VERMONT JOURNAL OF ENVIRONMENTAL LAWvjel.vermontlaw.edu/files/2013/06/Vol.-14-Issue-3.pdf ·...

VERMONT JOURNAL OF ENVIRONMENTAL LAW

Volume 14 Issue 3 Spring 2013

ARTICLES

Endless War or End this War? The History of Deadline

Litigation Under Section 4 of the Endangered Species

Act and the Multi-District Litigation Settlements Benjamin Jesup

How to Enforce a Carbon Tax: Lessons

from the Montreal Protocol and the U.S.

Experience with the Ozone Depleting

Chemicals Tax Bruce Pasfield &

Elise Paeffgen

How Texas Overcame California as a

Renewable State: A Look at the Texan

Renewable Energy Success Maria C. Faconti

NOTES

Waste Incineration, Community Participation,

and Environmental Justice: A Comparative

Study of China and the United States Sara Imperiale &

Wang Pian Pian

Improving the Enforceability of the Genetically

Modified Food Labeling Law in China with

Lessons from the European Union Yu Zhuang &

Wenxuan Yu

VERMONT JOURNAL OF ENVIRONMENTAL LAW VERMONT LAW SCHOOL

Volume 14, Issue 3 Spring 2013

ARTICLES

Endless War or End this War? The History of Deadline Litigation Under

Section 4 of the Endangered Species Act and the Multi-District Litigation

Settlements

Benjamin Jesup…………………………………………………………..327

How to Enforce a Carbon Tax: Lessons from the Montreal Protocol and the

U.S. Experience with the Ozone Depleting Chemicals Tax

Bruce Pasfield & Elise Paeffgen………………………………………....389

How Texas Overcame California as a Renewable State: A Look at the

Texan Renewable Energy Success

Maria C. Faconti…………………………………………………………411

NOTES

Waste Incineration, Community Participation, and Environmental Justice:

A Comparative Study of China and the United States

Sara Imperiale &Wang Pian Pian…………………………………….…435

Improving the Enforceability of the Genetically Modified Food Labelling

Law in China with Lessons from the European Union

Yu Zhuang & Wenxuan Yu……………………………………………….465

VERMONT JOURNAL OF ENVIRONMENTAL LAW

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2012–2013 EDITORIAL BOARD

EDITOR-IN-CHIEF

Robert Reagan

ADMINISTRATIVE EDITOR SENIOR MANAGING EDITOR SENIOR ARTICLES EDITOR

Daniel Fineberg Robert Reagan Pierce Wiegard

SENIOR NOTES EDITOR MANAGING EDITORS SYMPOSIUM EDITOR

Juliette Balette Rachel Stevens Thomas Broderick

Danielle Changala

WEB EDITOR ARTICLES EDITORS EVENTS EDITORS

Mary Stubblefield Jeffrey Aslan Alex Funk

Clemmensen Amanda Dumville Walter Sainsbury

Melissa Marks Andrew Fiscella

Sara Imperiale

HEAD NOTES EDITORS

Marcelo Betti Cindy Hurt

Graham Jesmer

William Sullivan

PRODUCTION EDITORS

Zjok Durst Jay Eidsness Keenan Hawkins

Zachary Price Daniel Niedzwiecki Zephyr Jost

Douglas Johnson

James E. Smith

EDITORIAL STAFF

Molly Armus Andrew Fowler Christine Mertens

Jordan Asch Rob Glover Emily Migliaccio

Abigail Barnes Jacqueline Goodrum Eric Mortensen-Nemore

Jared Bianchi Molly Gray Emily Remmel

Will Bittinger Bob Harper Casey Ryder

Jonathan Blansfield Christopher Keach Jared Schroder

Andrew Bolduc Will Labate Scott Seigal

Emily Burgis Lara Maierhofer Christopher Smith

Kate Durost Megan McLaurin Noah Strebler

Kalika Elofson Marissa Meredyth Sam Weihman



FACULTY ADVISORS

Janet Milne

Professor of Law

Christine Ryan

Environmental Research Librarian

ADMINISTRATION

Marc Mihaly

President, Dean, and Professor of Law

Mark Latham

Vice Dean for Academic Affairs and Professor of Law

Lorraine Atwood

Vice President of Finance and Administration

Kathleen Hartman

Associate Dean for Enrollment Management

Shirley Jefferson

Associate Dean for Student Affairs and Diversity



FACULTY

Susan Apel Oliver R. Goodenough Patrick Parenteau

Tracy L. Bach Cheryl Hanna Craig M. Pease

Betsy Baker Hillary Hoffman Brian Porto

Alexander W. Banks Gregory Johnson Rebecca Purdom

Laurie Beyranevand Martha L. Judy Laurie Ristino

Margaret Barry Laurie C. Kadoch Doug Ruley

Richard O. Brooks Kenneth R. Kreiling Betsy Schmidt

Matt Carluzzo Kevin Jones Linda Smiddy

Christine Cimini Donald Kreis Benjamin Sovacool

Jason Czarnezki Gil Kujovich Pamela J. Stephens

Liz Ryan Cole Siu Tip Lam Gus Speth

Sheryl Dickey Mark Latham Jennifer Taub

Michael Dworkin Yanmei Lin Peter Teachout

Stephen Dycus Jingjing Liu Joan Vogel

John Echeverria Reed E. Loder Jessica West

Arthur C. Edersheim Michelle Martinez-Campbell Jeff White

Peg Elmer James May Stephanie J. Willbanks

Stephanie Farrior Beth McCormack L. Kinvin Wroth

Paul Ferber Philip Meyer Tseming Yang

David B. Firestone Marc Mihaly Hanling Yang

Jackie A. Gardina Janet E. Milne Carl Yirka

Clara Gimenez Laura Murphy Maryann Zavez

Sean Nolon

Cathryn C. Nunlist



VISITING FACULTY

ADJUNCT FACULTY

Bonnie Barnes Kevin Griffen Sheldon Novick

Robin Barone David Hall Larry Novins

Gary Brooks Martina Hofmann Tad Powers

Jared Carter Michael Hogan Linda Purdy

Matt Chapman Eric Janson Dan Richardson

Michele Childs Elizabeth Kruska Anabel Rideau

Teresa Clemmer Benoit LeBars Anna Saxman

Jennifer Emens-Butler Mathew Levine Belinda Sifford

John Evers Eric Lopez Nonny Soifer

Catherine Feeney Randy Mayhew Martha Smyriski

Catherine Gjessing Billie Munroe Audia Ann Vessels

Robert Gagnon Jack Tuholske Robert Sand

ENDLESS WAR OR END THIS WAR? THE HISTORY OF DEADLINE LITIGATION UNDER SECTION

4 OF THE ENDANGERED SPECIES ACT AND THE MULTI-DISTRICT LITIGATION SETTLEMENTS*

Benjamin Jesup**

TABLE OF CONTENTS

Abstract ..................................................................................................... 328

Introduction ............................................................................................... 329

I. Prelude to War ...................................................................................... 332

A. The ESA ......................................................................................... 332 B. The First Twenty Years of Skirmishes ........................................... 336

II. Mobilization ........................................................................................ 341

A. The Fund For Animals Case ........................................................... 341 B. Budget Battles: The Moratorium .................................................... 344 C. Post-Moratorium: The Listing Priority Guidance ........................... 346

III. The Battle of Overdue Listings .......................................................... 348

IV. The First Battle of Critical Habitat .................................................... 351

Interlude: A Prisoner Exchange—The “Mini-Global Settlement” ........... 355

V. The Second Battle of Critical Habitat ................................................. 358

Interlude: A Second Front: The Regulated Community Strikes Back ...... 359

* This Article is a revision of a paper of the same title originally published by the Rocky Mountain Mineral Law Foundation in the manual of the Special Institute on Special Institute on Federal Regulation of Cultural Resources, Wildlife, and Waters of the U.S. (2012). ** Attorney-Adviser, Office of the Solicitor, Department of the Interior. J.D., New York University, 1990; B.A. Haverford College, 1986. The views expressed in this Article are solely those of the author and do not purport to reflect the views of the Office of the Solicitor, the Department of the Interior, or the United States. Thanks to all of my comrades-in-arms, including Joan Goldfarb, Philip Kline, and Mike Young in the Fish and Wildlife Branch of the Solicitor’s Office; the attorneys in the regional Solicitor’s Office and Department of Justice who have done most of the actual fighting in the Listing Wars; and the FWS personnel who work tirelessly to conserve species despite the constant distractions caused by my profession.

328 VERMONT JOURNAL OF ENVIRONMENTAL LAW [Vol. 14

VI. The Battle of the Mega-Petitions ....................................................... 362

Interlude: “Over There!” Foreign Species Litigation and Subcap ............ 367

VII. Peace? The Multi-District Litigation Settlements ........................... 368

A. The Case ......................................................................................... 370 B. The Mediation ................................................................................. 372 C. The Settlements ............................................................................... 373 D. Debriefing ....................................................................................... 377

VIII. Swords into Plowshares .................................................................. 380

ABSTRACT

The Fish and Wildlife Service’s (FWS) program to list species under the Endangered Species Act (ESA) has been mired in litigation and controversy for decades. Much of that litigation has addressed not substantive decisions, but FWS’s inability to comply with the ESA’s deadlines for taking action. With limited resources, effectively unlimited workload, and strict statutory deadlines, each management or litigation strategy that FWS used to try to address this conundrum ultimately failed. As a result, court orders and settlement agreements swamped the listing program and FWS lost any ability to prioritize its efforts and get the most bang for the buck in protecting imperiled species. This race-to-the-courthouse environment decreased the program’s efficiency and further limited the number of species actually listed and protected by the ESA. This article traces the history of this deadline litigation (the “Listing Wars”), beginning with the skirmishes over the listing of the northern spotted owl over twenty years ago, through the congressionally imposed moratorium on listings in the mid-1990s and its aftermath, the battles over designation of critical habitat for listed species, and to the influx of massive petitions to list hundreds of additional species in the late 2000s. This article then discusses in detail a pair of settlement agreements signed in 2011 that have the potential to change the trajectory of the listing program and the Listing Wars. Those settlements impose obligations on the parties until 2017: they require FWS to make listing determinations for hundreds of species that have remained in administrative limbo due to lack of resources, but they also are designed to give FWS a respite from the litigation that has contributed to the logjam. This article also explores why settlement was possible, and describes the developments since the settlements were filed. In the year and a half since the settlements were approved, deadline litigation has radically decreased, and the rate of listing determinations is at the highest level in

2013] Endless War or End This War? 329

fifteen years. Whether congressional action will again derail the program remains to be seen.

INTRODUCTION

“War is only a cowardly escape from the problems of peace.” Thomas Mann

Call me Thucydides.1 Some years ago—never mind how long precisely—having nothing particular to interest me in other areas of the law, I thought I would enter the fray of Endangered Species Act litigation. Although it has done nothing for my spleen or circulation, it has given me a unique opportunity to play the role of historian to the Listing Wars.2 Historians need history. And history is made up of historic events. The resolution—in the form of two separate settlement agreements—of a single, centralized multi-district case has the potential to be a historic event by drastically changing the trajectory of the listing program under the Endangered Species Act (ESA).3 This paper provides an insider’s view of the history that led to these settlements, an analysis of the settlements themselves, and some thoughts on how they may change the course of history of the ESA. The ESA is one of the most ambitious and far-reaching of environmental statutes anywhere in the world.4 In fact, the ESA endows the United States Fish and Wildlife Service (FWS) with considerable power 1. Ancient Greek, author of History of the Peloponnesian War. In describing his history, Thucydides wrote:

The absence of romance in my history will, I fear, detract somewhat from its interest; but if it be judged useful by those inquirers who desire an exact knowledge of the past as an aid to the understanding of the future, which in the course of human things must resemble if it does not reflect it, I shall be content. In fine, I have written my work, not as an essay which is to win the applause of the moment, but as a possession for all time.

THE LANDMARK THUCYDIDES: A COMPREHENSIVE GUIDE TO THE PELOPONNESIAN WAR 16 (Robert B. Strassler, ed., 2008). A worthy sentiment, which I share (although I do not mean to suggest that my essay is one for the ages). 2. With apologies to Herman Melville. See HERMAN MELVILLE, MOBY DICK, OR THE WHALE 3 (Penguin Classics, Deluxe ed. 2009). 3. 16 U.S.C. §§ 1531–44 (2006). 4. See, e.g., Bruce Babbitt, The Endangered Species Act and “Takings”: A Call for Innovation Within the Terms of the Act, 24 ENVTL. L. 355, 356 (1994) (explaining that the ESA is “undeniably the most innovative, wide-reaching, and successful environmental law which has been enacted in the last quarter century”); Tenn. Valley Auth. v. Hill, 437 U.S. 153, 180 (1978) (noting that ESA is “the most comprehensive legislation for the preservation of endangered species ever enacted by any nation”).


over actions that may affect species that the ESA protects. Exercise of that power, however, requires compliance with a host of procedural and substantive requirements. 5 Those requirements begin with FWS’s determination that a species should be protected by the ESA. 6 That determination (referred to as “listing,” as the species is added to the list of threatened and endangered species) is governed by section 4 of the ESA.7 Given the extinction crisis being caused by the power of industrialized society as well as the sheer number of human beings on the planet, there are many species that might qualify for protection under the ESA. But because of the actual and perceived effect of listing under the ESA, those decisions are controversial, as is the very paradigm of the ESA’s protection of imperiled species. 8 Thus, FWS is faced with significant “problems of peace”: a statute that places many demands on FWS, a political system that routinely fails to provide FWS with the resources necessary to meet those demands, and interested parties watching FWS’s every move (or failure to move).9

Congress apparently anticipated that FWS would at times be either unable or unwilling to fully meet its responsibilities under the ESA, and it provided the public with the ability to sue the government to force compliance with the mandates of section 4.10 Thus, armed and motivated by

5. The ESA is implemented by both the Secretary of the Interior and the Secretary of Commerce. 16 U.S.C. § 1532(15). Those Secretaries have delegated their responsibilities under the ESA to FWS and the National Marine Fisheries Service (NMFS), respectively. Pursuant to Reorganization Plan No. 4 of 1970, which established the National Oceanic and Atmospheric Administration (NOAA), FWS implements the ESA with respect to terrestrial and freshwater species, as well as some marine mammals; NMFS, a part of NOAA, implements the ESA with respect to the remainder of marine species. See 50 C.F.R. § 222.101 (explaining that the National Oceanic Atmospheric Administration implements the ESA “pertaining to wildlife and plants under the jurisdiction of the Secretary of Commerce”). As a practical matter, FWS has jurisdiction over the vast majority of listed species (and species being considered for listing). Unlike FWS, NMFS has not faced an extreme mismatch between resources and responsibilities with respect to section 4 of the ESA. Nat’l Oceanic Atmospheric Admin., Candidate and Proposed Species Under the Endangered Species Act (ESA), http://www.nmfs.noaa.gov/pr/species/esa/candidate.htm (last updated Feb. 28, 2013) (listing NOAA candidate species). Therefore, NMFS has largely been a noncombatant in the Listing Wars. This article focuses exclusively on FWS. 6. Listing a Species as Threatened or Endangered, U.S. FISH & WILDLIFE SERV. (June 2011), http://www.fws.gov/endangered/esa-library/pdf/listing.pdf. 7. 16 U.S.C. § 1533 (2006). 8. Daniel J. Rohlf, Section 4 of the Endangered Species Act: Top Ten Issues for the Next Thirty Years, 34 ENVTL. L. 483, 494 (2004). 9. See id. (describing this situation as setting up an “inevitable conflict between the huge task of listing all deserving species as threatened or endangered, and the agencies’ limited ability to do the job”). 10. See 16 U.S.C. § 1540(g)(1)(C) (2006) (establishing procedure for suing FWS where there is an alleged failure of the Secretary to perform non-discretionary duties under section 4 of the ESA).


the power of the ESA, a variety of combatants have reacted to the problems of peace by launching the Listing Wars.11 Referring to the litigation over the listing program as warfare is not a new creative insight on my part. In 2003, Jason Patlis published an excellent article that used the listing moratorium, the listing budget cap, and the early battles of the Listing Wars as the case study for his discussion of legislative riders.12 In it, he used the metaphor of warfare to describe the situation.13 Better still, he nested that metaphor within a larger one: a five-act play that tells the story of epic battles.14 Mr. Patlis cleverly describes his fifth act as unfinished, awaiting the intervention of the deus ex machina for resolution of an apparently insoluble problem.15 As I am no playwright, I will stick with the first metaphor. This history begins by examining the origins of the Listing Wars. It then follows the conflict through each of its major phases: the Battle of Overdue Listings, the First and Second Battles of Critical Habitat, and the Battle of the Mega-Petitions. This history does not attempt to address in detail the myriad of substantive disputes relating to section 4 or issues arising from the key provisions of section 4 and related definitions—many of those battles have already attracted whole colleges of historians. The history concludes with an extended discussion of the Multi-District Litigation (MDL) settlement agreements that hold some chance of de-escalating the conflict, if not actually leading to a complete cessation of hostilities. The other parties to these settlement agreements are WildEarth Guardians (Guardians), and the Center for Biological Diversity (CBD). Over time, these organizations have become the most active and litigious environmental groups with respect to section 4 issues—in recent years, they have filed considerably more section 4 lawsuits against FWS than all other plaintiffs combined.

11. Working on ESA issues for the government is usually intellectually stimulating, often fun, but rarely violent. Thus, referring to the litigation and controversy of the ESA’s implementation as a “war” may seem inappropriate. And yet, meaning no disrespect to those who have experienced the horrors of actual war, as someone on the front lines of the listing wars for sixteen years, the metaphor has sometimes seemed surprisingly apt. Litigation is stylized battle—lawyers the warriors, and settlements the ceasefires and peace treaties. Thus, the reader will perhaps forgive my extended use of this martial metaphor. 12. Jason M. Patlis, The Endangered Species Act: Thirty Years of Politics, Money, and Science: Riders on the Storm, or Navigating the Crosswinds of Appropriations and Administration of the Endangered Species Act: A Play in Five Acts, 16 TUL. ENVTL. L.J. 257, 257 (2003). 13. See id. at 306 (using the metaphor of war to describe the “great battle waged by Congress and the President,” in reference to the power of the purse versus the power of the veto). 14. Id. at 262. 15. Id. (“The final Act remains unfinished, as the characters await the arrival of the deus ex machina—that unexpected, improbable, and often supernatural character in Greek and Roman drama that never fails to intervene in an otherwise hopeless situation and untangle the plot to the satisfaction of all concerned.”).


The MDL settlements were described as one of the top ten environmental issues to watch in 2012.16 It remains to be seen whether they will truly resolve the problem described in Mr. Patlis’s play; if so, I would argue that they are better characterized as flowing from the internal logic of the play, rather than an external deus ex machina.

I. PRELUDE TO WAR

A. The ESA

“[A prince] must also learn the nature of the terrain . . . .” Machiavelli, The Prince

During the Twentieth Century, there was an increasing realization that population growth, technological advances, and market forces were able to drive ever more species to extinction. As the myth of America’s infinite resources slowly faded (a process not yet completed), there were fitful efforts to harness the power of the federal government to forestall extinction.17 Wildlife law and federal conservation actions in the first half of the Twentieth Century focused largely on regulation of commercial exploitation of vulnerable species. The best examples of this were the Lacey Act of 1900, 18 the Fur Seal Treaty (1911), 19 the Migratory Bird Treaty Act (1918),20 and the Bald Eagle Protection Act (1940).21 There was also an effort to protect particular lands for the benefit of species conservation, beginning with President Theodore Roosevelt’s designation of Pelican Island as a federal wildlife refuge.22 Notwithstanding those efforts, the threats to what we now call biodiversity continued to escalate. In the 1960s, Rachel Carson’s Silent Spring, warning of the insidious threat that pesticides pose to wildlife, contributed to the growing understanding that merely regulating the 16. Patrick A. Parenteau and Daniel Niedzwiecki, Landmark Settlement Under the Endangered Species Act, VERMONT LAW TOP 10 ENVTL. WATCH LIST (Dec. 12, 2011), http://watchlist.vermontlaw.edu/esa-settlement. 17. Stewart Udall famously referred to this as the “Myth of Superabundance” in Chapter 5 of his classic history of environmentalism, The Quiet Crisis. STEWART UDALL, THE QUIET CRISIS 54 (1963). 18. 6 U.S.C. §§ 3371–3378 (2006). 19. 18 U.S.C. § 42 (2006). 20. 16 U.S.C. §§ 703–12 (2006). 21. 16 U.S.C. § 668–668(d) (2006). 22. See Pelican Island National Wildlife Refuge: History of Pelican Island, U.S. Fish & Wildlife Serv., http://www.fws.gov/pelicanisland/history.html (last updated Sept. 18, 2009) (describing the beginning of designating wildlife sanctuaries in the United States with the designation of Pelican Island).


exploitation of species directly used by humans was inadequate to prevent additional extinctions.23 These concerns found their ultimate legislative expression in the ESA. Passed in 1973, the ESA is one of a series of laws resulting from the environmental awakening of that era, symbolized by the celebration of the first Earth Day in 1970. 24 The ESA superseded two attempts in the prior decade to create a broader federal law to stem extinction: the Endangered Species Preservation Act of 1966 and the Endangered Species Conservation Act of 1969.25 These precursors to the ESA had significant limitations that the ESA was meant to address.26 The ESA is the metaphorical battlefield on which the Listing Wars have been fought; its provisions are the terrain that can provide tactical advantages to its combatants. Those who would understand (or participate in) the Listing Wars must understand the terrain of the ESA as Machiavelli encouraged his Prince to understand the literal terrain of his dominion. What follows is a description of the relevant provisions of the ESA as it read in 2011 (and as it still reads in 2013). Some of the amendments to the original text are discussed in the next section. In contrast to earlier laws, the ESA is not limited to a single class of animals, but covers all wildlife and plants.27 Also in contrast to earlier laws, it is not limited merely to prohibiting or regulating direct overexploitation, but contemplates a comprehensive program of conservation.28 Thus, it not only prohibits direct taking and killing of protected species,29 but it also: (1) prohibits “harm” of protected species,30 defined by regulation to include habitat modification that kills or injures wildlife (even if indirectly)31; (2) requires federal agencies to consult with FWS to ensure that they do not take actions that jeopardize listed species or adversely modify habitat identified as critical (this is referred to as “section 7 consultation”)32; and

23. RACHEL CARSON, SILENT SPRING 296–97 (Houghton Mifflin Co., 25th ed. 1987). 24. In particular, the National Environmental Policy Act, 42 U.S.C. §§ 4321–4370(f) (2006), the Clean Air Act, 42 U.S.C. §§ 7401–7671q (2006), the Clean Water Act, 33 U.S.C. §§ 1251–1387 (2006), and the Marine Mammal Protection Act, 16 U.S.C. §§ 1361–1421(h) (2006). 25. Endangered Species Preservation Act of 1966, Pub. L. No. 89–669, 80 Stat. 926 (Oct. 15, 1966); Endangered Species Conservation Act of 1969, Pub. L. No. 91–135, 83 Stat. 275 (Dec. 5, 1969). 26. See generally MICHAEL J. BEAN AND MELANIE J. ROWLAND, THE EVOLUTION OF NATIONAL WILDLIFE LAW 194–98 (3d ed. 1997) (providing an overview of the precursors to the Endangered Species Act). 27. See 16 U.S.C. § 1532(16) (defining “species” to include “fish or wildlife or plants”). 28. Id. § 1531 (b) (defining the purposes to include conservation). 29. See id. § 1538 (referencing that the protection for plants is more limited). 30. See id. § 1532(19) (defining “take” to include “harm”). 31. 50 C.F.R. § 17.3; see Babbitt v. Sweet Home Chapter of Cmtys. for a Great Oregon, 515 U.S. 687, 687 (1995) (upholding regulation defining “harm” against a facial challenge). 32. 16 U.S.C. § 1536(a)(1)–(2).


(3) provides federal agencies with authority to take positive actions to conserve listed species.33

The prerequisite for application of this comprehensive program of conservation is listing as a threatened or endangered species. “Species,” “threatened species,” and “endangered species” are all defined terms in the ESA.34 The genesis of the Listing Wars is found in the statute’s procedures for making listing determinations; those procedures make up the bulk of section 4. Section 4(a)(1) authorizes (or, arguably, mandates) FWS to determine whether species are threatened or endangered based on a number of enumerated factors. 35 The determination must be made by regulation. 36 Section 4(a)(3)(A) requires that FWS, “to the maximum extent prudent and determinable,” designate critical habitat for the species concurrently with listing it.37 “Critical habitat” is also a defined term and the FWS must also make critical habitat designations by regulation. 38 Listing decisions must be made solely on the best scientific and commercial data available, without any consideration of the impacts of listing.39 Critical habitat designations must similarly be made on the basis of the best scientific data available; however, in contrast to listing determinations, FWS must consider the economic as well as other impacts of the designation and has the authority to exclude areas from the designation if the benefits of excluding the area outweigh the benefits of including it.40 Rulemaking to list a species can be triggered in two different ways.41 First, FWS has the authority to initiate rulemaking to list any species that it concludes is threatened or endangered. FWS implements this authority through the candidate-assessment program, by which it evaluates species for which it has information suggesting that listing may be warranted. If FWS determines that listing is warranted, it either immediately proposes to list the species, or adds the species to the “candidate list.” Species on the candidate list are assigned a “listing priority number” based on the threats

33. Id. § 1536(a)(1); see also 16 U.S.C § 1531(c)(1) (explaining that Congress’s policy requires federal agencies to “seek to conserve endangered species and threatened species”). 34. Id. § 532(6), (16), (20). 35. Id. 36. Id. 37. Id. § 1533(a)(3)(A). 38. Id. § 1532(5)(A). 39. Id. § 1533(b)(1). 40. Id. § 1533(b)(2). 41. The procedures described below generally apply to determinations that a listed species no longer warrants listing (“delisting”), to determinations to change the listing status from endangered to threatened, or vice versa.


they face and their taxonomic uniqueness. 42 Species with the highest priority are the first to be proposed for listing when resources to do so are available. Second, members of the public can force FWS to consider listing a species by petitioning FWS. Upon receipt of a petition to list, FWS must, to the maximum extent practicable, make a preliminary determination on the petition and publish that finding in the Federal Register within ninety days.43 This is referred to as a “90-day finding.” If FWS determines that the petition presents “substantial information” that listing may be warranted, FWS must initiate a review of the status of the species.44 If not, the petition process is concluded. If FWS initiates a status review, it must, within 12 months of receipt of the petition, issue another determination, referred to as a “12-month finding.”45 That finding can conclude that listing the species is not warranted, in which case the petition process is over.46 Alternatively, it can conclude that listing is warranted, in which case FWS must promptly issue a proposed rule to list the species.47 Or it can conclude that listing is warranted, but rulemaking is currently precluded by pending proposals for other species.48 This is referred to as a “warranted-but-precluded finding” and requires that FWS also find that it is making expeditious progress in adding and removing species from the list. 49 The allowance for a warranted-but-precluded finding is Congress’s express acknowledgement that FWS may not always have sufficient resources to begin the listing process immediately for every species that it determines warrants listing.50 When FWS makes a warranted-but-precluded finding, it assigns the species a listing priority number and adds it to the candidate list. Thereafter, FWS must annually reconsider the species until FWS either makes a not-warranted finding or proposes the species for listing.51 FWS is also required to monitor the status of warranted-but-precluded species.52 Regardless of which process triggers the proposed rule, the rulemaking process is governed by the Administrative Procedure Act, supplemented by

42. See sources cited infra notes 97, 98 and accompanying text. 43. 16 U.S.C. § 1533(b)(3)(A). 44. Id. 45. Id. § 1533(b)(3)(B). 46. Id. § 1533(b)(3)(B)(i) 47. Id. § 1533(b)(3)(B)(ii). 48. Id. § 1533(b)(3)(B)(iii)(I). 49. Id. § 1533(b)(3)(B)(iii)(II). 50. See H.R. CONF. REP. No. 97-835, at 21–22 (1982), reprinted in 1982 U.S.C.C.A.N. 2860, 2862–63. 51. 16 U.S.C. § 1533(b)(3)(C)(i). 52. Id. § 1533(b)(3)(C)(iii).


additional requirements specific to section 4. 53 (FWS can forego those required procedures in emergency circumstances.) 54 Once a species is proposed for listing, the ESA requires that FWS make a final listing determination within one year (which can be extended by six months in certain circumstances).55

Note that the procedural framework laid out by the ESA imposes deadlines of various degrees of rigidity for different parts of the process. First, there is no deadline at all for FWS to issue a proposed listing rule on its own initiative. Second, the deadline for making a ninety-day finding is subject to the modifier “to the maximum extent practicable.”56 Third, the deadline for a twelve-month finding is unqualified, but one of those findings allows for a proposed listing rule to be deferred for some indefinite period of time, until rulemaking is no longer precluded by higher priorities. Fourth, once FWS issues a proposed rule there is again an unqualified deadline by which FWS must issue a final determination (subject to a six-month extension). And finally, the deadline for designating critical habitat is qualified by the ambiguous phrase “to the maximum extent prudent and determinable.”57 The ESA also allows the public to enforce these varying deadlines. Section 11(g)(1)(C) allows any person to commence a civil suit against FWS “where there is alleged a failure of [FWS] to perform any act or duty under section 4 which is not discretionary.”58

B. The First Twenty Years of Skirmishes

“The bugle sounds, the charge begins/But on this battlefield no one wins.” Iron Maiden, The Trooper

Despite the broad language and sweeping objectives of the 1973 Act, there appears to have been relatively little conflict regarding the ESA during its first five years (particularly with respect to section 4). This may have been because none of the interested parties yet realized the strength of the language of the ESA, or that its scope extended so far beyond

53. See id. § 1533(b)(4) (explaining that the provisions of section 553 of title 5 will apply to any regulation promulgated to carry out the purposes of this chapter); id. § 1533(b)(5)–(6). 54. Id. § 1533(b)(7). 55. Id. § 1533(b)(6)(A); id. § 1533(b)(6)(B)(i). 56. Id. § 1533(b)(3)(A). 57. Id. § 1533(a)(3)(A). 58. Id. § 1540(g)(1)(C).


charismatic megafauna. 59 In any case, as the assassination of Archduke Ferdinand led inexorably to World War I, the Supreme Court’s 1978 decision in Tennessee Valley Authority (TVA) v. Hill60 led (although less immediately) to the Listing Wars. In TVA v. Hill, an environmental group sought to enjoin completion of the almost-finished Tellico Dam.61 That dam would flood the only known habitat of an obscure, recently discovered small fish, the snail darter. 62 Since the snail darter had been listed as endangered, the environmental group argued that the Tennessee Valley Authority could not complete the dam without violating section 7’s prohibition of jeopardizing a listed species. 63 The Supreme Court agreed, based in part on Congress “plain intent” to “halt and reverse the trend towards species extinction, whatever the cost.” 64 With this decision, the power of the ESA, which allowed citizens to halt federal actions despite major economic consequences, was revealed. TVA v. Hill was controversial and Congress acted quickly to amend the ESA. Notwithstanding the controversy, the 1978 amendments to the ESA were relatively modest. Rather than changing the fundamental balance struck by section 7 (as interpreted by the Supreme Court), Congress added provisions to try to encourage early resolution of possible conflicts between endangered species conservation and economic activity.65 More dramatic, but less significant in practice, Congress created an ad-hoc, cabinet-level “Exemption Committee,” empowered to override the prohibitions of section 7 in certain circumstances if a conflict could not be avoided. 66 The committee is popularly referred to as the “God Squad” for its authority to make the ultimate decision of whether to approve an action that might cause a species to become extinct—an authority that has been infrequently invoked and has resulted in only two exemptions (and none since 1979).67 Because the power of section 7 survived largely intact from this legislative adjustment, one of the indirect results of TVA v. Hill was to

59. See Shannon Petersen, Comment, Congress and Charismatic Megafauna: A Legislative History of the Endangered Species Act, 29 ENVTL. L. 463, 466–67 (1999) (exploring the expectations for the Endangered Species Act at the time of its passage). 60. 437 U.S. 153 (1978). 61. Id. at 157–58. 62. Id. at 158–59. 63. Id. at 150–60. 64. Id. at 184. 65. E.g., 16 U.S.C. § 1536(d) (limiting the ability to commit resources to projects after consultation begun). 66. 16 U.S.C. § 1536(e)–(n). 67. See Eric M Yuknis, Would a “God Squad” Exemption Under the Endangered Species Act Solve the California Water Crisis, 38 B.C. ENVTL. AFF. L. REV. 567, 578–83 (2011).


highlight the importance of listing decisions, the prerequisite for section 7 consultation. In fact, the 1978 amendments included two additional procedural requirements in section 4: (1) additional provisions relating to notice and public hearings and (2) the requirement that critical habitat be designated concurrent with listing.68 These new requirements had the effect of slowing listings. 69 With the arrival of the regulation-averse Reagan Administration, the listing program effectively came to a halt. During the first year of that Administration, FWS issued final listing determinations for only two species.70 This, in turn, was the impetus for the 1982 amendments to the ESA. With those amendments, section 4 largely reached its current form.71 The principal purpose of the amendments to section 4 was to ensure that listing determinations (in contrast to critical habitat designations) were based “solely on biological criteria and to prevent non-biological considerations from affecting such decisions,” but the amendments were also “intended to expedite the decisionmaking process and to ensure prompt action in determining the status of the many species which may require the protections of the Act.” 72 It aimed to achieve the latter goal in part by “replac[ing] the Secretary’s discretion with mandatory, nondiscretionary duties.”73 Thus, the amendments added deadlines for petition findings, but with the escape valve for warranted-but-precluded twelve-month findings.74 The amendments also shortened the time allowed between proposed and final rules from two years to one, but clarified that listings could be finalized without concurrent critical habitat designations in certain circumstances, eliminating a major reason for the gridlock in the listing program in the previous several years.75

68. An Act to Amend the Endangered Species Act of 1973, Pub. L. No. 95-632, 92 Stat. 3751 (1978). 69. See J. Michael Scott, et al., Introduction, in THE ENDANGERED SPECIES ACT AT THIRTY: REVIEWING THE CONSERVATION PROMISE, VOL. 1, at 3, 9 (Dale D. Goble, et al. eds., 2006). But see D. Noah Greenwald et al., The Listing Record, in THE ENDANGERED SPECIES ACT AT THIRTY: REVIEWING THE CONSERVATION PROMISE, VOL. 1, at 51, 56 (Dale D. Goble, et al. eds., 2006) (arguing that the new requirements in the 1978 amendments did not slow the rate of listing). 70. See H.R. REP. NO. 97-567, at 11 (1982), reprinted in 1982 U.S.C.C.A.N. 2810; Greenwald et al., supra note 69, at 56–57. 71. For an excellent discussion of the early years of the listing program, including the various amendments to section 4, see Oliver A. Houck, The Endangered Species Act and Its Implementation by the U.S. Departments of Interior and Commerce, 64 U. COLO. L. REV. 278, 281–85 (1993). 72. H.R. CONF. REP. NO. 97-835, at 19 (1982), reprinted in 1982 U.S.C.C.A.N. 2860. 73. Id. at 20. 74. Id. at 21. 75. Id. at 21–22.


