Court Says World Bank Can Be Sued. But More Remedies Needed
Author
Bruce Rich - Environmental Law Institute
Environmental Law Institute
Current Issue
May-June 2019
Issue
3
Bruce Rich

In February, the Supreme Court ruled that the World Bank’s International Finance Corporation as well as other international organizations are not totally immune from lawsuits in the United States. The complaint, Jam v. International Finance Corporation, was filed in the D.C. District Court in 2015. It alleged that the 4,150 megawatt Tata Mundra coal power plant in India, financed with a $450 million loan by the IFC in 2008, contaminated drinking and irrigation water of local farm communities, severely harmed fisheries and fisherfolk, and adversely affected through air pollution public health, inducing involuntary economic and physical displacement.

Though the IFC’s compliance advisor/ombudsman confirmed these allegations in 2013 and again in 2015, management did not act to remedy the problems. Earth Rights International and the Stanford Law Supreme Court Clinic, representing the affected communities, challenged the IFC’s claims to almost complete legal immunity, based on the International Organizations Immunity Act. That 1945 law grants international organizations the same immunity from lawsuits as sovereign states, an immunity that then was almost total. Both the trial court and the appeals court for the D.C. Circuit supported the IFC’s arguments, decisions that the Supreme Court reversed with a 7 to 1 majority.

The main issue was a narrow one: whether the language in the 1945 statute granting the “same” immunity to international organizations as to sovereign states should be interpreted in a “static” or a “dynamic” fashion. In other words, whether the near total immunity that sovereign states enjoyed in U.S. law in 1945 would be frozen in time for international organizations, although the 1976 Foreign Sovereign Immunities Act created broader exceptions for lawsuits against sovereign states.

Chief Justice Roberts ruled that since the FSIA changed the legal parameters for immunity of sovereign states, then the “same” immunity for international organizations also changed. He cited the “reference canon” of statutory interpretation, namely that when a general subject (rather than a specific law) is referred to in a statute, the legal conditions concerning that subject change when relevant future legislation changes.

Roberts wrote that the 1976 FSIA provided that sovereign states (and thus the IFC and other international organizations) could be sued for their “commercial activities,” giving an opening for the plaintiffs to pursue relief. But, he emphasized, “as the government suggested at oral argument, the lending activity of at least some development banks, such as those that make conditional loans to governments, may not qualify as ‘commercial’ under the FSIA.”

And even if all multilateral development bank lending activity were to qualify as commercial, it would also have to be shown that there is a “sufficient nexus” to the United States and that the lawsuit is “based upon” the commercial activity or acts performed in connection with the commercial activity. Remanding the case to the appeals court for further deliberation based on the Supreme Court’s ruling, Roberts noted the government argument that “it had serious doubts whether petitioner’s suit, which largely concerns allegedly tortious conduct in India, would satisfy the ‘based upon’ requirement.”

After four years, the litigation could continue substantially longer. For poor farmers and fisherfolk in India, delayed justice is denied justice more than for most plaintiffs. Litigation in U.S. courts seeking redress for the over half million victims of the 1984 Union Carbide Bhopal chemical disaster continued until 2012. Political pressure by major donor governments on the IFC to assume responsibility for its negligence would provide quicker and more effective redress.

The negligence extends beyond the needless harm inflicted on local poor people. Tata Mundra is also one of the 50 biggest point sources of greenhouse gas emissions on Earth. And the inexpensive electricity rates that Tata and the IFC touted to justify the project depended on import of highly subsidized Indonesian coal. Indonesia halted the subsidies, and in 2011 Tata Power asked the Indian government — in vain — to allow it to double the rate it charged customers, since the plant was losing $250 million annually.

In 2012, Tata Power’s executive director announced that henceforth the company would only invest in wind and solar, both domestically and abroad. “Why would anyone want to invest at this stage in a coal project?“ he said. Then Standard and Poor’s and Moody’s downgraded the company’s debt. In 2017 Tata offered to sell 51 percent of its equity in the multi-billion-dollar coal plant to several Indian states for one rupee. There were no takers.

Court says World Bank can be sued. But more remedies needed.

Climate Litigation Has at Least for Now Dodged a Possibly Fatal Blow
Author
Richard Lazarus - Harvard University
Harvard University
Current Issue
March-April 2019
Issue
2
Richard Lazarus

This past fall, the “Trial of the Century” was scheduled to commence in a federal court in Oregon. The plaintiffs? Twenty-one children. The defendant? No less than the United States. And the accusation? That the federal government had violated the children’s constitutional rights by “creating, controlling, and perpetuating a national fossil fueled based energy system, despite long-standing knowledge of the resulting destruction.”

