Big Oil Uses Fiction, Not Fact, to Oppose New Transparency Rules

Are wild claims “facts”?  Oil companies would like you to believe so.  Spend some time perusing the avalanche of submissions that oil and gas companies have sent into the Securities and Exchange Commission (SEC) trying to water down forthcoming rules requiring them to publish their payments to the governments where they operate, and you’ll notice that they have one thing in common: a nearly complete lack of facts to back up their wild claims.   

EarthRights International (ERI) advocates for strong rules because our community partners in Burma and elsewhere want to use payment information to hold their governments accountable for the wealth received from resource extraction.  But the companies complain that if they have to disclose their payments as Congress has mandated, they’ll lose contracts to less transparent competitors and could be forced to violate foreign restrictions on disclosure.  Their lawyers and lobbyists have done their job well – nothing keeps regulators off your back like an appeal to their fear of losing out to the Chinese or crippling American enterprise in uncertain economic times.  Yet their submissions are curiously devoid of evidence; instead of providing facts, the companies pose hypotheticals, speak in generalities, and float widely varying estimates of compliance costs with no explanation. 

Meticulous research by Publish What You Pay coalition (PWYP) members has shown that these scare tactics are just smoke and mirrors.  When you place the companies’  claims next to the actual facts, it's clear that what Big Oil really fears is public scrutiny of its questionable dealings, rather than competitive injury to its operations.  The SEC must show that it's not “in bed” with Exxon and Chevron and their friends and issue rules that comply with the law

ERI recently submitted a letter to the . . .

Are big oil and the SEC in cahoots, or is the SEC just scared?

Faced with the threat of a lawsuit if they issue effective rules to implement a new law requiring oil, gas and mining companies disclose their payments to governments, the Securities and Exchange Commission (SEC) was hit today with a hilarious yet appropriate stunt by our friends from Oxfam America. The intended purpose of this pre-Valentine’s Day action was to draw attention both to industry’s high pressure tactics, and to remind the SEC that they are not clients of big business, but government agents tasked with drafting rules to implement laws passed by Congress.

More actions are planned in the near future, beginning next Thursday at Chevron’s Houston offices. Oxfam America, Global Witness and other human-rights and anti-poverty organizations also are planning to place ads in several news publications next week, including the print edition of The Wall Street Journal and web editions of the Hill, the Washington Post, Politico and the Huffington Post. 

Ian Gary, Oxfam’s Senior Policy Manager with their oil, gas and mining program discussed the purpose of the morning’s action: “Our campaign aims to send a strong message that we’re watching, and ready to fight back if the regulatory agency issues weak final rules.” The truth is that only rules that adhere to the law—meaning project-by-project disclosures with no exemptions—will produce information that will allow civil society and investors to evaluate secretive deals between extractive companies and governments, and ensure that people in resource-rich countries benefit from energy development. 

The oil industry, led by their lobby, the American Petroleum Institute (API), has made wild claims that they will lose hundreds of millions of dollars and be forced to break foreign laws if the SEC rules do not grant them exemptions that would, in reality, totally gut the new law.  Their claims are simply untrue, overstated, and unsupported.  . . .

Nigerian Groups Ask Norway to Divest from Shell Over Oil Spills

The Norwegian Government has been given a second chance to put its money where its ethical mouth is.  Earlier this week, a coalition of scientists, environmentalists, and Nigerian community representatives petitioned Norway’s Government Pension Fund to divest from Royal Dutch Petroleum, claiming that the company is violating the Fund’s Ethical Guidelines by causing severe environmental damage through oil spills in the Niger Delta.  Norway should accept the complaint and divest, or risk undermining its public commitment to responsible investment and breaching its own Ethical Guidelines.

The Fund, which is reported to be largest sovereign wealth fund in the world and an influential global investor, subjects its investments to an ethical screen that is meant to prevent Norwegian public money from financing human rights abuses, environmental degradation, war crimes, and the trade in certain destructive products like weapons and tobacco.

Norway’s Council on Ethics investigates companies in the Fund’s portfolio and, based on its research, can recommend divestment if there’s an unacceptable risk that the company’s activities will make the Fund complicit in unethical behavior.  However, the recommendation is not binding; the Norwegian Ministry of Finance can decide to ignore the recommendation entirely, or to prescribe other courses of action, like active shareholder engagement.

The system has often worked well.  The Fund has divested from a number of mining and timber companies based on human rights and environmental concerns; the list of excluded firms even includes Wal-Mart, which was pegged as a violator of labor rights.  It has also divested from arms dealers and tobacco manufacturers.  The Fund was even able to take a position on the Israeli occupation of the West Bank, excluding from its portfolio companies that it deemed to contribute to violations of the law of war.  In a number of other cases, where the Ministry . . .

"¡La gente inteligente, defiende el medio ambiente!" Thousands march for the right to water in Peru

Today, thousands of Peruvians are now participating in a "Grand National March for the Right to Water and Life." Many of the marchers are setting off from the lagoons of Cajamarca, or from the Amazonian jungle, or from the Southern Andes, marching hundreds of miles to arrive in the capital, Lima during the second week of February. The march seeks to broadly respond to a public policy in Peru of valuing a particular model of economic development over the health and wellbeing of communities adversely affected by that "development" — particularly when large resource-extraction projects threaten a community’s water supply.