The 1982 Amendments led FWS and NOAA to rewrite the implementing regulations for section 4 in 1984.76 Those regulations, found at 50 C.F.R. part 424, have not been revised since. Despite TVA v. Hill and the 1982 amendments, there was very little litigation regarding section 4 during the first fifteen years of the ESA, even though, as discussed in the next section, FWS had never been able to keep up with the backlog of species requiring listing determinations.77 But after 1982, the pieces were in place, awaiting a triggering event. That event was the challenge to FWS’s determination that listing the northern spotted owl was not warranted.78 The northern spotted owl is associated with old-growth forests in the Pacific Northwest. The hope of some, and the fear of others, was that the spotted owl would make the snail darter look like a minor skirmish, as listing the spotted owl would affect not just a single large project, but a major economic activity (old-growth logging) throughout the Pacific Northwest. In other words, listing the spotted owl might provide significant protection to an entire ecosystem. In response to a 1987 petition to list, FWS conducted a status review and determined that listing was not warranted.79 A broad coalition of environmental groups filed suit. FWS argued that the court should defer to its expert judgment.80 The court, however, found that the finding failed to provide any analysis in support of FWS’s conclusion, and remanded the matter to FWS to provide an analysis.81 In response, FWS proposed to list the species and issued a final listing rule on June 26, 1990.82 In the meantime, the courts addressed a few other challenges to listing determinations.83 The environmental groups

76. Listing Endangered and Threatened Species and Designating Critical Habitat; Amended Procedures To Comply With the 1982 Amendments to the Endangered Species Act, 49 Fed. Reg. 38,900, 38,900 (Oct. 1, 1984). 77. Most of the handful of cases related to protections for threatened species under section 4(d), e.g., Christy v. Hodel, 857 F.2d 1324, 1326 (9th Cir. 1988), rather than issues relating to the merits of listing determinations or the process for making those determinations. Greenwald et al. describe the period from 1982 to 1990 as the paradigm for how FWS implemented the current section 4 language in the absence of NGO enforcement: better than the preceding two years, but still inadequate. Greenwald et al., supra note 69, at 58. 78. Endangered and Threatened Wildlife and Plants; Finding on Northern Spotted Owl Petition, 52 Fed. Reg. 48552, 48552 (Dec. 23, 1987) (codified at 50 C.F.R. pt. 17). 79. Endangered and Threatened Wildlife and Plants; Finding on Northern Spotted Owl Petition, 52 Fed. Reg. at 48,552. 80. Id. at 481. 81. Id. at 483. 82. Determination of Threatened Status for the Northern Spotted Owl, 50 C.F.R. § 17.11 (2011). 83. See Am. Fisheries Soc’y v. Verity, Civ. No. 88-0174 (E.D. Cal. Feb. 24, 1989) (reviewing decision not to list the winter-run Chinook salmon); Las Vegas v. Lujan, 891 F.2d 927 (D.C. Cir. 1989) (reviewing decision to emergency list the desert tortoise).


then sued FWS for its failure to designate critical habitat concurrently with the listing of the spotted owl. In 1991, the court invalidated FWS’s not-determinable finding and ordered it to designate critical habitat.84 Although technically a challenge to FWS’s finding that critical habitat for the spotted owl was “not determinable” rather than a deadline case, this case was a harbinger of things to come. Environmental groups, aware of the potential of the ESA to cause significant changes to the landscape, had begun to petition FWS for action, use the deadlines of the ESA to force action if it was not forthcoming, and challenge (if necessary) the substantive result of the action.85 The chief of the Wildlife Section at the Department of Justice noted in an article in 1991 that the growing backlog of species under consideration for listing was leading to a then-new trend of challenges to agency inactivity. 86 Some of those early deadline cases were rendered moot by FWS taking the required action,87 while others settled,88 and a few were litigated to conclusion. The first reported judicial decision on a pure deadline claim was issued in 1992, in which the court enforced the deadline for designating critical habitat for the razorback sucker. 89 By the time Congress imposed the moratorium discussed in section II(B), FWS was subject to a number of court orders and court-approved settlement agreements that required it to make a variety of listing and critical habitat determinations (with many more cases pending).90 The most significant of these was the settlement in the Fund for Animals case.

84. N. Spotted Owl v. Lujan, 758 F. Supp. 621, 629 (W.D. Wash. Feb. 26, 1991). 85. See Houck, supra note 71, at 284 (discussing Congress’s intent to force the listing process forward by creating an opportunity for citizen petitions and judicial review). 86. James C. Kilbourne, The Endangered Species Act under the Microscope: A Closeup Look from a Litigator’s Perspective, 21 ENVTL. L. 499, 501–02 (1991). 87. See, e.g., Silver Rice Rat v. Lujan, Nos. 89-3409, 91-2479, slip op. at 2 (D.D.C. May 26, 1992). 88. Two settlement agreements included large numbers of species. Cal. Native Plant Soc’y v. Lujan, No 91-0038 (E.D. Cal. Aug. 22, 1991) (FWS agreed to resolve the conservation status of 159 California plants and animals on the candidate list); Conservation Council for Haw. v. Lujan, No. 89-953 (D. Haw. May 9, 1991) (FWS agreed to make petition findings for 189 species of Hawaiian plants). These settlements were ultimately overshadowed by the Fund for Animals settlement, discussed infra note 108. 89. Colo. Wildlife Fed’n v. Turner, 1992 U.S. Dist. Lexis 22046, at *15–16 (D. Colo. Oct. 27, 1992). 90. See Patlis, supra note 12, at 293–94.


II. MOBILIZATION

A. The Fund For Animals Case

“We are going to have peace even if we have to fight for it.” Dwight D. Eisenhower

Almost since the inception of the Act, FWS has faced a backlog of listing actions. The 1973 Act directed the Smithsonian Institution to report to Congress which plants may be or become threatened or endangered.91 In 1975, the Smithsonian issued its report recommending that FWS consider over 3,000 plant species for listing.92 In effect, this was a petition for over 3,000 species. Presto, instant backlog. FWS’s budget for the listing program has never been sufficient to address the entire backlog. 93 It must be noted here that, as is common practice with respect to appropriations for federal agencies, Congress includes much of the detailed budget allocations in associated committee reports, not in appropriations laws. Thus, the “listing budget” originally referred to the committee report language that specified how much of FWS’s general appropriation was to be spent on section 4. As suggested by one commentator, after the 1982 amendments, the language of section 4 itself demonstrated that Congress recognized the inevitable conflict between the goals of the statute and the resources likely to be available to implement it. 94 Thus, as discussed above, Congress created petition-driven enforceable deadlines, while at the same time allowed FWS to delay issuing proposed listing rules in deference to higher

91. 16 U.S.C. § 1541. 92. See Threatened or Endangered Fauna or Flora: Review of Status of Over 3000 Vascular Plants and Determination of “Critical Habitat,” 40 Fed. Reg. 27,824 (July 1, 1975) (listing vascular plants that the Smithsonian Institution considers to be endangered). 93. One rather biased commentator has suggested that FWS’s listing backlog is at least in part due to purposeful delay, part of an alleged pattern of illegally allowing political considerations to influence management of the listing program. Ivan J. Lieben, Comment, Political Influences on USFWS Listing Decisions under the ESA: Time to Re-think Priorities, 27 ENVTL. L. 1323 (1997); see also Timothy Bechtold, Listing the Bull Trout Under the Endangered Species Act: The Passive-Aggressive Strategy of the United States Fish and Wildlife Service to Prevent Protecting Warranted Species, 20 PUB. LAND & RESOURCES L. REV. 99 (1999) (alleging that FWS used a myriad of delay tactics to avoid listing the bull trout and other species). A more objective commentator criticized the Department of the Interior for, in the 1980s, resisting budget increases for the listing program. Houck, supra note 71, at 293–94. In fact, as early as 1979, the General Accounting Office recognized that insufficient funding was hampering FWS’s efforts to list candidate species and recommended that funding for the listing program be commensurate with its priority (the highest within the endangered species program). U.S. GEN. ACCOUNTING OFFICE, ENDANGERED SPECIES—A CONTROVERSIAL ISSUE NEEDING RESOLUTION PROGRAM 30, 38 (1979). 94. Rohlf, supra note 8, at 494.


priorities. Congress’s instruction that FWS develop “a ranking system to assist in the identification of species that should receive priority review” is more evidence that Congress recognized this problem. 95 FWS complied with this mandate by publishing the 1983 Guidelines. 96 The 1983 Guidelines required that every candidate species be assigned a listing priority number, which set its relative priority for being proposed for listing. The listing priority numbers depend on the magnitude and imminence of the threats facing the species and its taxonomic distinctiveness.97 Nonetheless, by the early 1990s, the growing size of the candidate list (FWS had not yet issued proposed listing rules for over 600 species that it had determined warranted listing) 98 concerned environmental groups. Those groups worried that FWS’s ability to make warranted-but-precluded findings and put species on the candidate list instead of actually listing them created an administrative “black hole” where imperiled species would languish without protection, in some cases causing extinction. 99 That perception continues to the present day.100 This concern intensified in 1992, when President George H.W. Bush announced a moratorium on new regulations.101 For a period of time, this

95. 16 U.S.C. § 1533(h)(3). 96. Endangered and Threatened Species Listing and Recovery Priority Guidelines, 48 Fed. Reg. 43,098-02, 43,098-02 (Sept. 21, 1983). 97. Id. at 43,099–100. 98. OFFICE OF THE INSPECTOR GEN., U.S. DEP’T OF THE INTERIOR, REPORT NO. 90-98, AUDIT REPORT: THE ENDANGERED SPECIES PROGRAM—U.S. FISH AND WILDLIFE SERVICE 6 (1990) (stating that as of December 11, 1989, FWS had listed 601 domestic species on the candidate list and had an additional 3,033 domestic species for which it needed further data to make a determination as to whether listing was warranted). 99. See Houck, supra note 71, at 286 (“Whatever Congress’s intent, the ‘warranted but precluded’ category had become a black hole for unlisted species.”). This perception was not limited to environmental groups: the Department of the Interior’s own Inspector General released a report in 1990 criticizing FWS for its progress in listing candidates. OFFICE OF THE INSPECTOR GEN., supra note 98, at 5–10. 100. See Press Release, WildEarth Guardians, Federal Court Approves Historic Species Agreement (Sept. 9, 2011), available at http://www.wildearthguardians.org/site/News2?news_iv_ctrl=-1&page=NewsArticle&id=7177 (“‘The candidate list has been the black hole of the Endangered Species Act, where animals and plants that deserve the protection of the Act were consigned to an endless queue,’ said Jay Tutchton, General Counsel of WildEarth Guardians.”). A web search for “black hole,” “Endangered Species Act,” and “candidate” resulted in about 294,000 hits. For a detailed discussion of controversy surrounding FWS’s use of the warranted-but-precluded finding, see K. Mollie Smith, Abuse of the Warranted But Precluded Designation: A Real or Imagined Purgatory?, 19 SOUTHEASTERN ENVTL. L.J. 119 (2010) (arguing that the “warranted but precluded” designation of species is causing a serious delay in protecting at-risk species). 101. David E. Rosenbaum, Bush Is Extending Regulation Freeze as a Great Success, N.Y. TIMES, Apr. 29, 1992, http://www.nytimes.com/1992/04/29/us/bush-is-extending-regulation-freeze-as-a-great-success.html?pagewanted=print&src=pm.


resulted in a cessation of new final listing and critical habitat rules.102 A coalition of environmental groups filed a lawsuit, Fund for Animals, Inc. v. Lujan, challenging the manner in which the Department of the Interior implemented this moratorium with respect to rules to list species under the ESA.103 When FWS recommenced issuing final listing rules because those rules were subject to statutory deadlines (an exception to the moratorium), thus mooting plaintiffs’ original claim, plaintiffs amended their complaint to challenge more broadly FWS’s progress in listing species. The first count of the amended complaint asserted that FWS was unreasonably delaying the listing species in violation of section 706(1) of the Administrative Procedure Act. 104 The second count asserted that FWS’s warranted-but-precluded twelve-month findings were illegal because FWS could not demonstrate that it was making “expeditious progress” in carrying out its listing responsibilities.105 The Fund for Animals case thus challenged FWS’s key tool in managing the workload of the listing program. If the court ruled against FWS, it is not clear what remedy it would have imposed, but nothing other than legal impossibility would have prevented the court from ordering immediate action on all of the warranted-but-precluded species. Although plaintiffs’ victory was anything but assured, the relevant numbers gave plaintiffs significant ammunition, as did a 1990 report of the Inspector General of the Department of the Interior that suggested that the length of time (twelve years) that it calculated it would take FWS to address the candidate list was “not indicative of the ‘expeditious progress’ specified in the Act.” 106 Settlement presented a way for both sides to hedge the uncertainty of the situation. On December 15, 1992, the parties entered into what was certainly the most significant settlement agreement in the section 4 program until 2011. In it, FWS agreed to resolve the conservation status of the entire candidate list (then 401 species) 107 by September 30, 1996. 108 The settlement also

102. Id. 103. The Fund for Animals, Inc. v. Lujan, No. 92-800 (D.D.C. 1992). See generally Eric R. Glitzenstein, On the USFWS Settlement Regarding Federal Listing of Endangered Species, 10 ENDANGERED SPECIES UPDATE 1 (Mar. 1993) (lead attorney for plaintiffs describing the settlement). 104. Amended Complaint for Declaratory and Injunctive Relief at 33–34, The Fund for Animals v. Lujan, No.92-800 (D.D.C. 1992). 105. Id. at 34. 106. OFFICE OF THE INSPECTOR GENERAL, supra note 98, at 7. 107. Technically, the settlement applied only to “C-1” candidates, which correspond to the current candidate list. At the time, FWS maintained additional lists of species (“C-2” and “C-3” candidates), which it had not yet determined warranted listing. FWS subsequently discontinued the later categories. Notice of Final Decision on Identification of Candidates for Listing as Endangered or Threatened, 61 Fed. Reg. 64,481 (Dec. 5, 1996).


included complex provisions for dealing with additional species that FWS determined to be warranted-but-precluded. 109 Finally, the settlement expressly endorsed an ecosystem approach to listing.110 With the issue of the candidate list resolved, all that remained was for FWS to comply with the settlement.

B. Budget Battles: The Moratorium

“War is a matter not so much of arms as of money.” Thucydides, The History of the Peloponnesian War

FWS listed significantly more species per year from 1991 to 1995 than it had between 1973 and 1990. 111 While environmental groups thought FWS was doing too little in the listing program, many in industry thought the opposite. When the Republican Party gained a majority of Congress in the 1994 elections, one of its targets was the ESA.112 As a result, in April 1995, Congress rescinded one and a half million dollars from what had been an eight million dollar listing budget in fiscal year (FY) 1995; at the same time, Congress imposed a moratorium on final listing determinations and final critical habitat designations. 113 It is possible that the Fund for

108. Settlement Agreement at 2, The Fund for Animals, Inc. v. Lujan, No. 92-800 (D.D.C. 1992). 109. Id. at 5–6. 110. Id. 111. Greenwald et al., supra note 69, at 55, 59. Greenwald et al. argue that the primary reason for this increase was the series of lawsuits discussed above. Id. at 59. Although there may be some truth to that assertion, Greenwald et al. do not sufficiently address the principle that correlation does not imply causation. In fact, in one sentence, they directly equate “species . . . listed following lawsuits” with “species . . . listed as a result of litigation.” Id. Thus, according to Greenwald et al., FWS only gets “credit” for listings if it manages to complete the process without any group filing a petition or a lawsuit. This is a classic example of the fallacy post hoc ergo propter hoc. To be fair, Greenwald et al. support their conclusion by dividing the listing record into various periods to which they assign different characteristics (particularly the prevalence of litigation). But there are too many variables involved to make that segmentation useful for counterfactual comparison. Greenwald et al. never discuss the possibility that any of the listings that occurred after litigation would have occurred at about the same time absent the litigation. This is all the more problematic because legal vulnerability under the ESA often results from FWS choosing to begin the listing process, and FWS is more likely to agree to settle a case that is consistent with its preexisting priorities, facts that suggest that at least some of the time, FWS would take final action without the prompt of a lawsuit. Finally, Greenwald et al. never address the reality, discussed throughout this paper, that litigation can divert limited resources from the making of actual listing determinations. 112. Robert T. Nelson, Rewrite Endangered Species Act?—New GOP Representatives Plan To Emphasize Private-Property Rights, SEATTLE TIMES, Dec. 9, 1994, http://community.seattletimes.nwsource.com/archive/?date=19941209&slug=1946279. 113. Emergency Supplemental Appropriations and Rescissions for the Department of Defense to Preserve and Enhance Military Readiness Act of 1995, Pub. L. No. 104–06, 109 Stat. 73, 86 (1995); see generally Patlis, supra note 12, at 287–91 (discussing rescission and moratorium).


Animals settlement contributed to the moratorium because it had resulted in a large number of proposed listing rules, and called for still more in the next year and a half. 114 This may have heightened the controversy already associated with section 4 due to the listing of the northern spotted owl. In addition to the substantive and administrative challenge the moratorium posed for the implementation of section 4, the moratorium also raised legal questions in the context of the listing backlog and the existing court orders and settlement agreements. 115 The definitive case from this period was Environmental Defense Center v. Babbitt (a/k/a the “Red-Legged Frog case”).116 In this case, the latest in a series seeking to enforce the ESA’s deadlines with respect to a petition to list the red-legged frog, the issue was FWS’s failure to make a final listing determination on the proposed rule to list the species. The Environmental Defense Center filed suit on May 1, 1995, after the moratorium took effect. Nonetheless, the district court ordered FWS to make a final determination by September 15, 1995.117 FWS appealed, and sought a stay of the district court’s order. The Ninth Circuit denied the motion for stay, but the Supreme Court granted the stay so that the Ninth Circuit could rule on the appeal before FWS was required to violate either the moratorium or the district court order.118 On the merits, the Ninth Circuit agreed with the plaintiff that the moratorium did not repeal FWS’s duty under the ESA, but agreed with FWS that the moratorium prevented it from making a final listing determination. The Ninth Circuit vacated the district court’s order, and remanded to the district court to provide that compliance be delayed “until a reasonable time after appropriated funds are made available.”119 That moratorium continued into FY 1996 and became part of the budget showdown between the Clinton Administration and the Republican Congress.120 Although the bulk of the federal government was shut down “only” twice during the showdown, the “continuing resolutions” that kept the government operating often zeroed out the listing budget. Therefore, the

114. Glitzenstein, supra note 103, at 2. 115. See Patlis, supra note 12, at 293 (the moratorium resulted in limited funding leading to all activities being stalled). 116. 73 F.3d 867, 867 (9th Cir. 1995) (concerning final determination of endangered listing for red legged frog). (Note that within the “section 4 bar,” we tend to refer to cases by the critter, rather than the parties, as so many of the hundreds of cases have the same parties.) 117. Id. at 869–70. 118. Babbitt v. Envtl. Def. Ctr., 515 U.S. 1193, 1193 (1995). 119. Envtl. Def. Ctr v. Babbitt, 73 F.3d at 872. 120. See generally Patlis, supra note 12, at 283–87 (two aspects of the appropriations bill led to the impasse that resulted in the government shutdown during the winter of 1995-1996).


listing program was mothballed for much of the first half of FY 1996.121 The compromise to end the budget impasse included four million dollars for the listing program, and authorized the President to waive the moratorium,122 which he did on April 26, 1996.123

C. Post-Moratorium: The Listing Priority Guidance

“Therefore whoever desires peace, let him prepare for war.” Vegetius, De Re Militari

FWS anticipated that when the moratorium eventually ended, it would have a significant backlog of work with limited resources.124 Because the listing program had effectively been shut down for seven months, addressing the backlog no longer meant just answering the question of which proposed listing rules should have the highest priority (a question that could be answered by reference to the listing priority numbers assigned to candidates under the 1983 Guidelines).125 FWS also needed to prioritize the different types of listing activity. To meet this need, even before the moratorium was lifted, FWS issued an “Interim Listing Priority Guidance.”126 Shortly after the moratorium was lifted, the Interim Guidance was superseded by a similar but more detailed “Final Listing Priority Guidance.”127 The goal of this document was to “focus the limited listing resources on those actions that will result in the greatest conservation benefits to the species in the most urgent need of the Act’s protections.”128 Thus, the Guidance combined the strict biological priority of the 1983 Guidelines with an evaluation of the conservation importance of the different types of administrative action. The Guidance therefore gave

121. Endangered and Threatened Wildlife and Plants; Restarting the Listing Program and Final Listing Priority Guidance, 61 Fed. Reg. 24,722-02, 24,723 (May 16, 1996) (codified at 50 C.F.R. pt. 17); see also Patlis, supra note 12, at 291–94 (explaining that on April 26, 1996, the President suspended the listing moratorium language, while signing the omnibus appropriations bill into law, thus lifting the suspension period). 122. Final Guidance, 61 Fed. Reg. at 24,723; Omnibus Consolidated Rescissions and Appropriations Act of 1996, Pub. L. No. 104-134, 110 Stat. 1321–159 to 1321–160 (1996). 123. Suspension of the Provison Limiting Implementation of Subsections (a), (b), (c), (e), (g), or (i) of the Endangered Species Act of 1973 (16 U.S.C. § 1533), Contained in the Omnibus Consolidated Rescissions and Appropriations Act of 1996 (H.R. 3019), 61 Fed. Reg. 24,667 (May 16, 1996). 124. Final Guidance 61 Fed. Reg. at 24,723. 125. Id. 126. Endangered and Threatened Wildlife and Plants; Interim Listing Priority Guidance, 61 Fed. Reg. 9651-01 (Mar. 11, 1996) (codified at 50 C.F.R. pt. 17). 127. Final Guidance, 61 Fed. Reg. 24,727. 128. Id. at 24,725.


highest priority (after addressing any emergency situations) to final listing determinations for the 243 species with outstanding proposed listing rules. Proposed listing rules for the 182 candidate species, petition findings, critical habitat determinations, and delisting actions were a lower priority and FWS did not expect to undertake any work on those actions in FY 1996. 129 The Guidance was intended to be temporary, until the backlog of proposed listings for species facing high-magnitude threats was brought under control.130 Attorneys for plaintiffs in the Fund for Animals case submitted comments on the Interim Guidance complaining, among other things, that giving final listing determinations a higher priority than new proposed listing rules was inconsistent with the settlement in that case. 131 FWS responded that although it had proposed listing rules for 359 of the 443 species required to comply with the settlement, the budget situation of the previous year had made it impossible to comply with the settlement. More importantly, devoting all of its resources to issuing proposed rules for candidates would deny needed protection to higher-priority species just a step away from achieving that protection.132 The Guidance also expressly addressed how outstanding deadline litigation would be handled; the Department of Justice would notify the respective courts of the priority under the Guidance of the action at issue, and seek appropriate relief to allow the highest priority actions to be completed first.133 The Guidance concluded with a bold statement of intent that FWS and its lawyers would work mightily to defend during the first battles of the Listing Wars: “The Service will not elevate the priority of proposed listings for species simply because they are subjects of active litigation. To do so would let litigants, rather than expert biological judgments, control the setting of listing priorities.” 134 FWS ultimately would be forced to abandon that aspiration.

129. Id. at 24,727–28. 130. Id. at 24,736. 131. Id. 132. Id. 133. Id. 134. Id. at 24,738.


III. THE BATTLE OF OVERDUE LISTINGS

“In the practical art of war, the best thing of all is to take the enemy's country whole and intact; to shatter and destroy it is not so good.”

Sun Tzu, The Art of War If it was FWS’s hope that the rationality of the Guidance would help convince environmental groups to give FWS a grace period from additional litigation while FWS began to clean up the mess caused by the moratorium, that hope was quickly dashed. Although the Red-Legged Frog case insulated FWS from deadline litigation while funds were unavailable, it did not toll the deadlines of the ESA—the clock kept ticking throughout the moratorium. Thus, when the moratorium was lifted, final determinations for most of the 243 species already proposed for listing were overdue. Despite the fact that under the Guidance FWS gave completing final determinations for those species the highest priority, environmental groups filed a flurry of lawsuits seeking to accelerate that work. In addition, numerous petitions were filed before and during the moratorium that FWS had not been able to respond to;135 these overdue petition findings were the subject of additional litigation. The Guidance then became exhibit A in FWS’s defense against those suits. FWS argued that the courts should defer to it in how to allocate its limited resources as it emerged from the moratorium. Under this view, injunctions are extraordinary equitable remedies, and under these circumstances, courts should refrain from imposing them, even if FWS was admittedly in violation of the clear deadlines of section 4.136 FWS had some success, especially early on. For example, in Sierra Club v. Babbitt, 137 plaintiffs challenged FWS’s failure to make a final determination on a 1992 proposed rule to list the peninsular bighorn sheep. The court stayed the litigation during the moratorium. After the moratorium was lifted, plaintiff moved to have the stay likewise lifted. The court denied the motion, and relying on the Guidance, held that the budgetary circumstances excused FWS’s failure to comply with the statutory deadline:

Given that it would be “impossible,” for defendants to discharge their § 1533(6)(A) obligation as to all pending species within this fiscal year, the court finds that defendants’ prioritization scheme,

135. Endangered and Threatened Wildlife and Plants; Interim Listing Priority Guidance, 61 Fed. Reg. 9651-01. 136. Sierra Club v. Babbitt, 948 F. Supp. 56, 56 (E.D. Cal. July 24, 1996). 137. Id.


predicated upon biological need, is reasonable in light of the Endangered Species Act's purpose. Sporadic and disorganized judicial interference with defendants' priorities would result in a game of musical chairs plainly disruptive to a thoughtful and reasoned allocation of defendants' limited resources.138

But from the beginning, some courts found it easy to distinguish the Red-Legged Frog case. In contrast to Sierra Club v. Babbitt, those courts did not view the question to be whether FWS had the resources to immediately take all overdue actions—they found it dispositive that FWS now had some resources and that those resources could be used to take the action at issue in their particular cases. Thus, they either declined to exercise their discretion to refrain from issuing an injunction,139 or denied that they had such discretion. 140 As time passed, and the moratorium receded, courts had less and less patience with FWS blaming its then-current situation on an event that had occurred years before.141 Before it became obvious that the Guidance would ultimately be little help with the courts, FWS periodically revised the Guidance to reflect its progress on reducing the backlog of final listing determinations. Thus, on December 5, 1996, it announced that as of April 1, 1997, it would end its single-minded focus on final listing determinations and begin to allocate resources to other actions.142 But even with the last Guidance published, FWS was still making distinctions between actions—in particular, it kept designation of critical habitat as a low priority.143 In the meantime, the plaintiffs in the Fund for Animals case moved to enforce the settlement agreement, as FWS had publicly admitted in the Guidance that it would not attempt to comply with the settlement after the 138. Id. at 57 (citations omitted); see also Envtl. Def. Ctr. v. Babbitt, No. 94-CV-5561 (C.D. Cal. May 23, 1996) (concerning the western snowy plover); Envtl. Def. Ctr. v. Babbitt, No. 96-CV-6987 (C.D. Cal. Apr. 7, 1997) (concerning sixteen Channel Island plants); Catron County Bd. of Commissioners v. FWS, Civ. No. 93-700-HB (D.N.M. Aug. 18, 1997) (concerning the spikedace and loach minnow); cf. Biodiversity Legal Found. v. Babbitt, 146 F.3d 1249, 1254 (10th Cir. 1998) (concerning the Columbian sharp-tailed grouse and approving Guidance in the context of the statutory flexibility provided with respect to 90-day findings—“to the maximum extent practicable”). 139. See, e.g., Cal. Trout v. Babbitt, No. C-95-3961 (N.D. Cal. May 14, 1996). 140. See, e.g., Natural Res. Def. Counsel v. U.S. Dep’t of Interior, No. CV 98-7596, slip op. at 14–15 (C.D. Cal. Apr. 5, 1999), appeal dismissed as moot, 2001 WL 760519 (9th Cir. 2001). 141. E.g., Sw. Ctr. for Biological Diversity v. Babbitt, No. 98-CV-0180-K, slip op. at 9–10 (S.D. Cal. May 7, 1998) (distinguishing cases decided shortly after moratorium, noting that two years had passed, and ordering FWS to complete final listing determinations for 44 species by stated deadline). 142. Final Listing Priority Guidance for Fiscal Year 1997, 61 Fed. Reg. 64,475, 64,479 (Dec. 5, 1996). 143. Endangered and Threatened Wildlife and Plants; Final Listing Priority Guidance for Fiscal Year 2000, 64 Fed. Reg. 57,114-01 (Oct. 22, 1999).


moratorium—the Guidance required a focus on final determinations, as opposed to the proposed rules (or not-warranted findings) at issue in Fund for Animals. FWS moved to amend the settlement agreement.144 Ultimately, the parties entered into negotiations once more, and agreed to amend the settlement agreement by extending the date for compliance until December 31, 1998.145 Here we must take a brief detour into matters only a quartermaster could love: the budget. As mentioned above, the listing budget was not originally reflected in statutory language. As the volume of listing-deadline litigation increased, and available resources grew only slowly, the Department of the Interior and its appropriators in Congress realized that there was a distinct possibility that FWS would face a combination of court orders with which it would be impossible to comply without violating the budget allocations in the committee reports. Given the less-authoritative nature of committee reports, there was some concern that FWS would not be able to argue successfully in court that it was technically impossible for FWS to work on listing actions that would require in aggregate expenditures in excess of the listing budget. In that circumstance, to avoid contempt of court, FWS might be forced to seek to have resources reallocated from other areas of its budget. This would dramatically reduce the certainty with which FWS could administer its other programs, with concomitant decreases in efficiency and effectiveness. 146 As a result of these concerns, Congress converted the budget allocation for the listing program into a statutory mandate for FY 1998.147 This is referred to as the “listing cap,” and it has been in effect ever since.148 In effect, the Battle of Overdue Listings was fought to a draw. On the downside for FWS: (1) the Guidance was as ineffective at preventing listing deadline litigation as the Maginot Line was ineffective at sparing France from a German invasion; (2) FWS ultimately lost the judicial battle on the legal significance of the Guidance; and (3) FWS was required to spend a 144. See Final Listing Priority Guidance for Fiscal Year 1997, 61 Fed. Reg. at 64,476 (discussing plaintiff’s motion to enforce the settlement agreement). 145. See Final Listing Priority Guidance for Fiscal Years 1998 and 1999, 63 Fed. Reg. 25,502, 25,507 (May 8, 1998) (noting that amended settlement required a resolution of the status of eighty-five species by December 31, 1998). 146. See Press Release, U.S. Department of the Interior, Endangered Species Act “Broken”—Flood of Litigation over Critical Habitat Hinders Species Conservation at 1 (May 28, 2003), available at http://www.doi.gov/archive/news/03_News_Releases/030528a.htm (describing a circumstance in which DOI eventually did seek to shift funding from other programs). 147. Department of the Interior and Related Agencies Appropriations Act, 1998, Pub. L. No. 105–83, 111 Stat. 1543 (1997); Final Listing Priority Guidance for Fiscal Years 1998 and 1999, 63 Fed. Reg. 25,502, 25,503 (May 8, 1998) (discussing the listing cap and its effects). 148. See generally Patlis, supra note 12, at 306–11 (describing evolution of the listing cap language).


significant amount of resources and energy managing the enormous litigation workload—this cut into the amount of substantive listing work that FWS was able to get done.149

On the other hand, FWS nonetheless made reasonable progress in digging out from the backlog caused by the moratorium. Many of the deadline cases brought by environmental groups sought final listing determinations on proposed rules. This was, of course, FWS’s highest priority under the Guidance, so the litigation focused on the propriety of a court setting a deadline for the action, and, if so, what the deadline should be. So FWS was able to settle some of these cases because the final listing determinations at issue were nearing completion. Even in the absence of a settlement, courts often adopted FWS’s schedule for completion of the final determination.150 Thus, FWS was more or less able to follow the Guidance for several years, and by the end of the twentieth century, it had largely eliminated the backlog of final listing determinations while being able to shift sufficient resources to issuing proposed listing rules and complete its compliance with the Fund For Animals settlement. 151 But even as FWS achieved this goal, new battle lines were being drawn.

