Climate litigation moves to the private sphere: the case of Lliuya v RWE AG

Posted by: Frances Lawson

As highlighted in other recent posts on this blog, from the Netherlands to the USA to New Zealand, there is a clear trend for citizens to feel emboldened to take governments to court for a lack of action on climate change. The course less charted until now has been actions against private companies – the actual emitters of greenhouse gases – for the damage caused by their activities. In an indicative court order on 30th November 2017 the appeal court in Hamm, Germany, signalled that it is indeed. A final judgement on the specific facts relating to Lliuya v RWE AG is pending the collection of expert evidence. Regardless of the outcome, the interim statement by the court is likely to excite climate change litigators and activists, while generating jitteriness among large German carbon-emitters, as well as those elsewhere.

Lliuya v RWE AG: The background

There is a cruel injustice in the way that climate change impacts are distributed; the vast majority of those presently affected, and those likely to be most affected at least in the near-term, are those that have played a minimal role in accelerating global warming through anthropogenic emissions. At UNFCCC level, these countries repeatedly call out for sufficient financial resources to mitigate and adapt, to the extent possible, the large-scale devastation that almost seems inevitable. However, progress on financial flows remains sluggish; money matters in politics, and too much is at stake.

Into the hiatus has stepped Saul Luciano Lliuya, supported by environmental NGO Germanwatch. Bypassing political sluggishness, he is suing German energy giant RWE over their contribution to global warming. Saul lives with his family in Huaraz, a small city in the Peruvian Andes situated below a glacial lake. Due to the gradual melting of glacial ice, the lake presents a serious risk of flooding his home (as well as those of hundreds of nearby families). The Peruvian authorities declared a state of emergency in relation to this eleven times between 2009 and 2012. However, despite some action by the government the risk persists. Safeguarding against it is costly, and Mr Lliuya is seeking financial support to implement the preventative measures his family desperately needs.

The less contentious part of the claimant’s case is that the part that climate science has already established; that anthropogenic emissions are responsible for the rapid acceleration of global warming, which in turn plays a substantial role in melting glacial ice. Mr Lliuya’s claim goes on to link these generally accepted facts with the increased flood hazard where he lives. The most avant-garde part of his case is the assertion that because RWE AG are responsible for 0.47% of historic global emissions, they should contribute that proportion of the preventative costs. Should his action succeed in this regard, the implications for other major corporate emitters are obvious.

In legal terms, the claim is essentially one of nuisance and is based on the notion that the lawful use of one’s property should not impair the ability of others to enjoy their own. §1004 of the German Civil Code states:

(1) If the ownership is interfered with by means other than removal or retention of possession, the owner may require the disturber to remove the interference. If further interferences are to be feared, the owner may seek a prohibitory injunction.

(2) The claim is excluded if the owner is obliged to tolerate the interference.

On (1), it is alleged that RWE is the ‘disturber’, and the ‘interference’ it is asked to remove is the risk of flooding. While this risk has not yet materialised – Mr Lliuya’s property has not yet been hit by flooding – there is German case law claims have been allowed to be brought where it is ‘inevitable’ that the risk will lead to damage. Accordingly, the claimant has put forward a wealth of evidence to demonstrate that it is a matter of when, not if, flooding occurs.

Under German law the onus would be on the respondent to prove whether the exception in (2) applies. Proactively, the claimant emphasises that an injunction on RWE’s operations is not being sought (which could increase the extent of the interference that must be tolerated).

At first instance, the District Court of Essen dismissed the claim. First, they found the motion put forward by the claimant to be insufficiently precise as required by the German Code of Civil Procedure. This was easily remedied for the appeal. Second, the defendant was found not to be a disturber ‘due to the absence of adequate and equivalent causation of the impairment’ (p.6), the ‘impairment’ being the flood hazard. The issue of causation lies at the heart of the claim.

Causation

The key question is: what test of causation should be applied? In situations where there is a single actor, the ‘but for’ or ‘conditio sine qua non’ test establishes a causal link only if by removing the act the effect would not arise (this is also what is meant by ‘equivalent’ causation). The District Court applied this in a fairly straightforward manner. It stated that for causation to be found:

the past and future greenhouse gas emissions by the defendant would have to be hypothetically undone, and the supposed flood hazard eliminated as a result.” (p.6)

In other words, an individual emitter is only responsible for an event caused by collective global emissions if by removing its specific emissions the event would not have happened. Given this, it is easy to see why the court was ready to dismiss the claim. If RWE’s 0.47% share of emissions never existed, the remaining emissions would still have accelerated global warming and give rise to the present flood hazard.