The focal point for the march is the Conga project, a proposed gold mining operation in Cajamarca, which presents an emblematic example of many of the most salient issues to which the march seeks to respond. Here in our Peru office, we have been keeping a close eye on the development of the project and its opposition. The project was recently put on hold after public protests and a report prepared by the Ministry of the Environment called attention to the environmental risks associated with the proposal. Now, however, a new executive cabinet—formed in the aftermath of the political upheaval following the release of the Ministry of Environment’s report—seems likely to give the project the go-ahead in spite of a great deal of opposition from local civil society organizations and the regional government.

The march has quickly taken on a much broader appeal. It is serving as a rallying point for similar concerns and a growing social movement opposing development policies that leave communities impoverished and sick. Coordinated activities are being organized throughout the country, including by farmers in the north, by those living in the southern highlands, and by organizations of indigenous . . .

US appeals court rejects Chevron's attempt to avoid $18bn pollution judgment in Ecuador

A couple of weeks ago, I blogged about an Ecuadorean appeals court upholding an $18 billion dollar judgment against Chevron for massive oil pollution in the Amazon rainforest. The Court rejected Chevron’s arguments that the judgment was procured by fraud. Today, a decision by a federal appeals court in New York makes it more likely that this judgment can be enforced. 

Last year, fearing that it was going to lose in Ecuador, Chevron sued the plaintiffs in New York seeking a court order that would prevent the plaintiffs from trying to enforce any Ecuadorean judgment outside of Ecuador. Since Chevron no longer does business there, the judgment could not be enforced inside Ecuador.

A New York trial judge accepted Chevron’s arguments that the Ecuadorean proceedings were likely tainted by fraud, and issued an order barring the plaintiffs’ lawyers from enforcing any judgment, at least until Chevron’s fraud allegations could be tried in New York. Then, back in September, the appeals court overturned that trial court order, but it did so without issuing an opinion explaining its reasons, so the parties did not know precisely what the court of appeals had decided. 

Today, the court issued its opinion. It held that the New York law under which Chevron sued only determines if a foreign judgment can be enforced in New York; a New York court lacks power to determine whether a foreign judgment is enforceable anywhere else. Therefore, the trial court was not authorized to order the plaintiffs not to enforce the Ecuadorean judgment outside New York.  

Chevron, of course, will still try everything else it can think of to prevent the judgment from being enforced. We’ll keep you posted. . . .

Keystone XL rejection is a victory for environmental and human rights advocates

This guest post was contributed by Emily Ponder, a legal intern in our US office. Emily is a first-year law student at the University of Virginia School of Law.

Everyone knows that oil is a dirty business, but tar sands oil may be the dirtiest. That is why environmentalists, indigenous groups, and small-town Nebraska famers alike are celebrating President Obama’s rejection of the Keystone XL pipeline Jan. 18.

The tar sand oil extraction process and its transport poses serious health and environmental hazards, and the Keystone XL pipeline would have made 2,000 miles of land—and communities—vulnerable to its destructive risks.

The energy-intensive process of extracting tar sands emits three times more carbon dioxide emissions three times higher than the extraction of conventional oil. [Edit: As noted in the comments, this refers only to emissions during extraction, which is a small percentage of total emissions. However, because of these high extraction emissions, the "well-to-wheels" emissions of Canadian tar sands are still the highest of US oil sources, 16.5% higher than the baseline and 22% higher than domestic crude oil.] What’s more, extraction of the tar sands oil in Canada, at the head of the pipeline, poisons water downstream with chemicals such as cyanide and anomia. Indigenous communities downstream from extraction sites in Alberta have seen an increase in rare cancer, renal failure, lupus, and hyperthyroidism.

At the other end, refineries in Texas would have increased air pollution, making communities vulnerable to respiratory problems and lung disease, not to mention high levels of smog and acid rain.

And the miles of pipeline in between Canada and Texas wouldn’t have gone unscathed, either. TransCanada’s Keystone I pipeline spilled a dozen times in less than a year of operation. If the Keystone XL had been built, a similar track record . . .

Downstream from Lago Agrio, Ecuador continues to put megaprojects before people and their land

An oil pipeline near Lago Agrio, Ecuador

When an Ecuadorean appeals court in Sucumbíos upheld an $18 billion judgment against Chevron earlier this month, I happened to be passing through Lago Agrio—the famed location of the oil contamination at issue in the case. As we took the highway out of town, we followed the path of the oil-pipeline that snakes its way southwest, towards Quito. “The government does more to protect the pipeline than it does to protect drivers,” my guide informed me as we headed east.

I wasn’t surprised. In fact, the purpose of my trip southeast of Lago Agrio was to visit another project that is wholly supported and driven by the Ecuadorian government, and that has little promised benefit for the people, or the forests and rivers, in its path. This project is the massive Coca Codo Sinclair hydroelectric dam.

