmental engineers and Ducks Unlimited members would derive filtering of fertilizer run-off and recreation from the wetlands as environmental asset, respectively, while even the farmer using any filled-in wetlands as factor of production employs the land more to enable the growth of crops. In parallel, there is typically not a ready market to determine the value of environmental filtering (e.g., “clean” groundwater), or for that matter local recreational services (e.g., duck hunting). Economists might ask correspondingly whether these constitute public goods, beyond traditional neoclassical economics keyed off of property rights and efficiency concerns? More often than not, valuation in large-scale environmental litigation is contingent. For example, in the Exxon Valdez litigation, the chief question ultimately lay in contingently valuing the environment degraded by the massive oil tanker spill, since liability was quickly conceded. The difficulty was figuring out how much are numerous seals, penguins, and pristine arctic ice cathedral glacier visages really worth on the basis that citizens as “lower 48” residents might want to visit them in the future, as opposed to calculating some subsistence value to local Inuit hunters and interference with catches of commercial fishing interests in the famously dangerous Bering Sea fishing industry. Is this treating damages as being more to a public good, and what and whose rights might be entailed in asking “lower 48” residents how much they might consider paying as theoretical tourists? So, after all, what is a beautiful Himalayan mountain landscape worth, distinguishing it from constituent properties as too rocky and cold to be arable?

Is it more realistic to rely on hypothetical values reaching for outsider tourism, or is it more insightful to value based upon ecosystem services provided to locals?  If treated as an ecosystem services problem, said services are typically conceptualized as including provisioning services (provision of food, fresh water, fuel, fiber and similar goods), regulating services (encompassing climate, water and disease regulation as well as pollination–  so filtering ground water would fit), supporting services (such as soil formation and nutrient cycling) and cultural services (reaching from educational, aesthetical, cultural heritage values as well as recreation and tourism–  so Ducks Unlimited and glacier cruises both would fit here).

And is restraining the farmer from filling in the wetlands a taking of his property? Reaching back to Unit 3 (Sagasti & Colby), it depends in part on whether your frame of reference may be “frontier economics” versus perhaps “environmental protection” or “resource management.” But as a legal matter, unless all zoning law is unconstitutional, regulating to preserve community resources like groundwater should be permissible.

2/5 The second technical take-away is to realize that economists, also environmental economists, typically target a unitary setting that, in the alternative, assumes a single market and no subdivisions (so no differing countries, rich and poor), and as a result “international environmental economics” for the longest time was more about positive modelling currently applied to international environmental issues like climate change. This differed from international economic law being coextensive with well-established monetary and trade law topics in international economics. So international environmental economics is relatively underdeveloped, and typically relies on a variety of hidden assumptions, whether you contemplate neoclassical economic or ecosystem services approaches. They tend to assume perfect markets, meanwhile the core of modern environmental economics in the context of climate change employs concepts like free riders (for example, which countries might pay what carbon costs, contemplating differential prices), externalities presupposing market failure (for example carbon taxes generally embodying social costs of fossil fuels) and a general lack of cost internalization (to be countered generally by “polluter pays” principles).

The practical cross-over problem visible already in Dr Mahatir’s speech in Unit 1 is that climate change in particular tends to be cast as an “us” vs “them” issue between rich industrialized countries seeking to freeze GHG parts per million to preserve a comfortably attractive world, and poorer developing countries desiring to become richer and so wanting to increase GHG emissions as part of their industrialization strategy to achieve at least what they believe to be an acceptable minimum standard of economic development. This eventually raises distributive justice issues, of the type referred to traditionally under the rubric of environmental or climate justice. Environmental Justice (what it means when polluting industries are always sited on the wrong side of the railroad tracks) recently moved to the fore domestically, see Kelley, “Harris, Ocasio-Cortez introduce environmental justice bill: The new Climate Equity Act of 2020 would hold Congress accountable for the effects of its environmental policies” (The Hill, 08/06/20; providing for scoring of bills’ effects on minority and poorer communities), at https://thehill.com/changing-america/sustainability/climate-change/510924-harris-ocasio-cortez-introduce-environmental. So it might become more prominent theoretically in international environmental law affairs like treaty negotiations, but has not found too much resonance thus far with the governments of developed countries, as witnessed by resistance like the US ultimately rejecting LOS and CBD obligations implementing distributive justice claims.

3/5 The third technical take-away was that it called to the fore that traditional neoclassical (environmental) economics focused primarily on “efficiency” initially. (It downplayed the dual problems of market failure and delineating property rights, particularly due to externalities.) More recently, “sustainability” is understood normally as an intergenerational problem, namely what do we owe our children’s children, not whether we owe anything to our poorer neighbors in our own generation. So even focusing on “sustainability” does not automatically answer questions about a “fair” distribution, instead advantaging “efficiency” or aggregate welfare over time. Here efficiency refers to the idea that the resolution produces in utilitarian terms the greatest aggregate net benefit, without asking questions about how that benefit may be distributed in a population. Meanwhile, an environmentalist “maxi” position might reject the very idea of traditional welfare maximization strategies in the environmental policy toolbox like tradeable emissions permits to lower aggregate costs of compliance in lowering emissions to a specific level (essentially based on the claim that it is immoral, not to mention self-defeating, to create property rights in the emission of pollutants). But, from a technical viewpoint, those “property rights” are precisely the technical mechanism employed to create the viable trading market upon which the efficiency strategy rests. Absent the trading market, you are probably thrown back on more speculative strategies like contingent valuation, or more expensive strategies like command and control regulation again.

Even traditional economists, however, would freely admit that there is a difference between employing positive economic analysis analytically to describe the actions of people and the impact of those actions on the environment understood as an asset, versus normative economics providing guidance on how optimal service flows can be defined and achieved (which seems closer to the ecosystems services approach). However, normative economics is traditionally described for environmental economics in terms of involving concerns about efficiency, on the one hand, versus sustainability, on the other hand (except sustainability here is interpreted as intergenerational, rather than intragenerational). But just excluding something from your definitions does not necessarily make it go away, as witnessed by the essentially political claim to environmental justice raised by Mahatir in the early 1990s, and Harris and Ocasio-Cortez most recently. (We designate such a claim as political because of who raised the issue, but you could equally refer to it as a moral claim, no value judgment intended. …)

4/5 The theoretical problem is whether we traditionally defined distributive justice out of normative environmental economics (economists might say, oh, it is political economy, and we economists only do economics, so by definition “distributive justice” cannot be part of “technical economics”). Distributive justice is typically viewed as more of a philosophical discussion, meanwhile in law we presumably are looking for a way to achieve governance, rather than simply debating issues (like we train you in law school). Without thereby launching ourselves on an entire law and philosophy course, let us admit that different class members probably see things different ways. To sketch out a few initial possibilities, however, the egalitarian strain of distributive justice traditionally might seek “equality.” But equality can equally be defined in terms of equality of opportunity versus equality of outcome. There are many conservatives, mostly libertarians (adhering to ideas about it conflicting with liberty and property), who would reject much environmental regulation, but believe strongly in equality of opportunity.