The claimant’s submissions, both for the first hearing and for the appeal, disclose two alternativ models of causation, however. First, the claimant suggests that causation is established by virtue of the fact that the defendant’s emissions have increased the risk of flooding. Modifying the ‘but for’ test, he claims that were it not for the defendant’s emissions, ‘the degree and the extent of the flood risk would be lowered’ (p.14, Grounds of Appeal). Arguably, this approach does not play in his favour. Having based the claim on the premise that flooding is inevitable, this could require him to show that the defendant’s emissions tipped the risk of flooding from being ‘highly likely’ to being virtually certain; something incredibly difficult, if not impossible, to establish.

The claimant may be on stronger footing in his second approach, namely that a strict application of the ‘but for’ test is simply not appropriate in this context. Its high threshold is to be relaxed in cases of ‘cumulative causation’, where the relevant interference is caused by the cumulative or additive effect of multiple actors, each adding to the problem but none being necessary for its existence. Applying this to the facts of the case: the sum of all greenhouse gas emissions has led, in a ‘but for’ sense, to the present ‘impairment (inevitable flooding), and some of these stem from the defendant.

This alternative test has a grounding in case law. As far back as 1866 in the Scottish case of Duke of Buccleuch v Cowan, an individual polluter was deemed liable for having ‘materially contributed’ to the pollution of a river, despite the fact that they were just one of many, and that without their involvement the river would nonetheless have been polluted. The claimant cites domestic and international authorities to demonstrate the continuing relevance of this test. Its application often rests on a judgment as to whether it is required to ensure fairness and justice – as put by the Australian High Court in March v Stramare (E&MH) Pty (1991) cited by the claimant. In that case, the court stated: “(the ‘but for’ test) applied as an exclusive criterion of causation, yields unacceptable results and the results which it yields must be tempered by the making of value judgments and the infusion of policy considerations” (para 171). It remains to be seen whether the strict case can be deviated from in this instance.

Adequacy

In addition, German law requires that any legally relevant cause is ‘adequate’. This is essentially the test of ‘reasonable foreseeability’ that is employed in English tort law – is it objectively reasonable that one standing in the position of the defendant would expect their emissions to contribute to the flood hazard?

The District Court found against the claimant on the basis that ”any single emitter, even a major one such as the defendant, does not substantially increase the effects of climate change”. However, this seems untenable in light of the facts. RWE is one of the world’s largest private emitters; it emits more than entire countries, including the Netherlands. Moreover, the claimant cites case law that the ‘adequacy’ test is one of de minimis; in other words, its role is merely to preclude trivial causes. 0.47% of global emissions is not a trivial amount. Furthermore, the impacts of climate change have been well understood for decades; the defendant cannot rely on ignorance of the potential risks of their operations.

The Appeal Court’s view and its significance

So far, the Appeal Court has only released an ‘Indicative Court Order and Order for the Hearing of Evidence’. This sets out the questions of fact that need to be answered by independent experts before a full judgement can be delivered. It does not reveal the court’s view on the legal arguments. For this, we have to rely on Germanwatch’s interpretation of events.

According to Germanwatch, the judges agreed entirely with their interpretation of the law, and in doing so found that RWE could be liable for its partial contribution to the flood hazard, and its emissions are not so insignificant as to be ‘inadequate’. On this basis, the defendant was asked if they would like to settle but they declined. The facts are disputed, and so to help the Appeal court deliver a final judgment, independent experts are being appointed to investigate. Undoubtedly, the most important of these facts is whether there is a causal chain linking the defendant’s emissions to the flood hazard. The District Court dismissed the notion that certain power plants in Western Europe could have a significant effect on the way this system brings about flooding in a remote Peruvian city. After all, the climatic system is so complex and is shaped by El Nino events, sunspots and many other factors beyond climate change.

So caution is necessary, and nothing has yet been decided. Nevertheless, win or lose, this case marks something of a watershed in climate litigation. It suggests that the victims of climate change may finally be able to achieve some redress. It may also accelerate decarbonisation efforts, making them more attractive when the alternative could increase the risk and extent of compensation payouts. The seminal 2017 Carbon Majors Report linked 100 companies with half of all emissions since the industrial revolution, and RWE AG is 41st on that list. While some of the companies on that list are in jurisdictions where a similar lawsuit is highly unlikely at present, this is not the case for all.

From a corporate perspective, the case is deeply troubling. RWE seem to be genuinely taken aback by the lawsuit, feeling unfairly singled out especially given its efforts to become more environmentally friendly. This is also understandable in light of the fact that their emissions are the by-product of an important public purpose; providing energy for people. Moreover, the potential for this case to unlock the floodgates for similar claims makes it highly likely that they will appeal any finding against them.

