The Klamath River Dam Removal Agreement: Lessons for Negotiation

The Klamath River.  Photo: Linda Tanner.

The Klamath River.  Photo: Linda Tanner.

An agreement to implement the largest river restoration project in the United States was signed last week on a fish cleaning table at the mouth of the Klamath River in northern California.  The agreement hasn't garnered much national attention, but serves as a model for negotiating a complex stakeholder agreement over water resources.  This week I've been running negotiation simulations in my Natural Resources Law and Ocean and Coastal Law classes to drive home the significance of multi-party conflicts over natural resources, and the challenges of coming to a mutually beneficial agreement when so many parties have an interest in the resource.  The Klamath River is a textbook example of a multiple use resource conflict.  

The river and its network of dams provide irrigation to farmers in Oregon's upper basin and California's lower basin, hydropower to energy markets, instream flows to federal public lands, domestic water and aquatic species for several tribes, and sustain a diverse ecosystem that includes three species listed under the federal Endangered Species Act (including the Coho Salmon).  The operator of the dams is owned by Berkshire Hathaway, the river provides recreation and tourism opportunities to local communities, and its path crosses the state boundary between Oregon and California.  In other words, stakeholders include large-scale farmers, small-scale farmers, federal agencies, endangered species, tribal governments, conservationists, corporate interests, two western states, and watershed communities.  For many years the dynamic of the conflict pitted the dam operator and farmers benefiting from the irrigated water dams provide against the downstream tribes and conservationists who were critical of the cumulative impacts dams were having on the watercourse as a whole.  There has been extensive litigation and political wrangling in the last several decades, intensifying the conflict.  Compounding these issues is a decline in the absolute quantity of water resources available in recent years.  

It seems remarkable, then, that this diverse group of stakeholders could have come to an agreement.  Upon closer inspection, it seems that ancient doctrines of water law and the judicial system may have played a necessary role in getting the parties to the negotiating table.  The United States federal government holds a reserved water right to sustain federal public lands, from which it must also protect and preserve the water rights of the several tribes.  In this case, the Klamath Tribes (established by the Klamath Treaty of 1864), had priority water rights.  In the western water law system of prior appropriation, senior water users have priority over junior water users, but it can take many years of legal battles to validate senior water rights.  In 2013, an arbitration court finally validated the tribes senior water rights over upstream farmers using the dams.  In a previous case, United States v. Adair, the judge concluded:

"Although the reservation has now been terminated, members of the Klamath Tribe and the tribe itself have the right to sufficient water to protect their hunting and fishing rights on lands of the former reservation and for agricultural purposes on those lands. Protection of these rights, the court notes, will require maintenance of a natural stream flow through both an existing marsh and forest land on the former reservation."

That court decision prompted the stakeholders to negotiate an agreement that would operationalize the tribes' legal victory.  And it didn't hurt, I suppose, that the dam operator's financial projections were ambivalent: it might have been more expensive to continue maintaining and licensing the dams than removing them.  These new legal and financial developments gave the parties the mutual reality needed to get the deal done, which included a second agreement designed to compensate farmers and ranchers who stand to lose from dam removal. 

The Klamath River restoration agreement is remarkable in its scope, representing the largest river restoration project in the country.  It is remarkable in its promise, providing hope to tribes, conservationists, and local communities dependent on the health of the river's ecosystems.  But it might be most remarkable in its resolution, providing a fascinating example of a multi-party stakeholder negotiation that will likely result in a ground-breaking restoration agreement.  While centuries-old water laws are much maligned, it is clear they still have a powerful role to play in twenty-first century water management.  

The Marijuana Ordinance

Arcata Plaza, Humboldt County, California.  Photo: Terrence McNally.

Arcata Plaza, Humboldt County, California.  Photo: Terrence McNally.

One of the early trends in marijuana regulation is to include a heavy dose of local governance.  States that have legalized marijuana cultivation, sale, and consumption are being broadly permissive of local governments that want to enact their own marijuana regulations.  Local regulations can be more or less permissive of marijuana activities (often they outright prohibit the cultivation or sale of marijuana), and for states the advantages of local governance are numerous.  Because marijuana regulation is so new, states often have little experience or expertise on the subject, so getting local governments involved helps develop institutional capacities.  It also encourages experimentation with diverse regulatory approaches that might lead to innovative or create policies that can be replicated in other localities or on the state level.  And, since many legalization statutes are created by ballot initiative, allowing local governments to create their own rules makes marijuana regulation a less divisive issue on the state level, where politicians might retain some discomfort with the industry.

Local governments can use their power to enact ordinances to regulate marijuana agriculture, and that power has been utilized in states like California, Colorado, and Washington.  In most cases, though, ordinances make small changes or adopt broad positions.  There are few ordinances that comprehensively address marijuana agriculture.  Humboldt County, however, is an exception, having recently passed the Commercial Medical Marijuana Land Use Ordinance. Humboldt County officials had been working on the Marijuana Ordinance for several years, in collaboration with marijuana industry groups and farming representatives.  The close collaboration between local officials and industry representatives enabled the ordinance drafting process to move forward quickly and with political support, a dynamic that may prove to be equally helpful in other jurisdictions.  

My forthcoming article on marijuana agriculture goes into detail on the Humboldt County Marijuana Ordinance.  Part of that analysis is reproduced below:

The Marijuana Ordinance itself is relatively comprehensive in scope, addressing farming styles (indoor, outdoor, and mixed), historical use protections and benefits for existing farms, tiered permitting requirements based on zoning classifications, total farm acreage and marijuana cultivation area, water quantity and quality protections, energy use, and farm labor standards.  The ordinance addresses many of the issues explored in this article, and the choices those issues present to local governments.  The ordinance represents a clear attempt to regulate marijuana agriculture in a tailored fashion; marijuana cultivation limits (no more than one acre) indicate a preference for small scale farming and a rejection of large-scale consolidation models, demonstration of sufficient water rights and water quality compliance permits are required, and energy used in indoor farms must come from renewable sources or be offset with carbon credits.  The ordinance even attempts to create a ‘Humboldt Artisanal Branding’ certification program for small-scale, organic marijuana farms.  The Marijuana Ordinance does not address crop insurance or disaster relief, but local governments are not well-suited to provide financial services of this nature.

The central tension local governments face when regulating marijuana agriculture, particularly in jurisdictions where marijuana is already a primary crop, is between the need to bring farmers out of the shadows and into the regulatory system, on the one hand, and the need to create and enforce regulations that have a meaningful impact on cultivation and the direction and impact of the industry, on the other hand.  The Marijuana Ordinance addresses this tension by incentivizing existing farmers to register and participate with the county by providing benefits to those farmers who step forward within 180 days following passage of the Ordinance.  Those benefits include a larger maximum cultivation area (43,560 square feet, as opposed to a maximum 10,000 square feet for new farms), as well as a certificate of good standing for purposes of priority processing of state permits.  In addition, the ordinance incentivizes the retirement and relocation of existing farms located in environmentally sensitive areas by allowing farmers to cultivate an area four times larger in environmentally resilient areas.

It remains to be seen if the certificate of good standing will have meaningful value, but the cultivation area restrictions on new farms (which would include existing farms that chose not to register by the deadline) are significant, and may ultimately provide a pronounced advantage to existing farmers, who can cultivate an area over four times larger than new farmers.  In my conversations with farmers in the county, “to legalize or not to legalize” has been a frequent topic of debate.  Considering the isolationist nature of the marijuana farming industry in northern California, that debate is a promising sign for the county.

In other aspects, the Marijuana Ordinance is less well thought out.  It is logical to require that marijuana farmers have water rights (either riparian or by appropriation) sufficient to meet their agricultural needs, as well as water use plans and other documents certifying water use, but the ordinance may require water rights holders to agree to forego any water diversions from May 15th to October 31st.  Instead, marijuana farmers would be required to collect and store water during the rainy season in quantities sufficient for the dry season.  While there is some evidence that water used for purposes of marijuana cultivation may have adverse effects on water resources during periods of low flow, the ordinance’s prohibition on dry season water use as a general rule is unprecedented.  