The problem in that sense is how do you define equality of opportunity? Is it countries putting the same amount of carbon out your smokestacks now (after the industrialized countries have already substantially raised carbon levels since the Industrial Revolution, which was Dr. Mahatir’s viewpoint)? Or do you calculate emissions in terms of responsibility reaching back to the Industrial Revolution to account for the historical past? Or is it defined as countries being entitled to some kind of per capita allocation which would benefit densely populated states (per capita energy consumption and so carbon generation by inhabitants of most industrialized countries in markedly higher than that of the much more numerous inhabitants of major developing countries (remember the map of the world by 1995 GDP?)? Or what? There might be a tendency to reach for contractual explanations by analogy to Rawls, except there has been little movement in the world of treaties thus far, and raw self-interest does not work much better to the extent the ultimate result of no deal if everyone is put off by the exercise would presumably lead to every country being worse off.

5/5 Beyond distributive justice issues, the agency problem and analysis in international environmental law is prominent based upon the observation of the heavy involvement of environmental NGOs in attempts to make law reaching back to its earliest beginnings. The implicit claim is that the environmental NGOs presumably know better than governments what the environmental interests of their citizens demand, except governments claim both that their state character and representative democracy is on their side. But the weakness of constraints on self-interested agents is a common theme in economic analysis that you may remember from courses like business corporations.

Pursuing environmental economics as analytical tool, is the world as we know it invariably coming to an end, or is the world just full of Chicken Littles telling us that the sky is falling? Focusing on a little narrative history may provide some perspective of environmental economics and dominant narratives reaching back, putting us back into the timeline represented by the 1972 Stockholm Declaration, 1992 Rio Declaration and 2002 Johannesburg Declaration (followed by the Kyoto Protocol effective in 2005, and the 2015 Paris Agreement). Looking back, the chief concern in the 1970s-80s involved actually two competing environmental narratives drawn more out of the natural than social sciences. Their frame of reference was not GHGs, although atmospheric chemistry was already on the CFC ozone-depletion agenda that would yield the Montreal Protocol in 1987. The chief concern involved modelling depletion of non-renewable natural resources and population pressure tied to the emergence of the modern developing world as economic powerhouse(s).

The juxtaposition involved the limits to growth discussion associated on the one hand with Jay Forrester of MIT and computer modelling in a 1972 study entitled The Limits to Growth. Forrester argued on the basis of systems dynamics and feedback loops that within 100 years society would run out of the non-renewable resources on which its industrial base depended (so there was, figuratively speaking, no place at the inn for the developing countries effectively to grow economically). The counterpoint was provided in a 1976 book by Herman Kahn entitled The Next 200 Years: A Scenario for America and the World. It essentially argued that continuing technological progress would push back the natural limits indefinitely (so there would be, figuratively speaking, a new world for developing and developed countries both to grow into). In a nutshell, the whole discussion seemingly boiled down to the pessimists versus the optimists, in modelling terms. For today’s environmental discussions invariably focused on issues like climate change and carbon generation, the humorous insight was that the older 1970s-80s arguments were focused on non-renewables, and the chief concern was that we might run out of resources like … fossil fuels.

It obviously did not happen that way, and the new natural science modelling approach now assumes based upon various prognostications that we are rapidly moving from a world of mitigating climate change (meaning examining choices to cut back on GHG emissions to limit climate change), to a world of adapting to climate change (meaning locally all those expensive adaptations like a minimum $2 billion infrastructure spend to address increasing flooding in Charleston tied to sea level rise, as well as the increasing danger of storm surges, etc.). Accepting the natural science consensus does not infer the end of the world. Instead, it simply points to the difficult nature of choices to be made, where environmental economics is another analytical tool. To that extent environmental economics as the study of allocating limited resources is simply another tool in the governance exercise of trying to make appropriate international environmental law. But you need to comprehend equally that the details of environmental economics (and regulation) are often not value-neutral, even understood from a technical perspective.  So please remind yourself in passing of the current spectrum of possibilities, by revisiting again in our Unit 3 materials the table at pages 186-89 of the Sagasti & Colby ecodevelopment piece.

Copyright 2020–21 © David Linnan.

Treaty Interpretation and Treaty Process Approaches to International Environmental Law: Package Deal vs. Framework Convention

1/2 Read the Vienna Convention on the Law of Treaties for the technical interpretive rules (the US has not joined in the treaty, but maintains that it simply states the customary law rules), particularly its broader interpretive provisions including Articles 31-32 on plain meaning versus going behind the text, Article 30 (effect of states being party to different treaties, or treaty versions; for example, the Kyoto Protocol which has come into force, but which the US declined to adopt as amendment to the 1992 UN Convention on Climate Change) and Article 38 (treaties can create customary law to bind non-signatory states).

2/2 Compare :

a. Caminos, Hugo and Michael R. Molitor. “Progressive Development of International Law and the Package Deal”. The American Journal of International Law. October 1985, Vol. 79 No.4, pp 871-90

with

b. “Global and Regional Approaches to the Protection and Preservation of the Marine Environment” Boczek, Boleslaw Adam. Case W. Res. J. Int’l L. vol. 16 (1984) pp 39-70.

with

c. “Crafting a Winning Coalition: Negotiating a Regime to Control Global Warming”. By James K. Sebenius. From Greenhouse Warming: Negotiating a Global Regime. Washington D.C., World Resources Institute, 1991. pp. 69-98.

Copyright 2020–21 © David Linnan.

The Mekong River is one of the world’s great river systems, flowing 4,909 km through six countries: China, Myanmar, Thailand, Lao PDR, Cambodia, and Viet Nam. Like the mighty Mekong River that reaches thousands of kilometers, the knowledge and experience gained studying the lower Mekong River basin stretches far as well, back over 50 years when the United Nations founded the Mekong Committee. The hundreds of surveys and studies from this work were the beginning of the information storehouse that is today maintained and supplemented by the successor of the Mekong Committee, the Mekong River Commission (MRC).

