Wake Forest Law Review

By Anthony Biraglia

In the civil case of Goldfarb v. Mayor & City Council of Baltimore, the Fourth Circuit vacated a Maryland district court’s dismissal of statutory claims under the Resource Conservation and Recovery Act (“RCRA”). In a published opinion released on July 1, 2015, the Court determined that dismissal of the plaintiff’s claims under either Federal Rule of Civil Procedure (“FRCP”) 12(b)(1) or 12(b)(6) was improper based on the evidence considered, and that there were several extremely contentious fact issues that required adjudication beyond the motion to dismiss stage.

RCRA Claims and District Court Ruling

The RCRA fits into the federal environmental regulatory scheme by governing the treatment, storage, and disposal of solid and hazardous waste. Although the EPA generally has oversight responsibility under the statute, it does allow private citizens to bring civil actions under certain circumstances. Here Golfarb and others (collectively “Goldfarb”) brought claims against the City of Baltimore (“the City”), CBAC Gaming (“CBAC”), and Maryland Chemical in connection with an agreement between the City and CBAC to develop a casino on land previously owned by Maryland Chemical (“the Casino Site”). Golfarb, who frequented the recreational activities available in surrounding areas, relied on environmental studies that purportedly showed negative impacts from hazardous waste migration from the Casino Site. The plaintiffs alleged that actions and inactions by the City, CBAC, and Maryland Chemical constituted a violation of RCRA.

First, the district court found that CBAC was shielded from liability under the RCRA because any remedial measures under the RCRA would be inconsistent with those identified as appropriate in a permit issued under the Clean Water Act (“CWA”). When such inconsistencies would arise, an anti-duplication provision in the RCRA protects persons that would otherwise be subject to liability. Second, the district court found that Goldfarb failed to state a claim against the city pursuant to two separate provisions of RCRA despite several complex factual issues that remained unresolved. Third, the district court found that Goldfarb failed to state a claim against Maryland Chemical because Maryland Chemical did not “contribute” to the waste at issue under the statute. The Fourth Circuit vacated the district court’s judgment as to all claims.

Plaintiffs Stated RCRA Claims Against All Three Defendants

The Court first addressed Goldfarb’s claims against CBAC. Because the district court was not clear as to whether it dismissed the claims under the FRCP 12(b)(1) or 12(b)(6), the Fourth Circuit proceeded to analyze, and find incorrect, the ruling under both standards. With regard to the subject-matter jurisdiction challenge under FRCP 12(b)(1), the Court found that a provision in the RCRA that defers to other acts (such as the CWA) when obligations would be variable does not implicate subject-matter jurisdiction. Thus, it was improper for the district court to dismiss claims against CMBC for a lack of subject-matter jurisdiction.

With regard to the failure to state claim challenge under 12(b)(6), the Court indicated that the district court would have had to find that potential obligations to be imposed under the RCRA would be “inconsistent” under the statute. The district court did not engage an analysis of what type of obligations would be inconsistent, but the Fourth Circuit applied the dictionary definition to determine that the case must be remanded in order to decide whether those inconsistencies exist. The Court reasoned that the district court could not have reasonably determined at the motion to dismiss stage that the plaintiff’s RCRA allegations would lead to inconsistent obligations for CMBC under the statute.

Next, the Court addressed claims against the City. Goldfarb brought claims under § 6972(a)(1)(A) (“(a)(1)(A)”) and § 6972(a)(1)(B) (“(a)(1)(B)”), both of which were dismissed by the district court for failure to state a claim. On the contrary, the Fourth Circuit identified specific facts in Goldfarb’s complaint that tied the City’s actions to the language of (a)(1)(A). By asserting specific, identifiable actions, Goldfarb should have avoided dismissal as to this claim under FRCP 12(b)(6).

With regard to the (a)(1)(B) claim, the plaintiffs alleged, and the Fourth Circuit found, that the district court improperly focused on the disposal of waste where the statute also contemplates liability for the handling and storage of such waste. Because the plaintiffs alleged essentially the same facts for the (a)(1)(B) claim as the (a)(1)(A) claim, the Court found that the plaintiffs advanced sufficient facts to survive a motion to dismiss.

Finally, the Court addressed the district court’s dismissal of Goldfarb’s claims against Maryland Chemical. The district court reasoned that because Maryland Chemical was alleged to have “spill[ed], releas[ed], and/or dispos[ed] of hazardous waste,”incidents that could have occurred “without any active human participation.” Maryland Chemical could not have “contributed” to the pollution under the statute. The Fourth Circuit rejected this, stating that the complaint alleged sufficient past activities by Maryland Chemical to have it deemed a contributor to the pollution.

Vacated and Remanded

Based on the foregoing analysis, the Fourth Circuit vacated the district court’s judgment as to all claims and remanded the case for further proceedings.

marsh

By Taylor Anderson

On June 17, 2015, the Fourth Circuit issued its published opinion regarding the civil case S.C. Coastal Conservation League v. United States Army Corps of Eng’rs. The appellant, the South Carolina Costal Conservation League (“League”), appealed the district court’s dismissal of its various federal law claims against various appellees, including the Army Corps of Engineers (“Corps”), the Environmental Protections Agency (“EPA”), South Coast Mitigation Group (“South Coast”), and agency officials. The League also appealed the district court’s denial of its motion for leave to amend its complaint. The Fourth Circuit affirmed the judgment of the district court, holding that the League did not identify any concrete injury in fact.

The League Alleges Several Environmental Counts

South Coast owned a 700-acre tract of private property in South Carolina. The entire tract was adjacent to two tributaries of the Back River fork of the Savannah River and the Back River’s marsh system. This case involved a dispute over the use of 485 acres of freshwater wetlands on this tract (“Embanked Tract”) which is separated from the Back River and its marsh system by man-made earthen embankments. These embankments include a variety of water control structures which can be opened in order to directly connect the Embanked Tract with the Back River and its tidal marsh system. When the water control structures are open, brackish water from the Back River and its tidal marsh system enters the Embanked Tract.

This litigation stemmed from South Coast’s desire to connect the Embanked Tract with the Back River fork of the Savannah River and its tidal marsh system to allow the entire 700-acre tract it owns to become a functioning tidal marsh integrated with the Savannah River. South Coast desired to remove all of the material used to create the earthen embankments currently separating the Embanked Tract from the Savannah River and to deposit such material in adjacent ditches. South Coast applied for a permit to carry out this project. Together, the Corps and the EPA approved South Coast’s permit, allowing South Coast to place the excavated material from the embankments into adjacent ditches.

On August 16, 2013, the League filed its First Amended Complaint against the Corps, the EPA, and South Coast. This complaint contained six counts, alleging violations of different environmental laws. The League filed this complaint because it believed that unless the approved project was stopped, saline water from the Savannah River would intrude onto the Embanked Tract and convert the freshwater wetlands thereon to saltwater wetlands, thus impairing its members’ use and enjoyment of the Lower Savannah River ecosystem.

Between January 27, 2014 and February 14, 2014, South Coast conducted tests regarding the salinity of the water inside the impoundments on the Embanked Tract and the salinity of the water immediately outside the Embanked Tract in the Back River and its marshland system. The test revealed the average salinity of water inside the Embanked Tract was 3.4 parts per thousand and the average salinity of the water immediately outside the Embanked Tract was 2.8 parts per thousand.

On March 14, 2014, the League sought leave to amend its First Amended Complaint to include a claim that the Corps failed to comply with the cumulative impact analysis required by the National Environmental Policy Act (“NEPA”). South Coast moved to dismiss the entire action as moot, arguing that the League’s primary feared harm (i.e., the conversion of freshwater wetlands to saltwater wetlands) had already occurred. The district court agreed with South Coast’s argument, denied the League’s motion for leave to amend, and dismissed the entire case on July 11, 2014. The League filed a timely appeal.

The Fourth Circuit Holds the Claim Moot

The Fourth Circuit first noted that under the United States Constitution, article III, § 2, federal courts are limited to resolving cases and controversies where the plaintiff possesses standing to challenge the defendant’s alleged misconduct. To satisfy Article III’s standing requirement, the plaintiff must have suffered or be imminently threatened with a concrete and particularized injury in fact that is fairly traceable to the challenged action of the defendant and likely to be redressed by a favorable judicial decision. When a case or controversy ceases to exist, the litigation is moot, and the court’s subject matter jurisdiction ceases to exist also.

In echoing the district court, the Fourth Circuit reasoned that because the water inside the Embanked Tract was more saline than the water the League sought to prevent from entering the Embanked Tract, the court could not provide meaningful relief with respect to the League’s feared harm of the wetlands on the Embanked Tract turning from freshwater wetlands to saltwater wetlands. Allowing South Coast to level the embankments and place the fill dirt in the adjacent ditches would not make the water within the Embanked Tract any more saline than it currently is.

The Fourth Circuit Affirms the Denial of the Motion for Leave to Amend

The Fourth Circuit disposed of the League’s challenge as to the district court’s denial of its Motion for Leave to Amend its First Amended Complaint. The Fourth Circuit held that because the district court’s mootness ruling was sound and the League offered no additional basis for standing, the district court did not abuse its discretion in denying, on the ground of futility, the League’s motion seeking leave to amend its First Amended Complaint.

Judgment Affirmed

Because the League’s did not allege a concrete and particularized injury in fact, it did not have standing to bring an action. The Fourth Circuit affirmed the district court’s ruling that because the League did not have standing to bring an action, its claims were moot.

By David Darr

Today, in the civil case of Consolidated Coal Co. v. Georgia Power Co., a published opinion, the Fourth Circuit established that a seller of items containing hazardous materials is not liable for contribution of the cleanup of those materials under the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”) if its subjective intent was to sell those items as opposed to disposing of the hazardous materials. Because the Eastern District of North Carolina did not err in deciding that Georgia Power did not arrange its transformers for disposal under CERCLA, and that there were no genuine issues of material fact, the Fourth Circuit affirmed the order of the District Court granting summary judgment in favor of the Georgia Power.

Appellants Contended that Georgia Power’s Intent Was to Arrange for the Disposal of Hazardous Materials

The appellants argued that the District Court erred in granting summary judgment in favor of Georgia Power because Georgia Power had the dual intent of gaining revenue and disposing of toxic waste when they sold electrical transformers, arguing that this dual intent creates the intent necessary for arranger liability under CERCLA.

History of Georgia Power’s Sale of Transformers to Ward and the Proceedings Below

Georgia Power, appellee, sold its used electrical transformers in the early 1980’s via auctions. These electrical transformers contained polychlorinated biphenyls (“PCBs”), which are known carcinogens and have been banned since 1979. CERCLA governs the liability of parties who are disposing of PCBs. Before selling used transformers at auction, Georgia Power would inspect the oil inside the transformers for the PCB content to determine if the Toxic Substance Control Act of 1976 (“TSCA”) prevented it from selling the transformers for reuse. If the oil contained over 50 ppm, then the transformers could not be sold for reuse. For the transformers that Georgia Power sold at auction, it usually removed all of the PCB-containing oil, except for a thin coating of oil inside the transformer to prevent moisture damage that could make the transformers unfit for reuse. However, sometimes Georgia Power left the oil inside of the transformer when it was sold or left the caps off the transformers, exposing them to potential moisture damage. Georgia Power referred to this auction process as “scrapping” the transformers, but made in clear that scrapped transformers are “actually sold.”

Ward Transformer Company (“Ward”) purchased 101 used Georgia Power transformers that needed repair from 1983 to 1984. Ward ran a business reconditioning damaged or used transformers and reselling them. Ward stored and repaired the transformers it purchased to customer specifications at its facility in Raleigh (“Ward Site”). Ward made a profit off of these sales. Ward Site is now on the Environmental Protection Agency’s (“EPA’s”) National Priorities List due to PCB contamination from the oil in Ward’s transformers, and in 2004, the EPA ordered a removal action, which resulted in the removal of over 400,000 tons of contaminated soil. Consolidated Coal Company (“Consol”), PCS Phosphate Company (“PCS”), and Duke Energy Progress (“Duke”), appellants, have been required to bear the brunt of the removal costs, costing Consol and PCS more than $17 million.

In 2008 and 2009, Consol and Duke filed complaints against from Georgia Power, PCS, and other defendants in the Eastern District of North Carolina for contribution costs under CERCLA. The district court consolidated these actions. PCS counterclaimed against Consol and Duke, and cross-claimed for CERCLA contribution against the other defendants, including Georgia Power. Consol, PCS, and Duke all claimed that Georgia Power “arranged for disposal” of PCBs and thus it was liable for contribution under CERCLA at 42 U.S.C. § 9607(a)(3). The parties agreed to use the actions against Georgia Power as a test case and stayed the actions against all the other defendants. Georgia Power moved for summary judgment, and the District Court granted the motion. The court found that there was not intent to create arranger liability under CERCLA because the transformers were still useful when sold, as evidenced by Ward’s ability to make money out of reselling them. PCS and Consol appealed.

CERCLA and Arranger Liability

CERCLA allows for contribution liability when an entity arranges hazardous materials, one of which is PCB, for disposal. The question of whether a seller arranges hazardous material for disposal is a question to be decided on a case-by-case basis. In the absence of direct evidence of the intent to sell hazardous materials for disposal, the Fourth Circuit uses a four factor test formed in Pneumo Abex Corp. v. High Point, Thomasville & Denton Railroad Co. that weighs (1) whether the intent of the buyer was to reuse the hazardous materials or to dispose of the hazardous materials before reuse; (2) the value that the hazardous materials sold for; (3) the usefulness of the hazardous materials in the condition they were sold in; and (4) whether the hazardous materials were leaking or loose at the time of transferral. The Supreme Court’s decision in Burlington Northern & Santa Fe Railway Co. v. United States also caused to court to add another element to this test requiring that the seller has to have something more than mere knowledge that some disposal may occur as a collateral consequence of the sale. This “something more” includes intentional steps to dispose of the hazardous material beyond what is inherent to the sale, and it is a fact-intensive inquiry. Because this is an appeal from a summary judgment, the standard of review is de novo, and there has be a genuine issue of material fact that could cause a reasonable finder of fact to decide for the nonmoving party.

Georgia Power Did Not Have Arranger Liability Under CERCLA

The Fourth Circuit first decided that there was no direct evidence that Georgia Power intended the sale of its transformers to be a disposal of PCBs under CERCLA. The court dismissed the appellants’ argument that Georgia Power’s references to auctioning transformers as “scrapping” them meant that Georgia Power intended to dispose of the transformers. The court noted that Georgia Power specified in one document that “scrapping” meant “actually sold.” The court also dismissed the appellants’ argument that Georgia Power testing the concentration of PCBs in the transformers before sale was direct evidence that the sale was intended to dispose of PCBs. The Fourth Circuit saw this as merely complying with the TSCA and having nothing to do with disposing of PCBs via sale.

Deciding that there was no direct evidence of intent to sell the transformers for disposal of PCBs, the Fourth Circuit turned to circumstantial evidence and its Pneumo Abex four-factor test, as modified by Burlington. The court found that the first Pneumo Abex factor (reuse of the hazardous material versus the hazardous material being necessary to dispose of before reuse) weighed against the appellants. The appellants claimed this factor weighed in their favor because the transformer shells were what Ward wanted, not the oil containing PCBs contained within the shells. The court did not buy this argument because there was no evidence that showed that Ward ever intended to separate the oil from the transformers, and that separation of the oil from the transformers was likely impracticable. The court also noted that Ward resold entire transformers, not merely scrapping them, and that there was no evidence that showed that Georgia Power thought that Ward would do anything other than reuse the entire transformers after it bought them.

The Fourth Circuit also found that the second Pneumo Abex factor, considering the value of the materials sold, weighed against the appellants. The appellants argued that Ward sold the transformers in spite of the PCBs, not because of them. However, the court found that Ward was able to sell the transformers at a profit as particularly important to this factor. Additionally, the court reasoned that without the oil the transformers would have lost value because they could be damaged by moisture.

The Fourth Circuit also found that the third Pneumo Abex factor, concerning the usefulness of the materials as sold, weighed against the appellants. The appellants argued that the PCB content in the transformers was not useful and was undesirable. The court did not buy this argument because the transformers continued to be used after Ward reconditioned them and there was nothing in the record that showed that their use was affected negatively by PCBs.

The Fourth Circuit also found the fourth Pneumo Abex factor, concerning whether hazardous materials were leaking at the time of the transaction, to weigh against the appellants. The appellants argued that, while the transformers were not leaking when transferred, they were equivalent to a leaking transformer because of Ward’s intended use. The court disagreed and required actual leaking for this factor.

Finally, due to Burlington, the court added an additional element, which required something more than knowledge that some disposal would occur as a result of the transaction, to its test. The court also found this element to weigh against the appellants. The appellants argued that Georgia power knew that Ward could spill PCBs while rebuilding the transformers. The court did not buy this argument because there was no evidence that showed that Georgia Power would think that Ward would spill the oil in the process of reconditioning the transformers, and there was no evidence of something more than knowledge either. Due to all these factors weighing in Georgia Power’s favor, the Fourth Circuit found that there was no circumstantial evidence pointing to Georgia Power’s intent to dispose of PCBs, as opposed to selling of its used transformers. Therefore, the Fourth Circuit ruled that Georgia Power did not have arranger liability under CERCLA.

Fourth Circuit Affirmed Summary Judgment in Favor of Georgia Power

The Fourth Circuit affirmed, holding that there was no genuine issue of material fact that could cause a reasonable finder of fact to determine that Georgia Power had arranger liability under CERCLA.

Dissent Argued that Intent Was an Issue for a Trier of Fact

Judge Wynn dissented, arguing that the case should have been sent back to the District Court to determine what Georgia Power’s intent was when it the sold the transformers. Judge Wynn thought that CERCLA should have been given a broad interpretation because it was a remedial statute. The definition of “arrange” in CERCLA should therefore be looked at broadly. He also distinguished the Supreme Court’s decision in Burlington from this case because Burlington was the result of a lengthy trial not a summary judgment. Judge Wynn then looked at United States v. Cello-Foil Products, Inc., which the Supreme Court used to reach their decision in Burlington. Cello-Foil overturned an arranger liability decision because the district court used summary judgment, as opposed to a trial, to decide intent. Judge Wynn then cited Fourth Circuit precedent saying that intent is an issue that is typically left up to the trier of fact. Judge Wynn disagreed with the majority that no reasonable finder of fact could infer that Georgia Power intended to dispose of PCB-containing oil when it sold its transformers to Ward. Therefore, viewing the facts in the light most favorable to the appellant, Judge Wynn would have reversed and sent this case back to the district court for trial.

Michael B. Kent, Jr.*

Introduction

The expanded use of horizontal drilling and hydraulic fracturing (“fracking”) has raised significant concerns about the environmental impacts of the process. Incidents of methane leaks, water contamination, and air pollution are among the most frequently-raised issues.[1] But fracking has other potential impacts, as well—specifically, impacts on the character of local communities. As one scholar has noted, fracking is, from start to finish, an industrial process, with the same potentially disruptive effects that flow from other industrial land uses.[2] “In many cases,” as another commenter notes, “communities are encountering large-scale industrial fossil fuel production for the first time, and as remote natural gas resources are exhausted, fracking continues to push closer to residential areas.”[3] In several states, these circumstances have created tension between state laws regulating oil and gas exploration, on the one hand, and local land use ordinances seeking to restrict fracking-related activities, on the other. The policy debate concerns what level of government should regulate fracking; the legal debate concerns whether state fracking legislation preempts local land use authority. Courts considering the issue to date have tended to side with local governments, invalidating state-level attempts to wrest control over fracking from local communities.

In the summer of 2014, North Carolina entered this debate when the General Assembly enacted fracking legislation that expressly preempts local ordinances prohibiting, or having the effect of prohibiting, oil and gas development.[4] This Essay considers whether North Carolina’s preemption provision is likely to pass judicial scrutiny or suffer the fate of similar legislation in other states. After reviewing the reasoning employed by other courts, as well as the mechanics of the North Carolina preemption provision, my preliminary conclusion is that North Carolina’s fracking legislation will likely have more success when facing judicial scrutiny than similar legislation has received elsewhere.

Marcellus Shale Litigation

The legal tension between state and local power over fracking has been highlighted by recent litigation flowing out of the states that contain the Marcellus Shale formation, where fracking activities have been in full swing.[5] Two decisions—one from the New York Court of Appeals and the other from the Pennsylvania Supreme Court—highlight the legal issues.

1.  Wallach v. Town of Dryden[6]

Two New York municipalities enacted local zoning ordinances that prohibited oil and gas operations within their respective jurisdictions.[7] Oil and gas lessees in both towns sued, arguing that the ordinances were preempted by a state statute, which provided that it “shall supersede all local laws or ordinances relating to the regulation of the oil, gas, and solution mining industries.”[8] In a consolidated appeal, a majority of the New York Court of Appeals disagreed.[9]

Noting that New York is a home rule state, and that zoning is one of the “core powers of local governance,”[10] the majority stated that it would find preemption only where there was clear legislative intent to specifically preempt local land use authority.[11] The majority then reviewed the language of the state statute, as well as the overall statutory scheme and legislative history, and concluded that no such intent existed.[12] The statutory language preempting local laws “relating to the regulation of the oil, gas, and solution mining industries,” did not include these zoning laws, which were “[p]lainly . . . directed at regulating land use generally [rather than] the details, procedures or operations of the oil and gas industries.”[13] In short, because the land use ordinances did not directly regulate oil and gas operations, they were not preempted, despite their indirect effect on such operations.

2.  Robinson Township v. Commonwealth[14]

In a case that spawned four separate opinions covering more than 100 pages in the Reporter, a divided Pennsylvania Supreme Court held that local autonomy trumped a state statute regulating oil and gas development.[15] Among other things, the statute at issue (known as “Act 13”) amended the state’s oil and gas laws to: (1) provide for a single, statewide zoning regime for oil and gas development activities;[16] and (2) preempt local ordinances purporting to regulate oil and gas operations in a manner different than that established by the statewide scheme.[17] Several municipalities and municipal officials filed suit to challenge Act 13 on the grounds that it violated several provisions of the Pennsylvania and United States Constitutions.[18]

In the state supreme court, a three-member plurality viewed Act 13 as violating article I, section 27 of the Pennsylvania Constitution.[19] That provision—the so-called “Environmental Rights Amendment”—bestows “a right to clean air, pure water, and to the preservation of the natural scenic, historic and esthetic values of the environment” and says that “the Commonwealth shall conserve and maintain [the state’s natural resources] for the benefit of all people.”[20] According to the plurality, this provision of the state constitution obliges each branch of government—at both the state and local levels—to consider in advance the environmental effect of any proposed action it might take.[21] Moreover, because local governments are obligated in the same manner as the state, the state legislature had no power to take from them the necessary means by which they might fulfill that obligation (here, the power to regulate land uses).[22] Finally, the plurality concluded that the protection of environmental values was a quintessentially local issue “that must be tailored to local conditions.”[23] For all of these reasons, Act 13’s uniform, statewide zoning regime was held unconstitutional.[24]

North Carolina’s Fracking Legislation

The experience of litigation in the Marcellus Shale demonstrates that state statutes purporting to preempt local land use regulations have not been met with judicial favor. Because North Carolina’s recent fracking statute contains a preemption provision, the question is whether this judicial disfavor will repeat itself and threaten the scheme worked out by the state’s General Assembly to balance the tension between state and local legislation. To help answer this question, the following is a discussion of the North Carolina preemption provision and a brief analysis of how North Carolina’s law differs from that in New York and Pennsylvania.

1.  The Preemption Provision

North Carolina General Statute § 113-415.1 explicitly states that the General Assembly intends “to maintain a uniform system” relating to oil and gas operations and that “any local ordinance that prohibits or has the effect of prohibiting oil and gas exploration, development, and production activities . . . shall be invalidated to the extent necessary to effectuate the purposes of [the fracking statute].”[25] The scope of the provision specifically includes local laws “regulating land use,” as well as “horizontal drilling or hydraulic fracturing.”[26] There is a catch, however; the statute only invalidates local laws “that the Mining and Energy Commission has preempted pursuant to this section.”[27]

The statute then provides a process for obtaining a preemption decision from the Commission. Whenever a local ordinance would prevent its operations, the oil and gas operator may petition the Commission to review the ordinance.[28] Upon receipt of such a petition, the Commission must hold a public hearing in the affected locality within sixty days, after which it must decide whether and to what extent the ordinance should be preempted.[29] To the extent that the local ordinance imposes generally applicable restrictions, it is presumed to be valid unless the Commission makes a factual finding to the contrary.[30] Moreover, the Commission may only preempt a local ordinance if it makes all of the following findings:

(1)  That there is a local ordinance that would prohibit or have the effect of prohibiting oil and gas exploration, development, and production activities, or the use of horizontal drilling or hydraulic fracturing for that purpose.

(2)  That all legally required State and federal permits or approvals have been satisfied and that the permits or approvals have been denied or withheld only because of the local ordinance.

(3)  That local citizens and elected officials have had adequate opportunity to participate in the permitting process.

(4)  That the oil and gas exploration, development, and production activities, and use of horizontal drilling or hydraulic fracturing for that purpose, will not pose an unreasonable health or environmental risk to the surrounding locality and the operator has taken or consented to take reasonable measures to avoid or manage foreseeable risks . . . .[31]

2.  Preliminary Analysis

Although nothing is certain, there are several reasons to think that the preemption provision of the North Carolina fracking statute will have more judicial success than those in New York and Pennsylvania. First, whereas New York is a home rule jurisdiction, North Carolina is not. Technically, municipalities in North Carolina “can exercise only that power which the legislature has conferred upon them.”[32] Although the General Assembly has indicated that powers granted to local governments should be construed broadly,[33] the courts have not always followed this directive. According to a recent decision of the North Carolina Court of Appeals, local powers are to be construed broadly only where there is an ambiguity in the authorizing statute; otherwise, the plain meaning of the statute “must be enforced as written.”[34] Additionally, the courts have held that local power is necessarily limited when exercised in a manner that is inconsistent with state law.[35] Such an inconsistency exists when the local ordinance purports to regulate a subject that municipalities are expressly forbidden to regulate by state statute, or purports to regulate a field for which the state statute demonstrates an intent to provide a uniform scheme.[36] Because the fracking statute expresses an intent to create a uniform system relating to oil and gas operations, as well as expressly invalidates local ordinances preempted by the Mining and Energy Commission,[37] it probably would be deemed sufficient to overcome any local zoning authority that otherwise might exist. Accordingly, the reasoning employed by the New York court in Wallach—which relied heavily on local home rule authority and past precedent indicating that attempts to overcome such authority should be construed narrowly—is unlikely to find much traction given North Carolina’s differing laws on local power.[38]

The reasoning of the Pennsylvania court in Robinson Township seems unlikely to fare much better. Although the North Carolina Constitution contains a provision relating to natural resources, it is nowhere near as robust as the language contained in the Pennsylvania Constitution. The North Carolina provision states that “it shall be a proper function of the State . . . and its political subdivisions . . . to control and limit the pollution of our air and water . . . .”[39] Although this language might possibly be used to impose an obligation similar to that in Robinson Township, the North Carolina language (i.e., “proper function”)[40] is much weaker in this regard than that of the Pennsylvania Constitution (i.e., “shall conserve and maintain”).[41] Moreover, research has revealed no North Carolina judicial decision interpreting the provision that broadly. Finally, unlike the statewide zoning regime in Robinson Township, the North Carolina fracking legislation—which seeks to preserve generally applicable zoning ordinances and allows preemption only if the fracking operations do not pose unreasonable risks to the locality[42]—leaves plenty of room for local considerations and local tailoring.

Conclusion

One of the predominant legal issues with the recent spate of fracking in the United States is whether state statutes pertaining to fracking operations preempt local ordinances relating to land use. While the case law demonstrates some judicial disfavor with the preemption argument, the North Carolina fracking legislation (along with North Carolina local government and constitutional law) differs substantially from that of other states where the issue has been tested. Although there are no certainties, a preliminary review suggests that the preemption provision of North Carolina’s fracking statute will fare better than those challenged in other jurisdictions.

       *   Associate Professor of Law, Campbell University School of Law.

      [1].   See Jason Schumacher & Jennifer Morrissey, The Legal Landscape of “Fracking”: The Oil and Gas Industry’s Game-Changing Technique Is Its Biggest Hurdle, 17 Tex. Rev. L. & Pol. 239, 243–51 (2013) (discussing potential water and air quality issues).

      [2].   David B. Spence, Federalism, Regulatory Lags, and the Political Economy of Energy Production, 161 U. Pa. L. Rev. 431, 480–81 (2013) (noting aesthetic, noise, and social issues in addition to air and water quality).

      [3].   Rachel A. Kitze, Note, Moving Past Preemption: Enhancing the Power of Local Governments Over Hydraulic Fracturing, 98 Minn. L. Rev. 385, 389–90 (2013).

      [4].   See generally Act of June 4, 2014, 2014 N.C. Sess. Law 2014-4 (providing for development of oil and gas exploration) (effective, with some exceptions, June 4, 2014).