IV. THE FIRST BATTLE OF CRITICAL HABITAT

“Even if some disgruntled citizen had threatened to vandalize water umbel critical habitat, threats of environmental terrorism should not be allowed to

defeat the ESA.” Judge Alfredo Marquez152

Not all of the litigation in the late 1990s was limited to seeking acceleration of final listing determinations. During this period, the focus of

149. Greenwald et al. argue that litigation accelerates the speed at which listing determinations are made. Greenwald et al., supra note 69, at 63. This is certainly true with respect to some species in some circumstances. But that blanket assertion fails to reflect both the varied circumstances in which listing determinations are made as well as the larger picture. Sometimes settlements and court orders merely codify what would have happened in the absence of litigation. In others, priorities are shuffled due to litigation, and the determination for one species is accelerated, but those for others (which the FWS views as higher priorities) are then necessarily delayed. Turning to the big picture, litigation imposes transaction costs. This raises the question of whether any greater efficiency spurred by litigation outweighs the inefficiency created by responding to litigation. This is an interesting and difficult-to-answer question, but its existence is not even acknowledged by Greenwald et al. 150. See, e.g., Envtl. Def. Ctr. v. Babbitt, No. 96-CV-6987 (concerning sixteen Channel Island plants); see also Sw. Ctr. for Biological Diversity v. Babbitt, 97-CV-00704 (D. Ariz. Aug. 24, 1998) (permitting FWS to maintain its schedule regarding the listing of the San Xavier talus snail). 151. Final Listing Priority Guidance for Fiscal Years 1998 and 1999, 63 Fed. Reg. 25,502, 25,507 (May 8, 1998). 152. Sw. Ctr. for Biological Diversity v. Babbit, 97-CV-00704, at 23.


litigation began to shift to critical habitat. Indeed, one of the reasons that FWS was able to list so many species in the 1990s, both before and after the moratorium, is that those listings were rarely accompanied by designations of critical habitat.153 In most cases, FWS relied on the statutory exception included in section 4(a)(3)—designation concurrent with listing is only required “to the maximum extent prudent.”154 Thus, for hundreds of species in the 1990s, FWS concluded that designation was “not prudent.” In doing so, FWS was creating a piper that would have to be paid, and thus paving the way for the next phase of the Listing Wars. At that point, FWS had long viewed the designation of critical habitat as an expensive and controversial process that usually added little additional protection to a species once it was listed. 155 FWS eventually employed a variety of strategies to deal with the critical-habitat problem: it tried to avoid the legal requirement of designation; failing that, it tried to delay the requirement; and failing that, it tried to designate cheaply to conserve its resources for higher priorities. Three circuit court decisions blew the first two strategies out of the water and severely limited the third.

153. Between April 1996 and July 1999, FWS listed 256 species, but published critical habitat designations for only two of them. Patlis, supra note 12, at 300. 154. 33 U.S.C. § 1533(a)(3)(A). 155. A discussion of the basis of FWS’s historical antipathy to designating critical habitat, how that antipathy has manifested itself in administrative action (or inaction), and how the courts have reacted to FWS’s position is beyond the scope of this paper. See generally Kalyani Robbins, Recovery of an Endangered Provision: Untangling and Reviving Critical Habitat Under the Endangered Species Act, 58 BUFFALO L. REV. 1095, 1097–98 (2010) (discussing problems plaguing critical habitat designations and their protections); Michael Senatore et al., Critical Habitat at the Crossroads: Responding to the G.W. Bush Administration’s Attacks on Critical Habitat Designation Under the ESA, 33 GOLDEN GATE U.L. REV. 447, 449 (2003) (arguing that the George W. Bush Administration’s attacks on critical habitat protection warrants priority attention); Jared B. Fish, Note, Critical Habitat Designations After New Mexico Cattle Growers: An Analysis of Agency Discretion to Exclude Critical Habitat, 21 FORDHAM ENVTL. L. REV. 575, 582–96 (2010) (arguing that the U.S. Fish and Wildlife Service has failed to fulfill its obligation to make critical habitat designations for threatened or endangered species). But a good snapshot of FWS’s position at the beginning of the First Battle of Critical Habitat is found in a Federal Register notice that announced FWS’s intention to develop policy on the role of habitat in endangered species conservation. Notice of Intent to Clarify the Role of Habitat in Endangered Species Conservation, 64 Fed. Reg. 31,871 (June 14, 1999). If anything, the Department of the Interior’s views regarding critical habitat strengthened during the George W. Bush Administration. See Press Release, U.S. Department of the Interior, Endangered Species Act “Broken,” supra note 146 (discussing the high costs of critical habitat designations and court orders forcing the FWS to make the designations). More recently, partly in response to Gifford Pinchot Task Force v. U.S. Fish and Wildlife Service, 378 F.3d 1059, 1076 (9th Cir. 2004), which invalidated the regulatory definition of “destruction or adverse modification” of critical habitat, 50 C.F.R. § 402.02, FWS has moderated its position. The MDL settlement with WildEarth Guardians, discussed below, announced FWS’s intent to designate critical habitat concurrently with future listings. Stipulated Settlement Agreement, Exhibit 1, ¶ 8, In re: Deadline Litig., Misc. Action No. 10-377 (EGS) (D.D.C. May 10, 2011).


First, in Natural Resources Defense Council v. Department of the Interior,156 plaintiffs challenged FWS’s not-prudent finding with respect to critical habitat for the coastal California gnatcatcher.157 The district court upheld this finding; the Ninth Circuit reversed. In its opinion, the Ninth Circuit emphasized that Congress intended the not-prudent exception to the requirement of designating critical habitat to be invoked only in the rare circumstance in which designation would not benefit the species.158 FWS had made not-prudent findings for hundreds of listed species in the 1990s based on similar logic. Thus, this case, along with several subsequent district court cases following it, 159 not only made future not-prudent findings very difficult to justify (FWS has made only a handful in the last twelve years), but it made FWS vulnerable to challenges on hundreds of past findings. Second, Forest Guardians v. Babbitt drove the last nail in the coffin of the Guidance. 160 The district court, in a challenge to FWS’s failure to designate critical habitat for the Rio Grande silvery minnow, had deferred to the Guidance, and stayed the case for two years.161 The Tenth Circuit reversed. 162 It held that the failure to designate was agency action unlawfully withheld in violation of section 706(1) of the Administrative Procedure Act.163 The court further held that because the APA states that a “reviewing court shall . . . compel” such action, courts have no equitable discretion not to issue an injunction. 164 Therefore, the Tenth Circuit remanded the case to the district court with instructions to order FWS “to issue a final critical habitat designation for the silvery minnow as soon as possible, without regard to the Secretary's other priorities under the ESA.”165 Thus, the silvery minnow case made it essentially impossible to delay designation because of inadequate resources.

156. Natural Res. Def. Council v. U.S. Dep’t of the Interior, 113 F.3d 1121, 1123 (9th Cir. 1997). 157. Recall that critical habitat must be designated only “to the maximum extent prudent,” 16 U.S.C. § 1533(a)(3)(A); therefore, if FWS finds that designation is not prudent, it need not designate critical habitat. 158. Natural Res. Def. Council v. U.S. Dep’t of the Interior, 113 F.3d at 1126. 159. E.g., Conservation Council for Haw. v. Babbitt, 2 F. Supp. 2d 1280, 1288 (D. Haw. 1998) (remanding not-prudent findings for 245 listed plants); Jumping Frog Research Inst. v. Babbitt, 1999 WL 1244149, at *1 (N.D. Cal. Dec. 15, 1999), as amended (Jan. 18, 2000) (remanding not-prudent finding for red-legged frog). 160. 174 F.3d 1178, 1178 (10th Cir. 1999). 161. Id. at 1181. 162. Id. at 1193. 163. 5 U.S.C. § 706(1); Forest Guardians v. Babbitt, 174 F.3d at 1191. 164. Forest Guardians v. Babbitt, 174 F.3d at 1191. 165. Id. at 1193.


Third, in New Mexico Cattle Growers Association v. U.S. Fish and Wildlife Service, 166 FWS designated critical habitat for the southwestern willow flycatcher. Under section 4(b)(2), FWS was required to consider the economic impacts of designation. 167 FWS limited its analysis to the incremental impacts of the designation—in other words, it did not consider those impacts that would equally be caused by other factors. Because FWS determined that any measures to avoid destruction or adverse modification of critical habitat would also be required to avoid jeopardy to the species, and thus were already required by the listing of the species, designation of critical habitat would have no incremental impacts.168 The designation was challenged by a ranchers’ organization. The district court upheld the designation, affirming FWS’s use of an incremental analysis, 169 but the Tenth Circuit reversed. Because FWS interpreted the section 7 prohibitions regarding jeopardy and adverse modification so similarly, an incremental analysis would render meaningless the requirement of considering economic impacts. 170 The court remanded the designation to FWS to consider the impacts of designation that were “co-extensive” with other causes. 171 Conducting a co-extensive economic analysis is necessarily a more expensive proposition than conducting an incremental one because it must address additional considerations. This not only meant that future designations would be more expensive, but, similar to the gnatcatcher case, it also meant that past designations relying on incremental analyses were vulnerable to challenge. To switch metaphorical horses: those students of physics out there may have heard the three Laws of Thermodynamics drolly paraphrased as “you can’t win, you can’t break even, and you can’t get out of the game.” Similarly, the Gnatcatcher, Silvery Minnow, and Flycatcher critical habitat cases can be considered to form the three Laws of Critical Habitat: you have to do it, you have to do it now, and it’s going to be expensive. FWS’s fundamental difficulty after the moratorium was that, unlike during the moratorium (when FWS could spend no money at all on final listings and designations), FWS had some money and therefore could take 166. 248 F.3d 1277 (10th Cir. 2001). 167. See Endangered and Threatened Wildlife and Plants; Final Determination of Critical Habitat for the Southwestern Willow Flycatcher, 62 Fed. Reg. 39,129 (July 22, 1997) (codified at 50 C.F.R. pt. 17.95) (designating critical habitat by FWS under court order on July 22, 1997). 168. Id. at 39,138. (“[B]ecause critical habitat designation is not expected to cause additional habitat restrictions in any biological opinions issued under the Act, there are no incremental economic effects attributable to the designation.”). 169. N.M. Cattle Growers Ass’n v. U.S. Fish & Wildlife Serv., 81 F. Supp. 2d 1141, 1162 (D.N.M. 1999), rev’d, 248 F.3d 1277 (10th Cir. 2001). 170. N.M. Cattle Growers Ass’n, 248 F.3d at 1285. 171. Id. at 1285–86.


some, but not all, of the required actions. 172 Although the court in the Peninsular Bighorn Sheep case had been willing to look at the big picture and realize that the ability to take some actions did not equate with the ability to take every action required by the statute, most courts were unwilling to look beyond the immediate issue before the court: the ESA requires an action, FWS has some money available to take it, and therefore the court must order compliance on a schedule that assumes that the action is FWS’s highest priority.173 Of course, in the context of limited resources, everything cannot be the highest priority.174 Eventually, this myopia on the part of the courts resulted in FWS having its priorities decided almost exclusively by the courts (and therefore the plaintiffs). A species not lucky enough to have an advocate would languish at the back of the line, as FWS sought to juggle the listing balls so as to avoid contempt of court.175 This was difficult, but not crippling—immediately after the moratorium, the acknowledged backlog consisted mostly of actions that FWS viewed as relatively high priorities. However, as the Laws of Critical Habitat unfolded in the circuit court decisions discussed above, the scope of the backlog in effect increased by orders of magnitude, and the prospect of taking actions not subject to court orders (particularly proposed listing rules) became increasingly unlikely.

INTERLUDE: A PRISONER EXCHANGE—THE “MINI-GLOBAL SETTLEMENT”

“I don't know whether war is an interlude during peace, or peace an interlude during war.” Georges Clemenceau

Thus it was that FWS eventually had to pay the piper with respect to all of the critical habitat designations it avoided in its effort to get final listings completed. But the environmental groups had a piper of their own: their success in forcing FWS to undertake a plethora of designations. On November 22, 2000, FWS announced that environmental groups had 172. Patlis, supra note 12, at 295. 173. Id. at 294. 174. Cf. Lake Woebegone (“where all of the children are above average”). 175. Those of us fighting the Listing Wars on behalf of the government sometimes remarked during this period, and only half in jest, that it would be helpful if a court would appoint a receiver (who would be insulated from deadline challenges) to run the listing program. Although it would be best for FWS to be able to set its own priorities, the worst possible situation was the one we actually faced: with dozens of environmental groups and judges chaotically pulling the listing program one way or another, the ability to be efficient and maximize the conservation benefit with available resources seriously suffered. Thus, a single receiver or single judge would have been an improvement. But there did not seem to be any way to achieve this.


succeeded in securing so many court orders requiring FWS to designate critical habitat that this preempted all other work. 176 In 2001, after additional court orders, FWS reached the point where it would soon be forced to choose between violating the Anti-Deficiency Act177 or violating court orders. Worse, from a species-protection perspective, the entirety of the listing budget was now being allocated to complying with court orders; this left no funds for other actions, no matter how high the relative priority.178 Because, as discussed above, there is no specific deadline for issuing proposed listing rules, and even meritorious petitions could result in warranted-but-precluded findings of indefinite duration, there were no court orders to propose listing. Without proposed listings, final listings, which FWS identified as the highest conservation priority after the moratorium, ground to a halt.179 The environmental groups realized that they had been perhaps too successful in their campaign to force FWS to designate critical habitat, proving again the old adage: “Be careful what you ask for.” With this recognition, however, came an opportunity. Both sides had some leverage (environmental groups, the threat of contempt; FWS, the ability to withhold progress on less legally vulnerable actions that were high priorities for the environmental groups). Moreover, the parties had parallel interests: both wanted to refocus the listing program more on listings. Taking advantage of this opportunity, the parties began to discuss a global settlement. It eventually became clear that the parties would not be able to agree to a comprehensive settlement of the litigation involving the listing program, but they were able to agree to some of each other’s highest priorities. Thus, the oxymoronically dubbed “Mini-Global Settlement” was filed on September 28, 2001, and approved on October 4, 2001. 180 In it, FWS agreed to undertake a laundry list of petition findings, proposed rules, and

176. Press Release, U.S. Fish & Wildlife Serv., Flood of Court Orders Preclude New Listings of Threatened and Endangered Species in FY 2001 (Nov. 22, 2000), available at http://www.fws.gov/pacific/news/2000/2000-195.htm. 177. The Anti-Deficiency Act makes it a crime for federal employees to expend more than is appropriated by Congress, among other things. 31 U.S.C. § 1341(a)(1)(A) (2006). 178. Press Release, U.S. Fish & Wildlife Serv., supra note 176. 179. Greenwald et al. note that the numbers of final listings decreased from 1994 to 1999 as a result of the implementation of policies meant to stymie the public’s ability to force listings, Greenwald et al., supra note 69, at 60–61, and that “[t]he increase in critical habitat designations only contributed to an existing trend,” id. at 61. In addition to disagreeing with their characterization of “Interior’s strategy,” id. at 60, I note that the moderate decrease in final listings could have resulted from the moratorium, decreased budgets, and the increased resources need to undertake the entire listing process for species that were not already proposed for listing or at least longstanding candidates. 180. Consent Decree, Ctr. for Biological Diversity v. Norton, Civ. No. 01-2063 (D.D.C. Oct. 4, 2001).


decisions about emergency listing.181 In return, plaintiffs agreed to work in good faith with FWS to obtain modifications to court orders and settlement agreements in three cases to extend deadlines for critical habitat designations, and to dismiss a fourth case.182 In an effort to avoid a similar crisis in the future, the Department of the Interior and its appropriators agreed to revise the listing cap. Beginning in FY 2002, FWS’s appropriation included language limiting the amount of the listing budget that could be spent on critical habitat for species already on the list.183 This is referred to as the “critical habitat subcap.” In agreeing to the Mini-Global Settlement, the parties succeeded in averting a worst-case scenario. There was perhaps insufficient trust and negotiating space on the part of both sides at that time to allow additional progress to be made, and the listing program continued to be mired in controversy and litigation. As one commentator put it in 2003:

On the cusp of their fourth decade, the ESA's listing and critical habitat designation programs are more dysfunctional than at any other point in the statute's history. Almost constant litigation, as well as heated rhetoric from the agencies, lawmakers, environmentalists, and industry groups, now characterize the deceptively simple processes set forth in section 4. Bringing some semblance of order to this area continues to present one of the foremost administrative challenges in implementing the entire endangered species program.184

There would be a number of years and battles before it could reasonably be argued that the challenge had been met. In the meantime, the situation deteriorated again with more and more deadline challenges (and, as discussed below, remands of critical habitat designations). For about five years, the listing program was in a constant state of crisis, often on the verge (or past the verge) of running out of money, and being unable to meet its court ordered obligations.185 For example, in the spring of 2003, FWS 181. Id. ¶¶ 1–6. 182. Id. ¶ 7. In a story that predated the filing of the consent decree, the Washington Post described the settlement as a “surprising collaboration.” Deborah Schoch, Deal is Struck on 29 Endangered Species; Agreement Between Bush Administration, Environmental Groups Is Unexpected, WASH. POST, Aug. 30, 2001, at A7. 183. Appropriations for the Department of the Interior and Related Agencies Act of 2002, Pub. L. No. 107-63, 115 Stat. 419 (Nov. 5, 2001). 184. Rohlf, supra note 8, at 494. 185. U.S. FISH & WILDLIFE SERV., FISCAL YEAR 2008 BUDGET JUSTIFICATIONS 78 (2008) [HEREINAFTER FY 2008 BUDGET JUSTIFICATIONS], available at http://www.fws.gov/budget/2008/2008%20GB/03.03%20Listing.pdf (finding that “since FY 2000 the


was again on track to run out of money before the end of the fiscal year. The Department of the Interior issued a long press release, entitled “Endangered Species Act ‘Broken’—Flood of Litigation over Critical Habitat Hinders Species Conservation.” 186 In it, the Department railed against the requirement of designating critical habitat and the litigation attempting to force additional designations, and noted that it had been forced to request permission from Congress to divert funds from other endangered species programs, notwithstanding the critical habitat subcap. Ultimately, due to a combination of increased budgets, stipulated extensions, and opposed extensions being granted by courts, FWS managed to avoid being held in contempt of court.187

V. THE SECOND BATTLE OF CRITICAL HABITAT

“The best tank terrain is that without anti-tank weapons.” Russian Military Doctrine

As discussed in the previous section, FWS’s rear-guard action to avoid designating critical habitat eventually crumbled, as the courts swept away each argument FWS sent into battle. Thus, FWS began to designate critical habitat—a lot of it. This did not satisfy the environmental groups in all cases. In many cases, they viewed the designations as inadequate. The result? Back to the battlefield. Environmental groups contested numerous designations. The challenges included arguments that FWS: (1) should have designated unoccupied habitat; 188 (2) set too high a standard for when “special management considerations or protection may be required”;189 (3)

Service has spent essentially all of its listing appropriation on compliance with existing court orders, litigation, support, and related program management and administrative functions”). 186. Id. 187. Plaintiffs in several cases moved for contempt during this period, but the courts avoided ruling on those motions. See Defenders of Wildlife v. Norton, No. 00-2996 (D.D.C. Jan. 15, 2004) (holding that although the FWS “openly and willfully” ignored the court’s original order, it would not be a productive use of judicial resources or the litigants’ resources to undertake a proceeding that might further divert FWS from designating critical habitat for the Canadian lynx); Ctr. for Biological Diversity v. Norton, 304 F. Supp. 2d 1174 (D. Ariz. 2003) (denying motion as premature in litigation concerning the Mexican spotted owl); Sw. Ctr. for Biological Diversity v. U.S. Fish & Wildlife Serv., No. C 99-02992 CRB (N.D. Cal. Nov. 6, 2003) (court issued order to show cause in case concerning La Graciosa thistle, but scheduled hearing over four months in the future, giving FWS time to comply). 188. See Ctr. for Biological Diversity v. Norton, 240 F. Supp. 2d 1090 (D. Ariz. 2003) (concerning the Mexican spotted owl). 189. Id. at 1099.


improperly excluded areas under section 4(b)(2);190 or (4) otherwise failed to designate sufficient habitat.191 Regardless of the merits of those cases, their defense once again diverted precious resources from actually implementing section 4. Worse, when successful, those cases resulted in costly remands or settlements. And worse still, even if the environmental groups did not challenge a designation, FWS still needed to watch its flank.

INTERLUDE: A SECOND FRONT: THE REGULATED COMMUNITY STRIKES BACK

“You must not fight too often with one enemy, or you will teach him all your art of war.”

Napoleon Bonaparte The larger part of the Second Battle of Critical Habitat actually was fought against the regulated community. As mentioned above, FWS was issuing new designations at a furious pace in the early 2000s. While environmental groups challenged some of these designations as inadequate, the regulated community challenged more as unsupported or procedurally defective. Thus, FWS was required to fight a two-front war in earnest. This “Malachi Crunch”192 threatened to put the listing program on a treadmill of designating, redesignating, and re-redesignating critical habitat193 with no end in sight.194 190. See Ctr. for Biological Diversity v. Bureau of Land Mgmt, 422 F. Supp. 2d 1115, 1146 (N.D. Cal. 2006) (concerning the Peirson’s milkvetch). 191. Ctr. for Biological Diversity v. Army Corps. of Engineers, No. CV 03-29-M-DWM (D. Mont. May 25, 2005) (concerning the Kootenai River white sturgeon). 192. From an episode of the television series “Happy Days” involving a demolition derby, in which the Malachi brothers notoriously incapacitated opponents by simultaneously colliding with a victim from opposite directions. See Malachi Crunch, URBAN DICTIONARY http://www.urbandictionary.com/define.php?term=Malachi%20Crunch (last visited Mar. 4, 2013) (defining term). 193. For example, FWS designated critical habitat for the southwestern willow flycatcher under court order on July 22, 1997. Final Determination of Critical Habitat for the Southwestern Willow Flycatcher, 62 Fed. Reg. 39,129-01 (July 22, 1997) (codified at 50 C.F.R. pt. 17); see Sw. Ctr. for Biological Diversity v. Babbitt, 1997 U.S. Dist. Lexis 23935, *1, *11 (D. Ariz. Mar. 20, 1997) (ordering designation in 120 days). The regulated community successfully challenged the designation and FWS issued a new designation on October 19, 2005. 50 C.F.R. § 17.11(h). In turn, this designation was challenged by environmental groups in 2008. FWS settled the case on July 13, 2010, pursuant to which it issued a new final designation on January 3, 2013. Designation of Critical Habitat for Southwestern Willow Flycatcher, 78 Fed. Reg. 344-01 (Jan. 3, 2013) (codified at 50 C.F.R. pt. 17). 194. Representatives of the regulated community also challenged FWS’s alleged failure to review the status of listed species at least every five years as required to section 4(c)(2). Although these were deadline suits with respect to section 4, those reviews were conducted by a different office than listing and critical habitat designations, and were not covered by the listing cap. While complying with


In the wake of the New Mexico Cattle Growers (flycatcher) decision, FWS settled or sought voluntary remands of many cases on the ground that it needed to reconsider the economic impacts of the designation.195 The regulated community also challenged designations, with some initial success, on a variety of other grounds, including: whether FWS had correctly identified particular areas as “occupied by the species at the time of listing,” 196 whether FWS had identified the physical and biological features with sufficient specificity, 197 and whether the areas designated actually had those features.198 One of the first comprehensive opinions on the merits of a critical habitat designation was in a case challenging the designation of critical habitat for the Alameda whipsnake. In that case, the court agreed with plaintiffs on many of the criticisms of the designation, using hypertechnical reasoning and language that was very problematic for FWS. 199 This case encouraged more challenges raising similar arguments.200 Beyond simply responding to legal challenges from the regulated community, during this period the Department of the Interior actively sought to craft critical habitat designations in a way less likely to create conflict with the regulated community. Thus, the Department was willing, and perhaps eager, to exclude areas from designation under section 4(b)(2) or otherwise reduce the size of designations.201 this duty has also been a serious challenge for FWS, it has not had a significant effect on the Listing Wars. 195. See, e.g., Natural Res. Def. Council v. U.S. Dep’t of the Interior, 275 F. Supp. 2d 1136 (C.D. Cal. 2002) (concerning the coastal California gnatcatcher); N.M. Cattle Growers v. U.S. Fish & Wildlife Serv., 2004 U.S. Dist. Lexis 28289 (D.N.M. Aug. 31, 2004) (concerning the spikedace and loach minnow). 196. See, e.g., Homebuilders Ass’n v. U.S. Fish & Wildlife Serv., 268 F. Supp. 2d 1197, 1235 (E.D. Cal. 2003) (concerning the Alameda whipsnake). 197. Middle Rio Grande Conservancy Dist. v. Babbitt, 206 F. Supp. 2d 1156, 1178 (D.N.M. 2000), aff’d, 294 F.3d 1220 (10th Cir. 2002). 198. See, e.g., Cape Hatteras Access Pres. Alliance v. U.S. Dep’t of the Interior, 344 F. Supp. 2d 108, 123 (D.D.C. 2004) (concerning the piping plover). 199. For example, one of the court’s criticisms of the designation was that FWS was not clear whether its use of the term “need” was meant to be synonymous with “essential” (the statutory term). Homebuilders Ass’n, 268 F. Supp. 2d at 1213, 1214. In addition, the court suggested that FWS could not determine what areas were essential for the conservation of the species unless it had determined the conditions under which the species would be delisted. See id. at 1214. 200. See Settlement Agreement and Stipulation of Dismissal, Home Builders Ass’n of N. Cal. v. U.S. Fish & Wildlife Serv., No. 2:05-cv-01363-LKK-JFM (E.D. Cal. Mar. 14, 2006) (concluding a challenge to critical habitat for twenty-seven California species; settlement required FWS to reconsider five designations in light of the decision in the Alameda whipsnake case). 201. See generally Senatore et al., supra note 155 (discussing George W. Bush Administration’s attempt to limit critical habitat protection); Fish, supra note 155 (discussing failure of U.S. Fish and Wildlife Service to designate critical habitats). During this period, the Inspector General of the Department of the Interior conducted investigations of alleged misconduct by a deputy assistant secretary with respect to the listing program, and her impact on the outcome of a number of listing and


Ultimately, it is not clear that the regulated community achieved much lasting benefit from its campaign against critical habitat designations. In many cases, industry challenges resulted in remands in which the new designations were significantly reduced. However, those smaller designations were usually challenged by environmental groups leading to a third set of relatively larger designations.202 Challenges to the designation of particular limited areas perhaps have been the most successful in achieving their aims.203 Moreover, subsequent cases limited some of the interpretive victories that the regulated community achieved in early cases. Thus, the Ninth Circuit has now solidly rebutted the need for FWS to consider the co-extensive economic impacts of designation.204 It is not clear whether New Mexico Cattle Growers has any continued vitality outside, or even within, the Tenth Circuit. Similarly, subsequent courts have rejected the most problematic language in the Alameda whipsnake case.205 But challenges on both fronts continue, and some courts continue to be willing to nitpick FWS designations.206 From a cynical and strategic perspective, the regulated community’s second front may have achieved two goals that are difficult to assess. First, by tying up the listing program for years in defending and redesignating the critical habitat, the regulated community prevented FWS from taking additional actions that might have increased the regulatory burden on that community. Second, by regularly challenging critical habitat designations,

critical habitat determinations. See DEP'T OF THE INTERIOR, OFFICE OF INSPECTOR GEN., REPORT OF INVESTIGATION: JULIE MACDONALD, DEPUTY ASSISTANT SECRETARY, FISH, WILDLIFE AND PARKS (2007); DEP'T OF THE INTERIOR, OFFICE OF INSPECTOR GEN., REPORT OF INVESTIGATION, THE ENDANGERED SPECIES ACT AND THE CONFLICT BETWEEN SCIENCE AND POLICY (Dec. 10, 2008). 202. See, e.g., Designation of Critical Habitat for Southwestern Willow Flycatcher, 78 Fed. Reg. 344 (Jan. 3, 2013) (designating a new critical habitat for the Southwester Willow Flycatcher after a previous designation was challenged by the Center for Biological Diversity); see also Press Release, U.S. Fish and Wildlife Service, U.S. Fish and Wildlife Service Designates Critical Habitat Releases Economic Analysis for Bull Trout 2 (Oct. 12, 2010), available at http://www.fws.gov/pacific/bulltrout/pdf/FCH_final%20NRv2_101210.pdf (describing designation of approximately five times as many stream miles as previously designated in 2005 in response to a challenge by environmental groups). 203. See, e.g., Otay Mesa Property, L.P. v. U.S. Dep’t of the Interior, 646 F.3d 914 (D.C. Cir. 2011) (concerning the San Diego fairy shrimp and vacating the designation of the particular property subject to the challenge). 204. Ariz. Cattle Growers’ Assoc. v. Salazar, 606 F.3d 1160 (9th Cir. 2010) (concerning the Mexican spotted owl). 205. See, e.g., Home Builders Ass’n of N. Cal. v. U.S. Fish & Wildlife Serv., 616 F.3d 983 (9th Cir. 2010) (upholding critical habitat designation for fifteen endangered or threatened vernal pool species). 206. See, e.g., Otay Mesa Property, L.P., 646 F.3d at 915 (holding that the FWS designation of property as “occupied” based on the isolated observation of four San Diego fairy shrimp on the property was not supported by the record).


the regulated community drove up the cost of designations and contributed to the perception of a program dominated by litigation, reinforcing the narrative that the ESA is broken. 207 As noted below, that narrative can support legislative efforts to amend the ESA or limit its implementation.208

VI. THE BATTLE OF THE MEGA-PETITIONS

“Those who cannot remember the past are condemned to repeat it.” George Santayana, The Life of Reason

Environmental groups arguably achieved their primary goals during the battles over critical habitat. By FY 2007, FWS had designated critical habitat for most of the species listed in the 1990s (and therefore most of the domestic species listed as threatened or endangered).209 The environmental groups had more successfully challenged the resulting designations than the regulated community. The listing budget increased dramatically during the 2000s; the Bush Administration apparently preferred to seek increases in the listing budget rather than risk contempt proceedings.210 As the volume of critical habitat work began to wane, FWS was able to increase the resources spent on other actions. Having learned hard lessons from the ultimate failure of the Listing Priority Guidance to act as an effective shield against deadline litigation, FWS chose to focus its resources on the actions most vulnerable to successful deadline challenges: petition findings. 211 FWS had come a long way from the bold statement in the Guidance that it would not give priority to species subject to litigation: after a decade of the Listing Wars, FWS now gave priority to whatever action was most vulnerable to potential litigation.212 There had been a slow but steady stream of new petitions and litigation to enforce the deadlines for petitions; FWS had never stopped making petition findings, but there were many that were years overdue. Beginning 207. Press Release, U.S. Department of the Interior, Endangered Species Act “Broken,” supra note 146. 208. See infra text accompanying note 329. 209. Patrick Parenteau, An Empirical Assessment of the Impact of Critical Habitat Litigation on the Administration of the Endangered Species Act, 2–3 (Aug. 6, 2005), available at http://lsr.nellco.org/cgi/viewcontent.cgi?article=1000&context=vermontlaw_fp. 210. See Press Release, Earthjustice, Ken Goldman, U.S. FWS Listing Moratorium Threatens Endangered Wildlife (Nov. 22, 2000), available at http://earthjustice.org/news/press/2000/u-s-fws-listing-moratorium-threatens-endangered-wildlife (describing the listing budget for 2001 of around 6.4 million dollars); see also FY 2008 BUDGET JUSTIFICATIONS, supra note 185, at 77 (describing the listing budget for 2007 of around seventeen million dollars). 211. FY 2008 BUDGET JUSTIFICATIONS, supra note 185, at 78. 212. Cf. Endangered and Threatened Wildlife and Plants; Interim Listing Priority Guidance, 61 Fed. Reg. 9651, 9654 (Mar. 11, 1996).


in FY 2006, FWS began making substantial progress in reducing the backlog of petition findings. Thus, by FY 2007, FWS began allocating some resources to high-priority listing proposals. 213 And having learned from the critical habitat battles, FWS attempted to include concurrent critical habitat proposals with those listings, hoping that it would be more efficient in the long run.214 In 2007, Guardians filed two unprecedented petitions with FWS. One covered 475 species in the southwest;215 the other covered 206 species in FWS’s Mountain-Prairie Region.216 These petitions did not directly include information in support of listing; instead, they incorporated by reference information on these species found in NatureServe, a non-profit clearinghouse for species data from natural-heritage programs. 217 These petitions were nicknamed “mega-petitions.” The mega-petitions presented a dilemma for FWS—just when resources were starting to become available for proposed listing rules, FWS had to choose between responding to the petitions and issuing proposed rules for candidate species.218 Knowing that deadline litigation would be forthcoming,219 FWS chose to undertake the enormous job of making the petition findings. But for a while, FWS was able to continue working on proposed listing determinations, albeit at a reduced rate. Not to be outdone by Guardians, on April 20, 2010, CBD filed its own mega-petition, covering 404 aquatic species in the southeast. In contrast to

213. FY 2008 BUDGET JUSTIFICATIONS, supra note 185, at 79. 214. See Press Release, U.S. Fish and Wildlife Service, Draft Economic Analysis of Critical Habitat Proposal for Nevin’s Barberry Plant Available for Public Review and Comment (Oct. 17, 2007), available at http://www.fws.gov/news/NewsReleases/showNews.cfm?newsId=B4E90055-C3BE-C78B-BFEFDA9D83A65EA5 (proposing a critical habitat for Nevin’s Barberry Plant). 215. Press Release, WildEarth Guardians, Group Seeks Federal Protection for 475 Southwestern Endangered Species: Largest Listing Petition Filed in Thirty Years (June 21, 2007), available at http://www.wildearthguardians.org/site/News2?news_iv_ctrl=-1&page=NewsArticle&id=5701. 216. Press Release, WildEarth Guardians, Petition to List 206 Critically Imperiled or Imperiled Species in the Mountain-Prairie Region under the Endangered Species Act (July 24, 2007), available at http://www.wildearthguardians.org/site/News2?news_iv_ctrl=-1&page=NewsArticle&id=5445. 217. See About Us: Our Mission, NATURESERVE.ORG, http://www.natureserve.org/aboutUs/index.jsp (last visited Feb. 12, 2013) (describing the mission and operations of NatureServe). 218. U.S. Fish and Wildlife Service, US Fish and Wildlife Service Listing Program Work Plan Questions and Answers, http://www.fws.gov/endangered/improving_ESA/FWS%20Listing%20Program%20Work%20Plan%20FAQs%20FINAL.PDF (last visited Feb. 27, 2013). 219. Guardians did sue before FWS could complete the ninety-day findings. Partial 90-Day Finding on a Petition to List 475 Species in the Southwestern United States as Threatened or Endangered with Critical Habitat, 74 Fed. Reg. 66,866 (Dec. 16, 2009) (codified at 50 C.F.R. pt. 17).