The April 5, 1995 Agreement on the Cooperation for the Sustainable Development for the Mekong River Basin (“Mekong Agreement”), which established the MRC, was a coming-of-age for this river basin agency. No longer under the umbrella of other organisations, the management responsibility of the MRC was placed in the hands of its four Member Countries: Cambodia, Lao PDR, Thailand and Viet Nam. However, taking a “whole basin” approach through cooperation with the upper riparian countries is crucial for the sustainable management of the Mekong River Basin, which experiences great differences in flow and flooding in the wet and dry seasons. Just one year after the signing of the 1995 Mekong Agreement, the MRC began to forge its working relationship with its Dialogue Partners, namely the People’s Republic of China (China) and the Union of Myanmar (Myanmar) as the upper Mekong River basin countries. The Dialogue Partners have cooperated chiefly in providing flood season hydrographic flow data in terms of exchanging scientific information, rather than participating in active management of the combined upper and lower Mekong River basins.

The 1995 Mekong Agreement also imposes substantial obligations on Member Countries for projects affecting the Mekong River, for example its Chapter 3, Articles 1-2 require them “to cooperate in all fields of sustainable development, utilization, management and conservation of the water and related resources of the Mekong River Basin including but not limited to irrigation, hydropower, navigation, flood control, fisheries, timber floating, recreation and tourism … [t]o promote, support, cooperate, and coordinate [equitable and shared Mekong River basin development in all Member Countries].” There are no substantive legal rules imposed on the Dialogue Partners by the Mekong Agreement or any similar international legal agreement. The 1995 Mekong Agreement led to the adoption by the MRC Member Countries of the Guidelines on Implementation of the Procedures for Notification, Prior Consultation and Agreement (“PNPCA”) for proposed projects, which PNPCA in practical terms calls for a full environmental and social impact assessment and plan for any Mekong River project under the MRC’s authority.

This peculiar arrangement distinguishing between the upper and lower Mekong River basins reflects historical circumstances, namely that the lower Mekong River basin was originally largely within the territory of the former French colonies (plus Thailand), so the lower basin was essentially viewed as a separate development entity at the time of decolonization. In development terms, the tensions behind exploitation of the Mekong River were originally perceived as chiefly between Thailand as relatively fast developing country, and the former French colonies, later formally Socialist countries, as relatively slowly developing countries. Meanwhile, China was not even recognized by the UN at the time the Mekong Committee was created, and Myanmar (then Burma) remained isolated as a result of its internal politics. This split in legal regulation or riverine regimes has taken on new significance as attempts have increased to exploit the entire Mekong River economically for purposes like hydroelectric power generation. To date, China has built hydropower dam projects in the upper Mekong River basin, while relatively poor Lao PDR is currently the location of planned hydropower dam projects.

Congratulations on your new job as junior lawyer in the Hong Kong offices of Dewey, Cheatam & Howe, the outside legal counsel to Hong Kong Light & Power (HKL&P), a private sector electricity generating firm building and operating electric power infrastructure in Asia, including hydroelectric power projects. HKL&P is contemplating construction of a significant Mekong River hydropower dam project to tie into its existing power grid, which would ultimately have the effect of decreasing by as much as 20% Mekong River dry season water flow as measured in Thailand and Vietnam as downstream riverine states (thus potentially affecting both rice crops and industrial development during their dry season). HKL&P management is contemplating in the alternative building its project in China or in Lao PDR, and you have been directed to write for your client HKL&P a preliminary legal advisory letter explaining the riverine legal framework(s) applicable on the public international law side to the two potential sites at different locations in the upper and lower Mekong River basins, to the extent they may affect construction or operation of HKL&P’s contemplated Mekong hydropower dam project. Please articulate the applicable international law principles, then evaluate their potential effects on your client’s project. Since it has been a while since seventh grade geography, take a quick look at a map to envision the geography under discussion.

Copyright 2020–21 © David Linnan.

The US and Canada are parties to the 1909 Boundary Waters Treaty (Boundary Waters Treaty), which established the International Joint Commission (IJC, with three Canadian and three US commissioners) to manage the shared US.-Canadian waterways, including the Great Lakes, often constituting our common international border. In the 1980s, the IJC was charged jointly by the US and Canadian governments pursuant to Boundary Waters Treaty Article IX to

“examine into and report upon the water quality and quantity of the Flathead River, relating to the transboundary water quality and quantity implications of the proposed coal mine development on Cabin Creek in British Columbia near its confluence with the Flathead River, and to make recommendations which should assist Governments in ensuring that the provisions of Article IV of the said treaty are honoured.”

The Flathead River basin straddles Southern British Columbia and Northern Montana. Boundary Waters Treaty Article IV provides in its entirety

“[Canada and the US] agree that, except in cases provided for by special agreement between them, they will not permit the construction or maintenance on their respective sides of the boundary of any remedial or protective works or any dams or other obstructions in waters flowing from boundary waters or in waters at a lower level than the boundary in rivers flowing across the boundary, the effect of which is to raise the natural level of waters on the other side of the boundary unless the construction or maintenance thereof is approved by the aforesaid International Joint Commission.

It is further agreed that the waters herein defined as boundary waters and waters flowing across the boundary shall not be polluted on either side to the injury of health or property on the other.”

The IJC appointed several technical committees under the Flathead River International Study Board. In December 1988 the IJC issued its report entitled Impacts of a Proposed Coal Mine in the Flathead River Basin (1988 Report). The 1988 Report stated that

“The IJC recommends that, in order that Governments can ensure that the provisions of Article IV of the Boundary Waters Treaty are honoured in the matter of the proposed coal mine at cabin Creek in British Columbia:

(1) the mine proposal as presently defined and understood not be approved;

(2) the mine proposal not receive regulatory approval in the future unless and until it can be demonstrated that:

(a) the potential transboundary impacts identified in the report of the Flathead River International Study Board [Ed, see Mine Development Committee Technical Report] have been determined with reasonable certainty and would not occur or could be fully mitigated in an effective and assured manner; and,

(b) the potential impacts on the sport fish populations and habitat in the Flathead River system would not occur or could be fully mitigated in an effective and assured manner; and

(3) the Governments consider, with the appropriate jurisdictions, opportunities for defining and implementing compatible, equitable and sustainable development activities and management strategies in the upper Flathead River basin.”