The remedy sought by the plaintiffs was no less ambitious than their claim that the Constitution’s Due Process Clause confers on individuals the right to “a stable climate system capable of sustaining human lives and liberties.” Plaintiffs sought a court order directing the government to implement “an enforceable national remedial plan to cease the constitutional violations by phasing out fossil fuel emissions and drawing down excess atmospheric CO2.”

The 50-day trial seemed unstoppable only days before its start date. The judge had repeatedly denied the government’s motions to dismiss the complaint. No less significantly, by declining to certify the case for interlocutory appeal, the judge had refused to allow the federal government the ability to appeal those rulings before trial.

Nor had either the Ninth Circuit or the Supreme Court been willing to come to the federal government’s rescue. The Ninth Circuit had twice denied the Department of Justice’s mandamus petitions to hear their arguments for dismissal before trial. And the Supreme Court in July had rebuffed the solicitor general’s request to stay the trial court proceedings.

Everything shifted, however, on the eve of trial. The case was postponed and its future remains uncertain. Reversing herself in late November, the trial judge agreed to certify the case for interlocutory appeal and the Ninth Circuit has scheduled the case for expedited consideration.

So what happened? What prompted the trial judge to change her mind?

When the justices denied the solicitor general’s request for a stay in July, too little attention was paid to the order’s fine print. While formally denying the government’s requests, the High Court simultaneously left little doubt it believed that the trial judge should have certified the case for interlocutory appeal. The July order set forth the central statutory touchstone for certification — a case raising a “controlling question of law as to which there is a substantial ground for difference in opinion” — and then offered the Court’s clear view that the “striking breadth of the plaintiffs’ claims present substantial grounds for difference in opinion.”

That is why when the trial court failed to take the initial hint and continued to insist on trial, the justices double-downed when the solicitor general a few days before trial filed a mandamus petition with the Court and again asked the justices to stay the trial. This time Chief Justice Roberts immediately stayed the trial to allow the full Court to consider the motion. And, although the Court once again denied the stay request, here again the fine print of the Court’s order left little doubt that it wanted the Ninth Circuit and trial judge to clean up this mess so that the Supreme Court would not have to take the extraordinary step of intervening.

The exclusive reason the High Court gave for denying a stay was not that mandamus was unwarranted but that the Supreme Court need not be the one to grant mandamus because there was good reason to believe the Ninth Circuit would. In Supreme Court-speak, that is about as close as one can get, short of a formal reversal, to the Court telling the Ninth Circuit to fix the problem. The wording was no doubt a compromise reached by the chief and some of more liberal justices seeking to avoid a worse outcome.

The Ninth Circuit plainly got the hint. A few days later, the appeals court stayed the district court proceedings and asked the trial judge to “promptly resolve” the government’s motion to reconsider the denial of interlocutory appeal. And, while insisting that it had not changed “its belief that this case would be better served by further factual development at trial,” the district judge subsequently made clear she understood what she was being asked to do, and certified the case for interlocutory appeal.

Indeed, the entire turnabout was so head-spinning that one of the three Ninth Circuit judges dissented from that court’s decision to hear the appeal. Judge Michelle Friedland wrote she did not believe the trial judge was truly “of the opinion” that interlocutory appeal was warranted but had “felt compelled to make that declaration.”

As disappointed as the plaintiffs no doubt are, I suspect climate litigation has at least for now dodged a fatal blow. Had the lower courts not retreated and the justices been forced to act, it is not hard to imagine the harsh ruling that would have likely resulted in such an extravagant case — with negative repercussions affecting all climate jurisprudence.

It is not hard to imagine the harsh ruling that would have likely resulted.

Climate litigation has at least for now dodged a possibly fatal blow.

Kavanaugh's Ascent Is Enormously Significant for Environmental Law
Author
Richard Lazarus - Harvard University
Harvard University
Current Issue
January-February 2019
Issue
1
Richard Lazarus

Justice Brett Kavanaugh. What does his joining the High Court mean for environmental law? How will he differ from Justice Anthony Kennedy, for whom he clerked and now replaces?

Normally, any such comparative inquiry would be hopelessly speculative even when, as here, the new justice has previously served as a federal appellate judge. Most judges, as was true for Neil Gorsuch on the Tenth Circuit, have decided very few environmental law cases.