The environmental impacts of this rule are unclear, as well.  While wet season flows are high and waterways can likely support an increase in diversions, ecological processes may depend on these traditionally high flows, and widespread wet season diversions and water storage may disrupt the wet season environment.  In addition, since irrigation demands are substantial during the dry season, the environmental impact of building large storage tanks on every marijuana farm, necessitating building materials, construction waste, and a storage footprint, may outweigh the benefits intended by the rule.  Moreover, if this rule is perceived to be unreasonable and infeasible by marijuana farmers, they may reject the ordinance and regulatory process as a whole.

Cognizant of its shortcomings and the hurried nature of its drafting, the Marijuana Ordinance contains a flexibility provision that may reassure skeptical farmers that compliance is attainable.  If, upon inspection, a marijuana farm does not comply with the requirements of the ordinance, a farmer may nonetheless be granted a provisional license, as well as a two-year window within which to cure the violation.  The provision is not only generous with respect to the compliance grace period, it also may provide enough time for county officials and marijuana farming representatives to address problematic aspects of the ordinance and make amendments prior to enforcement of violations.  It will take time for farmers to adjust to the dry season water use ban, if they adjust at all, but two years may be sufficient to devise wet season storage infrastructure or develop an alternative water use plan with the county and state officials. 

It is clear that marijuana ordinances are in their infancy.  So far most local governments have only superficially addressed marijuana agriculture.  Humboldt County, however, has capitalized on its economic and political ties with the marijuana farming community to develop a first-of-its-kind marijuana agriculture ordinance.  It remains to be seen if the county’s marijuana farmers buy into the regulatory framework, but initial signs are promising.  As marijuana legalization and regulation moves forward, the Humboldt County Marijuana Ordinance may prove to be a model for local governments.

 

Marijuana Appellations: the future of the marijuana industry?

Photo: Gavin White

Photo: Gavin White

For the past few months I've been working on another article about marijuana regulation.  This time I'm looking at the ways in which the marijuana industry will interact with state agricultural laws and policies.  One of the issues I address in the article is the perceived inevitability of the marijuana industry becoming consolidated into a small number of large-scale farms producing vast quantities of marijuana.  This would have the effect of turning marijuana into an agricultural commodity, indistinct, cheap, and widely available.  For understandable reasons many in the marijuana industry, as well as other stakeholders, bemoan this inevitable future.  

I don't believe that consolidation and commoditization is inevitable.  In fact, there are a number of ways in which the marijuana industry can evolve and continue providing a role for small-scale farmers producing unique products.  One approach is to follow the wine industry's lead and adopt appellations for marijuana.  As a preview of my article, I'm posting below my discussion of marijuana appellations and their viability going forward:

In response to fears that legalization will lead to commoditization of the marijuana industry and a consequent influx of generic marijuana that runs small-scale farmers out of business, some jurisdictions have proposed adopting appellations for marijuana cultivation.  An appellation is a certified designation of origin, that may also require certain quality or stylistic standards be met.  Appellations are most commonly associated with the wine industry, but they can be applied to any agricultural product in which the geographic origin carries importance.  The wine industry’s model rests on the assumption that environmental conditions (soil, aridity, temperature, etc., collectively known as the “terroir”) influence grape quality, and there is general agreement that assumption has merit.  Designation requirements that have quality standards also tend to increase the quality of grapes grown in the appellation, improving wine quality and the region’s reputation.

As the reputation of a region’s agricultural product grows, the appellation designation creates a unique market for the product, increasing prices while precluding other producers from associating their products with the region.  Appellations therefore create mandatory differentiation in the market, frustrating efforts to commoditize the industry.  Protectionism of local industries and their brands (e.g., Champagne, France) has a secondary benefit: by certifying that products with geographic indicators are accurately designated, consumers are assured of authenticity.  These twin goals of providing economic benefits and consumer protection underlie the basic motivations of most appellation systems.

There are several reasons the appellation model may be well-suited for the marijuana industry.  First, there is some merit to the claim that environmental conditions influence marijuana quality, and would therefore provide a basis for place of origin designations.  Marijuana farming has become so widespread in northern California in part because growing conditions there are ideal.  While California is known for being an infamously arid state, in reality the problem is distributional: while almost all of its population is located to the south, most of the state’s water resources were historically located north of Sacramento.  That is a problematic dynamic for population centers and the agricultural Central Valley, but it provides ample water resources for marijuana farming.  As a double bonus, California’s northern counties are dry during the summer growing season, when excess precipitation and humidity might dampen and spoil marijuana crops.  

In Jamaica, by contrast, marijuana farmers traditionally used genetic strains that were accustomed to tropical humidity and temperatures, cultivating marijuana with unique characteristics.  Seed companies regularly market their strains to match a diversity of outdoor conditions.   Instead of competing with each other to produce the most popular generic strains, appellations allow regions to embrace the strains that grow well in their environment.  For example, France’s Burgundy and Rhône regions are well-known for growing pinot noir and syrah grape varietals, respectively.  Neither region is threatened by outside producers or forced to adopt ill-suited varietals because they have created individual markets for their own well-respected grapes.  The same could be true of marijuana producing regions.

The economic incentive to provide monopolistic protections and marketing power to appellation regions is, without doubt, relevant to the marijuana industry.  Counties that have developed robust marijuana farming industries may feel that the influx of mass-produced generic marijuana that would come from national legalization may wipe out their existing small-scale farmers. Appellations can protect the brand-name associated with a region.  An appellation system could ensure that only marijuana grown in Humboldt County, California carries with it the Humboldt County designation.  In addition, marijuana appellations can adopt specific standards that collectively enhance the quality and reputation of their region.  In France, for example, wine appellations can require that vineyards only use certain varietals, limit irrigation practices that increase yields at the cost of grape quality, or attain a predetermined alcohol content.  While these requirements make production more challenging, they collectively increase the region’s overall product. Many of these practices could be applied to marijuana cultivation as well.

Of course, this model would require a broadly inclusive (i.e., transboundary) regulatory framework in order to be effective.  The United States wine industry’s appellations are regulated by the Treasury Department’s Alcohol and Tobacco Tax and Trade Bureau (TTB), but for obvious reasons the TTB is unlikely to establish a national appellation system for marijuana if cultivation remains illegal under federal law.  States can develop their own appellation frameworks, however, and as long as states maintain import/export bans (likely in the short-term given federal interstate commerce enforcement concerns) those state regulations may prove effective.  State appellation regulations may even prove resilient if the federal prohibition is lifted and a federal agency regulates the industry.  

It would be difficult for individual counties or local government bodies to enforce their own appellation designations if other jurisdictions do not follow suit.   Enforcement of geographic indicators outside of the regulatory body’s jurisdiction is notoriously difficult.  In one infamous case, it took fourteen years and a trade mission for the Napa Valley Vintners Association to convince the Chinese government to grant protected status to the term “Napa.”   While the marijuana industry is increasingly mobilized and represented through interest groups, it will be difficult to force jurisdictions to recognize geographic indicators without the assistance of a broader regulatory framework.  Still, local attempts to create appellations can generate momentum and set precedent for other jurisdictions to replicate the model.  It is not a given that the TTB will establish marijuana appellation regulations upon legalization, but state and local governments can make that more likely by creating the foundations for regulation.

The second incentive to create appellations – providing consumer protection – is equally compelling in the marijuana industry.  Because marijuana has been (and in many jurisdictions continues to be) cultivated on the black market for so long, consumers have traditionally had little to no information regarding where or how their marijuana was grown.  It is notoriously difficult to determine the origin of marijuana even in the aggregate, but by one estimate two-thirds of marijuana consumed in the United States came from Mexico in 2008.  Given the well-publicized violence and corruption associated with Mexican drug cartels, it is not unreasonable to believe consumer behavior would reflect a preference for domestically grown marijuana if geographic designations were reliable.  Given marijuana’s illicit dimensions in many jurisdictions where it remains prohibited, marijuana appellations can provide some assurance of authenticity and ethical cultivation.  There is evidence that legal marijuana cultivation in the United States is driving “cartel grows” out of business; appellations can assist the market in providing consumers with choices that meet their standards in similar fashion.

Appellations can provide consumers with more information than place of origin as well.  The requirements common in French wine appellations mentioned above (e.g., restricting supply, eligible varietals, or alcohol content) are not only collectively beneficial to the region’s producers, they can provide more information to the consumer as well.  Considering how many strains of marijuana are in existence, there is value in a regulatory framework that easily and reliably communicates important characteristics to consumers, such as the strain and its THC or CBD levels.