Guardians’ mega-petitions, the CBD petition contained detailed substantive information, and totaled 1,145 pages in length. 220 The FWS listing staff worked feverishly to make ninety-day findings on the mega-petitions. As many of these findings were likely to be positive, FWS began making plans for staffing and funding status reviews and the required twelve-month findings.221 As a result, it became clear that after a small spurt of new proposed listing rules, FWS would have to redirect its forces almost exclusively to making petition findings. But once again, a piper-paying moment was approaching: by focusing on petitions, FWS had reduced its litigation risk with respect to the ESA’s statutory deadlines. In doing so, however, it gradually increased its legal vulnerability with respect to the growing list of species subject to warranted-but-precluded findings (the candidates). Similarly, CBD and Guardians had successfully pressed FWS where FWS was legally weakest. But in doing so, they had prevented FWS from allocating resources to proposing and listing the species that those groups thought were really the highest priorities. The parallels to the circumstances that led to the Mini-Global Settlement were striking. Initially, the environmental groups again turned toward litigation to address the delay in listing candidate species. In fact, even before the filing of the mega-petitions, a number of environmental groups were pressing FWS to take action on candidate species. In 2005, five environmental groups, including CBD and the predecessor group of Guardians, filed suit in the United States District Court for the District of Columbia, challenging FWS’s alleged failure to make petition findings for four species. The case, Biodiversity Conservation Alliance v. Norton, 222 was assigned to Judge Kessler, who had ruled against FWS on many occasions.223 FWS made the overdue findings before any court ruling, concluding that listing two of the 220. CTR. FOR BIOLOGICAL DIVERSITY, PETITION TO LIST 404 AQUATIC, RIPARIAN AND WETLAND SPECIES FROM THE SOUTHEASTERN UNITED STATES AS THREATENED OR ENDANGERED UNDER THE ENDANGERED SPECIES ACT (Apr. 20, 2010), available at http://www.biologicaldiversity.org/programs/biodiversity/1000_species/the_southeast_freshwater_extinction_crisis/pdfs/SE_Petition.pdf. 221. In fact, FWS found that the Guardians’ petitions presented substantial information that listing may be warranted for ninety-six species. Partial 90-Day Finding on a Petition To List 206 Species in the Midwest and Western United States as Threatened or Endangered with Critical Habitat, 74 Fed. Reg. 41,649 (Aug. 18, 2009); Partial 90-Day Finding on a Petition to List 475 Species in the Southwestern United States as Threatened or Endangered with Critical Habitat, 74 Fed. Reg. 66,866 (Dec. 16, 2009). FWS found that CBD’s petition presented substantial information that listing was warranted for 374 species. Endangered and Threatened Wildlife and Plants; Partial 90-Day Finding on a Petition To List 404 Species in the Southeastern United States as Endangered or Threatened With Critical Habitat, 76 Fed. Reg. 59,836 (Sept. 27, 2011) (codified at 50 C.F.R. pt. 17). 222. Memorandum Opinion, Biodiversity Conservation Alliance v. Norton, Civ. No. 1:04-cv-02026-GK (D.D.C. May 8, 2006). 223. See, e.g., Defenders of Wildlife v. Babbitt, 958 F. Supp. 670 (D.D.C. 1997) (challenging whether the Canadian lynx should be on the endangered species list).


species was warranted but precluded. Plaintiffs amended their complaint to challenge those findings. Perhaps thinking that in Judge Kessler they had a good forum for a more dramatic challenge, the plaintiffs eventually amended their complaint to challenge the warranted-but-precluded findings for as many as 268 candidate species.224 Thus, this initially limited case morphed into a modern Fund for Animals case, sometimes referred to as the “candidate case,” the “mega candidate case,” or the “CNOR case.” 225 The basis for the plaintiffs’ claims was that FWS was not making “expeditious progress” with respect to listing.226 The government moved to strike the amended complaint as to the additional species, but the court denied the motion, noting that FWS may nonetheless have achieved its objective, because ruling on the motion delayed the case by five months.227 (The plaintiffs must have been pleased, with Judge Kessler already evincing skepticism of the government’s motives.) Summary judgment briefing was completed by the summer of 2007. Then something unexpected happened. Or, rather, didn’t happen. Judge Kessler, who was on senior status, never ruled. Years passed. Plaintiffs occasionally filed a notice of related authority. The parties engaged in on-again-off-again settlement discussions, which never led to an agreement. Guardians and CBD eventually filed additional cases challenging a handful of new warranted-but-precluded findings in other courts, alleging among

224. Third Amended Complaint for Injunctive and Declaratory Relief, Biodiversity Conservation Alliance v. Norton, Civ. No. 04-2026 (GK) (D.D.C.). The number of candidates actually at issue in the case was never clear. In addition to the two original candidates, the plaintiffs stated that they were challenging the warranted-but-precluded findings for “many other species of great interest to plaintiffs,” id. ¶ 1; the plaintiffs also noted that FWS had made warranted-but-precluded findings for “286 candidate species, including more than 240 species subject to formal petitions by plaintiffs,” id. ¶ 28; the plaintiffs made claims and sought relief for “other species,” e.g., id. ¶ 41; and the plaintiffs included an addendum, listing fifty-seven species and “Hawaiian plants,” entitled “Partial List of WBP Species as to which CBD Members, Board Members and Staff Have Aesthetic, Recreational, Professional and Similar Interests, id. at 23–26. Presumably the addendum was meant to be an assertion of standing. 225. “CNOR” stands for “Candidate Notice of Review,” a document in which FWS makes its required annual findings for species for which listing is warranted-but-precluded. See 16 U.S.C. § 1533(b)(3)(C)(i) (articulating that a petition for a warranted-but precluded finding is treated “as a petition that is resubmitted to the Secretary . . . on the date of such finding and that presents substantial scientific or commercial information that the petitioned action may be warranted”). The most recent CNOR: Endangered and Threatened Wildlife and Plants; Review of Native Species That Are Candidates for Listing as Endangered or Threatened; Annual Notice of Findings on Resubmitted Petitions; Annual Description of Progress on Listing Actions, 77 Fed. Reg. 69994 (Nov. 21, 2012) (codified at 50 C.F.R. pt. 17). 226. 16 U.S.C. § 1533(b)(3)(B)(iii)(II). 227. Memorandum Opinion, Biodiversity Conservation Alliance v. Norton, Civ. No. 04-2026, at 1.


other things, FWS’s failure to make “expeditious progress.” The most significant of these related to the greater sage-grouse.228 While the listing of the northern spotted owl was hoped or feared to make the battle of the Tellico Dam versus the Tennessee snail darter look like a minor skirmish, the greater sage-grouse is widely considered to have the potential to be the spotted owl on steroids.229 The greater sage-grouse, although greatly reduced from historical numbers, is still widespread, and listing would affect an entire ecosystem even larger than the old-growth forests of the Pacific Northwest: the sage lands of the Intermountain West. In 2002 and 2003, FWS received three petitions to list the sage-grouse, and in 2004 FWS made a positive ninety-day finding and initiated a status review.230 At the conclusion of the status review, FWS found that listing was not warranted.231 The Western Watersheds Project (WWP) successfully challenged this finding in Western Watersheds Project v. U.S. Forest Service. 232 Judge Winmill, in a highly critical opinion, held that FWS’s finding was arbitrary and capricious, and remanded to FWS.233 On remand, FWS determined that listing the sage-grouse was warranted but precluded. 234 The species was given a relatively low listing priority number (eight),235 suggesting that it could be many years before the species was actually proposed for listing. WWP again filed suit, and was eventually joined by Guardians and CBD.236 This case was pending when settlement discussions in the MDL case began. Meanwhile, FWS was also frustrated by its inability to allocate listing resources to proposed rules for candidate species. While the environmental groups plowed familiar ground by using litigation to attempt to force progress on candidates, FWS also plowed familiar ground: it sought yet

228. See, e.g., Margot Roosevelt, Payback Time for the Cock of the Prairie, CNN (Dec. 6, 2004), http://articles.cnn.com/2004-12-06/politics/sagegrouse.tm_1_mark-salvo-timber-industry-endangered-species-act?_s=PM:ALLPOLITICS (discussing the difficulty of getting federal protection for sage grouse). 229. Id. 230. Endangered and Threatened Wildlife and Plants; 90-Day Finding for Petitions to List the Greater Sage-Grouse as Threatened or Endangered, 69 Fed. Reg. 21,484-01 (Apr. 21, 2004) (codified at 50 C.F.R. pt. 17). 231. Endangered and Threatened Wildlife and Plants; 12-Month Finding for Petitions to List the Greater Sage-Grouse as Threatened or Endangered, 70 Fed. Reg. 2243 (Jan. 12, 2005). 232. 535 F. Supp. 2d 1173 (D. Idaho 2007). Note that the court erroneously substituted the Forest Service for FWS in the case name. 233. Id. 234. Endangered and Threatened Wildlife and Plants; 12-Month Findings for Petitions to List the Greater Sage-Grouse (Centrocercus urophasianus) as Threatened or Endangered, 75 Fed. Reg. 13,910-01 (Mar. 23, 2010) (codified at 50 C.F.R. pt. 17). 235. Id. at 14,008. 236. W. Watersheds Project v. U.S. Fish & Wildlife Serv., No 10-cv-229, 2011 WL 22690430 (D. Idaho July 9, 2011).


another budget cap to try to keep one aspect of the listing program from cannibalizing the rest of the program. With separate caps on both critical habitat designations and petition findings, FWS might then be able to use the remainder of its budget to work on biologically important but legally disadvantaged proposed listing rules. Thus, FWS requested in February 2011 a petition subcap for FY 2012;237 Congress included the language in the FY 2012 appropriations law.238

INTERLUDE: “OVER THERE!” FOREIGN SPECIES LITIGATION AND SUBCAP

“Armed forces abroad are of little value unless there is prudent counsel at home.”

Cicero On its face, section 4 makes no distinction between foreign and domestic species. FWS has traditionally assigned application of the ESA to foreign species to its foreign affairs office rather than its ESA office. Thus, for much of the forty years of the ESA, foreign species have not been in direct competition with domestic species for section 4 resources. (This is no longer the case, as in 2010, FWS transferred foreign section 4 work to the Endangered Species Office.) Like the domestic listing program, the foreign listing program has suffered from inadequate resources in comparison to its workload. The foreign listing program’s situation is potentially more dire from an administrative perspective: the number of foreign species that technically meet the definition of “threatened species” or “endangered species” is likely orders of magnitude greater than the number of domestic species meeting those criteria. Because the protections that apply to foreign species are largely limited to prohibitions on import or export, FWS has understandably focused primarily on species in active trade (as opposed to species imperiled due to, for example, habitat destruction in foreign countries).239 Perhaps because of this, it took longer for deadline litigation to strike the foreign listing program. Interestingly though, it was in this context that FWS lost on the issue of “expeditious progress.” 240

237. U.S. FISH & WILDLIFE SERV., BUDGET JUSTIFICATIONS AND PERFORMANCE INFORMATION, (2012), available at http://www.fws.gov/budget/2012/FWS%202012%20Budget%20Justifications.pdf. 238. Consolidated Appropriations Act, 2012, Pub. L. 112-74, 125 Stat. 988 (2011). 239. U.S. Fish and Wildlife Service, Branch of Foreign Species, Endangered Species Program, FWS.GOV (Apr. 2011), http://www.fws.gov/endangered/esa-library/pdf/foreign_species.pdf. 240. Ctr. for Biological Diversity v. Kempthorne, 2008 U.S. Dist. Lexis 4866, at *21–25 (N.D. Cal. Jan. 23, 2008).


In 2006, CBD sued FWS for its failure to list foreign candidate species, including many that had been candidates for over twenty-five years. In a January 2008 decision, Center for Biological Diveristy v. Kempthorne, referred to as the “foreign candidate case,” the court held that FWS was not making expeditious progress. 241 In doing so, the court stated that:

[I]t is difficult to ignore the fact that some of the species for which Plaintiffs have standing are related to petitions that date as far back as 1980, over 25 years ago. If the Service were allowed to continue at its current rate, it is hard to imagine anytime in the near or distant future when these species will be entitled to listing. Such delay hardly qualifies as “expeditious progress” and conflicts with the purpose of the ESA . . . .242

With the loss of the foreign candidate case, things looked very grim for FWS in the CNOR case. Judge Kessler, however, continued to refrain from ruling throughout 2008, 2009, and 2010. In the meantime, FWS recommended to Congress yet another cap, this time on foreign listings. That was also put in place in FY 2012.243

VII. PEACE? THE MULTI-DISTRICT LITIGATION SETTLEMENTS

“Right, as the world goes, is only in question between equals in power, while the strong do what they can and the weak suffer what they must.”

Thucydides, The History of the Peloponnesian War In 2003, Mr. Patlis identified three possible sources of resolution for the mismatch between the duties imposed on FWS and the resources Congress made available to it, with each source corresponding to one of the three branches of government: administrative action by the FWS, judicial action by the courts, and legislative action by Congress.244 Mr. Patlis correctly concluded that there was little room for optimism that administrative action alone could solve the problem,245 and little in the succeeding eight years changed the accuracy of that conclusion. FWS has struggled to become more efficient in its use of available resources, as well as to produce 241. Id. at 21–25. 242. Id. at 22–23. 243. See Consolidated Appropriations Act, 2012, Pub. L. 112-74, 125 Stat. 988 (2011) (imposing a $1,500,000 spending cap for implementing provisions of the Endangered Species Act for species not indigenous to the United States). 244. Patlis, supra note 12 at 315–22. 245. Id. at 315–17.


decisions better able to withstand judicial scrutiny (thus minimizing the expense of additional remands). These goals are, of course, in some degree of tension, as streamlining can increase legal risk. In any case, FWS simply does not have the authority to make changes sufficient to solve the problem. Perhaps Congress has been more helpful than those of us in the trenches recognized at the time. Although a legislative silver bullet was never forthcoming, 246 Congress has taken two types of action that have turned out to be crucial. First, Congress put hard limits on particular types of actions via the listing cap and critical habitat subcap.247 Although these limits have never been put to the ultimate test in court, they may have given the government enough additional leverage in negotiations with environmental groups to allow parties to settle on schedules for many overdue or remanded actions. Second, the listing budget grew substantially during the 2000s.248 The budget increases allowed FWS to make significant progress on the backlog of critical habitat designations and petition findings. As a result, by the late 2000s FWS could contemplate (at least prior to the impact of the mega-petitions) significantly increasing the number of proposed listing rules to address the backlog of candidate species. With respect to judicial action, Mr. Patlis argued for a sea change in judicial willingness to address the listing morass with equitable discretion.249 That has not occurred. The government has prevailed in some cases in ways that facilitate compliance with the requirements of section 4. For example, several Ninth Circuit cases hold the potential for reducing the sting of the “Third Law of Critical Habitat”—that designations will be expensive because of the scope of the required consideration of economic impacts.250 Nonetheless, the biggest judicial contribution to the possible end of the Listing Wars was made by the judges involved in the Multi-District Litigation. 246. Possible substantive legislative solutions included changing the applicable deadlines (such as tying critical habitat designation to recovery plans rather than listing), congressional codification or approval of a prioritization system, and revision of the citizen-suit provision. 247. See generally Patlis, supra note 12, at 306–11 (describing listing cap execution). 248. U.S. FISH & WILDLIFE SERV., FISCAL YEAR 2013 BUDGET JUSTIFICATION: ECOLOGICAL SERVICES (2013), available at http://www.fws.gov/budget/2013/PDF%20Files%20FY%202013%20Greenbook/5.%20Endangered%20Species.pdf; see also Goldman, supra note 210 (describing the listing budget for 2001 of around 6.4 million dollars); see also U.S. FISH & WILDLIFE SERV., supra note 248, at 77 (2008) (describing the listing budget for 2007 of around seventeen million dollars). 249. Patlis, supra note 12, at 319–20, 323–37. 250. Ariz. Cattle Growers’ Assoc. v. Salazar, 606 F.3d 1160 (9th Cir. 2010) (upholding use of incremental economic analysis for the Mexican spotted owl); Home Builders Ass’n of N. Cal. v. U.S. Fish & Wildlife Serv., 616 F.3d 983 (9th Cir. 2010) (upholding use of incremental economic analysis for the vernal pool species).


A. The Case

“I have traveled a long road from the battlefield to the peace table.” Moshe Dayan

After the CNOR case was briefed, there were occasional discussions between the parties about the possibility of a large-scale settlement. Ultimately, those discussions trailed off. And even with the transition to the Obama Administration, widely perceived as more inclined to faithfully implement the ESA,251 there was not an obvious, immediate change in the productivity of the listing program. 252 In frustration at the perceived continued lack of progress during the first year of the Obama Administration, CBD and Guardians filed a new flurry of petitions and deadline lawsuits. Guardians attempted to create a media event out of its activities, referring to them as the “BioBlitz.”253 Rather than attempt to settle the individual cases piecemeal, as it had in the past, the government took a different approach. On March 29, 2010, the Department of Justice (DOJ) filed a motion with the Judicial Panel on Multidistrict Litigation. 254 The government asked the panel to transfer

251. For example, shortly after taking office, President Obama issued a memorandum effectively countermanding regulations, promulgated three months before by the outgoing Bush Administration, that narrowed the circumstances under which section 7 consultation was required. 50 C.F.R. § 402.01 (2012). 252. See Allison Winter and Patrick Reis, Obama Admin Confronts ‘Candidate Species’ Backlog, GREENWIRE (Sept. 8, 2009), http://www.eenews.net/public/Greenwire/2009/09/08/3. This fact supports the conclusion that the Listing Wars were not merely the result of alleged political interference by the Bush Administration, and instead are due to substantial structural problems not easily cured by a change in administrations. Which is not to say that policy decisions made at a political level cannot exacerbate the problem. 253. Press Release, WildEarth Guardians, Conservation Group Celebrates Year of Biodiversity with ‘BioBlitz’ (Dec. 28, 2009), available at http://www.wildearthguardians.org/site/News2?news_iv_ctrl=-1&page=NewsArticle&id=5938. 254. The MDL Panel was created by 28 U.S.C § 1407.

The job of the Panel is to (1) determine whether civil actions pending in different federal districts involve one or more common questions of fact such that the actions should be transferred to one federal district for coordinated or consolidated pretrial proceedings; and (2) select the judge or judges and court assigned to conduct such proceedings. The purposes of this transfer or “centralization” process are to avoid duplication of discovery, to prevent inconsistent pretrial rulings, and to conserve the resources of the parties, their counsel and the judiciary. Transferred actions not terminated in the transferee district are remanded to their originating transferor districts by the Panel at or before the conclusion of centralized pretrial proceedings.


twenty cases from seven districts seeking 121 allegedly overdue petition findings, and assign them to a single district, the United States District Court for the District of Columbia. Those cases comprised all of the deadline lawsuits filed by CBD and Guardians during the previous three months. DOJ argued that these cases (and any similar deadline cases that the same groups might file subsequently) met the statutory requirements for such a transfer: the actions involved common questions of fact, transfer would promote the just and efficient conduct of the actions and serve the convenience of the parties, and transfer would avoid the possibility of inconsistent pretrial orders. 255 More importantly, from the government’s perspective, centralization of these cases might force a single judge to consider the tradeoffs inherent in a circumstance of limited resources and essentially infinite demands on those resources.256 Guardians opposed the centralization of the cases. It argued, among other things: (1) that transfer is only appropriate for pretrial proceedings, and that the main basis for the government’s motion was concern about conflicting remedies; and (2) that transfer would slow down rather than facilitate settlement of the individual cases.257 CBD took a different tack, dismissing all three of its cases; it then joined the government’s request to delete those cases from the transfer motion (as the motion was now moot with respect to the dismissed cases).258 At the same time, however, CBD filed a new case in the District Court for the District of Columbia that in effect consolidated its previous cases.259

Overview of Panel, U.S. JUDICIAL PANEL ON MULTIDISTRICT LITIGATION, http://www.jpml.uscourts.gov/panel-info/overview-panel (last visited Mar. 14, 2013). 255. Federal Defendants’ Brief in Support Motion to Transfer Actions at 1, In re: Endangered Species Act Section 4 Deadline Litig. (In re: Deadline Litig.), No. 2165 (J.M.P.L. April 2, 2010). Note that referring the cases to the MDL Panel at this point was more attractive than it had been at the outset of the Listing Wars: several intervening decisions of the MDL panel have interpreted 28 U.S.C § 1407 quite broadly, including in the ESA context. See In re Operation of the Missouri River Sys. Litig., 277 F. Supp. 2d 1378 (J.P.M.L. 2003) (stating that the transferred actions “involved common questions of fact, and that centralization would serve the convenience of the parties and witnesses and promote the just and efficient conduct of the litigation”); In re Polar Bear Endangered Species Act Listing and Section 4(d) Rule Litig., 588 F. Supp. 2d 1376 (J.P.M.L. 2008) (ordering the centralization of the actions and explaining the efficiencies to be gained in so doing). 256. As discussed supra in the text accompanying notes 138–140, a judge faced with a single overdue action will often just order FWS to take the action immediately without consideration of the broader context. 257. WildEarth Guardians’ Response to Federal Defendants’ Motion to Transfer Actions at 10–11, In re Deadline Litig., 277 F.R.D. 1 (J.P.M.L. Apr. 23, 2010). 258. Ctr. for Biological Diversity’s Resp. to Fed. Defendants’ Motion to Transfer Actions at 1, In re Deadline Litig., 277 F.R.D. 1 (J.P.M.L. Apr. 22, 2010). 259. See Federal Defendants’ Reply Brief in Support Motion to Transfer Actions at 3, In re Deadline Litig., 277 F.R.D. 1 (J.P.M.L. 2010).


On June 8, the Panel granted the government’s motion, predicting “substantial benefits for judicial economy and more consistent rulings as a consequence of centralization.” 260 Between settlements, dismissals, and new filings, the transfer order applied to twelve cases from four districts.261 Included in the transfer order was the new, consolidated CBD case. The cases were assigned to Judge Emmet Sullivan in District of the District of Columbia.262 Judge Sullivan was arguably a good draw for the government. He had substantial experience handling ESA litigation—in fact, he was currently handling the challenges to the listing of the polar bear and related cases that were transferred by the MDL Panel.263 He was also a relatively energetic judge, and it seemed likely that if a global settlement was reached, he would likely take some ownership of it and be willing to accept additional transfers to guard against inconsistent rulings from other courts. And, he was young enough to likely be on the bench throughout the life of a long-term settlement. On August 3, 2010, Judge Sullivan referred the case to the court’s mediation program with consent of the parties. He ordered that the mediation be completed by October 5, 2010.264

B. The Mediation

“To jaw-jaw is always better than to war-war.” Sir Winston Churchill

Modern life has many advantages over ancient Greece. Modern medicine, for example (as Thucydides recounts, the plague in Athens during the Peloponnesian War may have led to Athens’ eventual downfall), and high-quality optics (I’m a birder). Thucydides, however, had one advantage as a historian: no court-imposed confidentiality rules. In contrast, I cannot disclose the communications that took place during the mediation.265 Pity. But at least I can describe what is in the public record concerning the mediation, without elaboration or analysis. 260. In re: Deadline Litig., 716 F. Supp. 2d 1369, 1369 (J.P.M.L. 2010). 261. Id. 262. Id. at 1370. 263. In re Polar Bear Endangered Species Act Listing & § 4(d) Rule Litig., 588 F. Supp. 2d 1376, 1378 (J.P.M.L. 2008). 264. In re Endangered Species Act Section 4 Deadline Litig. (MDL No. 2165), No. 1:10-mc-00377-EGS (D.D.C. June 10, 2010). 265. D.D.C. LOCAL CIV. R. 84.9(a) (2010), available at http://www.dcd.uscourts.gov/dcd/sites/www.dcd.uscourts.gov.dcd/files/2010MARCHLOCALRULESREVISED_February2012.pdf.


Due to various delays, the parties held their first mediation session on September 24, 2010.266 Thereafter, the mediation and the associated stay of the litigation were extended a number of times.267 The parties ultimately held three all-day in-person meetings and dozens of telephone conferences and e-mail exchanges.268 The mediation closed on April 13, 2011 without a settlement, but on April 20, 2011, the parties sought to extend the stay for an additional month for additional settlement discussion.269

C. The Settlements

“If you want to make peace with your enemy, you have to work with your enemy. Then he becomes your partner.”

Nelson Mandela On May 10, 2011, nine months after the case entered the court’s mediation program, FWS and Guardians filed a settlement agreement with the court. 270 This settlement was much broader in scope than the cases covered by the MDL. Instead, it purported to comprehensively address the workload of the listing program, focusing in particular on clearing the backlog of candidate species.271 The Guardians settlement had a number of key provisions. First, FWS agreed to take a wide variety of specific listing actions in FY 2011 and FY 2012, including petition findings for over 600 species. 272 Second, for each of the 251 species that had been identified as candidates in the November 2010 Candidate Notice of Review, FWS agreed either to make a not-warranted finding or to issue a proposed listing rule prior to the end of FY 2016. 273 Third, FWS agreed to make particular determinations for six 266. Joint Status Report and Joint Motion for Stay of Proceedings, In re Deadline Litig., Misc. Action No. 10-377 (EGS) (D.D.C. Apr. 20, 2011) [hereinafter Status Report]. 267. Id. 268. Joint Motion for Approval of Settlement Agreement and Order of Dismissal of Guardians’ Claims at 13–14, In re Deadline Litig., Misc. Action No. 10-377 (EGS) (D.D.C. May 10, 2011) [hereinafter Joint Motion for Approval of Settlement Agreement]. 269. Joint Status Report, supra note 266, at 1. 270. Joint Motion for Approval of Settlement Agreement, supra note 268; see also Press Release, U.S. Dept. of the Interior, Fish & Wildlife Service Announces Work Plan to Restore Biological Priorities and Certainty to Endangered Species Listing Process (May 10, 2011), available at http://www.fws.gov/mountain-prairie/pressrel/DC11-24.htm (discussing a word plan agreed upon by FWS and Guardians); Press Release, WildEarth Guardians, Hope for Endangered Species Act Candidates (May 10, 2011), available at http://www.wildearthguardians.org/site/News2?news_iv_ctrl=-1&page=NewsArticle&id=6829 (mentioning the settlement agreement) . 271. Glitzenstein, supra note 103, at 1–2. 272. Stipulated Settlement Agreement, Exhibit 1, ¶ 1, In re Endangered Species Act Section 4 Deadline Litig., Misc. Action No 10-377 (EGS) (D.D.C. May 10, 2011). 273. Id. ¶ 2.


species during the stated fiscal years (including a not-warranted finding or proposed listing rule for the greater sage-grouse by the end of FY 2015).274 Fourth, FWS agreed to make final listing determinations on any proposed listing rules in accordance with the statutory deadlines.275 Fifth, FWS stated its non-binding intent to designate critical habitat concurrently with any final listing rules. 276 Sixth, Guardians agreed not to bring any deadline litigation (or challenges to warranted-but-precluded findings) prior to March 31, 2017.277 Seventh, Guardians agreed not to file petitions to list more than a total of ten species each fiscal year through FY 2016.278 Eighth, FWS and Guardians agreed to file joint motions to dismiss all five existing cases challenging warranted-but-precluded findings to which Guardians was a party, including the CNOR case and the greater sage-grouse case.279 Ninth, the settlement also included a number of provisions geared towards protecting FWS (and the agreement) from future litigation by third parties that could undermine the implementation of the settlement and efficient management of the listing program.280 And tenth, the settlement included various termination provisions, including the unilateral right of FWS to terminate the agreement (1) if any of the five warranted-but-precluded cases were not dismissed, or any other challenge to a warranted-but-precluded finding for one of the 251 candidate species was not dismissed as moot, or (2) if FWS determined that the level of deadline litigation had not been significantly reduced below the levels occurring between 2008–2010.281

FWS and Guardians moved to dismiss all of the Guardians suits from the centralized case. CBD was not a party to the Guardians Settlement, but because the Guardians Settlement resolved CBD’s claims FWS indicated that it would move to dismiss CBD’s remaining case as moot, or, if CBD was amenable, file a stipulation of dismissal.282 CBD was not amenable. In a response filed the next day CBD asserted that it had only learned on the day that the Guardians Settlement was filed that FWS and Guardians had been conducting negotiations without CBD.283 CBD requested that the court stay a ruling on the joint motion until it had an opportunity to evaluate the

274. Id. ¶¶ 2–5, 7. 275. Id. ¶ 7. 276. Id. ¶ 8. 277. Id. ¶ 9. 278. Id. ¶ 11. 279. Id. at 4, 8. 280. Id. ¶ 13. 281. Id. ¶ 15. 282. Joint Motion for Approval of Settlement Agreement, supra note 268, at 3. 283. Response of Plaintiff Ctr. for Biological Diversity to Joint Motion of WildEarth Guardians & Federal Defendants for Approval of Settlement Agreement and Order of Dismissal of Guardians’ Claims at 1, In re Deadline Litig., Misc. Action No. 10-377 (EGS) (D.D.C. May 11, 2011).


