Environment, Energy, and the U.S. Supreme Court: Judge Sonia Sotomayor Nominated for Membership on High Court

Whether federal judge Sonia Sotomayor is confirmed as the next associate justice on the U.S. Supreme Court will not hang in the balance as a result of environmental or energy issues.

The so-called “experts” are more concerned about fringe and/or hot-button issues. Real life issues like weighing environmental protection and economic development take a backseat to the issues that the radio and TV personalities can bang on and on about in their never ending quest for higher ratings.

Nevertheless, it is illuminating to consider what some in the business and environmental communities think about President Barack Obama’s first nominee for the Supreme Court.

There is no more quintessential business group than the U.S. Chamber of Commerce, and for the time being they are taking a cautious view of Judge Sotomayor. "In recent years, the Supreme Court has played an increasingly important role in deciding issues that affect the business community and the health of the economy,” the Chamber said in reaction to the nomination. “It is important that the confirmation process focus carefully on the nominee’s views and how they would impact economic growth and Main Street businesses. It is equally important that the next associate justice applied the law without bias.” In the past, the Chamber has endorsed nominees made by both Republican and Democratic presidents.

On the other hand, environmental groups have been outwardly enthusiastic about the nomination. Carl Pope, executive director of the Sierra Club, said, “Our different backgrounds strengthen us in our efforts to protect the natural and human environment, and we fully expect decades of exemplary service from Judge Sotomayor.” Similarly, Glenn Sugameli, responsible for researching judicial nominations for Earthjustice, said, “Her knowledge, understanding and service as a federal trial and appellate court judge provide invaluable perspectives for deciding environmental protection and related issues,” Greenwire reported (“Enviro Groups Like What They See in Obama’s Justice Pick,” May 27, 2009).

There are several cases Judge Sotomayor has been involved in that may shed some light on her philosophy in this area. Judge Sotomayor was a member of a three-judge panel that heard arguments in 2006 in Connecticut v. American Electric Power Inc.  In the case a group of attorneys general alleged that greenhouse gas emissions were in effect a public nuisance. A federal trial court ruled in favor of the utilities, and the case was on appeal to the Second Federal Circuit Court of Appeals. According to Greenwire, Judge Sotomayor said during a hearing, “I have absolutely no idea about the science of global warming. But if the science is right, we have relegated ourselves to killing the world in the foreseeable future. Not in centuries to come but in the very near future.” The appellate panel has handed down no decision.

Brazil: The Next Big Oil Opportunity?

The government of Brazil will begin selling concessions for the right to develop the "pre salt" oil reserves off the coast of Sao Paulo state as early as next year.

This is particularly important news since the country suspended the selling of concessions in 2007 when enormous oil reserves were found in Brazil's territorial waters.

Edson Labao, Brazil's mines and energy minister, has told the Financial Times ("Brazil to Open Up Vast Offshore Fields," May 29, 2009), "We will certainly be holding auctions next year. this means the oil companies can begin to prepare their treasury reserves."

The FT article put this development in more context:

"The new reserves promise to turn Brazil into an important oil exporting nation and further highlight the differences between Petobras, Brazil's publicly traded but government-controlled oil company of growing international status, and the declining fortunes of its regional rivals Pdvsa of Venezuela and Pemex of Mexico."

Before the selling of concessions begins, however, the government needs to establish a new regulatory framework for development in this area. This may be problematic bearing in mind that the country will have national elections in 2010 and the Congress may be unwilling or unable to reach agreement before then.

In any case, it is time to start saving. I have $100 I plan to bid.

New Book Examines European Union's Climate Change Policies

The European Union's leadership role in addressing climate change is explored in a new book written by David Buchan, a senior fellow at the Oxford Institute for Energy Studies and a former Financial Times energy editor.

"Energy and Climate Change: Europe at the Crossroads," is particularly timely as the United States begins to seriously consider for the first time whether to address climate change.  The EU has been seriously (although not always entirely successfully) working on this issue for a decade, and in 2005 established the world's first cap-and-trade system for carbon dioxide emissions.  The EU has committed to reducing its carbon emissions by 20 percent based on 1990 levels by 2020, as well as increasing the percentage of renewable energy to 20 percent by 2020.

This morning's Financial Times includes a book review ("EU's Global Warming Policy Blazes a Trail," May 28, 2009) that is highly favorable to Mr. Buchan's book.  Among other things, the book review says:

"His book will be indispensable for anyone who wants to understand the progress the [European energy] industry has made in the past decade, and where it is likely to go in the next.  The framing narrative is the story of how the European Union's politicians and officials tried to forge collective approaches to meet three often conflicting challenges: competitiveness, energy security, and climate change."

I have not yet read the book (although I've just ordered it).  However, one thing is for sure: The global leader in addressing climate change is in Brussels, where the EU is primarily located.   Washington, D.C., has not even merited a mention until the last few months.

