Posts Tagged environment

Mengozzi AG saves ETS in energy policy legal basis opinion.

Others have studied the EU’s legal basis for energy policy much better than I have. Chiefly among them prof Leonie Reins. e.g.  for RECIEL here and in her Phd here. The impact of this discussion is high: since the introduction of an energy Title in the EU Treaties (following Lisbon) whether so designed or not, the prospect of that Title’s requirement on unanimity for measures which ‘have a significant effect on a Member State’s choice between different energy sources’ looms heavily over the EU’s environment policy. The EU’s emissions trading system – ETS is the prime candidate for falling victim to an extensive interpretation of Article 192(2)c TFEU, which harbours the unanimity requirement within the Treaty’s environment Title. [The energy Title, Article 194, has similar challenges].

In C-5/16 Poland v EP and Council Mengozzi AG Opined last week. At issue is Poland’s opposition to a MSR – a market stability reserve for the Union greenhouse gas emission trading scheme, essentially a long-term parking for surplus allowances to enable the ETS to safeguard collapse of prices in the event of excess supply. The resulting increase in the price of allowances was inter alia intended to encourage fuel switching and to discourage investments in coal-fired power stations (hence of course Poland’s interest).

Relevant to future reference is especially the AG’s view at 25, which I include in full: ‘as a derogation, Article 192(2)(c) TFEU is to be interpreted strictly, especially since an efficient modern environment policy cannot ignore energy questions. I share the fears expressed by the defendants and the interveners that the applicant’s proposed interpretation of Article 192(2)(c) TFEU and the conclusions which it draws from that interpretation for the examination of the legal basis of the contested decision would effectively block any legislative initiative by recognising a right of veto for Member States, as the Union would adopt measures inviting them only to rationalise their CO2-consuming activities. Furthermore, such an interpretation would doom the ETS to failure as it would prevent the EU legislature from correcting its structural deficiencies. In addition, although I would point out that the goal of introducing the MSR is not to form the price of allowances but simply to ensure the efficiency of the ETS, in any event, an operator’s choice of a certain energy source or production technology cannot depend on that price alone, which does not in itself define the production costs, which are determined by a variety of factors. Even with the introduction of the MSR, the choice of technology still remains in the hands of operators and is not dictated by the European Union.’

I am not sure to what degree the Court’s judgment will enable us to draw criteria with wider impact than just the current case – but it would certainly be helpful. Mengozzi AG firstly emphasises strict interpretation of the ‘energy mix’ exception. Further, in the paras preceeding the aforecited one, links amendments to existing laws largely to the latter’s legal basis. Supports the Institutions and Spain, France and Sweden (intervening; the position of Germany, also intervening, was not made clear) in their warning against veto power in the energy /climate change context; and finally further dilutes the exception by looking at policies as they work in practice, not just in theory. On this point, the AG looks at the ETS specifically however his view has broader appeal: it would essentially mean that when Member States’ and individuals’ /undertakings’ behaviour is determined by regulatory intervention, some of which clearly based on a legal basis other than Article 192(2)c TFEU, the latter is not determinant in deciding proper legal basis.

This is an important case for the future of EU environment and energy policy.

Geert.

 

 

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Introducing: EU environmental law. A handbook.

This post should be preceded by a boast alert, but hey: a pat on one’s own shoulder does not hurt once in a while. With Dr Leonie Reins I have written EU Environmental Law, which has now been published by Edward Elgar. The blurb is here. Leonie and I have given a concise yet we hope complete overview of this ever-growing part of EU law. We hope it will please the reader!

I have copy /pasted the TOC below.

We are now turning our attention to (inter alia): EU energy law.

Geert.

Contents: 1. Setting the context

PART I BASICS/FRAMEWORK OF EUROPEAN ENVIRONMENTAL LAW 2. Principles of European Environmental Law 3. Environmental law making in the European Union 4: Implementation and enforcement Public Participatory Rights 6. Additional tools in implementing European Environmental Law 7. Environmental and Strategic Impact Assessment 8. Environmental Liability and Environmental Crime 9. State Aid and Competition Law

PART II SUBSTANTIVE LEGISLATION 10. Biodiversity and Nature Conservation 11. Water protection legislation and policy 12. Noise pollution legislation and policy 13. Air pollution legislation and policy 14. Climate Change legislation and policy 15. Waste legislation and policy 16. Chemicals legislation and policy 17. Trade and the Environment

Index

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Environmental due diligence (met in casu) is clearly part of BIT requirements. Allard v Barbados.