For further information about the case, see:

– The claimant’s initial Statement of Claim
– The District Court’s judgment
– The claimant’s Grounds of Appeal,
– The Appeal court’s Indicative Court Order
– Germanwatch’s interpretation of the Appeal Court’s view.

Environmental Law News Update

In this latest Environmental Law News Update, Christopher Badger, Charles Morgan and Natasha Hausdorff consider an inquiry into nitrate pollution by the Environmental Audit Committee, a House of Commons Committee Report on Brexit and Euratom, and a light-hearted look at a seasonal ‘sewer song’ and the balance between property rights and environmental interests.

 

Inquiry into nitrate pollution launched

The Environmental Audit Committee has launched an inquiry into nitrate pollution in the U.K. It will consider the nature, scale and impact of nitrate pollution on the environment and human life and review the current approach to chemicals regulation.

Once nitrates are released into water they exacerbate the growth of algae, which can lead to shortage of oxygen and create dead zones in which animals cannot live. High nitrate concentrations can also contaminate drinking water and pose a risk to human health.

Nitrate pollution is one area currently regulated by the EU, but which is considered to be at risk following Brexit. Back in 2014, 78% of UK surface and groundwater bodies failed to meet the ‘good’ ecological status prescribed in the Water Framework Directive. In 2015 the UK was referred to the ECJ for poor waste water collection and treatment, a case which is still on-going. In February of this year, the European Commission told the UK to take more intensive action to tackle water quality, as well as air quality and protected species. In November of this year, Environment Agency chief executive James Bevan told the House of Commons Environment, Food and Rural Affairs Committee that legally binding 2027 water quality targets under the Water Framework Directive would not be met.

The key questions underpinning the inquiry are:

• What is the scale of nitrate pollution in the UK and what is the likelihood of the pollution getting worse?
• What are the consequences of nitrate pollution for the environment and for human life?
• How important are the different sources of nitrate pollution? Where should action be taken?
• How effectively does Government regulate nitrate usage so that nitrate pollution is reduced as quickly as possible?
• Are other nations taking more effective action on nitrates that the UK can learn from?
• What more could Government do to reduce nitrate pollution as quickly as possible?

The deadline for providing written submissions is Thursday 18 January.

 

House of Commons Committee Report on Brexit and Euratom

A report released last week by the House of Commons Business, Energy and Industrial Strategy Committee addressed the impact of Brexit on the civil nuclear sector. Of particular note is the potential effect on the UK’s membership of Euratom.

The report concluded that it was highly doubtful that the UK would be able to implement Euratom-equivalent safeguards (or even the IAEA standards) by March 2019. The Committee therefore recommended that Euratom should continue to manage the UK’s safeguards regime and that, in the event this was not possible, that the government ensure that transitional arrangements last long enough for the Office for Nuclear Regulation (ONR) to take over.

The Committee was concerned that the Government is overly optimistic that nuclear co-operation agreements with the USA, Canada, Australia and Japan can be in place by March 2019. Instead, it considered that the Government should ensure the UK is able to continue trading with other countries through Euratom’s existing nuclear co-operation agreements until new bilateral agreements are established.

The Nuclear Safeguards Bill, introduced by the Government on 11 October 2017 in preparation for the UK’s departure from Euratom, seeks to extend the powers of the Office for Nuclear Regulation and the Secretary of State’s power to make Regulations under the Energy Act 2013, including the power to modify retained EU law within the meaning of the European Union (Withdrawal) Bill 2017-19.

The Committee considers that the provisions regarding Euratom require further parliamentary scrutiny, in particular in relation to: (i) determination of ownership of fissile material; (ii) security of fuel supply; (iii) impact of nuclear new builds on export controls; and (iv) implications of changes to the UK’s relationship with the internal energy market, and the EU Emissions Trading System.

It is worthy of note that the Committee did not address whether, as a matter of law, the UK would be required to leave Euratom. The UK’s notice of departure from Euratom has been particularly controversial; it remains to be seen whether this report will impact the Government’s position.

 

Sewers in Song

Christmas is the season for gathering around the family piano for a good sing-along, or at least it was 100 years ago. Amongst the songs of the music hall era available to this day (in sheet music collections and via YouTube) is “They’re Moving Father’s Grave to Build A Sewer”, a lament of great interest to those of us whose work involves that of the water industry. Its origins are obscure and lyrics vary from source to source but its basic message is plaintively clear:

They’re moving father’s grave to build a sewer
They’re moving it regardless of expense.
They’re moving his remains to lay down five-inch drains
To irrigate some rich bloke’s residence.

