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Prue Taylor of the New Zealand Centre for Environmental Law
This overview considers a variety of legal actions against both governments and government agencies (public actions), and against corporate entities (private actions). It is generally considered that governments and corporations in non-Kyoto Protocol ratifying nations are the most vulnerable to litigation, eg USA and Australia. However, nations that are dramatically failing to meet Kyoto obligations will also be at risk, eg Canada. As the gap between Kyoto obligations and the stringent cuts recommended by the Intergovernmental Panel on Climate Change (IPCC) grow, no nation and no corporation can consider themselves safe.
Over the past decade, the rate of climate change litigation has been rising slowly. By 2006 there were around ten significant cases. In 2007, increasing scientific certainty, emerging legal precedent and growing public awareness of climate change, are combining to create potent motivators for legal action.
An overview of climate change litigation
Climate change litigation began a decade ago but, until recently, few cases have delivered significant success. Progress has, however, been made in resolving some of the difficult legal issues inherent in climate change litigation. These include legal standing, causation, present harm, and duties of care. Parallels have been drawn between climate change and large environmental pollution cases, such as acid rain, and with early tobacco litigation. While there are similarities, there are also significant differences. These differences include complexities in proving that anthropogenic greenhouse gases caused the harm that is claimed, widespread generalised harm from global to local and the fact that contributing causes are the result of common economic and social activity.
Plaintiffs in climate change litigation are likely to be individuals including group actions, environmental and social responsibility groups and governments. In the case of governments, actions can be between state and federal governments or between sovereign nation states. Defendants include large GHG emitters, suppliers of fossil fuels, producers of products using fossil fuels, eg cars, and governments and government agencies with regulatory or permitting authority. Recent scientific evidence is beginning to lead to the door of less obvious parties including foresters, in the case of deforestation, and biofuel producers in the case of significant land use changes.
Motivations for litigation include compensation for present or future anticipated harm, prevention of continuing high emissions and the focusing of public attention. The most likely motivation will be to use the threat of litigation to influence larger changes to government and corporate policy.
Public law actions (international)
There have been few cases drawing on international environmental legal obligations, partly due to the difficulties inherent in establishing a cause of action and in finding a forum with jurisdiction. But the biggest problem is in finding nations with sufficient political will to pursue other nation states. The most likely litigants are those of small island nation states vulnerable to inundation. In 2002, for example, the island state of Tuvalu threatened legal action before the International Court of Justice against the USA and Australia but, to date, no action has occurred.
International human rights actions are generally considered to present better opportunities for success, based on either express rights to a decent environment, or on violation of fundamental rights such as those to life, liberty and property, as a result of environmental degradation. A petition to the International American Commission on Human Rights, by the Inuit people, asks for relief from human rights violations as a result of climate change caused by acts and omissions of the US.
Public international law obligations under the World Cultural and Natural Heritage Convention have also been the subject of climate change related petitions. Petitioners are currently asking for specified World Heritage Sites to be placed on the List of World Heritage in Danger, due to the impacts of climate change.
Public law actions (domestic)
Domestic environmental laws often provide a basis for action against governments and their agencies. Such action is usually intended to ensure statutory obligations to protect the environment are met, including those in relation to GHGs and the impacts of climate change. Where a government agency is required to use environmental assessment procedures as part of decision making on development projects or on the scope of regulatory measures, corporate interests are likely to be directly involved. For these reasons, corporate bodies often join government agencies in proceedings.
New Zealand
A number of cases for the permitting of gas fired power stations, have taken GHG emissions into account. These emissions have been treated as contributing to climate change and to resultant ecological harm. NZ courts have recognised international obligations under the Kyoto Protocol and the UN Framework Convention and the need for united compliance efforts to avoid Hardin’s tragedy of the commons.
In 2005, Greenpeace NZ challenged a decision to permit a coal-fired power station. A 2004 law change meant that GHG emissions could no longer be treated as an air discharge. However, the plaintiff successfully argued that climate change was still a relevant consideration, requiring decision makers to compare GHG intensive energy projects with those using renewable energy, such as wind power. This case is currently on appeal.