      [5].   Schumacher & Morrissey, supra note 1, at 303.

      [6].   23 N.Y.3d 728 (N.Y. 2014).

      [7].   See id. at 739.

      [8].   See N.Y. Envtl. Conserv. Law § 23-0303(2) (McKinney 2014).

      [9].   Wallach, 23 N.Y.3d at 739.

    [10].   Id. at 742–43.

    [11].   Id. at 743.

    [12].   Id. at 746–53.

    [13].   Id. at 746.

    [14].   83 A.3d 901 (Pa. 2013).

    [15].   Id. at 1000.

    [16].   See 58 Pa. Cons. Stat. § 3304.

    [17].   See id. §§ 3302–3303.

    [18].   Robinson Twp., 83 A.3d at 915–16.

    [19].   Id. at 913.

    [20].   Pa. Const. art. I, § 27.

    [21].   Robinson Twp., 83 A.3d at 952.

    [22].   Id. at 977–78.

    [23].   Id. at 979.

    [24].   Id. at 978, 981–82. A fourth member of the court concurred in the result, but on different grounds. Specifically, the concurrence found that Act 13 violated substantive due process by imposing zoning standards that bore no rational basis to local realities. See id. at 1000–09 (Baer, J., concurring).

    [25].   N.C. Gen. Stat. § 113-415.1(a) (2014).

    [26].   Id. § 113-415.1(b).

    [27].   Id. § 113-415.1(a).

    [28].   Id. § 113-415.1(c).

    [29].   Id. § 113-415.1(c)–(d).

    [30].   Id. § 113-415.1(f).

    [31].   Id. The Commission’s decision is reviewable under the state Administrative Procedure Act upon the filing of a petition within thirty days of the date of the decision. See id. § 113-415.1(h).

    [32].   Bowers v. City of High Point, 451 S.E.2d 284, 287 (N.C. 1994).

    [33].   See N.C. Gen. Stat. § 160A-4 (2000).

    [34].   King v. Town of Chapel Hill, 743 S.E.2d 666, 672 (N.C. Ct. App. 2013), aff’d in part, rev’d in part on other grounds, 758 S.E.2d 364 (N.C. 2014).

    [35].   See, e.g., Craig v. Cnty. of Chatham, 565 S.E.2d 172, 175 (N.C. 2002).

    [36].   N.C. Gen. Stat. §§ 160A-174(b)(4)–(5) (2000).

    [37].   N.C. Gen. Stat. § 113-415.1(a) (2014).

    [38].   See generally Wallach v. Town of Dryden, 16 N.E.2d 1188 (N.Y. 2014).

    [39].   N.C. Const. art. XIV, § 5.

    [40].   Id.

    [41].   PA. Const. art. I, § 27.

    [42].   N.C. Gen. Stat. §§ 113-415.1(a), (f) (2014).

PDF version of North Carolina’s “Fracking” Legislation by Michael B. Kent, Jr.

whitewater_rafting_water_1245476_h

By: Andrew Kilpinen

Today in American Whitewater v. Thomas Tidwell, the 4th Circuit affirmed the decision of the district court for the District of South Carolina that rejected challenges to the Forest Service’s revised management plan that allowed “floating” on a 21-mile stretch of the Chattooga River.

 2012 Forest Service Management Plan Opened Portion of 21-Mile Stretch to Floating Activities For First Time Since 1974.

Congress designated the Chattooga River (“River”) for preservation in 1974. Since then, the Forest Service has prohibited “floating,” non-motored boating, on the 21-mile northernmost section of the River (“Headwaters”). In a Solomonic compromise seeking to weigh the interests of fisherman, property owners, and floaters alike, the Forest Service revised its management plan in 2012 to allow floating on most of the Headwaters during select winter months. As is often the case with compromises, no one was satisfied with the outcome – lawsuits followed.

 Did the Forest Service Violate Federal Law When it Opened Portions of the Chattooga River for Floating?

Kayaking, canoeing, and whitewater rafting enthusiast not-for-profit American Whitewater (“Whitewater”), upset that the entire Headwaters were not opened for floating, alleged the Forest Service violated the Administrative Procedure Act (“APA”) and the Wild and Scenic Rivers Act (“WSRA”).

Property owners (“Rusts”) and environmental not-for-profit Georgia ForestWatch (“ForestWatch”), upset that the Forest Service opened any of the Headwaters to floaters, alleged that the Forest Service violated the National Environmental Policy Act (“NEPA”) when it failed to complete a sufficient risk analysis for the 2012 management plan.

 Forest Service Did Not Violate the WRSA.

Whitewater argues that remaining restrictions violate WRSA because floating was an outstandingly remarkable value (“ORV”) that led Congress to designate Chattooga River for preservation. The WRSA provides that Forest Service must “protect and enhance” all ORVs. Therefore, limited floating to any portion of the River violated the WRSA.

The Court did not agree. The Court found that the River’s ORV was its recreational activities in general, and not a single activity such as floating. Consequently, floating is not an independent ORV of the River that must be protected and enhanced under the WRSA.

 Floating Is Public Use And Could Substantially Interfere With Other Uses.

Whitewater argues that floating cannot be limited because it does not “substantially interfere” with any protected use of the Headwaters. The Court pointed out that floating is a “public use,” and is therefore not entitled to the “substantial interference standard” protection. Even if it was, the Court noted that the record supported the Forest Service’s conclusion that floating could interfere with other recreational uses.

 Rusts Complaint Moot Because Forest Service Has Never Opened Land-Adjacent Stretch.

Rusts sought declaratory judgment that the 1.7 mile portion of the Headwaters running through their land was non-navigable private property. The Court refused to render a decision on the issue and dismissed the Rusts’ declaratory judgment because the Forest Service never attempted to open the waterway adjacent to their property.

 Potential Illegal Trespass Over Rusts’ Property Not Reasonably Foreseeable.

Fearing an influx of kayakers traipsing through their backyard, the Rusts argued that the Forest Service violated NEPA because they failed to provide a sufficiently detailed analysis of the risk of illegal trespass. In support for their position, the Rusts offered the account of a man who trespassed over their property 40 years earlier and a stray newspaper report.

The Court recognized that the Forest Service was only required to analyze “reasonably foreseeable” effects of its decisions. The Court found that a possible spike in trespass across the Rusts land was too speculative to meet this standard.

The 4th Circuit affirmed the district court’s ruling affirming the Forest Service management plan for the Chattooga River.

By: Beate Sjåfjell*

Introduction: A Moral Imperative for Action

The company is one of the most ingenious inventions of our time.[1]  With limited liability for its investors, enabling capital to be (in theory) put to its most efficient use, the company has become the backbone of our economies.  But must this all-important component of our market economies be equated with environmental degradation to the extent that we risk dangerous loss of biodiversity and passing the tipping point of climate change?  In my opinion it must not.  We need to find out how to make the necessary changes.  We have a moral imperative for action.[2]

Climate change is a case in point for the necessity of working toward a sustainable development; toward the achievement of economic development and social justice within the nonnegotiable ecological limits of our planet.[3]  According to even the most conservative estimates of the Intergovernmental Panel on Climate Change (“IPCC”),[4] business as usual will most probably lead to climate change of a magnitude to which we cannot adapt, or to which we can adapt only at extremely high costs.[5]  Contrary to popular phraseology, dealing with climate change is not about saving the planet.  The planet will take care of itself.  The issue is whether we should preserve the very basis of our existence, of our societies as we know them today.[6]  Runaway climate change involves a high risk of severe environmental, social, and economic consequences,[7] and the challenge of climate change needs to be dealt with on all those levels, both in terms of mitigating as much as possible, and adapting to that which cannot be avoided.[8]

Climate change is not the only crisis we face.  There is a convergence of crises: the financial crises; the loss of biodiversity threatening the stability of our ecosystems;[9] the peaking of fossil energy sources;[10] and the harsh brutality of tens of thousands of people dying every day for poverty-related reasons.[11]  In the aftermath of one financial crisis and the furious effort to try to avoid a new full-blown crisis, the attention of world leaders is on stimulating growth and getting back to business as usual.[12]  Although there has been some talk of a “Global Green New Deal,” of turning the financial crisis into an opportunity for necessary transition to a green economy,[13] generally speaking, environmental concerns have a tendency to be placed on the backburner, along with concerns for the underprivileged of this world, when jobs are lost, revenues disappear, stock markets quiver, and the financial basis of developed countries appears to be in danger.[14]  Getting back on track with economic growth and business as usual is a postponement of the necessary focus on dealing with climate change and other overriding environmental concerns—a postponement that may turn out to be highly detrimental to our chances of achieving a sustainable global society: financially, socially, and environmentally.[15]

It is the poor people of this world who are already suffering the most, who are hit first by financial crises,[16] and who will continue to be affected the most, in the short term, as a consequence of climate change and the global energy situation.[17]  But ultimately these crises affect us all: there are many indications that business as usual is the right choice only if we desire a very uncertain future for our children and grandchildren.[18]  Unfortunately, by the time enough decision-makers realize that business as usual is not a viable alternative, it may very well be too late.[19]  That gives rise to the question: What do we do?

I.  The Role of Companies

What then is the role of companies in this bigger picture?  Surely it is not companies, but policymakers and lawmakers, our parliaments and governments, who should do what is necessary to lead us into sustainable development.  The responsibility of the state is incontestable.[20]  However, a part of that responsibility is considering the role of companies.[21]  The great significance of the function of companies within the global economy and the vast impact that the operations of companies today have, on an aggregated level, on society in general and on the biosphere and the atmosphere, means that a critical analysis of the purpose of companies and the regulatory framework within which they operate is crucial to a deeper understanding of the correlation between society and sustainable development.[22]  We cannot hope to achieve overarching societal goals without companies contributing to them.  Companies are all-important components of our economies, with an enormous unrealized potential for mitigating climate change.  As put forward by the IPCC, there is potential to reduce greenhouse gas emissions with existing technology, but a number of barriers prevent this potential from being realized.[23]

The conceived primacy of shareholders and of profit maximization for shareholders is arguably one such barrier, and indeed prime among them.[24]  Business acceptance of the nonprimacy of shareholder interests seems to be a necessary prerequisite for business to become sustainable, also in the environmental sense.  As long as profit (maximization) for shareholders is the overarching goal, any attempt at prioritizing environmental concerns and prioritizing climate change mitigation will quickly hit a ceiling.[25]  Certainly, profit in itself is good and necessary for the survival of our businesses providing workplaces, revenue, and in short, welfare.  The search for profit is legitimate and necessary.  The problem arises when profit becomes the overarching objective to the detriment of other legitimate interests and societal goals.  We need to find out how to change the framework within which profit is pursued, so that profit is pursued within the goal of sustainable development instead of the pursuit of profit being the main goal, with some good being done (or appearing to be done) in the name of corporate social responsibility.

II.  The Role of Law

A.     Beyond CSR and Mainstream Corporate Governance: Integration of Environmental Concerns

There are two dominant debates concerning companies: the Corporate Social Responsibility (“CSR”) debate and the Corporate Governance debate.[26]  CSR in a sustainable-development perspective could be seen as dealing with and bringing together two interrelated issues:[27] firstly, legal compliance and secondly, the company’s responsibility for going beyond such compliance, with the legal rules forming the floor and the voluntary part of CSR being a striving beyond that—a race to the top.[28]  In that sense, CSR would encompass and form a bridge between hard law, soft law, and ethical obligations.  But CSR does not do this.  Business lobbyists have captured the CSR concept and ensured that the definition legislators subscribe to is that of CSR as a voluntary activity.[29]  The business message may be said to be: “Do not legislate us, and we are willing to talk about how we behave.”[30]  This is not meant to ignore that good is done in the name of CSR.  And certainly the CSR movement has led to or been a part of a process where no self-respecting business leader will claim that her company disregards CSR.[31]  However, as I have argued elsewhere, defining CSR through delimitation against legal obligations is deceptive and detrimental to the development of a sustainably and socially responsible business and has contributed to giving CSR a bad name.[32]

Much of what companies claim as credit on their CSR accounts is involvement with issues unrelated to their businesses, for example the Norwegian Airport Express Train organizing computer classes for former drug addicts[33] or Norsk Hydro funding the Oslo Philharmonic Orchestra.[34]  Funding the Orchestra gives no indication at all of how Norsk Hydro is run as a business—how it contributes to or works against the mitigation of climate change, how its employees are treated, or whether it cares about the workers hired by its subcontractors.[35]  Organizing computer classes for the underprivileged or funding cultural activities is not CSR in the true sense—it is corporate charity work.[36]

The mainstream corporate governance debate concentrates on a small segment of the reality in which companies operate.[37]  This debate focuses on investors, first and foremost shareholders, and their relationship with the board of the company and, by extension, its management.  The corporate governance debate has spawned a number of corporate governance codes and legislative measures, such as the EU Directive on shareholder rights.[38]  Heavily influenced by the dominant legal-economic theory of agency,[39] the focus is on how to find the right incentives to make the board act as agents for the shareholders as principals with profit maximization as the overarching goal.[40]

Together with the capture of CSR as a voluntary affair for business, the narrow focus typical of the mainstream corporate governance debate promotes the shareholder primacy drive and the misconception that the company is and should be a vehicle for profit maximization for shareholders only—and that it is sufficient for companies to contribute to overarching societal goals.[41]  A true integration of environmental concerns is required.  The law, therefore, is necessary to ensure the contribution of companies, to level the playing field for companies that wish to actively contribute to the mitigation of climate change and of threats to biodiversity, and to ensure that their contributions are not limited by the competitive advantage that today’s system tends to give irresponsible and short-sighted companies.

B.     The Limited Effectiveness of Environmental Law

Having established that the law is necessary, this poses the question: What area of law?  Environmental law and other forms of external regulation[42] are important, but the limits of external regulation are well documented and consist of a number of interlinked issues, briefly sketched here.

First, the extraterritoriality issue or the issue of home state and host state.  For example, while European companies may be under relatively strict environmental regulation in their home state, the jurisdictional scope of home state regulation does not typically cover the companies’ business in other countries.[43]  The host state may have lax regulation or lacking enforcement.  Developing countries, needing jobs and revenue, may be fearful of making demands on companies from developed countries.[44]  Second, the regulatory lacuna at an international level—the stalled proposal for UN norms governing transnational companies is an example of this gap.[45]  Third, the legislatures cannot keep up with everything companies do or plan to do and the environmental consequences of their actions.[46]  Fourth, there is the danger of loopholes, boilerplate formulas or other measures through which companies comply or seem to comply with the law at as low a cost as possible.  This is the problem with reporting.[47]

Finally, and perhaps most importantly, sustainable development is about going further than the antipollution approach that often characterizes environmental law and other external regulation.  Sustainable development is a way of thinking.  To get decision makers in companies to think in a certain manner an internal company perspective is required.  In my opinion, this involves a company law perspective—not as an exclusive perspective, but as a necessary contribution.

C.     The Role of Core Company Law

This Article makes the argument that company law is a necessary tool for achieving sustainable companies, both to make the external regulation of companies more effective and to realize the potential within each company to make its own independent, creative, and active contribution to the mitigation of climate change.  Take the mainstream corporate governance debate as a starting point: If the focus of the board, and by extension, the management, is to be primarily on ensuring profit for shareholders and keeping the share price high, and the whole system encourages shareholders to focus on their profits, who then is to be responsible for the company’s action beyond its narrow obligation to comply with the law?  In my opinion, this should be the responsibility of the board.  But the board is under pressure from the shareholder primacy drive to focus on the short term rather than the long term and to disregard externalities that the company is not obligated by law to internalize (or which it can get away with ignoring).

In many jurisdictions, company law is seen as regulating the purpose of the company through its regulation of the relationship between the shareholders, the board, and management.  Company law is thereby seen as supporting the shareholder primacy drive, although that view arguably is more a social norm than a legal one.[48] Combating the negative effects of the shareholder primacy drive therefore, in my opinion, entails redefining the purpose of the company and the role and the purpose of the board.[49]  I believe redefining should be done in a principle-based manner, but it should be done in law, through the use of legal standards, instead of attempting to do this (only) through more or less voluntary codes and so on.  The law needs to create a floor beneath which no company can go, thereby promoting a race to the top through each company contributing in its own individual, creative way.

III.  The Research Project “Sustainable Companies”

A.     Internalizing Environmental Externalities

The international team of the Oslo-based research project “Sustainable Companies”[50] is dedicated to finding out how to move from the idea of internalizing externalities[51] to a research-based proposal.  Our vision is to contribute to the tools that make companies become a part of the solution.  The hypothesis underlying the project is that environmental sustainability in the operation of companies cannot be effectively achieved unless the objective is properly integrated into company law and thereby into the internal workings of the company.[52]  To test this hypothesis and to prepare the ground for well-founded proposals for reform at the end of the project period, an important first stage in the “Sustainable Companies” project has been to map the barriers to and possibilities for the promotion of sustainable business in the hitherto often ignored area of company law.[53]  Team members in our project, from a wide range of jurisdictions including countries in Europe, the Americas, Africa, and Asia,[54] have written country reports concerning the same set of questions with the main focus on core company law issues but also covering accounting/reporting and auditing/assurance, as well as the in practice very important but in company law not adequately addressed area of groups.  These country reports have formed the basis for the ongoing work with three cross-jurisdictional papers identifying the barriers to and possibilities for sustainable companies in the same three important areas: first, core company law; second, accounting/auditing rules; and third, the regulation of company groups.[55]  In this Article, a first tentative suggestion of the results of this mapping and what it entails for possible reforms is given.[56]  For reasons that will be made clear below, the focus is on core company law.

B.     Tentative Results: Possibilities and Critique

On the face of it, we see tentative glimmers of hope and possibilities for the promotion of companies in the increasing focus on CSR and the ethical obligations of a company to consider the environmental and societal impacts of its business.[57]  An analysis of the results of the mapping indicates that the two debates of CSR and mainstream corporate governance are reflected.[58]  On the one hand, there is more shareholder focus, also in continental European and Nordic countries originally having a wider perspective.[59]  On the other hand, there is more focus on the wider corporate responsibility also in shareholder primacy strongholds such as the United Kingdom, with its enlightened shareholder value.[60]  Exceptionally, the consideration of the environment is directly included in legal requirements of the duties of the board, as in the U.K. Companies Act of 2006,[61] while in jurisdictions like Germany we even see an increased emphasis in company law on a pluralistic view of the interests of the company.[62]  In countries that have had to rebuild their societies after communism, or as in South Africa after apartheid, we see tendencies to new approaches based on a broader understanding of the societal significance of companies.[63]  Certainly company law in many jurisdictions allows the inclusion of environmental concerns and also the prioritization of environmental protection over short-term profit, and we find legal sources that substantiate that from a legislative perspective.  Companies are expected to contribute toward societal goals wider than that of shareholder profit maximization.[64]

These two partly conflicting trends seem to lead to reporting being seen as the solution, as a compromise satisfying both groups, especially in the form it takes in most countries, where the extent to which companies internalize environmental externalities[65], for example, is voluntary, while the reporting itself is not—an approach that may be seen as underpinned through theories of reflexive law.[66]  We see this in EU law and it is taken further in Norway[67] and Denmark.[68]  We see the same tendency in some corporate governance codes, notably in the Netherlands.[69]  There are some court cases that arguably indicate a new approach, inter alia, in cases concerning the piercing of the corporate veil.[70]

There are also some business initiatives, in Germany and in Ireland for example, that seem to be working to contribute toward sustainable development.[71]  There are some institutional investors, some pension funds, which are on their way toward what may become truly socially responsible investment.[72]  And we see a very slowly growing tendency in public opinion to require more from companies.[73]

However, the positive tendencies are not sufficient, neither in their current scope nor in their capacity to develop—it is too little and most likely going to be too late.  Even more seriously, there is a two-pronged danger of the CSR talk and of reporting as the preferred perceived solution.  First, concerning reporting: when the core duty is not in place, when the decision makers in companies are not required to integrate environmental concerns into the decisions of how the core business of the company is to be run, and when there is no hard law stating that companies must be run in a socially responsible manner, we risk that environmental reporting is neither relevant nor reliable.[74]  There are even studies that indicate “a negative relation, i.e., the more a firm discloses, the worse its environmental performance.”[75]  The uglier the company, the more makeup it uses.  Similar problems are reported concerning the disclosure of social issues.[76]  Second, concerning CSR: corporate charity work is often used instead of true CSR, leading to greenwashing and deflecting our attention from how the core business of the company is actually run.[77]  Further, all the CSR talk creates a danger of the wool being pulled over our eyes—making us believe that enough is being done.  This is the danger with the company law reforms that are perceived by some as positive, notably the codification of the so-called enlightened shareholder value of the U.K. Companies Act.[78]  If this is seen as a step forward, it may serve to take the pressure off of legislators to undertake proper reform, due to the misconception that progress is made in terms of internalising externalities in business decision making, when the truth seems to be that nothing has changed at all—at least not for the better.  In the United Kingdom, as in most of the rest of the world, we are still seeing business as usual—or, with the current financial unrest following the financial crisis of 2008, desperate attempts to keep business going as usual.[79]  But business as usual is not and cannot be an alternative for humanity desiring to ensure viable ecosystems for future generations.[80]

C.     Tentative Results: The Main Barrier

The role of the board is central to the way companies are run and thereby to the contribution of companies to the mitigation of climate change and the mitigation of the destruction of biodiversity.[81]  Inspired by the ideas of agency theory, directors of the board are increasingly seen as agents for the shareholders as principals, with profit maximization as the goal.[82]  The tentative results of our cross-jurisdictional analysis indicate that shareholder primacy and the perceived overarching goal of maximizing shareholder profit present the most important barriers to the contribution of companies to environmental sustainability.[83]  Indeed, all tentative possibilities, all glimmerings of hope, are negated through the dominance of shareholder primacy and the short-term shareholder profit maximization drive.

This does give rise to the question: How can shareholder primacy be perceived as a main barrier in an analysis of company law, when shareholder primacy arguably is more of a social norm than a legal one?[84]  However, there is a clear link between this social norm and company law, because the social norm has developed within the framework of the law, as a result of what the law does and does not regulate.[85]  In my opinion, understanding this relationship may be a significant step in understanding how we can achieve change, and it certainly is also indicative of the possibility that lies in company law as it is today.

In what way has company law allowed this myth of shareholder primacy and profit maximization as a mandatory requirement to develop?  To understand that, it may be useful to return to the starting point of this Article, namely that the company is one of the most ingenious inventions of our time.  We mostly take it for granted today, but the company with limited liability for its shareholders is a relatively recent innovation, and much younger than the enforceable contract, that perhaps was the most innovative contribution of Roman law.[86]  Contracts and private property rights are necessary prerequisites for business as we know it and have much deeper historical roots as such.[87]  The idea of the company with limited liability, where people can invest their money in a business venture and expect a cut of future profits if successful and not lose more than their investment if unsuccessful, is relatively speaking the newcomer in the world of business.[88]  From one perspective, this was arguably not new: banks lend money to business projects along the same principles.[89]  The major difference is, however, that banks are protected through contract, while shareholders are not.[90]  Nor are shareholders owners, in any full, traditional sense of the word ownership.[91]

History saw the rise of this innovative way of financing companies, putting capital to its purportedly most efficient use, but for that to work on a grand scale, investors needed some kind of protection.  Naturally, therefore, Companies Acts setting up rules for companies with limited liability for their shareholders emphasize regulating the relationship between the shareholders on the one hand and the company, through its board and management, on the other.  This is not to say that no other interests involved in or affected by companies are dealt with in Companies Acts—most Companies Acts have some rules concerning creditor protection.[92]  The rights of creditors are, however, mainly regulated through other areas of law, with historical roots far surpassing those of companies with limited liability.

The focus on shareholders in the Companies Acts has in many jurisdictions led to company law being perceived as regulating the purpose of the company through its regulation of the relationship between shareholders and the company.  Nordic Companies Acts, for example, typically state that companies that do not have profit for shareholders as a purpose should regulate in their articles of association how the profit of the company is to be distributed.[93]  This is misconstrued, in my opinion, as setting out the purpose of the company understood as the company’s only or main purpose.  Understood historically, the Companies Acts set out the typical purpose that shareholders have with their relationship with companies in which they have shares, and serves as a protection of that purpose in the sense that if companies do not intend to distribute dividends to shareholders at all, then potential investors should be given a forewarning in the articles of association.  What the Nordic Companies Acts do not say anything about—and neither do Companies Acts, generally speaking, expressly regulate this issue—is what the purpose of the company on an aggregated level is, and what the guidelines are according to which the company is to be run.  The interlinked concepts of the purpose of the company and the interests of the company are therefore topics for debate in academic contributions, while in more pragmatic, practitioner-oriented literature the inference is simply drawn that shareholder focus in the Companies Acts translates into a prioritization of shareholder interest by the legislators.  The historically explicable fact of the focus of the relationship between the shareholders and the company organs in the Companies Acts, and the lack of express regulation of the core company issues of the purpose of the company and the interests of the company, has therefore led to the development within this vacuum of an idea of shareholder primacy.[94]  This is not to say that shareholder primacy cannot be substantiated as having legal support in any jurisdiction.  However, the dominance of the Anglo-American law-and-economics[95]inspired shareholder primacy[96] does seem to go far beyond anything that can be substantiated in a comparative analysis of company law.[97]  Certainly the narrow, short-term perspective that the shareholder primacy drive has led to is contrary to company legislation anywhere, and detrimental to the societal goals to which the regulation of companies is meant to contribute.[98]

The vacuum in the Companies Acts of many jurisdictions and the resulting development of the shareholder primacy drive, with its detrimental effects, has led to the extraordinary state of affairs of the Reflection Group on the Future of EU Company Law[99] suggesting that companies should be allowed to include in their articles of association that boards are allowed to promote the interests of the company[100] and to employ a long-term perspective.[101]  The Reflection Group thereby proposes to codify an acceptance of what, from any proper, in-depth company law analysis seems to be the state of law today—namely that shareholder profit maximization and shareholder primacy are not the only, nor should they be, the dominant guidelines in the narrow, short-term sense that we see today and that may be seen as contributing to the convergence of crises that we face.[102]  The perverse effect of that well-intended proposal may unfortunately be that it is used as an argument to say that narrow, short-term shareholder primacy is the norm according to European company law—otherwise, why would the Reflection Group suggest that the opposite should be expressly allowed?

D.    The Way Forward: Tentative Reflections

We see that what is perhaps the main barrier to sustainable companies has been allowed to flourish because of what the law regulates and what it does not.  This also indicates a way forward.  If a key problem is the lack of regulation of what the purpose of companies and the interests of companies are, then a clarifying regulation of those issues will not be just an additional layer of detailed regulation that entails only more expenses and aggravation for companies, but will set a key issue straight in a principle-based manner that could be the start of a shift in a sustainable direction.[103]  However, as we are so far off track from sustainable development, with a dramatic shift needed to achieve the presumed safe harbour of no more than two degrees Celsius warming,[104] we probably need to go beyond stipulating long-term, inclusive concepts of the purpose of the company and the interests of the company.  In my opinion, what urgently needs to be done is to clarify that the company, on an aggregated level, may and should have profit as a core of its purpose[105]—business cannot survive in the long run without making profit—but this should be sought within the overarching societal purpose of sustainable development.  This would be turning inside out the purpose of the company that shareholder primacy drive today promotes, where profit is the overarching purpose and perhaps some good may be sought in the name of CSR.

Because shareholder primacy in the narrow, short-term sense has been allowed to develop for so long, we will also need to consider incentives to support a shift towards sustainable development, and removing disincentives for sustainability that encourage the myth of shareholders as owners and shareholder profit maximization as the dominant guideline.  The concept of the interests of the company as a guideline should be developed accordingly, and as I have suggested elsewhere, be teamed together with a concept of sustainable development as an overarching guideline.[106]

A tentative conclusion from my point of view is that legal reform seems to be necessary to not only support the possibilities that company law today actually gives sustainable business, but to codify these possibilities expressly, preferably as mandatory guidelines, so that the competitive advantage is given to companies that wish to contribute to sustainable development and taken away from those that do not.  Legal reform seems to be necessary to start the difficult process of removing the barriers created mainly through social norms that have been allowed to develop in the vacuum caused by the lack of definition of the purpose of companies and of the interests of the company in company law.

Only once these issues are clarified as a matter of company law do we have a good basis for discussing incentives and sanctions, such as liability, and necessary supportive measures such as accounting and reporting—taken seriously—and not as marketing and greenwashing and wool-over-the-eyes pulling as we have today.

Reforming core company law seems in short to present itself as a necessary prerequisite to achieving sustainable companies, both to make the external regulation of companies more effective and to realize the potential within each company to make its own independent, creative, and active contribution to the mitigation of climate change.