No version of the song identifies the location or undertaker involved (far less the individuals), rendering it impossible to identify the specific statutory powers relied upon, although it seems likely that the works would have been performed under powers originally found in special Acts incorporating the provisions of the Towns Improvement Clauses Act 1847, section 24 of which, “if for completing the said works it be found necessary”, empowered local Commissioners to carry the new sewer “into or through any inclosed or other lands”. Similar provisions have existed ever since through frequent repeal and re-enactment. The current pipe-laying power is contained in section 159 of the Water Industry Act 1991. One notes also the reference to the expense incurred, doubtless by operation of the compensation provisions in section 24 or its successors (now section 180 of and Schedule 12 to the Water Industry Act 1991). A faculty may also have been required – see by way of example The Commissioners Of Sewers of the City Of London and the Vicar and Parishioners Of St. Botolph Without Aldgate v The Parishioners of the Same [1892] P 161.

The central issue raised by the lyrics is whether it was a proper exercise of those powers to disturb at least one (and probably many more) graves for what is neatly described in one version as “one old rich man’s convenience”. Such an imbalance of costs and benefits, or between direct consequences and externalities (to use the language of modern economics) may be compared and contrasted with (or perhaps likened to) that revealed by the long-running saga of Sir Charles Adderley’s battle with the Birmingham Corporation over the effect of that city’s sewage discharges upon the amenity of his downstream country estate, where his private property interests were effectively held to prevail over the needs of an entire population – Attorney-General v The Council of the Borough of Birmingham (1858) 4 K & J 527. We are shortly to hear from the Supreme Court on how the modern law should deal with the deprivation of a man’s property in the interests of the environment in Mott v Environment Agency, following argument last week from Stephen Hockman QC and Mark Beard. Something to look forward to in the New Year.

In the hope that this will provide our readers with a lively topic of Christmas dinner table conversation before retiring to the drawing-room to gather round the pianoforte and a blazing open fire (burning smokeless fuel of course), the members of Six Pump Court wish you a very Merry Christmas, One and All.

End Note

The inquisitive reader will quickly discover several more songs about sewers, including Spike Milligan’s “Sewers of The Strand”, Art Carney’s “Song of the Sewer”, Donald Jay’s “Working Down The Sewer”, The Stranglers’ “Down In The Sewer” and of course “The Sewer” from Les Miserables. These dwell upon the practical and functional rather than the legal aspects of the sewerage system, but are nonetheless of interest.

 

To keep up-to-date follow us on Twitter @6pumpcourt or contact bridgettough@6pumpcourt.co.uk to be added to the mailing list. If you have any comments or suggestions please feel free to contact us.

 

Please note the next Environmental Law News Update will be sent out on Monday 8th January 2018.

 

Environmental Law News Update

In this latest Environmental Law News Update, Christopher Badger, Charles Morgan and Natasha Hausdorff consider the fine imposed on Yorkshire Water for a sewage leak, new environmental and social reporting requirements in corporate strategic statements, and a report by Consumer Council for Water on the state of sewerage and drainage systems in the UK.

 

Yorkshire Water fined for raw sewage leak

On 27 November 2017, Yorkshire Water Services Limited pleaded guilty at Sheffield Crown Court to charges relating to a pollution incident in April 2014 where raw sewage was discharged into a watercourse and ultimately into 2 local ponds. They were fined £45,000 and ordered to pay costs of £24,762.56.

The fine is notable due to its low size. The discharge of sewage resulted in a raised level of ammonia in the water of the ponds and a reduced level of dissolved oxygen for a considerable period of time. The pollution from the illegal discharge was traced for over 3.5km downstream from the pumping station and a large number of fish died due to the toxic effects of ammonia.

Yorkshire Water’s annual report for 2017 shows that revenue for the year ending 31 March 2017 totalled just over £1 billion, with a gross operating profit figure of £317 million. This is a gross profit margin of 31%. However, due largely to an exceptional item linked to the fair value of index-linked swaps taken out by the Company in 2007/2008 as a hedge against movements in the Retail Price Index, the company made a loss before taxation of £362 million and received a tax credit of £101 million. It isn’t known to what extent this loss influenced the Court’s decision.

The Environment Agency’s press release can be found here

 

Environmental and Social Governance – Section 414CB Companies Act 2006 Reporting Requirements

Back on 1 January 2017, a new section 414CB of the Companies Act 2006 amended the mandatory content of a company’s strategic report, introducing a requirement that companies provide in their non-financial information statements, inter alia, an understanding of their impact on environmental and social matters. This marked a significant change in the substance of non-financial reporting.

During the year, the Corporate Governance Reform Agenda, part of a policy drive advanced by BIS, focused attention on s.172 Companies Act 2006, the duty imposed on a Director to promote the success of the company, having regard amongst other things to the impact of the company on the community and the environment.