Subsequently, 1980s plans to open the Cabin Creek coal mine were abandoned largely due to a retreat in energy prices (see Jim Mann, “Baucus Opposes Canadian Mine,” Daily Inter Lake Online Edition, May 4, 2004), but a new Canadian owner (Cline Mining Company) recently determined to open a mine at substantially the same location and allegedly the British Columbia government is determined “at all costs” to exploit its natural resources affecting the Flathead River basin (see Michael Jamison, “Canadian coal mIne proposal causes stir,” Missoulian.com news online, April 25, 2004). The news stories note that Montana’s Senator immediately approached the US Department of State arguing that the 1988 Report’s recommendations were still in place and others articulate an apparent view that the Boundary Waters Treaty should preclude opening the coal mine as a matter of law. It would appear that plans to open the Cabin Creek coal mine will rise and fall with the price of fossil fuel energy generally, so this may present a repetitive issue over time

The group preparing this should be split so that 1/4 of you will be appointed lawyers in the Office of the Legal Adviser at the US Department of State, 1/4 of you will be appointed lawyers in the Canadian Federal Ministry of Foreign Affairs, 1/4 of you will represent the IJC and 1/4 of you will represent Cline Mining Company seeking to open the coal mine. Assume that the Province of British Columbia, which seeks revenue, is both ideologically inclined and under considerable pressure to find additional revenue sources to meet this year’s strained budget and thus strongly supports the Cline Mining Company in its efforts to open the mine. The point is to be able to argue different positions as a technical matter of international law. The question for you to answer under public international law for your respective clients is what is the precise character of the 1988 Report’s recommendations and more generally what is the correct legal interpretation of Boundary Waters Treaty Article IV. Do they preclude, as a matter of public international law, British Columbia from issuing a mining permit to the Cline Mining Company, or instead are they merely declarative of the customary law principles that articulate a duty of consultation linked with state responsibility after the fact for cross border pollution (prior restraint being different from liability after the fact, as a matter of international law).

What exactly are the restraints under the Boundary Waters Treaty on opening the mine? What is going on here, and how do you deal with the treaty interpretation versus customary law problems? Argue from what you have learned about the law, as opposed to trying to construct a jury argument, because we are technically still looking at customary law and treaty interpretation. It is relatively common in domestic environmental disputes to bring litigation at the same time as remedies are pursued via a state legislature or politically-based commission by “trying the case in the media,” but you do not face the same options in the international law setting. Why is that?

Copyright 2020–21 © David Linnan.

Treaty Interpretation and Treaty Process Approaches to International Environmental Law: Package Deal vs. Framework Convention

1/3 All students should work individually to resolve the Mekong River Problem, addressing the problem of siting an investment in an international river basin where one group of countries have entered into a treaty downstream, but other countries upstream are not members of the treaty. Concerning the customary law rules on river basins, you already have seen them in the Lake Lanoux decision we read for Unit 2. Does it make a difference where the investment is located on a river flowing across national boundaries, and why? How does the interaction between customary and treaty law work here, so that you can advise your client?

2/3 Let’s divert to a policy inquiry for broader insight for all students. We have the 1992 UN Framework Convention on Climate Change, followed by the 1997 Kyoto Protocol effective in 2005 (mandating emissions reductions of basically 5% from a 1990 baseline during the period 2008-12, only by developed countries), including approaches like the Clean Development Mechanism or CDC permitting developed countries to “sponsor” aka fund projects to reduce greenhouse gas (GHG) emissions in developing countries to enable said developed countries to achieve their national reduction targets via “credits” for reducing GHG generation in developing countries (for example, via tropical forest preservation, or lessening emissions via “green” technology– perhaps electrifying vehicles, as well as funding renewable energy). This split system reflected ideas about differentiated obligations for developing countries, both as a matter of capacity, and at least informally because of their economic development goals, meaning industrialization largely in pursuit of the export-led development model (which theoretically would increase their GHG emissions). From a developing country perspective, economic growth is still their most important policy goal.

The Kyoto Protocol is still in effect, and some developing countries would still favor its approach, but it was substantially undercut by the US refusal to ratify it based upon President Bush’s conviction that it did not address the GHG atmospheric capacity problems (because of non-coverage of growing major developing country GHG emitters like China and India). Over time we moved to the 2015 Paris Climate Accord aka Paris Agreement and a system based upon announced national reduction goals, not specifically limited to developed countries, but without effective sanctions for failure to meet national GHG reduction goals (so enforceability is an issue). Notwithstanding its seeming non-binding character, the Trump Administration chose to withdraw from the Paris Agreement (although it would be relatively easy for the US to rejoin).

In his June 1, 2017 statement that the US would withdraw, President Trump emphasized that, if a better deal were negotiated, he would favor rejoining, but under the circumstances US undertakings under the Paris Agreement would negatively affect US employment and competitiveness, allow major emitters like China to continue to increase emissions for another 10+ years, and articulated his opposition to any US contribution to a $100 billion Green Climate Fund (to enable financing of developing country projects to reduce emissions). In any case, he thought the financial obligations imposed upon the US would be unreasonable, and staying in the Paris Agreement as constituted was not in the US or its citizens’ best interests (read the annotated statement here).

The 1991 Sebenius IR piece on negotiating a regime to control global warming was written in advance of the 1992 UNCCC negotiations, but expressed both negative assessments of what would not work as negotiating approach, as well as the best approach to reach agreement. We are yet to reach agreement, so with the benefit of hindsight was Sebenius right or wrong in his details? What changes in approach do you think Sebenius would recommend at this point to “get to yes,” other than possibly anticipated climate change effects progressively worsen for a further period of years, to inspire the parties that something must be done, etc.?

If you compare the Caminos & Molitor article on LOS, you will note the US’ opposition to LOS’ deep seabed mining provisions and the related concept of the international administration of such mining arrangements. With the benefit of hindsight, it is probably fair to say that President Reagan ultimately rejected ratification of LOS in large part because of opposition to the deep seabed mining provisions, which were viewed, fairly or unfairly, as paralleling the New International Economic Order demands of the developing world asserted in the early to mid-1960s (so roughly at the time LOS’ negotiation commenced). This might be termed an ideological opposition on Reagan’s part, but doubtlessly a deal killer. What do you think, was President Trump’s opposition to the Green Climate Fund based upon similar ideological concerns, yes or no? (It was said at the time that the $100 billion fund was “peanuts,” disregarding the fact that the US’ share probably would not have exceeded 15-20%.) There arguably was a similar ideological background to the US refusing to join the CBD, which we shall discuss in a later unit.

Would it work simply to replace the Green Climate Fund with CDM, which is still in place under the Kyoto Protocol, since then developed countries might effectively “buy” GHG reductions via financing developing world reduction projects? The problem seems to be that the developing world arguably perceives itself as a matter of distributive justice and differential treatment to be entitled to have someone else effectively pay for their own GHG reductions, meanwhile that approach seemed unacceptable to both Presidents Reagan (for LOS) and Trump (for the Paris Agreement). Does the name or characterization really matter, why or why not, since we see distributive justice arguments on the developing world side also in Dr. Mahatir’s speech you read in Unit 1? Or is this all less about ideology and more about simple negotiation leverage, since, after all, President Trump was willing to contemplate signing an “improved” Paris Agreement? Where does the problem seem to lie in repeatedly failing to reach agreement, since all countries are famously in the same boat on prospective climate change (except its negative effects would probably be greater in the developing world, as a matter of equatorial location)? How do you account for the continuing failure to reach agreement, at least through Sebenius’ eyes? Or did Sebenius miss something, in which case how would you understand the problem?