There is reason to doubt that the marijuana industry can or should adopt appellations, however.  Perhaps the most significant obstacle is the fact that a significant percentage of marijuana is grown indoors.  Since outdoor cultivation was risky during prohibition, the marijuana industry has a long-track record of, and experience with, indoor cultivation.  Growing indoors now offers advantages beyond privacy, allowing farmers to manipulate growing conditions such as soil content, air temperature, and light energy to maximize yields.  As one might expect, however, growing indoors makes the “terroir,” or geographic elements, irrelevant. 

However, appellations can still be useful in creating unique localized markets if regions adopt certain growing standards.  The marijuana industry has come under intense scrutiny on account of the energy demands of indoor agriculture (see below), and appellations could require indoor operations to meet clean energy standards.  One county has already required indoor farms to use exclusively renewable energy sources.  Appellations could also provide incentives for the industry to transition to, and embrace, outdoor cultivation by providing the geographic indicator protection (and its economic benefits) solely to outdoor marijuana farms.

Of course, while appellations would frustrate efforts to commoditize marijuana, an appellation system would not preclude consolidation.  The U.S. wine industry has been experiencing rapid consolidation despite a robust origin-focused appellation system.  Nonetheless, the number ofsmall-scale vineyards has remained stable, indicating a strong market for unique wines.  And it may be that consolidation is facilitated by the fact that U.S. appellation designations are only concerned with geographic origin, and do not impose quality or cultivation standards on producers.  In any case, the benefits of a marijuana appellation system are sufficient to justify consideration.  Especially in regions concerned that mass-produced generic marijuana will have devastating economic consequences for small-scale farmers, finding ways to differentiate products and generate market value will be an important policymaking objective.  A marijuana appellation system may provide the regulatory framework needed to achieve it.

Coral Gables' aggressive sea level rise agenda

While climate change and sea level rise are a decidedly political and partisan issue on the national level, here in Florida I have only encountered local governments that are trying to be as proactive as possible.  So far I have worked with Miami Beach, Miami, Hialeah, and Coral Gables city officials (for the most part I have no idea what their political affiliations are), and they are all keenly aware of the threats sea level rise present to South Florida communities.  Last week Politico published just the latest story on sea level rise in Miami Beach (read it here).  And several Florida mayors, many of whom have endorsed Republican presidential candidates, sent a letter to those candidates urging them to acknowledge climate change, sea level rise, and the actions needed to address our vulnerabilities.  Their plea became a point of contention in the most recent Republican presidential debate.

Coral Gables has been aggressively addressing sea level rise, with mitigation policies that incentivize energy efficiency and education programs that raise awareness of infrastructural threats.  They are hosting an ongoing speaker series on sea level rise, and it was a pleasure for me to participate last week.  The full video of my talk can be viewed here:

US and Canada agree to cut methane emissions; will regulations hold up?

US President Obama and Canadian Prime Minister Trudeau greet the audience.  Photo: Pete Souza, whitehouse.gov.

US President Obama and Canadian Prime Minister Trudeau greet the audience.  Photo: Pete Souza, whitehouse.gov.

When President Obama announced that the US would not be approving the Keystone XL pipeline project last November, a move that would frustrate efforts to bring crude oil from Canada to global markets, it was believed that Canadian Prime Minister Justin Trudeau's more climate-friendly politics made it easier for Obama to nix the project without damaging US-Canada relations.  The previous Prime Minister had pushed the pipeline as a national priority, while Trudeau was more circumspect in supporting the project.

It now seems climate policy might be an opportunity for collaboration between the US and Canada.  During Trudeau's visit to the White House this week, the two heads of state announced a joint plan to cut methane emissions in the oil and gas sector.  The plan calls for a 40-45 percent reduction from 2012 levels by 2025.  As the EPA administrator noted:

EPA will begin developing regulations for methane emissions from existing oil and gas sources [...] We will begin with a formal process to require companies operating existing oil and gas sources to provide information to assist in the development of comprehensive regulations to reduce methane emissions. An Information Collection Request (ICR) will allow us to gather information on existing sources of methane emissions, technologies to reduce those emissions and the costs of those technologies in the production, gathering, processing, and transmission and storage segments of the oil and gas sector.

Unfortunately, developing regulations of this nature take time, and even if the administration manages to complete the rule-making process by the time President Obama leaves office, actual implementation and enforcement of any new rules would be undertaken by the next President.  Unfortunately, several of the remaining candidates for president are not proactive when it comes to climate policy, and are unlikely to meaningfully enforce these rules.  They may even be prompted to develop their own rules for the oil and gas sector that disregard methane emissions.

The NYT's Andrew Revkin, for his part, is disappointed that these rules are coming so late:

McCarthy’s assertion that the leakage issue only became clear enough to act now is hard to swallow, particularly given Obama’s longstanding “all of the above” push on energy, which I supported, but only if it came with extra attention to oversight [...] Click back to our front-page 2009 report in The Times and this related Dot Earth post to see how clear the problem, and solutions, were even then.

Agency rulemaking in the closing hours of an administration's term in office is nothing new, of course, and many of those rules remain in effect despite lacking political support from the next administration.  But coupling these rules with foreign policy and the national security interest implicated by good relations between the US and Canada is a shrewd move that makes it more difficult for the next president to rescind the methane reduction pledge.  Prime Minister Trudeau will likely be in office for the next few years and is aggressively promoting his own climate policies.  Failing to hold up our end of the bargain by rescinding the methane regulations or failing to enforce them would not be the best way for the next president to start building a relationship with Canada.

Water Privatization vs Human Rights: Lessons from Flint

This blog post initially appeared on JURIST.  It can be accessed in its original form here.

Flint River.  Photo: Sarah Razak.

Flint River.  Photo: Sarah Razak.

When I teach Water Resources Law to my students, I often start each semester by juxtaposing two competing conceptualizations: water as a private commodity vs. water as a human right.  The contrast demonstrates the diversity in approaches to water management, while foreshadowing the public-private tensions that permeate contemporary water law debates.  Some students are attracted by the promises of privatization, including capital investments to upgrade infrastructure and the efficiencies of allowing market forces to allocate water where it is most valued.  Other students push back, noting the fundamental human need for water as a justification for holding water resources in common, while citing the negative externalities that frustrate attempts to monetize water accurately. 

Both viewpoints are playing out in the wake of the Flint, Michigan water crisis.  Last month I wrote about the rhetoric following the crisis, noting that many critics were echoing the human right to water perspective.   One Michigan state representative even proposed a bill that would declare water to be a human right.  To many observers, the crisis was caused by water managers holding financial considerations above public health and environmental justice.  Indeed, Flint's decision to switch from water provided by the Detroit Water and Sewerage Department to water provided by the Karegnondi Water Authority was largely a financial one, as the move was projected to save the city $19 million over eight years.  When the Flint city council voted to return to Detroit water, the city’s emergency manager opposed the move on financial grounds.  To many, water cannot be managed with such financial tunnel-vision, and a human right to water might rebalance water managers’ priorities.

But in the last several weeks, another view has (re)emerged.  Some have called for further privatization of water resources.  To these critics, the Flint water crisis is a crisis of public governance, one that may have been avoided had a private utility been in charge.  A private utility would still have received government oversight, while avoiding the messy political battles necessary to receive infrastructural investments.  A private utility, furthermore, would not have enjoyed sovereign immunity, providing an incentive to avoid litigation arising from water contamination.

So, which view is the right view?  It is important to get this right, to extract some broader lessons learned instead of dismissing the Flint ordeal as flukey mismanagement.  On the contrary, water infrastructure is crumbling across the country.   The American Society of Civil Engineers gives our drinking water infrastructure a D+ grade, and despite capital investments not keeping pace with upgrade costs, Congress has been spending less and less on local infrastructure maintenance.  The upshot of all this is that more and more pressure will be placed on water managers to provide safe, clean drinking water despite all these challenges. 

Just this week, the long-running water troubles experienced by residents of St. Joseph, Louisiana made headlines.  Their water has iron levels thirty-two times higher than the US EPA’s recommendations.  State engineers blame the iron concentration on faulty infrastructure in need of repair.  The small town’s representatives, though, have done little to address the problem.   In places where human and financial resources are scarce it will be difficult to promote sound water management, whether public officials are managing water resources directly or overseeing private operators.  As long as infrastructure continues to deteriorate and little to no resources are allocated to address water problems, we can expect to see more cases like Flint, Michigan, and St.Joseph, Louisiana.