In light of these developments, the Financial Reporting Council recently closed a consultation on proposed amendments to its ‘Guidance on the Strategic Report’ and intends to bring about reforms to non-financial reporting by June 2018.

ESG continues to gain prominence. Last month, prompted by the interim recommendations of the ‘High Level Expert Group on Sustainable Finance’ (whose final report is due this month), the European Commission announced it was considering whether to clarify that institutional investors’ duties  include taking into account sustainability risks. A proposed impact assessment will assess whether and how such a clarification could contribute to a more efficient allocation of capital and sustainable growth. It is expected that the Commission will clarify that the fiduciary duties of institutional investors and asset managers to explicitly integrate material ESG factors and long term sustainability.

S.414CB requires that the Strategic Report must include a description of the company’s policies and due diligence processes with respect to Environmental and Social Governance (ESG), as well as the principle risks, their adverse impacts and a description of risk management ((S414CB(1)-(2)). In so far as a company does not pursue policies in this vein, it is required to provide a clear and reasoned explanation for this absence (S414CB(4)). There exists a carve out for impending developments or matters in negotiation, where the disclosure of this information would, in the opinion of the directors, be seriously prejudicial to the commercial interests of the company (S414CB(9)).

Where a company makes use of a reporting framework it may specify this as an alternative to including the information in its statement. The top reporting frameworks providing a means of calculating ESG include the Dow Jones Sustainability Index, the Global Reporting Initiative and the Carbon Disclosure Project.  The frameworks have driven management attention to these areas, engendering greater awareness and assisting in the development of corporate programs.

A director who knowingly or recklessly approves a strategic report which is not in compliance with the requirements of the Act, and fails to take reasonable steps to secure compliance or to prevent the report from being approved, is liable to a fine upon conviction.

As more and more companies reach their financial year end, it will be interesting to note the extent, if any, of improvements to ESG reporting.

 

Sewerage undertakers still in trouble over sewer flooding

The Consumer Council for Water exists to champion the interests of water industry consumers (so pretty much everyone). In its recently-published report ‘Clear Way Forward: Delivering a resilient sewerage and drainage system’ it reports an annual increase of nearly one-third in instances of internal flooding of properties, particularly in the service area of United Utilities (90% increase) and Thames Water (39%).

The problems which the water industry faces are manifold and not entirely of its own making. Increased demand imposed upon an old system by population growth (with the statutory duty to accept new connections), abuse of the system by its use as a ‘liquid dustbin’ (resulting in chronic blockages, the greatest single offender being wet wipes of all types) and climate change (causing intense rainfall events) are amongst the challenges.

The statistics can’t have been helped by the compulsory vesting in the undertakers in 2011 of a vast length of formerly private sewers and lateral drains pursuant to The Water Industry (Schemes for Adoption of Private Sewers) Regulations 2011. This greatly increased the size of the public network and included many lengths of pipe of unknown location and performance with which the undertakers are still becoming acquainted.

The suggested solutions include a more proactive approach to sewer management, better customer communication and education and reduction of the amount of surface water entering the system (via SUDS and improved long-term drainage and wastewater management plans). The report recognises that the ‘obvious’ solution – build bigger sewers – is neither practical, economically feasible nor sustainable in the long run. Nor of course does the failure to do so result in liability in private law – Marcic v Thames Water Utilities Ltd. [2004] 2 AC 42.

As noted above, we are all water industry consumers. When it comes to the problems caused by sewage, we are all responsible …

 

To keep up-to-date follow us on Twitter @6pumpcourt or contact bridgettough@6pumpcourt.co.uk to be added to the mailing list. If you have any comments or suggestions please feel free to contact us.

The litigation effect of the Paris Agreement – New Zealand and Norway take the baton

Posted by: Frances Lawson

As the dust settles from COP23, it seems clear that action on climate change remains insufficient to prevent dangerous levels of global warming. If political ambition is lacking, can litigation come to the rescue? November saw milestones reached in a number of significant climate change actions, two of which were brought against national governments. In New Zealand, the High Court gave its verdict on a challenge to the government’s response to climate change, and in Norway the Oslo District Court heard oral submissions concerning the government’s decision to grant licenses for petroleum exploration. Both cases explore the extent to which climate-related international law imposes obligations upon states. This is a highly contentious area, and the significance of the resulting judgements is certain to extend far beyond their borders.

