Category: HELR Blog

[ELRS] Climate Change Regulation Through Litigation: New York’s Investigation of ExxonMobil under the Martin Act

By Chris Erickson, Junior Editor–Michigan Journal of Environmental and Administrative Law at University of Michigan Law School.

This post is part of the Environmental Law Review Syndicate. Click here to see the original post and leave a comment.

In November 2015, New York Attorney General Eric Schneiderman began an investigation into whether ExxonMobil made public statements about climate change that conflicted with its own internal research.[1] Schneiderman issued a subpoena to ExxonMobil ordering production of documents related to its internal climate change research and the use of that research in making strategic decisions.[2] This investigation differentiates itself from previous climate change litigation by attempting to hold companies responsible for their contributions to climate change using laws unrelated to climate change. If New York is successful in its investigation, it could signal a new wave of climate change litigation centered on issues tangentially related to climate change.

The current investigation pursues a different strategy than past approaches to climate change litigation. Climate change litigation against greenhouse gas (“GHG”) emitters usually involves violations of federal law (such as the Clean Air Act or the National Environmental Policy Act).[3] If a GHG emitter has not violated any federal or state environmental law, plaintiffs bringing an action against a GHG emitter face the difficult task of proving tort law nuisance claims.[4] Avoiding this, New York’s investigation aims to hold GHG emitters accountable by attacking something more tangible: disclosures to investors.[5] The Martin Act, a New York statute, gives broad power to the attorney general to investigate companies for finance-related “deception, misrepresentation, concealment, suppression, [or] fraud.”[6] Investigating large GHG emitters under the Martin Act allows New York to confront the problem of climate change without the difficulties of pursuing a climate change nuisance claim under tort law.

New York has been leading the movement for an increase in the disclosures companies must make about their internal climate change research. Before its current investigation, New York settled with Xcel Energy and Dynegy, Inc. in 2008 and AES Corp. in 2009, after investigating their omissions of climate change risks in SEC filings.[7] As part of the settlement agreements, the energy companies agreed to disclose their potential financial exposure due to climate change, the incorporation of their internal climate change research and projections into their overall strategic plans, and the companies’ efforts to reduce, offset, or limit their GHG emissions.[8]

Following these settlements, the federal government also sought to provide investors with information about companies’ financial exposure to various aspects of climate change.[9] In 2010, the SEC began to require companies to make certain climate change related disclosures.[10] These disclosures include the impact of climate change regulations, climate change’s effect on business trends (e.g. decreased consumer demand for goods that produce significant GHG emissions), and climate change’s physical effects (e.g. rising sea levels threatening property).[11]

These new SEC regulations give New York and other states an additional basis to investigate GHG emitters; however, it is unclear whether this government-led form of litigation will become a standard form of litigation for regulating the conduct of GHG emitters. The evolution of cigarette litigation provides insight. Individuals and families led the initial two waves of litigation but were unsuccessful due to skepticism about the emerging scientific research and vigorous opposition from cigarette companies.[12] State governments, and not individuals, assumed the lead in the third wave of litigation and sued tobacco companies for the costs of treating people with tobacco-related illnesses.[13] This approach was successful, resulting in $246 billion in settlements and the disclosure of millions of documents about the health risks of cigarettes and the deceptive marketing of cigarettes.[14]

Like cigarette litigation, climate change litigation also faces political hurdles. Congress and the attorneys general of Alabama and Oklahoma opposed New York’s investigation into ExxonMobil.[15] Lamar Smith, Chairman of the House Space, Science, and Technology Committee, subpoenaed both Schneiderman and Massachusetts Attorney General Maura Healey, seeking information regarding their investigations of ExxonMobil.[16] Both Smith and the attorneys general criticized the investigation as an infringement on the First Amendment protections that allow ExxonMobil and other companies to disagree about the science of climate change.[17]

Other states seeking to investigate GHG emitters using an approach similar to New York’s may face additional restrictions. The Martin Act gives the Attorney General of New York powers that are not available to many other attorneys general.[18] The Martin Act differs from other fraud statutes because the attorney general does not need to prove intent to demonstrate liability.[19] It also allows multiple remedies. While injunctive relief was the original remedy, the Martin Act now allows the attorney general to bring criminal or civil charges.[20] Of the seventeen attorneys general supporting New York’s investigation into ExxonMobil, only Massachusetts Attorney General Maura Healy has similarly issued a subpoena. [21]

New York may broaden its investigation as it receives more information from ExxonMobil. Potential targets include organizations that both publicly question climate change research and receive funding from GHG emitters.[22] Discrepancies between the public statements of these organizations and the internal documents of the companies providing them funding could offer more proof for attorneys general seeking charges. Because many of the large GHG emitters have funded the same climate change denying organizations (such as the Global Climate Coalition), the investigation into these organizations could ensnare other GHG emitters in similar Martin Act investigations.[23]

New York’s investigation is still young, and there is little certainty about the outcome. If successful, the investigation could encourage other states to pursue similar investigations into ExxonMobil and other large GHG emitters. Climate change litigation may follow a similar path to cigarettes and other toxic torts, in which the increasing scientific evidence does not result in litigation success until the evidence becomes “overwhelming.”[24] Until climate change science becomes overwhelmingly accepted, litigation involving residual considerations, such as fraudulent misrepresentations to investors, may be the most effective legal option for affecting companies’ contributions to climate change.

[1] Clifford Krauss, Exxon Mobil Investigated for Possible Climate Change Lies by New York Attorney General, N.Y.Times, Nov. 5, 2015, at A1.

[2] Bob Simpson, New York Attorney General Subpoenas Exxon on Climate Research, Inside Climate News, https://insideclimatenews.org/news/05112015/new-york-attorney-general-eric-schneiderman-subpoena-Exxon-climate-documents (last visited Jan. 22, 2017).

[3] Richard Dahl, A Changing Climate of Litigation, 115 Environmental Health Perspective, no. 4, A204, A206 (2007).

[4] See Douglas A. Kysar, What Climate Change Can Do About Tort Law, 41 Environmental Law, no. 1, 10739, 10739 (2011).

[5] Justin Gillis and Clifford Krauss, Exxon Mobil Investigated for Possible Climate Change Lies by New York Attorney General, N.Y.Times, Nov. 5, 2015, at A1.

[6] N.Y. Business Law § 352 (McKinney 2016).

[7] Assurance of Discontinuance Pursuant to Executive Law §63(15), In the Matter of Xcel Energy Inc., (2008) (No. 08-012) [available at http://www.ag.ny.gov/sites/default/files/press-releases/archived/xcel_aod.pdf]; Assurance of Discontinuance Pursuant to Executive Law §63(15), In the matter of Dynegy, Inc. (2008) (No. 08-132) [available at http://www.ag.ny.gov/sites/default/files/press-releases/archived/dynegy_aod.pdf]; Assurance of Discontinuance Pursuant to Executive Law §63(15), In the Matter of AES Corp., (2008) (No. 09-159), 2009 [available at http://www.ag.ny.gov/sites/default/files/press-releases/archived/AES%20AOD%20Final%20fully%20executed.pdf].

[8] See Id.

[9] Commission Guidance Regarding Disclosure Related to Climate Change, 75 Fed. Reg. 6,297, (Feb. 2, 2010) (to be codified at 17 C.F.R. pt. 211, 231, 234).

[10] Id.

[11]Id.

[12] Lincoln Caplan, Will the “Tobacco Strategy” Work Against Big Oil?, News Desk, The New Yorker, Nov. 17, 2015, http://www.newyorker.com/news/news-desk/will-the-tobacco-strategy-work-against-big-oil.

[13] Id.

[14] Id.

[15] Laurel Brubaker Calkins, Oklahoma, Alabama Accuse NY of Stifling Climate Debate, Bloomberg, https://www.bloomberg.com/news/articles/2016-03-30/oklahoma-alabama-support-exxon-mobil-in-ny-led-climate-probe (last visited Jan. 22, 2017).

[16] David Hasemyer, State Attorneys General Subpoenaed by Rep. Lamar Smith for Exxon Fraud Probe, Inside Climate News, https://insideclimatenews.org/news/13072016/lamar-smith-exxon-climate-probes-subpoenas-state-ags-eric-schneiderman-maura-healey (last visited Jan. 22, 2017).

[17] This argument appears misguided as it does not address whether ExxonMobil committed actionable fraud or deception, as determined by the Martin Act, by not disclosing internal information about climate change.

[18] See Nicholas Thompson, The Sword of Spitzer, Legal Affairs, May–June 2004, https://www.legalaffairs.org/issues/May-June-2004/feature_thompson_mayjun04.msp.

[19] State v. Rachmani Corp., 525 N.E.2d 704, 708 (N.Y. 1988).

[20] Assured Guar. (UK) Ltd. v. J.P. Morgan Inv. Mgmt. Inc., 962 N.E.2d 765, 768 (N.Y. 2011).

[21] See David Hasemyer, Exxon Widens Climate Battle, May Depose 17 State AGs Over Investigations, Inside Climate News, https://insideclimatenews.org/news/09112016/exxon-climate-change-investigation-research-scandal-state-attorneys-general (last visited Jan. 22, 2017).

[22] Clifford Krauss, More Oil Companies Could Join Exxon Mobil as Focus of Climate Investigations, N.Y.Times, Nov. 7, 2015, at B3.

[23] See Id.

[24] Richard Dahl, A Changing Climate of Litigation, 115 Environmental Health Perspective, no. 4, A204, A204 (2007).

[ELRS] Enough Horsing Around

By Joseph Godio, Senior Editor–Georgetown Environmental Law Revie

I. INTRODUCTION

New York City is a city thought by many to be one of the most incredible, majestic, and beautiful cities in the world.  Its prominence and prosperity has grown just like the skyline, continuously reaching new heights.  Ironically, one of the most beautiful places in New York City, Central Park, is also home to one of the most ugly and archaic realities of not just the city, but of the country.  Walking through midtown Manhattan you will find iconic buildings, thousands of business professionals and tourists, and incredible culture.  The ugliness that you will also find is animal cruelty, on full display.

There is a large horse and carriage industry in New York City and carriage drivers are able to exploit horses for upwards of fifty dollars for a short twenty-minute ride.[1]  Under the Animal Welfare Act, horses do not receive any federal protection.[2]  As such, day in and day out, horses are treated in an inhumane manner by the carriage industry in New York City.[3]  The American Society for the Prevention of Cruelty to Animals (“ASPCA”), stated “[t]he life of a carriage horse on New York City streets is extremely difficult and life threatening . . . carriage horses were never meant to live and work in today’s urban setting.”[4]

Carriage horses are forced to work in a harsh environment, foreign to their natural habitat.  They work roughly nine hours per day, seven days a week, walking on hard pavement, pulling a carriage weighing hundreds of pounds, and inhaling unhealthy air from cars, buses, and taxis.[5]  Among the many effects of working in this unnatural environment are incidents where horses will react by taking off at full speed into the busy city streets.[6]  These horses are denied the their fundamental needs to live healthy lives, such as pasture time to “graze, stroll and socialize freely on grass.”[7]

II. BACKGROUND

The protection of horses was a central campaign policy used by Mayor Bill de Blasio in his 2013 Mayoral campaign.[8]  Mayor de Blasio gained support of animal rights activists because of his political stance on the issue.[9]  In January of 2016, an “agreement in concept” was announced by Mayor Bill de Blasio’s office, which would have significantly reduced the horse carriage industry.[10]  The agreement would have shrunk the horse and carriage industry from its current size of two hundred and twenty horses down to ninety-five by 2018.[11]  The agreement would have required the building of a new stable in Central Park, which would have been large enough to house seventy-five horses at the time.[12]

In order to effectuate and implement the agreement and plan, the City Counsel needed to approve the deal.  Unfortunately, in February of 2016, the New York City Counsel did not simply reject the vote, rather they canceled the vote altogether.[13]  The legislation failed as a result of the Teamster’s union pulling support for Mr. de Blasio.[14]  When the Teamsters pulled out, the legislation no longer had the sufficient number of votes for it to pass.  After the cancelation of the vote, a carriage driver and spokesman for the industry, Ian McKeever, stated to reporters, “It’s a great day for the horse and carriages.”[15]  However, for the horses, it meant the continuation of inhumane treatment, starvation and borderline torture.

Currently, most carriage horses are housed in Clinton Park Stables, which is a building located on 52nd Street near the Hudson River.[16]  Most of the stalls inside the Clinton Park Stables are eight feet by ten feet.[17]  However, according to customary and humane housing for horses, the ideal stall size for a horse of one thousand pounds or larger is twelve feet by twelve feet.[18]  For more “compact breeds,” such as ponies, the ideal size is ten feet by ten feet.[19]  This necessarily entails another level of inhumane treatment of these horses.  When they are not subject to the harsh life on the job, they retire to a stall that is too small for house their large frames.

In addition to ill-equipped housing, horses are treated inhumanly throughout the course of their lives.  Even as the horses grow tired, sick and old they are still required to work long excruciating hours every day.[20]  They often suffer from respiratory ailments as a result of breathing exhaust fumes on a daily basis, and typically develop extreme leg issues from traversing the city streets on hard, unforgiving surfaces all day.[21]

In many instances, these issues go untreated.  On September 14, 2006, a horse that had worked pulling carriages through New York City for nearly two decades, collapsed in Central Park.[22]  After the horse collapsed, the carriage driver began to whip the defeated horse repeatedly in attempts to get the horse to stand up and continue working.[23]  A crowd, terrified, gathered around urging the carriage driver to stop.[24]  Eventually, a police trailer took the horse away to her stable, and the horse died early the next morning.[25]  Similarly, in April of 2014, a carriage driver falsified records to force an “old, asthmatic” horse to continue working.[26]  The horse was involved in a horse-carriage accident in September 2013, and the carriage deriver was previously charged with working horses for more than twelve hours in a twenty-hour period.[27]

As another example, on February 23, 2015, a horse was found in his stall unable to stand up.[28]  Thereafter, it was discovered that the horse had suffered a fractured leg and was later euthanized.[29]  In another event, in December of 2013, a carriage driver was charged with cruelty to animals after he was discovered to be working a horse that was “visibly inured and struggling to pull the weight of the carriage.”[30]  A veterinarian later found that the horse had “thrush—an infection of the hoof that, if left untreated, can lead to permanent lameness and sometimes even require euthanasia.”[31]  These are just a few examples of the multiple pages of reports of inhumane treatment of these horses that occur far too often.

The horses are not the only living beings at risk due to the horse and carriage industry.  Horses are prey animals and, therefore, have a “highly developed flight drive that is easily triggered when they are startled by an unexpected or threatening stimulus.”[32]  In other words, the loud, busy and chaotic streets of New York City seems like the worst place for an extremely sensitive thousand pound animal to be.

There have been over thirty carriage horse accidents in the past few years alone.  Many of these instances involve horses being “spooked,” from which their natural reaction is to take off running.[33]  On June 9, 2014, something in the city spooked a horse and he bolted through the city streets.[34]  An innocent bystander attempted to stop the horse by grabbing its reins and was then dragged by the horse.[35]  On October 19, 2014 a witness videos shows a spooked horse bolting up 11th avenue in Manhattan, running full speed through busy a busy intersection.[36]  In another incident involving a bolting horse, occurring on October 28, 2011, a witness described the incident, “The horse took off at top speed and could not be stopped.  He could have easily trampled a pedestrian.”[37]  Had the horse trampled an innocent pedestrian, who would have been to blame?  In our society, it is more likely than not that the media would have depicted the horse as out of control, where it was merely acting instinctively, but in the wrong environment.

Therefore, having horses in an over populated New York City is incredibly dangerous to all that are in the area.  At any moment, a horse may be spooked and may take off, putting everyone in its path at risk of serious injuries, if not death.  The risk to public safety does not end there, however.  Spending about nine hours a day on the job, horses naturally defecate on the same streets they traverse.  There are two hundred and twenty horses in the horse and carriage industry in New York City.[38]  Making matters worse, “carriage drivers often do not clean up after the horses, leaving waste and rotting debris.”[39]  Therefore, city health officials have an additional burden to regularly monitor the horses for diseases to ensure that they are not carrying disease that could be transmitted to other animals, or to humans.[40]

III.      SOLUTION

Given the fact that previous efforts by Mayor de Blasio and animal rights activists have failed, a different approach is needed to effectuate a change in the exploitation of horses in New York City.  I will propose two approaches that will result in a cleaner environment in the streets of New York City, as well as eliminate the inhumane treatment of horses.  The first approach that I propose will result in the end of the horse and carriage industry through a phase-out process, and is likely to be met with the strongest opposition, as it is the more ambitious approach.  The second approach will still allow the operation of the industry, but will reduce the number of horses allowed, as well as increase the standards of horse keeping, ensuring that they are treated humanely.

A. FIRST APPROACH

Too drastic of a change, too quickly, will not only be logistically difficult to implement, but also will result in the displacement of many workers that rely on the industry for income.  Therefore, the first approach that I propose is a phase-out process by which carriage drivers will still be able to operate for a certain amount of time, but after which operation will be in violation of the law.  This process will be implemented through newly promulgated regulations and a strict permit process.

Under this approach, beginning January 1, 2018, no more permits will be issued to operate a horse a carriage.  After this date, those with current and up to date permits will be allowed to continue operation.  Those with said permits will be legally allowed to continue operation until July 1, 2019.  After this date, any operation of horse and carriage will be in direct conflict with the law and will be subject to minimum fines of $5,000, confiscation of the horse and any additional penalties imposed by law.  This approach is similar to the workings amortization periods with non-conforming uses in the context of zoning laws.

B. SECOND APPROACH

In the alternative, this more lenient approach is more of a compromise.  It will have the effect of minimizing the possibility that horses are treated inhumanely, will reduce the number of horses used in the city, but will still allow for the operation of the industry.  This approach, like the approach of Mayor de Blasio previously discussed, will reduce the number of horse in the New York City horse and carriage industry from two hundred and twenty to seventy-five.

In addition, these seventy-five horses will be placed on a rotation system and will, by law, only be allowed to serve a maximum of six months of service every three years.  This will help to ensure that the polluted air, hard concrete, and busy Manhattan streets will have as little impact on the longevity of the life of the horse as possible.  Furthermore, this rotation will ensure that large, full-grown horses are not subject to living in stalls that are too small for the majority of their lives.  Finally, this compromise will require that carriage operators attain a higher level of horse training, will be subject to city inspections of housing arrangements for the horses, and will be subject to high fines and relinquishment of license after only one violation.

IV. CONCLUSION

In recent years the debate over the horse and carriage industry in New York City has grown more and more contentious.  Meanwhile, these horses are treated inhumanely, subject to harsh working conditions, and, the public is put at risk.  Through either of the approaches I have proposed, we can begin to protect horses and make the streets of New York City a more sanitary environment.  Implementation will be met with strong opposition, but that cannot deter action.  Mistreated horses cannot speak for themselves and tell us the pain that they go through, but the record of inhumane treatment speaks volumes.  If we stand by and allow this inhumane treatment continue, that too, speaks volumes about us as a society.

[1] Inside A Stable Where Central Park’s Carriage Horses Live, Business Insider, http://www.businessinsider.com/the-stables-where-central-park-carriage-horses-live-2012-4?op=0#clinton-park-stables-is-located-on-52nd-street-near-the-hudson-river-1 (last visited May 12, 2016).

[2] The Cruelty of Horse-Drawn Carriages, PETA http://www.peta.org/issues/animals-in-entertainment/horse-drawn-carriages/ (last visited May 13, 2016).