Consequently, if one wants to stay current on action (and not just talk), the key is to know what the EU is doing.  As far as the U.S. goes...well one would just as well (until recently) pick up People Magazine and read about the lives of the rich and famous. This is about as "hot" as the news has typically gotten in the U.S.    

LLM Student Wins Rocky Mountain Mineral Law Foundation Scholarship

Soudeh Mollasalehi, an LLM student in the Environmental and Natural Resources Law & Policy Graduate Program, has been awarded a 2009-2010 Rocky Mountain Mineral Law Foundation Scholarship.

The Foundation is the world's pre-eminent natural resources organization and has members from around the globe.

Ms. Mollasalehi, a top graduate of Shahid Beheshti University Faculty of Law in Tehran, Iran, is shown in the picture at Xcel Energy's Ponnequin Windfarm in northern Colorado.

This award recognizes Ms. Mollasalehi's past and current academic performance as well as her potential for making important contributions in the future. To be honored by the Rocky Mountain Mineral Law Foundation is a wonderful tribute for anyone, and we are very proud to have Soudeh as a student in our program at the University of Denver.

Ms. Mollasalehi joins two former graduate program scholarship winners: Katia Castillo, of Lima, Peru (LLM, 2008); and Marina Marti, of Buenos Aires, Argentina (LLM, 2008).

Trial Involving Ken Saro-Wiwa, Deceased Nigerian Environmental Activist, Begins Today in New York

A case alleging that Shell was involved in the death of Ken Saro-Wiwa, an author and former Nigerian environmental activist, reached a New York federal trial court today.

According to the plaintiffs, Mr. Saro-Wiwa died in 1996 at the hands of the militarily-controlled Nigerian government as the result of his campaign against the oil drilling practices of Royal Dutch Shell.  As reported in the Financial Times ("Old Law Exhumed by Rights Fighters," May 26, 2009), his final words were, "Lord, take my soul but the struggle continues."

As described by The New York Times ("Oil Industry on Trial," May 22, 2009), "The trial...will examine allegations that Shell sought the aid of the former Nigerian regime in silencing Mr. Saro-Wiwa, a vociferous critic, in addition to paying soldiers who carried out human rights abuses in the oil-rich but impoverished Niger Delta where it operated."   

The case is being pursued under a heretofore little known federal statute, the Alien Tort Claims Act, which has been used to give parties allegedly injured by the wrongdoing of another outside the U.S. a way to pursue the action in U.S. courts.  This, of course, is an extremely simplified version of the Act, but suffice it to say the use of the Act to seek recovery in the U.S. is of great concern to many multinational firms.

According to the FT, "The potential of these lawsuits to generate huge damages and disastrous publicity now hovers, according to one lawyer whose firm defends big companies, 'very close to the consciousness of corporate America acting overseas.'"

I do not pretend to be an expert on the Act or on the facts of the Saro-Wiwa claim for that matter.  However, what is clear is that multinational natural resources-related firms -- whether they like it or not -- may be required to appear before an American federal court to answer for their allegedly illegal behavior that may have taken place thousands of miles from the U.S.

It also underscores the fact that natural resources firms operating around the world, sometimes in quite "isolated" locations, need to be mindful of their relationships with the communities in which they operate.

The American legal process is oftentimes a long and complicated affair, and there is no telling what will happen with the claim by Mr. Siro-Wiwa's relatives.  However, the "anything goes" attitude that at least some (and perhaps way too many) firms have taken with regard to the communities in which they operate must be a thing of the past -- unless their shareholders are willing to answer for the misdeeds of the company.

A logical next question is, what about Chinese firms that operate as "arms" of the government.  Are they particularly concerned about their corporate actions?  I'm afraid I don't know the answer to that, but I fear the people in Sudan would tell an awful story about their relationships with Chinese oil firms operating there.

Stoel Rives LLP Publications on Energy Issues

The law firm of Stoel Rives LLP has authored a series of energy-related books that are freely available (after you register) on their website.

I have not read any of these, but they might be worth knowing about if you are working or researching in any of the following areas:

• The Law of Green Building
  
• The Law of Oceans & Tidal Energy
  
• The Law of Biofuels
  
• The Law of Wind
  
• the Law of Solar Energy

Click here to visit the website where you can access the books.

Financial Challenges for U.S. Electric Utility Sector

The U.S. electric utility sector, the second most intensive capital sector in the country, has tremendous financial and environmental challenges ahead of it.

A recently published report, "The Financial Crisis and Its Impact on the Electric Utility Industry," puts it this way: 

"Today, the electric utility industry faces the greatest challenge in its history.  In order to meet the projected growth in electricity demand, major investments are needed to expand and modernize most elements of the electric utility business.  At the same time, concerns about global climate change and other environmental issues have created a new industry emphasis on more energy-efficient products and services and low-emission generation sources."

Some have estimated that the sector will need infrastructure investment in the range of $1.5 to $2 trillion in the next two decades (and that is "net of projected savings from aggressive energy efficiency and demand response programs.")