New Zealand

In Thomson v The Minister for Climate Change Issues a 26-year old law student brought an application for judicial review of the government’s dual decarbonisation targets:

● 30% reduction in greenhouse gas emissions (GHGs) by 2030 relative to 2005 levels (30/30), issued in accordance with the Paris Agreement as New Zealand’s nationally determined contribution (NDC)
● 50% reduction in GHGs by 2050 relative to 1990 levels (50/50), set under its domestic Climate Change Response Act 2002 (“the Act”)

While the judge technically dismissed the claimant’s application, it found in her favour in relation to the 50/50 target but decided against issuing a remedy given the strong climate pledges of the new Labour government.

30/30 target

This was the first time that the courts have been asked to review a country’s NDC. A preliminary question had to be answered: is this even a matter for the judiciary? The defendant argued it was not, pointing out that it was not set under domestic law but as part of an international agreement – foreign policy being the sole domain of government – and that many socio-economic and other factors need to be weighed in the balance, a task the courts are not equipped to handle. However, heavily influenced by the growing line of climate change case law in other jurisdictions – from the Dutch Urgenda case to the US case of Massachusetts v Environmental Protection Agency – the NDC was found to be amenable to review. This section of the judgment is likely to be used by environmentalist litigators elsewhere as a useful precedent.

Another key question was whether there are limits to the freedom of states to select the commitments contained in their NDCs. The claimants argued that the 30/30 target should have been more ambitious, on the basis that it falls short of what is required to adequately respond to the threat of climate change. However, while less ambitious than it might have been (and less ambitious than the 50/50 target), the judge noted that NDCs are subject to continual review as part of the UNFCCC negotiations and that the 30/30 target fell within the bounds of the commitments made under the Paris Agreement. In other words, the Paris Agreement may provide some parameters in terms of nationally determined contributions, albeit fairly weak ones.

Are there limits to the basis upon which a state decides its NDC? According to the claimant, when setting the NDC the government was required (but failed) to consider: i) the cost of dealing with the effects of climate change, ii) the impact of climate change on the people of Tokelau (a low-lying New Zealand territory) and other Pacific Islanders, and iii) the fact that globally, the current NDCs do not limit global temperatures to “well below 2 degrees” as per the objective of the Paris Agreement.

It was held that the government was not obliged to take i) and iii) into account on the grounds that the Paris Agreement neither stipulates a specific way of assessing the costs and benefits of NDCs, nor requires states to make up for any shortfall in global efforts to meet the 2 degree target. It was required to consider ii), but only in relation to Tokelau (and not other pacific islands) due to Tokelau’s “dependence on New Zealand and its status in international law” (para 157). The judge did not find a breach of this requirement.

50/50 target

The court had to decide whether there was an obligation on the state to reconsider its 50/50 target in light of the latest scientific consensus, as provided by the 5th Assessment Report (AR5, published in 2014) of the Integovernmental Panel on Climate Change (IPCC), and if so, whether the duty to do so had been fulfilled.

In finding for the claimant on both counts, the judge identified an implied duty deriving from international law. The Climate Change Response Act 2002 provides the relevant Minister with the discretion to review the 50/50 target, and under New Zealand law, discretionary powers must be read in a manner consistent with the country’s international duties. It was held that when considered together, certain passages in the Paris Agreement make clear that parties: “should update their individual measures in light of [relevant scientific] information” (para 91, emphasis added).

Although the use of ‘should’ may suggest a degree of choice, the judge concluded that the government must reassess its targets set under the Act in order to “to give effect to…what New Zealand has accepted, recognised and committed to under the international instruments” (para 94, emphasis added). On this view, states are not merely encouraged to ensure their climate action adequately considers the latest evidence, but are compelled to do so under international law.

This interpretation of international law is significant. It is likely to add to the weaponry of environmentalists around the world that believe politicians to be ignoring the evidence on climate change; this judgment is an indication that the Paris Agreement may be taken by national courts – in certain circumstances – to compel them otherwise. Of course, an obligation to ‘review’ a target is not the same as an obligation to set higher targets, but it may provide pressure to do so.

Norway

In times when politicians are wavering and non-committal, it demands courage from the courts to overrule political decisions in order to safeguard our future.” – Truls Gulowsen, Head of Greenpeace Norway (Interview with the Guardian)

On 22 November 2017, oral hearings concluded at the Oslo District Court concerning a decision to issue licenses for oil and gas exploration in new areas of the Barents sea. The action, brought by Greenpeace and Nature & Youth, a Norwegian environment-focused youth organisation, and with the support of 500,000 signatories, challenged the compatibility of expanding oil drilling with tackling climate change. It is centred on the decision’s alleged incompatibility with Article 112 of the Norwegian Constitution that states:

Every person has the right to an environment that is conducive to health and to a natural environment whose productivity and diversity are maintained. Natural resources shall be managed on the basis of comprehensive long-term considerations which will safeguard this right for future generations as well…The authorities of the state shall take measures for the implementation of these principles”.

