Environmental Ethics, Environmental Law, and Trade

1. Environmental Ethics, Environmental Law, and Trade

2. Objectives • Show how law is sometimes used to embody ethical principles, particularly in environmental law • Show how how trade policy can undercut the ethical principles embodied in domestic law. • Relate these ideas to issues in the news

3. Ethics and the Law • Law reflects the ethical judgments of a society. • Ethics serves as a basis for laws, changes in law reflect changing ethical views. • Environmental law embodies shared ethical values.

4. Ethical Principles in Environmental Law • The Polluter Pays Principle • The Precautionary Principle

5. The Polluter Pays Principle • Don’t make messes. • If you make a mess, clean it up. • Pollution is an externality—a cost not borne by the parties to a transaction. Goal—internalize the costs of pollution. • The polluter pays principle is an internalization strategy embodied in U.S. law. • Superfund, CERCLA, RCRA, USTA

6. The Precautionary Principle • Take precautionary measures to anticipate, prevent or minimize environmental harm. Rather than await certainty, regulators should anticipate potential environmental harm and act to prevent it. • International treaties, some signed by the U.S., expressly adopt the precautionary principle. • Rio Declaration, Cartagena Protocol (SPS treaty), Kyoto Protocol

7. Trade Policy, Domestic Law, and Environmental Protection • Trade policies and trade agreements (NAFTA, WTO, FTAA) can undercut domestic environmental protection laws.

8. NAFTA Provisions • NAFTA protects the property rights of foreign investors: • No direct or indirect expropriation without compensation • Indirect expropriation is sometimes called “Regulatory Taking” • NAFTA allows a foreign citizen or corporation to sue a government for improper expropriation.

9. Protecting Property Rights • Governments MUST protect rights to private property against unjust takings: • The Fifth Amendment states: • No person shall be . . . deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use without just compensation. • The expropriation clauses build this requirement into trade agreements

10. Kinds of Takings • Property can be taken directly—as in imminent domain—for public uses. • Property can be taken indirectly—its value greatly reduced or eliminated—by government regulations that impose costs or limit profits. • “Regulatory takings” cases haven’t worked well in U.S. courts. • Exception: Lucas v. South Carolina Coastal Comm. • “Regulatory takings” theory limits government too much.

11. Environmental Law and Expropriation • Environmental laws tend either to impose direct costs on, or to limit the profitability of, some activity. • Foreign corporations claim that domestic environmental laws indirect expropriations for which they are entitled compensation from the government (taxpayers).

12. NAFTA cases undercutting environmental law • Ethyl Corp v. Canada • Methanex Corporation v. United States • S.D. Meyers Corporation v. Canada

13. Ethyl Corp. v. Canada • Ethyl makes a gasoline additive Methylcyclopentadienyl Manganese Tricarbonyl (MMT) to reduce emissions • MMT is banned in several states as a health risk. • Canada banned MMT as a health risk. • Ethyl sues Canada under Chapter 11 for illegal expropriation for LOST PROFITS! • Ethyl WINS.

14. Methanex Corp. V. U.S. • Methanex is a Canadian corporation that makes methyl tertiary-butyl ether (MTBE) an oxygenate gasoline additive. • MTBE was banned by California because of its perceived threat to humans and the water supply. • Gov. Davis found "on balance, there is significant risk to the environment from using MTBE in gasoline in California." • Methanex claims that the science supporting the ban is inadequate, despite evidence that MTBE causes cancers in some lab animals.

15. Methanex, continued • Methanex sued the U.S. for $970 million, claiming that California’s environmental regulation: • The MTBE ban illegally prefers a U.S. product (Ethanol) • Constitutes an illegal expropriation of profit • This case constitutes "a clear threat to California state sovereignty and democratic governance.“

16. S.D. Meyers • S.D. Meyers deals in treating toxic wastes, specializing in PCB’s. S.D. Meyers processes contaminated transformers, some imported from Canada. • Acting under the Basel Convention on Transboundary Shipment of Hazardous Waste, Canada bans the export of PCB contaminated transformers.

17. Meyers, continued • Meyers sues Canada for having expropriated its profits by banning exports (thus giving the profits to Canadian corporations). • Remember, international treaty law bans the transboundary shipment of toxic waste. • S.D. Meyers WINS.

18. Other Trade Agreements, The WTO and the FTAA • NAFTA type worries plague other trade agreements • The WTO has ruled that environmental protection laws and consumer safety laws are really “technical trade barriers”—disguised tariffs. • The Turtle/Shrimp case and the Beef Hormones case. • The FTAA would expand NAFTA to all of Central and South America (except Cuba) AND include ‘services’ under the treaty.

19. How does all this relate to my life or to issues in the news today? • Trade protests (the Battle in Seattle, the riots in Montreal in 2001, attempts to protest the WTO ministerial in Doha, Qatar) turn on these issues. • Domestic sovereignty, our right to make our own laws and to embody our ethical convictions in law, is at risk.