3/3 Everyone should read the problem, but groups of students will be appointed to work on and present the Flathead Mine and Boundary Waters Treaty Problem, addressing the extent to which an older 1909 Boundary Waters treaty does or does not govern the modern problem of what happens when Canadian provincial authorities desire to permit a coal mine in the watershed 50 miles north of the boundary waters under circumstances that may lead to mine tailings and the like washing into the boundary waters river, and perhaps eventually impacting river trout in scenic Montana on the other side of the boundary waters river. Ultimately, the problem is whether and how you might take a 111-year old treaty chiefly aimed at navigable waters concerns, and use it to address environmental issues some distance from the boundary waters river itself? Is this legitimate in international law terms, because here you must interpret a treaty?

Copyright 2020–21 © David Linnan.

Treaty Interpretation and Treaty Process Approaches to International Environmental Law: Package Deal vs. Framework Convention

1/4 Let us focus on four things this week, as a matter of switching gears away from examining the suitability of ESG human rights litigation-based and industry standard legal approaches to international environmental law. We are now in something of a transition longer term to examining a selection of the more important international environmental law treaties (and why some may work better than others). Bottom line, in the environmental area, does a traditional law of(/between) nations approach work markedly better than an individual or group-focused rights approach?

First, we shall work a couple of technical, legal problems to do this as lawyers (as opposed to political science, international relations or IR, or environmental mavens). The first one involves the simple question of whether and how it may be permissible to use an existing, arguably non-environmental treaty to try to address transboundary problems. The hidden issue is that there are technical public international law rules for interpreting treaties that really follow Civil Law rules instead of what you might see in a Common Law system when a court tries to stretch a statute, etc. to reach a certain situation. So we shall look at the 1969 Vienna Convention on the Law of Treaties for the technical interpretive rules (the US has not joined in the treaty, but maintains that it simply states the customary law rules). This takes us into the question whether it is legitimate technically speaking to repurpose an existing treaty in order to address newer environmental problems? So what is the matter with such an approach, are we not all supposed to be creative lawyers? Or is there something peculiar to international law that ties us more closely to textual and similar interpretations, even though textual gaps and ambiguities may be unavoidable as a practical matter?

2/4 The second aspect for you to think about working from the Vienna Convention is what are the rules that apply to the problem where a state signs but does not ratify a treaty (and also the case where it ratifies and then withdraws, then rejoins, as the US apparently has done with the 2015 Paris Agreement), but other states do embrace the treaty (and so conform their behavior to its requirements, etc.). This raises questions about a treaty’s effect on (non-member) third party states. The technical question is whether at a certain point the behavior of the signatory states adhering to the treaty may produce customary law, and we ask the question here because there are important international environmental law treaties which the US has chosen not to ratify. Meanwhile, most other countries have done so, so how to treat their effects longer term? For example, the US did not ratify a core agreement in the form of the Convention on Biological Diversity (CBD), as product of the 1992 UN Rio Conference (which we shall talk about subsequently), and and we withdrew from and then rejoined the 2015 Paris Agreement related to the 1992 UN Framework Convention on Climate Change. So this question repeats itself whenever we shall examine an international environmental treaty in which the US has not joined or seemingly changes its mind about as a political matter.  For better or worse, the US has not shown great consistency in this area..

3/4 The third aspect is more procedural in terms of how best to structure reaching treaty-based agreement on international environmental problems. There were two traditional approaches in the environmental law area, namely the “package deal” versus the “framework convention” approach. Meanwhile, on the political side, IR tended more to focus on ideas like coalitions and vetos steering the negotiating process itself.

The first or package deal convention approach is premised upon addressing difficult problems in treaty form by an extended negotiation process involving vastly differing state positions and interests, where final agreement is achievable chiefly by means of a horse-trading process. (So in practice, the package deal might be regarded as resembling a contentious domestic legislative process.) The Law of the Sea Treaty (“LOS”) is the leading example of a package deal treaty with environmental and natural resource overtones. It took twelve years of repeated large, inconclusive meetings to negotiate, and in the end involved something of a trade-off between states interested in freedom of navigation like the US with its military and commercial interests, versus states more interested in natural resource issues like a 200 mile coastal fishing rights in the form of LOS’ exclusive economic zone (“EEZ”). The package deal follows the traditional truism that you should not watch the making of legislation or sausage. Notwithstanding the extended effort, the US eventually chose not to ratify LOS in 1992, adopting the position instead that its freedom of navigation provisions in the US national interest simply restated customary law anyway.

Under the second or framework convention approach, countries recognize the general outlines of a complex problem needing to be addressed, and then undertake in a minimal initial treaty agreement to fund and cooperate on the study of more specific issues, with a view to articulating policy and funding in subsequent amendments once a clearer understanding of how to address the broader problem is achieved. The problem with the framework convention approach is that it enables incremental progress in the face of uncertainty, but pushes most of the politically difficult choices into an ever-receding further future, which works until the future becomes now, at which point trade-offs may have become more constrained with the passage of time (think IPCC 2021 Report, dribbling out in three parts over the next 6-12 months). In the alternative, the argument can be made that this has been the outcome 28 years on with the 1992 UN Framework Convention on Climate Change generally, following the US’ opposition to the Kyoto Protocol (adopted in 1997, in force without US participation since 2005) and withdrawal from the 2015 Paris Climate Accord aka Paris Agreement (and subsequent rejoining), as opposed to the idea that the complex and vested interests involved would have rendered any package deal equally challenging.

4/4 The final aspect is to ask the question whether certain kinds of environmental treaties and governance are better pursued on a regional rather than worldwide basis in international environmental law terms, switching from consideration of atmospheric problems (greenhouse gases, etc.) to issues like desertification in Africa, or largely closed marine regions on the example of the Mediterranean Sea or the Persian Gulf. How do things work differently, once an environmental problem becomes more local or regional (smaller number of states involved, typically more shared interests, continuing relationships as neighboring states, etc.)?

Copyright 2020–21 © David Linnan.

Private Sector Voluntary Codes & ESG (Market-Orientation & Litigation Safe Harbors)?