IV.  The Proposals of the “Sustainable Companies” Project

The “Sustainable Companies” project seeks in the last phase of the project[107] to identify necessary measures to dismantle the barriers preventing business from becoming sustainable and legal mechanisms and incentives to propose to promote truly responsible business.[108]  For the European part of the project,[109] EU law, the common framework for thirty European countries, contains the legal basis for making necessary changes to achieve sustainable business (and sustainable development in general).[110]  However, the necessary steps have not been taken.[111]  This lack of movement may be seen as indicative of a general problem: we may presume that the legislators have sufficient knowledge and on the EU level they have not only knowledge and sufficient legal basis to move forward,[112] but even legal obligations to take action to achieve the goal of sustainable development.[113]  Legislators nevertheless often seem to be powerless to move beyond path-dependent ways of dealing with the pervasive issues of our time.  Legislative work tends to be reactive rather than proactive, based on postulates and superficial discussions, with a striking lack of time and energy devoted to in-depth analysis of the underlying issues and the consequences of existing and proposed new legislation.[114]  The “Sustainable Companies” project therefore aims to conclude its work with research-based concrete proposals for any necessary change on the EU level, as well as jurisdiction-specific proposals for a number of the countries represented in the project team.[115]  These may take the form of proposals for legal reform within and beyond company law as well as proposals for guidelines for companies wishing to become true contributors to sustainable development.

Conclusion: Global Challenges Call for Global Debate

The challenges we face are global by nature.  Global challenges ideally require a global approach and an unprecedented holistic and forward-looking approach.[116] The international climate negotiations in Copenhagen and in Cancun have shown, as presumably will the coming negotiations in Durban, that we cannot depend on the governments agreeing to the necessary measures to mitigate climate change as far as still possible.  And even if the international community against all odds was to reach an agreement on a sufficient reduction in greenhouse gas emissions,[117] regulators around the world would be in dire need for effective proposals regarding how to achieve those goals.  And to reiterate: climate change is but one case in point for the necessity of a shift toward sustainable development.[118]

The “Sustainable Corporation” Symposium organized by the Wake Forest Law Review is one piece of an important jigsaw puzzle of international debate and collaboration necessary to move forward;[119] the “Sustainable Companies” research project, with its international team of scholars, is another.  Let us hope that there will be enough jigsaw puzzle pieces in time to make the picture complete.

 


*   Professor at the University of Oslo, Faculty of Law, Department of Private Law.  Head of the research project “Sustainable Companies” and the research group “Companies, Markets, Society and the Environment.”  Dr. Juris 2008, University of Oslo; Cand. Jur. 1999, University of Oslo.  My warmest thanks to Alan Palmiter for inviting me to present this Article at the Wake Forest Law Review Symposium “The Sustainable Corporation,” and to the participants for invigorating and challenging discussions.  I would also like to express my gratitude to my colleagues in the research project “Sustainable Companies” for their insightful contributions to our ongoing research.  The views expressed in this Article are my own and do not necessarily represent those of the project team.  All comments are welcome atbeate.sjafjell@jus.uio.no.

        [1].   The enforceable contract may be the most innovative contribution of Roman law.  See Alan Watson, The Evolution of Law: The Roman System of Contracts, 2 Law & Hist. Rev. 1, 1 (1984).  In a similar manner, company law has contributed to the contemporary economy.  See Raghuram G. Rajan & Luigi Zingales, Saving Capitalism from the Capitalists: Unleashing the Power of Financial Markets to Create Wealth and Spread Opportunity 59, 160 (2003).

        [2].   Others have also eloquently argued this proposition.  See generally Jonathon Porritt, Capitalism as if the World Matters (Earthscan rev. ed. 2007).  The title of this Article is inspired by and intended as a tribute to Jonathon Porritt’s book.

        [3].   Sustainable development—the balancing of economic development, environmental protection, and social justice—has famously been defined as a development that “meets the needs of the present without compromising the ability of the future generations to meet their own needs.”  Rep. of the World Comm’n on Env’t and Dev.: Our Common Future, ¶ 27, U.N. Doc. A/42/427, Annex (Aug. 4, 1987) [hereinafter Our Common Future].  For a discussion of the concept and criticism against it, see Beate Sjåfjell, Towards a Sustainable European Company Law: A Normative Analysis of the Objectives of EU Law, with the Takeover Directive as a Test Case § 10.7 (2009).  See also Christina Voigt, Sustainable Development as a Principle of International Law: Resolving Conflicts Between Climate Measures and WTO Law (2009).

        [4].   See generally Intergovernmental Panel on Climate Change, Fourth Assessment Report: Climate Change 2007 (2007), available at http://ipcc.ch
/publications_and_data/publications_and_data_reports.shtml.

        [5].   “Unmitigated climate change would, in the long term, be likely to exceed the capacity of natural, managed and human systems to adapt.  Reliance on adaptation alone could eventually lead to a magnitude of climate change to which effective adaptation is not possible, or will only be available at very high social, environmental and economic costs.”  Lenny Bernstein et al., Synthesis Report, in Intergovernmental Panel on Climate Change, Climate Change 2007: Synthesis Report, Contribution of Working Groups I, II, and III to the Fourth Assessment Report of the IPCC (R.K. Pachauri & A. Reisinger, eds., 2007), [hereinafter Synthesis Report]available at http://ipcc.ch/publications_and
_data/ar4/syr/en/main.html.  This is not a new wake-up call and is perhaps better perceived as a final warning.  See Our Common Future, supra note 3, ¶ 126 (“We are unanimous in our conviction that the security, well-being, and very survival of the planet depend on such changes, now.”).

        [6].   As stated in the conservative magazine The Economist, about “trying to avert the risk of boiling the planet”: the “costs are not huge.  The dangers are.”Economics of Climate Change: Stern Warning, Economist, Nov. 2, 2006, at 14.  The Stern Review has characterized climate change as “the greatest and widest-ranging market failure ever seen,” pointing out that it poses “a unique challenge for economics” (and, may we add, for law).  Nicholas Stern, Stern Review: The Economics of Climate Change (2006), available at http://www.hm-treasury.gov.uk/d/Executive_Summary.pdf.

        [7].   “The resilience of many ecosystems is likely to be exceeded this century by an unprecedented combination of climate change, associated disturbances (e.g., flooding, drought, wildfire, insects, ocean acidification), and other global change drivers (e.g., land-use change, pollution, over-exploitation of resources).”  Neil Adger et al., Summary for Policymakers, in Climate Change 2007: Impacts, Adaptation and Vulnerability, Contribution of Working Group II to the Fourth Assessment Report of the Intergovernmental Panel on Climate Change (M.L. Parry et al. eds., 2007), available at http://ipcc.ch
/publications_and_data/ar4/wg2/en/spm.html.

        [8].   See supra notes 5 and 7 and accompanying text.

        [9].   See Millennium Ecosystem Assessment, Ecosystems and Human Well-Being: Biodiversity Synthesis 2 (José Sarukhán et al. eds., 2005), available athttp://www.maweb.org/documents/document.354.aspx.pdf [hereinafter Biodiversity Synthesis] (“Human actions are fundamentally, and to a significant extent irreversibly, changing the diversity of life on Earth, and most of these changes represent a loss of biodiversity.  Changes in important components of biological diversity were more rapid in the past 50 years than at any time in human history.  Projections and scenarios indicate that these rates will continue, or accelerate, in the future.”).  See also, e.g., Alison Benjamin, Fears for Crops as Shock Figures from America Show Scale of Bee Catastrophe, Observer, May 1, 2010, www.guardian.co.uk/environment/2010/may/02/food-fear-mystery-beehives-collapse.

      [10].   See, e.g., Jeremy Leggett, After the Credit Crisis—Next It Will Be Oil, Fin. Times, June 8, 2010, http://www.ft.com/intl/cms/s/0/6b195284-733c-11df
-ae73-00144feabdc0.html#axzz1dX3qlp00 (“[T]he ITPOES companies fear an irrecoverable fall in global oil supply by 2015 at the latest and that if oil producers then husband resources, a global energy crisis could abruptly morph into energy famine for some oil-consuming nations.”); Indus. Taskforce on Peak Oil & Energy Sec., The Oil Crunch: A Wake-up Call for the UK Economy (Simon Roberts ed., 2010), available at http://peakoiltaskforce.net/wp
‑content/uploads/2010/02/final‑report‑uk‑itpoes_report_the‑oil‑crunch_feb20101
.pdf.

      [11].   See Ban Ki-Moon, Foreword to U.N., Millennium Dev. Goals Rep. 2010 (June 24, 2010) (“[I]t is clear that improvements in the lives of the poor have been unacceptably slow, and some hard-won gains are being eroded by the climate, food and economic crises.”).  And more recently, see Mark Tran, UN Declares Famine in Somalia, The Guardian, July 20, 2011, http://www.guardian.co.uk/global-development/2011/jul/20/un-declares-famine-somalia.  The U.N.’s official declaration that two parts of Somalia are in famine amid the worst drought in east Africa for sixty years poignantly illustrates the devastating situation many people face: “The drought in east Africa has left an estimated 11 million people at risk, but Somalia has been the worst hit country as it is already wracked by decades of conflict.” Id.  Andrew Mitchell, the UK’s international development secretary, is quoted as saying: “In Somalia, men, women, and children are dying of starvation.  The fact that a famine has been declared shows just how grave the situation has become.”  Id.

      [12].   The tensions in the international economy and the efforts to revive it are aptly captured in Chris Giles, Alan Beattie & Hugh Carnegy, G20 Strains Cast Shadow Over Meeting, Fin. Times, Oct. 13, 2011, http://www.ft.com/intl
/cms/s/0/db4ab070-f5ae-11e0-be8c-00144feab49a.html.

      [13].   See Press Release, U.N. Env’t Programme, “Global Green New Deal”—Environmentally-Focused Investment Historic Opportunity for 21st Century Prosperity and Job Generation, (Oct. 22, 2008), http://www.unep.org/newscentre
/Default.aspx?DocumentID=548&ArticleID=5957; see also Edward B. Barbier, Rethinking the Economic Recovery: A Global Green New Deal (2009), available athttp://www.sustainable-innovations.org/GE/UNEP%20%5B2009
%5D%20A%20global%20green%20new%20deal.pdf; Green Economy, United Nations Env’t Programme, http://www.unep.org/greeneconomy/ (last visited Mar. 11, 2012).

      [14].   As pointed out by professor of economics Edward B. Barbier: “Fossil fuel subsidies and other market distortions, as well as the lack of effective environmental pricing policies and regulations, will diminish the impacts of G20 green stimulus investments on long-term investment and job creation in green sectors.  Without correcting existing market and policy distortions that underprice the use of natural resources, contribute to environmental degradation and worsen carbon dependency, public investments to stimulate clean energy and other green sectors in the economy will be short lived.  The failure to implement and coordinate green stimulus measures across all G20 economies also limits their effectiveness in ‘greening’ the global economy.  Finally, the G20 has devoted less effort to assisting developing economies that have faced worsening poverty and environmental degradation as a result of the global recession.”  Edward B. Barbier, Green Stimulus is Not Sufficient for a Global Green Recovery, Vox (June 3, 2010), http://www.voxeu.org/index.php?q
=node/5134.

      [15].   Whether the current global uprising against the financial system can transmute into a call for sustainability in all three dimensions remains to be seen.  SeeMichael Stothard, Shannon Bond & Matt Kennard, Wall St Protests Spread to Global Stage, Fin. Times, Oct. 14, 2011, http://www.ft.com/intl/cms/s/0
/611665f0-f65e-11e0-86dc-00144feab49a.html; see also Shannon Bond, Obama Extends Support for Protesters, Fin. Times, Oct. 16, 2011, http://www.ft.com/intl
/cms/s/0/052226f8-f80c-11e0-a419-00144feab49a.html (“Others stressed they were part of a global movement for justice.  ‘First came the Arab Spring and Spain’sindignados.  Then came the Wall Street protests.  In London, we are now part of this movement campaigning for a better world.’”).

      [16].   Although the U.N. cites some positive results in terms of the Millennium Development Goals, the 2010 Millennium Development Goals Report also indicates that progress against hunger has been impacted more severely by economic troubles: “The ability of the poor to feed their families was hit consecutively by skyrocketing food prices in 2008 and falling incomes in 2009, and the number of malnourished, already growing since the beginning of the decade, may have grown at a faster pace after 2008.”  U.N., Millennium Development Goals Report 2010 (June 24, 2010) [hereinafter MDG Report], available at http://www.un-ngls.org/spip.php?page=amdg10&id_article=2681.

      [17].   See Joachim von Braun, The World Food Situation: New Driving Forces and Required Actions 12 (2007), available at www.ifpri.org/pubs/fpr/pr18.pdf (“When taking into account the effects of [unmitigated] climate change, the number of undernourished people in Sub-Saharan Africa may triple between 1990 and 2080 . . . .”); see also Synthesis Report, supra note 5.

      [18].   See, e.g., MDG Report, supra note 16.

      [19].   See, e.g., Climate Change 2007: Mitigation of Climate Change, Contribution of Working Group III to the Fourth Assessment Report of the Intergovernmental Panel on Climate Change (B. Metz et al. eds., 2007) [hereinafter Mitigation], available at http://ipcc.ch/publications_and_data/ar4
/wg3/en/contents.html (calling for emissions to peak before 2015).

      [20].   See generally Beate Sjåfjell, If Not Now, Then When?: European Company Law in a Sustainable Development Perspective, 7 Eur. Company L. 187 (2010).

      [21].   Tending to be ignored or left to the realm of voluntary corporate social responsibility initiatives, a case may be made for including the regulation of companies in the toolbox of regulators pursuing sustainable development.  See generally Sjåfjell, supra note 3.

      [22].   Id.

      [23].   Lenny Bernstein et al., Industry, in Mitigation, supra note 20.

      [24].   See Sjåfjell, supra note 3, § 4.3.5.

      [25].   See generally Beate Sjåfjell, Why Law Matters: Corporate Social Irresponsibility and the Futility of Voluntary Climate Change Mitigation, 8 Eur. Company L. 56 (2011).

      [26].   Beate Sjåfjell, Internalizing Externalities in E.U. Law: Why Neither Corporate Governance nor Corporate Social Responsibility Provides the Answers, 40 Geo. Wash. Int’l L. Rev. 977, 981 (2009).

      [27].   For example, including the three dimensions of sustainable development: environmental protection, social justice, and economic development, in CSR debates also known simply as “Planet, People and Profit.”  See T. Lambooy, Corporate Social Responsibility: Legal and Semi-legal Frameworks Supporting CSR 10 (Deventer: Kluwer, 2010).

      [28].   Sjåfjell, supra note 25, at 56–64.

      [29].   See, e.g., Communication from the Commission Concerning Corporate Social Responsibility: A Business Contribution to Sustainable Development, at 5, COM (2002) 347 final (July 2, 2002), available at http://eur-lex.europa.eu
/LexUriServ/LexUriServ.do?uri=COM:2002:0347:FIN:en:PDF (“CSR is a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis.”).  For an example on a national level, see Beate Sjåfjell, Report from Norway: Another CSR Victory for the Business Lobbyists, 5 Eur. Company Law 235 (2009), available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id
=1413388.  We may, however, be seeing the first indications of the EU definition of CSR attempting to get out of the straight-jacket of voluntarism, see the Commission’s newest Green Paper on CSR.  See A renewed EU strategy 2011-14 for Corporate Social Responsibility, COM (2011) 681 final (Oct. 25, 2011), available at http://ec.europa.eu/enterprise/policies/sustainable-business
/files/csr/new-csr/act_en.pdf.

      [30].   Sjåfjell, supra note 25.

      [31].   Id.

      [32].   Id.

      [33].   This was heralded by the Norwegian business newspaper Dagens Næringsliv in December of 2010 as an example of CSR.

      [34].   See Sponsor, Filharmonien Oslo, http://www.oslofilharmonien.no/lang
/en/filharmonien/sponsor/ (last visited Mar. 11, 2012).

      [35].   See Our Values, Norsk Hydro, http://www.hydro.com/en/Subsites
/NorthAmerica/About-Hydro/Our-values/ (last visited Mar. 11, 2012).

      [36].   It could be argued, of course, that corporate charity work (“CCW”) is a part of an extended concept of CSR, but we should distinguish between CSR in the wide sense, including CCW, and the core of true CSR; for further explanation, see Sjåfjell, supra note 25.  For different definitions of CSR, see generally Archie B. Carroll & Kareem M. Shabana, The Business Case for Corporate Social Responsibility: A Review of Concepts, Research and Practice, 12 Int’l J. Mgmt. Revs. 85 (2010).

      [37].   Sjåfjell, supra note 3, § 4.1 (explaining the current debates including the mainstream corporate governance, and introducing a new structure for analysis of issues concerning companies, involved parties and affected interests).

      [38].   See Council Directive 2007/36/EC, O.J. 2007 (L 184/17–24) (on the exercise of certain rights of shareholders in listed companies).  For an overview of corporate governance codes, see Index of Codes, European Corporate Governance Institute, www.ecgi.org/codes/all_codes.php (last visited Mar. 11, 2012).  For a critical perspective, see generally Steen Thomsen, The Hidden Meaning of Codes: Corporate Governance and Investor Rent Seeking, 7 Eur. Bus. Org. L. Rev. 845 (2006).

      [39].   Beate Sjåfjell, More Than Meets the Eye: Law and Economics in Modern Company Law, in Law and Economics. Essays in Honour of Erling Eide, 217 (Erik Røsæg et al. eds., 2010), available at http://papers.ssrn.com/abstract
=1601980.

      [40].   Id.  See also Sjåfjell, supra note 3, § 4.3.5.  See also Kent Greenfield, From Rights to Regulation in Corporate Law, in Perspectives on Company Law: 2, 1 (Fiona Patfield ed., 1997).  However, indications on EU level may now be found that these alleged truths are questioned and that the problems with a too short-term perspective that the shareholder primacy drive entails are acknowledged.  See, e.g., The EU Corporate Governance Framework, COM (2011) 264 final (Apr. 5, 2011),available at http://ec.europa.eu/internal_market
/company/docs/modern/com2011-164_en.pdf.

      [41].   A.A. Berle, Jr., Corporate Powers as Powers in Trust, 149 Harv. L. Rev. 1049, 1049 (1931).

      [42].   As opposed to the internal regulation of the competence, duties, and decision making in companies through company law.

      [43].   Michael Anderson, Transnational Corporations and Environmental Damage: Is Tort Law the Answer?, 41 Washburn L.J. 399, 409 (2002).

      [44].   See generally Janet Dine, Companies, International Trade and Human Rights (2005) (discussing the complex relationships between corporations, nation states, and international organizations).

      [45].   See United Nations, Econ. & Soc. Council, Comm. on Human Rights, Sub-Comm. on the Promotion and Protection of Human Rights, U.N. Doc. E/CN.4/Sub.2/2003/12/Rev.2 (2003); Surya Deva, UN’s Human Rights Norms for Transnational Corporations and Other Business Enterprises: An Imperfect Step in the Right Direction?, 10 ILSA J. Int’l & Comp. L. 493 (2003); Carolin F. Hillemanns, UN Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises with regard to Human Rights, 4 German L.J. 1065 (2003).

      [46].   D.G. Goyder, The Just Enterprise 36 (1987) (giving the example of the countryside of Northamptonshire being dug up in search of iron ore: “It was some years before the government passed legislation imposing on companies the legal duty of reinstating fields and woods devastated by open-cast mining, and by then it was too late to recover much of the amenity value lost.”).

      [47].   Sjåfjell, supra note 25.

      [48].   See infra Part III.C.

      [49].   See infra Part III.D.

      [50].   For more information about this project, which is financed by the Research Council of Norway and has a dedicated team of thirty-five scholars from many regions of the world, see Sustainable Companies, Univ. of Oslo, http://www.jus.uio.no/ifp/english/research/projects/sustainable-companies/ (last visited Mar. 11, 2012) [hereinafter Sustainable Companies].

      [51].   Sjåfjell, supra note 26, at 1003–04.

      [52].   See Sustainable Companies, supra note 50.

      [53].   See generally Benjamin J. Richardson, Sustainability and Company Law: An Improbable Union?, 8 Eur. Company L. 54 (2011).

      [54].   See Sustainable Companies, supra note 50 (listing the team members).  The tentative analysis below is based on draft mapping papers, many of which are still works in progress.  Direct reference to the draft mapping papers are generally not made in this Article.  The final versions will be made available in 2012 on the website’s publications page.  The jurisdiction-specific papers published in the Sustainable Companies project referred to below are initial discussions of some of the issues that are analysed over a broader scale in the mapping papers.

      [55].   All three draft papers were presented at the international conference “Towards Sustainable Companies: Identifying New Avenues” in Oslo on August 29 and 30, 2011.  For more information about the conference, see Towards Sustainable Companies: Identifying New Avenues, Univ. of Oslo, http://www.jus.uio.no/ifp/english/research/projects/sustainable‑companies/events/conferences/sustainable-companies-conference-2011.html (last visited Mar. 11, 2012).

      [56].   Again, the tentative summary of the results and what they entail for possible future reform is my own personal view, not necessarily representative of the view of the whole project team, nor of my co-authors for the cross-jurisdictional paper in core company law.

      [57].   This is apparent in the emphasis placed on these issues by those who sell sustainability services to companies.  See, e.g., Global Sustainability, PwC http://www.pwc.com/gx/en/sustainability/index.jhtml (last visited Mar. 11, 2012).

      [58].   The two debates are introduced infra Part II.A.

      [59].   For an illustrative example of Norway, see generally Sjåfjell, Towards a Sustainable Development: Internalising Externalities in Norwegian Company Law, 8 Int’l & Comp. Corp. L.J. 103 (2011).

      [60].   See generally Charlotte Villiers, Directors’ Duties and the Company’s Internal Structures Under the UK Companies Act 2006: Obstacles for Sustainable Development, 8 Int’l & Comp. Corp. L.J. 47 (2011).

      [61].   Id.

      [62].   Gudula Deipenbrock, Sustainable Development, the Interest(s) of the Company and the Role of the Board from the Perspective of a German Aktiengesellschaft, 8 Int’l & Comp. Corp. L.J 15 (2011).

      [63].   See generally Richard Croucher & Lilian Miles, Corporate Governance and Employees in South Africa 10 J. Corp. L. Stud. 367 (2010).

      [64].   See Sjåfjell, supra note 59.

      [65].   And other societal externalities.

      [66].   Karin Buhmann, Reflexive Regulation of CSR to Promote Sustainability: Understanding EU Public-Private Regulation on CSR Through the Case of Human Rights 18 (Univ. of Oslo Faculty of Law Research Paper Series, Paper No. 2010-07), available at http://ssrn.com/abstract=1712801.

      [67].   Sjåfjell, supra note 25.

      [68].   Karin Buhmann, The Danish CSR Reporting Requirement: Migration of CSR-Related International Norms into Companies’ Self-Regulation Through Company Law?, 8 Eur. Company L. 65 (2011).

      [69].   Tineke Lambooy, Corporate Social Responsibility: Legal and Semi-legal Frameworks Supporting CSR 107–46 (2010).

      [70].   Although the Supreme Court expressly indicated the result in Hempel was an interpretation of the Norwegian Pollution Act, the case may arguably be the forerunner of a special type of piercing the corporate veil, with its own set of conditions.  Beate Sjåfjell, Environmental Piercing of the Corporate Veil: The Norwegian Supreme Court Decision in the Hempel Case, 7 Eur. Company L. 154, 154–60 (2010), available at http://papers.ssrn.com/abstract=1616820.

      [71].   See Deipenbrock, supra note 62, at 7–8 (explaining the concept of the German “econsense”).

      [72].   Anita M. Halvorssen, Addressing Climate Change Through the Norwegian Sovereign Wealth Fund (SWF)—Using Responsible Investments to Encourage Corporations to Take ESG Issues Into Account in Their Decision-Making 13–14 (Univ. of Oslo Faculty of Law Research Paper Series, Paper No. 2010-06), available at http://ssrn.com/abstract=1712799.  See generally Benjamin J. Richardson, Socially Responsible Investment Law: Regulating the Unseen Polluters (2008) (providing background material on socially responsible investment).

      [73].   See, e.g., Oliver Ralph, All Change: Long-term Success Requires Flexibility and Co-operation, Fin. Times, Oct. 10, 2011, http://www.ft.com/intl
/cms/s/2/097d7244-f10d-11e0-b56f-00144feab49a.html (discussing how companies must maintain strong relationships with consumers, staff, shareholders, and investors when facing productivity challenges).

      [74].   See generally Sylvie Berthelot et al., Environmental Disclosure Research: Review and Synthesis, 22  J. Acct. Literature 1 (2003) (analyzing environmental disclosures and concerns over their reliability).

      [75].   Id. at 20.

      [76].   William. S. Laufer, Social Accountability and Corporate Greenwashing, 43 J. Bus. Ethics 253, 255–57 (2003).

      [77].   Sjåfjell, supra note 25.

      [78].   See generally Surya Deva, Sustainable Development: What Role for the Company Law?, 8 Int’l & Comp. Corp. L.J. 76 (2011).  The question may even be raised whether what has been seen as a codification of a previously existing enlightened shareholder value norm may have been a shift to the detriment of the environmental and other societal interests through the clear hierarchy that has now been set out in the Act, with other interests to be taken into account as far as that benefits the shareholders—previously that relationship could at least be seen, by some, as open for discussion.

      [79].   Martin Wolf, Britain Must Escape its Longest Depression, Fin. Times, Sept. 1, 2011, http://www.ft.com/intl/cms/s/0/c6c14d92-d332-11e0-9ba8
-00144feab49a.html#axzz1nQSCI6qz.

      [80].   “[A]n acceptable environment is not the product of social development, but a prerequisite for it to exist, and is a right bound up with human life, without which there is neither mankind nor society nor law.”  Case C-176/03, Comm’n v. Council, 2005 E.C.R. I-7879, I-7896 n.51 (citing Demetrio Loperena Rota, 3 Los derechos al Medio Ambiente adecuado y a su protección, 3 Revista Electrónica de Derecho Ambiental 87 (1999)).

      [81].   Sjåfjell, supra note 3.

      [82].   Id.

      [83].   Id.

      [84].   Simon Deakin, The Coming Transformation of Shareholder Value, 13 Corp. Governance: An Int’l Rev. 11, 11 (2005) (“Shareholder primacy originates not in company law, but rather in the norms and practices surrounding the rise of the hostile takeover movement in Britain and America in the 1970s and 1980s.  It is . . . essentially a cultural rather than a legal point of reference.”).

      [85].   Id. at 13–14.

      [86].   See generally Watson, supra note 1.

      [87].   John Micklethwait & Adrian Wooldridge, The Company: A Short History of a Revolutionary Idea, 4 (2003).

      [88].   Id. at 46–54.

      [89].   Jesper Lau Hansen, Nordic Company Law: The Regulation of Public Companies in Denmark, Finland, Iceland, Norway, and Sweden 34–36 (2003).

      [90].   Id. at 31–36.

      [91].   Sjåfjell, supra note 3, § 3.3.3.

      [92].   Some, such as the Norwegian Companies Acts, also include rules on the involvement of employees in the decision making of companies, while the most central rules concerning the protection of employees is in a separate act—the Working Environment Act.  Norway has two limited liability companies acts: the Public Limited Liability Companies Act of June 13, 1997, No. 45 and the Private Limited Liability Companies Act of June 13, 1997, No. 46, both available (for a fee) in English translations in the Norwegian Institute of Public Accountants’ product Norwegian Company Legislation.  Revisorforeningen, http://www.revisorforeningen.no/a9356038/English/eBooks (last visited Mar. 11, 2012).  The Working Environment Act of June 17, 2005, No. 62 is freely available in an English translation.  Working Environment Act, Arbeidstilsynet, http://www.arbeidstilsynet.no/binfil/download2.php?tid
=92156 (last visited Mar. 11, 2012).

      [93].   See Norwegian Public Limited Liability Companies Act § 2-2(2) (“If the objective of the company’s activities is not to generate a financial return for its shareholders, the articles of association must contain provisions on the allocation of profit and the distribution of assets upon dissolution of the company.” (my translation)).

      [94].   The development and rise of shareholder primacy has other explanations as well, but in a legal analysis this is a main point.  For a broader discussion, see generally Andrew Keay, Moving Towards Stakeholderism? Constituency Statutes, Enlightened Shareholder Value, and More: Much Ado about Little?, 22 Eur. Bus. L. Rev. 1 (2011).

      [95].   The positive contributions of law and economics to our understanding of company law and the consequences of various forms of regulation are, in my opinion, indisputable.  However, so are the negative effects of the abuse of legal-economic theories meant to be descriptive as normative, and of the abundance of postulates based on concepts and ideas removed from the theories in which they originated and disconnected from the assumptions on which they are based.  SeeSjåfjell, supra note 25.

      [96].   To the extent that the end of history at one point was declared, see generally Henry Hansmann & Reinier Kraakman, The End of History for Corporate Law(Yale L. Sch., L. & Econ. Working Paper No. 235, 2000), available at ssrn.com/abstract=204528.

      [97].   Even in jurisdictions where the prioritization of shareholders over other interests may be said to have legal basis, such as the U.K., see Deakin, supra note 88, at 11.