[3] Carriage Horses, The Humane Society of the United States, http://www.humanesociety.org/issues/carriage_horses/ (last visited May 13, 2016).

[4] Cruel and Inhumane Horse Drawn Carriages, NYCLASS, http://www.nyclass.org/horse_drawn_carriages (last visited May 11, 2016).

[5] Id.

[6] Id.

[7] Id.

[8] Michael M. Grynbaum, New York City Announces Deal on Carriage Horses in Central Park, NY Times, http://www.nytimes.com/2016/01/18/nyregion/new-york-city-announces-deal-on-carriage-horses-in-central-park.html (last visited May 14, 2016).

[9] Id.

[10] Id.

[11] Id.

[12] Id.

[13] J. David Goodman and Michael M. Grynbaum, Mayor de Blasio’s Carriage-Horse Plan Falters in City Counsel, NY Times, http://www.nytimes.com/2016/02/05/nyregion/horse-carriage-deal-new-york.html (last visited, May 15, 2016).

[14] Id.

[15] Id.

[16] Supra Inside A Stable Where Central Park’s Carriage Horses Live note 1.

[17] Id.

[18] Karen Briggs, Stall Design, The Horse, http://www.thehorse.com/articles/10366/stall-design (last visited, May 18, 2016).

[19] Id.

[20] Supra The Cruelty of Horse-Drawn Carriages note 2.

[21] Id.

[22] Incidents Involving Horse-Drawn Carriages, PETA, http://www.mediapeta.com/peta/PDF/HDCIncidentsFactsheet_JO_Jan2016.pdf (last visited May 18, 2016).

[23] Id.

[24] Id.

[25] Id.

[26] Id.

[27] Id.

[28] Id.

[29] Id.

[30] Id.

[31] Id.

[32] Supra Carriage Horses note 3.

[33] Id.

[34] Supra Incidents Involving Horse-Drawn Carriages note 22.

[35] Id.

[36] Id.

[37] Id.

[38] Supra New York City Announces Deal on Carriage Horses in Central Park note 8.

[39] Supra Cruel and Inhumane Horse Drawn Carriages note 4.

[40] Id.

Our Money is Safe, but the Planet Is Not: How the Carbon Bubble Will Cause Havoc for the Environment, but Not the Stock Market

By Breanna Hayes, Managing Editor, Vermont Journal of Environmental Law

I. Introduction

Human use of fossil fuels dates back to prehistoric times.[1]  Before the Industrial Revolution, humans mostly relied on wood, wind, and water as energy sources.[2]  But as the Industrial Revolution progressed, humans developed a dependence on fossil fuels.[3]  In addition, the advancements of the Industrial Revolution allowed for the human population to grow rapidly.[4]  Combined, these facts indicate that, not only were humans developing a greater dependence on fossil fuels, but also there were more humans on earth than ever before.  With a greater number of humans, fossil fuel dependence was even more severe.

While humans blindly relied on fossil fuels for centuries, by the 1940s scientists began predicting the impact that fossil fuels would have on the environment.[5]  In 1949, M. King Hubbart made a prediction known as “Hubbart’s Peak.”[6]  According to this prediction, fossil fuels would peak in the 1970s.[7]  Hubbart further predicted that despite the peak in fossil fuels, humans would still have a rising demand for energy.[8]  According to Hubbart’s predictions, the energy sector would need to replace fossil fuels with renewable energy sources to meet the demand.[9]  As predicted, oil peaked in 1971, with other fossil fuels soon to follow.[10]  Yet, by the time the world began to acknowledge Hubbart’s peak, fossil fuels had “become so firmly interwoven into human progress and economy, that changing this energy system would drastically alter the very way we have lived our lives.”[11]  While the transition will be difficult, many nations around the world have begun to move away from fossil fuels.[12]  A major victory in the movement from fossil fuels was the Paris Agreement, which has been ratified by more than 100 countries.[13]  In the Paris Agreement, countries committed to, “holding the increase in the global average temperature to well below 2°C above pre-industrial levels and pursuing efforts to limit the temperature increase to 1.5°C above pre-industrial levels, recognizing that this would significantly reduce the risks and impacts of climate change”[14]

While world governments are progressing towards greener energy to combat climate change, a problem arises in the energy industry.  Publicly traded energy companies are a considerable market force,[15] despite demand for fossil fuels continuing to decrease and the demand for renewable energy sources rising.[16]  In 2015, even though fossil fuel prices were at a multi-year low, “over half of global power capacity additions in 2015 came from wind, solar, hydro and nuclear.”[17]  Additionally, the Paris Agreement, formulated in December 2015, creates the expectation that policy-makers will advance progressive ideas to help countries meet the agreed-upon two degree Celsius cap.[18]  An obvious way to mitigate this change is for energy companies to start diversifying portfolios to include renewable sources.[19]  However, timing is key for both the market and the climate.  Concerning the market, “If [companies] move too quickly, money could be left on the table from their fossil fuels business. But too slowly, and they could miss their window of opportunity.”  On the other hand, the world has a very restricted carbon budget if it is going to honor the two degree Celsius cap embodied in the Paris Agreement.[20]

This article focuses on the window of time that companies have to shift from fossil fuels to renewable energy. The article provides a quick overview of public companies and the use of stock.  Then, the article discusses the “Carbon Bubble” and how it compares and contrasts to both the dotcom and housing market bubbles. Finally, the article discusses the environmental impact of the energy industry’s financial choices.

II. Background: Brief Overview of Public Companies

Public companies differ from private companies in two ways.  First, public companies trade stock on the public stock exchange and second, public companies make regular, legally required disclosures to the Securities Exchange Commission (SEC).[21]  By selling stock on the public stock exchange, any person can purchase stock in a company.  In addition to individual citizens, institutional investors—such as pension funds, insurance companies, and mutual funds—may purchase public stock.[22]  The SEC requires publicly traded companies to make regular disclosures to protect both individual and institutional investors.[23]  According to SEC, public companies must “disclose meaningful financial and other information” so there can be a “common pool of knowledge for all investors to use to judge for themselves whether to buy, sell, or hold a particular security.”[24]

When a company decides to sell stock to the public, multiple factors determine the price for the stock and the price can fluctuate constantly.  Regardless of what a person pays for a share of stock, they are entitled to the same thing—a share of the company’s equity.  The company’s equity can be determined by a simplified formula.  All companies have assets and liabilities.  Assets are the fixed infrastructure and inventory the company can liquidate, and liabilities are the debts a company owes.  Because a company’s equity is subordinate to its debts, equity can be determined by subtracting the liabilities from the assets.  The equity is then divided by the amount of stock the company issued. For example, if a company owns $50 million worth of assets and has $20 million in liabilities, the company’s equity would be $30 million.  If the company issued 2 million shares, each share would be worth $15 of the equity.

As mentioned, a stock’s price is not locked in to its current value of equity.  Rather, many factors, such as investor enthusiasm may alter the price. [25]   If investors believe that the company will grow, stock may sell higher than it is worth in equity.  Yet, a problem arises when stock price increases rapidly but the assets of the company do not catch up.  When assets’ prices appreciate beyond their value, a market bubble emerges.[26]   For example, “Investors may bid up the price of an asset in the belief that its price will continue to rise and when the ever-higher price results in an ever-smaller number of buyers, the price eventually declines rapidly.”[27]  Inevitably, the bubble bursts and the price drops.[28]

Some are concerned that energy companies are creating a bubble.[29]  The concern stems from how energy companies value assets.  Energy companies consider reserves of fossil fuels as assets.[30]  But, in light of current political and social action regarding climate change, many believe that energy companies will not be able to utilize all fossil fuel reserves that are now considered assets of the companies.[31]

III. The Carbon Bubble

Prior to the Paris agreement, nearly 200 countries signed the Cancun Agreement, which embodied an international commitment to keep the global temperature from rising more than two degrees Celsius from pre-industrial levels.[32]  The Cancun Agreement additionally acknowledges the possible need to further restrict global warming to 1.5 degrees Celsius.[33]  In November 2011, Carbon Tracker Initiative (CTI), a nonprofit think tank, used the Cancun Agreement as a reference point and pioneered the concept of “the Carbon Bubble.”[34]   Relying on the assertion that the world would limit carbon usage within the bounds of the Cancun Agreement, CTI calculated that the world’s energy budget was about one-third of what energy companies had in reserves.[35]  The other two-thirds would be “stranded assets.”  CTI defined stranded assets as:

Fossil fuel energy and generation resources which, at some time prior to the end of their economic life (as assumed at the investment decision point), are no longer able to earn an economic return (i.e. meet the company’s internal rate of return), as a result of changes in the market and regulatory environment associated with the transition to a low-carbon economy.[36]

CTI further calculated, that by 2011, the world had already used a third of its usable energy budget.[37]

CTI also asserted that the carbon bubble could pose financial risks to investors.  The report states that:

The current system of market oversight and regulatory supervision is not adequate to send the required signals to shift capital towards a low carbon economy at the speed or scale required. The current short-term approach of the investment industry leaves asset owners exposed to a portfolio of assets whose value is likely to be seriously impaired.[38]

CTI further criticized the energy industry for continuing to use invested money to explore for more fossil fuel reserves, despite the fact that the reserves already located would exceed the carbon budget.

IV. The Other Bubbles: Housing and Dotcom

To understand the possible effects of a carbon bubble, it is useful to look at the two most recent economic bubbles: the dotcom and housing bubbles.  The dotcom bubble occurred from 1995-2001 and revolved around the growing tech industry catalyzed by the advent of the internet.[39]  The housing bubble began to grow in 2000 and burst in 2006 after banks and other originators approved more and more subprime and nonprime mortgages.[40]  The distinguishing factor between the housing bubble and the dotcom bubble is the was the impact on the economy.  The housing bubble had a heavy impact on the economy, while the dot com bubble did not.[41]

In the 1990s, the internet became increasingly integrated into everyday life.  In response to growing dependence on the internet, many online retail companies began springing up.[42] Investors enthusiastically invested in companies that were taking advantage of the internet frontier.[43] Investor enthusiasm was so high, some companies saw stock prices double within one day of an IPO.[44]  The flow of investments fueled the “dotcom bubble.”[45]

The intense investor enthusiasm made stock prices rise[46] however, some companies were losing as much as $10 million to $30 million per quarter.[47]  Due to these unsustainable losses, many internet-based companies folded.[48]  Between March and April of 2000, roughly a trillion dollars worth of investments were lost.[49]

Just as the dotcom bubble popped, the housing bubble began to grow.[50]  In the early 2000s, banks and other originators approved more subprime and nonprime loans.[51]  These mortgages were high risk because approved borrowers often had low credit scores or were charged rates and fees higher than they were unqualified for.[52] Some mortgage loans had risks layered, including those where potential repayment issues were deferred by permitting “adjustable” payments.[53] Such structures allowed borrowers to select monthly payments that were lower than the fully amortized rate.[54] This meant that borrowers could make no principal payments and just send in a fraction of the interest accruing each month, for the first few years. With this type of adjustable rate mortgage, the principal balance would grow.[55] The rates would reset in a few years to the fully amortized rates, and then monthly payments would spike to a level that many borrowers could not afford. After banks and other originators approved subprime mortgages, banks would pool these mortgages and use them to back securities that they would then sell to investors, including other banks.[56]  Certain slices of these mortgage-backed securities were sometimes repackaged into new pools that also issued securities.[57] This scheme worked to help supply needed credit to the housing market while borrowers could afford their payments. However, when payments spiked and many borrowers defaulted, the mortgage-backed securities began to decline in value. Some banking firms that held mortgage-linked securities in their portfolios began to collapse.[58]

The burst of both the dotcom and housing bubbles caused a loss of roughly $6 trillion in household wealth.[59]  While both bubbles caused similar losses, the housing bubble burst had a much greater effect on the rest of the economy than the dotcom bubble did.[60]  The housing bubble had a stronger effect on the economy because of the population impacted.[61]  When the dotcom bubble burst, the majority of investors were wealthy and less indebted.[62]  Even though those investors lost money, they still had disposable income.  In contrast, the people who felt the shock of the housing bubble were mostly low-income homeowners.[63]  The bubble was fueled by subprime and nonprime loans that many people could not afford to repay.  As a result, most of these people’s income went into trying to pay their mortgages and save their homes.[64]  Unlike the wealthy, albeit unlucky, investors who lost wealth in the dotcom bubble, the homeowners impacted by the housing bubble could not afford to continue retail spending.[65]  Consequently, the economy felt a much greater shock from the housing bubble burst than the previous dotcom bubble burst.

V. The Carbon Bubble Mirrors the Dotcom Bubble on a Financial Scale

It is unlikely that the carbon bubble will have the same detrimental effect on the economy that the housing bubble had.  This is because the carbon bubble differs from the housing bubble in two significant ways.  First, the carbon bubble is not fueled by debt, subprime or otherwise.  Second, the carbon bubble is more similar to the dotcom bubble because the people who will most likely feel the shock are wealthy investors who will be able to absorb the loss without halting retail spending.

In the housing crisis, the assets that were overvalued were the mortgage-backed securities.  Borrowers could not repay high-risk loans, so there was no capital to fund the mortgage-back securities.  On the other hand, there are still high consumption rates of fossil fuels.[66]  Whereas the housing bubble was built on unsustainable loans, the carbon bubble is forming around anticipated legislation.  The carbon bubble is not forming from industry’s inability to provide reserves, rather anticipatory need for regulation.

Another factor that fueled the housing bubble was government intervention.  The government promoted home ownership, leading more people to borrow money.[67]  In contrast, governments are not promoting fossil fuel usage. The recent election of Donald Trump to the Presidency may impact how “stranded” the energy company assets really are.  During the Obama Administration, the United States made strides toward greener energy, which included signing the Paris Agreement.[68]  The President-Elect Donald Trump has pledged to withdraw from the Paris Agreement and has supported the use of fossil fuels.[69]  Therefore, the United States may not provide restrictive legislation that would burst the carbon bubble.  Nevertheless, while a pro-fossil fuel administration in the United States may delay the shock, it will still come.  The United States is only one of the countries that ratified the Paris Agreement.  While fossil fuels may have a market in the United States under a Trump Administration, the global market will still decrease.

The carbon bubble will most likely affect the economy similarly to the dotcom bubble.  If the shares plummet, those affected will be mostly wealthy or institutional investors. For example, according to the Forbes Global 2000 list of the World’s Biggest Public Companies, ExxonMobil ranked as number 9 and Chevron ranked number 28.[70]  The companies also ranked first and third respectively for public companies in oil and gas operations.[71]  Of the 4.15 billion outstanding ExxonMobil shares, company insiders own over 500 million and institutions own over 2 billion.[72]  Similarly, of the 1.89 billion outstanding Chevron stock, corporate insiders own approximately 75 million and institutional investors own more than 1.18 billion shares.[73]  While personal wealth would be lost if energy stock plummeted, it would not have the same detrimental effect on retail spending as the housing bubble did.

Furthermore, stockholders are holding the companies accountable for their practices.  Recently, ExxonMobil shareholders agreed to the “prudent use of investor capital in light of the climate change related risks of stranded carbon assets.”[74]  Also, some shareholders are bringing a securities class action alleging that ExxonMobil materially misrepresented its assets[75] (although currently, the class is not yet certified[76]). Shareholders can use these avenues to assist legislators in holding these companies to the carbon budget.

VI. The Environment Will Still Suffer

While the carbon bubble is unlikely to wreak havoc on the economy, the threat to the environment is still very real. In fact, the lack of effect on the economy may increase the threat to the environment.  If the world is committed to keeping global temperatures below two degrees Celsius, as of 2013, 60-80 percent of fossil fuel reserves must stay under the ground.[77]  The use of fossil fuels and the transition to renewables may not lead the world to a financial crisis, but if the transition is not quick, the world may face an environmental crisis.  If energy companies are too slow in transitioning from fossil fuel to renewable sources, they will overspend on the carbon budget.  If that happens, the likelihood of global temperatures exceeding the agreed on cap of two degrees Celsius increases. [78]  There are many effects that rising temperatures could have on the environment, including shrinking glaciers, loss of sea ice, accelerated sea level rise, longer and more intense heat waves, shifts in plant and animal ranges, trees flowering sooner, etc.[79] Many of these effects are already documented.[80]

If these changes continue, communities will feel the impact.  The effects could be health-based, social, or cultural due to a change in the availability of natural resources.[81] According to the Environmental Protection Agency,

Climate change may especially impact people who live in areas that are vulnerable to coastal storms, drought, and sea level rise or people who live in poverty, older adults, and immigrant communities. Similarly, some types of professions and industries may face considerable challenges from climate change. Professions that are closely linked to weather and climate, such as outdoor tourism, commerce, and agriculture, will likely be especially affected.[82]

While energy companies are inflating the carbon bubble by burning carbon and contributing to these environmental effects, it is unlikely that courts will hold companies liable.[83]  This is because, without a federal cause of action, it is challenging to prove causation.[84]  Since climate change is a global problem, it is challenging to prove that individual companies caused certain environmental issues.

VII. Conclusion

There is reason to be concerned about the carbon bubble, but that reason is not the stock market.  Most likely, the carbon bubble will not have the effect on the economy that the housing market did.  This is because, on the financial side, either the companies will divest from fossil fuels or the people who will be affected by the carbon bubble burst will be wealthy enough to absorb the shock.

On the other hand, if companies continue to burn carbon and inflate the carbon bubble, people will feel the environmental effects on a societal level.  Natural resources may become scarcer, cultural ways of life may fade due to lack of resources and communities may be destroyed due to harsh storms.  The impact on communities will not come from a stock market crash;  it will come from environmental catastrophes.

[1] A Brief History of Coal Use, U.S. Dep’t of Energy, http://www.fe.doe.gov/education/energylessons/coal/coal_history.html (last visited Nov. 16, 2016).

[2] Eric McLamb, The Ecological Impact of the Industrial Revolution, Ecology Glob. Network, (Sept. 18, 2011) http://www.ecology.com/2011/09/18/ecological-impact-industrial-revolution/.

[3] Id.

[4] Id.

[5] Id.

[6] Id.

[7] Id.

[8] Id.

[9] Id.

[10] Id.

[11] Id.

[12] Lorraine Chow, 150 Days and Counting, Costa Rica Gets All its Electricity From Renewables, EcoWatch, (Sept. 7, 2016) http://www.ecowatch.com/costa-rica-renewable-energy-1998953868.html; Justin Gillis, A Tricky Transition from Fossil Fuel: Denmark Aims for 100 Percent Renewable Energy, NYTimes, (Nov. 10, 2014) http://www.nytimes.com/2014/11/11/science/earth/denmark-aims-for-100-percent-renewable-energy.html (discussing Denmark’s commitment to wind energy);  Justin Gillis, Sun and Wind Alter Global Landscape, Leaving Utilities Behind, NYTimes, (Sept. 13, 2014) http://www.nytimes.com/2014/09/14/ science/earth/sun-and-wind-alter-german-landscape-leaving-utilities-behind.html (discussing Germany’s commitment to renewable energy, the largest industrial power to do so.)

[13] Paris Agreement- Status of Ratification, UNFCCC, http://unfccc.int/paris_agreement/items/9444.php (last visited Nov. 21, 2016).

[14] The Paris Agreement, art. 2(1)(a), Nov. 4, 2016.