Guardians Settlement thoroughly and respond substantively.284 On May 12, 2011, Judge Sullivan issued a minute order, scheduling a status hearing for May 17 and ordering the parties to file by May 16 their proposed recommendations for further proceedings.285 The same day, Guardians filed a response to CBD’s May 11 filing.286 In its May 16, 2011 filing, CBD stated that it had “many concerns” about the Guardians Settlement.287 First, “the Center does not believe that the obligations imposed on Federal Defendants are enforceable, and therefore, the agreement is illusory.” 288 Second, CBD asserted that the Guardians Settlement was contrary to public policy and illegal because it undermined other purposes of the listing program and “its overall effect would be to stymie petitions and lawsuits to enforce the ESA’s statutory deadlines.”289 CBD noted that it remained willing to negotiate a resolution to its claims.290 After the hearing, Judge Sullivan ordered the parties back into mediation. In a subsequent press release, CBD described the Guardians Settlement as “deeply flawed.”291 On July 12, 2011, FWS and CBD filed a settlement agreement with the court. 292 This settlement was substantially less ambitious than the settlement with Guardians in that it did not require FWS to address all of the outstanding candidates, nor did it impose as many restrictions on the future actions of CBD. In it, FWS agreed to take a number of specified actions by stated fiscal years.293 As with the Guardians agreement, FWS 284. Id. at 2. 285. In re Deadline Litig., minute order, Misc. Action No. 10-377 (EGS) (D.D.C. May 12, 2011). 286. WildEarth Guardians’ Rep. to Ctr. for Biological Diversity Resp. to Guardians’ & Federal Defendants’ Joint Motion Seeking Approval of Settlement Agreement, In re Deadline Litig., Misc. Action No. 10-377 (EGS) (D.D.C. May 12, 2011). 287. Recommendation of Ctr. for Biological Diversity for Further Proceedings at 4, In re Deadline Litig., Misc. Action No. 10-377 (EGS) (D.D.C. May 16, 2011). 288. Id. 289. Id. at 4–5. 290. Id. at 7. 291. Press Release, Center for Biological Diversity, Judge Halts Settlement Over Hundreds of Endangered Species, Orders Parties Back to Negotiations (May 17, 2011), available at http://www.biologicaldiversity.org/news/press_releases/2011/839-species-05-17-2011.html. 292. Joint Motion for Approval of Settlement Agreement & Order of Dismissal of the Center’s Claims, In re Deadline Litig., No. 10-377 (D.D.C. July 12, 2011); see also Press Release, U.S. Fish and Wildlife Service, Fish and Wildlife Service Strengthens Work Plan to Restore Biological Priorities and Certainty to Endangered Species Listing Process (July 12, 2011), available at http://www.fws.gov/midwest/News/release.cfm?rid=433 (discussing the agreed upon work plan); Press Release, Center for Biological Diversity, Historic Agreement Moves 757 Imperiled Species Toward Endangered Species Act Protection (July 17, 2011), available at http://www.biologicaldiversity.org/news/press_releases/2011/species-agreement-07-12-2011.html (mentioning the settlement agreement). 293. Joint Motion for Approval of Settlement Agreement & Order of Dismissal of the Center’s Claims, supra note 292, at ¶¶ B.1–4.


agreed to make final listing determinations on any proposed listing rules in accordance with statutory deadlines.294 In return, CBD agreed (1) not to oppose the Guardians Settlement;295 (2) to use its best efforts to obtain the agreement of its co-plaintiffs to dismiss the warranted-but-precluded cases, and, failing that, to withdraw from the cases;296 and (3) to extend most of the deadlines contained within the settlement agreement to fiscal year 2016 if its deadline litigation exceeds certain bounds.297 In addition, FWS could terminate the CBD Settlement if the court did not approve the Guardians Settlement.298 Thus, the CBD Settlement can be viewed as an addendum to the agreement with Guardians. After the motions to approve the settlement agreements were filed, Safari Club International moved to intervene for the purpose of opposing approval of the settlements. 299 On September 9, 2011, Judge Sullivan denied Safari Club’s motion to intervene and approved both settlements.300 Safari Club appealed. On appeal, Safari Club argued that the settlements illegally prevented FWS from continuing to make warranted-but-precluded findings on the candidates.301 The D.C. Circuit affirmed. First, the court held that Safari Club could not intervene as of right because it lacked standing. 302 The court reasoned that Safari Club lacked standing both because the ESA does not require FWS to make a preclusion finding before proposing listing and because the petition provisions were designed to facilitate, rather than delay, listing.303 Second, the court declined to find that the district court had abused its discretion in denying permissive intervention.304

Meanwhile, on December 17, 2012, the National Association of Homebuilders filed a new complaint collaterally attacking the settlements on grounds similar to those argued by Safari Club. 305 Interestingly,

294. Id. ¶ B.5. 295. Id. ¶ B.6. 296. Id. ¶ B.9. 297. Id. ¶ B.10. This provision is the subject of an ongoing dispute between the parties. 298. Id. ¶ B.6. 299. The previous year, the Tejon Ranch Company had moved to intervene in one of the centralized cases; Judge Sullivan denied that motion before the mediation began. In re Deadline Litigation, 270 F.R.D. 1, 7 (D.D.C. 2010). 300. Id. 301. In re Endangered Species Act Section 4 Deadline Litig.–MDL No. 2165, 704 F.3d 974, 977 (D.C. Cir. Jan. 4, 2013). 302. Id. 303. Id. at 974–980. 304. Id. at 979–980. 305. Complaint for Declaratory and Injunctive Relief, Nat’l Assoc. of Home Builders v. Salazar, No. 02013-EGS (D.D.C. Dec. 17, 2012).


Homebuilders filed this case in the D.C. federal district court, where it was assigned to Judge Sullivan. It is not clear why Homebuilders thinks that it will obtain a better result with a collateral attack making similar arguments in the same forum, particularly when its suit was filed after the oral argument of the Safari Club appeal (which did not go well for Safari Club).306

D. Debriefing

“A conqueror is always a lover of peace.” Karl von Clausewitz, On War

What was it that allowed Guardians, CBD, and FWS to reach this point? The most important factor was that all of the parties shared some basic common interests. First, all three parties wanted FWS to implement section 4. In particular, they all wanted FWS to be able to resolve the conservation status of the candidate species—this same commonality is presumably what allowed for the Fund for Animals settlement almost twenty years ago. Second, the parties recognized that litigation, although sometimes providing useful torque to the gears of the listing program, had an even greater potential to act as sand in those same gears. The more time FWS spent responding to litigation, the more resources it had to spend on litigation support, even if FWS ultimately prevailed in the litigation. And when FWS did not prevail, it was often forced to re-juggle its resources, further reducing the overall efficiency of the listing program. Historically, distrust prevented the parties from acting on these common interests. Environmental groups often did not believe that the leadership of FWS would take any controversial listing actions (or any actions at all) in the absence of litigation. For its part, the leadership of FWS doubted the ability of the environmental groups to be realistic and, in particular, to accept the limitations under which FWS must operate. The participation of Gary Frazer and Michael Bean was another contextual factor that facilitated this settlement. Gary Frazer has done two tours as the Assistant Director for Endangered Species at FWS: from 1999 to 2004, and from 2009 until now. 307 The fact that Mr. Frazer had been reassigned from this position partway through the Bush Administration may have increased his standing with Guardians and CBD. Michael Bean, Counselor to the

306. Lawrence Hurley, Court Cool on Hunters' Bid to Shoot Down Major Listing Settlement, GREENWIRE (Nov. 20, 2012), http://www.eenews.net/Greenwire/2012/11/20/4. 307. Assistant Director of Endangered Species Program: Gary Frazer, FWS.GOV, http://www.fws.gov/offices/gfrazer1.html (last updated Aug. 3, 2009).


Assistant Secretary for Fish and Wildlife and Parks beginning in 2009, had previously worked for decades at the Environmental Defense Fund (EDF). 308 Although EDF is a more middle-of-the-road environmental organization than either Guardians or CBD, Mr. Bean brought credibility to the government negotiating team (in addition to being an acknowledged innovator in ESA matters). Another factor central to these settlements was the unique procedural setting, with the MDL panel transferring all of the cases to one judge. The sweeping scope of the settlements was a much better fit in an MDL proceeding than it would have been in any single deadline case. This made it more likely that the court would approve a comprehensive settlement. Moreover, FWS could have more confidence in the effectiveness of provisions in the settlements that were designed to make collateral attacks on the settlements more difficult. For example, a judge in an MDL proceeding would be more likely to accept the transfer of additional cases to ensure that they would not conflict with the MDL settlements. Similarly, other courts should be more likely to defer to a settlement achieved under the imprimatur of an MDL proceeding than simply a settlement in one of many deadline cases. A final factor that facilitated settlement was the fact that both parties had some degree of leverage. FWS, of course, had violated the deadlines at issue in the consolidated cases. More importantly given the scope of the eventual settlements, FWS had significant vulnerability on the issue of “expeditious progress” with respect to its warranted-but-precluded findings (notwithstanding the fact that it listed a number of species in the period immediately preceding the settlements). All of these gave Guardians and CBD significant leverage. On the other hand, by succeeding in getting the existing cases centralized, the government had a reasonably good chance of getting one judge to consider the big picture, minimizing the likelihood of draconian and conflicting court orders. This was a position that FWS had been hoping to achieve for many years, and it gave FWS a degree of leverage previously unattainable. A related point is that each of the parties could offer concessions in the context of a settlement agreement that the opposing parties could not easily obtain (or could not obtain at all) through litigation. Thus, notwithstanding the existence of the CNOR case, it would be difficult in contested litigation for Guardians or CBD to obtain court orders requiring FWS to resolve the 308. Press Release, U.S. Dep’t of Interior, Assistant Sec’y of the Interior Tom Strickland Announces Appointment of Renowned Wildlife Law Expert Michael Bean as Counselor (May, 11, 2009), available at http://www.doi.gov/news/pressreleases/2009_06_11_releaseA.cfm?renderforprint=1&.


entire candidate list by a date certain.309 And FWS certainly would not have been able to obtain from a court any kind of cease-fire or restraint on the filing of additional deadline cases or petitions. What about the substance of the settlements themselves? I can offer a few observations. First, and most significantly, the settlement agreements went far beyond the substance of the cases at issue. Much like the Constitutional Convention at Philadelphia, the ostensible purpose of the negotiations was relatively humble (amendments to the Articles of Confederation; settlement of a number of petition deadline cases), but the outcome was much more ambitious (the U.S. Constitution; a codification of the priorities for the program—and a reduction in litigation—for six-plus years). On the other hand, the MDL context seems like the perfect vehicle for such a broad settlement. Second, the MDL settlements have the potential to significantly improve FWS’s ability to implement section 4. The settlements largely codify FWS’s own priorities. In so doing, these settlements correct an unintended consequence of Congress’s effort to provide FWS with a little flexibility. In the circumstances that have prevailed in the past fifteen years, the ability to make warranted-but-precluded findings has had the perverse effect of making it all but impossible to issue proposed listings. By enshrining the duty to propose species for listing in these court-approved settlements, FWS has succeeded in giving proposals equal standing with petition findings and critical habitat designations. Moreover, although these settlements focus on resolving the status of candidate species, they are not simply a rehash of the Fund for Animals settlement. Matters had grown more complicated since 1993. The issue now was not just slow progress by FWS in the face of inadequate resources—deadline litigation had itself become a major barrier to listings. Therefore, the settlement had to address ways to decrease litigation. Third, the fact that there were two plaintiffs in the centralized cases had consequences.310 On the one hand, negotiating with multiple parties makes things more complex. Here, it resulted in two separate settlements, which may make compliance more challenging. From a different perspective, the settlements suffer from the fact that there are only two plaintiffs (albeit the

309. Even if this result could be obtained in court, jamming it down FWS’s throat would make an unpredictable congressional response more likely. See Dep’t of Def. and Full-Year Continuing Appropriations Act of 2011, Pub. L. 112-10, § 1713, 125 Stat. 38, 150 (2011) (requiring FWS to reissue a rule that had the effect of partially delisting the gray wolf, after that rule had been vacated by a court) (a constitutional challenge to this statute was rejected in Alliance for the Wild Rockies v. Salazar, 672 F.3d 1170, 1175 (9th Cir. 2012)). 310. It is also relevant that there is only one defendant—the National Marine Fisheries Service, which makes listing determinations with respect to marine species, is unaffected.


most prolific in the listing-deadline arena): these settlements do not bind other parties, whose actions may also make compliance more challenging. Other environmental groups, industry groups, states, and tribes can all file petitions, make deadline challenges, and seek remedies in successful merits challenges that conflict with the principles or details of the settlements. As mentioned above, some provisions in the Guardians Settlement may help address these possibilities. Fourth, the settlements in no way limit the ability of Guardians and CBD to file merits challenges to section 4 actions. FWS can no doubt handle some continuing merits challenges, but if deadline litigation is simply replaced by additional merits litigation, then the settlements will have been a failure. Fifth, the Guardians Settlement included important provisions allowing FWS to terminate the agreement. If not unenforceable, as CBD once claimed, neither is it guaranteed to survive. Lastly, the settlements may de-intensify a heretofore harmfully adversarial relationship.311 Whatever differences the parties have had in the past, reducing distrust and improving communication among these parties may lead to better implementation of section 4. This is not, however, a uniformly held position: some may worry that the government negotiating team played the role of Neville Chamberlain at Munich—appeasing an irreconcilably hostile power that will take what is given, and continue to seek more, until the onset of the inevitable conflagration. The truth should become apparent over time.

VIII. SWORDS INTO PLOWSHARES

“The only good part of a war is its ending.” Abraham Lincoln

As the dust settles, the staff at FWS, and those who represent them, are crawling out of their foxholes and cautiously surveying the landscape. It has been about two years since the settlements were signed and it is now possible to make some observations and draw some tentative conclusions. First, the settlements have survived thus far. The agreement with Guardians included a number of termination provisions relating to budget and

311. See Phil Taylor, Obama Settlement with Green Groups Sparked Major Change in Listing Decisions, GREENWIRE (Jan. 11, 2013), http://www.eenews.net/Greenwire/2013/01/11/3 (quoting a representative of Guardians as stating that its relationship with FWS “has never been better” and noting that a CBD representative “stopped short of praising” the Obama administration’s implementation of the ESA in the first term).


litigation issues: none of them have been triggered. And, as discussed above, the D.C. Circuit rejected Safari Club’s attempt to challenge the settlements. Second, FWS has been able to comply thus far. It has met all of the requirements for FYs 2011 and 2012 (with the exception of a few rules for which FWS obtained unopposed short-term extensions from the court).312 Thus, the pace of issuing new proposed and final listing rules has increased significantly, and the candidate backlog is already significantly lower.313 In some sense, this is not a surprise, as the Guardians Settlement essentially codified what had been FWS’s anticipated work plan. That said, as von Moltke observed, no battle plan survives contact with the enemy: in the past, FWS has often been unable to follow through on its plans, and new contingencies (court orders, petitions, and emergency listings) arise. Thus, completing the first stage of the settlement should be considered a major accomplishment. Time will tell whether changes in FWS’s budget situation (which can only be uncertain in the current political and economic climate) or other contingencies will impede compliance in future fiscal years. The imposition of the budget “sequester” on March 1, 2013, is certainly not helpful. Third, to maximize its chances of being able to continue to deliver what it has promised, FWS will need to redouble its efforts to make the listing program as efficient and effective as possible. In addition to the efficiency gains that directly resulted from reduction in litigation caused by the MDL settlements, improving the effectiveness of the listing program will require investing considerable effort in streamlining the decision-making process. It may also require developing substantive policies that will take some of the uncertainty, and therefore legal risk, out of the decisions FWS makes.314

312. Allison Winter, Endangered Species: Petitions for New Species Protection Wobble Balance in FWS Settlement, Agency Says, GREENWIRE (Aug. 7, 2012), http://www.eenews.net/Greenwire/print/2012/08/07/3. 313. Taylor, supra note 311; Michael Wines, Endangered or Not, But at Least No Longer Waiting, N.Y. TIMES (Mar. 6, 2013), http://www.nytimes.com/2013/03/07/science/earth/long-delayed-rulings-on-endangered-species-are-coming.html?pagewanted=all&_r=0; see Review of Native Species That Are Candidates for Listing as Endangered or Threatened; Annual Notice of Findings on Resubmitted Petitions; Annual Description of Progress on Listing Actions, 77 Fed. Reg. 69994 (Nov. 21, 2012) (noting that as of November 2012, candidate list had been reduced to192 species—including new candidates added since the November 2010 CNOR). 314. The productivity of the listing program has also suffered from the analog of “defensive medicine.” The plethora of merits challenges have caused FWS to vastly increase the size, complexity, and expense of its section 4 determinations. Although to some degree this may be a good thing, leading to better and more transparent decision-making, there is also the danger that FWS’s analyses resembles a medical practice in which doctors drive up the cost of health care by ordering unnecessary tests as a hedge against possible malpractice claims. The ability to develop generic policy may ameliorate this effect.


These sorts of investments, however necessary, were hard to justify when the listing program was living hand to mouth, with FWS desperately trying to avoid contempt of court. Thus, the Listing Wars had the effect of substantially stunting policy development for fifteen years. In the last couple of years, however, FWS has made some progress on this front. On May 1, 2012, FWS and NOAA amended the regulations governing critical habitat designation to change the way in which critical habitat is delineated; this has the potential of saving hundreds of thousands of dollars per year in Federal Register and Code of Federal Regulations (C.F.R.) publication costs.315 FWS and NOAA have also published a draft policy interpreting “significant portion of its range,” a crucial term in the ESA’s definitions of “endangered species” and “threatened species.”316 A number of other policy initiatives are now in the works. Fourth, the signing of the settlements appears to be having conservation benefits beyond simply potentially speeding up listing determinations (and therefore applying the ESA’s regulatory protections to some species more quickly). By providing concrete deadlines for listing determinations for all 251 candidates—but deadlines that for the most part are distant enough to allow conservation action to be taken before a final determination is made—the settlements can encourage federal, state, and private actors to take conservation measures in the interim to reduce the likelihood that the species will ultimately be listed.317 Thus, for the greater sage-grouse, there have been numerous announcements about new conservation initiatives that have expressly cited the impending deadline set in the settlements.318 Fifth, the existence of the settlements helped secure, at least for the time being, a major litigation victory for FWS in a different case. As mentioned above, the settlements required Guardians and CBD to either move to dismiss or withdraw from the existing challenges to warranted-but-precluded cases. As a result, all of those cases except one were promptly dismissed. The exception was the greater sage-grouse case. There, WWP was also a plaintiff, and it refused to drop the case.319 CBD withdrew; the

315. 50 C.F.R. § 424.12 (2012). 316. 76 Fed. Reg. 76987, 76987-88-01 (Dec. 9, 2011). 317. Taylor, supra note 311. 318. E.g., Instructional Memorandum No. 2012-044, Bureau of Land Mgmt., BLM National Greater Sage-Grouse Land Use Planning Strategy (Dec. 27, 2011), available at http://www.blm.gov/wo/st/en/info/regulations/Instruction_Memos_and_Bulletins/national_instruction/2012/IM_2012-044.html (detailing instructions for considering greater sage-grouse conservation measures, noting that FWS is scheduled to make a new listing decision in FY 2015).

319. Western Watersheds had been informed of the fact of the MDL negotiations, and had agreed to extend the briefing schedule in the sage-grouse case during that period, but had not been a party to the negotiations and did not approve of the 2015 deadline for removing the sage-grouse from the candidate list. W. Watersheds Project’s Response/Reply Brief in Support of Motion for Summary


government and Guardians moved to dismiss the case as prudentially moot, and the government and WWP cross-moved for summary judgment. Judge Winmill, who had vacated FWS’s last twelve-month finding for the sage-grouse in a strongly worded opinion, ruled for FWS, by the narrowest of margins. Although he rejected the argument that the case was moot, he declined to hold that the finding was arbitrary and capricious, despite “troubling aspects of the FWS decision process.”320 He indicated that he would have found that FWS was not making “expeditious progress” but for its commitment in the MDL, stating:

The Director also had to certify that the FWS is making expeditious progress on its ESA duties in order to place the sage grouse in the warranted-but-precluded category. Congress originally intended that this category be used sparingly and that it not become a bottomless pit where controversial species are dumped and forgotten. There are now over 250 species in this category, and the average time spent there is about 19 years. Species have gone extinct while waiting for listing rules. By no common sense measure of the word "expeditious" has the FWS made expeditious progress in its ESA duties. While the FWS blames these delays on a lack of funding by Congress, some of the agency's financial woes are self-inflicted. In the past, the FWS's parent agency—the Interior Department—has refused to seek sufficient funds from Congress and has actively sought caps on ESA spending. Nevertheless, as discussed above, the FWS has recently committed to reducing the backlog, and has made specific commitments regarding the sage grouse. These commitments are the only reason the Court will uphold the agency's certification that it is making expeditious progress. If those commitments prove unreliable, the Court will quickly revisit its findings here upon prompting from any party.321

The blunt statements in Judge Winmill’s opinion demonstrate the usefulness of the settlements in defending against other litigation. Still, it Judgment at 4, W. Watersheds Project v. U.S. Fish & Wildlife Serv., No. 10-cv-229-BLW (D. Idaho Nov. 17, 2011). 320. W. Watersheds Project v. U.S. Fish & Wildlife Serv., No. 4:10-CV-229-BLW, 2012 U.S. Dist. Lexis 13771, at *7 (D. Idaho Feb. 2, 2012). 321. Id. at *6–7. WWP filed a motion to alter or amend judgment, which the court denied. W. Watersheds Project v. U.S. Fish and Wildlife Serv., No. 4: CV 10-229-BLW, 2012 U.S. Dist. Lexis 140969 (D. Idaho Sept. 26, 2012). WWP did not appeal.


remains to be seen whether the continuing jurisdiction of Judge Sullivan will be an effective check to additional inconsistent court orders. Sixth, thus far, deadline litigation has decreased. 322 Of course, the Guardians settlement prohibits that group from filing deadline litigation during the period of the settlement agreement, so it has not filed any. Notwithstanding the hope that the settlement agreements would de-intensify a historically adversarial relationship, CBD appears to be determined to push the envelope. CBD filed deadline suits during fiscal year 2012 seeking to have the Service make twelve-month findings for three additional species in the following year,323 the maximum allowed under the CBD settlement without triggering automatic extensions of deadlines in that agreement.324 These cases were filed in the D.C. federal district court and assigned to Judge Sullivan. CBD wanted to resolve the cases before the end of FY 2012 because of the language in the automatic-extension provision. The parties did not settle prior to that time. Unfortunately for the government, Judge Sullivan granted CBD summary judgment during the last week of FY 2012. In an order not accompanied by a written opinion, he directed the parties to negotiate deadlines for the three findings, and instructed that those dates occur during the period covered by the CBD settlement in the MDL case.325 The parties were subsequently able to settle the cases.326 In any case, the continued pressure from CBD in the form of litigation and new petitions may hinder, rather than encourage (as CBD hopes) the efficiency of the listing program, and could eventually jeopardize the Service’s ability to comply with the settlements. 327 But even with these cases, deadline litigation with CBD is greatly reduced from prior years. More importantly, no other group has stepped forward to fill this void: exactly one other listing deadline case has been filed since the settlements were approved.328

322. Taylor, supra note 311. 323. Complaint for Declaratory and Injunctive Relief, Ctr. for Biological Diversity v. Salazar, Nos. 1:12-cv-00861, 01073, 01091 (D.D.C.). 324. Joint Motion for Approval of Settlement Agreement & Order of Dismissal of the Center’s Claims, supra note 292, at 5. 325. Ctr. for Biological Diversity v. Salazar, Nos. 1:12-cv-00861, 01073, 01091, slip op. 1–2 (D.D.C. Sept. 25, 2012). 326. Stipulated Settlement Agreement, Ctr. for Biological Diversity v. Salazar, Nos. 1:12-cv-00861, 01073, 01091 (D.D.C. Feb. 14, 2013). 327. See Winter, supra note 312 (quoting the FWS as having difficulties arising from limited resources and increasing demands). 328. Complaint for Declaratory and Injunctive Relief at 1–2, Ctr. for Envtl. Sci. Accuracy & Reliability v. Salazar, No. 1:12-cv-01311-JEB (D.D.C filed Aug. 7, 2012) (challenging FWS’s alleged failure to make a timely 12-month finding on a petition to list the American eel); see Declaration of Paul Souza ¶ 34, Ctr. for Biological Diversity v. Salazar, No. 1:12-cv-00861 (D.D.C. filed July 27, 2012) (explaining the state of deadline litigation after the MDL settlement).


A reduction in litigation, particularly deadline litigation, may also have the indirect benefit of improving the listing program by improving the morale of FWS personnel. These good folks trained for years because they want to do biology and work on conservation; they do not want to be glorified paralegals providing litigation support while being pilloried from all sides for trying to do their jobs in challenging circumstances. Thus, a reduction in litigation may help the listing program attract and retain the most talented staff. Seventh, some members of Congress have expressed concern over the settlements as a part of a larger criticism of the ESA. On December 6, 2011, the House Committee on Natural Resources held an oversight hearing on ESA litigation. 329 In the associated press release, the Committee made specific reference to the MDL settlements as support for its assertion that “the ESA has become taken over by lawsuits, settlements and judicial action.”330 There was a particular interest in the attorneys’ fees that the government would pay to Guardians and CBD as a result of the MDL settlements. These fees were the subject of many questions at the hearing, which included representatives of both groups, as well as a letter from the Committee to the Department of Justice requesting information.331 More recently, ESA critics appear to be operating from a new set of talking points, stating emphatically that the settlements were the result of an allegedly inappropriate “closed-door” process. 332 A bill has even been introduced in the Senate to amend the ESA to require detailed public process prior to filing a settlement, and to give States and counties a veto over possible settlements. 333 This criticism ignores the reality that settlement discussions of any sort are almost always conducted behind

329. The Endangered Species Act: How Litigation is Costing Jobs and Impeding True Recovery Efforts, Before House Committee On Natural Resources, HOUSE.GOV (2011), http://naturalresources.house.gov/Calendar/EventSingle.aspx?EventID=270315 (showing hearing schedule for December 6, 2011). 330. Press Release, Excessive Endangered Species Act Litigation Threatens Species Recovery, Job Creation and Economic Growth (Dec. 6, 2011), available at http://naturalresources.house.gov/UploadedFiles/12.06.11-ESAHearingRecap.pdf. 331. Letter from Rep. Doc Hastings, Chairman, Comm. on Natural Res., U.S. House of Representatives, to Ignacia S. Moreno, Assistant Attorney General, Envtl. & Natural Res. Div., U.S. Dep’t of Justice (Mar. 19, 2012), available at http://naturalresources.house.gov/UploadedFiles/LtrToMorenoOnESA03.19.12.pdf. 332. Taylor, supra note 311 (quoting Rep. Hastings as complaining about closed-door settlements); Sen. David Vitter, Endangered Species Act’s Hidden Costs, WASH. TIMES (Feb. 8, 2013), http://www.washingtontimes.com/news/2013/feb/8/endangered-species-acts-hidden-costs (arguing that the MDL settlements were the result of a grossly unfair secret process); Editorial Board, Fishing for Wildlife Lawsuits, WALL ST. J. (Mar. 11, 2013), http://naturalresources.house.gov/blog/?postid=323235 (complaining that government used sue-and-settle tactics with friendly green groups to impose the MDL settlements with no public input). 333. Taylor, supra note 311.


closed doors, and those discussions are generally confidential, as are the agreements themselves until filed in court. Of course, as a practical matter, the bill described would effectively prohibit all settlements covered by its terms. There seems to be a suggestion that the settlements are some kind of inappropriate collusion between FWS and the environmental groups. This may be a more extreme version of the appeasement concern mentioned above—that the settlements are the equivalent of the Molotov-Ribbentrop Pact.334 Of course, this is simply incorrect. FWS’s relationship with these groups has been strongly, even bitterly, adversarial since the groups formed, through Democratic and Republican administrations alike. Moreover, the settlements require nothing more than better implementation of the existing law. It seems odd to criticize an agency for trying to do the job mandated by Congress. A more reasonable criticism is that with 1,391 domestic species already listed as endangered or threatened, 335 FWS’s resources would be better spent on recovery actions for those species than to list hundreds more that FWS will struggle to conserve. Regardless of the merits of that view, it is not a tradeoff allowed under current law. FWS learned in the beginning of the Listing Wars that courts will not allow these sorts of tradeoffs even among the different types of listing actions given the express commands of the ESA. Congressional critics of the MDL settlements sit in the body with the power to adjust the legal mandates. It remains to be seen whether the MDL settlements will result in any substantive congressional response, as the Fund for Animals settlement may have contributed to the moratorium in 1995–1996.336 The upshot is that a combination of luck, good judgment, risk taking, and the logic of the situation allowed these parties to step out of the rut that they had created. Rather than holding out for total victory, or the intervention of a deus ex machina, they took responsibility for coming up 334. The Molotov-Ribbentrop Pact was a short-lived agreement by which Nazi Germany and Stalin’s Soviet Union divided Eastern Europe. It was signed on August 23, 1939, a week before Germany invaded Poland, initiating World War II, and was broken when Germany invaded the Soviet Union on June 22, 1941. 335. Summary of Listed Species Listed Populations and Recovery Plans, U.S. FISH & WILDLIFE SERVICE (Jan. 29, 2013), http://ecos.fws.gov/tess_public/pub/boxScore.jsp. 336. During the height of the Listing Wars, there were several efforts at ESA reform legislation that would have addressed the listing and critical-habitat-designation processes. Most notable were S. 1180, 106th Cong. (1999), which would have delayed designation of critical habitat to the recovery-planning stage, and what is sometimes referred to as the “Pombo Bill,” Threatened and Endangered Species Recovery Act of 2005, H.R. 3824, 109th Cong. (2005). The latter, which among many other changes would have eliminated critical habitat entirely and required economic analyses for listing, passed the House in 2005. See generally Brian E. Gray, The Endangered Species Act: Reform or Refutation, 13 HASTINGS W.-NW. J. ENVTL. L. & POL'Y 1 (2007) (describing the Pombo Bill).


with a compromise solution that acknowledged their common interests, and sought to manage the areas in which their interests diverged. (Perhaps there is a lesson here for Congress . . . ) Thus far, the results have been encouraging. No doubt there will be challenges; even if we have achieved a sort of peace, the problems of peace can be so daunting that war can seem like an attractive alternative. Therefore, it will take commitment, compromise, restraint, and hard work from all of the parties to keep from responding to the drums of war. I, for one, am ready for this war to end. It has been counterproductive in the extreme, although it has certainly kept me gainfully employed. It is my hope that all interested parties can get to the hard work of trying to develop productive solutions to the “problems of peace” with respect to the ESA. In any case, as much as I would like to say that “I ain’t gonna study war no more,” 337 the role of Cincinnatus 338 will have to wait. There are many important substantive issues in section 4 that have yet to be resolved. Litigation will no doubt be required to resolve some of them, but at least those are fights worth having.

As Mr. Patlis might say, “Curtain.”

“Peace is not only better than war, but infinitely more arduous.” George Bernard Shaw

337. Down by the Riverside, lyrics available at http://en.wikipedia.org/wiki/Down_by_the_Riverside. 338. Cincinnatus was a hero of early ancient Rome. He was given dictatorial powers during a military crisis, which he immediately gave up after leading the Roman army to victory, and returned to his life as a simple farmer. I do not mean to suggest that my role has been any more comparable to Cincinnatus than it has been to Thucydides, but perhaps it will one day be analogous to the role of those American Revolutionary War officers who joined the Society of the Cincinnati, resolving to follow the example of Cincinnatus. See THE INSTITUTION OF THE SOCIETY OF THE CINCINNATI, THE SOCIETY OF THE CINCINNATI, http://societyofthecincinnati.org/institution.htm (last visited Feb. 12, 2013) (describing the Institution’s principle guiding document and founding tenets).