Kavanaugh, however, is a rare counter-example. The docket of the D.C. Circuit, on which Kavanaugh served for 13 years, includes a heavy dose of environmental law. And, although the three-judge panels for those environmental law cases were decided by random draw, Kavanaugh participated and otherwise wrote in a disproportionately high number, especially Clean Air Act cases. Moreover, because the Supreme Court (including Kennedy) reviewed several of those cases, Kavanaugh’s appellate court record offers a solid basis for gleaning both how he is likely to vote as a justice and how his votes might (or might not) differ from Kennedy’s.

Here’s what environmental lawyers can fairly expect from Justice Kavanaugh. First, he will be a reliable vote against broad readings of EPA’s statutory authority to enact pollution-control regulations. This will be true when the agency is challenged by environmentalists for embracing narrow interpre-tations of its authority. And it will be true when industry challenges EPA for adopting broad interpretations.

In both respects, Kavanaugh will likely mirror the votes of Justice Antonin Scalia when he was on the Court. The difference will be style rather than substance. Kavanaugh will lack Scalia’s bite and bark.

Kavanaugh’s votes on EPA’s regulatory reach will be markedly different from Kennedy’s. While the retired jurist sided with Scalia in many cases, he also departed from him in several significant environmental law cases in which Kavanaugh, had he been on the Court at the time, would have voted differently. Unlike Kennedy, a Justice Kavanaugh would have denied Justice John Paul Stevens the majority he had for the Court’s ruling that the Clean Air Act authorizes EPA to regulate greenhouse gases (Massachusetts v. EPA), he would have provided Scalia with the majority he lacked for his narrow reading of the geographic reach of the Clean Water Act (Rapanos v. United States), and he would clearly have struck down EPA’s interstate air pollution regulation (EPA v. EME Homer Generation LP.), given that the justices, including Kennedy, reversed Kavanaugh’s opinion for the D.C. Circuit on that issue.

For that same reason, many of EPA’s most ambitious regulatory programs adopted during the Obama administration, such as the Waters of the United States Rule, would likely be roughly received with Kavanaugh rather than Kennedy on the Court. The only saving grace for EPA’s Clean Power Plan, should its legality ever somehow reach the justices, is that Kavanaugh would be recused, given his participation in the D.C. Circuit case.

Kavanaugh’s record further suggests a readiness to invoke constitutional law as a basis for limiting the reach of federal environmental law. Most notably, he has frequently invoked constitutional separation-of-powers principles in repudiating broad readings of EPA regulatory authority. According to Kavanaugh, those principles support judicial rejection of congressional delegation of agency authority to address “major issues” absent clear and specific evidence of such legislative intent.

By contrast, Kavanaugh’s views on the Article III standing of environmental citizen suit plaintiffs are not without some ambiguity. His record is less one-sided. But it seems safe to assume that he will be less receptive to such suits than Kennedy. What is unclear is whether he will replicate Scalia’s consistent hostility to citizen standing.

The same is true for Congress’s authority under the Commerce Clause to enact environmental laws. Kavanaugh seems poised to be less sympathetic than Kennedy to a broad reading and there is too little known to speculate whether he will embrace Scalia’s narrow view of Congress’s constitutional reach.

One area of environmental law, however, for which we have no data is Kavanaugh’s views on the regulatory-taking issue. Kennedy was the decisive vote and, over Scalia’s dissent, frequently voted to reject takings challenges to governmental restrictions on development in environmentally sensitive lands. Kavanaugh had no takings cases on the D.C. Circuit (with those cases redirected to the Federal Circuit). If a true originalist like Robert Bork, he will give little credence to regulatory takings claims. But if more of a selective originalist like Scalia, Kennedy’s departure may signal a major shift in the Court’s takings precedent as well.

One thing is clear. Justice Kavanaugh’s confirmation is enormously significant for environmental law.

We know his record.

Kavanaugh's ascent is enormously significant for environmental law.

Kennedy’s Mark on Environmental Law Is Incalculable and Profound
Author
Richard Lazarus - Harvard University
Harvard University
Current Issue
September-October 2018
Issue
5
Richard Lazarus

Even in the midst of a president’s tweeting “breaking news” seemingly every minute of a 24-hour cycle, Supreme Court Justice Anthony Kennedy’s June announcement of his retirement was a bombshell. And for good reason. Kennedy has had outsized influence on the High Court ever since he joined its bench in February 1988.