[15] See The World’s Biggest Public Companies, Forbes, http://www.forbes.com/global2000/list/#tab:overall (last visited Nov. 21, 2016) (listing ExxonMobil, PetroChina, Chevron, Total, Sinopec, and Royal Dutch Shell in the top 50 public companies).

[16] Tara Schmidt, 2016: Time for Energy To Reinvent Itself?, Forbes, (Dec. 15, 2015) http://www.forbes.com/sites/woodmackenzie/2015/12/15/2016-time-for-energy-to-reinvent-itself/#1a2eaaef7386.

[17] Id.

[18] Id.

[19] Id.

[20] Carbon Bubble, Carbon Tracker Initiative, http://www.carbontracker.org/report/carbon-bubble/ (last visited Nov. 11, 2016).

[21] Public Companies, SEC https://www.investor.gov/introduction-investing/basics/how-market-works/public-companies (last visited Nov. 21, 2016).

[22] What We Do, SEC http://www.sec.gov/about/whatwedo.shtml (last visited Nov. 21, 2016).

[23] Id.

[24] Id.

[25] Id.

[26] Jonathon D. Glater, Student Debt and the Siren Song of Systemic Risk, 53 Harvard J. on Legislation 99, 121 (2016).

[27] Id.

[28] Id.

[29] Duncan Clark, Why Can’t We Give Up Fossil Fuels, The Guardian, (Apr. 17, 2013 12:49PM) https://www.theguardian.com/environment/2013/apr/17/why-cant-we-give-up-fossil-fuels.

[30] Id.

[31] Id.

[32] Juliet Eilperin & William Booth, Cancun Agreements put 193 nations on track to deal with climate change, The Washington Post(Dec. 11, 20100 http://www.washingtonpost.com/wp-dyn/content/article/2010/12/11/AR2010121102308.html.

[33] The Cancun Agreement, art. 139(a)(iv).

[34] Carbon Bubble, Carbon Tracker Initiative, http://www.carbontracker.org/report/carbon-bubble/ (last visited Nov. 11, 2016).

[35] Id.

[36] Key Terms, Carbon Tracker Initiative, http://www.carbontracker.org/resources/ (last visited Nov. 21, 2016).

[37] Carbon Bubble, supra, note 34.

[38] Unburnable Carbon, Carbon Tracker Initiative, 18 (2011).

[39] Ben Geier, What Did We Learn From the Dotcom Stock Bubble of 2000?, Time, (Mar. 12, 2015). http://time.com/3741681/2000-dotcom-stock-bust/.

[40] Jennifer Taub, Other’s People Houses,  140-145181-183

[41] Steven Gjerstad & Vernon L. Smith, From Bubble to Depression?, The Wall Street Journal, (Apr. 9, 2009) http://www.wsj.com/articles/SB123897612802791281; Amir Sufi & Atif Mian, Why the Housing Bubble Tanked the Economy and the Tech Bubble Didn’t, FiveThirtyEight, (May 12, 2014) http://fivethirtyeight.com/features/why-the-housing-bubble-tanked-the-economy-and-the-tech-bubble-didnt/.

[42] Geier, supra note 38.

[43] Id.

[44] Id.

[45] Id.

[46] Id.

[47] Id.

[48] Id

[49] Id.

[50] Taub, supra note 39, at 166.

[51] Id.

[52] Id.

[53] Id.

[54] Consumer Handbook on Adjustable Rate Mortgages, The Federal Reserve Board, 4, http://files.consumerfinance.gov/f/201204_CFPB_ARMs-brochure.pdf

[55] Id.

[56] Taub, supra note 39, at 156.

[57] Id. at 157.

[58] Id. at 185.

[59] Amir Sufi & Atif Mian, supra note 40.

[60] Id.

[61] Id.

[62] Id.

[63] Id.

[64] Id.

[65] Id.

[66]Fossil Fuels Still Dominate U.S. Energy Consumption Despite Recent Market Share Decline, U.S. Energy Information Administration, https://www.eia.gov/todayinenergy/detail.php?id=26912 (last visited Dec. 10, 2016).

[67] Glater, supra note 26, at 125.

[68] The United States Formally Enters the Paris Agreement, The White House, (Sept. 3, 2016) https://www.whitehouse.gov/blog/2016/09/03/president-obama-united-states-formally-enters-paris-agreement

[69] Here’s How Soon Donald Trump Could Pull Out of a Historic Climate Change Deal, Fortune, (Nov. 10, 2016) http://fortune.com/2016/11/10/donald-trump-climate-change-paris-agreement/; Ashley Parker & Coral Davenport, Donald Trump’s Energy Plan, More Fossil Fuels and Less Rules, NYTimes, (May 26, 2016) http://www.nytimes.com/2016/05/27/us/politics/donald-trump-global-warming-energy-policy.html.

[70] The World’s Biggest Public Companies, Forbes, http://www.forbes.com/global2000/#/industry:Oil%20&%20Gas%20Operations (last visited Nov. 27, 2016).

[71] PetroChina ranked second, however information on stock distribution was unavailable. Id.

[72] ExxonMobil Corporation, Yahoo Finance, https://finance.yahoo.com/quote/XOM/financials?p=XOM (last visited Nov. 27, 2016).

[73] Chevron Corporation, Yahoo Finance, https://finance.yahoo.com/quote/CVX/financials?p=CVX (last visited Nov. 27, 2016).

[74] XOM Return Capital to Shareholders to Avoid Stranded Assets in 2016, Ceres, https://www.ceres.org/investor-network/resolutions/xom-return-capital-to-shareholders-to-avoid-stranded-assets-2016 (last visited Nov. 27, 2016).  

[75] ExxonMobil Corporation, Rosen L. Firm, http://www.rosenlegal.com/cases-988.html (last visited Nov. 27, 2016).

[76] Id.

[77] Unburnable Carbon 2013: Wasted Capital and Stranded Assets, Carbon Tracker Initiative, (Apr. 2013) http://www.carbontracker.org/report/unburnable-carbon-wasted-capital-and-stranded-assets/.

[78] Id.

[79] The Consequences of Climate Change, NASA, http://climate.nasa.gov/effects/ (last visited Nov. 27, 2016).

[80] Id.

[81] Climate Impacts on Society, Envtl. Prot. Agency, https://www.epa.gov/climate-impacts/climate-impacts-society#equity (last visited Nov. 27, 2016).

[82] Id.

[83] AEP v. Connecticut, 564 U.S. 410 (2011)

[84] Id.

The Legislative History of the National Park Service’s Conservation and Nonimpairment Mandate

By Caitlin Brown, UC Berkeley School of Law, Class of 2017

Introduction

The National Park Service manages over 84 million acres of land divided between 413 different sites, and in 2015 alone, served 307.2 million visitors.[1] Their management goals are based on the 1916 National Park Service Organic Act (“the Act”). Section 1 of the Act defines the Park Service’s purpose as “to conserve the scenery and the natural and historic objects and the wild life therein and to provide for the enjoyment of the same in such manner and by such means as will leave them unimpaired for the enjoyment of future generations.”[2] How are conservation and impairment from section 1 of the Act defined in the legislative history? How did these concepts originally enter the legislation, and what did Congress think the implications of the standards were? Professor Eric Biber of Berkeley Law posed these questions to me to assist with his research for an article he wrote with Elisabeth Long Esposito, The National Park Service Organic Act and Climate Change.[3] Given that 2016 is the centennial of the National Park Service’s founding by the Organic Act, a deep dive into the legislative history of the National Park Service seemed timely.

In the legislative history, Congress never explicitly defined conservation or impairment. However, the concerns of the Congressmen and the experts who influenced the legislation allow inferences about what these provisions mean. Generally, one can interpret these terms by reference to the differences between National Parks and National Forests. In comparison to National Forests, managed for consumptive use of their resources, National Parks were to be preserved for their scenic value and protected for the benefit of future generations.

As the Park Service manages millions of acres of land vulnerable to the impacts of climate change, these questions are important.[4] The Organic Act and subsequent amendments could offer leeway to Park Service managers as they try to respond to those impacts. Because neither the Organic Act nor its amendments set out specific management directives, I searched the legislative history for any evidence from the debates, conferences, and hearings that was useful in interpreting the extremely broad language of section 1. Ultimately, nothing in these documents prohibits active management by the Park Service to conserve and protect against the effects of climate change.

I. Documents Researched

My research encompassed the legislative history of the National Park Service including hearings beginning in 1912 on what would become the 1916 Organic Act, the 1970 General Authorities Act, and the Redwood Amendments in 1978.  I read the related hearings, reports, and floor debates to better understand the usage and meaning of conservation and impairment as terms in the Act.

II. Discussion and Analysis

  1. 1912-1914: Laying the Groundwork for the Organic Act

The Secretary of the Interior and the American Civic Association[5] first suggested the mandate to prevent detrimental uses of the parks[6] in a proposed bill in 1912.[7] The hope was that this section would define “clearly and definitely the purposes for which the public parks [should] be maintained and . . . to prohibit any uses which would be detrimental to these purposes.”[8] The language of the proposed bill read:

That the parks, monuments, and reservations herein provided for shall not at any time be used in any way contrary to the purpose thereof as agencies promoting public recreation and public health through the use and enjoyment by the people of such parks, monuments, and reservations, and of the natural scenery and objects of interest therein, or in any way detrimental to the value thereof for such purpose.[9]

This ‘purpose’ language, however, did not quite accomplish Congress’s goal of clarity because it did not specify any detrimental uses or create a hierarchy when any of the enumerated purposes conflicted.

However, the legislative history in 1912 explained how the parks, monuments and reservations differed from other public lands, which in turn provides a glimpse into the purpose of the parks.  For example, the Secretary of Agriculture, James Wilson, emphasized the difference between national forests and national parks, namely that national forests “should be managed with a view to their fullest possible development and use, in order that the industries dependent upon them may secure necessary supplies.”[10] Conversely, “the national parks should be managed with a view to preserving their scenic interest and furnishing a recreation ground for the people, only allowing such use of their resources as may be necessary to improve and protect them.”[11] He recommended against including “large bodies of heavy timber” because “there would ultimately be a pressure on the park bureau to cut it on a commercial basis.”[12] However, if parks had to be in “timber country,” they should still be managed with “reference to their scenic beauty.”[13] This recommendation makes it clear that the scenic beauty of parks was to be put ahead of commercial use.  It was for this reason that Secretary Wilson also recommended amending section 4 of the bill which, at the time, allowed for the Secretary of Interior to:

[S]ell or dispose of dead or insect-infested timber and of such matured timber as in his judgment may be disposed of without detriment to the scenic or other purposes for which such parks, monuments, or reservations are established, grant leases and permits for the use of the lands the development of the resources, or privileges for the accommodation of visitors in the various parks, monuments, and reservations herein provided for, for periods not exceeding twenty years.[14]

His amendment struck the language above and only allowed the Secretary of Interior to:

[G]rant leases and permits for such use of the land and such development of its resources as may be necessary for the improvement and protection of such parks, monuments, and reservations, or for privileges for the accommodation of visitors to the various parks, monuments, and reservations herein provided for, for periods not exceeding twenty years.[15]

He narrowed the Secretary of Interior’s authority because he believed the original language authorized “a fuller use than should be allowed.”[16] Under the original bill the Secretary could have authorized harvest of mature timber and only had to explain that in his judgment it was not detrimental to the park. Wilson’s amendment flipped the requirement to only allow timber harvest (or other uses of resources) when it was necessary to improve and protect the parks.

Similar inferences can be drawn from the testimony of the Chief Forester of the Department of Agriculture in 1914 when discussing the Grand Canyon. At that time the Grand Canyon was a National Forest. However, it was recognized that it should be a National Park instead. The Chief Forester noted that the Department of Agriculture was working “with the Interior Department in getting methods and outlining boundary lines,” preparing for it to become a National Park.[17] The Forest Service was already “administering it with reference to its park features” so that when it became a park it would “go right along without any change of policy” and there would not be “any shacks along the rim.”[18] This discussion suggests that the conservation and nonimpairment purposes meant allowing parks to retain their wild characteristics—their “park features”—and remain free of scenery marring structures. In addition to these references in the 1912 and 1914 hearings, the general tone indicates it was obvious that the parks were special and different and needed particular management.[19] Neither these bills nor their legislative history defined the difference between these management practices in any detail.

The driving force, instead, behind these bills leading up to the passage of the Organic Act was not to clearly define conservation and nonimpairment to guide future Park Service leaders, but rather to “to bring the administration of the various parks and monuments under one head, thus substituting uniformity of law and administration for the present disorganized condition.”[20] It is therefore unsurprising that much of this early legislative history concerns the administrative organization and funding of the park system, rather than the meaning of particular terms.[21]

  1. 1916: The Organic Act

In 1916, unified administration of the Park Service and the challenge of making that happen were still the driving force behind the bill.[22]  However, this was also when Congress incorporated language regarding the fundamental purpose of the Park Service:

[It s]hall be determined the fundamental object of the aforesaid parks, monuments, and reservations is to conserve the scenery and the natural and historical objects therein and to provide for the enjoyment of said scenery and objects by the public in any manner and by any means that will leave them unimpaired for the enjoyment of future generations.[23]

This language, framed by Frederick Law Olmstead, was included to “explain what the parks were for.”[24] In testimony, J. Horace McFarland, President of the American Civic Association, discussed what this language meant to him. However, he never specifically defined conservation or impairment; instead his statements allow inferences to be drawn about what these terms meant to him.  He considered establishing the Park Service to be of utmost importance because the purpose of the parks was “unrelated to any other purpose carried out by any other bureau or department in the whole Government scope or service.”[25] The parks were the “Nation’s pleasure grounds and the Nation’s restoring places” while the forests were “the nation’s wood lots.”[26] The national parks needed to be “dignified by a separate handling” in order to be “freer from the assaults of selfishness.”[27] And the “two ideas of the parks” (conservation and enjoyment by the public) should never be weakened, only strengthened.[28] Once again, in distinguishing between the National Parks and National Forests, it is clear that parks were different and special.  It was of the utmost importance to “preserve for [the people] wide spaces of fine scenery for their delight” and “perpetual enjoyment.”[29]

Glimpses into what the purpose of the Park Service meant to Congress can be found in the House Public Lands Committee’s discussion of conservation of wildlife and the protections of national monuments and reservations.  Because the parks were free of “public lumbering” and “protected by law from hunting of any kind,” they alone “had the seclusion and other conditions essential for the protection and propagation of wild animal life” and would become “great public nature schools.”[30] Further, the national monuments and reserves were to be “administered in connection with the national parks, which they strongly resemble.”[31] The “protection and preservation” was “of great interest and importance, because a great variety of objects, historic, prehistoric, and scientific in character, are thus preserved for public use intact, instead of being exploited by private individuals for gain and their treasures scattered.”[32] These discussions recognize conservation and nonimpairment of resources for future generations as the purpose of the Act, despite the lack of express definitions.

In later versions of the bill, Congress slightly changed the fundamental purpose language to “[to] conserve the scenery and the natural and historic objects and the wild life therein and to provide for the enjoyment of the same in such manner and by such means, as will leave them unimpaired for the enjoyment of future generations.”[33] In this committee report, the purposes of the park service are further defined in relation to the management of national forests: “It was the unanimous opinion of the committee that there should not be any conflict of jurisdiction as between” the two departments which could hinder the management of the parks “set apart for the public enjoyment and entertainment” as opposed to the forests which were “devoted strictly to utilitarian purposes.”[34] This “segregation of national park[s]” required “the preservation of nature as it exists.”[35] As such, the conservation and nonimpairment standards were what set the parks apart from the national forests. The discussion of this difference in the legislative history was as close as Congress got to defining the terms.

  1. 1969-1970: The General Authorities Act

The General Authorities Act of 1970 was not a “glamorous bill” and was intended to clarify that the National Park System’s fundamental purpose extended to all of the different areas managed by the Park Service and not just the parks and monuments.[36] Between 1916 and 1970 the concept of the national park system had “broadened to include battlegrounds and historic places, as well as areas primarily significant for their outdoor recreation potential.”[37] The aim of the bill was to make sure that all park system units were “appropriately administered so that the long-term interests of the public [could] be served.”[38] Congress reiterated that the “objective of the national park system [was] to conserve and protect for the edification and enjoyment of the American public—now and in the future—areas and places of national significance.”[39] Again, this bill offered no definition of conservation.

  1. 1977-1978: The Redwood Amendment

The Redwood Amendment reaffirmed Congress’s support that decisions by the Park Service would be based on the criteria provided by 16 U.S.C. § 1—the conservation and nonimpairment language—and that this language would also guide courts when resolving conflicts between “competing private and public values and interests in the areas surrounding Redwood National Park and other areas of the National Park System.”[40] Surprisingly, this transboundary reach was not disputed by the minority views published in the report.[41]

The amendment added the following language to the end of the General Authorities Act:

Congress further reaffirms, declares and directs that the promotion and regulation of the various areas of the National Park System . . . shall be consistent with and founded in the purpose established by the first section of the Act of August 25, 1916, to the common benefit of all the people of the United States. The authorization of activities shall be construed and the protection, management and administration of these areas shall be conducted in light of the high public value and integrity of the National Park System and shall not be exercised in derogation of the values and purposes for which these various areas have been established, except as may have been or shall be directly and specifically provided by Congress.[42]

It was necessary to reaffirm the purpose of the National Park System because the committee was “concerned that litigation with regard to Redwood National Park and other areas of the system may have blurred the responsibilities articulated by the 1916 Act creating the National Park Service.”[43] “Accordingly,” the committee reported, the “Secretary is to afford the highest standard of protection and care to the natural resources within . . . [the] National Park System. No decision shall compromise these resource values except as Congress may have specifically provided.”[44] While not specifically identifying this as the conservation and nonimpairment mandate, it can be inferred as such given that conservation and nonimpairment were the purposes of the National Park Service defined in section 1 of the Act.

Congress meant for the Redwood Amendment to establish “once and for all that the administration of our great park resources is a preeminent responsibility of the United States.”[45] Further, it “elevates and strengthens the management standards establishing the National Park Service in 1916 to requirements of law.”[46] And, importantly for Park Services managers, the Redwood Amendment “insures that management decisions affecting our park system must square with this standard and that competing interests not consistent with the first section of the act
of August 25, 1916, may only be approved if specifically authorized, either previously or through subsequent legislation, by Congress.”[47] In sum, the Redwood Amendment clarified that Congress intended for Park Service managers to have authority to manage the lands for conservation and nonimpairment in order to comply with the legally-mandated management standards.

Conclusion

The Organic Act and subsequent legislation granted the Secretary of Interior authority to manage the National Parks System consistently with the fundamental purpose language. Neither the statute nor the legislative history defines the terms “conservation” or “impairment” clearly.  The Redwood Amendment’s legislative history comes closest to explaining the intent behind these mandates, offering guidance for both Park Service managers and courts when considering disputes between public and private interests and always putting conservation before a detrimental use unless specifically directed by Congress.

When considering the impacts of climate change on the National Parks, the legislative history behind the conservation and nonimpairment mandate supports active management to conserve and protect all units within the Park Service. At the time the Act was passed, the legislators could not have contemplated the potential impacts of climate change. Instead, they planned protection for the parks against detrimental human uses. But it is from the legislators’ protective language that Park Service managers can justify their authority to protect against the detrimental impacts of climate change.

[1] Nat’l Park Serv., National Park Service Overview (2016), https://www.nps.gov/aboutus/news/upload/NPS-Overview-09-01-2016.pdf.

[2] 16 U.S.C. § 1 (1916) (codified at 54 U.S.C. § 100101(a)) (emphasis added).