HOW TO ENFORCE A CARBON TAX: LESSONS FROM THE

MONTREAL PROTOCOL AND THE U.S. EXPERIENCE WITH

THE OZONE DEPLETING CHEMICALS TAX

Bruce Pasfield & Elise Paeffgen*

TABLE OF CONTENTS

Introduction ............................................................................................... 390

I. ODS and Carbon Taxes: A Market Approach to Pollution Control ..... 391

II. Ozone Depleting Substances Phase-Out and Tax ............................... 393

A. International Command-and-Control Regulation to Phase Out Use of

ODS ................................................................................................. 393 B. U.S. Regulation of ODS .................................................................. 394

1. Clean Air Act Regulations .......................................................... 394 2. The United States’ ODS Domestic Tax ...................................... 395 3. Excess Tax on Imports into the United States ............................. 396

III. Enforcement Challenges with the ODS Phase-Out and Tax .............. 396

A. ODS Phase-Out Schedule and Border Tax Incentivized Smuggling

.............................................................................................................. 396 B. United States Initially Unprepared to Uncover Entities Gaming the

ODS Phase-Out and Tax ................................................................. 397 C. Smuggling and Consumer Preferences Prevented Intended Shift to

ODS Alternatives ............................................................................ 398

IV. Application of ODS Deficiencies to a Carbon Tax ........................... 398

A. Smuggling of Carbon Intensive Goods ........................................... 399 B. Smuggling of Fossil Fuels .............................................................. 401

* Bruce Pasfield is the lead partner for Alston & Bird LLP’s Environment and Land Use

practice group in Washington, D.C. His practice focuses on environmental law and corporate

governance issues. He regularly provides compliance advice to clients on the phase out of ozone

depleting substances and greenhouse gases. He holds a J.D. from Vermont Law School and a B.A. from

Gettysburg College. He is licensed in Maryland, the District of Columbia, and Florida. Elise Paeffgen is

an associate in the Environment and Land Use group at Alston & Bird LLP. She holds a J.D. magna

cum laude from Vermont Law School, a M.E.M. from the Yale School of Forestry and Environmental

Studies, and a B.A. with high honors from Oberlin College. She is licensed in Ohio.


1. Petroleum .................................................................................... 401 2. Coal Smuggling ........................................................................... 402 3. Emissions Increases from U.S. Coal Exports .............................. 403 4. Natural Gas .................................................................................. 403

V. Applying Lessons Learned to a Carbon Tax ....................................... 404 A. Training and Resources for Administering a Carbon Tax and

Corresponding Border Tax ............................................................ 404 B. Imposing a Border Tax on Imports ................................................. 404 C. Tax on Exports ................................................................................ 405 D. Compliance with the WTO Border Adjustments ............................ 405 E. Flexibility in Tax Rates—The Pigovian Model .............................. 407 F. Other Incentives Needed to Cause a Switch to Alternatives ........... 409

Conclusion ................................................................................................ 409

INTRODUCTION

Global climate change is one of the most controversial environmental

and political issues of our time. The scientific community has reached a

broad consensus that the earth’s atmosphere is warming and that

anthropogenic greenhouse gas (GHG) emissions contribute to that

warming. 1 Yet there is still considerable political debate over the

consequences of such warming and what steps, if any, governments should

take in response. At one extreme are those that believe voluntary measures

to restrict GHG emissions are sufficient and that mandatory measures are

unnecessary and would weaken economies. At the other extreme are those

who believe that GHG emissions should be reduced without regard to the

economic consequences of such reductions. Somewhere in the middle is a

growing consensus that a balanced approach to curbing GHG emissions is

necessary and feasible. Many economists believe that a carbon tax is the

most effective option for reducing GHG emissions. They argue that it is

superior to other market-based approaches because it is simpler to

implement, transparent, provides price certainty, and is more efficient.2

Several countries have agreed with this line of reasoning and

implemented carbon taxes. Australia recently passed a carbon tax that

1. Anthropogenic emissions of greenhouse gases are generally understood to include

emissions caused by human activity such as a car’s exhaust or emissions from a coal-fired electric

energy plant. COUNCIL ON ENVTL. QUALITY, ANNUAL REPORT ch. 1 (1993), available at

http://clinton4.nara.gov/CEQ/reports/1993/chap1.html (last visited Feb. 21, 2013).

2. Roberta F. Mann, The Case for the Carbon Tax: How to Overcome Politics and Find our

Green Destiny, 39 ENVTL. L. REP. NEWS & ANALYSIS 10118, 10122 (2009); see also Michael J.

Zimmer, Carbon Tax: Ready for Prime Time?, 8 SUSTAINABLE DEV. L. & POL’Y 67, 68 (2008).

2013] How to Enforce a Carbon Tax 391

began on July 1, 2012.3 Other countries, such as the Netherlands, Sweden,

Norway, Denmark and Costa Rica, have had carbon taxes since the early

1990s. Further, South Africa is looking to introduce a carbon tax, which

will be incorporated in its treasury’s budget this year.4 Although the United

States does not have a carbon tax, it has support from the majority of

Americans.5

However, before Congress considers enacting a carbon tax, it should

examine a similar tax designed to reduce the use of ozone depleting

substances (ODS). While there are differences between a carbon tax and an

ODS tax, important lessons can be learned from the United States’

experience with the ODS tax. This paper will examine these lessons in the

context of a carbon tax. Part I presents an overview of environmental taxes

and the advantages of environmental taxes as a government-imposed means

of pollution control. Part II presents the international and domestic

experience with an ODS phase-out including the United States’ imposition

of the Ozone Depleting Chemicals Tax. Part III outlines enforcement

challenges that arose under the ODS tax and their significant potential for

repeat under a carbon tax. Part IV discusses carbon tax limitations and

addresses ways to prevent a repeat of ODS tax problems. Throughout this

paper, we have highlighted the structural and legal challenges that may

arise—and must be considered—in the practical implementation of a

carbon tax.

I. ODS AND CARBON TAXES: A MARKET APPROACH TO POLLUTION

CONTROL

A carbon tax is a market-based means of reducing environmental

pollutants. ODS and excess concentrations of GHGs in the atmosphere are

environmental pollutants. When released, ODS migrate to the upper

atmosphere and destroy the ozone layer, which protects the earth from the

sun’s harmful UV-B rays.6 This destruction is linked to medical problems

3. Rod McGuirk, Australia’s Senate Passes Carbon Tax, GREENWIRE (Nov. 8, 2011),

http://www.eenews.net/Greenwire/2011/11/08/archive/12?terms=australia+carbon+tax.

4. Thompson Reuters Point Carbon News, Recent Global Carbon Politics, CARBON MKT. N.

AM., 5 (Feb. 24, 2012), http://www.pointcarbon.com/polopoly_fs/1.1767638!CMNA20120224.pdf.

5. A recent study by the Yale Project on Climate Change Communication found that the

majority of Americans support a revenue-neutral carbon tax. Majority in U.S. Support Revenue-Neutral

Carbon Tax, Survey Says, ENVIRONMENT360 (Nov. 22, 2011),

http://e360.yale.edu/digest/majority_in_us_support_revenue-neutral_carbon_tax_survey_says/3222.

6. See Ozone Layer Protection Glossary, U.S. Envtl. Prot. Agency,

http://www.epa.gov/ozone/defns.html (last visited Dec. 15, 2011) (providing that various ozone-

depleting substances accelerate the destruction of the stratospheric ozone layer).


such as skin cancer and cataracts.7 Also impacting the atmosphere is an

increase in anthropogenic GHG emissions, which causes global temperature

rise.8 The impacts of climate change include rising sea levels, exacerbated

droughts, proliferation of disease vectors, and biodiversity loss. 9 Two

distinct problems, ODS and GHGs are similar in that both anthropogenic

pollutants are released by diverse sources in a multitude of countries, the

pollutants stay in the atmosphere for a very long time, and their effects are

felt globally, rather than in a limited location near the emission source.10

Viewed in economic terms, pollution—such as emissions of ODS and

GHGs—results from market failure. 11 Pollution, from the production of

goods and services, generates costs to parties outside a market transaction,

an effect that is referred to as a negative externality.12 For example, when

our society consumes ODS or fossil fuels, it creates pollution that has a

societal cost—everyone suffers the consequences of a depleted ozone layer

and climate change.

Because no country controls the earth’s atmosphere, some form of

international agreement was required to phase-out ODS, and is currently

required to reduce GHG emissions.13 Governments can address pollution

through a variety of approaches, most of which can be categorized as

voluntary, command-and-control, or market-based approaches.14 In the near

term, a carbon tax can be a fairly optimal market-based solution for

incentivizing energy efficiency measures and reducing GHG emissions.

With a set price on GHGs, businesses and consumers can plan ahead,

making more prudent and efficient decisions. A carbon tax is simple to

7. See Health and Environmental Effects of Ozone Layer Depletion, U.S. Envtl. Prot.

Agency, http://www.epa.gov/ozone/science/effects/ (last visited Feb. 27, 2013) (linking UVB radiation

to nonmelanoma skin cancer and cataracts).

8. WORKING GROUP II OF THE INTERGOVERNMENTAL PANEL ON CLIMATE CHANGE,

CLIMATE CHANGE 2007: IMPACTS, ADAPTATION AND VULNERABILITY (Martin Parry et al. eds., 2007),

available at http://www.ipcc.ch/publications_and_data/ar4/wg2/en/contents.html (last visited Feb. 27,

2013) (assessing the impacts of anthropogenic CO2 increases).

9. See THE PEW CENTER ON GLOBAL CLIMATE CHANGE, CLIMATE CHANGE 101:

UNDERSTANDING AND RESPONDING TO GLOBAL CLIMATE CHANGE (Jan. 2011), available at

http://www.c2es.org/docUploads/climate101-fullbook.pdf (summarizing the effects of climate change

on the anthropogenic world).

10. See Cass R. Sunstein, Of Montreal and Kyoto: A Tale of Two Protocols, 31 HARV.

ENVTL. L. REV 1, 2 (2007) (advocating the adoption of an international agreement in order to effectively

address global climate change).

11. SCOTT J. CALLAN & JANET M. THOMAS, ENVIRONMENTAL ECONOMICS AND

MANAGEMENT: THEORY, POLICY AND APPLICATIONS 29 (2d ed. 2000).

12. Id. at 76.

13. Id. at 99.

14. Reuven S. Avi-Yonah & David M. Uhlmann, Combating Global Climate Change: Why a

Carbon Tax Is a Better Response to Global Warming Than Cap and Trade, 28 STAN. ENVTL. L. J. 3,

20–21, 28 (2009).


adjust, and it can have a built-in evaluation period at which the tax level can

be reset if market-based changes are too weak or too strong. 15 Yet as the

United States’ experience with the ODS phase-out demonstrates, a carbon

tax has limitations. Those limitations become apparent upon examination of

the legal mechanisms used to phase out ODS.

II. OZONE DEPLETING SUBSTANCES PHASE-OUT AND TAX

A. International Command-and-Control Regulation to Phase Out Use of

ODS

In 1987, the United States signed the Montreal Protocol on Substances

That Deplete the Ozone Layer (Montreal Protocol), 16 an international

agreement to phase out ODS. 17 The Montreal Protocol provides ODS

phase-out timelines based on the potency of the ODS. 18 In developed

countries19 such as the U.S., the phase-out began in 1989 when command-

and-control regulations froze production of the most harmful group of

ODS, chlorofluorocarbons (CFCs), at 1986 levels.20 Production was further

reduced by seventy-five percent by 1994, and, with limited exceptions,

completely phased out by 1996.21 The next most harmful group of ODS,

mainly hydrochlorofluorocarbons (HCFCs), will be reduced by ninety

percent by 2015 and by 100% by 2030.22

In developing countries, the phase-out of CFCs began in 1999,23

when

production was frozen at the average of 1995–1997 levels.24 Production was

further reduced by fifty percent in 2005, followed by eighty-five percent in

15. Zimmer, supra note 2, at 69.

16. Protocol on Substances That Deplete the Ozone Layer (Montreal Protocol), Sept. 16,

1987, 26 I.L.M. 1541, 1550.

17. Id. at 1541.

18. Internal Revenue Serv., Ozone Depleting Chemicals (ODC) Excise Tax Audit Techniques

Guide, http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Ozone-Depleting-

Chemicals-(ODC)-Excise-Tax-Audit-Techniques-Guide (last updated Apr. 30, 2013).

19. The Montreal Protocol divides countries between Article II (developed countries) and

Article V (developing countries) based on historical uses of ODS. This division is generally consistent

with the division between developed and developing countries and we use the later terminology because

it is more easily understood.

20. Ozone Depleting Chemicals, supra note 18.

21. Id.

22. Protection of Stratospheric Ozone: Allowance System for Controlling HCFC Production,

Import and Export, 40 C.F.R. § 82 (2003).

23. Elizabeth R. DeSombre, The Experience of the Montreal Protocol: Particularly

Remarkable, and Remarkably Particular, 19 UCLA J. ENVTL. L. & POL'Y 49, 73–74 (2001).

24. Id.


2007, and 100% (i.e., the complete phase-out) in 2010.25 For developing

countries, HCFCs will be frozen in 2016 at 2015 levels and reduced to a

100% phase-out by 2040.26

Notably, the Montreal Protocol’s phase-out schedule does not include a

restriction on consumption. ODS that has been lawfully produced or

imported in a country can continue to be used by consumers until stockpiles

are depleted. In addition, the Protocol allows for the continued consumption

and trade of recycled or “used” ODS that is reclaimed to proper standards

for re-use. As will be discussed later in this paper, the continued use of

lawfully stockpiled and recycled ODS made tracking ODS difficult, and

provided avenues for black market smuggling of newly manufacturing ODS

in developing countries. A similar problem could arise with trade in carbon-

intensive goods and fossil fuels. In spite of these enforcement issues and the

incomplete nature of the phase-out, the Montreal Protocol has already been

successful at decreasing ODS. Groups such as NASA, NOAA, and EPA all

applaud the success of the Montreal Protocol, which has been referred to as

the most successful multilateral environmental agreement to date.27 As a

result of the Protocol, ODS has decreased in the atmosphere, and the ozone

hole is on a path to recovery.28

B. Regulation of ODS in the United States

1. Clean Air Act Regulations

In the U.S., Congress incorporated much of the Montreal Protocol’s

phase-out requirements in Title VI of the Clean Air Act (CAA), 42 U.S.C.

§ 7671 et seq., and the accompanying Stratospheric Ozone Protection

Regulations, 40 C.F.R. Part 82. The “phase-out” codified therein is a near-

complete ban on the production and import of ODS under the time frames

25. THE TRANE COMPANY, CFC FREE: THE CHALLENGE OF CHANGE (1998), available at

http://www.usgbc.org/Docs/LEED_tsac/Energy/TRANE-CFC%20Free.pdf.

26. New Stronger Montreal Protocol Controls Reduce Developing Country HCFC Emissions

about 58 Percent, U.S. ENVTL. PROT. AGENCY, http://www.epa.gov/ozone/intpol/pograph.html (last

updated Aug. 19, 2010).

27. Press Release, Nat’l Aeronautics & Space Admin., Tabataha Thompson, NASA Keeps

Eye on Ozone Layer Amid Montreal Protocol’s Success,, (Sept., 13, 2007), available at

http://www.nasa.gov/home/hqnews/2007/sep/HQ_07192_montreal_protocol.html; Study: Ozone

Layer’s Future Linked Strongly to Changes in Climate, NAT’L OCEANIC AND ATMOSPHERIC ADMIN.

(Feb. 16, 2011), available at http://www.noaanews.noaa.gov/stories2011/20110216_ozone.html; The

Montreal Protocol on Substances that Deplete the Ozone Layer, U.S. ENVTL. PROT. AGENCY,

http://www.epa.gov/ozone/intpol/index.html (last visited Feb. 27, 2013).

28. Montreal Protocol: Frequently Asked Questions and Answers, U.S. ENVTL. PROT.

AGENCY, available at http://www.epa.gov/ozone/downloads/MP20_QandA.pdf (last visited Feb. 27,

2013).


specified in the Montreal Protocol. 29 The most harmful group of ODS

(mostly CFCs) are identified as Class I controlled substances and the

remainder (mostly HCFCs) are identified as Class II controlled substances.

The U.S. agreed to accelerate its phase-out of the most harmful Class II

substances, requiring significant reductions in 2004 and 2010.30 As with the

Montreal Protocol, use of lawfully stockpiled or recycled ODS is legal

under the CAA.31 Lawful production or importation that takes place until

the phase-outs are complete is regulated through a consumption allowance

scheme.32 Companies that had produced ODS prior to the phase-out were

awarded consumption allowances that permitted them to continue to import

or produce ODS at proscribed levels consistent with the ODS phase-out

schedule. As will be discussed further, the allowance scheme also created a

challenge for law enforcement that initially did not fully appreciate which

companies did and did not have these allowances.

2. The United States’ ODS Domestic Tax

To accelerate the removal of ODS from the market and encourage the

creation and use of non-ozone depleting alternatives, Congress also

established an excise tax on ODS. 33 This tax, known as the Ozone

Depleting Chemicals Tax, is designed to complement the command-and-

control-based phase-out in the CAA. 34 The tax is designed to decrease

lawful use of stockpiled or recycled ODS after the phase-out dates. This tax

is imposed on the sale or use35 of ODS by an importer or manufacturer.36

29. UNITED NATIONS ENV’T PROGRAMME, HANDBOOK ON THE MONTREAL PROTOCOL ON

SUBSTANCES THAT DEPLETE THE OZONE LAYER (7th ed. 2006), available at

http://ozone.unep.org/Publications/MP_Handbook/Section_1.1_The_Montreal_Protocol.

30. HCFC Phaseout Schedule, U.S. ENVTL. PROT. AGENCY,

http://www.epa.gov/ozone/title6/phaseout/hcfc.html (last visited Feb. 27, 2013).

31. See 40 C.F.R. § 82.154(g),) (establishing exceptions for reclaimed or recycled Class I and

II substances under the CAA).

32. 42 U.S.C. § 7671c (2012).

33. The tax was included in the Omnibus Budget Reconciliation Act of 1989, Pub. L. No.

101-239, 103 Stat. 2364. See generally Protection of Stratospheric Ozone, 40 C.F.R. pt. 82

(implementing the Montreal Protocol in the U.S.). It went into effect on January 1, 1990.

34. 26 C.F.R. §§ 52.4681, 52.4682 (2012).

35. ODS are considered to be used in the manufacture of a product if it is “[i]ncorporated into

the product . . . [r]eleased in to the atmosphere in the process of manufacturing the product . . . or [is]

[o]therwise used in the manufacture of the product.” 26 C.F.R. § 52.4682-3(d)(2) (2012). Therefore,

substances used in the production process that are not physically incorporated in the final product are

taxed. The predominant production method approach is used if there is no information about the amount

of ODS used in the production process.

36. I.R.C. § 4681(a)(1) (2006).


The excise tax rate is calculated by multiplying three factors: (1) the

base tax rate; (2) the ozone depletion factor of the ODS; 37 and (3) the

pounds of ODS.38 The base tax rate was first set at $1.37 per pound39 and

then increased to $5.35 per pound in 1995, with an annual forty-five cents

increase.40 Currently, the base tax rate is $12.55 per pound.41

Additionally, a floor stock tax is imposed on “any person (other than

the manufacturer or importer of the [ODS]) that holds [ODS] for sale or for

use in manufacturing on January 1 of each year.”42 The excise tax and floor

tax level the playing field for ODS sales. Manufacturers, who might

stockpile ODS that was manufactured prior to the phase-out, must still pay

the excise tax at the rate in place when the ODS is eventually sold.

Likewise, a person who holds ODS for longer than a year has to pay a

yearly floor stock tax on any unsold ODS. In this manner, both ODS

manufacturers and wholesalers pay an equivalent tax on the ODS they hold

or sell.43

3. Excise Tax on Imports into the United States

The tax code addresses the concern of imported ODS by subjecting all

lawful imports of ODS, or of products containing ODS, to the same excise

tax. The import tax is imposed on “the date the [ODS] is first sold or used

by its manufacturer or importer” and is subjected to the same tax rates as

imposed on U.S.-manufactured ODS.44

III. ENFORCEMENT CHALLENGES WITH THE ODS PHASE-OUT AND TAX

A. ODS Phase-Out Schedule and Border Tax Incentivized Smuggling

Prior to the Montreal Protocol phase-out period, lower ODS production

costs in developing countries created an incentive to manufacture ODS in

developing countries for eventual lawful import to the United States and

37. The ozone depletion factor reflects the potency of each individual ODS with values

ranging from 0.1 to 10.0. Ozone Depleting Chemicals, supra note 18.

38. Id.

39. CALLAN & THOMAS, supra note 11, at 243.


41. Ozone-Depleting Chemicals Excise Tax, KPMG,

http://www.kpmg.com/us/en/industry/japanese-practice/pages/2010-issue2-article1.aspx (last visited

Feb. 27, 2013).


43. There are a few tax exemptions. One notable exemption is for use in further manufacture,

i.e., use as a feedstock. Id.

44. Id.


other developed countries. Once the phase-out period began, this disparity

in production costs created an immediate financial incentive for smuggling.

Added to that incentive was the additional ten years that the Montreal

Protocol provided developing countries to continue production of the most

harmful group of ODS before requiring their phase-out. 45 Thus, as the

phase-out commenced, supply of ODS in developed countries tightened and

the economic incentive to illegally import ODS manufactured in developing

countries increased. In the U.S., the profit for illegal ODS imports from

developing countries was further heightened by the ODS tax. As a point of

reference, illegally smuggled ODS through the port of Miami was second

only to cocaine during the early stage of the phase-out in the mid-1990s.46

B. United States Initially Unprepared to Uncover Entities Gaming the ODS

Phase-Out and Tax

When the phase-out commenced, the U.S. was ill-equipped to respond

to ODS smuggling. On the one hand, the U.S. Environmental Protection

Agency (EPA) was well aware of the companies that had consumption

allowances and was careful to check these companies’ reported use of the

allowances to make sure that they were not importing more than their share

of ODS; however, EPA was largely unaware that companies with no

consumption allowances were importing ODS completely outside the

regulatory scheme. U.S. Customs Service (Customs)47

on the other hand

had excellent information on the companies that were importing CFCs, but

did not know about the Montreal Protocol or the CAA phase-out schedule.

Smugglers were able to exploit this communication failure between EPA

and Customs and illegally imported hundreds of thousands of pounds of

ODS, largely without detection.48 This enforcement gap created immense

uncertainty in the marketplace, and threatened to undermine the Protocol.49

However, when law enforcement was alerted to the problem, its forceful

45. See UNITED NATIONS ENV’T PROGRAMME, supra note 29 (Article 5, section 1 entitles

developing countries to a ten-year delay for complying with the control measures set out in Articles 2A

to 2E.).

46. STEPHEN O ANDRESON & K MADHAVA SARMA, PROTECTING THE OZONE LAYER: THE

UNITED NATIONS HISTORY 184 (Lani Sinclair ed., 2002).

47. U.S. Customs Service is now U.S. Customs and Border Protection. About CBP, CBP.GOV,

http://www.cbp.gov/xp/cgov/about (last visited Feb. 27, 2013).

48. Steven P. Solow, The Big Chill: How Federal Agencies Are Working Together to Stop

CFC Smuggling, 12 NAT’L. ENVTL. ENFORCEMENT J. 9, 11 (1997). 49. It was not until a border agent in the Miami area had her car air-conditioning replaced (a

repair involving ODS) that the U.S. Customs started to become generally aware of the Montreal

Protocol and the phase-out of ODS. When the inspector returned to her duty post, she was alarmed at the

quantity of ODS that was being imported into South Florida without restriction. She contacted EPA and

discovered that many of the noted importers were illegal. Id. at 11.


response ultimately curtailed the black market and helped level the playing

field for those businesses that were abiding by the new laws.50

C. Smuggling and Consumer Preferences Prevented Intended Shift to ODS

Alternatives

The ODS smuggling described above and consumer preferences

combined to prevent the ODS tax from having its intended salutary effect.

The ODS tax was designed to incentivize a switch to ODS alternatives

under the belief that the ODS tax along with decreased supply would

increase ODS prices and make ODS alternatives more attractive. In some

consumer markets, however, this switch to alternatives never occurred, in

part because the price point for the alternatives was never reached. For

example, automobile owners were not willing to pay $250 to retrofit their

cars to run their air-conditioning on ozone friendly alternatives when they

could simple fill up with CFC-12 or Freon™51 for a lower price. The price

stayed lower in part because of a ready supply of black market-smuggled

ODS, but also in part because of consumer preferences not to seek retrofits.

By the time the prices did rise, most consumers had already bought new

cars that ran on ozone friendly HFC. Thus, the retrofit solution that

Congress hoped to achieve from the tax never came to full fruition. As the

ODS tax demonstrates, if environmental taxes are poorly designed or

enforced, they may not have the intended effect of reducing pollution and

fostering use of more environmentally friendly products. Further, even if

properly designed, an environmental tax is better suited to reduce

consumption than it is to bolster the market for alternatives. Consumers are

slow to make major changes in buying patterns and, as the case with car air

conditioning shows, they may forego air conditioning or even pay more to

run their cars on ODS than to retrofit and switch to alternatives.

IV. APPLICATION OF ODS DEFICIENCIES TO A CARBON TAX

If a carbon tax is implemented, Congress should anticipate that many of

the same problems with ODS could be repeated. Focusing first on the

potential for illegal imports and exports, our review below suggests that

black market smuggling may occur in certain markets, and will require

training and additional government resources. The carbon-related import

50. Id. at 9.

51. Freon™ is the DuPont brand name for CFCs, HCFCs, and similar compounds.

Chlorofluorocarbons (CFCs), NOAA, http://www.esrl.noaa.gov/gmd/hats/publictn/elkins/cfcs.html (last

visited Feb. 27, 2013).


with the profit margin most comparable to ODS is carbon-intensive goods,

followed by fossil fuels.

A. Smuggling of Carbon Intensive Goods

Carbon-intensive goods—a category of imports likely included under a

carbon tax—may be relatively easy to smuggle in ways consistent with

ODS smuggling. Carbon intensive goods include iron, steel, steel mill

products, aluminum, cement, glass, pulp, paper, chemicals, industrial

ceramics, and could include other products manufactured by processes

emitting significant quantities of GHGs.52

In the context of ODS smuggling, the failure to train law enforcement

on the new regulatory scheme allowed smugglers to import ODS without

any significant subterfuge. It was not until law enforcement became aware

of both the regulatory scheme and the smuggling that smugglers needed

more creative ways to illegally import ODS. One of the more common

schemes was to import virgin ODS misrepresented as recycled ODS (which

were legal).53 This tactic could be used for carbon-intensive goods. Under

the CAA, “used” ODS were exempt from import restrictions and unlimited

quantities could be imported into the U.S. for reclamation and eventual

reuse.54 Carbon-intensive goods, such as steel, aluminum, glass, and oil, are

commonly recycled, and shipping manifests could be falsified based on

claims of recycled goods. Document falsification is neither labor- nor

resource-intensive, and importers may be inclined to falsify their documents

for only a small profit margin. As was the case with ODS, customs officials

without in-depth training will have no way of determining whether a good

is virgin or reclaimed and knowledge of such facts would require

investigation in the exporting country, 55 an intensive step infrequently

undertaken.

One of the largest cases of ODS fraud occurred with the smuggling of a

fire-fighting chemical known as Halon 1301. In 1997, China was the largest

country of origin for U.S. imports of Halon 1301.56 Virtually all the imports

52. America’s Energy Security Trust Fund Act of 2009, H.R. 1337, 111th Cong.

§ 4694(a)(5)(A), (6) (2009).

53. Lary Cook Larson, The Art of Smuggling: What Customs Officers Need to Know, in U.N.

ENV’T PROGRAMME, ILLEGAL TRADE IN OZONE DEPLETING SUBSTANCES: IS THERE A HOLE IN THE

MONTREAL PROTOCOL 16 (2001).

54. See 40 C.F.R. § 82.154(g), (creating exceptions for reclaimed or recycled Class I and II

substances under the CAA). 55. Id.

56. Environment—China: Calls to Block ‘Illegal’ Chinese Trade in CFCs, Inter Press Service,

(Nov. 12, 1998), http://www.ipsnews.net/1998/11/environment-china-calls-to-block-illegal-chinese-

trade-in-cfcs.


of Halon 1301 originating in China during 1997 were labeled as recycled.57

However, suspicions quickly arose—China had only one Halon 1301

reclamation plant, which was not capable of producing the imported

quantity of halons.58 As the real story surfaced, it became clear that virgin

halons were labeled as recycled and mixed with shipments of recycled

halons. Numerous export companies were used to divide up shipments and

avoid attention, a plan which succeeded for roughly a year.59

Shipments of carbon intensive goods could also be mislabeled with a

false country of origin. Under such a scenario, the falsely listed country of

origin would be a country with an equivalent carbon export duty, but the

real country of origin would be one without any tax or equivalent restriction

on carbon intensive goods. This is comparable to ODS smuggling, where

importers used a false country of origin to import large quantities of ODS.

For example, also in the case of Halon 1301, seventy tons were allegedly

imported in the U.S. from Italy, despite Italy’s prohibition against halon

exports to developed countries.60

In addition to mislabeling, other smuggling methods could be utilized

for carbon intensive goods. ODS were smuggled through transshipment and

triangulation,61 two types of misrepresentation. Transshipment occurs when

a ship stops in an intermediate country—while in transit to a named

country—and ODS are switched out and sold on the black market.62 The

empty containers continue on to the named country and the ODS stay in the

transit country for sale on the black market. For example, CFCs from

Northern Europe were exported to South America on ships that stopped in

Spain. 63 The ODS never made it to South America, and the importing

company in South America did not exist. 64 In triangulation, ODS are

shipped to another country, disguised, and sent to a developed country

where they are illegally imported.65 In the case of ODS, European countries

would send the ODS to a European outpost under colonial rule—in the

Caribbean, Canary Islands, or French Pacific—where the ODS would be

disguised and returned to Europe. 66 Other known methods of ODS

57. Id.

58. Id. 59. Julian Newman, Illegal Trade in Ozone-Depleting Substances, in STEPHEN O. ANDERSEN

& K. MADHAVA SARMA, U.N. ENV’T PROGRAMME, PROTECTING THE OZONE LAYER: THE UNITED

NATIONS HISTORY 184 (Lani Sinclair ed., 2002).

60. Id.

61. Larson, supra note 53, at 17. 62. Id.

63. Newman, supra note 59.

64. Id.

65. Larson, supra note 53, at 51.

66. Newman, supra note 59.


smuggling included shipping ODS cylinders as “returned merchandise,”67

and falsely labeling full cylinders as empty containers. All of these methods

were used to smuggle ODS into the U.S. and could be repeated again with

carbon intensive goods.

B. Smuggling of Fossil Fuels

In addition to the smuggling of carbon intensive goods, a carbon tax

may also lead to the smuggling of fossil fuels. The chart below shows the

price increase for gasoline, coal and natural gas that would result for a

domestic carbon tax comparable to Australia’s.

Short Term Energy Price Impacts of $23.81 / tonne CO2 tax

Unit Price per Unit

(in dollars)

Tax per

Unit (in

dollars)

Price

Increase (%)

Gasoline Gal 3.92 0.21 5.72

Coal MMBtu 4.87 2.47 102.87

Natural Gas MMBtu 4.91 1.19 32.00

We examine the market for each of these fuels and the potential for

smuggling in more detail below.

1. Petroleum

A look at the quantity of fossil fuel imports shows that refined

petroleum is the fossil fuel most likely to be smuggled. The United States

currently imports about 3.5 million barrels per day of refined petroleum.68

Such a quantity creates numerous smuggling opportunities, 69 including

bunker fuels in shipping. A price increase will drive ships to fuel or refuel

in countries without a carbon tax.70 Fuel use is harder to track on ships,

making a surcharge more difficult to impose.71

Fuel smuggling is already an issue on a small scale. Chartered ships are

buying more fuel than needed and doctoring consumption records to show

67. Larson, supra note 53, at 17.

68. Gilbert Metcalf & David Weisbach, The Design of a Carbon Tax, 33 HARV. ENVTL. L.

REV. 499, 527 (2009).

69. Id. at 529.

70. Id.

71. Id.


that all the fuel is used when it is not.72 Currently, shipping companies use

this illegal fuel themselves, but if the fuel price rise from a carbon tax is

large enough, they will have the incentive to sell it on the black market

instead.

A large smuggling potential for fossil fuels also lies with aviation fuels,

particularly in regard to international flights. Fuel for domestic flights is

charged at the refinery, but it is impossible to know if the fuel will be used

domestically or internationally. 73 The International Civil Aviation

Organization (ICAO) prohibits taxing fuel for international flights.74 If the

United States violates this treaty or renegotiates it to allow the carbon tax, a

smuggling and leakage problem will arise. Whenever possible, airplanes

will simply fuel or refuel in countries without a carbon tax. Fuel left over

from international flights could be used for domestic flights.

A similar smuggling problem could arise on an individual level.

Individuals could drive across the border to Canada or Mexico and fill their

tanks with gas to avoid paying a carbon tax. This is comparable to

Canadians driving to the U.S. to purchase cigarettes to avoid Canada’s

steep cigarette tax. Although this smuggling is at a very small scale, and

will have a minimal impact on CO2 emissions, it must still be considered.

The scale of this smuggling problem may never be large enough to cause

the carbon tax to fail; however, it will prevent a level playing field for

domestic supply.