The report, commissioned by the Edison Electric Institute, provides an excellent overview of how the financial crisis is playing out in the context of U.S. electric utilities.

Oil $150 Per Barrel by 2012?

Since last summer's oil price of nearly $150 per barrel, the price has plummeted although now it is somewhere in the range of $60 per barrel.

However, Saudi Arabian Oil Minister Ali Naimi yesterday predicted that oil prices could approach $150 per barrel in three years time because of recent lack of investment in exploration and production.

Mr. Naimi said at a meeting of the Group of Eight energy ministers, "If others [besides Saudi Arabia] do not begin to invest similarly in new capacity expansion projects, we could see within two-to-three years another price spike similar to or worse than what we witnessed in 2008."

A combination of factors have hurt the investment picture, Mr. Naimi said, including weak demand, low prices, and troubled credit markets, the Financial Times reported ("Saudi Warns of $150 Oil Within Three Years," May 25, 2009).

Meanwhile, today's Financial Times includes an excellent special report on energy.  Anyone interested in the energy sector should read through this report.

America's Cap-and Trade Legislation: A "Dour" View From Across the Pond

At least one major European-based publication -- The Economist magazine, which is published in London -- has poured a huge bucket of cold water on the Waxman-Markey "American Clean Energy and Security Act of 2009."

Despite the self-congratulatory pronouncements of the last few days among some members of America's politically green class, this week's Economist includes an editorial entitled "Climate Change and Congress: Weak Medicine," which comments on the failings (in its view) of this legislation.

(Now I hasten to say that something may be better than nothing in this case, and to be sure the U.S. has been missing in action for most of this decade in regards to the climate debate.  But on the other hand, many Americans have a curious way of looking at "reality" that only another American -- but hardly anyone else in the world -- could appreciate.)

Here is the Economist's assessment of three reasons why the legislation is too weak:

"First, it envisages America cutting carbon dioxide emissions by 17 percent below 2005 levels by 2020...Europe, by contrast, is aiming to cut its emissions by 20 percent below 1990 levels by 2020...

"Second, the purpose of a cap-and-trade system is to introduce a carbon price.  But the bill sets a ceiling of $28 per ton on the price of carbon -- too low to change behavior enough.

"Third, under a cap-and-trade system, the government issues permits to pollute.  The Administration had wanted 100 percent of permits to be auctioned, but the bill would hand most of them out free...When that happened in Europe, power-generation companies passed the cost of buying permits on to consumers and pocketed the value of the ones they had been given free.  In order to avoid such an outcome, the bill specifies that the value of free permits must be passed on to consumers.  But if consumers are protected from price increases, they will have no incentive to cut back on carbon consumption -- which is one of the goals of the scheme."

In contrast, The Economist suggests that America should dump this legislation and enact a carbon tax:  "Sceptics will howl about the initial cost, but it will be transparent and far, far cheaper than the impact of serious climate change."  

The Economist has been wrong on a million fronts before and it will be again.  But this editorial should provoke at least some consideration in the U.S. about whether the current cap-and-trade bill is the way to go.

Of course, the other point that makes this assessment even "richer" is that it comes from a European-based publication.  That will provide plenty of cover for those in the U.S. who are prone to rail on about how "the Europeans" (writ large) are always trying to tell "the infants" in "the colonies" how to do things.  No parent and child relationship is ever easy to understand, and this one isn't either.

Eurelectric, EU-Based Trade Group, Publishes New Report on Smart Grids

The development of smart grids is a way to equip European electricity transmission and distribution operators to contribute to the European Union's ambitious energy-climate legislative package, according to Europe's leading electric utilities' trade group.

According to "Smart Grids and Networks of the Future," published last week by the trade organizaiton Eurelectric, "The current economic crisis provides extra motivation to accelerate the process [of establishing a smart grid] since electric grid infrastructure, as the 'backbone of the economy,' is a good place to kick-off the recovery."

Eurelectric defines "smart grid" in this manner:

"A smart grid is an electricity network that can intelligently integrate the behavior and actions of all users connected to it -- generators, consumers and those that do both -- in order to efficiently ensure sustainable, economic and secure electricity supply.  A smart grid, involving a combination of software and hardware allowing more efficient power routing and enabling consumers to manage their demand, is an important part of the solution for the future."

The report "sets out the state of play on smart grids, the nature of the distribution grid and network development in European countries.  It includes details on drivers for smart grids, network development, investments, new services expected from distribution system operators, active grid management, smart metering, and regulation."

Understanding electricity generation and distribution and how they are regulated in the EU are not topics for the weak of heart.  It is complicated and often amusing to watch as Brussels and the EU member states battle it out to see who will play a more important role in the future. But this much is clear: Eurelectric understands that the European public is in no mood to hear the electric utilities whine about climate change-related mandates on the sector; consequently, Eurelectric tries as best it can to position itself as an enthusiastic player in the EU's attempts to deal with climate change.