The claimants challenged the decision to issue licenses on substantive and procedural grounds:

1) The decision to issue licenses being incompatible with Article 112
2) The government breaching its obligation to properly consider Art 112 when issuing the licenses

The incompatibility of the license decision with Art 112

What does Article 112 require? Is it a conduit for bringing international climate change law into the Norwegian constitution, and if so, what are the consequences?

Neither Norwegian case law nor statute set out the substantive obligations of Article 112. Given this, the claimants invoked the ‘presumption principle’, according to which Norwegian law must be interpreted in accordance with international law, and claimed that the licensing decision breaches it.

The relevant international obligations include the ‘no harm’ principle, a feature of customary international law according to which states must “prevent, reduce and control the risk of environmental harm to other states”, the ‘precautionary principle’, under which the absence of scientific certainty should not prevent states taking action to limit or prevent a risk of serious or irreversible environmental harm provided there are reasonable grounds for believing that such harm could or will occur, and a recent statement by the UN Human Rights Committee in relation to Article 12 of the International Convention on Economic Social and Cultural Rights 1966 (ICESCR):

Since climate change directly contributes to the violation of human rights, States have an affirmative obligation to take measures to mitigate climate change…
(Para 54)

Do these principles prevent the extraction of more fossil fuels? The risks associated with climate change are well documented. The drilling licenses in questions have an estimated contribution of 4,767m tonnes of CO2 or 0.5% of the world’s remaining carbon budget if global temperatures are to be held within a 2 degree limit. Additionally, some exploration zones lie deep in the Arctic and under the ‘albedo effect’, black carbon produced during extraction could cause the surrounding ice to melt. Therefore, it may seem that that drawing from these untouched reserves is incompatible with Norway’s duty to refrain from accelerating climate change, especially as it indicates an intention to continue extracting fossil fuels well into the future. However, as petroleum exploration is lucrative for the Norwegian economy, the government is reluctant to make a decisive move away from it.

Similar to Thomson, the government’s position is that decarbonisation efforts are outside the purview of the courts. Should the judge find the issue amenable to review, the government’s submission was that Article 112 doesn’t create individual rights but instead expresses societal aims. Even if it does impose obligations, the government claimed these have not been breached. It put forward a number of arguments, chief among these being that international agreements allocate fossil fuel emissions to the place of combustion, not the place of extraction. 97% of Norway’s electricity comes from renewable sources and therefore the bulk of the extracted oil and gas would count towards the emissions of other countries.

If the court does find that international law – whether through the Paris Agreement or otherwise – provides substantive obligations to take precautionary measures on climate change, this could be a watershed moment. It could force states to reconcile with an uncomfortable truth; that unfettered growth is incompatible with our duty to protect the planet.

The obligation to consider Article 112 when making the licensing decision

Arguably, the claimants are on stronger footing with their fall-back claim that at a minimum Article 112 requires the government to take into account the potential climate change impacts of its decision. The government’s position is that this was done by parliament when it voted down proposals to ban the issue of licenses on climate change grounds. However, the court may need to be convinced that parliament not only refused to veto the proposed licenses, but that it also refused to amend them in light of the potential climate change impacts.

Ultimately, this case will turn on the court’s interpretation of the obligations imposed by Article 112, as well as hotly debated issues of general public international and climate change law. Given this, the verdict – expected in early January 2018 – will be eagerly anticipated.

See the claimants’ written submissions here, and the government’s response (only available in Norwegian) here.

This piece has been co-authored by Vedantha Kumar.

 

You can keep up-to-date with this Climate Change blog by following @6pumpcourt on Twitter

Environmental Law News Update

In this latest Environmental Law News Update Christopher Badger and Charles Morgan consider the Environment Agency’s consultation on a new Enforcement and Sanctions Policy, an inquiry into Green Finance by the Environmental Audit Committee and new farming rules for water.

 

Environment Agency Consults on New Enforcement and Sanctions Policy

The Environment Agency currently acts according to the principles contained in three documents: Enforcement and Sanctions – Statement (v.3, 2014, 9 pages) – a high level statement of principle; Enforcement and Sanctions – Guidance (v.4, 2015, 75 pages) – a working document providing a methodology for determining the appropriate method of response (criminal sanctions/civil sanctions); Enforcement and Sanctions – Offence Response Options (v.11, 2016, 175 pages) – a comprehensive list, sector by sector, of available responses to specific offences and applicable civil sanctions.

Each document tells the reader that it must be read together with the others. Only then will the full mystery be revealed.