[3] Eric Biber & Elisabeth Long Esposito, The National Park Service Organic Act and Climate Change, 56 Nat. Resources J. 193, 208 n.84 (2016). My research was used to support the point that “[i]f any lesson can be drawn from the Organic Act’s legislative history, it is probably that Congress intended the Park Service to have broad discretion to protect the scenic nature of its lands, and prioritize protection of scenery over other goals (such as commercial timber harvesting).” Id. at 208.

[4] This was the framing for Professor Biber and Ms. Esposito’s article. Biber & Esposito, supra note 3.

[5] The American Civic Association (“the ACA”), led by J. Horace McFarland, promoted “the beautification of cities and the preservation of national treasures, such as Niagara Falls and Yosemite’s Hetch Hetchy Valley.” Ellen Terrell, John Horace McFarland: Unsung Hero of the National Park Service, Library of Congress (August 25, 2016) https://blogs.loc.gov/inside_adams/2016/08/john-horace-mcfarland-unsung-hero-of-the-national-park-service/. McFarland and the ACA promoted creation of the National Parks Bureau—which would become the National Park Service—arguing that national management of the parks was critical to protect them. See John Horace McFarland, Address of Mr. J. Horace McFarland, 1911 Proceedings of the National Parks Session of the American Civic Association 10 https://babel.hathitrust.org/cgi/pt?id=loc.ark:/13960/t8tb1gb0j;view=1up;seq=5.

[6] When I use the word ‘parks’ in this memo, I am referring to all the different types of units the Park Service managed at the time of the legislation (in 1916, for example, National Parks, National Monuments and National Reservations).

[7] S. Rep. No. 62-676, at 1­–2 (1912). It was at this time, too, that the Secretary of Interior and the ACA recommended, “the name of the organization should be the National Park Service instead of Bureau of National Parks.” Id. at 1.

[8] Id. at 2.

[9] Id. at 1.

[10] Establishment of a National Park Service: Hearing on H.R. 22995 Before the H. Comm. on the Public Lands, 62nd Cong. 5 (1912).

[11] Id.

[12] Id.

[13] Id.

[14] Id. at 3 (emphasis added). Section 4 of this version of the bill would eventually become section 3.

[15] Id. at 5 (emphasis added).

[16] Id.

[17] National Park Service: Hearing on H.R. 104 Before the H. Comm. on the Public Lands, 63rd Cong. 77 (1914).

[18] Id.

[19] See S. Rep. No. 676 (1912); Establishment of a National Park Service: Hearing on H.R. 22995 Before the H. Comm. on the Public Lands, 62nd Cong. (1912); National Park Service: Hearing on H.R. 104 Before the H. Comm. on the Public Lands, 63rd Cong. (1914).

[20] S. Rep. No. 62-676, at 2 (1912).

[21] See, e.g., Bureau of National Parks: Hearing on S. 3463 Before the H. Comm. on Public Lands, 62nd Cong. (1912) (explaining why the Service needs an engineer and an assistant attorney; issues with salaries of these positions); Establishment of a National Park Service: Hearing on H.R. 22995 Before the H. Comm. on the Public Lands, 62nd Cong. (1912) (lack of coordination between the parks and consistent appropriations means that facilities and roads are not well developed); National Park Service: Hearing on H.R. 104 Before the H. Comm. on the Public Lands, 63rd Cong. (1914) (the parks all have similar needs but are not managed as one unit leading to very expensive local administration).

[22] Congressmen were particularly upset at the lack of visitors to the western parks after the 1915 Panama-Pacific International Exposition in San Francisco. Instead of returning by way of Yosemite and Glacier, “75 percent of them returned by the Canadian Pacific thanks to the very efficient advertising which Canada [had] done.”  National Park Service: Hearing on H.R. 434 and H.R. 8668 Before the H. Comm. on the Public Lands, 64th Cong. 35 (1916). They took it as a personal affront and attributed it to a lack of a National Park Service, which Canada had, which would have been coordinated enough to lure people to the American parks: “the Canadian national parks, because of their exploitation and because of the things that had been done to make them ready for the comfort and convenience and safety of the tourists, drew the great, wholesale travel. . . That meant thousands upon thousands of dollars of cold American cash for Canada, to be credited to its parks.” Id. at 6. See also S. Rep. No. 64-662 (1916) (discussing why Park Service is necessary and appropriations needed); 53 Cong. Rec. 12, 150 (1916) (hiring decisions given to Secretary of Interior rather than Congress).

[23] National Park Service: Hearing on H.R. 434 and H.R. 8668 Before the H. Comm. on the Public Lands, 64th Cong. 52 (1916) (emphasis added).

[24] Id.

[25] Id. at 53.

[26] Id.

[27] Id. Selfishness was seen as a threat because “[t]he places of scenic beauty do not increase, but, on the contrary, are in danger of being reduced in number and diminished in quantity, and the danger is always increasing with the accumulation of wealth, owing to the desire of private persons to appropriate these places.” Id. at 54.

[28] Id. at 54.

[29] Id. (quoting the British ambassador in November 1912).

[30] Id. at 43-44.

[31] Id. at 46.

[32] Id.

[33] H.R. Rep. No. 64-700, at 1(1916).

[34] Id. at 3.

[35] Id.

[36] 116 Cong. Rec. 24,955 (1970); see also A Bill Relating to the Administration of the National Park System: Hearing on H.R. 14114, Before the H. Subcomm. on National Parks and Recreation of the Comm. on Interior and Insular Affairs, 91st Cong. (1969).

[37] S. Rep. No. 91-1014 (1970); see H.R. Rep. No. 91-1265 (1970).

[38] S. Rep. No. 91-1014 (1970).

[39] Id. at 1–2.

[40] S. Rep. No. 95-528, at 8 (1978).

[41] See id. at 50-57.

[42] Id. at 24.

[43] Id. at 14.

[44] Id.

[45] 124 Cong. Rec. H2017 (daily ed. March 14, 1978) (statement of Rep. Burton).

[46] Id.

[47] Id.

The Importance of GIS in Emergency Management

By Monika Holser, UCLA School of Law, Class of 2018 

GIS (geographic information system) is a computer system for “capturing, storing, checking, and displaying data related to positions on the Earth’s surface.”[1]  It allows multiple layers of information to be displayed at once, enabling one to visualize and understand relationships on a map.[2]  Different types of information can be overlaid in the program regardless of their original format or source.[3]  According to ESRI, GIS is described as the “go-to technology” for location-based decisions and is fundamental in understanding the current and future issues involving geographic space.[4]

The modern growth of geospatial technology positively interacts with, and influences all aspects of disaster management – such as mitigation (modeling hazards and vulnerability to develop strategies), preparedness (formulating emergency response and evacuation plans), response (executing such plans), and recovery (assessing damages, rebuilding, preventing recurrence, and educating the public).[5]  Considering we cannot prevent natural disasters, it is important to determine potential hazards and where they stand in relation to our communities.  As a visualization tool, GIS can assist in locating, identifying, and understanding relationships between areas of social vulnerability and potential hazard exposure.  For example, available U.S. census data can be layered onto a map to include the distribution of age, income, ethnicity, housing quality, transportation capacity, etc.[6]  This information can be used to create appropriate mitigation strategies, to identify how or where certain areas should be evacuated, or even how first responders (law enforcement, medical personnel, fire service etc.) should approach certain areas during a disaster.[7]

Furthermore, with advances in GIS and computer technology today, individuals and communities can potentially use the increasingly accessible tools to manage their own knowledge and community data.[8]  If promoted within communities, GIS can be utilized to communicate risks and hazards to the population with no requisite specialized knowledge.[9]  Currently, many communities and homeowners lack the knowledge and motivation to take appropriate cautions or mitigate potential hazards.  Having access to personalized and compelling visuals may ameliorate the issue, while providing local governments invaluable information for disaster management and preparedness.[10]

Challenges and Future Steps – A Look at FEMA Flood Mapping

First and foremost, data is the most essential element of GIS mapping – the program itself merely creates a visual display of the inputted data.[11]  Without accurate data, the program cannot produce accurate depictions of the desired information or relationships between them.  Therefore, the greatest challenge is the weakness of current data, or the lack of data in general.  Although currently improving, there is also a deficiency of readily available GIS software, and more importantly, a failure in the communication/utilization of GIS and the information it can provide.[12]

Considering the significant role GIS already plays in emergency management, I believe the government, as well as local governments, should be allocating funds to improve each of these three issues.  First, to increase data collection and to improve the accuracy of existing data, second, to promote the use of GIS software by communities, and third, to improve the accessibility and communication of the information produced.  In regards to these aspects, I would like to discuss the ongoing Federal Emergency Management Agency (FEMA) flood mapping as part of the National Flood Insurance Program (NFIP).

The NFIP was created to provide a means for homeowners to financially protect themselves from flood events – flood insurance is offered to property owners if the community participates in the NFIP and meets floodplain management ordinances established by FEMA.[13]

FEMA’s flood hazard mapping program, Risk Mapping, Assessment and Planning (MAP), identifies flood hazards and assesses risks of certain areas.[14]  This mapping is used to create the Flood Insurance Rate Maps (FIRMs), the basis of NFIP regulations and insurance requirements.[15]  The FIRMs are then used to determine insurance premiums and set minimum floodplain standards for communities based on the assessed risks of the particular location.[16]   Currently, the NFIP states that it is working towards updating the accuracy of flood maps and providing policyholders with information to better understand the program.[17]

1. Improving Accuracy of GIS Data

In cost-benefit analysis, hazard mapping is found to have positive net benefits, thereby indicating that it is beneficial to work towards improving the accuracy of our mapping.[18] A study conducted by FEMA in 2000 found that when considering all costs (flood data updates, map maintenance, new mapping, conversion to new standards, and customer service), the flood maps created a benefit of 1.33 billion dollars, with a cost of 799 million.[19] Currently, flood maps are used an estimated 30 million times a year by government agencies, FEMA contractors, lenders, insurance agents, land developers, community planners, property owners, realtors, and by others for risk assessment, land management, mitigation, and disaster response.[20]  With this in mind, it is clear that the accuracy of these maps is vital and relevant to widespread decisions.

For example, improving the accuracy of FEMA’s flood maps is predicted to directly affect the insurance rates and land use.[21]  More accurate estimates of flood risk allow appropriate insurance premiums to be calculated for certain areas and particular structures.[22]  The accuracy of price may also increase the understanding and trust of flood risk, and therefore encourage and ensure insurance coverage.[23]  In connection to land use, the correctly priced insurance premiums accurately reflect risk, and in turn, reduce the development of land in high-risk areas.[24]  Improvements in accuracy can add restrictions to properties that should have been designated at-risk (reducing future losses of life and property), and conversely, lifting restrictions in areas that were incorrectly designated at-risk (lowering costs and mandatory improvements, enabling the land to be used in other ways).[25]  In fact, FEMA’s website includes an option to contest floodplain boundaries if homeowners believe their properties were incorrectly identified in high-risk areas – increasing accuracy of flood maps may therefore reduce the contesting of boundaries and save time, money, and effort of all parties.

Learning from the NFIP and FEMA’s FIRM flood maps, we can see that it is indeed beneficial to invest in data collection for GIS use in emergency management.  This can be applied to any context, rather than solely floods and national flood insurance – perhaps to fire or earthquake risks, or anything relevant to a community’s planning.

2&3. Promoting Use of GIS Software and Improving Communication of Risks

Little research has been done to show how to effectively communicate risk to the public through hazard maps.[26]  However, previous studies have shown that in particular, there are issues with communicating via FEMA’s FIRM flood maps.[27]  Taking it upon myself to investigate the FEMA website, I found it very difficult to navigate and understand.  There is an overwhelming amount of information and it is unclear how or who it is intended to be used by.  Through the Flood Map Service Center ‘Search by Address’ page, a homeowner can simply type in their address to pull up an interactive flood map, National Flood Hazard Layer (NFHL).  This is where the seemingly simple task becomes complicated.  I downloaded the map corresponding to my current apartment address only to find that I had absolutely no idea what I was looking at, or what any of the data meant.  I then managed to locate an FAQ page on the website, linking a 54 page document available for download titled, “How to Read a Flood Insurance Rate Map Tutorial.”  It is quite possible that I did not spend enough time attempting to read and understand the guidance provided by the FEMA webpage, but it is clear why a homeowner or individual with little to no experience in this area would fail to understand the implications of the data.

Furthermore, FEMA’s in-house mapping software, HAZUS, is available to the public for download.  HAZUS, utilizing GIS systems, is described as a “nationally applicable standardized methodology that estimates potential losses from earthquakes, hurricane winds, and floods.”[28]  Looking to download and examine the software, I found that it requires ESRI’s ArcGIS program to run, and that the FEMA site directs users to ESRI where it can be purchased.  From this, I can assume that the HAZUS program is primarily used by and targeted towards local governments, rather than individuals and homeowners.  Although this makes sense, it again limits the accessibility of invaluable information that can be provided – and even local governments may choose not to pursue the costs of analyzing the public data through GIS mapping (costs of the program and of individuals educated to use the program, time to overlay data, etc.).

Again, based solely off of FEMA’s FIRM maps and HAZUS program, we can see that the accessibility of GIS programs, as well as the communication of risk information, is at issue.  As suggested by Susan Cutter, a Geography Professor at the University of South Carolina, emergency managers should look to community partners such as universities to assist with mapping and analysis needs.[29]  From personal experience, she describes the ongoing partnership between the University of South Carolina and the South Carolina Emergency Management Division, allowing the two to work towards a common goal – students can gain experience, while the organization can utilize the resources produced.[30]  She further suggests that if costs of the program or ability to use a program are at issue (such as ESRI ArcGIS), other mapping tools or platforms may be available.[31]  For example, I downloaded QGIS, a free GIS program rather than the common, but pricey ArcGIS.

Conclusion

Starting with FEMA, and moving towards states and local governments, GIS investment should be prioritized for use in disaster management.  Funds ideally should be directed towards increasing data and improving accuracy of that already existing, towards making GIS programs available for use (or finding assistance through partnerships), and towards promoting the communications of risk assessment with the public.

 

 

 

 

 

 

 

 

 

 

 

 

 

[1] GIS, National Geographic Society, http://nationalgeographic.org/encyclopedia/geographic-information-system-gis/ (last visited Nov. 1, 2016).

[2] Id.

[3] Id.

[4] What is GIS, ESRI, http://www.esri.com/what-is-gis (last visited Nov. 1, 2016).

[5] T.J. Cova, GIS in Emergency Management in Geographical Information Systems: Principles, Techniques, Applications, and Management 845-858, 850 (1999).

[6] Disaster Preparedness and Recovery, Emergency Management, http://www.emergencymgmt.com/disaster/How-GIS-Can-Aid-Emergency-Management.html (last visited Nov. 1, 2016).

[7] Alexandra Enders & Zachary Brandt, Using Geographic Information System Technology to Improve Emergency Management and Disaster Response for People with Disabilities, 17 J. of Disability Pol’y Stud. 223-29, 224 (2007).

[8] Phong Tran et al., GIS and Local Knowledge: A Case Study of Flood Risk Mapping in Viet Nam in Disasters 152-169, 155 (2009).

[9] Id. at 153.

[10] Id.

[11] Enders & Brandt, supra note 7, at 224.

[12] Cova, supra note 5, at 856.

[13] Flood Insurance Reform, FEMA, https://www.fema.gov/flood-insurance-reform (last visited Nov. 1, 2016).

[14] National Flood Insurance Program: Flood Hazard Mapping, FEMA, https://www.fema.gov/national-flood-insurance-program-flood-hazard-mapping (last visited Nov. 1, 2016).

[15] Id.

[16] Flood Insurance Reform – Mapping Flood Hazards, FEMA, https://www.fema.gov/flood-insurance-reform-mapping-flood-hazards (last visited Nov. 1, 2016).

[17] Flood Insurance Reform, FEMA, https://www.fema.gov/flood-insurance-reform (last visited Nov. 1, 2016).

[18] Committee on FEMA Flood Maps et al., Mapping the Zone: Improving Flood Map Accuracy 79 (2009).

[19] Id. at 82.

[20] Id. at 79.

[21] Id. at 80-81.

[22] Id. at 81.

[23] Id.

[24] Id. at 80.

[25] Id.

[26] Id. at 91.

[27] Id.

[28] Hazus-MH Overview, FEMA, https://www.fema.gov/hazus-mh-overview (last visited Nov. 1, 2016).

[29] Disaster Preparedness and Recovery, Emergency Management, http://www.emergencymgmt.com/disaster/How-GIS-Can-Aid-Emergency-Management.html (last visited Nov. 1, 2016).

[30] Id.

[31] Id.

Judging a Book by its Cover: The Tension between Evidentiary Gatekeeping and Compensatory Theories of Tort

By Julie Amadeo, J.D. 2016, New York University School of Law. This article has been adapted from a larger work.

I. Introduction

Human minds are primed to jump to conclusions. Call them intuitions, or things we just know, our ability to draw conclusions is a survival instinct, developed over many years of evolutionary progress. Now assume a man has been largely healthy his entire life. Maybe this man is a line worker at a factory, or a firefighter, or even just a soccer player. Suddenly, he learns that he has a fatal disease that will cause him to suffer for various years before finally killing him. He sees his co-workers falling ill with the same sickness and they all begin to think it must be something they were doing in common. Perhaps it was the chemicals they produced at work, or something burning in the fires, or maybe the turf they played on. But, there’s no evidence of this, it is just a hunch. Producing conclusive scientific evidence is costly and would take years. Perhaps the only way of getting any sort of evidence is to sue the employer, or products producer which would lead to discovery and possible answers. The man approaches a lawyer who is well known in the field of toxic harms and asks him to take on his case. The lawyer, however, declines and informs the man because of the lack of epidemiological – human study—evidence available on the topic, his case would likely be decided in favor of the defendant on summary judgment and he would never get the closure he is looking for.

II. Wrestling with Epidemiological Evidence

Epidemiology is a method of scientific study which measures the “distribution and determinants of disease frequency and occurrence in humans.”[1] In litigation, epidemiological evidence is generally used for the purpose of proving causation.[2] Historically, epidemiology was not a necessary feature of toxic harms cases, for example in Ferebee v. Chevron Chemical Co. the court took the stance that “on questions such as these, which stand at the frontier of current medical and epidemiological inquiry, if experts are willing to testify that such a link exists, it is for the jury to decide whether to credit such testimony.”[3] The court ultimately held that there was sufficient evidence for the jury to find that the defendant in this case was at fault.[4] However, courts have taken many different approaches to the ways they evaluate and admit epidemiological evidence. Importantly, there seems to be a distinction in the way courts treat epidemiology with respect to mass tort claims and cases where there is either negative or sparse epidemiological evidence to wrestle with.[5]

In a post-Daubert world of evidence, epidemiology is nearly universally accepted as the most reliable form of evidence for demonstrating a toxic harm. However, epidemiological evidence is not easy to come by. Often the only studies that have been performed are studies done by the defendants in the case, which of course are favorable. This desire for epidemiological evidence is born out of the need for evidentiary rules to help the judge move her docket: they provide efficiency and reliability in the courtroom. In contrast, tort law has developed with the aim of providing deterrence to bad actors and compensating victims of negligent acts. These two different legal systems are at odds when rules that help judges move their dockets also impair the ability for the tort system to evenly sort out and find negligent actors and make them pay the victims they have harmed.