Thank you Govert Coppens for alerting me to the PCIA award‘s publication. I had reported earlier on this case in which  the Canadian owner of an eco-tourist facility in Barbados sued the Government of Barbados for an alleged breach of the full protection and security provision (among other provisions) in the Canada- Barbados bilateral investment treaty. Peter Allard argues in his claim that Barbados breached its treaty obligations by failing to enforce its domestic environmental laws, which he alleges led to the environment being spoilt and a loss of tourist revenues at his eco-resort.

The Tribunal is careful not to phrase the case as a pioneering case or a case in any way anything but run of the mill. This is evident from its very consideration (at 53) that ‘underlying the claims is a fundamental factual disagreement as to whether the Claimant has suffered loss or damage as a result of any actions or inactions of Barbados.’

This subsequently leads the Tribunal into what is effectively peer review of parties’ opposing expert reports on variety in fish and bird species, salinity, the health of crabs, etc., coming down in favour of Barbados: no convincing case of deterioration was made by claimant. One must bear in mind that the burden of proof lies with the latter. Next the Tribunal concluded that, even if it had found that there was a degradation of the environment at the Sanctuary during the Relevant Period (which it did not), it would not have been persuaded that such degradation was caused by any actions or inactions of Barbados.

The Tribunal further found that, being aware of the environmental sensitivities of the Sanctuary, Barbados took reasonable steps to protect it (at 242). It formulates Barbados’ BIT duties here as being a duty of care, not strict liability. It then undertook due diligence of the steps Barbados had taken to address known environmental concerns for the area and concluded (at 249) that ‘Barbados’ approach in addressing the Sluice Gate and general pollution issues at the Sanctuary as part of its governance of the entire area does not fall short of what was appropriate and sufficient for purposes of the duty of due diligence required by Article II(2)(b) of the BIT.

 

This tribunal was clearly not in a law-making mood but that arguably does not matter. The analysis it undertakes unequivocally and matter of factly establishes that countries’ indifference (quod non in casu) to take steps necessary to contain and remedy environmental degradation are a clear breach of BITS’ core requirements.

Geert.

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South East China Sea award puts wind in the sails of UNCLOS environmental provisions.

Most of the political attention to the panel’s award on the South East China Sea issue has gone to the implications for Chinese sovereignty in the area. That is in itself neither surprising nor problematic. It is worth highlighting however that 2 out of 6 of the Panel’s conclusions, as listed by Herbert Smith Freehills, relate to environmental protection:

  1. failed to protect and preserve the marine environment by tolerating and actively supporting Chinese fishermen in the harvesting of endangered species and the use of harmful fishing methods that damaged the fragile coral reef ecosystem in the South China Sea;
  2. inflicted severe harm on the marine environment by constructing artificial islands and engaging in extensive land reclamation at seven reefs in the Spratly Islands;

If one includes a third one, ‘interfered with the traditional fishing activities of Philippine fishermen at Scarborough Shoal;’ as being part of the principle of sustainable development, then half of the Chinese infringements relate to environmental protection in the wide sense. These findings highlight how closely linked environmental protection is to natural resources and to territory generally, and how environmental protection has come of age and is now part of core debates in public international law. Sadly also, of course, how in their search for scarce resources plenty of nations continue to trample freely on values which the 1992 Rio Declaration already found to essentially be part of customary international law.

A Monash student of mine is writing on the Panel report from the environmental angle and I shall share as and when that analysis is available.

Geert.

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Cheers to that! The CJEU on excise duties, alcohol, packaging and regulatory autonomy in Valev Visnapuu.

Postscript 10 December 2015 For a similar exercise, see Sharpston AG in C-472/14 Canadian Oil.

Less is sometimes more so I shall not attempt to summarise all issues in Case C-198/14 Valev Visnapuu. The case makes for sometimes condensed reading however it perfectly illustrates the way to go about dealing with obstacles to trade put in place for environmental, public health or, as in this case, both reasons.

Mr Visnapuu essentially forum shops Estonia’s lower prices on alcohol by offering Finnish clients home delivery of alcoholic beverages purchased there. No declaration of import is made to Finish customs and excise, thereby circumventing (accusation of course is that this is illegal) a variety of excise duties imposed for public health and environmental reasons, as well as a number of requirements relating to retail licenses and container requirements (essentially a deposit-return system) for beverages.