1/5 For general understanding, it helps to contemplate the idea that private sector developments are still steered somewhat by efforts at a higher level to encourage adherence to “international standards” and the like beyond legal obligations.  For general background, watch the video “Promoting Social Change Through the Private Sector” (Harvard Kennedy School video 10/16/20).

2/5 For some fun concerning the odd contretemps of investment adviser and government opinion surrounding ESG, compare

a. Larry Fink (Blackrock CEO), A Fundamental Reshaping of Finance (2020 Annual Letter to CEOs, now on climate change and sustainability as investment concern; see also the linked sustainability letter to Blackrock accountholders)

and

b. Lauer, “BlackRock CEO’s Letter is a Watershed Moment for Climate Change: The First Name in Capitalism Has Taken a Strong Position: Will His Peers Follow Suit?” (InsideHook, 01/15/20)

with

c. Norton, “Sustainable Investing: New Labor Department Guidance Takes Aim at ESG Investing” (Barron’s 06/24/20)

and

d. Kennedy, Hurst & Crowley, “BP Walks Away from the Oil Supermajor Model It Helped Create” (Bloomberg 08/04/20)

e.  David vs Goliath: Inside Engine No. 1 Activist ETF (watch the podcast)

3/5 The private sector has embraced a variety of voluntary principles in the environmental and social impact areas:

a. Read the Equator Principles in its entirety (addressing financial institution involvement with project finance in terms of social and environmental impact)

b. and for a broader view of sectoral codes in the natural resources area see Besada & Martin, Mining Codes in Africa: Emergence of a “Fourth” Generation? (NSI 2013; providing some insight into what private investors should expect now when they propose a large natural resource-based project in a developing country– the natural resource “best practices” codes tend to be associated with Canadian and Australian initiatives, perhaps because of their relatively large natural resource sectors).

4/5 To get a better sense of the underlying social and environmental issues in the Freeport McMoran situation, beyond the Norwegian Government Petroleum Fund fact-finding report, please consult for the indigenous peoples’ viewpoint:

a. You Tube Video: Irian Jaya – Indonesia as a general presentation of effects on the native Papuans of development and government policies beyond the Freeport Grasberg mine as of 1995, recalling that the Freeport ATCA suit was filed in 1996 (note there is a cameo interview with Tom Beanal as Amungme tribal leader and named plaintiff under the Freeport ATCA lawsuit– so how does the tenor of the half-hour journalists’ film comport with the legal complaint?).

b. Understand also that Freeport McMoran as company was largely unpopular among ordinary Indonesians as well as local politicians under a narrative that they unfairly extracted excessive amounts of wealth from the nation for years under a former authoritarian regime, which held power up to 1998, such that to obtain their latest twenty-year extension of their mining concession as a condition they transferred control over the Grasberg mining operations to an Indonesian state-owned enterprise, compare

1. Sulaiman, “A guide to understanding the Freeport divestment deal,” JP, 07/16/18

With

2. “Freeport-McMoRan Announces PT-FI Divestment Agreement with PT Inalum” (Freeport Press Release 09/28/18)

Note the essential silence in the divestment discussion of anything relating to the Papuans, or their complaints.

5/5 To understand the approach and scope of more successful social and environmental impact reports and planning look like in practice, see British Petroleum’s (BP) efforts under the linked sources on environmental and social effects of the Tangguh LNG project, including human rights and social impacts compliance as case study.

Copyright 2020–21 © David Linnan.

Private Sector Voluntary Codes & ESG (Market-Orientation & Litigation Safe Harbors)?

1/3 Concerning the Trump Labor Department’s lecturing professional investment managers by proposed rule to ignore ESG (since abandoned), and so how to invest, what do you make of this? The brouhaha attracted considerable interest in the investment world, while you can read the financial industry commentary on Secretary Scalia’s draft rule via looking at the Law Library’s Green Finance Guide. The point is not to criticize the Trump Administration as such, but rather to demonstrate how deeply ESG has taken root in the private sector investing community. So when the government effectively wanted to discourage if not outright prohibit ESG investing, the investment industry very strongly opposed the measure.

2/3 Please read the Equator Principles closely, and ask yourself how they would apply to individual projects in both the US and developing countries (since coverage is global, not just in developing countries, although it is most visible perhaps in international projects because it mandates what amount to minimum standards)? Try to understand the mechanics of application (what are the actual tests, etc.). When you look at the Equator Principles membership, you will notice that among others Bank of America, Wells Fargo and JP Morgan are all members (hence the idea you can see this already in the Charlotte practice, since they are major law firm clients there and elsewhere).

Why do you think banks insist on EP, and how would you characterize compliance in legal terms? The original Equator Principles date back to the early 2000s, but they are already at version 3.0. The most recent additions include mandated climate change GHG-related disclosures, plus extension of EP’s scope beyond project finance as such, to what you might call “project-focused” loans (including bridge loans, etc.). The difference is that project finance is premised traditionally on non-recourse finance involving a special purpose vehicle created for a concession-based specific project with a projected life of at least 20-30 years, usually involving something like a build-operate-transfer (BOT) or build-operate-own (BOO) financing model. What do you think these consist of in the real world? (Jeopardy style, what is infrastructure?) Project-focused loans may not be non-recourse, but the focus is on the usage of the money regardless of the structure of the financial transaction.

The EPA as government agency has until recently strained to avoid the language of “climate change,” but you will notice that the private sector is entirely comfortable with incorporating it into their analysis of prospective loans. How do you think “enforcement” works in such a private sector voluntary code and safe harbor arrangement? What do you think happens if a potential borrower were to convince an Equator Principles member financial institution of its bona fides in terms of promises, but then simply disregards the promises once it has its project finance loan funds in hand?

3/3 Concerning the implicit comparison of the Freeport Grasberg mine and the Tangguh LNG project, we shall appoint a student group to work on this problem and report back. The practical insight is that the Papuans as Melanesians from a stone age culture within living memory faced off against a Western investor and (mostly Javanese) Indonesians from a modern culture, and as a result were essentially placed in the same position as nineteenth century American Indians. There was a struggle for land in which the locals were largely moved off their traditional lands to enable its exploitation by the newcomers, at the same time as Papuans largely lost their demographic majority in the overall local population through government programs encouraging inward migration from Java and other more developed areas of Indonesia.