Alternative solutions to the tort system, particularly administrative systems of dispute resolution, seem to hold promise for sorting out the tension between the two systems. An administrative system provides a mechanism for sorting out good evidence from the bad, and sorting out toxic from not toxic products, prior to the dispute resolution process. In contrast with a compensation fund system, which merely compensates victims without really providing the deterrence effects that tort law provides, an administrative system would deter negligent actors by putting them on notice that their product has been noted as toxic. Additionally it would compensate victims and also provide a cheaper way for them to get their “day in court” as they would not have to necessarily prove causation.

III. Artificial Turf: A Case Study

In 2008, the Attorney General of California brought suits against the Beaulieu Group and Fieldturf USA to enjoin their use of lead in artificial turf that was sold within the state of California.[6] Strikingly, the state of California had accepted over a decade prior to this suit being brought that lead was toxic and could lead to cancers and other health issues.[7] Because the State had already named lead as toxic, the plaintiff was able to conclusively state in the complaint that lead could lead to various illnesses and could definitely state the various methods of exposure humans would be submitted to by lead being present in the product.[8] In this case, the suit resulted in a settlement,[9] and while a large part of the desire to settle likely derived from the fact that the Attorney General brought the suit on behalf of the People of California, there was also a likely calculation relating back to the strength of the previously accepted science and thus the strength of the case. Perhaps, it is something like this type of certainty or strength of the evidence that the rules that have been developed regarding the admissibility of expert evidence and  epidemiological evidence specifically, are attempting to strive toward, in particular with respect to an argument regarding the efficiency of the dispute. Where defendants are sure that they will be found negligent in tort they will be more likely to resolve the issues out of court, or perhaps even refrain from the behavior where they uncover strong epidemiological evidence outside the universe of a lawsuit.

Artificial turf has come under fire for various toxic and environmental harms, broadly defined, in recent years. For example, in the world of sports, artificial turf has long been vilified for causing unprecedented and beyond normal injuries in athletes at an increased statistical rate when compared to natural grass.[10] Harkening back to claims of efficiency and deterrence, it has been argued that the best way to deter manufacturers of artificial turf from promoting the product is to embroil these manufacturers in litigation and hold them accountable for injuries.[11] However, attempts to bar the use of this turf by the National Football League Players Association in the 1970’s were undermined by insufficient medical data.[12] This was in face of a study done for the NFL by the Stanford Research Institute in 1974, demonstrating that natural grass is safer to play on than artificial turf, across the board.[13] Yet the U.S. Consumer Product Safety Commission still found that “based on evidence presently available, the use of artificial turf as a surface cover for athletic playing fields does not present an unreasonable risk of injury.”[14] Recently, the same year that the California Attorney General was granted an injunction against artificial turf companies for their use of lead, the same agency evaluated various samples of artificial turf and found that the “evaluation showed that newer fields had no lead or generally had the lowest lead levels.”[15] The discrepancy between the results, on the same or similar issues, before different law making bodies within the United States demonstrates why the rules which have developed on the admissibility of epidemiological evidence are important despite the various criticisms of them. For courts to deliver consistent results regarding issues of toxic harms, there needs to be a standard measuring stick. However, the issue remains that science and the law have different ideas of causation, and thus what science finds unsafe and what the law finds unsafe might differ. In the above scenario, California was able to go around the toxic harm tort causation issue by passing legislation. It remains to be seen whether a legislative command is always necessary to resolve possibly ambiguous causal issues in toxic harms. Perhaps, there are other alternatives either within the court system, or in an alternative dispute arena that would allow these issues to be resolved in a way that is both “fair” as well as practically effective.

A. Artificial Turf and Cancer

Another area of contention in the world of artificial turf is a potential link between the rubber tire crumbs used in the product and cancer. Recently, many concerned citizens have noticed and pointed out a correlation between cancer and artificial turf, especially among young athletes.[16] Crumb rubber was a solution created by engineers in the 1990’s as a method of recycling old rubber tires that were no longer useful.[17] This recycled material is then used to fill the artificial turf and provided stability and shock prevention to the turf.[18] However, since this solution arrived, studies have been done demonstrating that the tire crumbs, or crumb rubber, is laden with carcinogenic toxins.[19] The main problem is that despite this finding there is still a dearth of research on crumb rubber and its side effects, particularly when it comes to the human population.[20]

The Environment and Human Health organization produced a report based on studies done by various organizations on this issue.[21] Of these studies, only one of them is epidemiological.[22] This study, produced by the California Office of Environmental Health Hazard Assessment found that the levels of toxicity in artificial turf with crumb rubber filling were relatively low.[23] However, this study and others done by the same agency on crumb rubber, were funded by CalRecyle, the California state agency in charge of finding methods of recycling used rubber tires.[24] This presents a conflict of interest that neither Rule 702 nor the Daubert doctrine, and much less the current jurisprudence on epidemiological evidence, deals with. Courts would look to the epidemiological evidence provided and likely would conclude that there was insufficient evidence to present to a jury.[25] Yet, outside the courtroom, various agencies involved admit that there is a lack of sufficient evidence to draw the conclusions about the toxicity of the crumb rubber that have been drawn. In 2013, chairman of the Consumer Product Safety Commission, Eliot Kaye admitted that there was not enough evidence to draw conclusions as to safety.[26] This is the same commission which previously issued a press release stating this turf is safe in 2008.[27]

The Consumer Product Safety Commission is not the only agency that is calling for more research to be done on artificial turf and crumb rubber. In 2016, the Environmental Protection Agency, in conjunction with the Consumer Product Safety Commission and the Centers for Disease Control and Prevention as well as Agency for Toxic Substances and Disease Registry launched an action plan to study these issues.[28] Despite this, any argument brought before a court of law regarding the lack of evidence on this issue would fail, because it is not the job of the courts to decide which chemicals are toxic, it is merely the job of the court to proportion blame when issues arise out of negligent actions. Thus, it is not surprising that a lawsuit brought by the San Francisco Bay Chapter of the Sierra Club alleging that the San Francisco Recreation and Park Department did not do sufficient research on the issue of crumb rubber to determine that the toxicity in the artificial turf met the acceptable levels of toxins set by the local government ended in an unfavorable result.[29] On appeal, the Court of Appeals found that the report done in advance of the Beach Chalet project that was the center of the Sierra Club’s suit was adequate.[30]

Although, some might argue that given what is known and what is not known about the state of toxins within artificial turf and the crumb rubber that is used to fill it, a rule of evidence that does not allow information about this type of uncertainty is broken, the court’s stance on epidemiological evidence allows the court to manage a docket of cases and legal decisions about scientific problems in an efficient manner. Ultimately, it is the role of the legislature in conjunction with the scientific community to make policy decisions about what the acceptable amount of risk is when it comes to daily human interaction with toxins. Unfortunately, this leaves concerned citizens, and injured parties waiting for the holes in the science to be filled in by government actors and other nonprofit organizations in order to receive compensation for the issues that have been caused by the toxins. However, the resolution of the issues with regard to the presence of lead in artificial turf sheds some light on alternative solutions to the issue of toxic harms outside of the courtroom.

Again, the various cases dealing with artificial turf sheds light on the tension between evidentiary gatekeeping and compensatory theories of tort. While it is undeniable that more research could be done on artificial turf, toxicity studies have been done that demonstrate a baseline issue. Viewing these facts from the perspective that courts and court dockets must optimize efficiency, perhaps it makes sense that no compensation for plaintiffs can be awarded until a cut and clear chain of causation can be examined via the widely accepted epidemiology. However, in a system where companies are often influenced by risk of litigation and are the most able to study the products they offer to the public, having a compensatory tort system that precludes valid expert evidence on theories of reliability forecloses the court as a venue for certain plaintiffs and allows companies to get away with actions that might be unsavory. In this sense, the amount of litigation surround artificial turf, which is only beginning to lead to further research, represents a system failure wherein strict evidentiary gatekeeping encourages scant scientific research of potentially harmful consumer products.

B. Artificial Turf Outside the Tort System

There are two alternatives to remedies within the tort system: an ex ante administrative regulation system and a compensatory administrative system in the form of a victim’s compensation fund. Either system is designed to provide a solution to the problem presented by the admissibility of epidemiological evidence: causation.[31] However, whereas an ex-ante administrative regulation system is meant to deter and prevent toxic harms from occurring by identifying and prohibiting certain toxins from entering the market, an administrative compensatory system merely identifies and acknowledges harms that have occurred and compensates victims without the need for a full trial, though that process can take many forms. An administrative system could be designed in a variety of ways, however the benefits lie in the government assigning fault to actors without the need for trial.[32] Even outside a strict administrative system government involvement could take place in a variety of ways: as the settlement in the Beaulieu case suggests, actors are more likely to settle when a government actor is involved.[33] Government actors lend authority and facility to toxic harm suits by making it more likely that there will be injunctive relief and that negligent actors will settle suits.[34] Perhaps then, if government actors are required to fully accomplish the goals of tort law,[35] it would make sense to move fully from a system of tort to an administrative system where the government would decide fault based on a system of allocating the risk. Ex-ante government action is already taken in situations where certain types of behavior are regulated by administrative agencies.[36] Practically, an administrative system of allocating risk could be done either ex-ante, like regulation, or ex-post, like litigation.[37] However, in the case of toxic harms, because lack of proof and lack of notice tend to be issues, ex-ante processes may make the most sense in providing plaintiffs and potential litigants with swift and efficient justice.[38]

It has been argued that the tort system does little in terms of deterring, correcting, and compensating victims in the area of toxic harms due to the issues of causation that have largely been the focus of this paper.[39] Administrative systems of dispute resolution in the area of toxic harms would provide all the benefits that agencies are already lending to issues such as the artificial turf problem: specialist knowledge, independent investigations, flexibility with the ex-ante vs. ex-post view of the problems, as well as the ability to make policy decisions that are not within the ambit of the court.[40] There are various models of administrative systems including a tort and no-fault hybrid system, a narrowly tailored no-fault system, a broad no-fault system, a strict liability system, or a complex assessment of risk system.[41] These systems will be laid out briefly for the sake of comparing their various virtues and applying them to the case at hand.[42]

C. Models of Administrative Systems

The hybrid tort and no-fault administrative system is visible in the Price-Anderson Act that was promulgated with the purpose of promoting the development of nuclear testing and innovation in the scientific community.[43] The statute sets up a system where licensees under the statute must keep a certain amount of insurance and waive immunity from public liability.[44] The licensees are covered both by private insurers and by fees paid into a pool administered by the Nuclear Regulatory Commission.[45] Rabin suggests, that the hybrid characterization comes from the fact that the insurance model makes it a no-fault system, however the provision for private actors to bring a claim in order to receive compensation from the insurance creates a two-party system akin to torts.[46]

The model for the narrow no-fault system, according to Rabin, is the National Childhood Vaccine Injury Act of 1986.[47] The program lays out in a table a time period during which the injury related to the vaccine must occur in order of the victim to receive compensation.[48] This chart eliminates the question of causation. Thus a no-fault system is created where the “compensation fund is financed by an excise tax on each does of vaccine disbursed.”[49] This act was also promulgated with the purpose of stimulating private industry and insulating risky business for the public good from tort liability.[50]

An expansive no-fault system is modeled in both the Superfund Section 301(e) Student Group Report and the Environmental Law Institute Model Statute.[51] Due to the environmental nature of the case studies presented in this paper, we will focus on the Environmental Law Institute Model Statute (ELI Model). The ELI Model seeks to provide a truly regulated body of toxic chemicals by listing as one of its stated purposes “to reduce and prevent exposure to hazardous chemical substances or mixtures that cause or contribute to chronic or progressive diseases.”[52] The model sets up a strict liability system for substances or diseases covered within the proposed statute but leaves open a back door of discretion for the court to limit the liability of defendants if the defendants can show by a preponderance of the evidence that there were other factors involved in the plaintiffs illness.[53] The model allows for switching out of the administrative system back into the torts system, however Rabin notes that the lack of a possibility for switching from the torts system to the administrative system “once the hazardous nature of a product is well documented” is problematic.[54]

Clifford Fisher points out the many inefficiencies in the tort system when proposing his switch to a strict liability system: namely, that the burden of proof rests with the victim who likely does not have the access or resources to get the information they need to put on their case.[55] He goes so far to suggest, “the present system also creates a disincentive for risk-creators to act responsibly because it is not in their best economic interest to do so.”[56] In essence, he is suggesting that the tort system does not achieve deterrence of negligent actors nor compensation of victims in the realm of toxic harms. Instead, he suggests a strict liability system called an Environmental Compensation program, comparable to the Worker’s Compensation program where victims would file their claims to an insurance company.[57] This would allow the market to regulate the cost of risk, in so far as companies pay into the insurance system, which would incentivize risk takers to take the cost of that risk into account when planning business costs.[58] Fisher envisions, in addition to the deterrence effects afforded by companies paying into an insurance system, minimum health regulations that would help maintain socially acceptable levels of risk.[59] One last feature of Fisher’s proposal is to have a proportional liability system that “holds the risk-creator liable for the increased risk and for the losses of each victim of disease in the exposed population discounted by the probability that the risk-creator’s hazardous activity was the cause.”[60]

The most recent administrative system proposed is Albert Lin’s, which creates an internalized system of risk with federal levies imposed on sources of pollution.[61] Lin’s proposal would have the levies imposed be proportional to the amount of pollution released by sources.[62] The system does not supersede the tort system, but merely preempts claims that are foreseen and thus covered by the funds collected by the government.[63] However, his proposal does not allow individuals to opt out of the system, thus leaving the administrative system as the only recourse for the covered claims.[64] Lin’s proposal avoids the causation issue by awarding compensation for exposure to risk, not for injury in fact.[65] The last part to Lin’s proposal involves the use of database which would identify different toxins that would be covered under the administrative system; he suggests use of one of two already existing databases: the Agency for Toxic Substance and Disease Registry or the EPA’s Integrated Risk Information System.[66] While either of these databases would need to be updated with the help of the scientific community, Lin acknowledges that the informational needs of this system would be expansive.[67]

While an administrative system offers various tools to solve the problem of victims being compensated for their harms, they do not necessarily offer the best solution to this problem in terms of toxic and environmental harms. Certain no fault systems, such as the Price-Anderson Act and the National Childhood Vaccine Injury Act of 1986 were developed to encourage use of certain products which could be considered, or are, toxic.[68] In the case of environmental and toxic harms, the hope is to deter actors from using and abusing these chemicals rather than encourage them by giving them an easy out. The one improvement afforded by even an encouraging no fault system, is that a no fault system guarantees some compensation for victims, whereas a courtroom without epidemiological evidence guarantees failure. In an indirect way, a no fault system might require companies to think about the toxic harms they might be causing and weigh them, whereas as a court system that has created a loophole for these actors does not deter the behavior at all. Thus, although not fully resolving the tension between evidentiary gatekeeping and compensatory theories of tort, an ex-ante system relieves plaintiffs of evidence production that would allow for compensation without having to think about which evidence works best and then searching for that form of evidence among the research that is available on the topic.

Administrative systems such as the ELI model or Albert Lin’s proposal have heavy informational burdens. Thus, these proposals may suffer in areas such as environmental and toxic harms where the science is often catching up to the realities of plaintiffs’ situations. For example, in Lin’s proposal, if the harm has not yet been recognized by the database, the claim will then be kicked back into the court system, which defeats the purpose of creating a separate administrative system. These informational issues that are related to whether a claim goes into the administrative system or are litigated in tort create a dual system of treating claims that are relatively similar.

In the case of artificial turf, the administrative proposals would perhaps present a halfway solution to the problem presented by a need for epidemiological evidence. As the Beaulieu case demonstrates, if the toxin is recognized on a list either one presented by the administrative proposals, or one already in existence, then the administrative proposals for strict liability present a more manageable system that affords compensation without administrative costs in terms of evidentiary gatekeeping. However, in the case of crumb rubber, because more research on the issue is underway these systems just will not fix the current issue presented by the need for epidemiological evidence in order to put on a successful toxic harms case. In an ideal world, an administrative system proposal might have a wider statute of limitations window, not for latent harms, but for victims of harms that are newly discovered. So, if in five years a link were found between crumb rubber and cancer sufficient to put crumb rubber on the list for strict liability, a victim or victim’s estate could bring a claim at that time.

Another out of court solution to the issue of causation in environmental harms is the creation of victim compensation funds. Victim compensation funds have been used in situations of mass tort, for example September Eleventh, Agent Orange, and the Love Canal.[69] They are funds that pay out to victims of major accidents, natural disasters, and the like without respect to whether the insurer was the party at blame or not.[70] Typically, they shift the standard of care from negligence, used most often in the tort system, to strict liability, which is used sparingly.[71] A compensation fund can act similarly to an administrative system, for example having a no fault opt in system.[72] However, unlike administrative systems that typically have some criteria to be met before payout can occur, many compensation funds merely require victims to demonstrate they meet certain prerequisites, in order to keep evidentiary burdens low.[73] While the legal justifications for tort law include deterrence and compensation, the victims who file suits often begin seeking answers—but in the compensation fund system forego the answers they seek for compensation.[74] Administrative compensatory systems only present a solution to the tension between evidentiary gatekeeping and compensatory theories of tort if the evidentiary hurdles are less stringent than they are in a courtroom. Ex-ante administrative systems demonstrate a different approach to the acceptance of evidence; compensatory schemes, such as the September Eleventh fund, merely demonstrated the acceptance of causation where the cause is readily and easily ascertained. Thus, it is less clear that a compensatory scheme would provide a good solution or alternative to the tort system in the case of toxic harms.

Maritime law provides an example of a system which is a hybrid of the administrative system and compensation fund systems in the environmental realm, where the polluter pays the victims of its pollution[75] . However, as previously mentioned, this overlaps with administrative systems in many ways: polluter pays principle can be applied to civil liability cases, or the principle can be applied through an administrative trial.[76]

In the case of artificial turf, a compensation fund system may be different to plan and administer. For example, in the Benedictin cases, the medication that the scientists found and were published in the medical journals, demonstrated some fear and apprehension in the medical community that the drug was causing genital defects.[77] In the artificial turf cases this link in the scientific community is missing. In this manner, the compensation fund system is more similar to the actual tort system than an outside the tort system. Here, both suffer from an evidentiary causation problem: where there is missing information or linkage, the chances of compensation become slimmer and slimmer. Ultimately, it seems that between the administrative system and the compensation fund system, the administrative fund something is the better choice for smaller legal battles spread over many defendants with uncertainty.

IV. Conclusion

This paper has explored the tension between evidentiary rules that aim to foster reliability and efficiency with tort law whose purpose is to provide deterrence and compensation. There doesn’t seem to be one solution which would perfect the system to provide deterrence and reliability at the same time. What does seem apparent is that an administrative system, with a fact finding and research arm outside the dispute resolution system would provide a faster method of victims to be compensated for wrongs, and for those harms to be recognized widely without the need for epidemiological evidence in a court room. However, that conclusion presupposes that the administrators of a system would be proactive in researching potentially harmful chemicals, and also that findings that do not stem from epidemiology will be accepted.

The other potential solution to this issue would be to find a way in an adversary system for there to be a rule that allows evidence in which would not unfairly privilege one party over the other. However, since the rules are based on efficiency and reliability, not fairness, this does not seem to be relevant, nor would it function to improve the system. One question that begs to be asked is why not move from aims of reliability, efficiency, deterrence, and compensation to fairness? Firstly, those aims and justifications are attempting to get at versions of fairness. Secondly, it is impossible to be truly fair in a system where we entertain different versions of the same story and put decision making in the hands of impartial, but ultimately human jurors.