      [98].   See Sjåfjell, supra note 3, § 4.3.5.4 (discussing the means and end).

      [99].   Report of the Reflection Group on the Future of EU Company Law, European Comm’n (Apr. 5, 2011), http://ec.europa.eu/internal_market/company
/docs/modern/reflectiongroup_report_en.pdf.

    [100].   Id. at 37.  “[Promoting the interests of the company] may have priority over the interest of individual shareholders if these two are in conflict and if serving the short term interest of shareholders would have a direct negative impact on the long-term viability of the company.”  Id. at 37–38.

    [101].   Id.

    [102].   Id. at 7–8.

    [103].   Sjåfjell, supra note 59.

    [104].   Which in itself may be assumed to have severe, negative effects, as the IPCC has in its very reticent form shown us.  See generally Intergovernmental Panel on Climate Change, www.ipcc.ch (last visited Mar. 11, 2012) (containing various reports on the scientific, technical and socio-economic aspects of climate change).  And climate change is but one of several pressing issues as a case in point for sustainable development.

    [105].   See Sjåfjell, supra note 3.

    [106].   Id. at ch. 5; see also Sjåfjell, supra note 26, at 987, 1003–06.

    [107].   Through the end of 2012.

    [108].   The project’s results—our proposals for reform—will be presented at the final conference in Oslo on November 12 and 13, 2012.  Updated information will be available at http://www.jus.uio.no/ifp/english/research
/projects/sustainable-companies/events/.

    [109].   Europe was the starting point for the project, but the project happily has developed into an international research endeavour.

    [110].   Sjåfjell, supra note 3, § 10.7; Beate Sjåfjell, Quo Vadis, Europe? The Significance of Sustainable Development as Objective, Principle and Rule of EU Law,in Non State Actors, Soft Law and Protective Regimes (C. Bailliet ed., forthcoming 2012).

    [111].   See Nele Dhondt, Integration of Environmental Protection into other EC Policies: Legal Theory and Practice 482 (2003).

    [112].   Which I expect legislators on a national level have worldwide through their general competence.

    [113].   Quo Vadis, Europe?, supra note 110.

    [114].   See Sjåfjell, supra note 3, pt. V.

    [115].   A list of the research team members and their countries of representation is available at http://www.jus.uio.no/ifp/english/research/projects
/sustainable-companies/members/.

    [116].   “The economic analysis must therefore be global, deal with long time horizons, have the economics of risk and uncertainty at centre stage, and examine the possibility of major, non-marginal change.”  Nicholas Stern, Stern Review on the Economics of Climate Change: Executive Summary i, xxii (Report presented to the UK Government on Oct. 30, 2006), available at http://webarchive.nationalarchives.gov.uk/+/http://www.hm‑treasury.gov.uk/d/Executive_Summary.pdf.

    [117].   IPCC recommends a peak by 2015 and a reduction of at least fifty per cent by 2050.  See Brian Fisher et al., Issues Related to Mitigation in the Long Term Context, in Mitigation, supra note 19.

    [118].   See, e.g., Biodiversity Synthesis, supra note 9, at 2; Benjamin, supra note 9.

    [119].   For more information, see the issue from the Wake Forest Law Review Symposium “The Sustainable Corporation,” 46 Wake Forest L. Rev. 383 (2011).

 

By: Jessica L. Rutledge*

Introduction

Over the past ten years, the Colombian government has persistently been digging itself into a paradoxical hole so deep that it will be remarkable if the government can make it out on top.  Despite the impressive maintenance of democracy since 1810[1] and an “excellent relationship” with the United States on several fronts,[2] Colombia is far from a peaceful nation.  Plagued by seemingly endless civil wars and battles with violent guerilla organizations and drug cartels, the Colombian government has fought tooth-and-nail to keep its democracy in place.[3]  Colombian natives live in fear of left-wing terrorist rebel groups like the Fuerzas Armadas Revolucionarias de Colombia (“FARC”), the Ejército de Liberación Nacional (“ELN”), and the Autodefensas Unidas de Colombia (“AUC”).[4]  These groups kill more than three thousand innocent Colombian civilians each year, and have defiantly objected to Colombia’s negotiation efforts by repeatedly attempting to commit political assassinations and kidnap Colombian leaders.[5]

Perhaps the biggest problem with these terrorist groups is that they are standing on solid economic ground, bringing in an estimated two hundred to three hundred million dollars each year by taxing coca farmers, processing the crop into cocaine, and smuggling it into the lucrative international drug trade.[6]  Thus, what started as a “Colombian” problem has developed into an international problem, particularly as Colombia is responsible for the majority of worldwide cocaine production and U.S. cocaine traffic.[7]  Recognizing the urgency of this situation and realizing that inhibiting the drug trade would largely cut off funding to left-wing rebel groups, former President Andrés Pastrana Arango launched “Plan Colombia,” a supposed six-year program to end armed conflict by focusing on the aerial eradication of coca and poppy plantations, largely funded by the United States.[8]

However, what began as a good faith effort to bring peace and democracy to a troubled nation has developed into an epic battle of human and environmental rights.  Beginning in the year 2000, aerial fumigations of a powerful herbicide mixture containing glyphosate, a chemical with unknown acute toxicity levels in humans, was sprayed across the countryside for days at a time from 6 a.m. to 4 p.m. each day.[9]  While purportedly aimed at Colombian coca and poppy plantations, the clouds of spray were picked up by the wind and carried elsewhere, landing not only on Colombian people, animals, homes, and food crops but also across the border into Ecuador and into the San Miguel River bordering the two countries.[10]  Ecuador admits that at times, some herbicide drift was caused by the wind.[11]  However, Ecuador argues that all too often, Colombian planes sprayed herbicides directly on the shared national border and used Ecuadorean air space to turn around, allowing the herbicide to fall indiscriminately on Ecuadorean people, plants, and animals.[12]

Immediately following the sprayings, Ecuadorean citizens were inflicted with serious adverse health reactions, including fevers, diarrhea, intestinal bleeding, nausea, skin and eye problems, and even a few deaths.[13]  Local crops relied on by Ecuadorean people for sustenance—including yucca, plantains, rice, coffee, and hay—were destroyed.[14]  Despite Ecuador’s repeated attempts to negotiate with Colombia over a period of eight years, Colombia repeatedly refused to cooperate.[15]  Thus, in March of 2008, Ecuador submitted an Application Instituting Proceedings to the International Court of Justice (“ICJ”), demanding that Colombia’s actions be declared internationally wrongful acts, and that Colombia be ordered to compensate the Ecuadorean people and government for their losses.[16]  As it stands, the ICJ is thus confronted with a unique controversy where it must either challenge an international drug ring that has terrorized Colombia for decades or address human rights and environmental issues presented from a neighboring state.

As unique as the Case Concerning Aerial Herbicide Spraying (Ecuador vs. Colombia) (“Aerial Herbicide Spraying”)[17] is standing on its own, it has come before the ICJ at an interesting point in the jurisprudence of International Environmental Law (“IEL”).  On April 20, 2009, the ICJ delivered a landmark opinion for IEL in Pulp Mills on the River Uruguay (Argentina v. Uruguay) (“Pulp Mills”) that sets an interesting background for Aerial Herbicide Spraying.[18]  In Pulp Mills, Argentina argued that Uruguay breached its obligations under the 1975 Statute of the River Uruguay in connection with the planned construction and authorization of two pulp mills on the river.[19]  Although this claim is primarily grounded in treaty provisions binding only Argentina and Uruguay, Argentina argued—and the ICJ agreed—that the treaty incorporated customary international law standards, including general principles of cooperation, due diligence, and prevention to the extent that they represent the opinio juris of nations.[20]  In the end, the ICJ refused to award reparations to Argentina for the alleged damage from Uruguay’s pulp mills.[21]  The court did, however, introduce some interesting developments to IEL in its decision.  For example, the ICJ utilized the case to acknowledge separate obligations under IEL: “procedurally” based and “substantively” based obligations.[22]  Moreover, the court went out of its way to reemphasize that due diligence is a “corpus” of international law, and for the first time, that an environmental impact assessment (“EIA”) is required under customary international law.[23]

The main purpose of this Comment is to analyze the Aerial Herbicide Spraying case—which is still in its preliminary stages—and how the outcome may be based on the Pulp Mills decision.  To set the initial framework for this analysis, this Comment will track the development of the customary principles of due diligence and prevention in Part I by dividing their history into two separate “waves.”[24]  To do this, the Comment will primarily utilize and add to Dr. Jorge Viñuales’ contemporary assessment of IEL.  Additionally, this Comment will consider the impact of the International Law Council’s Draft Articles on the Prevention of Transboundary Harm from Hazardous Activities (“Articles on Prevention”) on IEL development.[25]

Part II of this Comment will engage in a discussion of Pulp Mills, including precisely what the ICJ decided and what the decision actually means in the context of IEL developmentFinally, drawing upon the analysis from Pulp Mills, Part III of this Comment will explore the potential repercussions of Pulp Mills for Aerial Herbicide Spraying.  This Comment concludes that the ICJ will almost certainly find that Colombia has violated its procedural obligations to Ecuador, notably by violating the general principles of prevention and cooperation.  Moreover, this Comment concludes that the ICJ will find that Colombia has violated its substantive obligations by disregarding the well-grounded principle that “states have . . . the responsibility to ensure that activities within their jurisdiction or control do not cause damage to the environment of other States.”[26]  Because Colombia specifically seeks refuge in the precautionary principle to excuse its actions, this Comment will assess the viability of this defense and ultimately conclude that Colombia has grossly misinterpreted the principle.  Moreover, as other scholars have predicted, this Comment concurs that Colombia’s best defense will be the doctrine of necessity.[27]  However, after a brief analysis, it demonstrates that Colombia does not meet the requisite test initially set forth in the Draft Articles on the Responsibility of States for Internationally Wrongful Acts (“Articles on State Responsibility”) and subsequently adopted in the Gabcíkovo-Nagymaros Project (Hungary v. Slovakia) (“Gabcíkovo-Nagymaros”).[28]  Thus, Colombia will most likely be held responsible for the harm inflicted upon Ecuador, despite its tragic predicament.

I.  The “Waves” of IEL

IEL as we know it today, like most areas of international law, is a haphazard collection of treaties, customary law, and general principles that have developed over time.[29]  At least for some facets of IEL, exactly what it constitutes is highly debatable, and more than one scholar will agree that many requirements are not conclusive enough to be customary.[30]  Perhaps the most frustrating problem is that unless a state has explicitly signed a treaty or committed an egregious ius cogens violation, it is arguably not bound to many of the so-called “requirements” of IEL.[31]

For example, while there is a general consensus that requirements like due diligence or the general principle of prevention are customary and thus required for every state,[32] very few sources actually explain the meaning of those requirements.  Moreover, when they are in fact mentioned in a treaty or convention, they are usually stated simply as an existing international obligation, without any explanation of how to comply.[33]  When one considers how broadly (or narrowly) a concept like “due diligence” or “prevention” could be interpreted, this becomes problematic.  Does due diligence require only common sense preventative measures or does it demand something more?  Does the principle of prevention always require a pre-action EIA?  Are these requirements lessened for developing states?  It is easy to see how such manipulation of meaning could work to both states’ advantage in a dispute.  After all, on Monday morning, the injured state can always speculate as to what the quarterback should have done when fulfilling its due diligence or prevention obligations.  However, the offending state has an equally powerful argument because it is nearly always questionable if a specific action would have truly changed the final score.

While the ICJ has certainly helped define general customary norms of IEL to reduce situations where such questions arise, it is important to recognize that within the ICJ there exists no stare decisis, and thus the court is not bound to follow its own prior opinions should it choose to abandon them.[34]  Despite not having an obligation to abide by its own decisions, the ICJ certainly does not disregard them easily.  Rather, as noted in Dr. Jorge Viñuales’ article, the ICJ tends, with few exceptions, to stick to and develop the law as stated in its prior decisions.[35]  In Viñuales’ article, he portrays this slow but consistent development by dividing the ICJ body of decisions prior to Pulp Mills into what he calls the First and Second Waves of IEL.[36]  The following two Subparts briefly define the First and Second Waves, as they will be referred to throughout the remainder of this Comment.  The third Subpart will address the ILC’s Articles on Prevention and their import for the ICJ when expanding upon IEL concepts.

A.            The First Wave

The First Wave began with the Trail Smelter Arbitration (United States v. Canada) (“Trail Smelter”), in which the ICJ ordered Canada to make reparations to the United States after fumes escaped from Canadian iron and ore smelters into the United States, damaging crops.[37]  The ICJ used the occasion to recognize the legitimacy of granting reparations to states that have suffered transboundary environmental harm, emphasizing that “no state has the right to use or permit the use of its territory in such a manner as to cause injury by fumes in or to the territory of another or the properties therein.”[38]

While Trail Smelter represented progress in IEL by virtue of its general recognition that transboundary environmental harm constitutes true harm under ICJ jurisprudence, Viñuales points out that the contours of IEL still remained incredibly unclear.[39]  After all, in Trail Smelter, the ICJ did not explicitly say that a state has an obligation not to allow its territory to be used for acts contrary to the environmental rights of other states, but rather used the phrase in reference to facts that merely implicated the environment.[40]  This nuance should not be overlooked, as it ever so slightly distinguishes between the general responsibilities states have when they directly cause harm to other states versus the more specific responsibility on states to refrain from causing harm to another state’s environment.

While the ICJ could have taken the opportunity to specifically elaborate on what it meant in Trail Smelter in later First Wave contentious cases, including the Corfu Channel Case (United Kingdom v. Albania) (“Corfu Channel”),[41] and the Nuclear Test Cases (Australia v. France) (New Zealand v. France) (“Nuclear Tests”),[42] Viñuales points out that these ICJ decisions were ultimately vague and ambiguous as to whether the Trail Smelter principle could be referenced solely in terms of environmental protection.[43]  For example, in Corfu Channel, Albania was held responsible for damage caused to British warships because Albania failed to warn Great Britain about underwater mines in its waters.[44]  While Corfu Channel was not technically about environmental issues, the ICJ used the occasion to incorporate a slightly different version of the Trail Smelter language by stating that it is “every State’s obligation not to allow knowingly its territory to be used for acts contrary to the rights of other States”[45]—language that was almost immediately repeated in Principle 21 of the Stockholm Declaration.[46]  However, as Viñuales explains, whatever value this reaffirmation of the Trail Smelter principle had at this point, it was rendered ambiguous by Nuclear Tests.[47]  In Nuclear Tests, Australia’s Attorney General, as the petitioner, cited the Trail Smelter/Corfu Channel/Stockholm Principle 21 assertion as if it were a customary principle of IEL.[48]  However, because the case was settled, the ICJ never made a full decision on the merits, and the ambiguity remained.[49]

Therefore, the true value of the First Wave was not in what it actually established but rather in what it had the potential to establish.[50]  While the ICJ clearly determined that states have an obligation not to use their territory to cause harm to other states, it never actually stated the principle expressly in favor of environmental protection, although it laid the groundwork to do so in the future.

B.            The Second Wave

What the First Wave introduced, the Second Wave developed.  The first case in the Second Wave that significantly contributed to IEL development was the ICJ’s Advisory Opinion on the Legality of the Threat or Use of Nuclear Weapons (“Legality of Nuclear Weapons”).[51]  In this case, the ICJ was presented with the question of whether a state’s use of nuclear weapons in war or other armed conflict would constitute a breach of that state’s international obligations.[52]  The ICJ expressly acknowledged that “the general obligation of States to ensure that activities within their jurisdiction and control respect the environment of other States or of areas beyond national control is now part of the corpus of international law relating to the environment.”[53]  Principally, Viñuales argues that this statement confirmed what the First Wave set the stage for—that the Trail Smelter/Corfu Channel/Stockholm Principle 21 assertion did in fact deserve deference specifically as a principle of IEL in favor of per se protecting the environment for its intrinsic value and not just for preventing general harm to another state.[54]  Given the fact that the ICJ has repeatedly cited this language verbatim in future decisions, including Pulp Mills, this point should not be underestimated.[55]  Despite this progress, Viñuales expresses his concern for the majority’s choice of the word “corpus.”[56]  He explains that “corpus” is not truly the same thing as a customary principle of international law, specifically because in the immediately preceding paragraphs the court referred not to widespread state practice, nor to opinio juris, but rather to Principle 21 of the Stockholm Declaration and Principle 2 of the Rio Declaration.[57]  This was noted by one of the dissenting (and environmentally progressive) judges, who argued that the principle does “not depend for (its) validity on treaty provisions” but rather is part of customary international law and the “sine qua non for human survival.”[58]

Despite the potential for ambiguity in Nuclear Tests, Viñuales argues that the ICJ confirmed protection of the environment per se as a customary principle of IEL in Gabcíkovo-Nagymaros.[59]  The Gabcíkovo-Nagymaros decision was famous primarily for adopting the ILC’s four-part test for the doctrine of necessity, a potential defense for Colombia in Aerial Herbicide Spraying analyzed briefly in Part III of this Comment.[60]  However, the ICJ made a few important comments in the decision with respect to the reaffirmation of IEL’s customary nature.  First, Viñuales points out that Gabcíkovo-Nagymaros classifies environmental interests as “essential interests” when considering whether a state has either satisfied or violated the doctrine of necessity.[61]  Second, in Gabcíkovo-Nagymaros, the ICJ explicitly references paragraph twenty-nine of Nuclear Tests when citing to “newly developed norms of environmental law,” which Viñuales interprets as definitive proof that a state’s obligation to ensure that activities in its jurisdiction do not harm the environment of other states is now customary IEL.[62]  Thus by the end of the Second Wave, the general obligation to avoid causing transboundary environmental harm was set in stone, but the specifics as to how a state might fulfill that requirement remained up for debate.

C.            The International Law Commission—Too Progressive to Matter for the ICJ, or Right on Target?

The International Law Commission (“ILC”) is a respected body of experts in international law appointed by the United Nations General Assembly in 1947 for the purpose of promoting the “progressive development of international law and its codification.”[63]  Since 1947, the ILC has worked on roughly thirty topics spanning a wide range of issues, and its works are generally regarded as good evidence of existing law, and occasionally as authoritative statements of it.[64]  The primary problem with relying on anything written by the ILC is that in its works, the ILC never distinguishes between codification and progressive development.[65]  Thus, it is sometimes difficult to tell whether the ILC is precisely stating the law “in fields where there already has been extensive State practice, precedent and doctrine” or if it is “preparing draft conventions on subjects . . . to which the law has not yet been sufficiently developed in the practice of States.”[66]  It has been suggested, however, that this absence of a distinction is actually beneficial to tribunals like the ICJ, because it makes reliance on their works possible without requiring a preliminary inquiry into the proposition’s current status.[67]

Indeed, the ICJ has repeatedly taken advantage of the fact that Article 38 of its Statute explicitly allows utilization of “the teachings of the most highly qualified publicists of the various nations” as a “subsidiary means for the determination of rules of law.”[68]  The court has relied on the ILC with greater frequency over the years,[69] something that various states have recognized by citing to ILC statements of the law when making submissions to the court.[70]  Therefore, the ILC’s various articles have become increasingly important, especially because they impose highly specific requirements often considered customary that serve to fill out IEL’s notoriously generalized requirements.

For example, in the Articles on Prevention, the drafters begin their commentary by restating the principles pointed out by Viñuales, citing to Legality of the Threat or Use of Nuclear Weapons as an example of the ICJ’s recognition that prevention of transboundary harm arising from hazardous activities is a corpus of international law.[71]  Moreover, Article 3 continues the generality with a citation to the Trail Smelter/Corfu Channel/Stockholm Principle 21 assertion.[72]  The generality ends there, however, and the specific requirements outlined in the remainder of the Articles on Prevention are incredibly important given the ICJ’s recent acceptance of several of them in Pulp Mills and the potential to reaffirm and expand that acceptance in Aerial Herbicide Spraying.

First, Article 3 sheds light on a state’s substantive obligations under IEL by providing a working definition of due diligence, explaining that a state must first introduce policies and legislation to minimize the risk of transboundary harm, in addition to ensuring that the policies succeed as written and are updated as new technology becomes available to prevent environmental damage more efficiently.[73]  Notably, the drafters explain that this standard of due diligence will be more rigorously applied as the state’s activity becomes increasingly hazardous[74] and as the state’s economic capability increases.[75]

Second, and critical in Pulp Mills and potentially for Aerial Herbicide Spraying, Articles 4, 9, and 10 provide an overview of a state’s obligation to prevent transboundary harm.[76]  Article 4 demands states of origin not only to cooperate with affected states, but also to cooperate in good faith, an idea utilized in Nuclear Tests when the ICJ stated that good faith is a “basic principle” of international relations.[77]  To cooperate in good faith, Articles 9 and 10 require states of origin and states likely to be affected by the proposed activity to “enter into consultations, at the request of any of them, with a view to achieving acceptable solutions” to prevent transboundary harm based on an “equitable balance of interests.”[78]  A state of origin is forbidden from engaging in mere formalities with “no real intention of reaching a solution acceptable to the other States.”[79]  However, neither Articles 9 nor 10 give a state likely to be affected an absolute veto over dangerous projects not prohibited by international law, and a state of origin is allowed to proceed with a project after failed consultations so long as it takes into account the equitable balance of interests of the states likely to be affected.[80]

Finally, Articles 7 and 8 of the Articles on Prevention concern the necessity of states to conduct an EIA whenever a proposed project has a risk of significant transboundary harm.[81]  At the time the Articles on Prevention were written, whether EIAs were a widespread enough practice to be a customary obligation was frequently debated.[82]  EIAs were not a radical idea, and are incorporated in the domestic laws of over a hundred nations as a general precaution against transboundary harm.[83]  Substantively, Articles 7 and 8 followed this trend by requiring states to conduct EIAs prior to authorizing projects or activities with the potential to cause significant transboundary harm, and to communicate the results with potentially affected states.[84]  Moreover, Article 8 forbids states from authorizing the planned activity or project until the earlier of six months or the receipt of a response from the notified state.[85]

Within the commentary to Article 7, the ILC indicated that the obligation to conduct an EIA “corresponds to the basic duty contained in Article 3” or the substantive obligation of due diligence.[86]  The obligations within Article 8 to notify, consult, and cooperate with potentially affected states concerning the results of the EIA is also directly aligned with the ILC’s analysis of a state’s general procedural obligations in Articles 9 and 10.[87]  Thus, the ILC essentially interpreted the requirement of an EIA as a blended requirement of substantive and procedural obligations, an idea that, as discussed in Part II, was utilized by the ICJ in Pulp Mills, and will likely be used again in Aerial Herbicide Spraying.[88]

II.  The Third Wave Begins—Pulp Mills on the River Uruguay

In his article, Viñuales predicted that Pulp Mills and Aerial Herbicide Spraying would provide a rich factual background for the ICJ to begin the Third Wave of IEL in which it could potentially introduce “more specific rights and obligations . . . as part of customary international law, including duties of environmental impact assessment and monitoring of any substantial projects with potential implications for the environment.”[89]  In this Part, this Comment argues that the ICJ absolutely began the Third Wave in Pulp Mills, because for the first time, the ICJ gave teeth to international principles like prevention and due diligence that were introduced—but never explained—in the First and Second Waves.  Moreover, the ICJ utilizes the specific language from the Articles on Prevention while doing so, and is thus subtly changing the work from what was once progressive development into authoritative, customary statements of IEL.

A.            The Background

The River Uruguay is a shared river flowing through Argentina, Brazil, and Uruguay used for drinking water, fishing, tourism, and recreational activities by both states.[90]  Realizing that the river needed to be protected, Argentina and Uruguay entered into a treaty called the Statute of the River Uruguay (“1975 Statute”) “in order to establish the joint machinery necessary for the optimum and rational utilization of the River Uruguay, in strict observance of the rights and obligations arising from treaties and other international agreements in force for each of the Parties.”[91]  The 1975 Statute also imposed obligations of prior notification for any project that might cause significant damage to the River Uruguay, and only if the notified country had no objections to the project would it be allowed to proceed.[92]  Moreover, to monitor the process and promote joint regulation and cooperation, the 1975 Statute established the Administrative Commission of the River Uruguay (“CARU”), a group composed of an equal number of representatives from Argentina and Uruguay.[93]

The dispute between Argentina and Uruguay arose under the 1975 Statute when Uruguay unilaterally commissioned, authorized, and began constructing two pulp mills on the River Uruguay without properly notifying or consulting with Argentina.[94]  Although the former president of Uruguay assured Argentinean officials that the authorization for the first pulp mill project, the Celulosa de M’Bopicua (“CMB”), would not be granted until Argentina received a sufficient EIA on the proposed mill, the official authorization to begin construction was granted on October 9, 2003, the day after the conversation took place.[95]  On October 27, 2003, Uruguay “notified” the Argentinean Embassy about the CMB project by sending two “seriously deficient” documents, one of which was a “Summary Environmental Report” from the company constructing CMB that made “no mention of the potential transboundary impact and [took] no account of the obligations under the 1975 Statute.”[96]  Following the authorization, the CARU meetings fell into deadlock, as Argentinean delegates refused to admit that Uruguay was following the 1975 Statute and Uruguayan delegates refused to admit that they were in violation of it.[97]

Thereafter, in October 2004, the Uruguayan government authorized a Finnish company to build a second pulp mill, the Orion mill, less than seven kilometers from CMB.[98]  This authorization occurred just three days after a meeting of CARU in which the project was not even mentioned to Argentinean delegates, even though the mill is allegedly the “largest industrial project ever envisaged on the shared section of the River Uruguay.”[99]  Over the protests of, and without proper notification or consultation with Argentina, construction of both CMB and Orion began in the second half of 2005.[100]  Although there were further attempts at negotiations after a change in government in Argentina in March 2005, the negotiations failed because the information supplied by Uruguay remained “fragmentary and inadequate” due to “inaccuracies and omissions,”[101] particularly concerning the liquid effluent, solid waste, and gas emissions of the mills.[102]

In its Application Instituting Proceedings (“Application”), Argentina indicated that due to the heavy reliance on tourism and fishing in the Argentinean cities surrounding the mills, its main concerns were the detrimental effects of the foul pulp mill odor on tourism and the risk of damage to fish stocks.[103]  Moreover, Argentina expressed additional concern for alleged “noise” and “visual pollution” caused by the pulp mills.[104]  Based on these alleged damages, Argentina not only argued that Uruguay violated the 1975 Statute binding the two states, but also contended that Uruguay violated procedural and substantive provisions of general, conventional, and customary international law as the 1975 Statute incorporated international obligations by reference.[105]  Specifically, Argentina argued that Uruguay violated both the 1975 Statute and substantive international law when the government failed to take all necessary measures to rationally utilize the River Uruguay and prevent transboundary environmental damage in violation of the principles of prevention and due diligence.  Argentina also alleged violations of the 1975 Statute and procedural international law when Uruguay failed to negotiate with Argentina, and failed to provide Argentina with timely and proper notification, in violation of the principles to inform, notify, and cooperate.[106]  Finally, Argentina emphasized that because Uruguay’s procedural violations were inextricably linked to its substantive violations, a “breach of the former entailed a breach of the latter.”[107]

B.            The Decision

First, because Article 60 of the 1975 Statute stated that “[a]ny dispute concerning the interpretation or application of the . . . Statute” unable to be settled by negotiations may be submitted for decision to the ICJ, Argentina and Uruguay agreed that the ICJ had jurisdiction over the case.[108]  However, the ICJ interpreted Article 60’s language narrowly and refused to recognize any claim that could not reasonably be interpreted as deserving relief under the 1975 Statute.[109]  Thus, because Article 36 of the 1975 Statute only forbade the states from engaging in projects that would change the ecological balance in the river, the ICJ concluded that Argentina’s claims of noise and visual pollution and the impact of the bad odor on tourism were all outside of its jurisdiction, since technically these damages were not limited to protection of biodiversity in and closely around the water.[110]

On the merits, the ICJ delivered its decision in the same way it was presented by Argentina in the Application—by dividing its response into the alleged procedural and substantive violations of the 1975 Statute.  First, the court rejected Argentina’s assertion that the procedural and substantive violations were so inextricably linked that a violation of one entailed a violation of the other.[111]  While the court recognized the existence of a “functional link” between them in the respect that if a state fully complies with its procedural obligations, it is unlikely that a substantive violation will develop, the 1975 Statute and common sense do not necessarily entail this result.[112]  For example, as was the case in Pulp Mills, a state can violate its procedural obligations, but if the state “subsequently abandons the implementation of its planned activity” such that the substantive violation never occurs, it cannot be found in violation of something it did not do.[113]

Next, the court considered the alleged procedural violations.[114]  Argentina specifically contended that Uruguay violated Articles 7 through 12 in the 1975 Statute, which generally mirror a state’s customary international obligations to cooperate, notify, and inform states that might be prospectively injured from a proposed project capable of producing transboundary harm.[115]  While both parties agreed at the outset that the CNB and Orion mills were of sufficient importance such that Uruguay was obligated to generally inform CARU of the projects,[116] they disagreed as to whether Uruguay had to inform CARU specifically about the extraction and use of the river water for industrial purposes by the Orion mill,[117] and as to the content and timeliness of the required notification.[118]

The ICJ began by explaining that the international duties to inform, notify, and cooperate are grounded in principles of prevention and due diligence, citing to the ever-so-present notion that it is “every State’s obligation not to allow knowingly its territory to be used for acts contrary to the rights of other States” to describe those principles.[119]  As if this assertion was not quite enough to make the point, the ICJ continued to specifically say that a state is thus obliged to use all means at its disposal to avoid activities that take place in its territory, or in any area under its jurisdiction, causing significant damage to the environment of the state.  The Court then noted that this obligation is “part of the corpus of international law relating to the environment.”[120]

Applying this principle, the ICJ found that Uruguay had an obligation to inform CARU in an EIA as soon as Uruguay discovered that its project might cause significant damage to Argentina.[121]  Moreover, Uruguay could not merely inform CARU of the potential environmental danger at its own convenience, but rather had an international obligation to inform prior to its authorization to begin constructing the mills.[122]  In this case, because Uruguay authorized both the CMB and Orion mills prior to giving CARU information—other than two insufficient documents pertaining to the CMB mill only[123]—and ignored requests from CARU for additional information prior to their unilateral authorization,[124] its noncompliance with its procedural obligations under international law and Article 7 of the 1975 Statute was glaringly obvious.