Australia
An interesting line of cases challenging the permitting of Australian coal mines began in 2004. The issue raised was whether environmental impact assessment (EIA) for coal mines should extend to include GHG emissions from coal subsequently purchased and used by third parties. Courts in a number of states generally accepted arguments from environmental groups, opening the way to challenge administrative decisions with respect to GHG producing developments and industries. A particularly important aspect of the 2004 decision was judicial comment that requirements to reduce GHG emissions from coal-fired power stations was important for ecological reasons and as a means of balancing present interests with future interests. This has been read as an indication that current economic benefits should no longer be traded off against the interests of future generations.
USA
One of the most significant cases on climate change so far has been the US Supreme Court ruling in Commonwealth of Massachusetts, et al v EPA. This litigation was initiated by 13 US States and territories, 13 NGOs and a number of municipalities. The respondent was the federal Environmental Protection Authority (EPA), supported by automobile manufacturers and associations, 10 US States, fossil fuel suppliers and power generators. The petitioners sought a review of EPA’s decision not to regulate GHG emissions from new motor vehicles under the Clean Air Act (CAA). The EPA maintained that the Act did not authorise them to regulate emissions due to an absence of Congressional intent that the CAA be used to regulate GHGs as a means of responding to climate change.
The US Court of Appeals for the District of Columbia Circuit dismissed the petition in 2005. This Court found that the EPA did have authority to regulate under the CCA, but that the EPA’s decision not to exercise that authority was based on proper grounds. This decision left difficult issues of legal standing unresolved. These included issues of harm, actual and potential, and the viability of regulation to redress harm.
In 2006 the US Supreme Court agreed to hear an appeal and delivered its decision in April 2007. It found in favour of the petitioners, namely that the EPA has authority to regulate under the CAA as carbon dioxide is an air pollutant. Further that there were no legal grounds supporting the EPA’s refusal to use authority under the CAA to regulate emissions.
Legal commentary is of the view that this decision will both significantly embolden potential litigants and fundamentally alter US political discourse on climate change. This is partly due to judicial findings in relation to legal standing. The Court determined that there was now sufficient scientific consensus on the link between anthropogenic GHG emissions and climate change and associated harms, the combined effect of which was to create sufficient standing to sue in courts to address climate change. Further, that states and individuals were suffering harm now and that those harms were both serious and well recognised. The shared nature of the injuries did not preclude individual petitioners right to sue. The EPA must now reconsider its decision and decide what steps it will take to address emissions from both motor vehicle and stationary sources. These sources currently account for around 60 per cent of US carbon dioxide emissions.
Nigeria
Human rights based claims centre around the argument that acts or omissions contributing to the release of GHG emissions and climate change create environmental harms that infringe on fundamental human rights, such as those to human life, health and property. In jurisdictions where there are constitutionally protected rights to a decent or healthy environment, the potential for successful action is enhanced. One landmark case under this cause of action is the 2005 decision of the federal High Court of Nigeria, ordering Shell Petroleum of Nigeria to stop gas flaring in the Niger Delta. It was found that the GHG emissions and toxins released violated the constitutional rights to life and dignity, of the people of the Delta State. Contempt of court proceedings were laid for failure to comply with the order to stop flaring, later in 2005.
Private law actions
There are a number of other private law causes of action available including product liability, negligence and the enforcement of general environmental duties. Two further causes of action are of particular interest to corporations.
Public nuisance
The potential of public nuisance is illustrated by the 2004 case Connecticut et al v American Electric Power Company Inc et al. Eight US States filed suit against six large power companies considered responsible for approximately 10 per cent of US anthropogenic carbon dioxide emissions. The plaintiffs claimed that harms to their citizens included injury to health and property, including ecological harm such as loss of biodiversity. They also claimed that the defendants could significantly reduce emissions through a range of cost effective measures. The claims were ultimately dismissed on the grounds that the case raised political questions for political branches of government to resolve. However, it cannot be presumed that this type of case would be decided the same way today. Judicial views change over time and will be influenced by rapidly emerging cost effective technology and scientific consensus regarding actual and imminent harm.