For critics on both sides of the privatization vs. human right spectrum the Flint water crisis is Exhibit A for the need to reform.  Unfortunately, water resources can be mismanaged in many different ways, whether privately or publicly held.  Water users in Flint paid a staggering $864 a year for water.  But a report by Food and Water Watch found that on average private utilities charge more for water than public utilities.  Complicating the matter further are the many water management frameworks that constitute a public-private enterprise.  Around the country there are examples of both public and private water providers working well, while others are struggling to meet the needs of their communities in safe, sustainable, and equitable ways. 

Regardless of which end of the spectrum you’re on, what should be clear is that water is a vital human resource, and to manage it well requires investment and expertise.  In the face of crumbling infrastructure and shrinking budgets, it will be tempting for water managers of any utility to short-change the system in favor of short-term payoffs.  Short-changing Flint’s water quality in favor of cost-saving measures was not a unique trade-off, but rather a circumstance public and private utilities will likely find themselves facing in the future.  If Flint provides one lesson learned, then, it’s that water regulators may want to reconsider the costs and benefits of short-term water management thinking.  The nation’s water infrastructure is in need of repair, and water resources are in need of responsible governance.  There may be more than one way to accomplish those objectives, but it will be hard to do so without significant investments.  

Supreme Shocker: Environmental Law in the Scalia Era

Photo: Ryan Stoa.

Photo: Ryan Stoa.

Last Thursday in my Ocean and Coastal Law class, we discussed the Supreme Court's majority opinion in Lucas v. South Carolina Coastal Council.  The opinion, written, by Justice Scalia, required the state of South Carolina to find "background principles" that would have prevented the plaintiff in the case from building on his property before the state enacted regulations that prevented construction on coastal lands for the purpose of environmental protection.  Unable to do so, South Carolina was eventually required to pay compensation for the regulation.  Although a controversial case, most of my students found Scalia's reasoning persuasive, a testament to his skills of argumentation.

After his passing, many have questioned what his death will mean for the Clean Power Plan.  I wrote last week about the stunning implications of the Supreme Court's stay of the plan (putting it on hold until the DC Circuit Court hears the case).  Since Scalia was part of the 5 justices voting for the stay (with 4 against), his passing makes it less likely the CPP will be struck down.  As many others have speculated (see examples here, here, and here), a justice appointed by President Obama, or a hypothetical President Clinton or Sanders, would very likely be more friendly to the CPP than Justice Scalia.  If the Supreme Court doesn't have a ninth justice by the time the DC Circuit issues its ruling, then a 4-4 decision from the Supreme Court would simply maintain the DC Circuit ruling.  And as has been noted, the government got a bit lucky there: the 3-judge panel selected from the DC Circuit court (which has a reputation for being conservative) consists of two judges appointed by Democratic presidents.   

Here's another wrinkle: one of the judges on the DC Circuit panel hearing the case is Sri Srinivasan, an early front-runner for the Supreme Court vacancy in the eyes of many observers.  If he recused himself from the Circuit or was confirmed by the Senate fairly quickly, another judge would be appointed to the Circuit court, which could alter the outcome of the decision.  Alternatively, if Srinivasan participates in the Circuit decision and then gets confirmed, he might recuse himself from the Supreme Court hearing of the case, leaving the door open for a 4-4 decision.

It will be interesting to see how this all plays out.  In the meantime, Dan Farber provides a summary of Scalia's environmental legacy that bears reflection:

Administrative law.  The Chevron test says that an agency’s interpretation of a statute is entitled to deference.  It can be set aside only if it is contrary to an unambiguous statute or if it is an unreasonable interpretation of an ambiguous statute.  There are only three cases in which the Supreme Court has ever held that a statute’s interpretation of an ambiguous statute was unreasonable, all three written by Scalia: Whitman v. American Trucking, UARG v. EPA, and Michigan v. EPA.  In all three cases, the “unreasonable” agency was EPA.  To be fair, in American Trucking, he did admit that another portion of the statute unambiguously required air quality standards to be based solely on health effects, not cost.

Property rights.  Justice Scalia wrote two major opinions elevating property rights over land use controls.  In the Lucas case, he held that a government regulation is a taking if it completely blocks development or other economic use of the land.  In the Nolan case, he held that even when the government would be justified in denying a permit completely, it can’t impose “logically unrelated” conditions on the permit, even if those conditions are in the public interest. In Stop the Beach Renourishment, he tried to freeze property law in place for all time by holding that a decision by a state supreme court reinterpreting state property law can be a taking.

Standing.  Justice Scalia wrote major opinions limiting standing for environmental groups in National Wildlife FederationDefenders of Wildlife, and Summers v. Earth Island Institute, Scalia narrowed standing law, making it more difficult for environmental groups to sue.

Federal jurisdiction. In Rapanos,  a plurality opinion by Scalia attempted to cut back drastically on federal authority over wetlands and streams.  Justice Kennedy, the swing voter, wrote a more nuanced opinion that gave the federal government more maneuvering room.

Supreme Shocker: court orders stay of Clean Power Plan

Courtroom of the United States Supreme Court.  Photo: John Marino.

Courtroom of the United States Supreme Court.  Photo: John Marino.

In a move virtually no one saw coming, the United States Supreme Court ordered a stay of the Environmental Protection Agency's Clean Power Plan pending review by the DC Circuit court.  The Clean Power Plan requires states to reduce greenhouse gas emissions by regulating emissions from electricity producers such as coal plants.  The DC Circuit is hearing the case to decide on its constitutional validity.

While the constitutionality of the Clean Power Plan had been questioned and debated by observers, it is highly unusual for the Court to insert itself into a pending case of a lower court in this way.  The DC Circuit had scheduled review of the CPP according to a timeline that would allow for a decision before any major action by the states, so few were expecting the Supreme Court to intervene and put a hold on the CPP in such urgent fashion.  Here's Patrick Parenteau on how odd the order is:

This action is unprecedented in a number of ways. The majority made none of the findings typically required to obtain a stay. There is no analysis of the merits of any of petitioners’ claims. There is no showing that the rule threatens any immediate harm to petitioners, especially given the long lead times EPA has built into the process. There is no showing that the balance of hardships tips decidedly in favor of the petitioners, especially given the fact that most states are well into the process of developing implementation plans and those that do not want to submit a plan don’t have to. There is no showing that the stay is in the public interest, especially given the warnings from the scientific community that time is fast running out to avoid catastrophic consequences of climate disruption. Never before has the Court interjected itself in a case with such high stakes that hasn’t even been fully briefed and argued before the lower court.

This is what the Court's order looks like: 

The order isn't a final decision invalidating the CPP, but it does create uncertainty for states who were developing plans to comply.  And it suggests that the five justices in favor of the stay may eventually overturn the plan.  Some have suggested the Court believes the EPA needs a more express authorization from Congress to implement such sweeping regulations.  If that's the case, it will deal a severe blow to the United States' chances to meet the climate commitments we signed onto in the Paris Climate Agreement.  Many states are leading the way on climate change mitigation, but the CPP was a key tool in requiring regulation in all states.  At the very least, the order ensures there will be a lot of attention on the DC Circuit as it hears the case and renders its opinion.  

Indoor agriculture's future: bright or blight?

Photo: Phil Hendley

Photo: Phil Hendley

Indoor agriculture - growing food in greenhouses instead of in an outdoor field - is nothing new.  Roman gardeners used a greenhouse-type system to provide cucumbers to the Emperor Tiberius every day of the year.   Today greenhouses cover 0.25% of the Netherlands' total area.  But two recent developments are making agronomists and the private sector look at indoor agriculture on a larger systemic scale. The first is that climate change is wreaking havoc on traditional agricultural areas.  California, for example, grows most of the United States supply of produce, but now faces a recurring lack of water to irrigate those crops.  Indoor agriculture can grow produce any time of the year, virtually anywhere:

In an indoor farm, water doesn’t inconveniently evaporate. LED lights can lengthen the hours of sunlight so plants can grow faster. CO2 levels can be tweaked. Even as the weather outside goes haywire, plants farmed indoors can live out an optimized version of the weather that they coevolved with — the weather of the past. The best weather of the past. 