[1] Michael Dore, Law of toxic Torts §28:1 (3rd ed. 2015).

[2] James T. O’Reilly, 1 Toxic Torts Prac. Guide §4:6 (2015).

[3] Ferebee v. Chevron Chem. Co., 736 F.2d 1529, 1534 (D.C. Cir. 1984)

[4] Id. at 1539.

[5] David L. Faigmna, et. al., 3 Mod. Sci. Evidence § 23:4 (2016) (“Complete order cannot be imposed on the different positions taken by the courts as to whether the plaintiff must present epidemiological data on general causation. The two following distinctions, however, explain many apparent inconsistencies: (a) whether the case involves a mass tort or not; and (b) whether there is adverse epidemiology or no epidemiological evidence at all.”)

[6] Consent Judgment as to Defendant Beaulieu Group ¶ 2-15, ECF RG 08407310; Consent Judgment as to Defendant Fieldturf USA, Inc. ¶ 2-15, ECF RG 08-407310.

[7] Compl. ¶ 20, ECF 08407310; although the legislative history for this regulation was not accessible at the time of writing, the author notes that the inclusion of lead as a toxic chemical was likely the result of scientific study which would have been probative within the scope of this paper.

[8] Id. at ¶ 22.

[9] Michael D. Green, Expert Witnesses and Sufficiency of Evidence in Toxic Substances Litigation: The Legacy of Agent Orange and Benedictin Litigation, 86 Nw. U. L. Rev. 643, 646 (1992) (discussing types of evidence that can demonstrate causation and why epidemiology is particularly favorable).

[10] Allan Mazur and Jennifer Bretsch, Looking Back: Synthetic Turf and Football Injuries, 10 Risk: Health, Safety & Env’t 1, 2 (1999).

[11] Nicholas P. Ruggiero, Are the Rights of Athletes Swept under the Carpet?, 3 Seton Hall J. Sport L. 237, 243 (1993) (assuming that artificial turf is in fact harder on the bodies of athletes than natural grass and determining the best ways to deter the advocacy of the product).

[12] Brian J. Duff, Game Plan for a Successful Products Liability Action Against Manufacturers of Artificial Turf, 5 Seton Hall J. Sport L 223, 231 (1995) (pointing to NFLPA grievances filed with the U.S. Consumer Products Safety Commission).

[13] John Underwood, Just an Awful Toll, Sports Illustrated, Aug. 12, 1985, http://www.si.com/vault/1985/08/12/620602/just-an-awful-toll.

[14] United States Consumer Product Safety Commission, CPSC Denies Petition on Artificial Turf and Lead Levels in Paint, CPSC.gov, Sep. 3. 1976 (Feb. 17, 2016, 1:10 am), http://www.cpsc.gov/en/newsroom/news-releases/1976/cpsc-denies-petitions-on-artificial-turf-and-lead-levels-in-paint/.

[15] United States Consumer Product Safety Commission, CPSC Staff Finds Synthetic Turf Fields OK to Install, OK to Play On, CSPC.gov, Jul. 30, 2008 (Feb. 19, 2016, 11:07 pm), http://www.cpsc.gov/en/newsroom/news-releases/2008/cpsc-staff-finds-synthetic-turf-fields-ok-to-install-ok-to-play-on/.

[16] Julie Foudy, Turf Wars: How Safe are the Fields where we Play?, ESPNW, Nov. 24, 2105 (Feb. 27, 2016, 7:23 PM), http://espn.go.com/espnw/news-commentary/article/14206717/how-safe-fields-where-play (opening with an anecdote about Coach Amy Griffith keeping a list of all of the athletes who have developed lymphoma cancers, which are rare for the age group of the athletes).

[17] Id.

[18] Julia Cheever, Beach Chalet Fake Grass Survives Appeal, Bay City News, Oct. 1, 2015 (Feb. 28, 2016, 7:52 PM), http://sfbay.ca/2015/10/01/beach-chalet-fake-grass-survives-appeal/.

[19] Environment and Human Health, Inc., Artificial Turf: Exposures to Ground up Rubber Tires – Athletic Fields, Playgrounds, Garden Mulch, Environment and Human Health, Inc. (Feb. 27, 2016, 7:44 PM), http://www.ehhi.org/reports/turf/health_effects.shtml (discussing different studies which have found cancer to be linked to crumb rubber).

[20] Supra, Foudy.

[21] Supra, Environment and Human Health, Inc.

[22] This is based on the studies provided via hyperlinks that are still functioning on the EHHI’s website. They can be found here: http://www.ehhi.org/reports/turf/health_effects.shtml. See, Office of Environmental Health Hazard Assessment, Evaluation of Health Effects of Recycled Waste Tires in Playground and Track Products, Integrated Waste Management Board, January 2007 (February 28, 2016, 11:30 AM) http://www.calrecycle.ca.gov/publications/Documents/Tires%5C62206013.pdf.

[23] Office of Environmental Health Hazard Assessment, Evaluation of Health Effects of Recycled Waste Tires in Playground and Track Products, Integrated Waste Management Board, January 2007 at 1-3 (February 28, 2016, 11:30 AM) http://www.calrecycle.ca.gov/publications/Documents/Tires%5C62206013.pdf.

[24] Supra, Foudy.

[25] See generally, Magistrini v. One Hour Martinizing Dry Cleaning, 180 F. Supp. 2d 584 (D.N.J. 2002); Baldonado v. Wyeth, 2012 WL 1965408 (N.D. Ill. 2012).

[26] Supra, Foudy.

[27] Supra, United States Consumer Product Safety Commission.

[28] United States Environmental Protection Agency, Federal Research on Recycled Tire Crumbs Used on Playing Fields, EPA.gov, February 18, 2016 (Feb. 28, 2016, 2:00 PM), http://www.epa.gov/chemical-research/federal-research-recycled-tire-crumbs-used-playing-fields.

[29] Sierra Club appeals Beach Chalet court decision that ignores critical safety hazards, Sierra Club Yodeler, Jan. 30, 2014 (Feb. 28, 2016, 6:34 PM), http://theyodeler.org/?p=9013.

[30] Julia Cheever, Beach Chalet Fake Grass Survives Appeal, Bay City News, Oct. 1, 2015 (Feb. 28, 2016, 7:52 PM), http://sfbay.ca/2015/10/01/beach-chalet-fake-grass-survives-appeal/.

[31] Robert L. Rabin, Some Thoughts on the Efficacy of a Mass Torts Administrative Compensation Scheme, 52 Md. L. Rev. 951, 952 (1993) (“Critics have argued, in essence, that the present tort system, designed to achieve corrective justice goals in simple two-party accidental harm cases, is not well-constituted to adjudicate effectively mass toxics episodes, where litigation involves identifying the sources of long-latent disorders, resolving a vast array of probabilistic causation issues, dealing with enormous numbers of parties widely distributed geographically, and other related complications.”).

[32] Id. at 954.

[33] See supra note 6, in this case the lawsuit was brought by the Attorney General of the state, but it was within the tort litigation system.

[34] James T. O’Reilly, 2 Toxic Torts Prac. Guide §28:3 (2015)

[35] Rabin, supra, at 952 (noting that torts are most effective when the damages are related to the injury, the claimants are involved in the litigation, costs are low, trials are speedy, and the award provides incentive for deterrence).

[36] Albert C. Lin, Beyond Tort: Compensating Victims of Environmental Toxic Injury, 78 S. Cal. L. Rev. 1439, 1461 (2005).

[37] Id. at 1462.

[38] Id.

[39] Id. at 1452-1459, 1465.

[40] Id. at 1465.

[41] Rabin, supra, at 955-962 (describing the administrative systems behind the Price-Anderson Act, National Childhood Vaccine Act of 1986, and Environmental Law Institute Model); Clifford Fisher, The Role of Causation in Science as Law and Proposed Changes in the Current Common Law Toxic Tort System, 9 Buff. Envtl. L.J. 35, 131 (2001) (describing a system that deals with the failure of causation in mass torts to bring sufficient deterrence); Lin, supra, at 1487 (describing a system where the government would use the newest forms of technology available to it to draw conclusions about risk assessment across a wide variety of industries).

[42] This section will utilize the methodology and theories laid out in the articles in note 113, supra.

[43] Rabin, supra, at 955; 42 U.S.C. § 2210 (2006).

[44] 42 U.S.C. § 2210 (2006).

[45] Id.

[46] Rabin, supra, at 955-57.

[47] Rabin, supra, at 958; 42 U.S.C.A. §300aa-33 (2003).

[48] 42 U.S.C.A. § 300aa-14 (1993, published by Westlaw 2015).

[49] Rabin, supra, at 960.

[50]Id.

[51] Rabin, supra, 960; Jeffrey Trauberman, Statutory Reform of “Toxic Torts”: Relieving Legal, Scientific, and Economic Burdens on the Chemical Victim, 7 Harv.Envtl.L.Rev. 177, 250-96 (1983).

[52] Trauberman, supra, at 251.

[53] Id. at 258.

[54] Id. at 284-286; Rabin, supra, at 961-62.

[55] Fisher, supra, at 131.

[56] Id.

[57] Id. at 143.

[58] Id. at 144.

[59] Id.

[60] Id. at 150.

[61] Lin, supra, at 1486.

[62] Id. at 1487.

[63] Id. at 1488.

[64] Id.

[65] Id. at 1490.

[66] Id. at 1491.

[67] Id.

[68] See, infra.

[69] Kenneth S. Abraham,  Individual Action and Collective Responsibility: The Dilemma of Mass Tort Reform, 73 Virginia L. Rev. 845 (1987).

[70] Id.; Gillian K. Hadfield, Framing the Choice between Cash and the Courthouse Experiences with the 9/11 Victim Compensation Fund, 42 L. & Soc. Rev. 645, 647 (2008).

[71] Id. at 854-55.

[72] Rochelle Chodock, et. al. “Insuring” the Continued Solvency of Pharmaceutical Companies in the Face of Products Liability Action, 40 Tort Trial & Ins. Prac. L. J. 997, 1000 (2005) (proposing a compensation fund or private insurance fund that would support pharmaceutical groups).

[73]Hadfield, supra, 647 (describing how some victims would have preferred to use the court system to filling our a form).

[74] Jill Schachner Chanen, Accounting for Lives, 93 ABA J. 58, 59 (describing the story of the mother of one victim who acknowledged that she was giving up the answers she sought for compensation).

[75] Chen-Ju Chen, The Liability and Compensation Mechanism under International Marine Environmental Law, LOSI Conference Papers (2012).

[76] Id.

[77] Abraham, supra, 855.

 

 

Constitutions & the Environment: Comparative Approaches to Environmental Protection and the Struggle to Translate Rights into Enforcement

 

By Kyle Burns, J.D. Candidate, 2017, University of Virginia School of Law.* 

This post is part of the Environmental Law Review Syndicate.

Introduction

Every nation around the world faces ecological hardships. Almost every nation has responded with a legal regime that attempts to ensure environmental protection. These environmental law schemes come in various forms. Some nations place environmental protection at the highest level, securing it within a national constitution, while others relegate it to the statutory level. Some nations have positive rights, placing a duty on the government to protect the environment, while others create negative rights, preventing discharges of pollution into the air and water. What becomes clear upon analyzing different regimes is that neither the source of the right (i.e. constitutional or statutory) nor the form of the right (i.e. positive or negative) is the dispositive factor determining how protective a nation’s environmental law regime is. I submit that it is the manner in which those rights are enforced that controls the end result. Thus, even the loftiest promise of environmental quality can go unrealized in the face of substandard enforcement or outright non-justiciability, while seemingly less important statutory restrictions on pollution may achieve greater benefits.

My conclusion is supported in three parts. Part I briefly describes environmental law in the United States, providing a backdrop for the remainder of the analysis. Part II describes major features of environmental law in six nations around the world, chosen as illustrative case studies of nations with environmental provisions in their constitutions. Part II makes a point to touch upon judicial interpretation and enforcement in those nations. Finally, Part III further discusses enforcement (or lack thereof) in environmental law, returning to the United States and directly comparing the American experience to those of other nations.

I.  Environmental Law in the United States

The United States Constitution is “pre-ecological.”[1] That is, it contains no reference, either explicit or implicit, to environmental concerns.[2] As a result, federal environmental law in the United States is entirely statutory. “[I]n response to rising public consciousness during the 1950s and 1960s of the perils of pollution and of the waste of natural resources,” a multitude of environmental laws arose during the 1970s that transformed the landscape for environmental law.[3] These statutes constituted a “quasi-constitutional reordering” of federal law.[4]

Four U.S. laws stand out as most prominent: the National Environmental Policy Act, Endangered Species Act, Clean Water Act, and Clean Air Act. The National Environmental Policy Act[5] (“NEPA”) has been referred to as “the Magna Carta of environmental protection.”[6] NEPA set the environmental policy of the federal government, regulating federal agencies.[7] Its requirements include an Environmental Impact Statement “for all proposals for legislation and other major federal actions which may significantly affect the quality of the human environment.”[8] The Endangered Species Act[9] (“ESA”) was heralded as “a rudimentary bill of rights for biodiversity.”[10] It “unsettled existing standards of conduct,” creating an absolute mandate that federal agencies not jeopardize the continued existence of endangered or threatened species or adversely modify their habitat.[11] The central purpose of the Act was to “provide a means whereby the ecosystems upon which endangered species and threatened species depend may be conserved.”[12] As a result of its strong protections, the ESA “remains a strong tool for species preservation, and it has earned its eco-centric stripes.”[13] The Clean Water Act[14] (“CWA”) “succeeded a failed 1965 federal law and a common law regime that applied often vague and indeterminate nuisance concepts and maxims of equity jurisdiction.”[15] Congress passed the CWA with the purpose of “[protecting] and [restoring] the chemical, physical, and biological integrity of the Nation’s waters.”[16] Its main policy, to eliminate all discharges of pollution into the nation’s waters by 1985, was “perhaps the boldest undertaking … of any environmental law.”[17] It aspired to achieve fishable and swimmable waters everywhere by 1983.[18] The Clean Air Act[19] (“CAA”) differs slightly from the other statutes, focusing more on human health than on purely ecological interests.[20] The CAA is meant “to protect the nation’s air quality so as to promote the public health and welfare and the productive capacity of its population.”[21] The main feature of the statute, the National Ambient Air Quality Standards, is cost-blind, protecting air quality even in the face of great economic cost.[22] These four statutes form the bedrock of American environmental law, creating the foundation upon which the last four decades of environmental protection efforts in the United States have been built.

II. Environmental Rights Abroad

Looking outside the United States, one finds a diverse array of environmental law regimes around the world. Three nations in particular––South Africa, India, and Nigeria––stand out as worthwhile case studies. Each nation provides a different perspective on how environmental rights can be enshrined in different ways in constitutions, and the manners in which those guarantees are translated into rights––or, how the promise of environmental protection sometimes fails to translate into enforceable rights.

A. South Africa

The Constitution of the Republic of South Africa contains an explicit environmental right in Section 24. Section 24 is in Chapter 2 of the Constitution, which contains its Bill of Rights. It reads:

Everyone has the right––

(a) To an environment that is not harmful to their health or well-being; and

(b) To have the environment protected, for the benefit of present and future generations, through reasonable legislative and other measures that––

(i) Prevent pollution and ecological degradation;

(ii) Promote conservation; and

(iii) Secure ecologically sustainable development and use of natural resources while promoting justifiable economic and social development.[23]

In concert with Section 7(2),[24] this provision creates an affirmative duty for the South African government to take action towards its fulfillment.[25] The exact content of that duty, though, is imprecise and requires a fair amount of judicial interpretation: “The evolution of constitutional environmental law heavily relies on the ability of, and opportunity for the courts to concretize the (often elusive) meaning of all rights that may have a bearing on the environment.”[26] Most often, the Constitutional Court––the highest court in South Africa––decides these questions.[27]

Stemming from Section 24 is the National Environmental Management Act (“NEMA”), South Africa’s primary environmental framework law.[28] The statute “provides generic provisions (including environmental management principles) regulating all environmental media and sectors and all public and private actions which may affect the environment.”[29] The definition of “environment” for the purposes of Section 24 is included in NEMA.[30] That definition “transcends mere ecological interests,” extending to “the socioeconomic and cultural dimensions of the inter-relationship between people and the natural environment.”[31] Despite the inclusion of statutes such as NEMA in the environmental law regime in South Africa, “[t]he entire South African environmental law and governance framework is premised on the [constitutional] environmental right.”[32] It is “the rationale behind, justification for, and foundation and impetus of environmental governance in South Africa.”[33]

A noteworthy feature of South African law is the standing requirement. The Constitution confers standing upon the following people:

(a) Anyone acting in their own interest;

(b) Anyone acting on behalf of another person who cannot act in their own name;

(c) Anyone acting as a member of, or in the interest of, a group or class of persons;

(d) Anyone acting in the public interest;

(e) And an association acting in the interest of its members.[34]

The most prominent aspect of this broad standing doctrine is the ability of any person to bring an action in the name of the public interest. The “almost non-exhaustive” provisions allows for class actions suits, actions on behalf of unidentifiable classes, and suits on behalf of groups of people, protecting and enforcing their environmental rights.[35] This means that “the environmental right is sufficiently comprehensive and all-encompassing to provide ‘everyone’ in South Africa with the possibility of seeking judicial recourse in the event that any of several potential aspects related to the right or guarantee derived therefrom is infringed.”[36] This remarkably broad standing requirement is perhaps even more important than the constitutional guarantee itself, giving essentially any person in the nation the ability to bring a suit in order to secure environmental protection pursuant to Section 24. It contrasts sharply with the restrictive standing requirements in the United States, discussed infra, in Part III.

B. India

India’s constitution and environmental rights jurisprudence presents a particularly interesting case. While the Constitution of India does explicitly reference the environment and environmental rights, it does so in a section of the constitution that is unenforceable. Article 48A, titled “Protection and improvement of environment and safeguarding of forests and wild life,” reads, “The State shall endeavour to protect and improve the environment and to safeguard the forests and wild life of the country.”[37] Article 51A instructs, “It shall be the duty of every citizen of India … to protect and improve the natural environment including forests, lakes, rivers and wild life, and to have compassion for living creatures.”[38] While these seem like powerful and instructive provisions upon first reading them, the source of these rights constrains their application. Article 37 unambiguously makes these provisions unenforceable: “The provisions contained in [Part IV] shall not be enforceable by any court, but the principles therein laid down are nevertheless fundamental in the governance of the country and it shall be the duty of the State to apply these principles in making laws.”[39] Thus, the Indian Constitution’s explicit reference to the environment is rendered ineffective due to its non-justiciability.

