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Tagged: Environmental Law

4

The Rule of Law with “Chinese Characteristics”

I spent last week in China leading a spring break trip for 38 of my current and former environmental law students. I had warned the group that they would be shocked by how polluted the air was and that tap water was not safe to drink even in the best hotels. But when we arrived in Beijing the skies were the clearest I had ever seen during my 21 previous trips to China (including the six months I lived in Beijing in 2008 while teaching at the China University of Political Science and Law (CUPL)). Alas, the clear skies were not the result of dramatic environmental improvements in China. Instead they were the product of 40-50 mph winds that temporarily had blown away the pollution, which soon returned.

On the morning of our first full day in China our initial stop was Tiananmen Square, site of the 1989 massacre of pro-democracy protesters. Our group was allowed to bypass the security screening that the Chinese public must undergo before entering the square. While posing for a group photo, I was surprised when a member of our group unveiled a large banner that read “Thank You, Suzann” to honor our program coordinator who helped organize the trip. Fearing that this was some kind of political protest, Chinese police immediately converged upon our group. Our local guide started shouting that we might get arrested. But the confrontation was averted when we rolled up the banner and the police accepted our explanation. But it was a quick reality check on the limits of free speech in China today.

During our nine days in China our group visited public interest groups, law firms, and law schools in addition to tourist sites in Beijing, X’ian and Shanghai. In our meetings with Chinese students, lawyers, and law professors the group gained some insights into what it is like to operate in a legal system without an independent judiciary or a tradition of respect for the rule of law. One lawyer at a Chinese law firm in Shanghai described it as “the rule of law with Chinese characteristics.”

The public interest movement in China remains deeply frustrated because Chinese courts frequently refuse to accept even the most meritorious lawsuits. I spoke about the BP oil spill settlement at a workshop organized by the All China Environment Federation (ACEF), a group of environmental lawyers founded in 2005. ACEF represents a group of 107 fishermen who were harmed by last summer’s ConocoPhillips oil spill in Bohai Bay. But the Tianjin Maritime Court has refused to accept their lawsuit. Our group also visited the Center for Legal Assistance to Pollution Victims (CLAPV), which operates a hotline to field environmental complaints from all over China.

Zhang Jingjing from the Public Interest Law Network’s Beijing office, who has been dubbed “the Erin Brockovich of China,” met with our group and expressed hope that the National People’s Congress eventually would adopt new legislation to facilitate public interest lawsuits. Our group also met with Zhenxi Zhong from Shanghai Root and Shoots, one of the few NGOs officially licensed by the Chinese government. Roots and Shoots, a group initially formed by Jane Goodall, is working in more than 200 schools in the Shanghai area to improve environmental education.

There are now more than 20,000 lawyers in Beijing and 14,000 in Shanghai. We visited a U.S. law firm’s Beijing office and a Chinese law firm’s Shanghai office where we had remarkably candid discussions of the challenges of legal practice in a country where politics trumps law. The U.S. law firm is not licensed to practice law in China so it hires Chinese law firms to implement its work product. It prefers to avoid the Chinese courts by using arbitration whenever it can. Aware of the Foreign Corrupt Practices Act, the U.S. lawyers have the Chinese law firms they hire sign non-corruption pledges.

The Chinese law firm in Shanghai hosted our group for its Friday afternoon discussion session. Their members explained that judges in China do not have to be lawyers and many of the most prominent judges are not lawyers, but rather were selected because of their strong ties to the Communist Party. Witnesses rarely come to court in China even when they are asked to do so. Disputes over siting new industrial plants usually are resolved not based on the law but on political power. Localities eager to attract industry make required environmental assessments a perfunctory exercise and local officials try to pressure lawyers not to bring environmental challenges. Siting decisions for power plants and new industries usually are made without consulting the public and there is little chance for lawyers to block them in court. When they are blocked, it invariably is due to the ability of opponents to generate sufficient public opposition to a project, rather than due to enforcement of the environmental laws.

There is some sense that change is in the air, a perception encouraged by China’s upcoming leadership transition and Premier Wen Jiabao’s public pleas for greater political and economic reform. The Chinese law students we met were hopeful that one day China will have an independent judiciary and strong respect for the rule of law. These students included moot court teams from CUPL and the Beijing Institute of Technology who did a practice round for us in advance of their coming to the U.S. to compete next weekend in the finals of the Stetson International Environmental Moot Court Competition.

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Do Initial Allocations of Property Rights Matter?

If the last two years of American economic life have demonstrated anything, it is that property rights are not static.  Sometimes things that were once private property become public property (see, e.g., Motors, General).  Sometimes things that were once public property become private property, then become public property again, before they presumably become private property again (see, e.g., Mae, Fannie).  And sometimes things that were once considered inherently communal and thus inamenable to private property rights at all, become divided and privatized (see,e.g., the air).

Tradeable carbon emissions allowances are an example of the latter.  There’s a lot to like in the cap-and-trade programs proposed under the Waxman-Markey and Kerry-Boxer bills.  I hope some robust version of them passes and becomes law.  But one sticky issue that needs to be resolved is how initial allowances to fill airspace with carbon gases should be allocated.  Options include auctioning off all of the allowances, giving the allowances to existing carbon producers, and, most politically palatable, something  in between – some mixed proportion of free allocations and auctions.