2. Coal Smuggling

Although coal will have over a ninety percent price increase from a

carbon tax, this profit margin may not be enough of an incentive to engage

in a more labor and resource-intensive means of smuggling. For example, it

would be difficult to hide enough coal in the hull of a ship or the back of a

truck to make a profit. Smuggling of enough coal to make a profit would

require the use of other techniques, such as smuggling by means of

misrepresentation and falsified documents. For example, if a shipment of

coal could be misrepresented as another product, the incentive to smuggle

may be strong enough. Additionally, the total U.S. recoverable coal

72. See, e.g., Joint Factual Statement at 3, United States. v. Mislang, 2:11-cr-00262-HGB-

ALC (E.D. La. 2011), EFC No. 15 (providing an example of an instance in which a commercial cargo

ship master admitted to altering reports on weather conditions in order to claim maximum fuel

consumption regardless of whether the fuel was actually used).

73. Metcalf & Weisbach, supra note 68, at 529.

74. Id. at 528–29 (citing Int’l Civil Aviation Org. [ICAO], Convention on International Civil

Aviation, art. 24, Dec. 7, 1944, T.I.A.S. No. 1591, 15 U.N.T.S. 295 (9th ed., ICAO Doc. 7300/9, 2006)).


reserves are 17,937 million short tons,75 and thus the supply shortage that

was observed with ODS will not be present to increase prices above and

beyond the increase from the tax.

3. Emissions Increases from U.S. Coal Exports

The vast supply of U.S. coal could give rise to increased GHG

emissions as coal is exported to and combusted in countries without a

carbon tax or equivalent carbon emission reduction program. This problem

is more than theoretical as there is already a coal export terminal planned

for Washington’s Port of Longview.76 If approved, this terminal is expected

to export over five million tons of coal annually.77 Coal companies are also

looking at two Oregon ports—the Port of Morrow and the Port of St.

Helens—for additional coal exports.78 Development of such coal export

terminals will increase the quantity of coal exported, and given the

geography of these ports, it is likely to be exported to China and other

Asian countries without a tax or otherwise imposed price on carbon.

Further, reverse smuggling could occur through these ports. Exporters

may falsify export documents showing that the coal was exported and then

could turn around and sell the coal domestically, at a hefty profit.

4. Natural Gas

Even though most domestically used natural gas is produced in the

U.S., there are forty-nine pipeline locations and eight liquefied natural gas

facilities where natural gas is imported or exported.79 This number could

increase substantially as production increases due to hydraulic fracturing.

However, given the nature of these facilities and their tight regulatory

oversight, smuggling seems unlikely in comparison to other fossil fuels.

Nonetheless, as natural gas exports increase, so does the potential to divert

75. U.S. ENERGY INFO. ADMIN., RECOVERABLE COAL RESERVES AND AVERAGE RECOVERY

PERCENTAGE AT PRODUCING MINES BY STATE (2011), available at

http://www.eia.gov/coal/annual/pdf/table14.pdf.

76. Progressive Railroading, Millennium Bulk Terminals to Build Export Coal Facility at

Washington Port (Feb. 27, 2012), http://www.progressiverailroading.com/class_is/article/Millennium-

Bulk-Terminals-to-build-export-coal-facility-at-Washington-port--30059#.

77. Felicity Barringer, Another Setback for a West Coast Coal Port, N.Y. TIMES (Dec. 30,

2010), http://green.blogs.nytimes.com/2010/12/30/another-setback-for-a-west-coast-coal-port.

78. Companies Sizing Up Oregon Ports for Coal Exports, LONGSHORE & SHIPPING NEWS

(June 20, 2011), http://www.longshoreshippingnews.com/2011/06/companies-sizing-up-oregon-ports-

for-coal-exports.

79. U.S. Energy Info. Admin., About U.S. Natural Gas Pipelines, EIA.GOV,

http://www.eia.gov/pub/oil_gas/natural_gas/analysis_publications/ngpipeline/index.html (last visited

Feb. 17, 2013).


natural gas—intended for export—back into the domestic market to capture

a higher price. Smuggling is a possibility even though the natural gas

market is narrow and tightly regulated.80

V. APPLYING LESSONS LEARNED TO A CARBON TAX

A. Training and Resources for Administering a Carbon Tax and

Corresponding Border Tax

In the U.S., one of the major problems with the ODS tax was

enforcement. To help reduce smuggling, effective enforcement systems

must be in place. Customs and EPA staff, as well as other relevant agencies,

should be well educated about the means of smuggling and the types of

fossil fuels and carbon intensive commodities that might be smuggled.

Particularly, they should be trained to recognize fraudulent documents and

to distinguish between virgin and recycled fuels and goods. Money for

additional investigators and training should be included in any carbon tax

legislation. Without adequate enforcement, smuggling will rise alongside

the increasing carbon tax and could threaten the effectiveness of the tax.

B. Imposing a Border Tax on Imports

Border adjustments are critical for a carbon tax to be effective. A

border tax ensures that imports from countries without a comparable

emissions price are not given a comparative advantage.81 It also prevents

leakage. Specifically, leakage can occur when there is a shift of energy

production to countries without a price on emissions, where fossil fuels and

energy intensive goods can thereby be extracted and/or manufactured at a

lower cost and then imported back into the countries such as the U.S. that

have imposed a price on emissions.82 The draw of industry to countries with

80. See, e.g., Laurel Brubaker Calkins & Carlos Manuel Rodriguez, Pemex Lawsuit Targets

U.S. Firms in Gas Smuggling Ring, Bloomberg.com (June 7, 2010),

http://www.bloomberg.com/news/2010-06-07/pemex-lawsuit-targets-basf-murphy-energy-over-natural-

gas-smuggling-ring.html (reporting a lawsuit against U.S. companies for allegedly smuggling natural

gas into the country).

81. According to a recent study by the MIT Joint Program on the Science and Policy of

Global Change, a carbon price (which could be imposed as a border tax) is a better means of controlling

leakage and reducing GHG emissions abroad compared to a border adjustment requiring importers to

purchase emissions allowances. A carbon price of only one-tenth of a cent would achieve GHG

reductions comparable to this border adjustment. NIVEN WINCHESTER, SERGEY PALTSEV & JOHN

REILLY, WILL BORDER CARBON ADJUSTMENTS WORK? 15 (2010).

82. Bernd G. Janzen, International Trade Law and the “Carbon Leakage” Problem: Are

Unilateral U.S. Import Restrictions the Solution?, 8 SUSTAINABLE DEV. L. & POL’Y 22, 22 (2008).


lower manufacturing costs is an issue of serious concern to U.S.

manufacturers and can only be addressed through an imposition of a border

tax.83

C. Tax on Exports

In addition, serious consideration must be given to a tax on exports. If

no such tax is imposed, nothing would prevent fossil fuels such as coal

from being extracted in the U.S. and then exported and combusted in a

country without carbon regulation, and carbon intensive goods could also

be exported to these countries for consumption. As mentioned, this is an

issue of concern for the Washington State terminal, as it may significantly

open this market in Asia. Taxing such exports could disadvantage U.S.

businesses in the global marketplace, but the failure to do so might

undermine the tax’s intended purpose of reducing carbon emissions.

D. Compliance with the WTO Border Adjustments

The imposition of a border tax raises the question of how to design a

tax that is: (1) harmonized with other countries’ efforts to regulate GHG

emissions 84 —regardless of whether other countries use a tax or other

mechanism to reduce carbon emissions; and (2) takes into account imports

from countries that do not regulate such emissions. In order to be

enforceable, border adjustments must comply with global trade law under

the World Trade Organization (WTO).85 Border adjustments implicate two

notions central to the WTO:

(1) the “national treatment” principle of Article III of the General

Agreement on Tariffs and Trade (“GATT”), which, in essence,

obligates WTO Members to ensure that imported goods are

subjected to regulatory and tax treatment no more burdensome than

the treatment to which the same goods, produced domestically, are

subjected; and

(2) the GATT Article XX defense, which allows WTO Members to

take discriminatory action against imports where “necessary to


84. Although this paper focuses on other economic hurdles to harmonization, it is worth

mentioning that offsets (particularly, projects conducted in other countries) pose another hurdle to

harmonization.

85. See Janzen, supra note 82, at 22 (arguing that “unilaterally imposed” restrictions are

inconsistent with a “globally coordinated approach” to the reduction of GHGs).


protect human, animal or plant life or health”—but only where such

action does not constitute “arbitrary or unjustifiable discrimination”

or represent a disguised trade restriction.86

So long as the border adjustment for imported goods applies a tax of equal

value to imports as to like domestic goods, it is consistent with the national

treatment principle. A joint UNEP and WTO report, Trade and Climate

Change, discusses the implication of the second notion quoted above:

The general approach under WTO rules has been to acknowledge

that some degree of trade restriction may be necessary to achieve

certain policy objectives, as long as a number of carefully crafted

conditions are respected. WTO case law has confirmed that WTO

rules do not trump environmental requirements. If, for instance, a

border measure related to climate change was found to be

inconsistent with one of the core provisions of the GATT,

justification might nonetheless be sought under the general

exceptions to the GATT (i.e. Article XX) . . . .87

Although this statement does not authoritatively state that justification will

be granted on Article XX grounds, at a minimum it provides the pathway

for a strong argument on those grounds.

No climate change-related policies have been disputed through the

WTO yet. 88 However, a tax on imports could be viewed as a trade

restriction and therefore form the basis of a claim from a WTO member that

the U.S. is discriminating against their exports.89 If such a claim were valid,

an environmental tax may not fit into the narrow statutory definition of the

Article XX defense.90 This determination rests with the WTO.91 The WTO

is split over whether trade regulation based on processes and production

methods (PPMs)—as opposed to physical attributes—is permitted. 92 A

WTO case, the Shrimp-Turtle Case, involved a PPMs regulation, yet the

court did not resolve whether PPMs are “arbitrary or unjustifiable

discrimination” under Article XX.93 Rather, the court sidestepped the issue

86. Id. at 24 (emphasis in original).

87. LUDIVINE TAMIOTTI ET AL., U.N. ENV’T PROGRAMME AND THE WORLD TRADE ORG.,

TRADE AND CLIMATE CHANGE xix (2009).

88. Id.

89. Janzen, supra note 82, at 24.

90. Id.

91. Id.

92. Id.

93. Id.


and stated that import restrictions are not “arbitrary or unjustifiable

discrimination” if the regulating country made a “serious, good faith effort”

to negotiate an international agreement that treats impacted parties

equally.94 The court distinguished between the obligation to negotiate with

the countries involved in the import and export of the good and the

obligation to reach an agreement finding that negotiation is all that is

required.95 This court decision will make the United States’ meaningful

participation in climate talks critical in upholding the U.S. tax on imports of

carbon intensive goods and fossil fuels under WTO rulings.

E. Flexibility in Tax Rates—The Pigovian Model

In addition to enforcement issues, another significant challenge will be

determining how to set a tax rate that will pay for the costs (i.e. damage to

human health and the environment) of pollution, and thereby decrease

emissions to the socially optimal level. In the ideal world, a Pigovian tax

satisfies this goal. Named after English economist Arthur Cecil Pigou (who

presented the concept in his seminal work, The Economics of Welfare) a

Pigovian tax is a tax used to correct a negative externality.96 Its tax rate is

equal to the social marginal damage from an additional unit of emissions.97

The rate schedule is essentially the marginal damage curve: the tax changes

with each unit of emissions.98 Economists typically present this scenario by

using a curve showing the marginal benefit of emission reductions, which is

basically equivalent to the marginal damage curve.99 Using this convention,

the tax rate schedule is the marginal benefit curve.100 If the tax has to be set

at a fixed rate—as commonly done in legislation—it should be set where

the marginal cost of abatement equals the marginal benefit curve.101 Figure

1 illustrates this efficient tax rate.

94. Id.

95. India etc versus US: ‘Shrimp-Turtle,’ WORLD TRADE ORG.,

http://www.wto.org/english/tratop_e/envir_e/edis08_e.htm (last visited Feb. 27, 2013).

96. Robert H. Frank, Heads, You Win. Tails, You Win, Too, N.Y. TIMES (Jan. 5, 2013),

http://www.nytimes.com/2013/01/06/business/pigovian-taxes-may-offer-economic-hope.html?_r=0.


98. Id.

99. Id.

100. Id.

101. Id.


Figure 1102

The Pigovian economic model assumes perfect knowledge, a nearly

impossible feat. To set a tax rate at the optimal rate, the government must

estimate the marginal cost and the marginal benefit of abatement curve.103

In the long term, uncertainty in these areas is virtually limitless: the

government must know the science and related effects of climate change, be

able to predict future economic and technical developments, and must

discount all values to the present.104 In the short term, however, economists

can make reasonable estimates about an initial carbon tax rate that will

maximize investment in energy efficiency and renewable energy at the least

cost to the economy. This fixed rate for a finite period will allow businesses

to properly plan for future investment and will provide predictability for

future growth.

As the country gains experience with a carbon tax, adjustments will

undoubtedly be needed to equate the marginal cost of abatement with the

marginal benefit. Depending on the circumstances, these adjustments could

require lowering the rate to alleviate unforeseen economic burdens or

increasing the rate to stimulate greater efficiencies needed to avoid the

102. In the graph, abatement is shown on the x-axis (increasing to 100% abatement as you

move right from the origin) and price is shown on the y-axis. The marginal cost of abatement curve

equals the marginal benefit of abatement curve at E, which has a corresponding tax rate of P*. A*

represents the socially optimal level of abatement, a figure correlated to the socially optimal level of

emissions.


104. Id.


more catastrophic consequences of climate change. Therefore, the tax rate

should be reevaluated and adjusted at regular intervals to ensure economic

and environmental targets are being achieved. Finally, it must be

remembered that while a carbon tax rate may be based on a desired

emissions target (such as an eighty percent reduction of 2005 levels by

2050), it is merely a target, not a mandatory limit. If the target is not

reached, other means—such as renewable portfolio standards (RPS) and

command-and-control regulations—must still be considered.

F. Other Incentives Needed to Cause a Switch to Alternatives

As the Pigovian tax discussion demonstrates, the carbon tax is unlikely

to reduce CO2 emissions to the exact optimal level, particularly as it

pertains to stimulating investment in alternative energy sources. Congress

should be careful to understand the alternative energy market and RPS, and

to anticipate events other than price points that might affect consumer

choices. For example, solar panels are not widely in use. There are

problems with grid compatibility, and consumers may be uninformed about

potential tax credits or unwilling or unable to pay upfront capital costs.

These barriers could prevent their widespread use even as the cost of their

installation declines. In short, a carbon tax cannot be all things to all people,

and while it may prove helpful in switching to alternative fuel sources,

stimulating energy efficiency may prove to be a more realistic goal.

CONCLUSION

Today a carbon tax is a simple, easy to implement, market-based means

of reducing GHG emissions. Although smuggling can be problematic, the

lessons learned from the ODS tax can be our guide to implement an

effective enforcement system. Carbon tax legislation with strong

enforcement provisions could be the most equitable way to reduce carbon

emissions. Congress should be careful to understand the tax’s limitations in

that it will be more successful in stimulating energy efficiency than in

changing consumer preferences or making alternative energy sources on par

with fossil fuels. If these limitations are properly understood and factored

into any ensuing legislation, a carbon tax can be the United States’ first best

step at solving the greatest environmental challenge of our time.

HOW TEXAS OVERCAME CALIFORNIA AS A RENEWABLE

STATE: A LOOK AT THE TEXAN RENEWABLE ENERGY

SUCCESS

Maria C. Faconti*

TABLE OF CONTENTS

Introduction ............................................................................................... 411

I. Renewable Portfolio Standards (RPS) .................................................. 415

A. California RPS Goals ...................................................................... 416 B. Texas RPS Goals ............................................................................ 419

II. The Texas Success .............................................................................. 421

A. Single Administrator ....................................................................... 421 B. Transmission Success Through Use of Competitive Renewable

Energy Zones .................................................................................. 422 C. Strong Punishments and the Texas Trading Scheme—Renewable

Energy Certificate Trading Program ............................................... 424

III. What California Can Learn ................................................................ 426

A. Agencies With Overlapping Authority ........................................... 427 B. The Need For Adequate Enforcement Mechanisms ....................... 429 C. The Problem With Unviable Projects and Inadequate Transmission

.............................................................................................................. 431

Conclusion ................................................................................................ 432

INTRODUCTION

The United States relies heavily on the use of fossil fuels to supply

electricity to the people within the country, with eighty-four percent of

* Ms. Faconti obtained her B.A. at the University of California, Los Angeles, her JD at the

William & Mary School of Law, and her LLM at the University of Texas School of Law, Austin. She

wrote this article while obtaining her LLM and any opinions expressed are hers alone and not those of

the Public Utility Commission of Texas or any of its employees.


energy produced in 2008 coming from this source.1 The United States has a

long history with fossil fuels; “[s]ince 1885, the United States has primarily

relied upon fossil fuels (coal, petroleum, and natural gas) as energy sources

for generating electricity, powering our country through an industrial

revolution, multiple wars, and the 1990s technology boom.”2 Though the

country, like all other countries, has relied on fossil fuels in the past, this

trend will need to change in order for the U.S. to sustainably grow into the

future.

The burning of fossil fuels has increasingly become a point of debate

within the U.S. and globally as the negative environmental impacts of this

process are analyzed 3 and as countries are pushing for a reduction in

greenhouse gas emissions. “In 2008, 85.1% of all U.S. greenhouse gas

emissions were carbon dioxide emissions. Of this 85.1%, 80% of America’s

carbon dioxide emissions (weighted for global warming potential) were

from fossil fuel combustion.”4 This carbon dioxide emitted from fossil fuel-

burning power plants has caused an increase in the acidity of our oceans

due to the ocean waters absorbing approximately fifty percent of the carbon

dioxide released from these plants. 5 This increased acidity, has harmed

fisheries and coral reefs, causing not only defects in these animals but also

dead zones within the oceans.6 In addition to increasing the acidity of the

oceans, fossil fuel combustion has caused chemical bioaccumulation in the

fish population, which can ultimately harm humans due to this fish

consumption.7

With the negative impacts of fossil fuels being increasingly proven,

there has been a push to generate energy in a more environmentally friendly

manner, primarily through the use of carbon neutral energy sources. 8

1. Joshua J. Houser, Supplying the Light at the End of the Tunnel: Using State-Level

Experience to Develop Federal-Level Renewable Energy Policy, 19 SE. ENVTL. L.J. 153, 154 (2010). In

2005, classic renewable sources, like biomass, solar, wind, and geothermal, only accounted for 1.5% of

net electricity generation within the United States, with the remaining energy coming from coal, natural

gas, petroleum, hydroelectric, and nuclear power. Robin J. Lunt, Recharging U.S. Energy Policy:

Advocating for a National Renewable Portfolio Standard, 25 UCLA J. ENVTL. L. & POL’Y 371, 376

(2007).

2. Houser, supra note 1, at 154.

3. “Climate change has been described as ‘perhaps one of the most daunting of the global

threats currently facing mankind.’” Lunt, supra note 1, at 374.

4. Hannah Wiseman et al., Formulating a Law of Sustainable Energy: The Renewables

Component, 28 PACE ENVTL. L. REV. 827, 841, n.63 (2011).

5. Houser, supra note 1, at 160–61.

6. Id. at 161.

7. Id.

8. Houser, supra note 1, at 161 (“[R]enewable energy sources, other than biomass and

‘open-loop’ geothermal systems, produce no emissions.”). Scientists fear that atmospheric carbon

dioxide levels will increase to above 700 ppm by 2100 (currently atmospheric carbon levels are at 380

ppm), which will increase the temperature by at least eight degrees Fahrenheit. Nicholas G. Morrow,

2013] A Look at Texan Renewable Energy Sources 413

Renewable energy sources can be the best option for a sustainable, carbon

neutral source of energy. Renewable energy, by emitting little to no

emissions:

do[es] not contribute to the multitude of health problems

associated with fossil fuel emissions. By not contributing to

disease, renewable energy lowers ‘health treatment costs [and]

health insurance rates’ and increases productivity by

decreasing the number of sick days taken by American

workers.”9

Additionally, renewable energy sources do not diminish with use, making

them a more stable source for our electricity supply.10 These sources are

also not subject to foreign manipulation or embargo in the same way oil and

gas are because they are domestically produced.11 Unlike non-renewable

sources, which are diminished through use and ultimately not sustainable

for future generations, renewable sources, barring natural changes, will

continue providing future generations the ability to meet their own needs.12

The push for renewable energy is becoming global. For example, the

European Union, Australia, and more than twenty-six U.S. states have

implemented laws similar to renewable portfolio standards in order to

reduce their reliance on fossil fuels and decrease greenhouse gas emissions

and pollution, hopefully adding to the quality of life of their citizens.13

Within the United States, both Texas and California have pushed for

renewable energy use within their borders. When many people think about

the greenest state in the nation, Texas generally does not make the top of

the list. Texas is known for big oil and gas, excessive carbon dioxide

emissions (being one of the world’s worst carbon polluters), and is

generally thought of as a state that is not environmentally friendly; Texas

holds the title of being both the leader in carbon emissions as well as energy

consumption.14 Texas is responsible for approximately eleven percent of the

total carbon dioxide emissions within the United States. If Texas were a

Federal Regulation of Greenhouse Gas Emissions A Practical Certainty: How Will the Texas Energy

Industry Survive—Maybe Thrive?, 17 TEX. WESLEYAN L. REV. 237, 239 (2011).

9. Houser, supra note 1, at 162–63.

10. Lunt, supra note 1, at 378.

11. Id.

12. Wiseman et al., supra note 4, at 834–36. “Each short ton of coal, 3.44 barrels of oil, or

19,428 cubic feet of natural gas burned represents one less unit of energy available to future

generations.” Id. at 836–37.


14. Morrow, supra note 8, at 247.


country it would rank as the world’s eighth largest carbon dioxide emitter,

falling between the United Kingdom and Canada.15 In contrast to Texas,

California is known for being filled with green-loving, recycling, granola-

eating, planet-huggers.16 Additionally, the state of California has a history

of leading the nation in nontraditional energy approaches. 17 What is

surprising is that Texas is beating California in the renewable energy arena.

Therefore, the assumptions people make about these two states will soon

need to change, as Texas is becoming a leader in renewable energy, being

the nation’s leading wind energy producer, 18 meanwhile, California

consistently fails to meet its renewable portfolio standard (RPS) goals,

adding very little new renewable capacity.19

This paper will look at why Texas, and not California, has been so

successful in achieving their renewable portfolio standards, even though

people traditionally associate California with renewable energy success.

Part I will look at the background and rationales for a state RPS.

Additionally, Part I will analyze the RPS policies in both California and

Texas. Part II will look at the success Texas has had, primarily in wind

energy. It will examine how Texas, traditionally thought of as a fossil fuel

state, has been able to exceed its RPS standards.20 This section will focus on

the main reasons for the success in Texas: the state’s use of a single

administrator of the program; the use of Competitive Renewable Energy

Zones that allowed for success in transmission; and the strong punishment

system in place for non-compliance coupled with the credit trading system

provides compliance incentives. Finally, Part III will focus on what

California can learn from the RPS system in Texas. This section

recommends ways the state can improve their RPS program, primarily

through reducing transaction costs associated with multi-agency

involvement, the need for a stronger enforcement mechanism to reduce the

15. Id. at 247–48.

16. Houser, supra note 1, at 163 (California has been deemed by many as being “possibly the

most progressive state in terms of environmental policy-making, [having] employed various incentives

and mandates to facilitate renewable energy development.”).

17. Kevin S. Golden, Senate Bill 1078: The Renewable Portfolio Standard—California

Asserts its Renewable Energy Leadership, 30 ECOLOGY L. Q. 693, 697 (2003).

18. Morrow, supra note 8, at 257. Texas is not only the nation’s leader in wind power

capacity, but is also a global leader. Few countries, including the United States, have a higher

cumulative wind power capacity than Texas. Kathryn B. Daniel, Winds of Change: Competitive

Renewable Energy Zones and the Emerging Regulatory Structure of Texas Wind Energy, 42 TEX. TECH.

L. REV. 157, 159 (2009).

19. Deborah Behles, Why California Failed to Meet Its RPS Target, 17 HASTINGS W.-NW. J.

ENVTL. L. & POL’Y 163, 165 (2011). In 2006, Texas exceeded the installed wind capacity of California.

Daniel, supra note 18, at 159.

20. Morrow, supra note 8, at 259 (In Texas, wind energy generation has allowed the State to

surpass its renewable energy goals as they are outlined in the State’s RPS.).


ability of delaying compliance, and preventing unviable projects from being

favored while also solving the transmission problem within the state.

Overall, this paper will conclude that California has a lot to work on if it

wants to have a successful RPS and be a renewable competitor in the

national market.

I. RENEWABLE PORTFOLIO STANDARDS (RPS)

Renewable portfolio standards are a way for states and countries to

diversify their electricity portfolio. By acquiring some of their electricity

from sources other than fossil fuels a state or country may become more

self-sufficient and less energy reliant on depleting non-renewable resources.

Many states, including Texas and California have realized the impacts of

climate change and the U.S. reliance on foreign oil and have begun

developing and implementing plans to curb consumption of fossil fuels and

switch to more renewable energy sources like solar and wind which do not

diminish with use and can be somewhat stable and reliable over the long-

term. 21 States with renewable standards are concerned with the

environmental impacts of fossil fuel use. These concerns include the air

pollution produced by fuel-burning power plants, which negatively affect

human health, increase greenhouse gas concentrations, and form smog due

to chemical reactions in the air.22 Texas and California are part of a growing

trend of states adopting RPS in order to diversify their electric generation

schemes in order to rely less heavily on non-renewable energy sources like

natural gas and coal.23

At the most basic level, an RPS is a statement by the state (or country)

mandating that utilities acquire a certain percentage of the state’s energy

production through less-polluting, renewable, resources.24 “A RPS ‘requires

electricity retailers to provide a minimum percentage of quantity [or fixed

amount] of their electricity supplies from [qualifying] renewable energy

sources.’”25 A state’s RPS is designed to carve out a piece of the market for

renewable energy, allowing it to enter the mainstream by removing market

21. Behles, supra note 19, at 164 (Many efforts to reduce carbon dioxide emissions have been

focused on the electric industry, which is responsible for forty percent of the carbon dioxide emissions

within the United States.); Houser, supra note 1, at 160 (Renewable energy generally refers to energy,

which is produced by a resource that is naturally replaced.).


23. Behles, supra note 19, at 164.

24. Id. (“[T]he majority of states have now enacted a ‘renewable portfolio standard’ (“RPS”),

which mandates electric utilities to obtain a percentage of their power from renewable sources.”).

25. Houser, supra note 1, at 154. Other definitions of renewable portfolio standards consist of

“government regulations that ‘require that a certain percentage of a utility’s overall or new generating

capacity or energy sales must be derived from renewable resources.’” Lunt, supra note 1, at 381.


barriers, while also creating a cost-effective and efficient method for

introducing this energy type into the market.26

RPSs differ in each jurisdiction; however, there are some consistencies.

Each RPS must specify what percentage or amount of electricity must be

generated from qualifying renewable sources, as well as a specific time

frame for compliance. Most states have opted for a standard that gradually

increases over time through small increments to ultimately arrive at a final

goal by a designated year.27 Additionally, each state can have different

qualifying facilities that will meet their RPS requirements, though generally

renewable energy sources include wind, solar, geothermal, hydropower, and

biomass.28 An RPS must also identify who must meet the obligation and if

the standard allows for a renewable energy credit trading system in order to

help utilities meet their obligations. 29 At a minimum, an RPS must be

accompanied by renewable energy certificates in order to help verify and

track compliance. 30 Overall, a successful RPS ensures that renewable

targets will be met in a way that is least costly both in terms of actual costs

and administrative costs.31 Though the U.S. federal government has not

adopted a national RPS, the push for renewable energy is not only

occurring on the state level but is also occurring on the federal level as seen

through the federal government’s promotion of the development of

renewable energy sources through the American Recovery and

Reinvestment Act of 2009. The American Recovery and Reinvestment Act

of 2009 extended the pre-existing tax credits for renewable energy

production and is often utilized by developers in many states, including

Texas and California. 32

A. California RPS Goals

California, like some other states, adopted RPS standards not only to

promote a renewable energy industry, but also to stabilize the state’s energy

26. Golden, supra note 17, at 700.



29. Lunt, supra note 1, at 382. “RPSs vary in the details, but they generally include a

renewable energy credit (REC) trading program that allows electric utilities to choose the most efficient

way to meet the PRS requirement—by generating electricity from renewable sources, purchasing

renewable energy on the wholesale market, or by purchasing RECs separate from the associated

electricity.” Lunt, supra note 1, at 382–83.

30. Ole Langniss & Ryan Wiser, The Renewables Portfolio Standard in Texas: An Early

Assessment, 31 ENERGY POL’Y 527, 527 (2003).

31. Id.

32. Houser, supra note 1, at 155. The American Recovery and Reinvestment Act also

provides funding for transmission development and renewable energy projects. Id.


market. 33 California has a long history of promoting renewable energy

development, adding the requirement to the State’s Public Utilities Code in

1991, requiring that environmental values be incorporated into all regulated

utilities’ energy procurement processes and requiring a portion of the state’s

energy to come from renewable sources.34 In 1996, the state went further,

creating the Renewable Energy Fund and setting aside 540 million dollars

in order to provide incentives and subsidies for renewable energy providers,

producers, and purchasers.35 California then adopted a very aggressive RPS

standard, which it strengthened in 2008, showing the state’s commitment to

renewable energy.36 Under the California system, the state allows electric

retailers to satisfy their RPS obligations through use of renewable

resources, including small hydro, wind, biomass, and solar facilities.37 The

state, in its RPS, has prioritized renewable energy as well as energy

efficiency over the generation of fossil fuels stating that the goals of the

RPS “includ[e] promoting stable electricity prices, protection of public

health, improvement of environmental quality, stimulation of sustainable

economic development, creation of new employment opportunities, and

reduced reliance on imported fuels.”38

Originally, the California RPS aimed for a minimum of twenty percent

of its energy to come from designated renewable sources by 2017 by

requiring a two percent increase every year until 2017.39 In order for this

goal to be met, each electricity provider was required to show that they

individually provided twenty percent of their energy from renewable

sources, making the standard a utility-based standard.40 California expanded

its RPS with Senate Bill No. 2X, which was signed into law on April 12,

2011, increasing the California RPS to thirty-three percent of retail

electricity sales by 2020.41 Though California has an ambitious RPS, the

state has not been able to meet its standards, showing that a poorly designed

RPS policy will not increase renewable energy generation.42 In addition to

33. Golden, supra note 17, at 693 (California saw an electric market failure during the state’s

electricity crisis in 2000–2001.).

34. Id. at 697.

35. Id. at 697–98.

36. Behles, supra note 19, at 169–70.

37. CAL. PUB. UTIL. CODE § 399.12 (West 2010); CAL. PUB. RES. CODE § 25741 (West 2011)

(In California, renewable resources include “biomass, solar thermal, photovoltaic, wind, geothermal,

fuel cells using renewable fuels, small hydroelectric generation of 30 megawatts or less, digester gas,

municipal solid waste conversion, landfill gas, ocean wave, ocean thermal, or tidal current.”).




41. The Desert Renewable Energy Conservation Plan: What is DRECP? CALIFORNIA

ENERGY COMMISSION, (Jan. 11, 2012), http://www.drecp.org/about/index.html.

42. Langniss & Wiser, supra note 30, at 528; see also Behles, supra note 19, at 165.


the RPS, Executive Order # S-14-08 has helped California develop the

Desert Renewable Energy Conservation Plan to promote solar energy

production; the state views solar power as the future of renewables.43 This

plan is expected to “provide binding, long-term endangered species permit

assurance while facilitating the review and approval of renewable energy

projects in the Mohave and Colorado deserts” within the state.44

In addition to providing percentage standards to be acquired via

renewable energy, California RPS includes several incentives for renewable

development. One such incentive is the feed-in tariff which “are payments

made by utilities to facilities that own and operate their own renewable

energy facilities on-site.”45 This program has spurred the creation of new

renewable energy capacity.46 Additionally, the state is trying to encourage

commercial and residential development of solar power through the

California Solar Initiative, which provides subsidies for solar installation.47

This initiative resulted in an additional twenty-five megawatts of solar

power to come online in 2009. The state has also budgeted fifty million

dollars for research and development in solar power.48 California has also

established the Multifamily Affordable Solar Housing program, which

offers up-front rebates for customers installing solar energy. 49 Though

California has many initiatives to help them meet the State’s RPS standard,

the State continues to fail to meet their goals, causing the state to continue

to fall behind other states in developing renewable energy.50

43. The Desert Renewable Energy Conservation Plan, supra note 41.

44. Id.


46. Id. (The expansion of the use of feed-in tariffs to all RPS-qualified renewable energy

sources has been linked to parties contracting for thirty-one future projects, totaling a combined capacity

of 34.67 megawatts.).