This did not stop Indian courts from finding an enforceable right to a clean environment for Indian citizens. The Supreme Court of India, as well as some lower courts, has interpreted a constitutional right to a healthy environment from the constitutional right to life.[40] Article 21 of the Indian Constitution protects the right to life: “No person shall be deprived of his life or personal liberty except according to procedure established by law.”[41] The Court first implied that the right to a healthy environment was fundamental and cognizable under Article 21 in the Dehradun Quarrying Case of 1983,[42] when, in response to a claim that illegal limestone mining was damaging the ecosystems in the Dehradun region, the Court directed its clerk to treat the letter as a writ petition under Article 32––the provision that lays out remedies for violations of fundamental rights.[43] While the Court did not explicitly find that environmental protection is a fundamental right, “exercise of Article 32 jurisdiction presupposed the infringement of a fundamental right.”[44]

Following the Dehradun Quarrying Case, lower courts (specifically, the High Courts) reiterated this interpretation of Article 21. In T. Damodar Rao v. The Special Officer, Municipal Corporation of Hyderabad, one High Court held,

[I]t would be reasonable to hold that the enjoyment of life and its attainment and fulfilment [sic] guaranteed by Art. 21 of the Constitution embraces the protection and preservation of nature’s gifts without [which] life cannot be enjoyed. There can be no reason why practice of violent extinguishment of life alone should be regarded as violative of Art. 21 of the Constitution. The slow poisoning [of] the polluted atmosphere caused by environmental pollution and spoilation [sic] should also be regarded as amounting to [a] violation of Art. 21 of the Constitution.[45]

The court also determined that the Supreme Court’s decision in the Dehradun Quarrying Case “can only be understood on the basis that the Supreme Court entertained those environmental complaints under Art. 32 of the Constitution as involving violation of Art. 21’s right to life.”[46] Several other High Courts came to the same conclusions about the meaning of the Supreme Court’s decision and the proper interpretation of Article 21.[47]

Finally, in Subhash Kuimar v. State of Uttar Pradesh, the Indian Supreme Court expressly determined that Article 21 includes a right to a clean environment: “any action that would cause environmental, ecological, air, water pollution, etc., should be regarded as amounting to a violation of Article 21.”[48] In so deciding, the Court reasoned that, “life in its proper dimension could not be enjoyed unless the ecological balance and the purity of air and water were preserved.”[49]

This extension of the fundamental rights doctrine makes sense in the context of the Indian Supreme Court’s jurisprudence. The Court had previously declared that the right to life “includes the right to live with human dignity and all that goes along with it.”[50] It also declared that fundamental rights “‘weave together a pattern of human rights guarantees’ that are not mutually exclusive and distinct.”[51] Despite the lack of an express, justiciable constitutional right to a clean environment, Indian citizens secured a powerful right to the environment through their Supreme Court and its decision to enforce the right to life and personal liberty in the context of environmental harms.

C.  Nigeria

Nigeria presents still a different case. The Nigerian Constitution, like the Indian Constitution, contains an explicit environmental reference in the section that lays out policy directives, rather than fundamental rights (or otherwise justiciable rights). Its Section 20 states, “The State shall protect and improve the environment and safeguard the water, air and land, forest and wild life of Nigeria.”[52] This section is contained in the chapter entitled “Fundamental Objectives and Directive Principles of State Policy,” indicating its status as a policy position rather than a guarantee of environmental protection.[53] However, the inclusion of this policy directive carries an implication that “the State recognises the intimate linkages between the environment and human rights and that the failure of the State to protect the environment may interfere with individual human rights.”[54] In addition, the Supreme Court of Nigeria has declared that constitutional policy directives may be made justiciable through an act of the legislature.[55]

There have been efforts in Nigeria to find a right to a clean environment through the constitutional right to life and dignity and through international law, specifically the African Charter on Human and Peoples Rights.[56] A Federal High Court refused to find such a right in Okpala v. Shell Petroleum Development Company (SPDC).[57] The Court did not decide on the question of whether there is a right to a clean environment through the constitutional right to life and dignity, instead deciding that the Applicants could not sue on behalf of the community or in a representative capacity, restricting standing in fundamental rights cases to individuals bringing suits on their own behalf.[58] In addition, the Court also refused to find an enforceable right to a clean and healthy environment through the African Charter, holding that the rights guaranteed under the African Charter were not covered within the definition of fundamental rights under the scope of Section 46(1) of the 1999 Constitution, which gives citizens a right to sue for redress of a violation of fundamental rights.[59]

Nigeria is a case study in unrealized potential. Its Supreme Court has the opportunity to find an enforceable right to the environment for its people, either through its own constitution or through the African Charter. But, the Court has refused. Between an unwilling judiciary and a corrupt government that has paid little attention to the environmental catastrophes in the Niger Delta,[60] the Nigerian Constitution’s promise of environmental protection will go unfulfilled.

III. Translating Rights into Enforcement

The experiences of South Africa, India, and Nigeria demonstrate that the promise of environmental protection or environmental rights does not always translate into rights on the ground. What one finds instead is that the way in which environmental protection is secured in national laws (i.e. in a constitution or in statutes) is not the dispositive factor; both can provide effective and powerful means of securing environmental benefits. Instead, it is the availability and potency of enforcement that determines how effective an environmental protection regime will be. In the end, as often occurs, the power lies with the judiciary.

Sometimes, the enforcement problem is inherent in constitutional provision itself. Rather than creating a justiciable right, the constitution instructs the legislature to take action, without prescribing a remedy in the event the legislature is inactive. The environmental provision in India’s constitution was of this type, serving as an explicitly unenforceable policy directive, leaving Indian citizens without a constitutional environmental right until the Indian judiciary found it elsewhere in the constitution. This is also the case in Nigeria, which remains without an enforceable environmental right. Even when a constitution instructs that a legislature “shall” take action––rather than using the more permissive “may”––in an attempt to impose a duty on the legislature to act, courts may still be unwilling or unable to force action upon the legislature.[61] In this way, statutes seem preferable to constitutions, as they do not suffer from the fault of unenforceability or non-justiciability.

This discussion brings the analysis back to environmental law in the United States, where enforcement is crucial and contested.[62] While environmental protection has never reached constitutional status, its presence at the statutory level is not inherently constraining on the force of the prospective right. For instance, NEPA’s language was powerful, broad, and sweeping. The Act’s first section recognized “the profound impact of man’s activity on the interrelations of all components of the natural environment,” declaring it the federal government’s policy “to use all practicable means and measures … in a manner calculated to foster and promote the general welfare, to create and maintain conditions under which man and nature can exist in productive harmony, and fulfill the social, economic, and other requirements of present and future generations of Americans.”[63] NEPA made it the “continuing responsibility” of the federal government to direct its national policy in a way that made it possible for the nation to “fulfill the responsibilities of each generation as trustee of the environment for succeeding generations,” “attain the widest range of beneficial uses of the environment without degradation, risk to health or safety, or other undesirable and unintended consequences,” and “enhance the quality of renewable resources and approach the maximum attainable recycling of depletable resources,” among other objectives.[64] It reads like a constitutional promise of environmental rights (perhaps the source of its “Magna Carta of environmental protection” nickname).

However, the promise of NEPA still fell short, and it failed because the Supreme Court gutted the significance of this language. When NEPA came before the Court, it put an end to the prospect for substantive interpretation of NEPA’s requirements, characterizing NEPA as “essentially procedural.”[65] In addition, the Court stated that NEPA did not allow courts to substitute their judgment for an agency’s or to elevate environmental factors over any other appropriate factors, despite the strong and unambiguous language in the Act’s first section.[66] In Strycker’s Bay Neighborhood Council v. Karlen, for instance, the Court struck down the Second Circuit’s use of NEPA for “the substantive standards necessary to review the merits of agency decisions,” instead holding that NEPA was merely procedural, meant to “insure a fully informed and well-considered decision.”[67] As of 2015, in the seventeen cases that the Court has decided on the merits regarding NEPA, those bringing actions on behalf of environmental interests have never succeeded.[68] NEPA could have been read to guarantee positive rights, even a “proto-constitutional” right to environmental protection.[69] It did not matter that NEPA was a statute. What mattered was the Court’s treatment of its language and refusal to take the promises of its first section seriously.[70]

The citizen suit is an innovation of U.S. environmental law. Citizen suits allow ordinary citizens to sue either the government or private actors for violations of federal environmental laws, including ESA, CWA, and CAA.[71] It provided a mechanism for enforcement, even when the government failed to act.[72] Judges could grant plaintiffs in citizen suit actions injunctive relief and civil remedies against violators of environmental laws, providing not just a justiciable claim but a remedy for those claims as well.[73] Citizen plaintiffs may also recover attorney’s fees and litigation costs, removing common disincentives for would-be plaintiffs to take action.[74]

But, the Supreme Court restricted the availability of citizen suits by tightening the standing requirement. In Lujan v. Defenders of Wildlife, the court denied standing to a citizen suit plaintiff in an Endangered Species Act case.[75] The Court specified that a plaintiff must have an injury in fact (which is “actual or imminent, not conjectural or hypothetical”); there must be a causal connection between the alleged injury and the action complained of; and it must be likely (not merely speculative) that the injury is redressed by a favorable decision.[76] The plaintiff bears the burden of proving all three of these elements.[77] The Court rejected the plaintiffs’ claim for standing on the basis that it did not adequately allege an injury in fact.[78] The plaintiffs’ alleged injury was that the action in question would increase the rate of extinction of endangered and threatened species.[79] The Court held that this was not sufficient.[80] The plaintiffs were instead required to “submit affidavits or other evidence showing, through specific facts, not only that listed species were in fact being threatened by funded activities abroad, but also that one or more of respondents’ members would thereby be directly affected apart from their special interest in the subject.”[81] The plaintiffs also failed to demonstrate redressability, as they attacked the Government’s action broadly and generally, rather than challenging specific projects that would bring them harm.[82] In denying the Lujan plaintiffs standing, the Court “sent a message to environmentalists and other public interest advocates that it would be tougher in policing limits on judicial access than in the past.”[83] It restricted the availability of citizen suit enforcement, which was intended to give the public the power to enforce environmental statutes. This stands in stark contrast to South Africa, where standing is virtually limitless.[84]

While some advocate for an environmental amendment to the United States Constitution, arguing that “[p]rotection of the environment has now become an urgent responsibility to which our traditional legal system responds inadequately,”[85] it is unclear whether such an amendment would have a profound impact. The experiences both at home and abroad demonstrate that the power to determine the strength of environmental rights lies with the judiciary. If the U.S. experience to date is any indication, between gutting the substance of NEPA and restricting the availability of standing for citizen suit plaintiffs, even a strong environmental amendment would likely face intense scrutiny from courts, especially the Supreme Court, who may still find a way to truncate the guarantees of the amendment and the availability of enforcement for the rights therein.

Conclusion

When breaking down the environmental law regimes of nations from around the world, two things become undeniably clear: enforcement matters, and the power ultimately rests with the judiciary. Even though the U.S. Constitution lacks any environmental provision, the environmental protections guaranteed by four major federal environmental statutes (alongside the many others) reach constitutional levels. Those laws, as written and intended, provide broad, sweeping guarantees, establishing the new environmental policy of the nation and securing environmental quality for its people. It was not until the courts defanged those laws via standing requirements that they lost their original luster and possibility. Though it may seem that environmental rights are better protected when located in the nation’s constitution, the experiences of the United States, South Africa, India, and Nigeria readily demonstrate that this is not the case. Both constitutional and statutory rights can succeed and both can fail. Instead, the judiciary––often, the nation’s highest court––ultimately determines whether the guarantees of those laws and their impressive language translate into actionable rights. Often, the promise is left unfulfilled.

* J.D. Candidate, 2017, University of Virginia School of Law. The author would like to thank Professor A.E. Dick Howard, whose seminar in comparative constitutional law inspired this piece.

[1] Jonathan Z. Cannon, Environment in the Balance 29 (2015).

[2] Id.

[3] Richard J. Lazarus, The Greening of America and the Graying of United States Environmental Law: Reflections on Environmental Law’s First Three Decades in the United States, 20 Va. Envtl. L.J. 75, 76–77 (2001).

[4] Cannon, supra note 1, at 33.

[5] 42 U.S.C. § (2012).ion 2014ction span (rather than et seq) law studentse on Federal Sentencing, taken of 2017. client?§ 4321–70m (2012).

[6] Cannon, supra note 1, at 34.

[7] Id.

[8] Joseph C. Sweeney, Protection of the Environment in the United States, 1 Fordham Envtl. L. Rep. 1, 15 (1989) (internal quotation marks omitted).

[9] 16 U.S.C. § 1531–44 (2012 & Supp. 2014).75jan. Hillearra Clubtitlementrectionsthird-year law studentse on Federal Sentencing, taken of 2017. client?

[10] Cannon, supra note 1, at 35.

[11] Lazarus, supra note 3, at 79.

[12] J.B. Ruhl, Keeping the Endangered Species Act Relevant, 19 Duke Envtl. L. & Pol’y F. 275, 280 (2009).

[13] Cannon, supra note 1, at 35.

[14] 33 U.S.C. §§ 1251388 (2012 & Supp. 2014).

[15] David Drelich, Restoring the Cornerstone of the Clean Water Act, 34 Colum. J. Envtl. L. 267, 269 (2009).

[16] Cannon, supra note 1, at 35 (internal quotation marks omitted).

[17] Id.

[18] Lazarus, supra note 3, at 78.

[19] 42 U.S.C. §§ 74017671q (2012 & Supp. 2014).

[20] Cannon, supra note 1, at 36.

[21] Id. (internal quotation marks omitted).

[22] Id.

[23] S. Afr. Const. ch. 2, § 24 (1996).

[24] Id. § 7(2) (“The state must respect, protect, promote and fulfill the rights in the Bill of Rights.”).

[25] Louis J. Kotzé & Anél du Plessis, Some Brief Observations on Fifteen Years of Environmental Rights Jurisprudence in South Africa, 3 J. Ct. Innovation 157, 158 (2010).

[26] Id.

[27] Id. at 161.

[28] Id. at 164, n.24.

[29] Id.

[30] See id. at 166.

[31] Id.

[32] Id.

[33] Id.

[34] S. Afr. Const., ch. 2, § 28 (1996).

[35] Kotzé & Plessis, supra note 25, at 163–64.

[36] Id. at 168.

[37] India Const. pt. IV, art. 48A (1949).

[38] Id. pt. IVA, art. 51A(g).

[39] Id. pt. IV, art. 37.

[40] See Peggy Rodgers Kalas, Environmental Justice in India, 1 Asia-Pac. J. on Hum. Rts. & L. 97, 108 n.51 (2000).

[41] India Const, pt. III, art. 21.

[42] Rural Litigation and Entitlement, Dehradun v. State of Uttar Pradesh, AIR 1985 SC 652.

[43] See Kalas, supra note 40, at 109.

[44] Id.

[45] T. Damodhar Rao v. The Special Officer, Municipal Corporation of Hyderabad, AIR 1987 AP 171, 181.

[46] Id.

[47] See, e.g., L.K. Koolwal v. State of Rajasthan, AIR 1988 Raj. 2; Madhavi v. Thilakan, 1988(2) Ker. L.T. 730; Kinkri Devi and Anr. v. State of Himachal Pradesh, AIR 1988 HP 4.

[48] Kalas, supra note 40, at 111 (citing Subhash Kuimar v. State of Uttar Pradesh, JT 1991 (1) SC 538).

[49] Id.

[50] Francis Coralie Mullin v. Union Territory of Delhi, AIR 1981 SC 746, 753.

[51] Kalas, supra note 40, at 109 n.54 (citing Maneka Gandhi v. Union of India, (1978) 2 SCR 621, 620–21).

[52] Constitution of Nigeria (1999), § 20.

[53] See id.

[54] Uchenna Jerome Orji, Right to a Clean Environment: Some Reflections, 42 Envtl. Pol’y & L. 285, 286 (2012).

[55] Id.

[56] Id. at 289.

[57] Id. at 288–89 (citing Okpala v. Shell Petroleum Development Company (SPDC), No. FHC/PHC/C5/518/2006 of 29 September, 2006).

[58] Id. at 289.

[59] Id. at 290.

[60] See generally Ibibia Lucky Worika, Deprivation, Despoilation and Destitution: Whither Environment and Human Rights in Nigeria’s Niger Delta?, 8 ILSA J. Int’l & Comp. L. 1 (2001).

[61] See A.E. Dick Howard, State Constitutions and the Environment, 58 Va. L. Rev. 193, 199 (1972).

[62] See, e.g., Drelich, supra note 15, at 268 (“Enforcement serves as the cornerstone of the Clean Water Act, but in recent years it has eroded. Two of the causes are obvious—eight years of an Administration notoriously hostile to environmentalism, and a pair of damaging Supreme Court cases.”).

[63] 42 U.S.C. § 4331(a) (2012).

[64] Id. § 4331(b).

[65] Vt. Yankee Nuclear Power Corp. v. NRDC, 435 U.S. 519, 558 (1978). See also Karin P. Sheldon, NEPA in the Supreme Court, 25 Land & Water L. Rev. 83, 84 (1990).

[66] Kleppe v. Sierra Club, 427 U.S. 390, 410 n.21 (1976). See also Sheldon, supra note 65, at 84.

[67] Strycker’s Bay Neighborhood Council v. Karlen, 444 U.S. 223, 227 (1980).

[68] Cannon, supra note 1, at 34.

[69] Id.

[70] However, the Supreme Court has upheld strong readings of other environmental statutes. See TVA v. Hill, 437 U.S. 153 (1978) (holding that Congress’s intent in passing the Endangered Species Act was to halt and reverse the trend of species extinction, even in the face of great economic cost).

[71] Cannon, supra note 1, at 37.

[72] Id.

[73] Id.

[74] Id.

[75] Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992).

[76] Id. at 560–61 (internal citation marks omitted).

[77] Id. at 561.

[78] Id. at 563–64.

[79] Id. at 562.

[80] Id. at 563.

[81] Id. (internal quotation marks omitted).

[82] Id. at 568.

[83] Cannon, supra note 1, at 29–30.

[84] See supra Part II.A.

[85] Lynton K. Caldwell, The Case for an Amendment to the Constitution of the United States for the Protection of the Environment, 1 Duke Envtl. L. & Pol’y F. 1, 1 (1991).

[ELRS] With Energy Law Federalism Under Construction, State Policymaking May Be Delayed

By John Bullock, Executive Editor, Harvard Environmental Law Review.*

This post is part of the Environmental Law Review Syndicate

Introduction

As the public has become more aware of the intense connection between the practices of electric utilities and greenhouse gas emissions, interested groups have shone a brighter spotlight on the regulation of utilities in the United States. Some have called on the Federal Energy Regulatory Commission (“FERC”) to take on a more environmentally conscious role when exercising their authority to set wholesale rates.[1] While FERC still hasn’t explicitly taken environmental considerations into wholesale rate setting, it has taken steps to continue to ensure reliability as the nation’s energy portfolio composition shifts.[2]

Generally, under the Federal Power Act, FERC has jurisdiction over sales of electricity for resale in interstate commerce (wholesale sales), electricity transmission, and practices “affecting” rates.[3] The Supreme Court recently authorized a construction of FERC’s jurisdiction in FERC v. Electric Power Supply Association (“EPSA”) to include practices that “directly affect” wholesale rates.[4] This decision was seen as good for clean energy, as it removed barriers for demand response resources[5] to compete in the wholesale market in the short-term, while allowing FERC to have more regulatory flexibility in the long-term.[6]

At the state level, legislators and regulatory bodies generally retain the authority to set retail rates, maintain and site local facilities, and to establish resource portfolios.[7] There are a wide range of potential policies that can be used to foster clean energy, including feed-in tariffs,[8] renewable portfolio standards,[9] rebates for renewables,[10] a carbon tax,[11] a ban on carbon imports and new coal plant construction,[12] and net-metering policies.[13] A majority of states in the country have passed some form of a renewable portfolio standard mandating a certain percentage of the state’s electricity come from renewable resources.[14] These policies can originate in the state legislature or can come from the state utility regulator directly.[15] These state policies use several different regulatory tools, from market-based incentives like renewable energy credits to other state law mechanisms such as long-term power purchase agreements or mandated utility-owned renewable generation.