Although Uruguay argued that it had no obligation under either the 1975 Statute or procedural international law to provide Argentina with an EIA, the ICJ flatly disagreed, concluding that an EIA was “necessary” to fulfill the general international requirements of notification and cooperation so that Argentina could fully assess the situation and engage in reasoned negotiations with Uruguay.[125]  Specifically, under the 1975 Statute, the ICJ held that Uruguay was plainly obligated to conduct an EIA containing a detailed description of the main aspects of work and the technical data necessary to assess the project’s impact.[126]  Thus, Uruguay truly failed to comply with this first step since the Summary Environmental Report it sent Argentina was far from a detailed description of the pulp mill projects.[127]  Regardless of the insufficiency of the initial report, Uruguay was supposed to give Argentina 180 days to initially respond to its proposed project under the 1975 Statute,[128] and only if Argentina had no objections would Uruguay be allowed to proceed.[129]  Therefore, because Argentina objected to the insufficiency of the environmental document it received and sent Uruguay an outline of its concerns and recommendations,[130] Uruguay was obligated to reserve an additional 180 days to negotiate a compromised solution.[131]  Because Uruguay neither completed a proper EIA and delivered it to Argentina prior to authorization so that the parties could engage in this process, nor allotted Argentina the response time and negotiation time it was entitled to under the 1975 Statute with respect to the insufficient Summary Environmental Report, the court held that Uruguay “breached its procedural obligations to inform, notify and negotiate.”[132]

Finally, the ICJ considered Argentina’s alleged substantive violations of both general international law and Articles 1, 27, 35, 36, and 41 of the 1975 Statute.[133]  The court declined to hold Uruguay responsible for causing any substantive harm.[134]  Practically speaking, this was because Argentina had yet to point to any substantive harm other than the noise, smell, and odor of the mills, all of which were previously determined not to be covered by the 1975 Statute since it was not literally pollution “in” the river, and was thus outside of the ICJ’s jurisdiction.[135]  Because Argentina likely recognized the absence of these specific protections in the 1975 Statute, it tried to work around it by arguing that under Article 1, Uruguay violated the object and purpose of the treaty to engage in “optimum and rational utilization” of the river when it caused the alleged specific harms.[136]  However, the court concluded that “optimum and rational utilization” was a reference not to specific rights or obligations but rather to a “balance between economic development and environmental protection that is the essence of sustainable development.”[137]  Thus, at least substantively speaking, even though it halted the projects, Uruguay was entirely within its rights to research the construction of the pulp mills in the first place to further its economic development so long as it proceeded sustainably.

The court spent the majority of the remaining decision on the alleged substantive violations, considering whether or not Uruguay was in violation of Article 41 of the 1975 Statute.[138]  Article 41 binds Argentina and Uruguay to protect, preserve, and prevent pollution in the River Uruguay’s aquatic environment and instructs the states to do this by adopting rules in accordance with “applicable international agreements.”[139]  The ICJ immediately interpreted Article 41 as an expression of the customary international obligation to act with “due diligence.”[140]  While the ICJ could have stopped with this assertion, the court went on to define the general due diligence principle, explaining that it entails “not only the adoption of appropriate rules and measures, but also a certain level of vigilance in their enforcement . . . such as the monitoring of activities.”[141]

The ICJ then explained that EIA preparation is one specific requirement within this definition of due diligence, concluding that “due diligence, and the duty of vigilance and prevention which it implies would not be considered to have been exercised” in a situation like Uruguay’s in the absence of an EIA on the project’s anticipated effects.[142]  Thus, the ICJ essentially elevated EIA preparation to a customary IEL obligation—noting in language that will almost certainly be repeated in future contentious cases—that the EIA “has gained so much acceptance among States that it may now be considered a requirement under general international law” anytime there “is a risk that the proposed industrial activity may have a significant adverse impact in a transboundary context.”[143]  In the next paragraph, the ICJ admittedly narrowed this new requirement’s breadth by declining to elaborate on the content or scope of a sufficient EIA.[144]  Instead, the Court merely acknowledged that neither the 1975 Statute nor general international law define the contents of an EIA, and while some conventions like the Espoo Convention do in fact outline specific requirements, neither Argentina or Uruguay are parties to it.[145]

After engaging in an extensive analysis of whether Uruguay violated the due diligence obligation by virtue of the location of the mills,[146] the mills’ effluent discharges into the water,[147] and the mills’ effect on biodiversity in and around the river,[148] the court still ultimately concluded that Argentina failed to provide conclusive evidence that Uruguay had not acted with the requisite degree of due diligence, even though Uruguay admittedly did not prepare an EIA prior to authorization.[149]  Regardless of the procedural hiccups, the ICJ pointed out that there was no conclusive proof that the mills either had “deleterious effects” on the river or had upset the “ecological balance of the river,” and consequently refused to hold Uruguay responsible for any alleged damage to Argentina.[150]

C.            What Pulp Mills Means

Pulp Mills is loaded with developments that could have reverberating effects for not only Aerial Herbicide Spraying, but also future ICJ cases generally.  First, the ICJ’s discussion of substantive and procedural international law was a unique development in terms of the organization of IEL.  For example, for the first time the court clarified that while procedural duties to inform, notify, and cooperate and substantive duties like due diligence and prevention “complement one another perfectly,” they should be analyzed separately.[151]  This analysis is reminiscent of that found in the Articles on Prevention, which separated its analysis of substantive international obligations in Article 3 from those of a procedural nature in Articles 9 and 10.[152]

Moreover, because the court let Uruguay off the hook without paying damages,[153] it demonstrated that damages are going to be unrecoverable in the future without present violations of substantive international law, even where blatant procedural violations exist.  However, while violation of procedural obligations alone will not qualify an injured state for damages, under the ICJ’s new analysis, a state’s compliance with procedural obligations will significantly increase the odds that they have substantively complied.[154]  Practically (and cynically) speaking, this hierarchy makes compliance with procedural obligations wise, but somewhat less important.  In reality, a state likely will not have to answer for its failure to cooperate with other states—beyond a slap on the wrist—if that state does not also inflict substantive harm.  On a brighter note, the division, for the first time, clarified how the ICJ will enforce specific areas of IEL, which is the first indicator that the ICJ is fulfilling Viñuales’ predictions and moving full force into the Third Wave.[155]

Second, the ICJ made two notable developments during its discussion of Uruguay’s procedural violations of international law.  First, while the ICJ could have grounded its analysis of Uruguay’s failures to inform, notify, and cooperate under the 1975 Statute and left it at that, the court instead went out of the way to talk about prevention and due diligence, a move that essentially functioned to “add content to what might have been an otherwise straightforward assessment of Uruguay’s obligations under conventional law.”[156]  Furthermore, not only did the court just mention the principles of due diligence and prevention, it actually strengthened those principles by imposing a new requirement on states to use all the means at their disposal to avoid causing transboundary harm.[157]  The ICJ then stated that this strengthened obligation is the one recognized as a corpus of international law, not the weaker principle defined in the First and Second Waves that states are simply obligated to refrain from using their territory to harm other states.[158]  Although this language may seem like a slight nuance, it could have big consequences in future decisions.  In the right case, the difference between the “obligation to refrain from” and the obligation to “use all the means at their disposal” could be the difference as to whether a state is held responsible for transboundary environmental damage or a state is off the hook.

Next, and as discussed in more detail below in the substantive analysis, there is no question that the most exciting development in Pulp Mills for the international community is the court’s discussion of EIAs in its analysis of both procedural and substantive international obligations.  During the procedural portion of the EIA discussion, the court outlined both the timeline and the process under the 1975 Statute to create EIAs and communicate the results with neighboring states.[159]  Despite this focus on the 1975 Statute, the discussion is notable because the court accepted a procedure that is exceptionally similar to Article 8 of the Articles on Prevention.  Both the 1975 Statute—as it is discussed in Pulp Mills—and the Articles on Prevention require provision of EIA results to a potentially affected state prior to action, a waiting period after the results are communicated before any action can be taken, and upon objection of the state, a set time period for negotiations to reach a mutually acceptable method to proceed.[160]  At this point, it is likely that the 1975 Statute and Article 8 EIA process is too technically specific to be adopted as a requirement of general international law in the Third Wave.  However, the court’s indication that this process is acceptable, if followed, gives states a guideline as to how they might proceed and perhaps opens up the possibility that the ICJ might consider adopting a specific process similar to this one in future contentious cases.

Third, during the ICJ’s analysis of substantive international law, the Court made two additional developments worth noting.  First—and perhaps a runner-up to the EIA in important progressions for IEL within Pulp Mills—the ICJ included a definition of a state’s due diligence obligation, explaining that states must both enact appropriate regulations and ensure their subsequent enforcement.[161]  Notably, this is not just any definition, but is exactly the definition provided in Article 3 of the Articles on Prevention.[162]  This definitional provision is important because it finally provides some guidance for the due diligence concept, taking a step toward relieving IEL of the generality of the concept and its capability for manipulation that plagued the First and Second Waves.  As Viñuales predicted, IEL has moved beyond the obvious conclusion that to exercise due diligence, states should avoid using their territory to cause transboundary harm to other states, and has instead provided two concrete requirements to guide states and the IEL community.[163]  The definition is also notable because although the ICJ does not expressly cite to the ILC in its opinion, the Articles on Prevention are clearly referenced.  This demonstrates the ICJ’s willingness to look to the ILC for guidance and adopt its language as authoritative statements of customary law, which significantly increases the importance of the articles that are not customary law.

Next, as Viñuales predicted would happen in the Third Wave, the ICJ sweepingly labeled EIAs as a customary requirement of due diligence.[164]  Despite the force of this statement, its actual value in future cases may be negligible based on the limiting statements that followed and the ultimate decision in Pulp Mills.  As mentioned above, immediately after declaring that EIAs are customary norms of IEL, the Court followed with the observation that “general international law [does not] specify the scope and content,” and that it will be within each state’s prerogative to determine either through its “domestic legislation or in the authorization process for the project the specific content of the [EIA] required in each case.”[165]  Thus, the current substantive requirement to perform an EIA is realistically only a shell.  While the recognition that EIAs are an obligation is a step in the right direction, providing clarity as to what due diligence entails, the important part remains unclear; if there is no requirement that a state’s EIA be sufficiently reliable, then what exactly is the point?  The state can exercise its discretion to complete an inadequate EIA just to facially satisfy the requirement.  Thus, the ICJ has seemingly replaced the formerly manipulable obligation of due diligence with a narrower, but still manipulable obligation to create an EIA, because both the injured state and the offending state are able to Monday morning quarterback as to the sufficiency of an EIA in question.

This interpretation is reinforced by the outcome in Pulp Mills. In Pulp Mills, Uruguay failed to deliver a timely EIA to Argentina.[166]  While Uruguay did deliver the “Environmental Summary Report” for the CMB mill, the report was completed by the economically involved company in charge of the mill’s construction, and was deemed insufficient by Argentinean representatives in CARU.[167]  Despite this failure, the ICJ found that Uruguay had satisfied its due diligence obligations.[168]  Thus, if Uruguay can avoid liability with an inadequate EIA for the CMB mill and no EIA for the Orion mill—in the very case where the EIA requirement was first promulgated—it is a safe conclusion that at least for now, the ICJ is not going to vigorously enforce this customary requirement for the purpose of awarding damages.

III.  The Third Wave Continued?  The Potential Repercussions for Aerial Herbicide Spraying after Pulp Mills

A.            The Case Against Colombia

Ecuador’s Application to the ICJ begins by acknowledging that the majority of the world’s coca and a large amount of the world’s opium poppy comes from Colombia.[169]  Despite this reality, Ecuador emphatically argues that combating the problem by aerially spraying toxic herbicides at, near, and over the border of Ecuador is not the answer, and is a violation of Ecuador’s rights under “customary and conventional international law.”[170]

First, Ecuador points out that Colombia ignored its own experts’ warnings by aerially spraying a compound containing glyphosate over illegal drug crops.[171]  According to Ecuador, as early as 1984, the Instituto Nacional de Salud (“INS”), Columbia’s national health institute, convened solely to consider whether aerial spraying would be a safe option to combat drug production.[172]  Far from approving its use, the INS concluded that glyphosate was “not recommended” and the acute toxicity “little known.”[173]  Additionally, in the areas of the world where glyphosate is utilized as a commercial weed killer, Ecuador notes that it is accompanied by severe warnings that it should only be applied by protected handlers and that users must “AVOID DRIFT” because of its potential to cause substantial harm not only to desirable plants and crops but also to humans if it is inhaled or if it comes in contact with the eyes.[174]  Thus, from the very beginning, Ecuador alleges that Colombia was aware of the potential harm, but chose to unilaterally authorize the dispersion of herbicides containing glyphosate both on and over the Ecuadorean border.

In addition, Ecuador claims that Colombia has refused to disclose the herbicide’s exact chemical composition.[175]  While the Ecuadorean government did learn from various press releases that the primary active ingredient is glyphosate, this is insufficient knowledge to form an opinion about the herbicide’s consequences, as glyphosate is notoriously more dangerous in combination with specific chemicals.[176]  Moreover, Ecuador notes that it is particularly concerned because the compound Colombia is rumored to be using contains a chemical called Cosmoflux 411F, which is manufactured solely in Colombia and has never been extensively studied, presumably because Colombia refuses to release the “proprietary” chemical composition.[177]  Because testing on glyphosate combination compounds have traditionally been conducted in temperate climates, Ecuador points out that its tropical climate is at even higher risk, especially since the area maintains a “mega-diverse” biodiversity classification.[178]

Ecuador first contacted the Colombian government on July 24, 2000, to express its concern about the impact of the herbicide combination on Ecuador’s people and environment.[179]  However, Ecuador explains that “from the start, Colombia has been . . . clear that it has no interest in addressing Ecuador’s concerns.”[180]  Colombia declined to give information to Ecuador upon its request, responding that, regardless of what Ecuador thinks, the aerial spraying is actually protecting them because “Plan Colombia is, precisely, the most effective method for protecting the fraternal country of Ecuador from the perverse effects of narco-trafficking and armed conflict.”[181]  Moreover, Colombia refused Ecuador’s requests to observe a ten kilometer no-spray zone away from Ecuador’s border in both July 2001 and September 2003, and upon receiving requests from Ecuador to negotiate a solution in April 2002, replied that it would not abandon an “irreplaceable instrument for solving the Colombian conflict and alleviating the danger that it presents to other countries.”[182]  Far from admitting that it was potentially in violation of international law, Colombia instead claimed protection under the precautionary principle, which allows states experiencing threats of serious or irreversible damage to use cost-effective measures to prevent environmental degradation regardless of a lack of full scientific certainty about those measures.[183]

Although Colombia appeared willing to cooperate on a few occasions, the situation never meaningfully changed.  For example, although Colombia agreed both in late 2003 and in early 2007 to set up joint scientific and technical commissions with Ecuador to examine the effects of aerial spraying in Colombia, these commissions quickly fell into deadlock and disbanded each time.[184]  Although Colombia finally agreed to a ten kilometer no-spray zone in December 2005, it resumed spraying directly on the border in December 2006.[185]  At this point, Ecuador submitted the Application to the ICJ, specifically alleging that Colombia failed to abide by its international obligations of prevention and precaution through its actions.[186]

B.            Aerial Herbicide Spraying after Pulp Mills: The ICJ’s Potential Analysis

Aerial Herbicide Spraying provides a perfect opportunity for the ICJ to utilize the two-step analysis process established in Pulp Mills for both procedural and substantive violations of international law.  It is likely that the procedural analysis in Aerial Herbicide Spraying will ultimately be very similar to Pulp Mills because in both cases the procedural violations are quite egregious.  Just as Uruguay violated its procedural duties to inform, notify, and consult Argentina by failing to communicate the dangers of the pulp mill projects prior to authorization, Colombia did not even mention aerial spraying to Ecuador prior to authorizing herbicide use on its border.  Moreover, Colombia blatantly ignored Ecuador’s concerns.  Instead of recognizing Plan Colombia as a problem, Colombia argued that it was protecting the Ecuadorean people by inhibiting drug production.[187]  Finally, just as Uruguay failed to draft and communicate an acceptable EIA to facilitate cooperation and negotiation between the states, there is no evidence that Colombia internally developed anything resembling an EIA; to the contrary, evidence indicates that it used the herbicide against its own experts’ warnings.[188]  In the unlikely event that Colombia did perform an EIA, it has yet to communicate it with Ecuador, even though it has been ten years since the spraying commenced.  As seen in Pulp Mills, this constitutes a procedural violation in and of itself.

The procedural analyses in the two ICJ cases could differ if the ICJ chooses to further develop its functional link analysis between procedural and substantive international obligations.  As discussed in Part II, the ICJ’s functional link analysis logically implies that compliance with procedural violations will increase the likelihood that a state complies with its substantive obligations.[189]  However, Aerial Herbicide Spraying demonstrates the opposite proposition, as it involves severe substantive harm directly resulting from Colombia’s procedural failure to cooperate.  For example, because knowledge of the herbicide’s composition is in the sole possession of Colombia, the only way that Ecuador can conduct scientific tests on the compound—protecting its people and environment—is if Colombia cooperates and shares the information.  Not only is Colombia hoarding the chemical composition citing its “proprietary” nature, effectively disallowing Ecuador from running the tests that the Colombian government refuses to do, Colombia also refuses to respect a small ten kilometer no-spray zone on the Ecuadorean border.[190]  Because this procedural failure to cooperate has largely caused the extreme substantive harm inflicted upon Ecuador, the ICJ should find Ecuador’s procedural case stronger than Argentina’s.  If nothing else, it is clear that Colombia has not used “all the means at its disposal to avoid activities” in its territory causing significant harm to the environment of other states, and thus a judgment that it has violated procedural international law is nearly certain.[191]

While the procedural analysis in Pulp Mills may be similar to Aerial Herbicide Spraying, the two cases are ultimately very different because whereas the substantive harm to Argentina was deemed undetectable, the substantive harm inflicted on Ecuador is undeniable.  In Pulp Mills, Argentina lost the case because it was essentially inconclusive whether the mills were actually causing effluent discharge increases in the River Uruguay or harming biodiversity in and around the river.  Here, Ecuador is able to cite to specific impacts in several named communities over specific time periods spanning from 2000 to 2007, in addition to citing to several paragraphs’ worth of generalized adverse effects across the entire northern border.[192]  Thus, unlike Uruguay—which avoided paying damages because it committed procedural, but not substantive violations—it is unlikely that Colombia can avoid restoring Ecuador for the obviously inflicted substantive harm.

The analysis in Aerial Herbicide Spraying could also prove to be interesting because of the potential for discussion on the newly defined due diligence principle.  If solely focusing on the environmental risk and harm inflicted by the aerial use of herbicides, it seems clear that even if the definition of due diligence remains limited to both the adoption of appropriate rules and measures and a certain level of vigilance and monitoring to ensure their enforcement as provided in Pulp Mills—Colombia has failed to meet it.  This leads to two further considerations: (1) the possibility that the ICJ could make this definition weaker or stronger at its discretion, and (2) the fact that the ICJ will have to factor in that Colombia is adopting rules and monitoring enforcement, albeit to combat drug trafficking and not environmental harm.  As to the first consideration, while the ICJ could follow its recent precedent in Pulp Mills, there is no guarantee given the lack of stare decisis.[193]  As demonstrated by Viñuales, however, the ICJ not only tends to follow precedent despite not being bound to do so, but also tends to build upon it during each respective IEL wave.[194]  Thus, if the ICJ chooses to follow the Third Wave theme that it seemingly began in Pulp Mills, it is likely that the ICJ will again defer to the Articles on Prevention and expand due diligence requirements.  This would be the perfect set of facts to hold that the standard of due diligence shall be what is “appropriate and proportional to the degree of risk of transboundary harm in the particular instance,”[195] or to create an increasingly intertwined functional link between procedural and substantive obligations by holding that due diligence necessarily requires “cooperation.”[196]  Neither of these additions will change the likely overall result that Colombia has violated its due diligence obligations, but will be valuable additions to the overall scheme of due diligence requirements.  Given that the ICJ went out of its way to “add content to what would have otherwise been a straightforward application” of law in Pulp Mills, it is not so farfetched that it would choose to do so again in Aerial Herbicide Spraying, even if it is not essential to the disposition of the case.[197]

As to the second consideration, the ICJ has not been presented with a case quite like this one in which it has to choose between the greater of two evils, environmental degradation or drug trafficking.  Perhaps the Court’s answer will lie in the failure of Plan Colombia’s aerial spraying program to meaningfully inhibit terrorist groups and the drug trade.  After Plan Colombia’s initial jumpstart from a 1.3 billion American aid package, critics argued that nothing in Colombia has changed, and is in fact almost worse.[198]  The left-wing terrorist groups Plan Colombia was enacted to destroy are as strong as ever, and according to the governor of one Colombian province “are like malaria, evolving to resist eradication and killing with efficiency,” and while they “may have lost their chance for victory,” they have not lost “their ability to cause suffering.”[199]  Additionally, it is debatable whether aerial spraying has slowed the flow of cocaine from Colombia at all.[200]  For example, in 2007, the United Nations reported that coca cultivation was up twenty-seven percent in 2007,[201] allowing Colombia to remain “by far the world’s largest cocaine producer and the supplier of 90 percent of the cocaine consumed in the United States” as of 2008.[202]  Critics also point to the fact that the “price, purity, and availability of cocaine in the United States has remained unchanged,” and thus the billions of dollars that the United States has spent to “attack the drug problem at the source” is money down the drain.[203]  Of course, as there are always two sides to every story, not everyone agrees.[204]  But because rebel groups and drug trafficking are still thriving eleven years after the introduction of Plan Colombia, and because there simply has to be another option to combat drug trafficking besides aerial spraying, the ICJ is likely to choose environmental and human rights protection over drug trafficking, at least for this day in court.

Lastly, because EIAs are now considered a substantive and a procedural requirement under general international law, the ICJ will almost certainly address them, and perhaps use Aerial Herbicide Spraying as an opportunity to clarify certain statements made in Pulp Mills.  As discussed in Part II, although the ICJ officially labeled EIA preparation as a customary requirement in Pulp Mills, the actual value of the requirement may be negligible as it did not define either the scope or contents, explaining that it was each state’s prerogative to determine the content according to domestic laws, and approved Uruguay’s EIA despite its utter inadequacy.[205]  On the facts of Aerial Herbicide Spraying, the ICJ is presented with a second chance to provide a bottom floor as to an EIA’s minimum requirements.  Like Uruguay, Colombia does not appear to have created an adequate EIA, if it created one at all. For example, according to Ecuador, Colombia held a meeting of its INS prior to authorizing Plan Colombia in which its own experts recommended against the use of aerial herbicides.[206]  Presumably the experts present prepared domestic studies to come to that conclusion, even though the results were not shared with Ecuador.  Thus, acknowledging that Colombia’s failure to communicate any research with Ecuador is a procedural and not a substantive violation, will this clearly deficient research be sufficient to meet the substantive EIA requirement set forth in Pulp Mills?  As the law stands now, the answer could truly go either way—after all, if one “seriously deficient” document in Pulp Mills was enough to satisfy the substantive part of the EIA requirement, that is not all that different than the present case.  While it may not contribute a great deal overall to IEL to hold that the environmental document potentially prepared by Colombia in the context of Aerial Herbicide Spraying was insufficient, the import of such a holding comes from the value that it could have for increasingly specific Fourth Wave cases down the road.  Clearly, most states would draft at least something and share it with their neighboring states.  Setting a bottom line now is the first step toward setting a stricter, more specific bottom line down the road such that one day the EIA requirement will be more than a shell and possess some teeth of its own.

C.            Colombia’s Citation to the Precautionary Principle

In defense of its actions, Colombia has cited the precautionary principle in diplomatic exchanges with the Ecuadorean government.[207]  The precautionary principle, as exemplified in Principle 15 of the Rio Declaration, gives the following instruction: “In order to protect the environment, the precautionary approach shall be widely applied by states according to their capabilities.  Where there are threats of serious or irreversible damage, lack of full scientific certainty shall not be used as a reason for postponing cost-effective measures to prevent environmental degradation.”[208]  While the precautionary principle is oft used and is certainly justified in appropriate circumstances, Colombia’s attempt to ground its actions in the principle in this case constitutes a misinterpretation of the principle and its purpose.

The precautionary principle is best understood in light of its rationale.  The rationale’s premise is that policy makers generally rely on the best available scientific data when developing effective regulatory policies.[209]  However, because scientific uncertainty is rampant, and because laws still need to be made, the precautionary principle allows states to act notwithstanding scientific uncertainty, but only while erring on the “side of excess environmental protection.”[210]  Thus, the precautionary principle is appropriately cited in the aftermath of a disaster when a state quickly reacts by choosing a method that has not undergone extensive scientific testing because the danger of allowing the disaster to fester is outweighed by the potential danger of the method to combat it.[211]  To illuminate this point, consider an oil spill.  Common sense tells us that oil spills are disasters that need immediate attention.  If a state reacts to an oil spill by using a chemical dispersant that has not been extensively tested, but has perhaps been used by other states in similar situations or does not contain ingredients known to be toxic, the state would be justified under the precautionary principle to use it.[212]  However, common sense also tells us that if the same state used a chemical dispersant with known toxic components, this is simply foolhardy behavior and the state will not be shielded by the precautionary principle.  The precautionary principle does not authorize ignoring the obvious, and a state with unclean hands cannot count on it for protection.

In this case, Colombia is essentially arguing that coca production, the drug trade, and guerilla activity constitute a “threat of serious or irreversible damage” that Colombia has chosen to combat by aerially spraying an unrevealed and untested herbicide over extended periods of time.[213]  Quite frankly, the precautionary principle was not intended to function in this type of situation.  The precautionary principle can be utilized by states when neither time nor scientific evaluation “allow the risk to be determined with sufficient certainty,” this is not the case in Colombia.[214]  While Columbia admittedly has a serious problem, it is not one that has suddenly descended on the government.  Rather it has plagued the country for decades.[215]  Far from being a case where scientific evaluation does not allow the risk to be determined with sufficient certainty, Colombia has had ten years from the commencement of Plan Colombia to run the requisite tests on the herbicide to determine its ramifications.  However, Colombia has either chosen not to test the herbicide or is hiding the results from the international community.  Furthermore, Colombia is purposefully withholding a complete list of the herbicide’s chemical ingredients such that no other state can test it.[216]  Thus, while coca production and guerilla terrorism are disasters that necessitate immediate government action, the precautionary principle does not provide a state with the justification to combat a longstanding problem with an untested solution over an extended period of time simply because the state feels that it is the “most effective method” to achieve its goals.  This is particularly so when it is primarily the state’s own unclean hands that have caused the scientific uncertainty to exist.[217]

D.            Doctrine of Necessity Defense

In Aerial Herbicide Spraying, the best defense that Colombia will have is that the drug trade and guerilla activity created a situation of necessity that demanded a response and excused their procedural and substantive internationally wrongful acts.  However, this Comment concurs with other scholars who have predicted that this defense will be an unsuccessful last resort.[218]

In Gabcíkovo-Nagymaros, the ICJ expressly adopted the doctrine of necessity as it appears today in Article 25 of the ILC’s Articles on State Responsibility.[219]  Under Article 25, in the event that a state commits an internationally wrongful act, the wrongfulness of it may be precluded if the act was (1) the only way for the state to safeguard, (2) an essential interest, (3) against a grave and imminent peril, and (4) the act does not seriously impair an essential interest of the state or states toward which the obligation exists, or of the international community as a whole.[220]  Although the Court accepted this four-part test, it also noted that the “ground for precluding wrongfulness can only be accepted on an exceptional basis,” and that the “state concerned is not the sole judge of whether those conditions have been met.”[221]

Colombia can likely produce a strong argument for the second and third prongs of the test.  According to Article 25, in the second prong, possible interests worth protecting include “preserving the very existence of the State”[222] and “ensuring the safety of a civilian population,”[223] both of which are pressing Colombian interests in the present situation.  Moreover, under the third prong, both of these essential interests are subject to grave peril due to the violent, narcotic-funded guerilla groups like FARC and ELN that have terrorized the country for years.[224]  While it could be argued that these interests are not facing imminent peril as Colombia has been fighting these groups for decades, it is truly irrelevant what the Court decides on this issue.  Colombia absolutely cannot meet the first prong of the doctrine, and likely cannot meet the fourth prong either.

