Environmental Ethics, Environmental Law, and Trade

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Environmental Ethics, Environmental Law, and Trade
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Objectives

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

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Ethics and the Law

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

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Ethical Principles in Environmental Law

• The Polluter Pays Principle
• The Precautionary Principle

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The Polluter Pays Principle

• Dont make messes.
• If you make a mess, clean it up.
• Pollution is an externalitya cost not borne by
  the parties to a transaction. Goalinternalize
  the costs of pollution.
• The polluter pays principle is an internalization
  strategy embodied in U.S. law.
• Superfund, CERCLA, RCRA, USTA

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The Precautionary Principle

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

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Trade Policy, Domestic Law, and Environmental
Protection

• Trade policies and trade agreements (NAFTA, WTO,
  FTAA) can undercut domestic environmental
  protection laws.

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NAFTA Provisions

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

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Protecting Property Rights

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

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Kinds of Takings

• Property can be taken directlyas in imminent
  domainfor public uses.
• Property can be taken indirectlyits value
  greatly reduced or eliminatedby government
  regulations that impose costs or limit profits.
• Regulatory takings cases havent worked well in
  U.S. courts.
• Exception Lucas v. South Carolina Coastal Comm.
• Regulatory takings theory limits government too
  much.

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Environmental Law and Expropriation

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

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NAFTA cases undercutting environmental law

• Ethyl Corp v. Canada
• Methanex Corporation v. United States
• S.D. Meyers Corporation v. Canada

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Ethyl Corp. v. Canada

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

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Methanex Corp. V. U.S.

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

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Methanex, continued

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

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S.D. Meyers

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

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Meyers, continued

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

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Other Trade Agreements, The WTO and the FTAA

• NAFTA type worries plague other trade agreements
• The WTO has ruled that environmental protection
  laws and consumer safety laws are really
  technical trade barriersdisguised tariffs.
• The Turtle/Shrimp case and the Beef Hormones
  case.
• The FTAA would expand NAFTA to all of Central and
  South America (except Cuba) AND include
  services under the treaty.

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How does all this relate to my life or to issues
in the news today?

• Trade protests (the Battle in Seattle, the riots
  in Montreal in 2001, attempts to protest the WTO
  ministerial in Doha, Qatar) turn on these issues.
• Domestic sovereignty, our right to make our own
  laws and to embody our ethical convictions in
  law, is at risk.