Travel is a wonderful opportunity to catch up on reading back issues of The Economist. Now I have made a valiant effort in recent years to reduce the pile. I am now only a few months behind. (I read the magazine diagonally when it comes out. Properly a little later). In the issue of 28 February of this year, there is a report on the town of Windsor, New York, along with 14 other towns along New York’s border with Pennsylvania, wanting to secede and join Penn. I have not been able to get an update on the state of affairs, and I am not sure whether the idea got much traction.
It is the ultimate answer to regulatory competition: to move an entire slice of territory into what is perceived as a preferable regulatory regime. The cause? New York’s strict (some might say: cautious) policy on fracking /shale gas. Penn State is fracking friendly. New York has banned it.
The Economist also flag that State secession in the US has only ever succeeded in 1777: when a chunk of New York became Vermont. Now, that’s a State where others pack and move to in upwards harmonisation fashion: for Vermont is arguably the top of the regulatory curve when it comes to environment and food regulation.
As I tweeted earlier, the French Constitutional Court has rejected the challenge to its moratorium on fracking. The precautionary principle was not quite addressed head on by the Court – it simply noted that in the current state of scientific insight, the ban was not disproportionate. The non-discrimination principle was also addressed: Schuepbach Energy had argued that in allowing geothermal projects and disallowing shale gas exploration, this principle was infringed. The Court disagreed: its review of the preparatory works of the Government Order showed that the government considered the two risks involved to be very different. Note the high degree of deference to the Government’s conclusions from scientific opinion. France is not by chance the state of origin of the ‘Bouche de la Loi’ theory!
Marjolein de Ridder and Sijbren de Jong report here on the geopolitical implications of shale. Legal arguments like the ones discussed in the French litigation have an important impact on that debate – or is it the other way around?
In Lone Pine Resoures v Canada, the company involved has filed a claim under NAFTA’s Chapter 11, which protects investors against ‘regulatory takings’. Quebec has placed a moratorium on fracking (shale gas exploration) by revoking all permits pertaining to oil and gas resources under the St Lawrence river.
I shall be reporting tomorrow on the rejection by the French Constitutional Court of the challenge to the French moratorium. In a related (not to fracking but to regulatory takings) development, the European Commission has posted an interesting defence of Biltateral Investment Treaties here. Reference is made ia to the ongoing Philip Morris and Vatenfall (Nuclear energy) issues, both high profile cases of alleged regulatory taking.
It has been reported that the challenge to the French moratorium on shale gas exploration, by US firm Schuepbach Energy, has been referred to the Constitutional Court. Schuepbach had initially challenged the freezing effect of the 2011 ban on the permits which the firm had been granted erlier in 2011, before the lower administrative court at Cergy Pontoise. This court referred for judicial review to the Conseil d’Etat, which now has passed the file on to the Constitutional Court.
I have difficulty getting hold of the official court documents. Reports suggest that the challenge is based on Articles 16 and 17 of the French Déclaration des droits de l’homme et du citoyen, dealing cq with the separation of powers and the right to property.
The French challenge comes amidst the imminent publication of the report commissioned by the European Commission into the suitability, or not, of the current legal framework in the EU and the Member States for regulating shale gas. A little bird tells me (ok, it’s a PhD student of mine, Leonie Reins, who co-authored the report) that the report will be published just after the summer.
In a related, more technical but not therefore less effective manner, Poland’s roll-out of fracking licences arguably received considerable setback following the ECJ’s end of June ruling in Case C-569/10, Commission v Poland: the court held that Poland should have put the licences out to open tender, in accordance with Directive 94/22 on hydrocarbons exploration. The case does not concern fracking licences alone, and the impact on licences that have already been issued is uncertain (although surely these licences cannot be held to be entirely kosher and free of challenge by competitors or NGOs, following the judgment).
Watch this space. I need not tell you that fracking is very controversial in the EU. See in particular this tour d’horizon /overview of contentious issues by Kathleen Garnett over at EU perspectives.