Confronted with a demand to settle various tax debts, as well as with a suspended prison sentence, Mr Visnapuu turns to EU law as his defence in a criminal proceeding. The CJEU then had to settle a variety of classic trade and environment /public health questions: whether the packaging and packaging waste Directive is exhaustive on the issue of deposit-return system (answer: no and hence the system additionally needs to be assessed vis-a-vis EU primary law: Article 34 ff TFEU or Article 110 TFEU); whether in the context of that Directive excise duties on packaging may be imposed (yes) and packaging integrated into a functioning return system exempt (yes; in the absence of indications that imported systems are less likely to enjoy the exemption); whether the relevant excise duties fall under Article 34 ff TFEU or Article 110 TFEU (answer: it is part of an internal system of taxation hence needs to be judged vis-a-vis Article 110 TFEU); and finally whether the retail licence requirement needs to be judged viz Article 34 or Article 37 TFEU (answer: mixed, given the various requirements at stake). Final judgment on proportionality is down to the Finnish courts.

Readers in need of a tipple would be advised to postpone until after reading the judgment. Again though the case shows that if one keeps a clear head, classic structures of applying EU law go a long way in untangling even complex matters of law and fact.

Geert.

 

 

 

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If you can’t beat them, join them? Using BITs for environmentally proactive purposes.

Update 29 September 2016. The award was made public on 28 September 2016. It sides with Barbados. Look for my analysis in a separate blog piece.

Thank you for the team at Dechert to remind us of the potential that BITs may be used to pursue proactive, rather than just reactive environmental litigation. A word of explanation: Bilateral Investment Treaties, in particular their investor-state dispute settlement mechanisms, are currently under a lot of pressure following the public outcry over the TTIP negotiations. Allowing private investors to sue countries that roll out regulation, using vague principles of protection of property, is seen by many as a form of corporate bullying.

Dechert’s briefing however reminds us firstly, specifically vis-a-vis stubborn air pollution in the Indonesia area, that States may carry responsibility in line with Trail Smelter’s nec utere tuo principle. The possibility for individuals (as opposed to neighbouring States) suing on that basis, is of course complicated by the mechanism of (absence of) direct effect of huge chunks of international environmental law. That is where investor-state can come in handily. Such as in Allard v Barbados at the Permanent Court of Arbitration. Dechert’s summary of that case reads ‘the Canadian owner of an eco-tourist facility in Barbados is currently suing the Government of Barbados for an alleged breach of the full protection and security provision (among other provisions) in the Canada- Barbados bilateral investment treaty. Peter Allard argues in his claim that Barbados breached its treaty obligations by failing to enforce its domestic environmental laws, which he alleges led to the environment being spoilt and a loss of tourist revenues at his eco-resort’.

A timely reminder of the good BITs can do, just before I am to speak (again) tomorrow on TTIP and why EU citisens are so suspicious of it.

Geert.

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FIPA, Tws Automation and Ivan: ECJ confirms the secondary nature of ‘principles’ in EU environmental law

European environmental law principles may not have practical legal force in and of themselves. They are transposed into secondary law. It is their (incorrect) application and interpretation in conjunction with secondary law, which gives rise to citizens and corporations calling upon the principles to support their individual position. Hence despite their trumpeted value as ‘principles’, in the law in practice, individual citizens or corporations need transposition of said principles in secondary law, to argue that such secondary law has infringed the principles.

A clear application of this reality, is the recent ECJ judgment in Case C-534/13, a case with an impossibly long series of applicants and defendants, which for ease of reference I have dubbed FIPA, Tws Automation and Ivan in title of current posting. (After the main protagonists).

The main issue that arose, was whether national (Italian) legislation under which no provision is made for the authorities to require owners of polluted land who have not contributed to that pollution to carry out preventive and remedial measures, and the sole obligation imposed concerns the reimbursement of the measures undertaken by those authorities, is compatible with the ‘polluter pays’ principle, the precautionary principle and the principles that preventive action should be taken and that environmental damage should be rectified at source as a matter of priority.

The ECJ emphasises the role of Directive 2004/35 in this context. Held that the Directive does not hold against such absence. And recalled in line with previous case-law, that the environmental principles of the Treaty ‘do no more than define the general environmental objectives of the European Union, since Article 192 TFEU confers on the European Parliament and the Council of the European Union, acting in accordance with the ordinary legislative procedure, responsibility for deciding what action is to be taken in order to attain those objectives. (…)  Consequently, since Article 191(2) TFEU, which establishes the ‘polluter pays’ principle, is directed at action at EU level, that provision cannot be relied on as such by individuals in order to exclude the application of national legislation — such as that at issue in the main proceedings — in an area covered by environmental policy for which there is no EU legislation adopted on the basis of Article 192 TFEU that specifically covers the situation in question (…) Similarly, the competent environmental authorities cannot rely on Article 191(2) TFEU, in the absence of any national legal basis, for the purposes of imposing preventive and remedial measures.(…)’ (at 39-41)

A sobering conclusion, yet one solidly rooted in legal practice and institutional balance. Geert.

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