In order to render this process of revelation easier, the Environment Agency proposes to combine the first two of these documents into one, to be called “the Enforcement and Sanctions Policy” (referred to as “the revised ESP”). A draft of 68 pages has been prepared together with a consultation document. Two major drivers for the proposed changes have been the 2014 Definitive Guideline for the Sentencing of Environmental Offences (on the practical operation of which there is now a considerable mass of experience) and the introduction of a power to accept enforcement undertakings (“EUs”) for breaches of the Environmental Permitting Regulations. It is proposed that the Sentencing Guideline should form the basis for the calculation of variable monetary penalties under the RESA régime. The new policy will also include revised guidance on climate change penalties and numerous other changes.

Perhaps the most novel proposal is a methodology for “natural capital assessment” as a means of quantification of an EU offer in the context of water pollution. This is set out in a further document “Water Pollution Natural Capital Calculator Guidance” and an accompanying Excel workbook file “Water Pollution Natural Capital Calculator”. The latter’s purpose is to estimate “the value the public holds for improvements to rivers, lakes and other water bodies such as reservoirs, canals”. The range of figures produced by the calculator will “provide a starting point to open discussion with the Environment Agency”. The devil here is definitely in the (invisible) detail; parameters (such as decline in water quality) are selected from a series of drop-down menus to which values are ascribed in a manner not transparent on the face of the spreadsheet, though doubtless to be found embedded within it. “Results” appear at the foot of the table in the form of the “Central” and “High” points of the range of suggested offers. Outcomes from four to eight figures in £s can readily be generated by casual experimentation. Behind this apparent simplicity must lie a sophisticated process of cost-benefit analysis, the most likely source being “Principals of Natural Capital Accounting” developed by the Office for National Statistics and Defra. Nothing about cost-benefit analysis, the assumptions upon which it is based and the values which it produces is set in stone (see Charles Morgan’s recent article published in the Journal of Water Law) and there is bound to be scope for respectable argument over both the methodology used and its application within the calculator, open to be raised by anyone prepared to decipher both and to respond during the consultation period (absent which, the calculator’s workings will in effect “solidify”).

The Environment Agency is now seeking views on its proposals. As it says: “this is your opportunity to ensure that the revised ESP can be understood by you and is clear and fair about the action we may take if a legal obligation is breached.” The consultation has now begun and will run until 15 January 2018. You can respond online.

 

Environmental Audit Committee looks into Green Finance

On 24 November 2017 the Environmental Audit Committee launched a Green Finance inquiry to scrutinise the Government’s strategy to develop ‘world leading Green Finance capabilities’.

The inquiry will examine:

• The measures set out in the Clean Growth Strategy;
• Whether the Green Investment Group is fulfilling commitments made by its new owners Macquarie;
• The UK’s future relationship with the European Investment Bank;
• How company reporting on climate liabilities and risks could be encouraged;
• Whether the Government’s policies are likely to deliver the levels of investment needed to meet the UK’s national and international environmental commitments.

The Committee’s starting point is to invite written submissions by 3 January 2018. Interesting topics include how can investment promote long-term sustainable development, what the effect of leaving the EU will be on investment in environmentally friendly projects and where the newly created ‘Green Finance Taskforce’ should concentrate its efforts.

Private sector investment in low carbon technology and infrastructure is considered key to whether or not the UK will meet its carbon budgets. In contrast, there is a question mark about the level of support from the Government for renewables projects. The key issue is whether current proposals are going to encourage innovation by and investment in UK business.

The Committee’s terms of reference can be found here.

New Farming Rules for Water

DEFRA has published a policy paper setting out ‘Farming Rules for Water’, due to take effect from April 2018 and intended to fulfil obligations under the Water Framework Directive. The paper follows a consultation that took place back in 2015.

The scope of the rules includes the storage and application of organic manures and manufactured fertilisers and protection of soil erosion. It is intended that the Environment Agency will carry out any checks against the rules as part of its existing risk-based, targeted farm inspections. The Agency will focus on catchments where agriculture is known to be having an environmental impact, as well as associated higher risk farming activities and non-compliant farmers.

Diffuse rules for farmers already include topics such as nitrates, slurry and pesticides. Further, the Government published River Basin Management Plans in February 2016 and intends to publish a 25-year environment plan at some point in 2018. Yet future environmental policy requires a coherent approach. It is estimated that 70% of the UK’s land is managed by farmers and the challenge for farming policy is whether it is possible to develop a supportive approach that engages with both food production and environmental measures, promoting productivity rather than stifling it.

The policy paper can be found here

 

Christopher Badger wins Legal 500 UK Junior of the year:  Real Estate, Environment and Planning

We are delighted to announce that Environmental Law News blog author Christopher Badger has won the Real Estate, Environment and Planning Junior of the Year in the Legal 500 2018 UK Bar Awards announced earlier today.