The second development is an advancement in greenhouse technology and software that monitors plants and growing conditions and adjusts those conditions to reach that optimized environment.  Importantly, these technological advances can mitigate the two major downsides of indoor agriculture: cost and energy.  Outdoor crops use sunlight and rain, so replicating that process makes indoor agricultural products more expensive.  And the massive amounts of electricity required to mimic the sun and pump water into the system dramatically increases the energy footprint of an already carbon-intensive industry.  

Agricultural start-ups are working on these inefficiencies and looking at ways to make indoor agriculture more sustainable (e.g. incorporating solar powered electricity sources).  But, as promising as indoor agriculture might seem, it will be some time until the energy demands are reduced to the point of sustainability.  Indoor agriculture can contribute to food security by ensuring stability in the supply chain, but the most resilient and sustainable food system grows crops at the time, place, and location where they are best suited.  If California isn't a suitable place to grow arugula anymore, it's likely there is a region somewhere else that is.  

Perpetuating agriculture in unsuitable locations, or deciding to replicate natural processes indoors, is partly a by-product of negative externalities and the difficulty in pricing resources like water and electricity to reflect their true cost.   Agricultural policies can make this more difficult as well, providing subsidies to traditional agricultural regions or placing zoning restrictions on lands with potential to support agriculture.  In the face of these barriers to agricultural mobility it's not surprising that market disrupters are enthusiastic about indoor agriculture, but let's not forget that policy changes in the agricultural sector can make a big difference in the resilience and efficiency of the food system.  The sun and the rain still have a role to play.

Greenhouses in the Netherlands.  Photo: Pieter Edelman

Greenhouses in the Netherlands.  Photo: Pieter Edelman

Photo: Sint -Katelijne-Wave

Photo: Sint -Katelijne-Wave


Supreme Court ruling preserves (and explains) electricity demand response programs

Image by Good Energy

Image by Good Energy

The Supreme Court issued a ruling this week that hasn't dominated the news cycle, but will have a profound impact on the way electricity markets operate.  In Federal Energy Regulatory Commission v. Electric Power Supply Associationthe Supreme Court upheld a Federal Energy Regulatory Commission (FERC) rule that required electricity operators to compensate demand reductions at the same rate as supplied electricity.  In other words, if you can manipulate the demand for electricity by communicating with consumers and asking for voluntary energy reductions during peak demand periods, every megawatt of avoided electricity will be compensated at the same price as a megawatt of supplied electricity.  

These manipulations are called demand response programs, and they provide benefits across the market.  Major consumers get paid to reduce their energy consumption during peak demand periods, utilities reduce their reliance on the most expensive energy sources, the likelihood of power outages goes down, and consumers benefit from lower prices of wholesale power.  And of course, a reduction in energy consumption is a win for the environment.  The only real losers are energy producers, such as the Electric Power Supply Association.  [David Roberts has a nice rundown of the history of demand response and this case.]

The EPSA contention was that FERC didn't have the authority to issue the rule because regulating retail electricity is a power reserved to the states.  The Court disagreed on the grounds that the Federal Power Act gives FERC the authority to regulate not only wholesale power rates, but also any practices affecting wholesale power rates.  Demand response directly affects wholesale power rates in obvious ways, so the Court ruled that FERC has the authority to create the rule.  The ruling preserves the existence and growth of demand response programs.

But as Matthew Christiansen notes, the Court went even further by finding that regulation of demand response is unambiguously within FERC's authority.  That means FERC won't be able to dismantle demand response programs in the future by reinterpreting its position that it has jurisdiction to regulate them (something a future FERC administration might want to do).  It could do so on substantive policy grounds, but at this point all the evidence on demand response programs supports their continued existence, so a substantive reversal would be tough to justify.

The Court's opinion, which is surprisingly clear in its explanation of demand response programs, can be seen here.

 

Flint water crisis evokes the 'human right to water' debate

The Holloway Reservoir Dam, which supplied Flint, Michigan with water from 1955-1967 and 2013-2015.  Photo: Tony Faiola. 

The Holloway Reservoir Dam, which supplied Flint, Michigan with water from 1955-1967 and 2013-2015.  Photo: Tony Faiola. 

In the 1990s the 'Washington Consensus' became the conventional wisdom for managing water resources.  Based on the premise that privatizing water and selling it as a commodity would finance delivery services and infrastructure while allocating water more efficiently, many countries (from Bolivia to the United States) endorsed water privatization.  While some transitions were effective, many became high-profile disasters, in many cases pricing lower and middle class households out of the water market.  Being a good necessary for survival, this led to a backlash and global movement to reconceptualize water not as a commodity but as a human right.   In 2010 the United Nations General Assembly passed a resolution recognizing a human right to water.  122 countries voted in favor of the resolution; the United States was not one of them.

In many cases municipal water in the United States is supplied by regional government institutions or public-private partnerships.  As water allocation has historically been the purview of state law, a diversity of institutional arrangements have developed over the years, many of which work well.  Nonetheless, the Flint water crisis shows that the conceptual debate (with very real consequences) over water as a commodity or human right is alive and well.  Although Flint's water supply was never fully privatized nor guaranteed by human right, the crisis as it emerged showed the fundamental tensions government service providers must grapple with.

To be fair, it should be noted that water infrastructure is crumbling across the country.  Most of it was built in the twentieth century, and is now in dire need of repair or replacement.  The American Society of Civil Engineers gives our drinking water infrastructure a D+ grade, estimating that replacement costs for pipes alone would exceed $1 trillion.  Despite capital investments not keeping pace with upgrade costs, Congress has been spending less and less on local infrastructure maintenance.  As a result, state and local governments must pick up the tab, leading to skyrocketing water bills for consumers.  In Detroit water bills average nearly $150/month, and Flint's water rates are among the highest in the United States.  When Detroit shut off water connections to households that couldn't pay, the UN condemned the move as a violation of human rights.

Given these circumstances, it shouldn't be surprising that water policies have prioritized cost-cutting and short-term gains.  Flint's decision to switch from water provided by the Detroit Water and Sewerage Department to water provided by the Karegnondi Water Authority was a financial one, as the move was projected to save the city $19 million over eight years.  While that's a good chunk of change for a cash-strapped city like Flint, it's worth noting that even at the time of the decision, huge risks were apparent.  On the one hand, officials knew it would take three years to connect to the KWA.  On the other hand, officials also knew that an interim water supply was not guaranteed - the DWSD had a termination clause that would allow it to stop providing water to Flint after 12 months.  Sure enough, the clause was exercised, putting Flint on the clock to obtain an alternate water source.

There were a number of problems with the Flint River option, but it did have one major advantage: it was the cheapest option, saving the city $5 million over two years.   On the surface, though, the rhetoric echoed the responsibility of government to provide water to citizens.  Flint Mayor Dayne Walling said "water is an absolute vital service that most everyone takes for granted...It's a historic moment for the city of Flint to return to its roots and use our own river as our drinking water supply."  When the Flint city council voted to reconnect to the Detroit water system after water quality concerns emerged, however, the state's emergency manager cited costs as justification for opposing the move.  

The outrage over the handling of the crisis is predicated on a few different factors, including political affiliations, race, and class.  But weaving in and out of these debates is the tension between water being managed as a commodity and the fundamental dependency that human populations have on water resources.  Just like water privatization efforts in the 1990s and 2000s led to public fury and protests around the world, so the Flint water crisis flames are stoked by water management decisions repeatedly based on financial considerations.  President Obama offered his own critique, calling the crisis "a reminder of why you can’t shortchange basic services that we provide to our people and that we, together, provide as a government to make sure that the public health and safety is preserved."  In the wake of the disaster, one Michigan state representative declared water to be a human right, and proposed legislation that would make the same point: "Are there teeth behind this bill? Possibly not, but at least we're making a statement that everybody in Michigan has a right."

Given the state of the country's water infrastructure, Flint is unlikely to be a one-off disaster.  Local governments are in a tough spot, with few resources available to maintain crumbling infrastructure, and an obligation to provide basic services like water supply to their citizens. Flint can demonstrate to other municipalities around the country that setting water policies based on short-term financial considerations not only may not pay off in the long-run, it may also strike a nerve shared by many people who view water as one of the most basic and essential services a government provides for its people.  Understanding that sensitivity and cultural connection to water will be a prerequisite for navigating the tough water management decisions that lie ahead.