The Indonesian government adopts a somewhat paternalistic attitude towards the Papuans, while letting be known their impatience at their seeming lack of gratitude for its development efforts. Meanwhile, the Papuans tend to be regarded less than favorably by many ordinary Indonesians. They look different as Melanesians, they speak different languages, and are regarded as primitives not least because their customary attire may consist solely of a penis gourd (nonetheless, there are Westerners who praise them as a sophisticated culture from which we should learn, see Jared Diamond, The World Until Yesterday (2012)). There is a small but stubborn guerrilla independence movement among some Papuans, drawing heavy-handed Indonesian military responses from time to time (against separatism, but in practical terms pressuring local villagers to reveal their haunts). However, the Papuans’ biggest grievance is essentially loss of traditional lands and so their way of life (as opposed to what might be called impingement on any sense of budding Papuan nationalism). So are mostly academic claims of indigenous peoples’ third generation rights under a human rights analysis recognized as a matter of state practice, and what is the legal significance of such a failure?

Tangguh is a multi-billion dollar BP project located also in Irian Jaya, Indonesia like Freeport’s Grasberg project, but it is the antithesis of Freeport Grasberg, and they recently signed contracts on expanding Tangguh from one to three LNG trains at a cost of several billion dollars. This differential treatment is partially a factual predicate for saying that Freeport lost several billion dollars essentially because of their questionable longer term behaviour leading to them being forced to divest a majority of the Grasberg project in order to secure an extension of their concession. As lawyers, you should be able to reverse engineer BP’s concerns that Tangguh not turn into another Freeport, and to understand the structure of the social and environmental framework to avoid another Freeport, or more generally the kinds of cases that formerly were filed regularly under the ATCA. So please articulate the legal basis of BP’s strategy and approach with a view to being able to replicate it elsewhere. What are its key elements?

We shall appoint different student groups to work and report back on two problems addressing on the one hand private ordering in the sense of implicit differences between the approaches visible in the contrast between the Freeport-McMoran Grasberg mine and BP’s Tangguh LNG project, versus our “known vs unknown unknowns” in terms of the decarbonization push now contemplated largely by the private sector, which seems crucial in the climate change context. To what extent does the business opportunity narrative drive change, versus traditional regulation or even international agreements as treaty law?

• BP’s Tangguh LNG Project and the Phantom Freeport Problem
• Energy Transition and Technology Forcing Problem

Copyright 2020–21 © David Linnan.

Private Sector Voluntary Codes & ESG Plus (Market-Orientation & Litigation Safe Harbors)?

In Units 3 & 4, we covered the theory and past practice of rights-based approaches to developing international environmental law since the 1990s, mostly practically speaking in the ATCA litigation context. We focused ultimately on the dual difficulties in reconciling public international law sources of law doctrine on the technical side, as well as the eventual withdrawal of ATCA jurisdiction by the US Supreme Court (ignoring for the moment potential litigation simply moving offshore). Meanwhile, there developed on the private sector side at least three different responses that were triggered largely on the one hand by almost twenty years of lively ATCA litigation, and on the other hand by a realization of likely longer term regulatory mandates and reputational costs that needed to be considered by financial institutions and markets. These developments might be viewed in the alternative, either in law practice terms as moving issues from analysis of potential legal liability more towards compliance as in the case of seeking to create potential safe harbors, or on the public international (environmental) law side, moving towards “soft” law and away from traditional public international (hard law) sources doctrine.

First, on the banking end of the financial sector, the private sector has embraced a variety of voluntary principles in the environmental and social impact areas before potential borrowers can receive financing for large scale projects. The likeliest example in practice is probably the construction of major infrastructure projects, on the example of electricity generating plants. The question would be raised in comparison of the creditworthiness of fossil-fuel fired generating plant projects, versus renewable energy projects (for example, carbon-free wind or solar generating plants). You can find a particular example in the form of the so-called Equator Principles (addressing financial institution involvement with project finance in terms of social and environmental impact), which some of you might encounter if you aspire to law practice in Charlotte (and, for a time, there was a similar financial institution initiative entitled the “Carbon Principles” especially targeting energy infrastructure). Both were premised on the idea that in reviewing larger scale project loans (and in particular non-recourse project finance loans), creditworthiness analysis required an environmental and social impact analysis and remediation plan. Over time that came to include climate change impacts, judged in terms of carbon generation. And if a project “failed” in terms of anticipated impacts on cashflows to repay loans, or otherwise might not be viable in the longer term due to increased operating and regulatory costs (e.g., a potential carbon tax on fossil fuel inputs for a mooted electricity generating plant at some point during the anticipated 20-30 year life of the loan), it simply would not pass muster before the institution’s credit committee to receive financing in the first place. It was not a matter of banks suddenly becoming “green” institutions, but rather recognizing likely regulatory and similar developments over time as affecting the repayment of any longer-term obligations. The private sector seemingly focused much more on longer-term economic viability in terms of projected cashflows available to repay borrowings, rather than just focusing on current regulatory and market structures. And by my count, The Equator Principles are already in Version 3.0, having been created initially in the early 2000s. This is lightening fast for such an industry initiative, and presumably reflects ferment within the (private) financial sector.

Second, on the capital markets end of the financial sector, we have already noted on the investment side the ESG concerns (also referred to on the entity side often as corporate social responsibility or CSR, if you remember that concept from your basic corporations law course). In the capital markets area, the focus is eventually on enterprise valuations and trading market prices for enterprise securities, with indirect links normally to compensation of the business enterprise’s senior management (who often are paid based upon enterprise performance, most commonly judged by its stock price). Failure to engage on environmental and social concerns can have serious consequences, as witnessed by disinvestment in Freeport-McMoran by the Norwegian Government Petroleum Fund as institutional investor (click on the Norwegian Government Petroleum Fund-Global Council on Ethics, Recommendation of 15 February 2006 to remind yourself of the facts).

Third, in natural resource industries with overseas projects in particular, there was an effort to be proactive in terms of seeking to establish what amounted to safe harbors under industry codes specifying “best practices,” or to design individual projects with a view proactively to address common shortcomings as revealed generally in ATCA litigation. As luck would have it, the continuing travails of the Freeport-McMoran project in Indonesia were seemingly the ghost comparison for planning construction of a subsequent large-scale British Petroleum LNG project in Indonesia, so that we can examine what private sector remediation (or avoidance in the first place) of environmental and social risks might otherwise eventuate in traditional ATCA litigation. It is fair to say that those natural resource companies seeking guidance could achieve similar outcomes to voluntary industry code safe harbors simply by reverse-engineering perceived failures to learn from the mistakes of other projects, and adjusting their project plans accordingly.

The three private sector responses above require business lawyers in practice to dance around the border between legal and compliance issues, typically in a planning and counselling capacity. From the client’s viewpoint, winning in any prospective litigation only to lose its operating license or go bankrupt due to business or political complications would constitute a truly pyrrhic victory. For multinational business enterprises, legal obligations as such are only one concern, and they typically are not even uniform between jurisdictions. (As example, Civil Law jurisdictions may be much more open than Common Law jurisdictions– particularly the US– in a legal, technical sense to second and third generation human rights approaches.)