Some of these state clean energy policies have recently been challenged or are currently being challenged in the federal courts on preemption and dormant commerce clause grounds.[16] Challenges to these policies typically allege that the state programs are either preempted by the Federal Power Act, or are an impermissible intrusion into Congress’s exclusive power to regulate interstate commerce.

The Court, by authorizing an expansion of FERC’s jurisdiction in EPSA, and by failing to clarify the preemption analysis under the Federal Power Act in another recent case, Hughes v. Talen Energy Marketing LLC, may have inadvertently created considerable uncertainty about the extent of federal and state authority—or at least failed to remedy existing uncertainty. More thorough discussions on the shifting approach to the division of state and federal authority in energy law can be found elsewhere.[17] This Article will instead offer some speculation about the impacts of EPSA and Hughes on state policymaking.

FERC v. EPSA and Hughes v. Talen Energy Marketing

In Federal Energy Regulatory Commission v. Electric Power Supply Ass’n, the Supreme Court upheld FERC’s assertion of jurisdiction by allowing it to regulate practices that “directly affect” wholesale rates.[18] At issue in EPSA was whether FERC had authority to regulate demand response transactions (where a provider contracts with consumers to reduce energy consumption), or whether those transactions should be classified as “retail sales.”[19] The Federal Power Act grants FERC jurisdiction over practices affecting rates, and in EPSA, the Court adopted a D.C. Circuit test that cabined that authority to practices “directly affecting” rates.[20] After adopting the directly affecting test, the Court found that FERC had jurisdiction over demand response practices, that the rule did not impermissibly tread into authority reserved to the states, and that FERC did not act arbitrarily and capriciously in its decision to compensate electricity users at the same rates as electricity generators.

Whereas EPSA dealt primarily with the extent of FERC’s jurisdiction under the Federal Power Act, Hughes v. Talen Energy tackled the separate but related issue of whether a state program was preempted under the Federal Power Act.[21] The case was on review from the Fourth Circuit, where the appellate court found that a Maryland program was preempted both as a matter of field preemption (because FERC “occupies the field” of setting wholesale rates), and also as a matter of conflict preemption (because rates under Maryland’s program conflicted with FERC approved rates).[22] On review, the Supreme Court affirmed the lower court’s ruling, albeit on narrow grounds, finding that the Maryland program “impermissibly intrude[d] upon the wholesale electricity market, a domain Congress reserved to FERC alone.”[23]

One could argue that the Supreme Court narrowed the scope of the Fourth Circuit holding. For example, the Court distinguished between contracts-for-differences (which was the regulatory mechanism that Maryland deployed to encourage new natural gas plant development) and other more traditional long-term power purchase agreements.[24] However, in other ways, the Court’s opinion is actually more ambiguous—the Court does not clarify whether the correct analytical approach here should be conflict, field, or another form of preemption analysis,[25] and two Justices wrote concurring opinions to advocate for their distinct approaches.[26]

Because the opinion only addressed a narrow set of situations, the court did little if anything to address whether any other state regulatory mechanisms designed to encourage renewable deployment would be preempted under the Federal Power Act, and specifically limited their holding to Maryland’s program.[27] The decision provides no guidance on how to analyze these state law regulatory programs unless they contain contracts-for-differences that are pegged to a FERC-approved wholesale price, as Maryland’s program did. Therefore, the case is unlikely to act as a prophylactic to the litigation that is ongoing in the lower courts.[28] It makes one wonder why the Supreme Court took the case in the first place—there was no circuit split after the Fourth Circuit’s decision, and the Court failed to use the case as an opportunity to instruct the lower courts.

Putting Hughes and EPSA Together:
Examining Impacts on State Regulatory Authority

Combining the holding from EPSA with Hughes along with some of the more archaic language in previous energy preemption cases provide ample fuel for challenges to state renewable energy policies. Simply, if the Federal Power Act draws a jurisdictional “bright-line,”[29] or if “[i]t is common ground that if FERC has jurisdiction over a subject, then the States cannot have jurisdiction over the same subject,”[30] then any practice that “directly affects” wholesale rates should be exclusively within FERC’s jurisdiction. This could result in effectively shrinking state regulatory authority after EPSA and Hughes.

Still, the extent of practices that come within FERC’s “affecting” jurisdiction is unknown, and it may be that FERC must first exercise this jurisdiction over a particular practice before it has a preemptive effect. However, this doesn’t prevent litigants from making those arguments in the lower courts to invalidate clean energy programs, and Hughes may stand as a missed opportunity to clarify the scope of preemption under the Federal Power Act.

In fact, litigants are already citing Hughes and EPSA to challenge state clean energy programs. On October 2016, the Coalition for Competitive Energy filed a challenge to the New York Public Service Commission’s Clean Energy Standard in the Southern District of New York.[31] The Clean Energy Standard was issued in August,[32] and set a target for New York to obtain fifty percent of their electricity from renewable resources by 2030.[33] In addition to continuing New York’s renewable energy credit program,[34] the Clean Energy Standard included a requirement that load-serving entities purchase Zero-Energy Credits that correlate with electricity generated by nuclear facilities.[35] Coalition for Competitive Energy is challenging this specific program (the zero-emissions credits) in their complaint, alleging that it “operates within the area of FERC’s exclusive jurisdiction” and should therefore be preempted.[36] The petition cites EPSA to argue that “[s]tate actions that ‘directly affect the wholesale rate’” are invalid.[37]

Additionally, the Second Circuit recently granted Allco’s request for an injunction to prevent state officials from conducting a clean energy request for purchase (“RFP”) in Connecticut.[38] The decision did not enjoin state officials in Massachusetts and Rhode Island who are also participating in the RFP.[39] While the Second Circuit did not disclose their reasoning when it granted the injunction,[40] Allco’s petition for injunction pointed to Hughes when arguing that the program was preempted under the Federal Power Act.[41]

While it may seem that uncertainty in the preemption context is a net loss for individuals concerned about an accelerated transition to clean energy, climate advocates may also weaponize Hughes in other contexts to argue that other state polices that prop up coal and natural gas plants are preempted by the Federal Power Act. For example, the Ohio Public Utilities Commission recently attempted to use power-purchase agreements—which can sometimes be a tool to generate procure renewables[42]—to subsidize coal plants in the state.[43] The proposal was blocked by FERC before it could take effect,[44] but the program could have been challenged under Hughes if it remained in place.

Both examples citing to Hughes show challenges to state energy programs that operate outside of FERC-approved markets, unlike the Maryland program at issue in Hughes where the parties adjusted the FERC-approved rate.[45] Perhaps the biggest challenge going forward for clean energy advocates will be how to distinguish state programs that do not advance climate goals (like the Maryland program at issue in Hughes) from those that do (such as the program at issue in Allco), when both often use the exact same regulatory tools.

The Supreme Court may return to the question of the extent of federal and state authority under the Federal Power Act sometime within the next few years. It could reach one of several conclusions. It may reaffirm past language about the “bright-line” between federal and state regulatory authority—confirming that EPSA represented an expansion of FERC’s power and a simultaneous restriction on state authority. It may endorse some form of concurrent jurisdiction, as it did in the Natural Gas Act context in Oneok Inc. v. Learjet, Inc.,[46] and if it does, it may then decide how to restructure the preemption analysis under this concurrent jurisdictional model. It may establish some method of floor preemption,[47] or alternatively, it may leave the preemption decision up to the federal agency,[48] as it does in some other contexts.[49] Also, the Court may simply leave the resolution of these issues up to the lower federal courts.

Conclusion

Regardless of the approach the court takes, the fact that all of these questions remain open and unresolved currently creates considerable legal uncertainty for state regulators that are trying to update and craft effective clean energy laws. States are already testing the boundaries of their authority in many instances,[50] and many may continue to do so despite these new uncertainties. Further, it may be impossible to disaggregate the influence that legal uncertainty is having on state regulators from other influences such as political pressures. I would assume state legislators and regulators—some that are designing state laws to ensure their compliance with the Clean Power Plan—would likely prefer clarity on what regulatory mechanisms they are allowed to use without running afoul of the Supremacy Clause. Hughes thus represents a missed opportunity, and the recent power trio of Oneok, EPSA, and Hughes may shortly turn into a quartet.

* J.D. Candidate, Harvard Law School. The author would like to thank Ari Peskoe, Senior Fellow in Electricity Law at the Harvard Environmental Law Program Policy Initiative, and Robin Smith and Nate Bishop for their help and advice. Any mistakes or omissions are the author’s own.

[1] See, e.g., Christopher Bateman and James T.B. Tripp, Towards Greener FERC Regulation of the Power Industry, 38 Harv. Envtl. L. Rev. 275 (2014) (arguing that consideration of environmental consequences by FERC is permissible under the Federal Power Act); Joel B. Eisen, FERC’s Expansive Authority to Transform the Electricity Grid, 49 U.C. Davis L. Rev. 1783, 1788 (2016) (arguing that under recent case law, FERC may now include environmental considerations into wholesale rates so long as those considerations “directly affect” those rates); Steven Weissman & Romany Webb, Berkeley Center for Law, Energy & the Environment, Addressing Climate Change Without Legislation: Volume 2, How the Federal Energy Regulatory Commission Can Use Its Existing Legal Authority to Reduce Greenhouse Gas Emissions and Increase Clean Energy Use (2014), https://perma.cc/JH8H-FLYT (arguing that FERC can add the cost of carbon when setting the prices in the wholesale market).

[2] Order No. 1000, Transmission Planning and Cost Allocation by Transmission Owning and Operating Public Utilities, 136 FERC ¶ 61,051, 76 Fed. Reg. 49841 (Aug. 11, 2011) (codified at 18 C.F.R. § 35) (requiring regional transmission planning to consider state and local public policy requirements); Order No. 745, Demand Response Compensation in Organized Wholesale Energy Markets, 134 FERC ¶ 61,187, 76 Fed. Reg. 16657 (Mar. 24, 2011) (codified at 18 C.F.R.§ 35.28(g)(1)(v)) (allowing demand response providers to bid into the wholesale market).

[3] New York v. FERC, 535 U.S. 1, 6–7 (1996).

[4] 136 S. Ct. 760, 773 (2016).

[5] FERC defines demand response as “a reduction in the consumption of electric energy by customers from their expected consumption in response to an increase in the price of electric energy or to incentive payments designed to induce lower consumption of electric energy.” 18 C.F.R. § 35.28(b)(4) (2015).

[6] See Joel B. Eisen, FERC v. EPSA and the Path to a Cleaner Energy Sector: Introduction, 40 Harv. Envtl. L. Rev. Forum 1, 7–8 (2016) (“In the long run, this concise, broad jurisdictional standard gives FERC considerable flexibility to promote a cleaner, more efficient Smart Grid.”).

[7] See 16 U.S.C. § 824 (a)–(b) (2016); New York, 535 U.S. at 19–25 (“FERC has recognized that the states retain significant control over local matters . . . [including] generation and transmission siting . . . [and] authority over utility generation and resource portfolios”) (citing Order No. 888, Promoting Wholesale Competition Through Open Access Non-discriminatory Transmission Services by Public Utilities, 75 FERC ¶ 61,080, 61 Fed. Reg. 21540, 21,626 n.543, n.544 (May 10, 1996) (codified at 18 C.F.R. § 35 and § 385)).

[8] See generally Toby Couture and Karlynn Cory, National Renewable Energy Laboratory, State Clean Energy Policies Analysis (SCEPA) Project: An Analysis of Renewable Energy Feed-in Tariffs in the United States (2009), https://perma.cc/G2MZ-AY7F.

[9] See generally David Hurlbut, National Renewable Energy Laboratory, State Clean Energy Practices: Renewable Portfolio Standards (2008), https://perma.cc/JWE4-J9BB.

[10] See generally Eric Lantz and Elizabeth Doris, National Renewable Energy Laboratory, State Clean Energy Practices: State Renewable Rebates (2009), https://perma.cc/HWE7-EBZM.

[11] The State of Washington considered a carbon tax in a 2016 ballot initiative. See, Initiative Measure No. 732 (filed March 29, 2016) https://perma.cc/26ZL-Z9D8.

[12] Minn. Stat. § 216H.03, subd. 3(2) and (3) (2007) (“no person shall . . . (2) import or commit to import from outside the state power from a new large energy facility that would contribute to statewide power sector carbon dioxide emissions; or (3) enter into a new long-term power purchase agreement that would increase statewide power sector carbon dioxide emissions.”)

[13] See generally Edison Electric Institute, Solar Energy and Net Metering (2016), https://perma.cc/Z3GU-5LKV.

[14] Jocelyn Durkay, “State Renewable Portfolio Standards and Goals,” National Conference of State Legislatures (July 27th, 2016) (reporting that “Twenty-nine states, Washington, D.C. and three territories have adopted an RPS, while eight [additional] states have set renewable energy goals”). https://perma.cc/DV9L-JRRL.

[15] See Public Service Commission of N.Y., Order Adopting a Clean Energy Standard (Aug. 1 2016). https://perma.cc/3GSF-Q36Z.

[16] See, e.g., North Dakota v. Heydinger, 825 F.3d 912 (8th Cir. 2016) (of three separate opinions, two held that Minnesota statute was preempted by the Federal Power Act); Rocky Mountain Farmers Union, et al., v. Richard W. Corey, 730 F.3d 1070 (9th Cir. 2013); Energy and Environmental Legal Institute v. Epel, 793 F.3d 1169 (10th Cir. 2015); Allco Finance Ltd. v. Klee, 805 F.3d 89, 95–96 (2d Cir. 2015) (rejecting plaintiff’s argument that solar contracts approved by the state regulator were preempted by the Public Utilities Regulatory Policies Act); see also Harvard Environmental Law and Policy Institute, State Power Project: Examining State Authority in Interstate Electricity Markets, https://statepowerproject.org (2016).

[17] Jim Rossi, The Brave New Path of Energy Federalism, 95 Tex. L. Rev. (forthcoming 2016).

[18] EPSA, 136 S.Ct. at 773.

[19] The D.C. Circuit found that FERC’s regulation of demand response transactions impermissibly intruded outside of FERC’s authorized jurisdiction under the Federal Power Act. EPSA v. FERC, 753 F.3d 216, 222 (D.C. Cir. 2014).

[20] EPSA, 136 S.Ct. at 774 (citing Calif. Independent System Operator v. FERC, 372 F.3d 395, 403 (D.C. Cir. 2004)).

[21] Hughes v. Talen Energy Marketing LLC, 136 S. Ct. 1288 (2016).

[22] PPL Energy Plus, LLC v. Nazarian, 753 F.3d 467 (4th Cir. 2014).

[23] Hughes, 136 S. Ct. at 1292.

[24] Id. at 1299 (“But the contract at issue here differs from traditional bilateral contracts in this significant respect: The contract for differences does not transfer ownership of capacity from one party to another outside the auction.”).

[25] Id. at 1297 (“A state law is preempted where Congress has legislated comprehensively to occupy an entire field of regulation, leaving no room for the States to supplement federal law,” as well as “where, under the circumstances of a particular case, the challenged state law stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress” (citations omitted).

[26] Id. at 1300 (Sotomayor, J., concurring) (clarifying that the purpose of the Federal Power Act should serve as the “ultimate touchstone” for the preemption analysis and the Court should resist “talismanic” preemption vocabulary); id. at 1301 (Thomas, J., concurring) (stating that he would not rest his holding on principles of implied-preemption).

[27] Id. at 1299 (“Our holding is limited: We reject Maryland’s program only because it disregards an interstate wholesale rate required by FERC. We therefore need not and do not address the permissibility of various other measures States might employ to encourage development of new or clean generation, including tax incentives, land grants, direct subsidies, construction of state-owned generation facilities, or re-regulation of the energy sector. Nothing in this opinion should be read to foreclose Maryland and other States from encouraging production of new or clean generation through measures untethered to a generator’s wholesale market participation.”).

[28] See supra note 16 and accompanying text.

[29] Federal Power Commission v. Southern Cal. Edison Co., 376 U.S. 205, 215–216 (1964) (“Congress meant to draw a bright line easily ascertained, between state and federal jurisdiction. . .”). But see Oneok, Inc. v. Learjet, Inc., 135 S. Ct. 1591, 1601 (2015) (describing the clear division between federal and state authority in the Natural Gas Act context as a “Platonic ideal”); FERC v. EPSA, 136 S.Ct. 760, 780 (2016) (“The [Federal Power Act] makes federal and state authority complementary”); Hughes v. Talen Energy Marketing, LLC., 136 S.Ct. 1288 (2016) (Sotomayor, J., concurring) (“the Federal Power Act, like all collaborative federalism statutes, envisions a federal-state relationship marked by interdependence”).

[30] Mississippi Power & Light Co. v. Mississippi ex. rel. Moore, 487 U.S. 354, 377 (1984) (Scalia, J., concurring). The majority opinion also acknowledges “FERC has exclusive authority to determine the reasonableness of wholesale rates. . .” Id. at 355.

[31] Complaint, Coalition for Competitive Energy v. Zibelman (S.D.N.Y. filed Oct. 19, 2016) (No. 1:16-cv-08164), https://perma.cc/U9Z9-2UR6.

[32] Public Service Commission of New York, Order Adopting a Clean Energy Standard (Aug. 1 2016), https://perma.cc/J82W-XSZP.

[33] Id. at 6.

[34] Id. at 38.

[35] Id. at 45.

[36] Complaint at 5, Coalition for Competitive Energy v. Zibelman, (S.D.N.Y. filed Oct. 19, 2016) (No. 1:16-cv-8164), https://perma.cc/U9Z9-2UR6.

[37] Id. at 11.

[38] Order Granting Preliminary Injunction, Allco Finance Ltd. v. Klee (2d. Cir. 2016) (No. 16-2946).

[39] See id.

[40] See id.

[41] Petition for Injunction at 2, Allco Finance Ltd. v. Klee, No. 16-2946 (2d. Cir. 2016) (No. 16-2946).

[42] Cf. American Council on Renewable Energy, Renewable Energy in Massachusetts (2014), https://perma.cc/V6GF-GEF8 (“In February 2014, the state approved 12 long-term power purchase agreements with four Massachusetts utilities for 409 MW of wind projects in Maine and New Hampshire”).

[43]See In the Matter of the Application of Ohio Electric Company, Case No. 14-1297-EL-SSO (Pub. Util. Comm’n of Ohio 2016), https://perma.cc/T24L-6XCA.

[44] Gavin Bade, FERC Blocks Ohio Power Plant Subsidies for AEP and FirstEnergy, Utility Dive (Apr. 28, 2016), https://perma.cc/4ZCG-SPQT.

[45] Hughes v. Talen Energy Marketing LLC, 136 S. Ct. 1288, 1299 (2016).

[46] 135 S. Ct. 1591, 1599 (instructing that for preemption under the Natural Gas Act, the appropriate inquiry is to examine the target at which state law “aims”).

[47] Jim Rossi and Thomas G. Hutton, Federal Preemption and Clean Energy Floors, 91 N.C. L. Rev. 1283 (2013).

[48] See Rossi, supra note 17 at 65 (stating that whether state programs are preempted may be left to FERC, as opposed to a case-by-case determination by the judiciary).

[49] See generally Brian Galle & Mark Seidenfeld, Administrative Law’s Federalism: Preemption, Delegation and Agencies at the Edge of Federal Power, 57 Duke L. J. 1933 (2008).

[50] See supra note 16 and accompanying text.