Will frackers be held liable for inducing earthquakes in Oklahoma?

A flare releases pressure from a natural gas fracking well in Oklahoma.  Photo: Joshua Pribanic.

A flare releases pressure from a natural gas fracking well in Oklahoma.  Photo: Joshua Pribanic.

Five years ago, before hydraulic fracturing became a common method to extract natural gas, Oklahoma recorded only three magnitude three earthquakes.  In 2015, Oklahoma recorded 907.  2016 is off to another record-breaking start: last week two earthquakes (magnitude 4.7 and 4.8) struck northern Oklahoma, where fracking dominates.  It's hard to predict if a larger earthquake will rock the state, but these recent quakes suggest that may be likely:

“I do think there’s a really strong chance that Oklahoma will receive some strong shaking,” said Daniel McNamara, a research geophysicist at the National Earthquake Information Center in Colorado, who has followed the state’s quakes.  Referring to the shocks that occurred Wednesday night, he added, “I’m surprised it didn’t rupture into a larger event.”

Most experts believe the drastic increase in earthquake incidence is the result of forcing fracking wastewater into the ground.  While that process is effective in disposing of fracking waste, it also disturbs fault lines.  In some cases, especially in Oklahoma, these disturbances become earthquakes.  

But while the science is clear to some in a broad "A is causing B" sense (fracking is causing earthquakes), the more specific causal connection between a particular fracking operator's activities causing damage to people or property is less clear.  It would be hard for a homeowner whose property has been damaged from an earthquake to present a strong scientific case that the earthquake was caused by a discrete defendant in order to assign liability and claim damages.   Some cases are already popping up, and in most of these property owners are suing a bundle of oil and gas companies in the hopes that they will be collectively responsible.  In regions where more than one company is injecting wastewater underground, that may be the strongest approach, but it dilutes the causal connection.

An added difficulty in these cases is the reality that, in most states, injecting water into the ground is illegal or negligent behavior.  In Oklahoma, neither the state legislature or the governor have taken any meaningful action to curb fracking activities.  Only the Oklahoma Corporation Commission has been assigned to propose restraints, and it has limited regulatory powers:

With no explicit authority to regulate seismic issues, the commission has persuaded producers to voluntarily follow a series of ever-stricter directives on waste disposal in earthquake zones. But while those orders appear to have curtailed earthquakes in some areas, the overall number has continued to soar.  Last month, a financially troubled producer in the northern oil and gas fields struck by Wednesday’s quakes, SandRidge Energy Incorporated, broke industry ranks and refused the commission’s request to scale back its underground waste disposal.

Professor Blake Watson (Dayton) believes courts should impose strict liability on fracking producers on the grounds that groundwater injection is inherently dangerous - a finding that would eliminate the need to show that producers were negligent in their activities.  The downside is that courts aren't the ideal branch of government to sift through scientific studies emerging in real-time and impose liability after-the-fact.  Ideally a strong administrative agency would do so.  In many cases they have proved effective:

In recent years, other states with oil and gas exploration have also seen an unusual number of earthquakes. State authorities quickly suspected that the earthquakes were linked to disposal wells. In Youngstown, Ohio, in 2011, after dozens of smaller quakes culminated in a 4.0, a nearby disposal well was shut down, and the earthquakes stopped. Around the same time, in Arkansas, a series of earthquakes associated with four disposal wells in the Fayetteville Shale led to a ban on disposal wells near related faults. Earthquakes were also noted in Colorado, Kansas, and Texas. There, too, relevant disposal wells were shut down or the volume of fluid injected was reduced and the earthquakes abated.

Absent a strong regulatory agency, though, property owners may have no other recourse than to pursue compensation through litigation, however challenging causation arguments may prove to be.  If Oklahoma's agencies continue to meekly regulate fracking activities and wastewater injection, we'll soon find out how the courts address induced-earthquake liability.

Malheur and Misfortune on Federal Public Lands

The Malheur National Widlife Refuge. Photo: John Bromley

The Malheur National Widlife Refuge. Photo: John Bromley

Over the weekend armed protesters stormed and occupied a federal building at the Malheur National Wildlife Refuge in northeastern Oregon.  Their complaint?  In this instance, the group is protesting against criminal charges brought against ranchers starting fires on federal lands in the region.  In general, the group is part of a small but vocal movement to return federal lands to states or private landowners.  Here is Jed Purdy on why their argument stands on shaky ground:

The Bundys’ side of these fights is rooted in the radical idea that the federal government was never supposed to hold Western lands permanently, but instead should have ceded them to the states or granted them directly to private owners. It is possible to piece together this argument from the text of the Constitution, but courts have never accepted it. It is not really a legal theory but a political wish that history ended in 1891, when the federal government began to create national forests, or even back in 1872, when Congress made Yellowstone the country’s first national park.

So it seems the best bet, if the law isn't on your side, is to make a spectacle of federal lands management.  In the Malheur Refuge, the group is exploiting recent disagreements between ranchers and wildlife refuge officials, who are required to prioritized the well-being of (you guessed it) wildlife.  Except that those disagreements may be overblown.  The ranchers in question have not backed the largely out-of-state protest group, and locals who participated in the most recent management planning process saw the Malheur as a model for collaboration, not conflict:

In 2013, Malheur completed its Comprehensive Conservation Plan. This is a long-range vision and management plan that all refuges are required to complete. Malheur stood alone in the refuge system for deciding to have a very inclusive, transparent stakeholder process which included local ranchers, county commissioners, tribes, conservation groups, local, state and federal agencies, etc.
We met many times over the course of three years and much to everybody’s surprise emerged with a consensus, collaborative approach that includes major initiatives on both the refuge and surrounding ranch lands. It is a plan that tries to respect both the ecology and the economics of the region. The groups involved have remained actively engaged in implementing the plan. It includes one of the largest wetland restoration efforts ever undertaken.

Having witnessed and participated in the stakeholder engagement process for Biscayne National Park's General Management Plan, which sparked a similar conflict between marine conservationists and fishermen, I can attest to the challenge it can be to satisfy every stakeholder's demands.  That's especially true when ideals like exploitation and conservation appear mutually exclusive.  There is some irony in the calls for federal relinquishment of public lands, as well.  First, because it was federal control that may have saved the Malheur in the first place:

Before the federal agencies came to eastern Oregon, large ranching operations from California had monopolized hundreds of thousands of acres of rangeland. Irrigation developers controlled water, cattle barons controlled the grass, and settlers were essentially locked out. Tensions were high.
During the 1890s, a populist, anti-monopolist rhetoric emerged among settlers and news editors. The local newspaper deplored the fact that the great Western ranges were passing into “the hands of a few big cattle or sheep companies,” and predicted that soon “an aristocracy of range lords and cattle kings would rule our mountains and plains.” In 1897, Peter French, the cattle baron who controlled the largest ranching empire in America, along the Blitzen River, was murdered by an angry homesteader. Arson, violence and grinding poverty flourished.

And second, because these lands were already occupied when the federal government laid claim to them on behalf of western settlers.  Purdy again:

Harney County was largely Paiute land until the Civil War, and later settler pressure and violence eroded the tribe’s claim to lands that were nominally reserved to it. The age of settlement lasted a few generations in eastern Oregon, beginning with the bloody dispossession of indigenous peoples and ending with the rather gentle conclusion of federal privatization.
American vigilantism is never racially innocent. Its two parents are self-mobilization on the frontier, usually against Native Americans at a time when homesteading was reserved to whites, and the racial terror of the Ku Klux Klan in the South during and after Reconstruction. It is too much to call the occupiers “domestic terrorists,” as the Oklahoma City Bomber Timothy McVeigh or the Klan were, but it is also obtuse to ignore the special comfort that certain white men have using guns as props in their acts of not-quite-civil disobedience. After all, guns were how they acquired their special sense of entitlement to public lands in the first place.

Nicaragua Canal postponed again for environmental and/or financial concerns

The west coast of Nicaragua, near the proposed route of the Nicaragua Canal.  Photo: Dylan Walters.

The west coast of Nicaragua, near the proposed route of the Nicaragua Canal.  Photo: Dylan Walters.