Under the first prong, the chosen action to safeguard the named essential interest must be the “only way” and the only means available to the state.[225]  This requirement is not taken lightly, and the plea for necessity “is excluded if there are other (otherwise lawful) means available, even if they may be more costly or less convenient.”[226]  One does not have to speculate very long to come up with other routes that Colombia could have chosen to combat the drug trade rather than aerially spraying toxic herbicides over coca and poppy plantations.  Indeed, former Latin American presidents noted in a 2009 interview that we must “acknowledge the disastrous consequences of current policies” to combat drugs and utilize other options, including education to decrease drug consumption, and aggressive combat against organizational crime.[227]  While all of these options may have admittedly been more difficult to implement than spraying herbicides out of planes, there is no denying that they were lawful alternative methods to combat drug production in Colombia and its effects.  These methods are advocated by other heads of state in Latin America that are dealing with equally destructive drug cartels in their respective states.[228]

Furthermore, under the fourth prong of the doctrine, the ICJ will again be presented head on with an opportunity to weigh Ecuador’s environmental and human rights interests against Colombia’s rights to preserve its government and ensure the safety of its civilian population.  To win on this argument, the ILC states in Article 25 that the interest deemed superior must outweigh all other considerations, and “not merely from the point of view of the acting State, but on a reasonable assessment of the competing interests.”[229]  Thus from the outset, Colombia will have a very high burden to demonstrate that its interest in protecting its people conclusively outweighs Ecuador’s interest in ensuring the quality of its environment and its people’s health and safety, particularly as aerial spraying is surely not the only means to combat drug trafficking.[230]  Because these two issues are arguably of equal importance, and because aerial spraying is causing health problems not only to Ecuadorean people and the environment, but presumably to Colombian citizens as well, it seems impossible that Colombia could demonstrate its interests outweigh Ecuador’s.  Thus, the ICJ will almost certainly conclude that Colombia failed to show the requisite state of necessity to excuse its commission of internationally wrongful acts, and will hold Colombia responsible for its procedural and substantive internationally wrongful acts.

Conclusion

In his book Showing Teeth to the Dragons, Harvey Kline notes that Colombia’s culture of violence is the “most intractable problem” within Colombia’s borders.[231]  He then repeats a query asked by others who have studied Colombia before him—what would it take to “convince Colombians that violence [is] not the way to solve problems after . . . an entire generation of people . . . saw violence as normal?”—a proposition that Kline believes is just as true in today’s world as it was when the question was first posed in 1962.[232]  It is undeniable that Colombia’s predicament is tragic.  Indeed, each day that Colombia survives, scholars have likened the state to a “sick person who just got out of intensive care, happy because he did not die, but who is still far from leaving the hospital and may relapse at any moment if he does not take measures to build on his successes.”[233]  However, at the end of the day, Aerial Herbicide Spraying is not about the problems that Colombia cannot seem to fix.  Rather, it comes down to a simple choice—the drug trade and suffering people, or the environment and suffering people?

Based on the ICJ’s trend throughout the First, Second, and now the Third Wave, I believe the answer is clear.  The environment is going to prevail.  The ICJ’s increasing specificity throughout all Waves, its newfound willingness to follow ILC recommendations, and its decision in Pulp Mills all point toward a favorable result for Ecuador.  However, the value of Aerial Herbicide Spraying extends beyond its arrival at a correct result.  In combination with Pulp Mills, Aerial Herbicide Spraying exemplifies a new direction for the ICJ—a direction towards clarity, specificity, and a world in which states cannot Monday morning quarterback their way out of international obligations quite as easily as they have in the past.  Viñuales’ Third Wave has arrived, and one can only hope that the waves will keep on coming.

 


[1]. Background Note: Colombia, U.S. Dep’t of State, http://www.state.gov
/r/pa/ei/bgn/35754.htm (last visited Nov. 10, 2011).

[2]. Id.

[3]. Marco Palacios, Between Legitimacy and Violence 1 (Richard Stoller trans., 2006) (recognizing four national civil wars in Colombia during 1876–77, 1885–86, 1895, and 1899–1902 respectively); see also id. at 135 (describing the time period between 1945–74 as “La Violencia,” defined as a “popular and largely peasant convulsion . . . that never really went away”); id. at 190–213 (explaining the rise to power of leftist guerilla groups, the violent crimes and torture inflicted by the groups, and the increasing prevalence of drug cartels connected to these groups in Colombia).

[4]. Harvey F. Kline, Showing Teeth to the Dragons 2 (2009).

[5]. U.S. Dep’t of State, A Report to Congress on United States Policy Towards Colombia and Other Related Issues (2003), http://www.state.gov/p
/wha/rls/rpt/17140.htm.

[6]. Simon Romero, Despite Rebel Losses, Cocaine Sustains War in Rural Colombia, N.Y. Times, July 27, 2008, at A1.

[7]. U.S. Dep’t of State, supra note 5.

[8]. Kline, supra note 4, at 45–48; see also U.S. Dep’t of State, supra note 5 (explaining the rationale for the Colombian aid package is the United States’ strong support of “combating the narcotics industry, promoting peace, reviving the economy, improving respect for human rights, and strengthening the democratic and social institutions of the country”); Luz Estella Nagle, U.S. Mutual Assistance to Colombia: Vague Promises and Diminishing Returns, 23 Fordham Int’l L.J. 1235, 1269 (2000) (noting that the United States’ initial plan pledged 7.5 billion dollars to Plan Colombia).

[9]. Application Instituting Proceedings, Aerial Herbicide Spraying (Ecuador v. Colom.), 2008 I.C.J. Pleadings 10, ¶ 13 (Mar. 31, 2008) [hereinafter Aerial Herbicide Spraying Application].

[10]. Id. ¶ 3.

[11]. Id.

[12]. Id.

[13]. Id. ¶ 4.

[14]. Id.

[15]. Id. ¶ 5.

[16]. Id.

[17]. See Aerial Herbicide Spraying Application, supra note 9.

[18]. Pulp Mills on the River Uruguay (Arg. v. Uru.), Judgment, 2010 I.C.J. 135 (Apr. 20), available at http://www.icj-cij.org/docket/files/135/15877.pdf.

[19]. Id. ¶ 25.

[20]. Id. ¶¶ 53, 65.

[21]. Id. ¶ 265.

[22]. Id. ¶ 70 (outlining the court’s analysis by noting the separation of procedural and substantive obligations).

[23]. Id. ¶¶ 101, 204.

[24]. Jorge E. Viñuales, The Contribution of the International Court of Justice to the Development of International Environmental Law: A Contemporary Assessment, 32 Fordham Int’l L.J. 232, 235 (2008) (noting that it is possible to “distinguish, for analytical purposes, two main trends or ‘waves’ of cases in the ICJ jurisprudence relating to IEL”).

[25]. Draft Articles on the Prevention of Transboundary Harm from Hazardous Activities, in Rep. of the Int’l Law Comm’n, 53d Sess., Apr. 23–June 1, July 2–Aug. 18, 2001, U.N. Doc. A/56/10; GAOR, 53d Sess., Supp. No. 10, at 370–77 (2001) [hereinafter Articles on Prevention].

[26]. Id. art. 3, cmt. 1; see also United Nations Conference on Environment and Development, Rio de Janiero, Braz., June 3–14, 1992, Rio Declaration on Environment and Development, princ. 2, U.N. Doc. A/CONF.151/5/Rev.1 (Vol. 1) [hereinafter Rio Declaration], reprinted in 31 I.L.M. 874, 876; Stockholm Declaration of the United Nations Conference on the Human Environment, adopted June 16, 1972, Report of the United Nations Conference on the Human Environment, princ. 21, G.A. Res. 2997, U.N. GAOR, 27th Sess., 21st mtg. [hereinafter Stockholm Declaration], reprinted in 11 I.L.M. 1416, 1420.

[27]. See Robert Esposito, The ICJ and the Future of Transboundary Harm Disputes: A Preliminary Analysis of the Case Concerning Aerial Herbicide Spraying (Ecuador v. Colom.), Pace Int’l L. Rev. Online Companion, Aug. 2010, at 43, http://digitalcommons.pace.edu/pilronline/15/.

[28]. Gabcíkovo-Nagymaros Project (Hung. v. Slovak.), Judgment, 1997 I.C.J. 7, 55 (Sept. 25), available at http://www.icj-cij.org/docket/files/92/7375.pdf; Responsibility of States for Internationally Wrongful Acts, G.A. Res. 56/83, art. 25, U.N. Doc. A/RES/56/83/Annex (Dec. 12, 2001) [hereinafter Articles on State Responsibility].

[29]. Patricia Birnie et al., International Law & the Environment, 12–13 (3d ed. 2009).

[30]. See Daniel Bodansky, Customary (and not so Customary) International Environmental Law, 3 Ind. J. Global Legal Stud. 105, 107 (1995) (noting that “international legal scholars tend to place importance on whether a norm represents customary international law and have spilled much ink debating whether particular environmental norms have achieved this status”); John H. Knox, Assessing the Candidates for a Global Treaty on Transboundary Environmental Impact Assessment, 12 N.Y.U. Envtl. L.J. 153, 153 (2003) (emphasizing that the “absence of a global treaty on environmental impact assessment (EIA) is an obvious gap in international law”).

[31]. See Dinah Shelton, Normative Hierarchy in International Law, 100 Am. J. Int’l L. 291, 299 (2006) (noting that “international law has traditionally been defined as a system of equal and sovereign states whose actions are limited only by rules freely accepted as legally binding”, a view that was recognized by the ICJ in 1986 when the court stated “in international law there are no rules, other than such rules as may be accepted by the State concerned, by treaty or otherwise, whereby the level of armaments of a sovereign State can be limited, and this principle is valid for all States without exception” (citing Military and Paramilitary Activities in and against Nicaragua (Nicar. v. U.S.), 1986 I.C.J. 14, ¶ 269 (June 27)).  However, this theory is derogated by ius cogens violations, or rules of international law that are so imbedded that they cannot be derogated by a state.  See generally Alfred von Verdross, Forbidden Treaties in International Law, 31 Am. J. Int’l L. 571 (1937), for the first article in which the theory of ius cogens was discussed in detail.

[32]. See Winfried Lang, UN-Principles and International Environmental Law, 1999 U.N.Y.B. 3, 160–61, available at http://www.mpil.de/shared/data/pdf
/pdfmpunyb/lang_3.pdf.

[33]. See Rio Declaration, supra note 26, princ. 2; Stockholm Declaration, supra note 26, princ. 21 (providing an example of an obligation to refrain from causing harm to another state without elaboration of how a state may meet the requirement).

[34]. Statute of the International Court of Justice art. 36, June 26, 1945, 59 Stat. 1055, T.S. No. 993 (1945) [hereinafter ICJ Statute].

[35]. See Viñuales, supra note 24, at 235.

[36]. Id.

[37]. Trail Smelter Arbitration (U.S. v. Can.), 3 R.I.A.A. 1905, 1965 (1941), available at http://untreaty.un.org/cod/riaa/cases/vol_III/1905-1982.pdf.

[38]. Id.

[39]. Viñuales, supra note 24, at 238.

[40]. See id. at 237–38, 243.

[41]. Corfu Channel (U.K. v. Alb.), Judgment, 1949 I.C.J. 4 (Apr. 9).

[42]. Nuclear Tests (Austl. v. Fr.), Judgment, 1974 I.C.J. 253 (Dec. 20); Nuclear Tests (N.Z. v. Fr.), Judgment, 1974 I.C.J. 457 (Dec. 20).

[43]. Viñuales, supra note 24, at 240.

[44]. Corfu Channel, 1949 I.C.J. at 22–23.

[45]. Id. at 22.

[46]. Stockholm Declaration, supra note 26, princ. 21.

[47]. Viñuales, supra note 24, at 240.

[48]. Id.  Citing to a principle or idea in pleadings to the ICJ is particularly important in all areas of international law because it tends to show the state practice and opinio juris required to establish the assertion as a customary norm.  Thus, when parties cited to Trail Smelter/Corfu Channel/Stockholm Principle 21 in their materials to the court, they were implicitly recognizing the customary nature of the requirement, or at the very least, their willingness to be bound by the requirement.  See generally Birnie et al., supra note 30, at 22–25, 141.

[49]. Viñuales, supra note 24, at 240.

[50]. Id. at 242–44.

[51]. Legality of the Threat or Use of Nuclear Weapons, Advisory Opinion, 1996 I.C.J. 226 (July 8).

[52]. Id. ¶ 1.

[53]. Id. ¶ 29 (emphasis added).

[54]. Viñuales, supra note 24, at 246.

[55]. Pulp Mills on the River Uruguay (Arg. v. Uru.), Judgment, 2010 I.C.J. 135 (Apr. 20).

[56]. Viñuales, supra note 24, at 246.

[57]. Id.

[58]. Legality of the Threat or Use of Nuclear Weapons, Advisory Opinion, 1996 I.C.J. 226, 504 (July 8) (Weeramantry, J., dissenting).

[59]. Viñuales, supra note 24, at 248.

[60]. Gabcíkovo-Nagymaros Project (Hung. v. Slovak.), Judgment, 1997 I.C.J. 7, ¶¶ 51–52 (Sept. 25); see also Mari Nakamachi, The International Court of Justice Decision Regarding the Gabcíkovo-Nagymaros Project, 9 Fordham Envtl. L. Rev. 337, 346–53 (1998).

[61]. Viñuales, supra note 24, at 248–49.

[62]. Id. at 249.

[63]. Statute of the International Law Commission, G.A. Res. 36/39, U.N. Doc. A/RES/36/39, art. 1 (Nov. 18, 1981) [hereinafter ILC Statute].

[64]. Birnie et al., supra note 29, at 29.

[65]. Id.

[66]. ILC Statute, supra note 63, art. 15.

[67]. Birnie et al., supra note 29, at 30.

[68]. ICJ Statute, supra note 34, art. 38.

[69]. See Gabcíkovo-Nagymaros Project (Hung. v. Slovak.), Judgment, 1997 I.C.J. 7, ¶¶ 51–53 (Sept. 25) (citing directly to the ILC’s former Article 33 (current Article 25) of the Draft Articles on Responsibility of States for Internationally Wrongful Acts as an acceptable expression of the doctrine of necessity).

[70]. Birnie et al., supra note 29, at 141.

[71]. Articles on Prevention, supra note 25, ¶ 3.

[72]. Id. art. 3, ¶ 1.

[73]. Id. art. 3, ¶¶ 11, 14.

[74]. Id. art. 3, ¶ 18.

[75]. Id. art. 3, ¶ 13 (noting that the “economic level of States is one of the factors to be taken into account in determining whether a State has complied with its obligation of due diligence”).

[76]. Id. arts. 4, 9, 10.

[77]. Id. art. 4, ¶ 2.

[78]. Id. art. 9.

[79]. Id. art. 9, ¶ 2.

[80]. Id. arts. 9–10.

[81]. Id. arts. 7–8.

[82]. See John H. Knox, The Myth and Reality of Transboundary Environmental Impact Assessment, 96 Am. J. Int’l L. 291, 291 (2002) (arguing that the “story” that environmental impact assessments are customary international law is simply “not true”).

[83]. Id. at 297.

[84]. Articles on Prevention, supra note 25, arts. 7–8.

[85]. Id. art. 8.

[86]. Id. art. 7, ¶ 6.

[87]. Id. arts. 8–10.

[88]. See discussion infra Part III.

[89]. Viñuales, supra note 24, at 253.

[90]. Application Instituting Proceedings, Pulp Mills on the River Uruguay (Arg. V. Uru.), 2006 I.C.J. Pleadings 2, ¶ 5 (May 6) [hereinafter Pulp Mills Application], available at http://www.icj-cij.org/docket/files/135/10779.pdf.

[91]. Id. ¶ 6 (emphasis added).

[92]. Id. ¶ 7.

[93]. Id. ¶ 6.

[94]. Pulp Mills on the River Uruguay (Arg. v. Uru.), Judgment, 2010 I.C.J. 135, ¶ 25 (Apr. 20).

[95]. Id. ¶ 31.

[96]. Pulp Mills Application, supra note 90, ¶ 10.

[97]. Pulp Mills, 2010 I.C.J. ¶¶ 32–33.

[98]. Pulp Mills Application, supra note 90, ¶ 12.

[99]. Id. ¶ 13.

[100]. Id. ¶ 14.

[101]. Id. ¶ 16.

[102]. Id. ¶ 20.

[103]. Id. ¶ 15.  Generally, pulp mills are factories that convert wood and other materials into fiber boards, which are then shipped to paper mills to be developed into paper.  Notably, pulp mills produce a distinctive and foul odor that can be detected for miles, although the odor itself is not environmentally harmful.  See Dorothy Thornton, Robert A. Kagan & Neil Gunningham, When Social Norms and Pressures are Not Enough: Environmental Performance in the Trucking Industry, 43 Law & Soc’y Rev. 405, 407 (2009) (noting that the results of one study on pulp mills showed that mill owners went out of the way to reduce unpleasant odors, even though environmental regulations did not require it).  Rather, the big problem with chemicals is water and air pollution as the production of pulp results in the “concurrent production of a large array of chemical by-products” which are often discarded into the environment.  Larry E. LaFleur, Sources of Pulping and Bleaching Derived Chemicals in Effluents, in Environmental Fate and Effects of Pulp and Paper Mill Effluents 21, 21 (Mark R. Servos et al. eds., 1996).

[104]. Pulp Mills on the River Uruguay (Arg. v. Uru.), Judgment, 2010 I.C.J. 135 (Apr. 20).

[105]. Pulp Mills Application, supra note 90, ¶ 24.

[106]. Id.

[107]. Pulp Mills, 2010 I.C.J. 135 ¶ 68.

[108]. Id. ¶ 48.

[109]. Id. ¶ 52.

[110]. Id.

[111]. Id. ¶¶ 77–79.

[112]. Id. ¶ 79.

[113]. Id. ¶ 78.

[114]. Id. ¶¶ 80–158.

[115]. Id.

[116]. Id. ¶ 96.

[117]. Id. ¶ 97.

[118]. Id. ¶ 98.

[119]. Id. ¶ 101 (citing Corfu Channel (U.K. v. Alb.), Judgment, 1949 I.C.J. 4, 22 (Apr. 9)).

[120]. Id. ¶ 101 (emphasis added) (citing Legality of the Threat or Use of Nuclear Weapons, Advisory Opinion, 1996 I.C.J. 226, ¶ 29 (July 8)).

[121]. Id. ¶¶ 105–06, 111.

[122]. Id. ¶ 105.

[123]. Id. ¶¶ 106–07.

[124]. Id. ¶ 106.

[125]. Id. ¶ 119.

[126]. Id. ¶ 80.

[127]. See id. ¶ 33.

[128]. Id. ¶ 80.

[129]. Id.

[130]. See id. 33.

[131]. Id. ¶ 80.

[132]. Id. ¶ 158.

[133]. Id. ¶ 169.

[134]. Id. ¶ 265.

[135]. See id. ¶¶ 263–64.

[136]. Id. ¶ 170.

[137]. Id. ¶ 177.

[138]. Id. ¶¶ 190–266.

[139]. Id. ¶ 190.

[140]. Id. ¶ 197.

[141]. Id.

[142]. Id. ¶ 204.

[143]. Id.

[144]. Id. ¶ 205.

[145]. Id.

[146]. Id. ¶¶ 207–14.

[147]. Id. ¶¶ 229–59.

[148]. Id. ¶¶ 260–62.

[149]. Id. ¶ 265.

[150]. Id.

[151]. Id. ¶ 77.

[152]. Articles on Prevention, supra note 25, arts. 3, 9–10.

[153]. Pulp Mills, 2010 I.C.J. ¶ 276.

[154]. Owen McIntyre, The Proceduralisation and Growing Maturity of International Water Law, 22 J. Envtl. L. 475, 489 (2010).

[155]. Viñuales, supra note 24, at 257 (predicting that the Third Wave would further expound on the enforceability of IEL).

[156]. Djurdja Lazic, Introductory Note to the International Court of Justice: Pulp Mills on the River Uruguay (Argentina v. Uruguay), 49 I.L.M. 1118, 1120 (2010).

[157]. Pulp Mills, 2010 I.C.J. ¶ 101.

[158]. Id.

[159]. Id. ¶ 80.

[160]. Id.; Articles on Prevention, supra note 25, art. 8.

[161]. Pulp Mills, 2010 I.C.J. ¶ 101.

[162]. Articles on Prevention, supra note 25, art. 3.

[163]. Viñuales, supra note 24, at 253.

[164]. Pulp Mills, 2010 I.C.J. ¶ 204.

[165]. Id. ¶ 205.

[166]. Id. ¶ 106.

[167]. Id.; see also Pulp Mills Application, supra note 90, ¶ 10 (indicating that the Summary Environmental Report was provided by ENCE, the construction company in charge of the CMB mill).

[168]. Pulp Mills, 2010 I.C.J. ¶ 265.

[169]. Aerial Herbicide Spraying Application, supra note 9, ¶ 9.

[170]. Id. ¶ 37.

[171]. Id. ¶¶ 10–12.

[172]. Id. ¶ 10.

[173]. Id.

[174]. Id. ¶ 20.

[175]. Id. ¶ 19.

[176]. Id. ¶ 22.

[177]. Id. ¶ 23.

[178]. Id. ¶ 25 (noting that Ecuador was named by the World Conservation Monitoring Centre of the United Nations Environment Programme as “mega-diverse” and is one of seventeen countries worldwide to boast the title); see also id. (explaining that Ecuador has the world’s highest biological diversity per area unit, meaning that on average, there are more species per square kilometer in Ecuador than anywhere else in the world).

[179]. Aerial Herbicide Spraying Application, supra note 9, ¶ 28.

[180]. Id.

[181]. Id. ¶ 29.

[182]. Id. ¶ 30.

[183]. Rio Declaration, supra note 26, princ. 15.

[184]. Aerial Herbicide Spraying Application, supra note 9, ¶¶ 31, 33.

[185]. Id. ¶ 32.

[186]. Id. ¶ 38.

[187]. Id. ¶ 29.

[188]. Id. ¶¶ 10–12.

[189]. McIntyre, supra note 154, at 489.

[190]. Aerial Herbicide Spraying Application, supra note 9, ¶¶ 23, 29–30.

[191]. Pulp Mills on the River Uruguay (Arg. v. Uru.), Judgment, 2010 I.C.J. 135, ¶ 101 (Apr. 20).

[192]. Id. ¶¶ 14–15, 17, 18.

[193]. ICJ Statute, supra note 34, art. 36.

[194]. See generally Viñuales, supra note 24.

[195]. Articles on Prevention, supra note 25, art. 3, ¶ 11.

[196]. Id. art. 4.

[197]. Lazic, supra note 156, at 1120.

[198]. U.S. Dep’t of State, supra note 5; see also Juan Forero, In the War on Coca, Colombian Growers Simply Move Along, N.Y. Times, Mar. 17, 2001, at A1.

[199]. Romero, supra note 6, at A1.

[200]. See Staff of Senate Caucus on Int’l Narcotics Control, Onsite Staff Evaluation of U.S. Counter-Narcotics Activities in Brazil, Argentina, Chile, and Colombia, S. Doc. No. 105–41, at 16 (1995) (noting that the program lacks “serious overall coordination” and has “sparse resources” while its policies generate environmental protests); see also Kline, supra note 4, at 45 (noting that although the Minister of Defense Juan Manuel Santos reported in July 2006 that the situation was improving, “the army had not defeated FARC and had not captured any of the major leaders”).

[201]. U.N. Office on Drugs and Crime, Coca Cultivation in the Andean Region: A Survey of Bolivia, Colombia, and Peru 7 (2008), available at http://www.unodc.org/documents/crop-monitoring/Andean_report_2008.pdf.

[202]. Romero, supra note 6, at A1.

[203]. Bill Marx, Plan Fails to Curb Flow of Colombian Drugs, Buff. News, Nov. 25, 2003, at B11.

[204]. Some contend that because three hectares must be cleared for every acre of coca planted, the coca farmers are actually causing more environmental damage than the herbicide due to excessive deforestation, implying that spraying the herbicide is actually the more environmentally friendly option.  See Joseph Weir, The Aerial Eradication of Illicit Coca Crops in Colombia, South America: Why the United States and Colombian Governments Continue to Postulate its Efficacy in the Face of Strident Opposition and Adverse Judicial Decisions in the Colombian Courts, 10 Drake J. Agric. L. 205, 240 (2005).

[205]. See supra Part II.

[206]. Aerial Herbicide Spraying Application, supra note 9, ¶¶ 10–12.

[207]. Id. ¶ 30.

[208]. Rio Declaration, supra note 26, princ. 15.

[209]. See Owen McIntyre & Thomas Mosedale, The Precautionary Principle as a Norm of Customary International Law, 9 J. Envtl. L. 222 (1997).

[210]. Id.

[211]. See id.

[212]. Id. at 224–25; see, e.g., Mark Guarino, EPA Scolds BP in Gulf Oil Spill: Dispersant is Toxic, Change It, Christian Sci. Monitor, May 20, 2010, http://www.csmonitor.com/USA/2010/0520/EPA‑scolds‑BP‑in‑Gulf‑oil‑spill‑dispersant-is-too-toxic-change-it; Oil Spill Dispersant (COREXIT ®EC9500A and EC9527A) Information for Health Professionals, Ctrs. for Disease Control and Prevention, (Sept. 14, 2011, 11:41 AM), http://www.bt.cdc.gov
/gulfoilspill2010/dispersants_hcp_info.asp.

[213]. Rio Declaration, supra note 26, princ. 15.  See Aerial Herbicide Spraying Application, supra note 9, ¶ 30.

[214]. Birnie et al., supra note 29, at 156 (emphasis added).

[215]. See supra text accompanying note 3.

[216]. See supra notes 175–78 and accompanying text.

[217]. Aerial Herbicide Spraying Application, supra note 9, ¶ 29.

[218]. See Esposito, supra note 27, at 52.

[219]. Compare Gabcíkovo-Nagymaros Project (Hung. v. Slovak.), Judgment, 1997 I.C.J. 7, ¶ 53 (Sept. 25), with Articles on State Responsibility, supra note 29, art. 25.

[220]. Articles on State Responsibility, supra note 28, art. 25.

[221]. Gabcíkovo-Nagymaros, 1997 I.C.J. ¶ 51.

[222]. Id. ¶ 14.

[223]. Id.

[224]. U.S. Dep’t of State, supra note 5.

[225]. Articles on State Responsibility, supra note 28, at art. 25, ¶ 15.

[226]. Id.

[227]. Fernando Henrique Cardoso, César Gaviria & Ernesto Zedillo, The War on Drugs is a Failure, Wall St. J., Feb. 23, 2009, at A15.

[228]. Id.

[229]. Articles on State Responsibility, supra note 28, at art. 25, ¶ 17.

[230]. See Viñuales, supra note 24, at 248–49 (explaining that part of the Second Wave’s value was the declaration in Gabcíkovo-Nagymaros that environmental interests are in fact essential interests that can be protected in and of themselves under the doctrine of necessity).

[231]. Kline, supra note 4, at 193.

[232]. Id.

[233]. Id. at 199.

* J.D. Candidate, May 2012, Wake Forest University School of Law.  The author thanks Dale & Suzanne Rutledge and Austin Watson for their constant encouragement and patience, and Katie Heath for her inspiration and many hours of help with this piece.

Article in PDF Form

By: Rachael A. Doyle*

Introduction

Congress enacted the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”)[1] to address and remedy the improper disposal of toxic and hazardous wastes.[2]  Since its enactment, CERCLA has been highly criticized for its ostensibly high transaction costs, its strict liability scheme, and the expensive cleanup costs associated with the program.[3]  Yet CERCLA purports to encourage private parties who had no part in improper disposal to clean up hazardous waste in a cost-effective manner and to then seek reimbursement of these response costs from the responsible party.[4]  By bifurcating the issues of liability and damages in a recovery response action, CERCLA seeks to prevent relitigation of issues by allowing for a declaration of liability, relegating the complicated issue of damages to a later stage in the litigation.[5]

Section 113(g)(2)[6] provides for mandatory declaratory relief in a CERCLA action.[7]  Circuits are split on whether a private party plaintiff can seek a declaratory judgment for future liability without successfully proving costs incurred under section 107(a).[8]  This Comment considers the far-reaching consequences of such a prerequisite to declaratory relief.  In order to consider whether a plaintiff can seek declaratory relief based solely on future liability, Part I explores whether such claims are truly ripe, whether the federal courts have subject matter jurisdiction over these claims, and finally, whether a declaratory judgment should be awarded under CERCLA’s declaratory relief provision or under the Declaratory Judgment Act.[9]  Part II presents the United States Courts of Appeals’ divergent approaches to the question of declaratory relief for future liability.  Finally, Part III argues that the statutory language and remedial purposes of CERCLA justify allowing declaratory relief based only on future liability.