Meanwhile, Trump Administration complications for the private sector involved governmental push-back in favor of fossil fuel industries (coal, oil and gas) in the form of attempted US Department of Labor rejection of ESG investing (following an announced focus on “climate risk” by major investment advisers like Blackrock, not themselves charitable institutions– but institutional investors are beginning to reckon with stranded investment and reserve costs as a drag on stock prices in the traditional energy sector) and seeking to ensure the eligibility of smaller (fracking) oil and gas firms under federal bail-out pandemic legislation. Oddly enough, government push-back seemingly favoring fossil fuels emerged as energy prices fell generally in the early stages of the COVID-19 pandemic (as the recession and lock-downs reduced travel and so fossil fuel demand, alongside general oversupply issues in the oil markets leading to lower fossil fuel prices). But the longer-term trend disfavouring fossil fuels is primarily attributable to the increasing competitiveness of renewable energy sources, so markets are reflecting behavior and the energy markets (hence carbon generation) even in the absence of “law.”

Now, under the Biden Administration, the most visible “decarbonization” push involves electric vehicles (EVs) which initiative the private sector is now backing up with very considerable research and business investment expenditures. What is visible from the outside institutional perspective increasingly since the early 2000s has been an attempt to encourage (voluntary) international standards via the private sector, which standards are currently migrating chiefly into areas like capital markets law domestic regulation via disclosure obligation, as opposed to a traditional focus on substantive mandates like Corporate Average Fuel Economy (CAFÉ) standards. CAFÉ standards are seemingly being replaced by concepts like limiting general temperature increases to 1.5 or 2.0 versus 2.5 degrees centigrade, but those substantive targets hardly contemplate regulating Mother Nature as such. Meanwhile, if corporate lawyers traditionally worked with Financial Standards Accounting Board (FASB) standards, are increasingly in practical capital markets terms required to contemplate Sustainability Accounting Board (SASB) standards.

Essentially, we started looking at this whole area in the international environmental law sphere in a quasi-political process like UN declarations increasingly over time incorporating what amount arguably to second and third generation human rights claims in the environmental area. Then we turned separately to domestic (US) courts where (international) human rights law and claimed international environmental law were pleaded as a source of law in ATCA lawsuits, typically without much success beyond traditional allegations of gross human rights violations as core first generation rights violations (allegations typically involving extrajudicial executions and torture). At that point US lawyers faced the issue of whether and how to recast any basic environmental claims as more traditional gross human rights violations, even while foreign litigation commenced.

But since only lawyers like litigation, the private sector response was more to seek agreement on standards and industry safe harbors as a way to avoid both litigation and injurious reputational/business effects in the longer term. So from a client perspective, it becomes more a compliance exercise, but one with serious consequences and costs in failing to adhere to proper standards, whether or not required by law in a particular jurisdiction. In a practical sense, this may represent for lawyers the differing perspectives of the outside counsel-advocate hired to try a client law suit in a particular jurisdiction when the die is already cast (and the lawsuit(s) have already been filed), versus business and in-house lawyers and compliance personnel, whose preferred approach in the first place is to keep the client out of trouble across multiple jurisdictions and avoid unnecessary lawsuits as business distractions. So how much of this constitutes managing legal risk versus “international environmental law” in your opinion, if it results indirectly from the history of ATCA litigation?

Copyright 2020–21 © David Linnan.

Human Rights Views Differing; ATCA Then, Now Business & Human Rights Approaches Internationally (Customary Law Versus General Principles)

1/3 Concerning the Freeport McMoran Grasberg gold and copper mine in Irian Jaya, Indonesia as ATCA litigation of the 1990s:

a. See the excerpted complaint filed April 29, 1996, in US District Court, Eastern District for Louisiana Civil Action 96-1476 Tom Beanal et al v. Freeport McMoran, (suit ultimately dismissed; a regular human rights count as first in the complaint was not included in the excerpt). For more factual background on the Freeport McMoran environmental issues, read the Norwegian Government Petroleum Fund document below, which is directed at ESG-style capital markets divestment but contains a factual description. Do you or do you not think that the lawyers in question stated a valid cause of action in their complaint? Why do you think it was written that way?

b. See the Norwegian Government Petroleum Fund-Global Council on Ethics, Recommendation of 15 February 2006 (on divestment of Freeport McMoran stock). The Fund is the investment vehicle into which the profits from Norway’s North Sea oil production go, while the Ethical Council is simply its advisory body. The Fund currently owns roughly 3% of all public securities outstanding anywhere on Planet Earth, so that it is the world’s largest institutional investor. You may treat it for these purposes as representative of the newer breed of socially conscious large investors, which is unusual only insofar as it publishes the basis for its investment decisions. You also may treat the Petroleum Fund Recommendation’s findings of fact as stating basically operationally what lay behind the Freeport-McMoran complaint’s stated second and third causes of action, beyond some claimed misbehaviour of individual Freeport-McMoran security personnel.

2/3 Concerning the law and sources doctrine again compare:
a. Center for International Environmental Law on human rights, the environment and economic development (CIEL; a 1997 white paper espousing what you might call a mid to late 1990s broad concept of international environmental law reaching back to the period immediately following the 1992 Rio conference– but do you see the “sustainable development” concept from Rio in the CIEL publication, why or why not?)

with

b. Flores v. Southern Peru Copper Corporation, 343 F. 3d 140 (2d Cir 2003) (now Flores’ ATCA ruminations have been superceded by the US Supreme Court’s Kiobel decision, but I want you to focus instead on what the Second Circuit says about sources doctrine and how you think it would have dealt with the Freeport case in terms of the three separate counts in the Freeport complaint).

Prior to Kiobel’s jurisdictional decision, the Flores case was broadly representative of lower courts’ narrow understanding of customary law human rights claims, or perhaps general principles analysis of international environmental law claims, notwithstanding the expert affidavits customarily offered (referred to in the Flores decision; and do they reflect international law sources doctrine, if you want to speak in technical terms?).

3/3 Concerning the ATCA-like cases now being brought abroad after Kiobel, please explore the following website left over from the UN Business and Human Rights process, with a special view to the kinds of litigation pending in different countries:

Business & Human Rights Resource Center– Corporate Legal Accountability Portal to see what some of those other countries are doing. The portal is leftover from a long-running UN examination of business and human rights obligations dating back to the early 2000s under the aegis of John Ruggie (when Kofie Annan was UN General Secretary).

Copyright 2020–21 © David Linnan.