While climate change negotiations dominated headlines this month, another global environmental concern came to a much less publicized turning point.  The proposed Nicaragua Canal project, which would move more earth than any infrastructure project in history, has been postponed until at least late 2016, according to the project team:

The company said the “design of the canal is being fine tuned”, in accordance with recommendations contained in an environmental impact assessment [...] “The construction of locks and the big excavations will start toward the end of 2016.”  HKND officials have said the route may be adjusted and other changes made to the original plan in order to offset such concerns and ensure the project is in compliance with international standards, so it can win support from the World Bank and other global institutions.  Such claims remain contentious [...]

Other concerns focus on the financing of the project, which remains obscure. HKND says it plans to build a global consortium with investors from many countries. Until now, however, most of the seed money has reportedly come from Wang’s personal fortune.

And that fortune has been devastated in recent months, as the Chinese stock market collapse has dramatically reduced Wang Jing's capacity to personally finance the project.  Bloomberg called him the worst performing billionaire in 2015:

Telecommunications entrepreneur Wang Jing, 42, was one of the world’s 200 richest people with $10.2 billion at the peak of the Chinese markets in June, according to the Bloomberg Billionaires Index. His net worth has since fallen to $1.1 billion.  His 84 percent drop so far in 2015 is the worst recorded by the index [...]
The billionaire said in a December 2014 televised press conference in Nicaragua that he was committing personal funds to the project, and he’s poured about $500 million of his own money into it so far [...]
“The turn of fortune in Mr. Wang’s financial resources will impact how and whether the canal can and will be built," said Daniel Wagner, CEO of Country Risk Solutions and a former country risk manager at General Electric Co. “I would expect, given this year’s financial gyrations in China, that the government is also asking itself whether the canal is a viable proposition."

Wang will most likely recover, but it will be difficult to convince investors to back the project if the environmental and social concerns remain a point of global concern.  This NPR segment suggests the canal will remain contentious for some time:


COP 21: 5 Thoughts on the Final Draft

A replica of the Eiffel Tower made from bistro chairs stands at the COP 21 conference venue.  Photo: Ryan Stoa.

A replica of the Eiffel Tower made from bistro chairs stands at the COP 21 conference venue.  Photo: Ryan Stoa.

The COP 21 Final Draft of the Paris Agreement has been released (see here for the text).  After months of preparations and weeks of negotiations, the text concludes the drafting phase of the agreement.  It's been fun following the ups and downs of COP 21, and a special thanks goes out to the Centre International de Droit Comparé de l'Environnement and FIU's College of Law, Sea Level Rise Solutions Center, and Institute for Water and the Environment for inviting me to the conference and allowing me to participate.  The process (and blogging!) isn't over, as countries now need to ratify the agreement through their own domestic political processes, and of course, the agreement needs to be, you know, implemented.  But for the moment we can step back and take stock of what the Paris Agreement means for international climate action.  5 thoughts:

The mood in Paris is optimistic

It's been a while since an international climate conference concluded on good terms.  The last major effort in Copenhagen was panned as a failure, breeding cynicism that a climate deal could ever be reached.  While the Paris Agreement has its faults (see below), it at least succeeded in bringing countries together to get started (if belatedly) on this business of climate change mitigation.  The conference birthed the "high-ambition coalition" which includes both poor and rich nations, and many of the world's biggest polluters were enthusiastic about ambitious mitigation targets:

One of the most unexpected developments in Paris is the biggest polluters coming around to the idea of setting an even more ambitious target of 1.5 degree. Canada, Australia, European countries, China, and the United States have all spoken in favor of recognizing the damage above 1.5 degrees.

The final text adopted the less ambitious goal of limiting warming to 2 degrees, but nonetheless, it's encouraging that on a philosophical level countries are realizing that climate change must be addressed.  Now they can decide how.

5-Year Reviews are In

I wrote at the outset of the conference that there was some consensus forming around the idea that countries' emissions (and progress in meeting emissions reductions) would be reviewed every five years.  That would allow the international community to monitor progress (and laggards) while providing a basis to adjust emissions reduction targets if climate science paints an increasingly bleak picture.  5-Year Reviews ended up being much more contentious than expected, as China pushed for more ambiguous reporting requirements.  The United States pushed hard to keep the 5-Year Reviews in the agreement, and in the end they were successful.  Based on its negotiating stance, the US should expect to lead the review effort, providing financial and technical assistance to developing countries to conduct the reviews.  The Reviews will begin in 2019.

Decarbonisation is Out (more or less)

One of the more ambitious goals of previous drafts of the agreement was complete decarbonisation by 2050.  In other words, to produce 100% of energy through renewable sources within 25 years.  It was always a bit of a reach, but the fact that decarbonisation was a talking point and negotiating item at all was surprising to some.  The final draft only calls for carbon neutrality (no net increase in carbon emissions) sometime in the second half of this century.  A far cry from decarbonisation by 2050.

Climate Finance tabled for now

The most divisive issue at COP 21 may have been the differentiation in responsibilities between rich and poor countries.  I wrote about this on Tuesday, particularly the "loss and damage" provisions that developing countries were desperate to include.  "Loss and Damage" provisions are in the final draft, but lack any meaningful obligations.  In fact, the preamble specifically interprets the loss and damage provisions of the text to not "provide a basis for any liability or compensation."  In other good news for rich countries, the financial obligations can was kicked down the road.  The previous commitment to provide 100 billion USD was maintained as a floor, while an increase in that amount was tabled until 2025.  A short-term win for developed countries, but one that doesn't resolve the underlying tensions between rich and poor countries when it comes to climate change.

The scope of the Paris Agreement was appropriately narrow

Anytime an environmental issue makes it onto the international agenda in a high-profile way, there's a temptation to piggy-back by making the issue a proxy for every other environmental issue.  Technically it's pretty easy to do, as environmental challenges are so intertwined that addressing one can be reasonably argued to be a prerequisite for addressing another.  And so it was at COP 21, where many were campaigning hard for the climate agreement to meaningfully address the role of women, indigenous groups, management of the oceans, and a host of other climate-related problems.  I spoke at an event on Thursday that was focused on human rights and climate change, and most of my co-panelists spoke with disappointment that the text was unlikely to address human rights.  These focus issue groups will be disappointed that the final draft does little (if anything) to address their core concerns.  Unfortunately, that probably wasn't realistic in the first place.  It was hard enough for negotiators to agree to a text that was narrowly focused on carbon emissions.  In fact, the conference went longer than expected in order to get it done.  Climate change does implicate countless other environmental challenges, but to add them all to the agenda would have precluded agreement on a more focused topic.  Many groups will be disappointed by the final draft, and they are right to continue pushing for progress, but at its core the Paris Agreement was about carbon emissions.  That other related issues were dropped along the way shouldn't detract from the fact that for the first time the international community has a meaningful framework from which to continue addressing climate change.

The Climate Generations area of COP 21 near the end of the conference. Photo: Ryan Stoa.

The Climate Generations area of COP 21 near the end of the conference. Photo: Ryan Stoa.

COP 21: As deal comes together, China and Saudi Arabia push back

Yesterday I wrote about the divide between developed and developing countries on the matter of climate change liability, so it's a pleasant surprise that the European Union and 79 African, Caribbean, and Pacific countries have formed an alliance to back a legally binding climate agreement with 5-year review intervals

Also encouraging was the release today of a clean draft of the Paris Agreement.  There are still many contentious questions to resolve in the next two days, including fundamental issues such as the purpose or goal of the agreement:

And on the collective end-game:

And with the end in sight, obstructionists are emerging.  So far reports call out China and Saudi Arabia for being the most active in frustrating progress.  On Saudi Arabia:

Behind the closed doors of negotiating sessions [...] the Saudis have strenuously resisted efforts to enshrine ambitious goals into the text of a Paris agreement.

The Saudis objected even to the mention of 1.5C – a new more ambitious target for limiting warming now endorsed by more than 100 countries including vulnerable low-lying states and big polluters such as the European Union and US.  The kingdom balked at the goal of decarbonising the economy by 2050.  The Saudis have also objected to demands for periodic reviews of climate plans, according to accounts from negotiators and observers. Saudi delegates complain that submitting a climate plan before Paris was difficult enough.