I.  CERCLA Procedure: Ripeness, Subject Matter Jurisdiction, and the Declaratory Judgment Act

In CERCLA actions, federal courts have inconsistently applied either the Declaratory Judgment Act or section 113(g)(2), CERCLA’s more specific provision for declaratory relief.  Whether one statute or the other controls is especially important for a plaintiff seeking a declaratory judgment based solely on future liability.  If the Declaratory Judgment Act applies, a plaintiff is unable to obtain declaratory relief because the Declaratory Judgment Act cannot alone confer subject matter jurisdiction on a federal court, and the court must dismiss the claim.[10]  Thus, the plaintiff’s declaratory relief claim must be predicated on CERCLA.  For a federal court to even consider a plaintiff’s request for a declaratory judgment, the court must not only have subject matter jurisdiction; the claim must also be ripe.  As discussed below, federal courts have confused the analysis of ripeness with the discussion of awarding declaratory relief.[11]  First, this Part gives an overview of recovering past response costs under section 107(a) for private plaintiffs, as well as obtaining declaratory relief under section 113(g)(2).  Next, this Part illustrates why plaintiffs continue to argue for declaratory relief pursuant to the Declaratory Judgment Act, and why federal courts continue to muddle their analyses of declaratory relief.

A.            Obtaining Declaratory Relief in a CERCLA Action

CERCLA’s “extensive and far-reaching liability scheme” allows the federal and state governments, private parties, and Indian tribes to “incur[] response costs in dealing with a release or threatened release of hazardous substances.”[12]  When a release does occur, section 107(a)(4)(A)–(D)[13] authorizes recovery of response costs from potentially responsible parties (“PRPs”).[14]  In order to claim cost recovery under section 107(a), a private party plaintiff must establish the following four elements:

(1) the site on which the hazardous substances are contained is a “facility” under CERCLA’s definition of that term, (2) a “release” or “threatened release” of any “hazardous substance” from the facility has occurred, (3) such “release” or “threatened release” has caused the plaintiff to incur response costs that were “necessary” and “consistent with the national contingency plan,” and (4) the defendant is within one of four classes of persons subject to the liability provisions of Section 107(a).[15]

Satisfying these four elements is essential for recovering response costs, and the stakes are high since “CERCLA imposes strict liability for the costs of cleanup.”[16]

CERCLA permits a plaintiff to seek a declaratory judgment for future liability “in any initial cost-recovery action under section 107.”[17]  According to section 113(g)(2), “the court shall enter a declaratory judgment on liability for response costs or damages that will be binding on any subsequent action or actions to recover further response costs or damages.”[18]  Allowing declaratory relief “economizes on judicial time”[19] and encourages prompt remedial action, placing “the costs on those responsible.”[20]  While courts do note that there “is an issue of prematurity” when it comes to the “allocation of the clean-up costs that [a plaintiff] has not yet incurred,” this prematurity does not foreclose consideration of declaratory relief.[21]  However, declaratory relief is not unrestricted; judgments have been limited to the “issue of liability for future response costs” and do not include recoverability of those costs.[22]  Moreover, “a defendant who is declared liable for future response costs may still challenge those costs as unrecoverable.”[23]

After the Superfund Amendments and Reauthorization Act of 1986 (“SARA”),[24] PRPs can seek contribution under section 113(f) “from other parties that have helped create a hazardous waste problem” at the contaminated site.[25]  Section 113(f) allows a PRP to seek contribution from other “PRPs with common liability stemming from an action instituted under § 106 or § 107(a).”[26]  While the standard for seeking contribution is identical to the standard for proving response costs under section 107(a),[27] the statutory language of section 113(f) is “silent on whether declaratory judgments are authorized in contribution actions.”[28]  Circuit courts have typically recognized that declaratory relief is permissible in contribution actions because it “is consistent with the broader purposes of CERCLA.”[29]  These broader purposes include managing the “massive and wasteful” litigation that often results in the environmental context.[30]

Importantly, courts typically refuse to find that future costs are too speculative to support a declaratory judgment.[31]  What is less clear is whether a plaintiff can seek a declaratory judgment for future liability without establishing a prima facie case under section 107(a).  This question first requires consideration of whether the Declaratory Judgment Act controls CERCLA actions.  If only the Declaratory Judgment Act applies—rather than CERCLA’s specific declaratory relief provision—a federal court will not have subject matter jurisdiction to consider the question of future liability unless a plaintiff can prove he is entitled to cost recovery under section 107(a).[32]  Second, this question requires a look at how courts have interpreted the language of section 113(g)(2), which specifically provides for declaratory relief in a section 107(a) cost-recovery action[33] and—by implication of the courts—in section 113(f) contribution actions.[34]  Courts’ divergent interpretations illustrate that the language of section 113(g)(2) is not entirely unambiguous.  As a result, some circuits require a finding of section 107(a) liability as a prerequisite for a declaratory judgment,[35] while others conclude that a declaration of future liability requires no proof of costs already incurred.[36]

B.            The Declaratory Judgment Act’s Relationship to CERCLA Recoverability

While federal courts typically issue declaratory judgments under section 113(g)(2) of CERCLA, plaintiffs consistently argue for a declaratory judgment under the Declaratory Judgment Act.[37]  The Declaratory Judgment Act provides that “[i]n a case of actual controversy within its jurisdiction . . . any court of the United States, upon the filing of an appropriate pleading, may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought.”[38]  In contrast to section 113(g)(2), in which there is no language discussing the necessity of a case or controversy, the Declaratory Judgment Act predicates relief on the existence of “a substantial controversy, between parties having adverse legal interests.”[39]

In the context of contribution, the First, Ninth, and Tenth Circuits, “have taken the position . . . that § 9613(g)(2), the declaratory judgment provision of CERCLA, applies to § 9613(f) contribution actions for both past and future response costs.”[40]  The First Circuit, in United States v. Davis, considered the applicability of the Declaratory Judgment Act “only because [it applies], at least by implication, to the availability of declaratory relief under § 9613(g)(2).”[41]  In section 107(a) actions, most courts rely solely on the language of section 113(g)(2) to grant declaratory relief.[42]  Since section 113(g)(2) compels the court to issue a declaratory judgment for future liability,[43] courts usually issue declaratory relief pursuant to this “mandatory” language.[44]  In contribution actions, it is not specifically stated in either section 113(g)(2) or section 113(f) whether declaratory relief is even allowed.[45]  While some courts apply the language of section 113(g)(2) to contribution actions, other courts find that the Declaratory Judgment Act controls for contribution actions because no specific relief is pronounced in the statute.[46]

Why do plaintiffs continue to argue for relief pursuant to the Declaratory Judgment Act when CERCLA specifically provides for declaratory relief in section 113(g)(2)?  For one thing, not all courts have limited the analysis of declaratory relief to the language of section 113(g)(2).  To illustrate this inconsistency, the Ninth Circuit has referenced the Declaratory Judgment Act in their analysis of CERCLA claims, stating that “[j]urisdiction to award declaratory relief exists only in ‘a case of actual controversy.’”[47]  Even in United States v. Davis, the First Circuit considered appellants’ arguments that “there is no case or controversy between the parties.”[48]  Since this “case or controversy” language is prevalent in plaintiff’s requests for declaratory relief in most other contexts, courts tend to consider arguments invoking the Declaratory Judgment Act in addition to those based upon section 113(g)(2).

1. Ripeness

In order for a court to even consider a plaintiff’s claim for declaratory relief, the claim must be ripe—a requirement that may trigger an analysis of the Declaratory Judgment Act’s “case or controversy” language.  This “case or controversy” language is closely linked with an action’s ripeness, and ripeness is particularly relevant when seeking declaratory relief because a court may be reluctant to exercise one of its traditionally discretionary powers without an actual controversy before the court.[49]  The Declaratory Judgment Act requires a “case or controversy” because courts want to resolve actual controversies between parties having adverse legal interests as opposed to issuing advisory opinions.[50]  According to the Supreme Court, the Declaratory Judgment Act is derived from the “case or controversy” requirement of Article III of the Constitution.[51]  Ripeness, a related doctrine, “is about more than just the immediacy of the controversy, but about whether the controversy can be settled now.”[52]  Therefore, courts may also borrow language from the Declaratory Judgment Act when awarding declaratory relief because it helps the courts consider declaratory relief from the perspective of ripeness.

For example, in City of Colton v. American Promotional Events, Inc., the City of Colton appealed a finding by the district court that prohibited awarding a declaratory judgment for future liability without the city showing that “it was entitled to recover any of its past costs.”[53]  The court considered the ripeness question in the CERCLA context.  Relying on precedent, the court found a CERCLA case ripe “when the ‘essential fact establishing [the plaintiff’s] right to declaratory relief—the alleged disposal of hazardous substances . . . has already occurred.’”[54]  The court went on to conclude:

None of these cases imposed any requirement that a party incur recoverablei.e., necessary and [national contingency plan]-compliant—response costs before its claim for declaratory relief is ripe.  Indeed, our cases make clear that so long as there has been a release of hazardous substances, and the plaintiff spends some money responding to it, a claim for declaratory relief is ripe for review.[55]

Another Ninth Circuit case explained that “[a]s soon as [the plaintiff] expended its first dollar, it could have sued . . . and sought a declaratory judgment.”[56]  Thus, once this essential step occurs—an expenditure of any amount, including nominal costs—the case is ripe, and an actual controversy concerning adverse legal interests is established, allowing judicial review.

By considering whether a “case or controversy” is before the court, federal courts are confusing the separate notions of ripeness and declaratory relief.  Ripeness is not based in the Declaratory Judgment Act—it is founded in Article III.[57]  Since section 113(g)(2) makes no mention of a “case or controversy” requirement, the use of such language should be limited to the analysis of ripeness.  As will be discussed below, the Declaratory Judgment Act has no place in CERCLA, except arguably in the context of contribution, and as a result, a “case or controversy” is only required as far as is needed to satisfy the justiciability doctrine of ripeness.

2. Subject Matter Jurisdiction

Not only must a plaintiff establish ripeness, the federal court must also have subject matter jurisdiction over the case.  This is extremely important for a plaintiff who seeks only declaratory relief as to future liability.  The Ninth Circuit’s opinion in American Promotional Events sheds light on the inter-related questions of whether a court has subject matter jurisdiction and whether declaratory relief is awarded based on the Declaratory Judgment Act or on section 113(g)(2).  In American Promotional Events, the court considered whether “the district court’s disposal of [plaintiff’s] CERCLA past response cost-recovery claims deprived the court of subject matter jurisdiction.”[58]  The court pointed out that “the Declaratory Judgment Act does not itself confer federal subject matter jurisdiction,” and that it is considered “an additional remedy in cases in which jurisdiction is otherwise established.”[59]  If a plaintiff cannot prove past recovery costs, but still seeks a declaratory judgment, the plaintiff cannot rely on the Declaratory Judgment Act to confer jurisdiction.

A plaintiff’s declaratory relief claim must be “predicated on CERCLA.”[60]  So long as the plaintiff’s claim is “non-frivolous,” it “suffices to establish federal question jurisdiction, even if that claim is later dismissed on the merits.”[61]  Thus, even though a plaintiff cannot establish section 107(a) cost recovery, the plaintiff should claim declaratory relief pursuant to the federal statute rather than the Declaratory Judgment Act.  Should the court dismiss the plaintiff’s section 107(a) claim, the court can then consider the declaratory judgment claim under the federal statute, even if the section 107(a) claim is dismissed on the merits.  Otherwise, the court is required to dismiss the remaining claim since the Declaratory Judgment Act itself cannot confer subject matter jurisdiction on the court.  This implies that subject matter jurisdiction is not an insurmountable barrier for a plaintiff arguing for declaratory relief, even when that plaintiff fails to prove costs incurred under section 107(a).

3. The Irrelevant Declaratory Judgment Act

When a plaintiff seeks only declaratory relief based on future liability, the plaintiff’s claim must be based on CERCLA itself; otherwise, the court will have to dismiss the claim if it is based on the Declaratory Judgment Act.[62]  As discussed above, courts have inconsistently applied the Declaratory Judgment Act in CERCLA actions.  The American Promotional Events opinion offers the most insight into this problem, considering specifically whether the Declaratory Judgment Act governs CERCLA actions or whether section 113(g)(2) controls.  Even though “Colton’s complaint referred to the Declaratory Judgment Act rather than CERCLA section 113(g)(2),” the Ninth Circuit found that “the latter provision clearly governs this initial cost-recovery action.”[63]  Concluding that section 113(g)(2) qualifies as a “more detailed declaratory relief provision,” the court went on to analyze the plaintiff’s claim for declaratory relief under section 113(g)(2).[64]  This rule was formulated in Hinck v. United States, in which the Supreme Court held that “in most contexts, ‘a precisely drawn, detailed statute pre-empts more general remedies’”—a holding “guided by [the Court’s] past recognition that when Congress enacts a specific remedy when no remedy was previously recognized . . . the remedy provided is generally regarded as exclusive.”[65]  This finding does appear to support the Ninth Circuit’s decision in American Promotional Events that declaratory relief pursuant to section 113(g)(2) should be the “exclusive” remedy, considering that such a remedy did not exist until Congress passed CERCLA.[66]

Despite a plaintiff’s best attempt to use the Declaratory Judgment Act, it is actually in his best interest to argue for declaratory relief pursuant to section 113(g)(2) of CERCLA, especially when the plaintiff is only arguing for a declaratory judgment regarding future liability.  While the court’s willingness to hear claims based on the Declaratory Judgment Act depends upon the jurisdiction, it seems that in most contexts, section 113(g)(2) is the safest way to establish that the federal court has subject matter jurisdiction over the claim.  It appears the Declaratory Judgment Act is most relevant in contribution actions in which the court may not allow declaratory relief to rest upon section 113(g)(2), and therefore, in this context, a plaintiff may want to argue for a declaratory judgment based on both section 113(g)(2) and the Declaratory Judgment Act.  But for private party plaintiffs seeking declaratory relief based only on future liability, the plaintiff should predicate the claim on section 113(g)(2) in order to establish that the federal court has subject matter jurisdiction over the case.

II.  The Dividing Line: Courts’ Conflicting Interpretations of Section 113(g)(2)

In order to establish a prima facie case of cost recovery under section 107(a), a plaintiff must satisfy four elements.  If one of the four elements is not satisfied, a plaintiff recovers nothing.[67]  This Part explores whether a plaintiff also must satisfy these four elements in order to obtain a declaratory judgment for future liability.  Circuit courts are divided on whether proof of past recovery is a sine qua non for obtaining declaratory relief regarding future costs.[68]  The language of section 113(g)(2) does not explicitly require proof of past recovery costs; however, courts have different justifications for this silence, if any justification at all.  With limited statutory guidance, the federal courts are divided on whether allowing a declaratory judgment without proof of past recovery costs is consistent with CERCLA’s overall purpose to prevent relitigation of the same issues.[69]

A.            Requiring Proof of Incurred Costs Under Section 107(a): The American Promotional Events Holding

The most recent and perhaps clearest iteration on this question is found in the Ninth Circuit’s opinion in City of Colton v. American Promotional Events.  In American Promotional Events, the district court held that the city had failed to establish a prima facie case under section 107(a) because it could not show that the response costs were “necessary and consistent with the [national contingency plan].”[70]  The district court ruled that this precluded consideration of declaratory relief for future costs.[71]  While the Ninth Circuit noted that other federal courts of appeals have taken different approaches to this question, it ultimately affirmed, analyzing the question under section 113(g)(2).[72]

The Ninth Circuit first focused on the language of section 113(g)(2).  It postulated that “‘liability for response costs’ must refer to the response costs sought in the initial cost recovery action, given that the sentence later refers to ‘any subsequent action or actions to recover further response costs.’”[73]  According to the court, such a reading permits a declaratory judgment for future cost-recovery actions only when a plaintiff has established cost recovery on “present liability” under section 107(a).[74]  By satisfying the elements of section 107(a), a plaintiff proves to the court that the defendant is presently liable, and therefore, must be declared liable for future response costs.  The court supported this finding by appealing to an “elemental canon of statutory construction,” which states, “where a statute expressly provides a particular remedy or remedies, a court must be chary of reading others into it.”[75]  This canon supports the court’s conclusion that Congress created a statute that expressly grants a remedy for a specific plaintiff—one who has satisfied the elements of section 107(a).  Otherwise, the court reasoned, Congress “could have provided that ‘the court shall enter a declaratory judgment on liability for further response costs.’”[76]  However, Congress did not, and the court found this reason enough to conclude that the language of section 113(g)(2) unambiguously requires a finding of section 107(a) cost recovery.[77]

The plaintiff convincingly argued that “CERCLA’s goal of encouraging private parties to clean up hazardous sites” supports granting declaratory relief solely based on future liability.[78]  Colton argued that precluding consideration of declaratory relief “would discourage private parties from taking future actions to clean up hazardous sites if they failed to comply with the [national contingency plan]” in their past actions.[79]  Yet the court was not persuaded by Colton’s argument because, the court reasoned, encouraging private response is not the exclusive goal of CERCLA.[80]  Rather, CERCLA’s goal is also to “make the party seeking response costs choose a cost-effective course of action” when considering how to clean up the waste.[81]  The court determined that “[p]roviding declaratory relief based on mere assurances of future compliance with the [national contingency plan] would create little incentive for parties to ensure that their initial cleanup efforts are on the right track.”[82]  The court refused to grant premature relief under CERCLA in order to prevent “perverse incentives.”[83]  According to the court, when a plaintiff has failed to show past response costs as consistent with the national contingency plan (“NCP”), granting a declaratory judgment for future liability would ultimately endorse action that is prohibited under section 107(a).[84]

The court also looked into the practicalities of granting declaratory relief in this limited situation.  The court found that it would have to make “complicated determinations” about the allocation of responsibility among the responsible parties, with no assurance that the plaintiff would ever establish that costs incurred were necessary and consistent with the NCP.[85]  Therefore, the court found that “CERCLA’s purposes would be better served” if the plaintiff came “to court only after demonstrating its commitment to comply with the NCP and undertake a CERCLA-quality cleanup.”[86]  Even in the court’s holding, it is difficult to ignore the court’s reprimand of the city for its failure to comply with the NCP and expectation of a declaratory judgment from the court in return.

In order to show why a plaintiff may fail to establish past cost recovery under section 107(a) and still seek a declaratory judgment as to future liability, some elaboration of the facts of American Promotional Events is required.  The City of Colton began examining its municipal supply wells for perchlorate contamination.[87]  These wells drew water from the Rialto-Colton groundwater basin.  The city found “concentrations ranging from about 4 to 10 micrograms per liter.”[88]  The California Department of Health Services (“CDHS”) had an “advisory action level” for perchlorate of four micrograms per liter.[89]  Because the action level was merely advisory, and not enforceable, the CDHS stated that the affected wells could still supply water in their current state.[90]  Colton decided otherwise, and treated the impacted wells for perchlorate contamination.[91]  Four million dollars later, Colton brought suit against industries located along the basin for reimbursement of treatment costs.[92]  The district court concluded that such costs were not necessary “because there was no immediate threat to the public health or environment” based on the unenforceable advisory action level.[93]  Four million dollars, of course, is small change compared to the fifty-five to seventy-five million dollars the basin-wide cleanup was estimated to eventually cost.[94]  Therefore, a declaration of future liability was incredibly important to Colton.

The American Promotional Events opinion offers full insight into a court’s justification for precluding declaratory relief for this particular type of plaintiff.  It displays a complete picture of what is required for a declaratory judgment under CERCLA: ripeness, subject matter jurisdiction, and the prerequisite of satisfying the requirements of section 107(a) to even obtain a section 113(g)(2) declaratory judgment, thereby illustrating the interconnectedness of all three requirements.  It also settles the Declaratory Judgment Act confusion by determining that only section 113(g)(2) applies in a cost-recovery action.  Colton failed to establish section 107(a) liability because its response costs were deemed not necessary and consistent with the NCP; it is important to remember, however, that this is only one of the requirements of section 107(a).[95]  A plaintiff may fail to establish liability if he cannot prove the remaining requirements.  It appears that the Ninth Circuit would still refuse to grant a declaratory judgment for a plaintiff failing to show that, for example, the defendant is within one of the four classes of persons subject to liability.[96]  The opinion does not appear to hinge upon Colton’s failure to comply with the NCP, but rather upon Colton’s failure to prove one of the essential elements under section 107(a).  Yet, one of the most fiercely litigated elements of cost recovery under section 107(a) is the requirement that response costs are necessary and consistent with the NCP, which explains the element’s frequent reoccurrence in the case law.[97]

B.            Other Courts’ Interpretations of Section 113(g)(2)

The Ninth Circuit is not the only court to consider the question of how a CERCLA plaintiff can receive declaratory relief for future liability.  As the Ninth Circuit points out, the Second, Third, and Eighth Circuits have all concluded that section 113(g)(2) applies only after a plaintiff has incurred response costs and comes to court prepared to establish a prima facie case of cost recovery under section 107(a).[98]  While these opinions support the American Promotional Events holding, they offer little insight into why section 113(g)(2) unambiguously applies only when costs have already been incurred under section 107(a).  These opinions are more significant for their holdings rather than for their analyses, as they devote limited attention to policy considerations raised by the private party plaintiffs.

In Trimble v. Asarco, Inc., a putative class brought suit against Asarco—a lead smelter and refinery—for emitting lead and other particulates into the air.[99]  Asarco maintained that these particulates were not adverse to the public’s health.[100]  The district court ruled that it lacked subject matter jurisdiction over the claim because the plaintiffs failed to show that they had incurred response costs necessary and consistent with the NCP since the plaintiffs did not expend any of their own money to investigate the effects of Asarco’s emissions.[101]  The Eighth Circuit reinforced the generally accepted notion that a plaintiff does not have to actually pay for a cost in order to incur it.[102]  An incurred cost “may be based on an existing legal obligation.”[103]  The court found, however, that “the mere possibility, even the certainty, that an obligation to pay will arise in the future does not establish that a cost has been incurred, but rather establishes that a cost may be incurred or will be incurred.”[104]  The court refused to allow a plaintiff to obtain declaratory relief for future liability without having already incurred response costs under section 107(a).[105]

Much like the City of Colton, the Trimble plaintiffs made a policy argument that refusing declaratory relief would ultimately injure the plaintiffs, who would have to spend money or incur debt in order to begin the cleanup process or investigate the waste.[106]  The plaintiffs argued that such a finding would “deny those with the least financial resources access to CERCLA’s benefits.”[107]  But the Eighth Circuit responded that while it “recognize[d] a potential for inequality within the CERCLA private cost-recovery scheme,” it refused to allow this inequality to overcome the court’s interpretation of the statutory language.[108]

In Gussack Realty Co. v. Xerox Corp., the Second Circuit reversed a jury award of $1,083,585 to the plaintiff for future response costs, finding that the award of “a present lump-sum payment of anticipated expenses” was not the “proper remedy.”[109]  The court ruled that only a declaratory judgment is appropriate.[110]  The court then refused to award a declaratory judgment because “[p]laintiffs ha[d] not incurred any compensable expenses under CERCLA.”[111]  Without any more explanation, the court ruled as a matter of law that declaratory relief was unavailable.[112]  The Third Circuit, in United States v. Occidental Chemical Corp., provided even less reasoning for its conclusion that declaratory relief is prohibited when a plaintiff does not satisfy section 107(a).[113]  The lower court had dismissed plaintiff’s claim under section 107(a), and as a result, had also dismissed plaintiff’s claim for declaratory judgment under section 113(g)(2)—the declaratory judgment provision of CERCLA.[114]  The Third Circuit reversed the dismissal of the plaintiff’s section 107(a) claim, noting that “it is understandable that the District Court, having erroneously concluded that Occidental had no liability for EPA’s outstanding past costs . . . dismissed the § 122(g)(2) claim for a declaratory judgment as to future costs.”[115]

These three cases demonstrate that before American Promotional Events there was little discussion and justification for federal court determinations that declaratory relief pursuant to section 113(g)(2) require a showing of costs incurred under section 107(a).  The other side of the conversation has been just as limited.  In each of these cases, plaintiffs have argued against such a finding by looking to the broader purposes of CERCLA, especially encouraging private cleanup by the responsible party.  For some courts, this argument has been persuasive.

C.            Courts Allowing for a Declaration of Future Liability

Both the First and Tenth Circuits have held that private party plaintiffs can obtain a declaratory judgment even when these plaintiffs fail to establish a prima facie case in a past cost-recovery action.[116]  In the First Circuit, the court formulated this rule in the context of contribution.[117]  Since establishing a cost-recovery action for contribution under section 113(f) is identical to establishing cost recovery under section 107(a), obtaining declaratory relief in both contexts will be treated interchangeably.[118]

In County Line Investment Co. v. Tinney, the Tenth Circuit determined that a plaintiff must prove that response costs are consistent with the NCP as an element of a section 107(a) claim.[119]  The court recognized two exceptions to this rule: (1) when “the factual record does not permit a determination of consistency with the NCP at the time the motion for summary judgment is filed”; and (2) when the plaintiff seeks only a declaration as to future liability for “future costs incurred consistent with the NCP.”[120]  Without further elaboration, the court cited two district court cases from New Jersey, discussed below.[121]  It appears that the Tenth Circuit found these exceptions rooted in the fact that the plaintiff can obtain a declaratory judgment as to liability, but in the future, the plaintiff will still have to prove that the future costs incurred were consistent with the NCP.  For a defendant who is declared liable for future costs, there is still an escape hatch—if the future costs are not NCP consistent, then the costs are unrecoverable.

The First Circuit addressed this issue in a contribution action in United States v. Davis.[122]  The court, having concluded that section 113(g)(2) applies in contribution actions, began its analysis by looking at the statute’s plain language.[123]  The court found that nothing in the language of section 113(g)(2) “precludes an interpretation that declaratory relief is available” for “future or past response costs.”[124]  Instead, the court determined that there is a “flexible time line” under section 113(f), in which a “defendant in a [section 107(a)] cost recovery action may initiate a contribution action before its own liability is established.”[125]  This same reasoning would apply to a defendant who has been found liable, and who seeks declaratory relief “before that liability has been fully discharged.”[126]  By comparing section 113(f) with section 113(g)(2), the court looked to the context of the statutory scheme and its purpose to conclude that the statute does not prohibit the award of declaratory relief for future liability only.

Perhaps one distinction can be drawn here—in contribution actions, liability has already been established.  A plaintiff has brought an action against the PRP, and has proven under section 107(a) that costs have been incurred.  As a result, this responsible party has brought a contribution action.  The First Circuit in Davis reasoned that this liable party could obtain declaratory relief for future costs incurred even when the party has not shown that it has incurred past response costs.[127]  The court went on to note that “allocation helps to alleviate the hardship that would be visited upon the [PRP] seeking contribution if that PRP was, in effect, required to finance the entire cleanup operation before getting a determination regarding the shares attributable to the other PRP’s.”[128]  If it is unfair for a liable party to incur all of the costs of the cleanup before obtaining declaratory relief, it appears that it is also unfair for an innocent private party to incur all of the cleanup costs before receiving a declaratory judgment.  Thus, this case indicates that when a liable party—and by logical extension, an innocent party—seeks a declaratory judgment for future liability, the party does not have to prove past response costs.

In two separate cases, the U.S. District Court for the District of New Jersey has also held that proving section 107(a) costs is not a prerequisite to obtaining declaratory relief as to future liability.[129]  In T & E Industries v. Safety Light Corp., the court determined it was precluded from “entering summary judgment as to specific amounts of the costs” incurred when the plaintiff had not proven that the costs were necessary and consistent with the NCP; however, it was not precluded from granting a declaratory judgment.[130]  The court disagreed with the defendant’s argument that such a declaratory judgment “is tantamount to writing a ‘blank check.’”[131]  The defendant was protected, according to the court, by the fact that the plaintiff would still have to prove that these future costs were NCP consistent, reiterating the Tenth Circuit’s justification for awarding declaratory relief.[132]

In Southland Corp. v. Ashland Oil, Inc., the district court again allowed declaratory relief, even when the liable plant had not yet started the cleanup process and was seeking contribution from another PRP.[133]  The court refused to find that the claim was premature.[134]  It supported this finding with the contention that declaratory relief is “consistent with CERCLA’s purpose of encouraging prompt remedial action.”[135]  While CERCLA’s overall purpose of encouraging quick and effective private party cleanup was not compelling enough for the Ninth Circuit, these circuit and district court opinions give some limited insight into why CERCLA’s purposes are better served by awarding declaratory relief for future liability only.