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Economist Robert Stavins, in the Coasean tradtion, has insightfully argued that  (with some caveats, including that transaction costs in this cap-and-trade program are similar to the transaction costs in others) the initial allocation of allowances doesn’t matter in most significant ways:  it will have no effect on the distribution of allowances after trading, and will have no effect on the total magnitude of emissions and their attendant social costs.

But there is another factor economists have not addressed, that could effect the total magnitude of emissions and their attendant social costs, and that may well depend in part on the method of initial allocations: compliance.

Law Professor Christine Parker and political scientist Peter May, among others, have demonstrated that compliance with business regulation is highest when the regulated businesses believe that the regulatory regime is fair.  Lower levels of compliance reduce the effectiveness of the regulation in producing the desired outcome, and increase the costs of achieving it.  In the world of carbon emissions, this would mean a higher total magnitude of emissions and a reduced benefit to the public through the higher costs required to achieve them.

HakonSnaefellsnesi

My research into Icelandic fisheries suggests that in moving natural resources from communal to private property through cap and trade programs, initial allocations of rights do have an important effect on the perceived fairness of the regulatory regime, and thus on the willingness of the regulated to comply with it.

In Iceland, the government decided to protect fish stocks by freely allocating tradeable fishing rights and implementing catch quotas.  Permits were issued to fishing vessel owners based on their average catches during a three-year test period.  New entrants to the industry must now buy their way in by purchasing or leasing rights from others through the Icelandic Quota Exchange.  Although the system has been successful in reducing the overall catch, the perception that it is unfair has led to open defiance.  In an extraordinary case before the Icelandic Supreme Court, one fishing company did openly what many apparently do quietly — defied the system on the grounds that it was unfair.  

Transactions costs, of course, are inevitable, but it is not transaction costs that have produced resistance to the Icelandic system.  Rather, resistance is itself is a type of transaction cost, broadly construed, produced by the perceived unfairness of the initial allocation of rights.  In other words, the initial allocation of rights does indeed effect the overall effectiveness of a private property system. 

There has been considerable uproar over the potential free allocation rights to current carbon emissions producers.  Whether or not, as a matter of classical economic theory, the initial allocation of rights should effect the overall effectiveness of the program, the perception of fairness or unfairness will probably effect compliance with the system, and that in turn will effect its overall effectiveness.  It is important, therefore, for policy makers to bear in mind that the perceived fairness of initial allocations of property rights does indeed matter.

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A Big Day for Enviros

Hi everyone! I’m psyched to be able to blog here, and to start on what to me is a really great legal day.

So how about that Supreme Court? And its decision in the two Clean Air Act cases today? The blogosphere’s been all over this already, but I have to say, as someone whose first Supreme Court amicus briefs (team-written with some very wonderful colleagues, I should say) were in these two cases, today was incredibly satisfying.[*] (Or, in more cas-speak: OMGWOW.)

One thing I’ve been trying to emphasize in my classes, though (perhaps to the frustration of my students) is that litigation is not the end all and be all. And these cases illustrate that. The Supreme Court’s decision in the global warming case, for example, is merely a remand back to the EPA to consider the petitioners’ request for a rulemaking–albeit one taking into account the Supreme Court’s guidance in Mass v. EPA. The EPA, therefore, could conceivably still reach the same decision on remand, albeit with more legally defensible reasoning. The PSD (Prevention of Significant Deterioration) case involving Duke Energy also involves a remand, and allows the lower court, on remand, to consider whether EPA’s allegedly inconsistent positions on this issue is “retroactively targeting twenty years of accepted practice.”

My anticipatory frustration is that although what happens next is as much a part of the whole story as the Supreme Court proceedings, there will be somewhat less press coverage of those later administrative (and political) proceedings. This is not to blame the press, really. I mean, it’s reflective of legal teaching, even, where the focus is more on the individual court “cases,” and less on the overall outcome (regardless of where the outcome “arises”). Hell, I see this in administrative law, where students are a lot more excited about reading current individual cases, than reading draft rulemakings and the comments made about them.

So I guess this is just a rambly way of getting to a question: how does one effectively “teach” the interaction between individual case decisions, administrative decisions, and broader societal politics? I don’t want to make my classes into any sort of poli sci/public administration class, and certainly couldn’t do effectively even if I wanted to. Yet I also believe that if we’re training students to advocate as effectively as possible for their clients, then we as educators should give them practice in thinking beyond strategizing about individual cases.

[*] A short recap: In Massachusetts v. EPA, the Supreme Court held that the EPA did have the authority to regulate greenhouse gases, and required it to re-review the plaintiffs’ request for a rulemaking. According to the Supreme Court, “Under the Act’s clear terms, EPA can avoid promulgating regulations only if it determines that greenhouse gases do not contribute to climate change or if it provides some reasonable explanation as to why it cannot or will not exercise its discretion to determine whether they do.” And in Environmental Defense Fund v. Duke Energy, the Supreme Court upheld the EPA’s regulations requiring permits for changes in power plants that lead to an annual increase in emissions, rejecting Duke Energy’s argument that permits can only be required when the changes lead to an increase in the hourly rate of emissions.