Kennedy’s impact on environmental law is no exception. Just the opposite. It deservedly adds an exclamation point to descriptions of the justice’s historic significance to the law in general.

Since Kennedy joined the Court, the justices have decided approximately 100 environmental law cases. Kennedy was in the majority in all but two of those cases and the Court subsequently overruled its ruling in one of those (Pennsylvania v. Union Gas) in Seminole Tribe of Florida v. Florida. The only remaining case in which Kennedy’s vote did not reflect the outcome was Alaska v. EPA, when he dissented from the ruling that the agency had lawfully rejected a state-issued Clean Air Act permit.

That’s it. In every other case, how Kennedy voted foreshadowed the High Court ruling. To be sure, not all those cases were five to four. Some were unanimous, meaning that Kennedy’s vote was not determinative. But many others did turn on the vote of a single justice, including many of the Court’s most significant environmental rulings.

A quick review of the most important environmental cases underscores Kennedy’s significance. For instance, although the justice plainly harbored a wariness of regulatory overreach, he did not reflexively shy away from respecting statutory language that backed EPA’s broad authority. He supplied the critical fifth vote in support of the Court’s historic ruling in Massachusetts v. EPA, when the Court upheld the agency’s authority to regulate greenhouse gas emissions under the Clean Air Act.

More recently, Kennedy voted with the majority in EPA v. EME Homer Generation L.P. to sustain the agency’s Cross State Air Pollution Rule, one of its most significant regulatory programs ever. The rule curbed pollution in 27 upwind states that were causing violations of air quality standards in downwind states. The D.C. Circuit had struck down the EPA rule on the ground that it lacked sufficient congressional authority. Yet Kennedy sided with the agency when the case reached the Court. Because Judge Brett Kavanaugh authored the lower court ruling averse to EPA, the EME Homer case will no doubt be discussed during his Senate confirmation hearings this fall.

Justice Kennedy’s influence on the geographic scope of the Clean Water Act was no less momentous. He deprived Justice Antonin Scalia of a majority in Rapanos v. United States. Kennedy rejected Scalia’s rigid, dictionary definition of “waters,” which would have dramatically cut back on the act’s reach. In its stead, Kennedy proposed his version of a “significant nexus” test, which embraced a far more expansive view of the law’s jurisdiction.

But these statutory-construction cases are not necessarily the most significant environmental law decisions in which Kennedy’s voice dominated the Court. The justice appreciated the need for tough environmental restrictions necessary to protect especially fragile ecosystems such as wetlands, floodplains, and coastal areas. That understanding was reflected in a series of cases in which Kennedy blocked Scalia’s efforts to place significant constitutional limits on environmental law’s reach.

Kennedy rejected Scalia’s attempt to limit Article III standing to enforce federal environmental law in both Friends of the Earth v. Laidlaw and again in Massachusetts v. EPA. He explained in Lujan v. Defenders of Wildlife that the demands of environmental protection meant that citizens should be able to satisfy Article III standing requirements based on allegations of causation and redress more attenuated than that contemplated by the common law.

On similar grounds, Kennedy likewise impeded Scalia’s effort to impose a Fifth Amendment regulatory takings test that would have rendered unconstitutional state and federal laws that restrict development in environmentally sensitive areas. Kennedy reasoned that government should be able to restrict such destructive activities without offending the no-takings guarantee even when, contrary to Scalia’s claim, they would not amount to common law nuisances or otherwise transgress background principles of property law.

Of course, Kennedy was not an uncompromising environmentalist. He was a moderate who cared deeply about states rights, property rights, and excessive regulation. His votes and opinions reflect those longstanding concerns as well. That is why he was dubbed the swing justice, a label that Kennedy rejected but was nonetheless apt. Unlike some others on the Court, Kennedy’s vote was always in play precisely because his contrasting perspectives on environmental law and other critical social issues affected by the law meant he did not come to cases with his mind already made up.

Kennedy’s mark on environmental law is incalculable and profound.

The Debate: Chevron Enshrined Deference to Agencies. Will Supreme Court Neuter It?
Current Issue
September-October 2017
Issue
5
The Debate

HEADNOTE ❧ The Supreme Court’s decision in Chevron v. NRDC has been at the heart of environmental law and administration law generally. But even before the ascension of Neil Gorsuch to the High Court, there were signs that the justices were looking on deference with skepticism.

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