“It is unacceptable for developing countries, like my own, to be asked to participate in this so called ratchet mechanism,” the Saudis were reported to have told the session.  “It was tough, we had to go to every ministry, every part of government. We developing countries don’t have the capacity to do this every five years. We are too poor, we have too many other priorities. It’s unacceptable,” a Saudi delegate said.

And on China:

Beijing's negotiating stance was causing anxiety among many delegates on Tuesday as the Paris talks intensified ahead of Friday's deadline, partly because India was expected to be a bigger obstacle to a successful agreement.
In Paris, however, one delegate told the FT that behind closed doors, India has been "quite helpful" on some measures while China's negotiators have been siding with other developing countries on several divisive issues, including a push to provide more information about the volume of each country's emissions.
In a sign of the tensions growing in private meetings this week, the EU climate commissioner, Miguel Arias Canete told reporters that although China's President Xi and other world leaders had called for strong climate action at the opening of the Paris talks, "things are much more complex" inside the negotiating rooms.
The Gulf Cooperation Council's Plenary HQ at COP 21.  Photo: Ryan Stoa.

The Gulf Cooperation Council's Plenary HQ at COP 21.  Photo: Ryan Stoa.

COP 21: "Loss and Damage" provisions have become the sticking point

Protesters at COP 21 target developed countries in demanding reform.  Photo: Ryan Stoa.

Protesters at COP 21 target developed countries in demanding reform.  Photo: Ryan Stoa.

Ever since the United Nations Framework Convention on Climate Change was created in 1992, there has been a division between rich industrialized countries and poorer industrializing countries.  The rich countries have typically been the strongest proponents of climate action, arguing that with all this new climate science it's everyone's responsibility to cut back on emissions.  In response the poor countries point out that rich countries got to reap the rewards of fossil-fuel driven industrial growth, and that growth is largely responsible for the GHGs trapped in the atmosphere. 

The COP 21 negotiations are showing that both groups have succeeded in making their point, to some extent.  That each country has shown up and pledged to reduce their emissions, including developing country giants like China, India, and Brazil, means the developed countries have succeeded in making emissions reductions a near obligation.  On the other hand, the developing countries have hinged the success of the Paris Agreement on the strength of the text's "loss and damages" provisions.  Essentially, in exchange for reducing emissions, developing countries want financial assistance from developed countries to help them cope with climate impacts. 

It's a reasonable request, and one the developed countries have essentially already agreed to in a broad sense, but it raises a number of thorny particulars that negotiators are having trouble resolving.  Resolving questions like Who has to pay, and how often?  and Who gets to receive, and for what purpose? are one challenge, but a potentially bigger hurdle will be the conceptualization of "loss and damage" provisions.  Developed countries are categorically against any language in the text suggesting they have legal liability for climate damages like loss of land, building damage, etc.  They are willing to make voluntary financial payments, but won't accept legal responsibility for climate impacts:

Industrialised countries acknowledge that they are obligated to provide climate finance, but with an eye on the changing global realities, would like developing countries "in a position to do so" to contribute to the money pot. This attempt to increase the donor base has been strongly contested by the developing countries.

The other contentious issue is who is eligible to receive the funds. All developing countries are eligible but increasingly there is talk of funding for "vulnerable" countries. There is however no clarity on what defines vulnerability. Many in the negotiations see this talk of vulnerable countries as a bid to divide up the developing countries bloc. The G-77 and China comprising a diverse developing countries have presented a resolutely unified front on the question of finance.

Ultimately the developing countries may realize that no country is going to accept the legal implications of a robust "loss and damages" provision.  Instead, they might end up angling for a strong financial commitment.  Rich countries, for their part, can make those commitments without implicating any legal obligations.  Instead of providing compensation for damages incurred from climate hazards like hurricanes, they can subsidize hazard insurance for countries in particularly vulnerable areas.  Many are saying the "loss and damage" provisions will come down to the wire.  Stay tuned.

COP 21: Paris Agreement won't address emissions from shipping

The European Union released a report last week claiming that the global shipping industry may account for 17 percent of global GHG emissions by 2050 (it already accounts for 2.4 percent).  If the industry were a country it would be the sixth largest polluter.  But because it isn't a country, and the industry as a whole lacks meaningful regulation, the Intended Nationally Determined Contributions (INDCS) countries are putting forth to validate their emissions cuts don't account for the shipping industry.  That responsibility falls to the International Maritime Organization, a UN body with regulatory authority but little capacity to impose new rules on the world's existing shipping fleet. 

The original draft of the Paris Agreement included some language that would address shipping emissions, but the latest draft has dimmed the prospect of regulating the notoriously elusive industry.  At best it might implore the IMO to create GHG emissions reductions targets.  Putting the industry on notice that its emissions will be a concern going forward is better than nothing, but certainly a disappointment to climate activists.  Ben Adler's take:

There are many ways in which regulations could bend the industry’s emissions curve downward. The most obvious would be stricter and more broadly applied fuel-efficiency standards. The IMO could also set speed limits, as ships emit less when moving slower. Alternative fuels could be researched and deployed. Also, ships use a lot of electricity for on-board operations, and that could be generated using sources other than oil, as cargo ships are big enough to support solar panels or even wind turbines.
The IMO, despite having commissioned a report that demonstrates the scope of the problem, has yet to take action. Critics suggest that bureaucratic inertia and coziness with the shipping industry could be to blame. So it may need a push.
Precisely because it is so central to economic activity, shipping is a touchy subject for the international community to tackle. As a small island nation, the Marshall Islands is as economically dependent on shipping as anyone. More so, in fact: 6.1 percent of the world’s ships (by tonnage) are registered in the Marshall Islands and provide a major source of its tax revenue. That’s why it’s afraid to act alone to regulate ships. If it were the only country to impose new rules on ships flying under its flag, the ships would just register elsewhere. But the Marshall Islands isn’t afraid to push for strong global rules that would be the same for ships registered in any country. Whatever risk to its economy that might pose, it pales in comparison to climate change.

COP 21: Consensus Emerging on 5-year Reviews

On the third day of the Paris Agreement negotiations, a consensus is emerging that countries should be evaluated every 5 years to monitor progress towards curbing emissions.  Periodic reviews have the benefit of ensuring that countries (and the international community) are aware that they are or are not meeting their emissions reductions commitments.  They also create an opportunity to impose further reductions if climate science continues to paint a bleak picture.  Here's Reuters:

Climate negotiators in Paris are drawing close to resolving one of the sticking points for a breakthrough emissions pact by favoring a five-year review period on promised greenhouse gas cuts, a top official said on Wednesday.
Regular reviews are seen as a crucial part of any agreement since countries' current pledges to cut emissions - submitted by 185 nations to the United Nations - will fail to prevent temperatures from rising 2 degrees Celsius (3.6 Fahrenheit) above pre-industrial times, seen as a dangerous level.
Countries have disagreed as to how often audits of those plans should take place. While many major emitters including China, the United States and the European Union supported a five-year period, a term included in an outline U.N. text last month, others such as India have been reluctant to commit.
"It seems now there is a growing consensus that (reviews) will be every five years," U.N. climate chief Christiana Figueres told a news conference on the third day of talks.There was still little progress on thornier issues, though, such as funding for developing nations and a long-term goal for phasing out fossil fuels.

COP 21: Opening Statements

Today marked the first day of the 21st Conference of the Parties of the United Nations Framework Convention on Climate Change.  Negotiators will be hammering out the details of the Paris Agreement for the next two weeks (for an overview see here), but for today the spotlight belonged to the world leaders setting the stage for the conference.  

A common thread being woven into the various speeches is the important role that climate action and the COP 21 will play in the fight against terrorism.  Here is US President Barack Obama on that nexus:

He added that the meeting symbolised a global "act of defiance" that proves the world stands undeterred by attacks linked to the Islamic State of Iraq and the Levant (ISIL) group in Europe and beyond.
"What greater rejection of those who would tear down our world than martialling our best efforts to save it," Obama said.

And the host, French President Francois Hollande:

"What is at stake with this climate conference is peace," [Hollande] said at the opening of the summit.
"The fight against terrorism and the fight against climate change are two major global challenges we must face," he said.

Chinese President Xi Jinping is emphasizing the need for developed countries to support developing countries financially.  And Pope Francis described humanity as being "at the limits of suicide."

More to come as the negotiations progress.