Anticipated to be the largest hydroelectric project in Ecuador, the dam is highly controversial. The project is estimated to affect more than 2,000 people and flood an area of 3 square kilometers of a delicate Amazonian basin.  The project could also potentially bring to a trickle Ecuador’s tallest waterfall, the San Rafael falls.  Critics and experts in Ecuador also question the fact that the dam is being bankrolled with a $1.68 billion dollar loan from China to finance 85 percent of the construction and equipment. In turn, the state-owned Chinese company, Sinohydro Corp., was awarded the construction contract in a process that many regard as having been procured without proper bidding. 

Most worrisome about the project however, might be that a substantial perimeter around the project was recently declared, by executive decree of the Ecuadorian government, to be a “militarized zone.” As a result, the area around the dam, and the people who live there, will be “under the . . .

Federal Appeals Court Confirms That Oklahoma "Sharia Ban" Is Unconstitutional

In November 2010, Rick and I blogged about the Oklahoma constitutional amendment that would ban state courts from considering foreign law, especially Sharia (Islamic law), as well as international law. As Rick noted at the time, the amendment was very likely unconstitutional.

This week, the U.S. Court of Appeals for the Tenth Circuit, which has jurisdiction over Oklahoma and is generally a fairly conservative court, confirmed that the amendment is unconstitutional. The court's opinion determined that the plaintiff, a Muslim (and U.S. citizen) living in Oklahoma, was stigmatized by the amendment, and that it therefore violated the Constitution's prohibition on religious discrimination.

Interestingly, the court's decision strikes down the amendment, but does not address anything beyond the Sharia ban. The Tenth Circuit didn't consider whether it was permissible to prohibit state courts from considering foreign law generally, or from considering international law.

That means this issue will probably come up again. Similar laws are being considered all over the country, and smart legislators will probably avoid specifically targeting Islamic law in the future. So another court will need to decide whether a general prohibition on considering foreign law or international law is constitutional; Rick and I think it clearly isn't.

Ecuadorean Appeals Court Upholds Huge Judgment Against Chevron for Pollution in the Amazon

Ecuadorean villagers harmed by Chevron's pollution of a formerly pristine corner of the Amazon rainforest have been seeking legal redress against the company for almost two decades. Yesterday, they moved a whole lot closer to finally achieving justice, as an Ecuadorean appeals court upheld a judgement of 18 billion US dollars against Chevron.

Chevron stands accused of pollution on a truly massive scale. The victims, indigenous peoples and farmers, originally tried to challenge that pollution in Chevron's home forum, the United States, but after years of litigation, a federal court in New York accepted Chevron's argument that the case should be heard in Ecuador. So the plaintiffs filed suit in Ecuador.

And they won. Last spring, an Ecuadorean trial judge found that Chevron is liable for 18 billion US dollars in damages. 

Chevron, of course, appealed. But even prior to that ruling, Chevron, sensing they were going to lose, began claiming that the plaintiffs' case was fraudulent, and actually sued the plaintiffs and their lawyers in New York, asking among other things that the New York court bar the plaintiffs and their counsel from trying to enforce any judgment. Surprisingly, the federal district court issued just such an injunction, but it was quickly overturned on appeal

Now, as of yesterday, an Ecuadorean appeals court has upheld the judgment. This is a huge victory for the plaintiffs, not only in their legal case, but also in the court of public opinion. Chevron's mantra has been that the public should ignore the trial court judgment because it was obtained by fraud. But they made that argument in the Ecuadorean appeal as well, and although I have not yet read the entire decision, it is hard to see how the appellate court could have upheld the verdict without at least implicitly rejecting Chevron's claims of fraud. 

The fight is not over. . . .

Defending the Use of State Law to Address Human Rights Abuses

In the past two weeks we at ERI have submitted amicus briefs in three cases before the Ninth Circuit and Fourth Circuit Court of Appeals, weighing in on a legal doctrine known as “foreign affairs preemption.”  While these briefs will likely receive less attention than the two Supreme Court amicus briefs that ERI will be submitting later this week in the Kiobel and Mohamad cases, they raise key arguments with respect to the ability to use state law claims to respond to human rights abuses occurring abroad.

Both federal appeals courts are sitting “en banc” to hear these cases, meaning that unlike an ordinary appeal where only three judges decide the case, many more judges—from eleven in the Ninth Circuit to all fourteen active judges on the Fourth Circuit—will be weighing in to set a single decision for the whole Circuit. The stakes are high.

First a few words on the doctrine.  The foreign affairs preemption doctrine was created in order to protect the federal government’s control over matters of foreign policy.  When it applies, it allows a court to refrain from applying state laws that intrude upon federal prerogatives in the field of foreign policy.  Those state laws are said to be “preempted”—meaning that they are superseded by the federal interest and cannot be applied.  Foreign affairs preemption applies either when there is a “conflict” with a specific federal law, or when the entire “field” is outside of the state’s authority, because the Constitution puts in the hands of the federal government.

Now back to our amicus briefs.  First, we weighed in on the Ninth Circuit case Movsesian v. Victoria Versicherung, A.G.  That case was originally filed under a special provision of the California Code which allows for the filing of lawsuits to collect on insurance policies . . .