Director liability
Generally speaking, corporate law places legal duties on directors and officers to make money in the interests of the corporation and its shareholders. There are few legal duties in corporate law to consider the environment. In some circumstances, directors putting environmental protection ahead of profits could be sued for failing in their fiduciary duties to shareholders. However, there are three important developments that argue against directors’ duties being considered a shield.
First, a growing number of commentators are arguing that corporations and their officers have social and environmental responsibilities, beyond returning profits to shareholders. A number of reforms have been proposed including those contained in the UK Company Law Reform Bill 2005. If passed as originally proposed, this Bill would have imposed a statutory duty of care upon directors, in respect of the environment and communities. Such a duty of care would have prevented directors and officers from acting in the best interests of the corporation, in a manner that also caused harm to the environment and communities. While this particular law reform failed, proponents will likely pursue it again in the future.
Second, commentators and reports have suggested that the financial liability arising out of climate change litigation could extend to billions of dollars. In these circumstances directors of corporations supplying fossil fuels, producing GHGs and financing harmful projects, could be in breach of a duty to act in the best interests of the corporation by failing to consider this increased financial liability and associated financial risks including those to shareholder value, corporate reputation, insurance and other associated commercial risks.
Third, there are now a range of mechanisms and studies that attempt to build environmental and social responsibility considerations into investment policy, taking these decisions beyond the traditional criteria of maximisation of financial returns. These developments are likely, in time, to extend beyond investment institutions to influence fiduciary law generally.
Corporate responses
Climate change litigation now presents a real and present financial risk for corporations. Actual costs of litigation are likely to be far outweighed by associated commercial risks. Traditional responses to this situation would include comprehensive risk assessment and measures to manage that risk including inhouse GHG mitigation measures. However, climate change demands responses that are much more comprehensive and structural in nature, ones that go beyond business as usual.
Appropriate responses require emission targets and timetables that are determined by ecological limits and not present economic efficiency or business as usual. Efforts to achieve anything less will expose businesses, people, property and living systems to devastating injury and harm. Governments will be reluctant to commit to stringent targets and timetables, fearing lack of support. Corporations have the influence and economic power to lead governments down the path of the ecologically determined regulation. Beneficial outcomes include regulatory certainty but also the achievement of a level of regulation that will be effective in the long term to protect and restore ecological systems upon which humanity depends.
Finally, climate change provides an important opportunity for corporations to seriously consider expanding their own understanding of corporate social and environmental responsibility, and the ethical and ecological arguments upon which this responsibility is based. Voluntary exercises of responsibility will only ever achieve limited outcomes. To be effective and fair, governments need to legislate.
In 2007, increasing scientific certainty, emerging legal precedent and growing public awareness of climate change, are combining to create potent motivators for legal action.
Climate change litigation now presents a real and present financial risk for corporations. Actual costs of litigation are likely to be far outweighed by associated commercial risks.
Author
Prue Taylor currently teaches environmental and planning law to graduate and undergraduate students at the University of Auckland, NZ and is the Deputy Director of the New Zealand Centre for Environmental Law. She is also a member of the IUCN Commission of Environmental Law and its Ethics Specialist Group. Prue’s specialist interests are in the areas of climate change, human rights, biotechnology, environmental governance, ocean law and policy, and environmental ethics. In 2007 Prue received an outstanding achievement award from the IUCN in recognition of her contribution as a world pioneer on law, ethics and climate change.
Organisation
The New Zealand Centre for Environmental Law (NZCEL) was established in 1998 as a specialist centre hosted by the Faculty of Law at the University of Auckland to provide expertise in the area of environmental law and resource management law.
Enquiries
Prue Taylor
School of Architecture and Planning
University of Auckland
Private Bag 92019
Auckland
New Zealand