These cases demonstrate that while federal courts have recognized that there is reason to award declaratory relief without first satisfying all of the elements of section 107(a), they have offered very little elaboration on why it should be allowed and when it should be granted.  What is apparent from this case law is the important point that allowing declaratory relief under these circumstances is not without its limitations.  The plaintiff will still have to show that future costs incurred are necessary and consistent with the NCP, a limitation that is not illusory.  By focusing on the remedial purpose of the statute, and searching the plain language of section 113(g)(2) for any sign of the statute precluding the award of declaratory relief based solely on future liability, these federal courts refuse to find that section 113(g)(2) should foreclose the possibility of a declaration of liability.

III.  An Alternative to the American Promotional Events Holding: When Declaratory Relief Should Be Allowed

The potential repercussions of the American Promotional Events holding, the policies and purposes of CERCLA, and the fact that section 113(g)(2) never explicitly prohibits consideration of only future liability together suggest a tenable argument that declaratory relief is permissible for a plaintiff unable to prove section 107(a) costs.  This circuit split illustrates that the conversation has been limited regarding the issue of declaratory relief based only on future liability.  Until the Ninth Circuit devoted an entire opinion to the question, federal courts had given little attention to explaining their holdings.[136]  Plaintiffs seek declaratory relief for future liability for a variety of factual reasons, and placing an unnecessary burden on these plaintiffs, especially innocent parties, discourages private party cleanup and ultimately punishes the wrong party.  Based on both the plain language of section 113(g)(2) and the broader purposes of CERCLA, a plaintiff should be permitted to seek declaratory relief, even if that plaintiff has failed to satisfy the requirements of section 107(a).

A.            The Plain Language of Section 113(g)(2)

The plain language of section 113(g)(2) supports rather than hinders a plaintiff’s argument for a declaratory judgment.  While section 113(g)(2) does not specifically detail who can obtain declaratory relief, it also does not suggest that there is any prerequisite that must be satisfied before receiving a declaratory judgment.  As the First Circuit noted, the statute does not preclude consideration in the context of contribution nor does it preclude consideration of future response costs.[137]  The language simply applies to the issue of “liability for response costs or damages that will be binding on any subsequent action or actions to recover further response costs or damages.”[138]  This is an important limitation: declaratory relief is limited to the issue of liability.[139]  While the defendant is considered liable, this does not necessarily mean the defendant will have to pay.  The plaintiff will still have to prove, at a later time, that these future costs are necessary and consistent with the NCP.

Moreover, the Ninth Circuit’s reading of section 113(g)(2) is somewhat contrived.  By concluding that the declaratory judgment refers to the present action—that is, that the plaintiff must show that it has presently incurred response costs—the court ignores the second half of the clause.[140]  The declaratory judgment “on liability for response costs or damages” may not refer to costs already incurred, but simply to the fact that it “will be binding on any subsequent action or actions to recover further response costs or damages.”[141]  At the very least, this suggests that the language is not clear, and it certainly does not indicate that past costs are a requirement for a declaration of future liability.

The Ninth Circuit also fails to compare section 113(g)(2) with section 107(a) and its purposes.  By adhering to the “elemental canon of statutory construction” that courts should hesitate to read additional remedies into a statute, the court fails to consider the context of the overall statutory scheme.[142]  Just as the First Circuit compared section 113(g)(2) with section 113(f), ultimately concluding that section 113(g)(2) supports the allowance of a declaratory judgment for future liability,[143] section 107(a) should also be considered and compared with section 113(g)(2).[144]  Section 107(a) requires a showing of necessary and NCP-consistent response costs; this purpose is not contravened, however, by allowing a declaration as to future liability since the plaintiff will still have to show that these future costs were necessary and consistent with the NCP.  Thus, there is no reason to require a plaintiff “to come to court only after demonstrating its commitment to comply with the NCP and undertake a CERCLA-quality cleanup.”[145]  A plaintiff who obtains a declaratory judgment can then undertake the CERCLA cleanup, bolstered with some incentive to comply with the NCP, and ultimately still have the burden to show its cleanup was “CERCLA-quality.”[146]  Thus, the plain language of section 113(g)(2) does not preclude consideration of a declaration for future liability only.

B.            Serving the Goals of CERCLA

CERCLA’s broad remedial purposes are best served when the statute is liberally interpreted.[147]  In nearly all of these cost recovery actions the federal courts give a cursory overview of CERCLA’s purposes, ultimately concluding that some other interest overrides them.  But more consideration should be given to CERCLA’s goals.  First and foremost, “CERCLA was intended to encourage quick response and to place the costs on those responsible.”[148]  Declaratory relief supports this central tenet because “all [involved] parties . . . will know their share of costs before they are incurred.”[149]  Thus, when a plaintiff cannot show that past response costs are recoverable, allowing for a declaration of future liability puts the defendant on notice about the potential for future damages or costs.  In CERCLA actions in which plaintiffs struggle to locate PRPs—especially solvent PRPs—a declaratory judgment permits the defendant to plan ahead.[150]  As the Ninth Circuit noted, “The more liability can be limited and quantified, the more practical it is for a party to budget and borrow to finance it.”[151]  Ultimately, this places the costs on the responsible party and allows the PRP to plan accordingly.

Also, “[e]arly determination of a defendant’s liability for as yet unproven CERCLA-cognizable costs . . . can speed the settlement process and thus promote Congress’s goal of encouraging private parties to undertake and fund expedited CERCLA cleanups.”[152]  By refusing to grant a declaratory judgment for future liability, federal courts discourage private parties from further cleanup of these waste sites.  What incentive is there for a plaintiff to continue to clean up the contaminated site when the court has refused to determine future liability?  Congress also intended to prevent relitigation of these issues, and such a goal is distorted when a court requires the plaintiff to come to court again to establish the issue of liability.[153]

This distinction also creates an unfair dividing line between the plaintiff who has expended a nominal and recoverable amount, and the plaintiff who has not expended a recoverable amount or any amount yet.  Allowing a plaintiff to seek a declaratory judgment “[a]s soon as [the plaintiff] expended its first dollar,”[154] is really no different from allowing the same for a plaintiff who has not expended its first dollar (or at least its first NCP-consistent dollar).  Ultimately, the responsible party should be declared liable because that party released a hazardous substance, and allowing that party to evade liability based on the plaintiff’s failure to respond in accordance with the NCP undermines basic notions of fairness.[155]

When a plaintiff does incur future costs that are NCP consistent, and never obtained a declaratory judgment from the court in the earlier action, the plaintiff is forced to shoulder the burden of costs without any assurance that the PRP will be held liable.  Moreover, as the First Circuit articulated in United States v. Davis, distribution of liability helps to alleviate the burden on a plaintiff who would otherwise have to pay for the entire cleanup “before getting a determination regarding the shares attributable to the other PRPs.”[156]  As mentioned earlier, this justification applies more powerfully when an innocent plaintiff is involved in a section 107(a) action.  Why should a private party incur all of the cleanup costs before obtaining a declaration of liability?  What incentive is there for a plaintiff to either begin or finish the cleanup process?  If future costs are not speculative in the context of section 107(a), they are no more so when a plaintiff has not yet incurred recoverable response costs and simply seeks a declaration of liability.[157]  Therefore, the overall purposes and goals of CERCLA are best served by allowing a plaintiff to obtain a declaration of future liability even when that plaintiff has failed to show past response costs under section 107(a).

Conclusion

Obtaining declaratory relief under section 113(g)(2) is mandatory when a plaintiff successfully shows incurred response costs under section 107(a).[158]  This Comment focuses on the fact that there is no requirement in the statutory text of section 113(g)(2) that prohibits plaintiffs from solely seeking a declaration of a PRP’s liability for future costs, especially when those future costs look certain.  While a declaratory judgment is typically awarded at the court’s discretion under the Declaratory Judgment Act, Congress has provided for mandatory declaratory relief in CERCLA actions under section 113(g)(2).[159]  Such a rule allows for expedited responses and settlement, and encourages private parties to clean up according to the NCP after the defendant is declared liable, thereby serving CERCLA’s broader purposes.  It also puts PRPs on notice of their liability and the possibility that they will have to reimburse the private party plaintiff, allowing the PRP to plan ahead.

CERCLA—and specifically the NCP, since it appears to hinder most of these section 107(a) actions—should not encumber a plaintiff’s choice to voluntarily clean up.[160]  Without allowing for the possibility of declaratory relief, there is no incentive for a plaintiff to continue or begin the cleanup process.  Why should an innocent party pay for the entire cleanup process before obtaining declaration of the responsible party’s liability?  The statute does not explicitly require this, nor should the federal courts.  The Ninth Circuit interpreted section 113(g)(2) narrowly, ignoring the important fact that no matter what, at some point, the private party plaintiff will have to show that these future costs were in fact necessary and consistent with the NCP.[161]  There is no blank check for the private party plaintiff, but there should be declaratory relief.


[1]. Comprehensive Environmental Response, Compensation, and Liability Act, Pub. L. No. 96-510, 94 Stat. 2767 (1980) (codified as amended at 42 U.S.C. §§ 9601–9675 (2006)).

[2]. Richard L. Revesz, Environmental Law and Policy 630–31 (2008).

[3]. Id.

[4]. See infra notes 12–15 and accompanying text.

[5]. Amoco Oil Co. v. Borden, Inc., 889 F.2d 664, 667–68 (5th Cir. 1989).

[6]. Section 113(g)(2) is codified as amended at 42 U.S.C. § 9613(g)(2).  However, this Comment will refer to the provision as section 113(g)(2).  Likewise, 42 U.S.C. §§ 9607(a) and 9613(f) will be referred to as sections 107(a) and 113(f), respectively.

[7]. See Reichhold, Inc. v. U.S. Metals Ref. Co., 522 F. Supp. 2d 724, 729 (D.N.J. 2007) (explaining that the entry of a declaratory judgment is mandatory in a section 107(a) cost-recovery action).

[8]. See City of Colton v. Am. Promotional Events, Inc.-W., 614 F.3d 998, 1006–07 (9th Cir. 2010) (describing the current circuit split).

[9]. 28 U.S.C. §§ 2201–2202 (2006).

[10]. See Skelly Oil Co. v. Phillips Petroleum Co., 339 U.S. 667, 671–72 (1950) (finding that the Declaratory Judgment Act does not alter the jurisdictional requirements of federal courts).

[11]. See infra Part I.B.1.

[12]. Richard L. Revesz & Richard B. Stewart, The Superfund Debate, in Analyzing Superfund: Economics, Science, and Law 3, 6–7 (Richard L. Revesz & Richard B. Stewart eds., 1995).

[13]. 42 U.S.C. § 9607(a)(4)(A)–(D) (2006).

[14]. § 9607(a)(1)–(4) (noting that PRPs can include prior owners and operators, generators, transporters, and current owners).

[15]. City of Colton v. Am. Promotional Events, Inc.-W., 614 F.3d 998, 1002–03 (9th Cir. 2010) (citations omitted) (quoting Carson Harbor Vill., Ltd. v. Unocal Corp., 270 F.3d 863, 870–71 (9th Cir. 2001) (en banc), cert. denied, 131 S. Ct. 646 (2010)).

[16]. United States v. Davis, 261 F.3d 1, 29 (1st Cir. 2001).

[17]. Am. Promotional Events, 614 F.3d at 1007.

[18]. § 9613(g)(2).

[19]. PMC, Inc. v. Sherwin-Williams Co., 151 F.3d 610, 616 (7th Cir. 1998).

[20]. Boeing Co. v. Cascade Corp., 207 F.3d 1177, 1191 (9th Cir. 2000).

[21]. PMC, Inc., 151 F.3d at 616.

[22]. United States v. Hardage, 982 F.2d 1436, 1445 (10th Cir. 1992).

[23]. Id.

[24]. Superfund Amendments and Reauthorization Act of 1986, Pub. L. No. 99-499, 100 Stat. 1613 (codified as amended in scattered sections of 42 U.S.C.).  The amendment states: “Section 113 of CERCLA is amended by adding the following new subsection[:] (1) CONTRIBUTION.—Any person may seek contribution from any other person who is liable or potentially liable under section 107(a), during or following any civil action under section 106 or under section 107(a).”  Id. § 113.

[25]. United States v. Davis, 261 F.3d 1, 29 (1st Cir. 2001).

[26]. United States v. Atl. Research Corp., 551 U.S. 128, 138 (2007).

[27]. Davis, 261 F.3d at 29.  But see Atl. Research Corp., 551 U.S. at 139 (noting that the three-year statute of limitations period for contribution actions under section 113(f) differs from the six-year statute of limitations for cost-recovery actions).

[28]. Boeing Co. v. Cascade Corp., 207 F.3d 1177, 1191 (9th Cir. 2000).

[29]. Id.  See also Davis, 261 F.3d at 46 (“The statute does not explicitly provide for declaratory relief for a contribution action [but] nothing in the statute precludes an interpretation that declaratory relief is available in both instances.”).

[30]. Boeing, 207 F.3d at 1191.

[31]. See, e.g., Kelley v. E.I. DuPont de Nemours & Co., 17 F.3d 836, 844 (6th Cir. 1994) (“The fact that future costs are somewhat speculative is ‘no bar to a present declaration of liability.’” (quoting United States v. Fairchild Indus., Inc., 766 F. Supp. 405, 415 (D. Md. 1991))).

[32]. See Consol. Edison Co. of N.Y., Inc. v. UGI Utils., Inc., 423 F.3d 90, 95 (2d Cir. 2005) (holding that subject matter jurisdiction only existed under section 107(a)).

[33]. Sun Co. v. Browning-Ferris, Inc., 124 F.3d 1187, 1192 (10th Cir. 1997).

[34]. See id. at 1191.

[35]. Union Carbide Corp. v. Thiokol Corp., 890 F. Supp. 1035, 1051 (S.D. Ga. 1994).

[36]. Rockwell Int’l Corp. v. IU Int’l Corp., 702 F. Supp. 1384, 1389 (N.D. Ill. 1988).

[37]. See, e.g., City of Colton v. Am. Promotional Events, Inc.-W., 614 F.3d 998, 1007 (9th Cir. 2010) (“Colton’s complaint referred to the Declaratory Judgment Act rather than CERCLA section 113(g)(2) . . . .”), cert. denied, 131 S. Ct. 646 (2010); United States v. Davis, 261 F.3d 1, 47 (1st Cir. 2001) (addressing “appellants’ arguments that the district court’s entry of a declaratory judgment was improper under the Declaratory Judgment Act”); see also Olin Corp. v. Consol. Aluminum Corp., 5 F.3d 10, 17 (2d Cir. 1993); Reichhold, Inc. v. U.S. Metals Ref. Co., 522 F. Supp. 2d 724, 728 (D.N.J. 2007); Mercury Mall Assocs. v. Nick’s Mkt., Inc., 368 F. Supp. 2d 513, 520 (E.D. Va. 2005).

[38]. 28 U.S.C. § 2201 (2006).

[39]. Md. Cas. Co. v. Pac. Coal & Oil Co., 312 U.S. 270, 273 (1941).

[40]. Davis, 261 F.3d at 46.

[41]. Id. at 47.

[42]. See, e.g., Am. Promotional Events, 614 F.3d at 1007–08.

[43]. 42 U.S.C. § 9613(g)(2) (2006) (requiring that “the court shall enter a declaratory judgment” for future liability (emphasis added)).

[44]. Reichhold, Inc., v. U.S. Metals Ref. Co., 522 F. Supp. 2d 724, 729 (D.N.J. 2007).

[45]. See supra notes 24–30 and accompanying text.

[46]. See, e.g., Olin Corp. v. Consol. Aluminum Corp., 5 F.3d 10, 17 (2d Cir. 1993); Reichhold, Inc., 522 F. Supp. 2d at 728; Mercury Mall Assocs. v. Nick’s Mkt., Inc., 368 F. Supp. 2d 513, 520 (E.D. Va. 2005).

[47]. Wickland Oil Terminals v. Asarco, Inc., 792 F.2d 887, 893 (9th Cir. 1986) (quoting 28 U.S.C. § 2201 (2006)).

[48]. United States v. Davis, 261 F.3d 1, 48 (1st Cir. 2001).

[49]. See John F. Duffy, Administrative Common Law in Judicial Review, 77 Tex. L. Rev. 113, 163–64 (1998) (“The injunctive and declaratory judgment remedies are discretionary, and courts traditionally have been reluctant to apply them to administrative determinations unless these arise in the context of a controversy ‘ripe’ for judicial resolution.”).  But see Reichhold, Inc., 522 F. Supp. 2d at 729 (holding that the entry of a declaratory judgment is “mandatory” in a section 107(a) cost-recovery action).

[50]. See Flast v. Cohen, 392 U.S. 83, 96 (1968) (finding the rule against advisory opinions to be rooted in Article III of the U.S. Constitution).

[51]. See Aetna Life Ins. Co. v. Haworth, 300 U.S. 227, 239–40 (1937) (explaining that the “case or controversy” language in the Declaratory Judgment Act “manifestly has regard to the constitutional provision”); Henry H. Gu, The Hatch-Waxman Act and the Declaratory Judgment Action: Constitutional and Practical Implications, 57 Rutgers L. Rev. 771, 785 (2005) (“The Court has observed that the Declaratory Judgment Act of 1934 was adjudged to be constitutional only by interpreting its provision requiring a case of ‘actual controversy’ as confining the declaratory remedy within conventional ‘case or controversy’ limits.”).

[52]. Raymond W. Beauchamp, England’s Chilling Forecast: The Case for Granting Declaratory Relief To Prevent English Defamation Actions from Chilling American Speech, 74 Fordham L. Rev. 3073, 3097 (2006).

[53]. City of Colton v. Am. Promotional Events, Inc.-W., 614 F.3d 998, 1004 (9th Cir. 2010), cert. denied, 131 S. Ct. 646 (2010).

[54]. Id. at 1005 (alteration in original) (quoting Wickland Oil Terminals v. Asarco, Inc., 792 F.2d 887, 893 (9th Cir. 1986)).

[55]. Id.

[56]. Cal. ex rel. Cal. Dep’t of Toxic Substances Control v. Neville Chem. Co., 358 F.3d 661, 668 n.4 (9th Cir. 2004).

[57]. See supra notes 50–52 and accompanying text.

[58]. Am. Promotional Events, 614 F.3d at 1006.

[59]. Id. (quoting Staacke v. U.S. Sec’y of Labor, 841 F.2d 278, 280 (9th Cir. 1988)); see also Skelly Oil Co. v. Phillips Petroleum Co., 339 U.S. 667, 671–72 (1950) (explaining that the Declaratory Judgment Act is a procedural statute, not an independent basis of federal jurisdiction).

[60]. Am. Promotional Events, 614 F.3d at 1006.

[61]. Id. (quoting Cement Masons Health & Welfare Trust Fund for N. Cal. v. Stone, 197 F.3d 1003, 1008 (9th Cir. 1999)).

[62]. 28 U.S.C. § 2201 (2006) (requiring a “case of actual controversy” in order for there to be federal jurisdiction).

[63]. Am. Promotional Events, 614 F.3d at 1007.

[64]. Id.

[65]. Hinck v. United States, 550 U.S. 501, 506 (2007) (quoting EC Term of Years Trust v. United States, 550 U.S. 429, 433 (2007)).

[66]. Am. Promotional Events, 614 F.3d at 1007–08.

[67]. See supra note 15 and accompanying text.

[68]. See Am. Promotional Events, 614 F.3d at 1007.

[69]. See United States v. USX Corp., 68 F.3d 811, 819 (3d Cir. 1995) (“In providing for the recovery of response costs, Congress included language to insure that a responsible party’s liability, once established, would not have to be relitigated . . . .” (quoting Kelley v. E.I. DuPont De Nemours & Co., 17 F.3d 836, 844 (6th Cir. 1994))).

[70]. Am. Promotional Events, 614 F.3d at 1004.

[71]. Id.

[72]. Id. at 1007–09.

[73]. Id. at 1007 (quoting 42 U.S.C. § 9613(g)(2) (2006)).

[74]. Id.

[75]. Id. (quoting Transamerica Mortg. Advisors, Inc. v. Lewis, 444 U.S. 11, 19–20 (1979)).

[76]. Id. at 1007–08.

[77]. Id.

[78]. Id. at 1008.

[79]. Id.

[80]. Id.

[81]. Id.

[82]. Id.

[83]. Id.

[84]. Id.

[85]. Id.

[86]. Id.

[87]. Id. at 1003.

[88]. Id.

[89]. Id.

[90]. Id.

[91]. Id.

[92]. Id.

[93]. Id. at 1004.

[94]. Id.

[95]. See supra note 15 and accompanying text.

[96]. Am. Promotional Events, 614 F.3d at 1007–08.

[97]. The NCP “establish[es] procedures and standards for responding to releases of hazardous substances.”  42 U.S.C. § 9605(a) (2006); see also PMC, Inc. v. Sherwin Williams Co., 151 F.3d 610, 616 (7th Cir. 1998) (finding that the purpose of requiring public comment is to ensure “that the remedial measures undertaken hopefully at the expense of someone else are not excessive or otherwise improvident”); Cnty. Line Inv. Co. v. Tinney, 933 F.2d 1508, 1513 (10th Cir. 1991) (“To be consistent with the NCP for the purpose of cost-recovery under section 107 of CERCLA, [private party] responses must, as appropriate, address the full range of [remedial] alternatives outlined in § 300.68(f), as well as comply with all other [remedy selection] provisions of § 300.68(e) through (i).  Such responses also must provide an opportunity for appropriate public comment.  This public comment must be consistent with § 300.67(d).”); 40 C.F.R. pt. 300 (2010).  But see James R. Deason, Note, Clear As Mud: The Function of the National Contingency Plan Consistency Requirement in a CERCLA Private Cost-Recovery Action, 28 Ga. L. Rev. 555, 577 (1994) (arguing that NCP consistency should be an element of damages and not an element of a plaintiff’s prima facie case for cost recovery under section 107(a)).

[98]. Am. Promotional Events, 614 F.3d at 1007.

[99]. Trimble v. Asarco, Inc., 232 F.3d 946, 950 (8th Cir. 2000).

[100]. Id.

[101]. Id. at 950–51.

[102]. Id. at 958.

[103]. Id.

[104]. Id.

[105]. Id.

[106]. Id. at 958 n.15.

[107]. Id.

[108]. Id.

[109]. Gussack Realty Co. v. Xerox Corp., 224 F.3d 85, 92 (2d Cir. 2000); see also Amoco Oil Co. v. Borden, Inc., 889 F.2d 664, 667 (8th Cir. 1989) (“Because of the complexity of CERCLA cases, which often involve multiple defendants and difficult remedial questions, courts have bifurcated the liability and remedial, or damages, phases of CERCLA litigation.  In doing so, disputed factual and legal issues pertaining only to liability are resolved before deciding the more complicated and technical questions of appropriate cleanup measures and the proportionate fault of liable parties.”) (citations omitted).

[110]. Gussack, 224 F.3d at 92.

[111]. Id.

[112]. Id.

[113]. United States v. Occidental Chem. Corp., 200 F.3d 143 (3d Cir. 1999).

[114]. Id. at 153.

[115]. Id. at 153–54.

[116]. See United States v. Davis, 261 F.3d 1, 46 (1st Cir. 2001); Cnty. Line Inv. Co. v. Tinney, 933 F.2d 1508, 1513 (10th Cir. 1991).

[117]. Davis, 261 F.3d at 14.

[118]. See supra notes 27–30 and accompanying text.

[119]. Tinney, 933 F.2d at 1512 n.7 (noting the important difference between a private party plaintiff and the government, and the “lessened standard of proof under the statute”).  Compare 42 U.S.C. § 9607(a)(4)(A) (stating that the government can recover “all costs of removal or remedial action incurred . . . not inconsistent with the national contingency plan”) (emphasis added), with § 9607(a)(4)(B) (stating that private parties can recover “necessary costs of response incurred . . . consistent with the national contingency plan”).

[120]. Tinney, 933 F.2d at 1513.

[121]. Id.

[122]. Davis, 261 F.3d at 46–47.

[123]. Id. at 46.

[124]. Id.

[125]. Id.

[126]. Id.

[127]. Id.

[128]. Id. at 47 (quoting United States v. Davis, 31 F. Supp. 2d 45, 58 (D.R.I. 1998)).

[129]. See Southland Corp. v. Ashland Oil, Inc., 696 F. Supp. 994, 1003 (D.N.J. 1988); T & E Indus. v. Safety Light Corp., 680 F. Supp. 696, 709 (D.N.J. 1988).

[130]. T & E Indus., 680 F. Supp. at 709.

[131]. Id. at 709 n.15.

[132]. Id.

[133]. Southland, 680 F. Supp. at 1003.

[134]. Id.

[135]. Id. (citing O’Neil v. Picillo, 628 F. Supp. 706, 730 (D.R.I. 1988)).

[136]. See supra Part II.A.

[137]. United States v. Davis, 261 F.3d 1, 46 (1st Cir. 2001).

[138]. 42 U.S.C. § 9613(g)(2) (2006).

[139]. United States v. Hardage, 982 F.2d 1436, 1445 (10th Cir. 1992) (“[T]he entry of declaratory judgment on the issue of liability for future response costs is appropriate.”).

[140]. City of Colton v. Am. Promotional Events, Inc.-W., 614 F.3d 998, 1008 (9th Cir. 2010), cert. denied, 131 S. Ct. 646 (2010).

[141]. § 9613(g)(2).

[142]. Am. Promotional Events, 614 F.3d at 1007–08 (quoting Transamerica Mortg. Advisors, Inc. v. Lewis, 444 U.S. 11, 19 (1979)); see also Dolan v. U.S. Postal Serv., 546 U.S. 481, 481 (2006) (“[I]nterpretation of a word or phrase depends upon reading the whole statutory text, considering the statute’s purpose and context.”).

[143]. United States v. Davis, 261 F.3d 1, 46 (1st Cir. 2001).

[144]. Id.

[145]. Am. Promotional Events, 614 F.3d at 1008.

[146]. Id.

[147]. See, e.g., Steven Ferrey, Inverting the Law: Superfund Hazardous Substance Liability and Supreme Court Reversal of All Federal Circuits, 33 Wm. & Mary Envtl. L. & Pol’y Rev. 633, 703 (2009); Blake A. Watson, Liberal Construction of CERCLA Under the Remedial Purpose Canon: Have the Lower Courts Taken a Good Thing Too Far?, 20 Harv. Envtl. L. Rev. 199, 272–73 (1996).

[148]. Boeing Co. v. Cascade Corp., 207 F.3d 1177, 1191 (9th Cir. 2000).

[149]. Id.

[150]. See Revesz & Stewart, supra note 12, at 7 (“Because significant periods of time—often several decades—can elapse between the disposal of hazardous substances and the cleanup, it is particularly likely that some PRPs will not be found or will be insolvent once they are found.”).

[151]. Boeing, 207 F.3d at 1190.

[152]. Cnty. Line Inv. Co. v. Tinney, 933 F.2d 1508, 1513 n.9 (10th Cir. 1991).

[153]. Kelley v. E.I. DuPont de Nemours & Co., 17 F.3d 836, 844 (6th Cir. 1994) (“In providing for the recovery of response costs, Congress included language to ensure that a responsible party’s liability, once established, would not have to be relitigated . . . .”).

[154]. See Cal. ex rel. Cal. Dep’t of Toxic Substances Control v. Neville Chem. Co., 358 F.3d 661, 668 n.4 (9th Cir. 2004).

[155]. See Deason, supra note 97, at 590 (“Simply stated, a party that causes hazardous waste to be released into the environment is ‘responsible’ for that release regardless of whether it ultimately bears the costs associated with the remedy.”); see also Watson, supra note 147, at 286 (“CERCLA . . . is arguably the most remedial of all federal environmental statutes, since its controlling focus is to remedy the harmful effects of previously disposed hazardous wastes in order to preserve the public health and the environment.”).

[156]. United States v. Davis, 261 F.3d 1, 47 (1st Cir. 2001) (quoting United States v. Davis, 31 F. Supp. 2d. 45, 58 (D.R.I. 1998)).

[157]. See supra notes 21–22 and accompanying text.

[158]. Reichhold, Inc., v. U.S. Metals Ref. Co., 522 F. Supp. 2d 724, 729 (D.N.J. 2007) (holding that the entry of a declaratory judgment is “mandatory” in a section 107(a) cost-recovery action).

[159]. Wilton v. Seven Falls Co., 515 U.S. 277, 282 (1995) (“[D]istrict courts possess discretion in determining whether and when to entertain an action under the Declaratory Judgment Act, even when the suit otherwise satisfies subject matter jurisdictional prerequisites.”).

[160]. See supra Part II.

[161]. See supra Part II.A.1.

* J.D. Candidate, May 2012, Wake Forest University School of Law.  The author would like to thank Professor Richard Schneider and the members of the Wake Forest Law Review for their assistance on this Comment, and her family for all of their love and support.

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