47. Id.; Ca. Pub. Utilities Comm’n, About the California Solar Initiative, CA.GOV,

http://www.cpuc.ca.gov/puc/energy/solar/aboutsolar.htm (last modified Dec. 22, 2011) (“The CSI

Program has a budget of $2.167 billion over 10 years, and the goal is to reach 1,940 MW of installed

solar capacity by the end of 2016.”).

48. Houser, supra note 1, at 166; About the California Solar Initiative, supra note 47.

49. Energy Bar Association, Committee Report: Report of the State Commission Practice &

Regulation Committee, 30 ENERGY L. J. 765, 818–19 (2009) (The State has allocated 108 million dollars

for this program.).

50. Langniss & Wiser, supra note 30, at 528; see also Behles, supra note 19, at 165.


B. Texas RPS Goals

Surprisingly, given the common stereotypes of the two states, Texas

actually adopted its RPS standards in 1999, before California. 51 Unlike

California’s RPS, which looks to a set retail percentage for the state, the

Texas RPS requires a set capacity contribution designated by a number of

megawatt capacity coming from renewables. 52 “Texas’ RPS originally

required ‘400 megawatts (MW) of new renewable capacity by 2003 and

increase capacity every two years after that to 2,000 MW by 2009.’”53 The

Texas Legislature, in 2005, increased the standard to 5,880 MW by 2015

and 10,000 MW by 2025. 54 These goals represent one of the most

aggressive policy standards within the United States.55 Though the state has

ultimate megawatt goals (instead of a percentage of energy produced), the

state requires each individual retail provider to obtain a percentage of their

electricity from renewable sources (like the California requirement). 56

Within the state, electricity retailers servicing the market must present a

specified number of renewable energy credits (RECs) annually to the state

regulating authority to show compliance with their quota. 57 In Texas,

renewable sources include wave/tidal, solar, geothermal, wind,

hydroelectric, and biomass.58

Texas has been successful with its RPS goals, exceeding them through

the use of wind energy production becoming the nation’s leader in wind

power.59

Texas has realized that wind is a permanent renewable resource

that can generate a great deal of electricity in a relatively low cost manner.60

Wind is also a good source of renewable power within the state because

there are parts of Texas that receive consistent, relatively high velocity

wind year around, providing for the ability to have large wind farms

51. Golden, supra note 17, at 701; Daniel, supra note 18, at 161.

52. See Brent Stahl et al., Wind Energy Laws and Incentives: A Survey of Selected State Rules,

49 WASHBURN L.J. 99, 138 (2009) (California RPS looks to a percentage whereas Texas RPS looks to a

specific megawatt requirement.).

53. Houser, supra note 1, at 168. Langniss & Wiser, supra note 30, at 528 (880 MW of

renewable energy represents approximately three percent of total electricity consumption within the

state of Texas.).

54. Stahl et al., supra note 52, at 138.

55. Langniss & Wiser, supra note 30, at 528.




59. Houser, supra note 1, at 168. (Though Texas has been successful meeting its RPS goals,

“almost half of all newly developed wind power has been wasted due to inadequate transmission

capacity.” However, this waste has been addressed through the creation of competitive renewable

energy zones). Golden, supra note 17, at 701.

60. David J. Hurlbut, Multistate Decision Making for Renewable Energy and Transmission:

An Overview, 81 U. COLO. L. REV. 677, 681 (2010).


running in a relatively consistent manner and able to take advantage of

economies of scale in development.61

From 2001 to 2002 Texas installed 900 megawatts of wind power,

nearly twice the amount required by the state’s RPS for that time period.62

In 2008, Texas generated over 6,000 megawatts of renewable wind energy,

exceeding the 2015 goal seven years early.63 By 2009, Texas had installed

7,118 MW of cumulative renewable capacity, and the economic downturn

does not appear to be slowing the pace. 64 Accordingly, at least within

Texas, wind power can be as competitive as other energy sources. The

state’s capital, Austin, has also committed to a renewable energy standard,

requiring thirty-five percent of its municipal-owned utility to be from

renewable energy sources.65

Though Texas has been very successful in utilizing wind to produce

energy, it has not diversified its portfolio. 66 However, in 2005, the

Legislature encouraged diversification by adding provisions to the RPS that

require 500 megawatts of power to be produced by a renewable energy

source other than wind by 2025 as part of the 2025 goal.67 Currently, wind

is the most competitive renewable energy resource within the state; solar

and biomass are currently too expensive to compete with wind. 68

Additionally, Texas seems to be focused on large-scale development, and

unlike California, Texas has few incentives that promote small-scale

renewable projects. However, small-scale wind projects in Texas can

receive a property tax exemption for the increased property value associated

with the system.69 Texas also allows for net metering with smaller scale

wind systems, allowing the excess electricity produced at these locations to

go into the grid, offsetting the electric customer’s electricity bill from the

utility.70


62. Hurlbut, supra note 60, at 692.

63. Morrow, supra note 8, at 259.

64. Daniel, supra note 18, at 159. (“Cumulative installed renewable capacity means

renewable energy that is produced by a generating facility that is either connected to a distribution or

transmission system, energy produced by a generating facility where the owner or controller of the

facility consumes the energy, or energy that is generated by a facility that within twelve months will be

connected and operating as part of a distribution or transmission system.”).

65. Wiseman et al., supra note 4, at 881. The city estimates that this commitment will cause a

rate increase by approximately twenty percent within the next ten years. Id. The goal in Austin is more

ambitious than the California standard showing that the assumptions about Texas not being as

environmentally friendly as California might be proving to be wrong, at least for parts of the state. See

supra Part I.A. and accompanying notes.

66. See Stahl et al., supra note 52, at 138.

67. Id.


69. Daniel, supra note 18, at 175–76.

70. Id. at 178.


II. THE TEXAS SUCCESS

Texas has been very successful at instituting its RPS for many reasons.

The state’s success can be primarily linked to the framework Texas

instituted for its RPS, which drove renewable generation through

establishing a base demand for renewable energy.71 Texas has been able to

prove that a well thought out, designed, and implemented RPS can spur

private sector renewable energy development with relatively minimal

involvement by the government.72 The state’s RPS has created a renewable

energy mandate that is seen as reliable, allowing for retail confidence in

entering into long-term contracts with renewable generators. 73 This has

allowed these generators to have access to low interest loans and capital,

allowing for more investment in renewables.74

Wind energy has been the primary means Texas has used to achieve its

RPS goals, causing the state to be the nation’s current leader in wind energy

production.75 In 2009, wind energy constituted six percent of electricity

produced in the state 76 Texas’s success in implementing its RPS and

exceeding its established goals are linked to the design of the system. The

system has succeeded for three reasons: (1) it has a single administrator,

which reduces transaction costs; (2) the state solved the transmission issue

through the use of Competitive Renewable Energy Zones; and (3) the

participants are persuaded into compliance through the use of strong

punishment mechanisms.

A. Single Administrator

Unlike other states within the continental United States where the

Federal Energy Regulatory Commission (FERC) has authority, the Texas

Legislature regulates the Texas retail and wholesale electric markets

through the Public Utility Commission of Texas (PUCT), allowing the state

more control over electricity.77 This means that Texas agencies do not have

to coordinate with FERC regarding electricity development. Adding to the

convenience and ease of the Texas system, like most states with a RPS,


72. Id.

73. Id. at 389.

74. Id.


76. Morrow, supra note 8, at 257. Though the Texas standard is less than the standard in

California, Texas has been able to exceed its goals, something that California is far from being capable

of.

77. Energy Bar Association, supra note 49, at 825.


Texas utilizes one agency to administer the program; in Texas the PUCT

implements the RPS program through the renewable emissions credit

trading program.78 The PUCT was responsible for creating and executing

the RPS policy and has successfully established clear rules and definitions.

The PUCT is responsible for locating areas with the most potential for the

best renewable siting while also reviewing plans involved in providing for

transmission line construction to these areas.79 Ultimately, the Texas RPS

has been successful because of the strong legislative support and because

the single agency responsible for implementing the program, the PUCT, is

committed to its successful implementation.80

B. Transmission Success Through Use of Competitive

Renewable Energy Zones

Texas has realized that transmission problems can hamper any RPS

goals by being a renewable energy development challenge.81 The state has

been able to successfully establish favorable transmission planning.82 To

solve the transmission problem, in 2005, Texas utilized Competitive

Renewable Energy Zones (CREZs), a policy in which new transmission

would be built to wind-rich areas before interconnection commitments were

signed with specific developers.83 The Texas Legislature created CREZs in

order to avoid the transmission constraints, which were experienced during

the development of the McCamey region; the Legislature wanted to

coordinate the development of renewable energy projects with the build-out

of adequate transmission to these areas.84 Texas Senate Bill 20 amended the

Texas Utilities Code allowing for the CREZ program, stating “that ‘[i]n

considering an application for a certificate of public convenience and

necessity for a transmission project intended to serve a [CREZ], the

commission is not required to consider . . . the adequacy of existing service

[or] the need for additional service,’” which is different from the


79. Daniel, supra note 18, at 179.



82. Langniss & Wiser, supra note 30, at 533. In Texas, grid expansion costs are paid by

electricity customers within the State (and not power plant operators). Id. at n.17. “Moreover, fees to

recover the embedded costs of existing and new transmission infrastructure are placed on electricity

consumers based on a flat fee, or postage stamp approach independent of the location of production or

consumption (congestion costs will also be charged).” Id.

83. Hurlbut, supra note 60, at 690, 693. A revision in 2005 to the Texas Utility Code

“directed the Texas [Public Utilities Commission] to ‘designate competitive renewable energy zones’

and to ‘develop a plan to construct transmission.’” Id. at 695.



requirement of proof that a new line is necessary before a traditional

transmission line can receive a certificate for construction.85 The bill also

gave confidence to transmission owners by making it clear that they would

not bear the costs of an underutilized CREZ line due to developer lack of

interest or a cancellation of a project.86

These CREZs allow for an expedited “approval process for utilities to

recoup transmission construction costs, thus encouraging transmission

development prior to generator construction and lender financing.”87 The

intent of the CREZ was to “select well-defined areas where meteorological

data showed vast amounts of top-quality wind potential—a market

opportunity so good that no rational wind developer with a line of credit

would pass it up.”88 In conjunction with the program, utilities building these

transmission lines were granted broad eminent domain powers.89 The hope

of this program is that “[t]he potential for return on investment in a CREZ

would be compelling enough to support a reasonable expectation that the

line would be utilized by a sufficient number of economically rational wind

developers—even if the developers were not known at the time the [Texas

Public Utilities Commission] authorized the transmission.”90 Ultimately, the

companies that could bring the wind projects online the quickest and

cheapest would be the companies developing the project.91 The creation of

CREZs made Texas wind farms easier to finance because it ensured

transmission infrastructure. 92 By building transmission infrastructure the

state made a powerful statement to developers that it will continue to

encourage renewable energy growth, helping Texas maintain its position as

a leader of wind energy generation.93

85. Hurlbut, supra note 60, at 694–95.

86. Id. at 695 (“‘If the commission issues a certificate of convenience and necessity . . . to

facilitate meeting the goal for generating capacity from renewable energy technologies . . . the

commission shall find that the facilities are used and useful to the utility in providing service . . . and are

prudent and includable in the rate base, regardless of the extent of the utility’s actual use of the

facilities.’”).



89. Wiseman et al., supra note 4, at 850, n.99.


91. Id. at 694.

92. Daniel, supra note 18, at 165 (“CREZs were developed to resolve the dilemma that faced

many developers who were hesitant to provide financial commitments for the development of wind

farms if the transmission infrastructure was not already in place and conversely, to facilitate plans for

creating transmission infrastructure in particular areas so that those areas could be developed as wind

farms.”).

93. Id. at 179.


C. Strong Punishments and the Texas Trading Scheme—Renewable Energy

Certificate Trading Program

Another key to the success of the Texan RPS is that the system is

moderately flexible, which allows energy suppliers to meet their mandate

under the RPS in a cost-effective manner. 94 The Texas RPS, utilizes

renewable energy credits (RECs), which are acquired through: the

generation of electricity by renewable sources; purchasing RECs from

facilities that are qualified as new, separately from the electricity; or by

buying the REC with the purchase of renewably produced electricity.95 An

REC, in Texas, is equal to one megawatt hour of Texas-generated,

qualifying renewable energy;96 the RECs are allocated to each of the state’s

“competitive retail provider[s] based on the percentage of electricity that

provider provides within the state.”97 Additionally, the rules promulgated

encourage the installation of new renewable facilities because tradable

RECs are only awarded to new facilities and producers that produce less

than two MW.98

The Texas RECs are coupled with a renewable energy certificate

trading program to facilitate the acquisition of RECs and is administered by

the Electric Reliability Council of Texas. 99 This renewable energy

certificate trading program is a cornerstone of the Texas RPS because it

drove the state’s renewable development and has reduced program

enforcement costs by making compliance easy to monitor.100

This trading

program has facilitated renewable energy demand by providing a relatively

easy mechanism for renewable energy producers to sell their renewable

energy to electricity retailers who must satisfy their requirements under the

RPS.101 The intent of the program was to “allow other means to satisfy the

renewable requirement without requiring that each retail electricity provider




97. Lunt, supra note 1, at 388. Morrow, supra note 8, at 259 (“The number of credits

required, called the load ratio share, is calculated by multiplying the RPS goal for that year by the

provider’s market share.”).

98. Lunt, supra note 1, at 388 (Additionally, “‘[a] facility is eligible to earn RECS if it relies

exclusively on energy that is naturally regenerated, such as solar, wind, geothermal, hydroelectric,

wave/tidal, biomass or biomass based waste products.”).

99. Id.

100. Houser, supra note 1, at 169. Texas is the first state to implement a trading program in its

RPS. Id. See also Houser, supra note 1, at 169, n.138. The program “[eases the tracking of compliance

for enforcement purposes, [improves] liquidity in the market, and [increases] the competitiveness of

Texas renewables by lowering their overall costs.” Golden, supra note 17, at 702.



actually own or contract directly for output from renewable energy

resources,” allowing for greater compliance and efficiency.102

The trading system causes the price of RECs to be brought down as

renewable generators compete to sell their certificates, thus increasing the

demand for renewable energy.103 “The tradable REC program is crucial to

the success of Texas’s RPS because, ‘the innovation of tradable RECs

allows electricity providers from any area of the state to seek the lowest

cost renewable resources without having to take delivery of the

electricity.’”104 The trading program also creates an incentive for developers

to invest in cost-effective renewable generation through the use of market

forces, while also discouraging the development of resources which are of

poor quality, with costly technology or inefficient equipment.105 Ultimately,

“[t]he purchase of a REC subsidizes the marginal cost of renewable

electricity, allowing the renewable provider to sell the electricity into the

grid at a price competitive with other sources of electricity,” spurring

renewable demand. 106 Without this trading program, it is believed that

retailers would have to contract with renewable energy generators directly

in a process that would be difficult due to the necessity of matching annual

obligations through contracting for the exact number of required RECs

required, thus creating inefficiencies.107 Finally, the trading program allows

for program stability because a retailer will not be tied to a poorly

performing supplier facility. The retailer will always be able to comply and

will not have to worry about being under-supplied by renewable energy.108

Because Texas provides ample opportunity for RPS compliance the

state has employed a strong sanction system if compliance is not met.

Under the Texas RPS, if a retail electricity supplier does not meet its

obligations, the penalty for non-compliance “is set to the lesser of five cents

per missing kWh or 200% of the mean trade value of certificates in the

compliance period.” 109 Compliance is measured annually, with a three-

month “true up” period, in which the utility has time to acquire extra RECs

102. Paul Hudson & Evan Rowe, Mandate & Market: Texas Electric Restructuring Act of

1999, an Environmental Case Study Six Years into Implementation, 1 ENVTL. & ENERGY L. & POL’Y J.

235, 241 (2005).



105. Hudson & Rowe, supra note 102, at 244 (“Because the price of a REC is basically the

difference between two market prices, the developers of renewable energy projects have an incentive to

develop the most cost-effective resources in the most cost-effective manner.”).


107. Hudson & Rowe, supra note 102, at 244.

108. Id. at 245.

109. Golden, supra note 17, at 701 n.50.


in order to comply with their obligations. 110 Though there is some

flexibility in the system, it is not worth delaying compliance. 111

Additionally, long-term contracts with retail suppliers have ensured their

ability to comply with RPS requirements; adding penalty provisions in their

renewable energy contracts encourages renewable projects to make

necessary construction deadlines and specifications. 112 The enforcement

mechanism in place in Texas, along with the strong penalty system, allows

for successful enforcement of the RPS, ultimately leading to compliance.113

III. WHAT CALIFORNIA CAN LEARN

Though California is generally a leader in energy and environmental

issues, 114 California has been unable to meet its RPS goals for many

reasons. Though the state has one of the most aggressive RPS policies in

the nation, “requir[ing]] 20% of the state’s energy to be generated from

renewable resources by 2010 and 33% by 2020.”115 However, California

has failed to meet its 2010 goal. It is estimated that in 2010 California only

received, at best, eighteen percent of its electric supply from renewable

sources, falling at least two percent short of the state’s goal. 116 More

troubling for a state pushing renewables is that between 2003 and 2009,

California only increased its renewable energy by 1.4 percent. 117

Additionally, the state continues to build new natural gas facilities that are

contrary to the RPS policy; these natural gas facilities are both expensive

for ratepayers within the state, but they are also linked to preventing

renewable development.118 California fails to meet its RPS goals for three

reasons: (1) the program is decentralized, with many agencies having

overlapping involvement; (2) inadequate enforcement mechanisms; and (3)

the state’s failure to prevent the proposal of unviable projects.119

110. Id. at 702, n.52; Langniss & Wiser, supra note 30, at 532.

111. Langniss & Wiser, supra note 30, at 532. California does not have such a system in place

thus making it attractive to utilities to delay compliance. See infra Part III.B and accompanying notes.


113. Id.


115. Id. at 165. With Executive Order S-14-08, issued in 2008, California accelerated their RPS

standards to the current standards stating “‘all retail sellers of electricity’ serve their load with 33% of

energy coming from renewable energy by 2020.” Id. at 168. California also requires greenhouse gas

emissions to be reduced to their 1990 levels by 2020. Id.


117. Id. (“There were ‘several years of fairly static energy production from renewable

resources’ [in California]. More recently, the percentage has increased because California unities have

signed short-term contracts with out of state resources.”).

118. Id. at 165.

119. Id. at 166.


A. Agencies with Overlapping Authority

California can learn from the Texas example and streamline the number

of agencies involved in siting and permitting renewable energy sites.

California differs from most other RPS states because multiple agencies in

California administer the program in a complicated delegation of

authority.120 This creates a difficult permitting environment and results in a

long timeframe for project siting while also providing many opportunities

for opposition groups to intervene in the project.121 By having so many

agencies involved in the process, the barriers to development are inevitably

higher causing developers to jump through multiple hoops, some of which

are overlapping.122 Unlike Texas, where one agency controls the process,

California has several agencies responsible for the implementation of some

aspect of the state’s RPS, including: the California Energy Commission, the

California Public Utilities Commission, and the California Air Resources

Board. 123 With all of these agencies involved, it can lead to delays in

projects and adds to the administrative costs of renewable energy within the

State. Before construction of a renewable energy facility within the state, a

developer must go to multiple agencies to obtain various permits, with each

agency having a large permit application backlog.124

In the California RPS system, the California Public Utilities

Commission (CPUC) must take all appropriate action in order to ensure that

all utilities meet the state’s RPS goals, while also ensuring cost-effective

projects advance and those investments in renewable energy are efficient

and “vigorously pursued.” 125 As to the important process of siting

renewable sites, Executive Order S-14-08 requires the California Energy

Commission to work with the California Public Utilities Commission and


121. Jesse Broehl, California Utilities Hide Behind Solar Smokescreen: Legal Loophole Allows

Penalties to be Avoided for Failing to Bring Wind Power Online, WIND POWER MONTHLY (April 1,

2009), available at http://www.windpowermonthly.com/article/958579/california-utilities-hide-behind-

solar-smokescreen---legal-loophole-allows-penalties-avoided-failing-bring-wind-power-online; Rachael

Salcido, Siting Offshore Hydrokinetic Energy Projects: A Comparative Look at Wave Energy

Regulations in the Pacific Northwest, 5 GOLDEN GATE U. ENVTL. L.J. 109, 157 (2011); Wiseman et al.,

supra note 4, at 870, n.178 (Groups are able to intervene at various stages even though the siting process

for renewables within the State has become centralized, thus local zoning is preempted.). This is

different from Texas where no agency has siting authority, which is specific to wind, although voluntary

state review is available. Id. at 872, n.181.

122. Wiseman et al., supra note 4, at 829.

123. Behles, supra note 19, at 171. “Both the California energy Commission (CEC) and the

California Public Utilities Commission (CPUC) execute and enforce the RPS. This is an unusual, and

perhaps more complicated, delegation of authority, as most RPS states have successfully used only one

agency to administer their RPSs.” Houser, supra note 1, at 164.




the California Independent System Operator to identify where and how

renewable energy should be sited and developed within the state.126

California also imposes additional transaction costs on developers by

requiring agencies to work with counties and cities in determining

environmental impacts associated with siting renewable projects. 127 The

California Environmental Quality Act requires both cities and counties to

consider and document the environmental impacts of their actions. This

includes granting licenses for renewable energy projects and requiring them

to determine if an environmental impact report or a negative declaration is

required for a specific project.128 In turn, the agencies must consult with

other responsible agencies and trustees who may also have jurisdiction over

a specific project.129

In addition, overlapping jurisdiction covers issues related to

transmission. 130 Though the California Independent System Operator

primarily manages transmission, a utility is required to acquire a certificate

of public convenience and necessity from the CPUC before a new

transmission line is constructed. 131 Authority overlap also occurs with

transmission planning, which is administered by regional planning

initiatives, including: the California Transmission Planning Group, the

California Renewable Transmission Initiative, and the Western Renewable

Energy Zone initiative.132 The coordination that must occur between these

various agencies and organizations increasing the cost of any renewable

energy development by adding unnecessary transaction costs.

Procurement related issues are also covered by several agencies, with

the California Energy Commission and the California Independent System

Operator making procurement related recommendations to the CPUC. The

CPUC is responsible for reviewing, accepting, modifying, or rejecting

renewable procurement plans submitted by utilities.133

An example of overlapping agency involvement is the newly developed

Desert Renewable Energy Conservation Plan (DRECP), which is designed

to promote renewable energy development in the California desert.134 To

administer this project, a Renewable Energy Action Team (REAT) was

formed with participation from the California Department of Fish and

126. Id. at 175.


128. Id. at 100–01.

129. Id. at 101.


131. Id.

132. Id.

133. Id.

134. The Desert Renewable Energy Conservation Plan, supra note 41.


Game, the California Energy Commission, the U.S. Fish and Wildlife

Service, and the Bureau of Land Management. 135 Each one of these

agencies must work together, with the California Public Utilities

Commission, National Parks Service, California Independent System

Operator, the Department of Defense, and the U.S. Environmental

Protection Agency, to develop a viable solar energy plant within the

Mohave and Colorado deserts.136

California would have more success implementing its RPS if there were

fewer agencies involved in the process, or at least a better defined agency

jurisdiction, like Texas. “In addition to overlapping authority being

resource intensive, different agencies may make decisions on the same

matter, which causes inconsistent results and makes compliance difficult to

monitor.”137 California may have greater success in the future because it

recognizes this barrier and is trying to alleviate permit application delays by

consolidating agency review and creating project review teams for

renewable energy projects.138

B. The Need For Adequate Enforcement Mechanisms

Unlike Texas, which has a strong sanction system, the punishment in

California for failing to meet the RPS requirement is almost non-existent

because the RPS program fails to contain strong mechanisms to force

compliance.139

Originally, the state had a significant monetary penalty in

the draft RPS; however, due to political pressure, this monetary penalty was

replaced by a discretionary contempt non-compliance penalty in the final

bill.140 The California RPS also allows for flexible attainment of the goals

by giving electricity corporations the opportunity to acquire additional

renewable energy resources in subsequent years to make up for the

shortfalls that have occurred in previous years. This mechanism allows

utilities to fall behind on their obligations and makes continued compliance

impractical.141

Additionally, the state’s RPS allows for a utility to forgo a penalty

payment for non-compliance if they can demonstrate a good faith effort

135. Id.

136. Id. With all of these agencies involved in one plant, it is difficult to imagine any

successful solar energy development will be built due to the sheer amount of coordination that must

occur between all of these agencies.



139. Behles, supra note 19, at 179–80.


141. Id.


towards RPS compliance.142 This lack of enforcement has caused some

utility companies to enter into purchase contracts for speculative solar

projects at unrealistically low prices. 143 Utilities have been accused of

avoiding compliance through betting on speculative, unviable, low-cost

technology, which will not be successful.144 The California RPS is weak

because it allows for contracts (and not real power) to be counted towards a

utility’s twenty percent threshold and does not look into whether the project

contract will be completed, and capacity installed, in the immediate future

(or within the compliance period).145 This loophole has prevented viable

renewable generation from coming online because it is difficult for viable

wind projects to compete with solar projects that have been priced in a way

that is unrealistically low.146

In order to have a successful RPS program, California needs to adopt

strong penalties for non-compliance, similar to those in the Texas RPS

design, which has caused a very successful rate of compliance.147 Because

of this lack of enforcement, utilities are putting off acquiring renewable

resources. “In the event that a utility fails to meet its RPS mandates, the

California Public Utility Code requires the utility to ‘procure additional

eligible renewable energy resources in subsequent years to compensate for

the shortfalls,’” thus allowing utilities to put off compliance into the

indefinite future.148

Like Texas, California has a renewable energy certificate program;

however, California’s program has not been as successful as its Texas

counterpart due to the ease utilities have in avoiding compliance.149 In

California, utilities are penalized for non-compliance on a case-by-case

basis; thus, there is no standardized penalty for non-compliance. 150

Additionally, RPS compliance can be excused if utilities can show that their

non-compliance was due to a lack of transmission capacity as long as a

reasonable effort was taken to obtain renewable power, which has proven to


143. Id.

144. Broehl, supra note 121, at 29–30.

145. Id. at 29 (“Since the law was passed in 2002, the [Public Utility Commission] has

approved 95 power purchase agreements (PPA) for 5.9 GW of clean power capacity, more than enough

to achieve the legal standard, it says. But [as of 2009] only about 400 MW of the contracted generation

has come online and the proportion of new renewable power has fallen from 14% in 2004 to 12.7% in

2007 as demand for electricity has grown.”).

146. Id. at 29.


148. Id. at 173.

149. Stahl et al., supra note 52, at 101–02; Golden, supra note 17, at 704 (California does not

have a credit trading system in place due to political pressure to eliminate it from the wording of SB

1078.).



be a standard that is easy to meet.151 In order to have a successful RPS,

California needs to abandon the myriad of excuses utilities are allowed to

use in order to avoid compliance.152

C. The Problem With Unviable Projects and Inadequate Transmission

California has not been successful in preventing unviable projects.153

This is very significant in a state that touts itself as being committed to

renewable energy sources because it has resulted in the failure of many

projects.154

“A common reason for projects to fail is the difficulty of securing

adequate transmission capacity, which should have surfaced and

been resolved in the request for offer stage. Notably, the Public

Utilities Code requires that the criteria for ranking and selection of

resources include ‘needed transmission investments and ongoing

utility expenses resulting from integrating and operating eligible

renewable energy resources.’”155

Because of the landscape within the state, utilities have incentives to try

to site their renewable generation in remote locations, which results in

higher transmission costs and requires greater capital investment. As a

result, projects have failed because they did not pick the most viable

projects, which does not happen in Texas where projects are determined by

their ultimate viability.156

“Texas has successfully required contract terms that penalize

construction delays and other types of operational issues. These provisions

have helped eliminate incentives for proposing projects that are likely to

prove unviable” and which are cost competitive. 157 The Texas system

provides little incentive for developers to propose projects with a high

probability of not being completed because such bidders will either fail to

garner the original contract, or face stiff penalties for procuring an

151. Id.

152. Broehl, supra note 121, at 30 (There is a “‘list of excuses or reasons why the utilities can

say we weren’t able to meet our RPS goals, such as the failure of a project, the lack of transmission, or

lack of bids to the RPS process.’”).

153. Behles, supra note 19, at 182 (In California, there is no deterrent for bidders to propose

projects that are unlikely to be built for various reasons.).

154. Id.

155. Id.

156. Id. at 185.

157. Id. at 186–87.


incomplete contract.158 By requiring stronger contract terms, California can

minimize the costs of contract failure, thus reducing the cost of renewable

development and hopefully incentivize developers to engage only in

projects that are likely to be successfully completed.159 California has taken

a cue from CREZ classifications in Texas through the creation of the

Renewable Energy Transmission Initiative (RETI), which, like the CREZ in

Texas, is designed to bring transmission to areas that are ideal for

renewable energy.160 The RETI program has allowed for the construction of

four major new transmission lines within the state at a cost of four billion

dollars.161 California also allows for some special cost-sharing schemes for

the financing of transmission in specifically designated areas.162 In addition,

California allows for Independent System Operators to recover construction

costs from generators who use the newly built transmission lines that serve

areas designated as prime renewable energy sources.163

CONCLUSION

“[E]xperience in several US states and European countries shows that

inadequate purchase obligations, overly broad renewable energy eligibility

guidelines, unclear regulatory rules, insufficient enforcement, and wavering

political support can all doom an RPS to certain failure.”164 In contrast, the

success of the Texan RPS shows that a well-designed and carefully

implemented program can result in a state known for its oil and gas to

become a leader of renewable power, specifically wind power, in the

United States and the world.165 Texas has a successful RPS, which has been

able to provide confidence to developers of renewable energy as well as

retail electricity suppliers, ensuring long-term investment in the least costly

renewable facilities.166 Texas has successfully lowered risks for developers


159. Behles, supra note 19, at 187. In California, “[u]tilities have a strong economic incentive

to develop new expensive facilities because rate recovery is based in part on capital expenditures. Due

to this incentive, utilities are not economically encouraged to evaluate all possible options for

integrating renewables such as increased energy efficiency. Thus, current economic incentives do not

sufficiently encourage innovative renewable energy development rather than other more cost effective

solutions.” Id. at 183.

160. “One of RETI’s primary objectives is to identify these prime renewable energy source

locations and develop long-term, ‘cost effective and environmentally benign’ transmission development

plans to provide access to these untapped resources.” Houser, supra note 1, at 167.

161. Id.

162. Wiseman et al., supra note 4, at 858.



165. Id. at 527, 533–34.

166. Id. at 532.


and utilities, thus breeding an environment for a successful RPS.167 Texas

has been successful because of the state’s strong legislative support for the

RPS, a committed state administrator in the Public Utilities Commission,

abundant wind, and favorable transmission rules.168 Though Texas is not

diverse in its renewable portfolio, it has successfully used low-cost wind

power in large-scale developments.169 Surprisingly, the wind industry in

Texas is growing in confidence and is beginning to compete on equal

footing with other generating sources, which are perceived as being more

traditional.170

California can learn a great deal from the success of Texas. Primarily,

the state has to decide if it really is committed to its RPS and if so, it needs

to institute changes in order to make it effective. One of the largest changes

that must be made in order for California to meet its RPS goals is that the

state must adopt measures to force compliance. This can be done by having

mandatory sanctions for non-compliance that are high enough that non-

compliance becomes more costly than compliance. Additionally, the state

needs to close present loopholes, which tend to encourage the appearance of

compliance through non-viable projects. If a state is committed to a

renewable standard, it must make non-compliance costly while also making

compliance easy. Compliance can be made easier by the use of a credit

trading market that prefers efficient and cost effective projects. As seen in

Texas, market forces can push for a quick increase in renewable energy

development.

In addition to closing loopholes and encouraging compliance,

California needs to make compliance easier in an administrative sense.

Currently the state utilizes too many agencies for renewable siting and

production. By having a number of agencies engaged in the process,

transaction costs are increased and delays are inevitable. The state needs to

streamline the process in order to encourage investment and show a

commitment to the process. By having various stages, there are more stages

where individuals can intervene in the process, allowing for a greater

potential of inconsistent decisions and requirements among the various

agencies. Unlike Texas, California does not have the pleasure of not having

to work with the FERC in certain instances. However, the state can give

authority of the entire siting, licensing, and completing processes to one

agency that can maintain a consistent process. Finally, California needs to

prevent unviable projects and take a greater interest in developing sufficient

167. Id. at 527.

168. Id. at 532, 534.

169. Id. at 534.

170. Id. at 534.


transmission to the areas that have the most potential for renewable energy

development. For California to be successful in meeting their RPS and

becoming a world leader again in renewable energy, the state needs to make

a greater commitment to its success and energy independence. Surprisingly,

renewable energy development is an area where California can learn from

Texas.

WASTE INCINERATION, COMMUNITY PARTICIPATION, AND

ENVIRONMENTAL JUSTICE: A COMPARATIVE STUDY OF

CHINA AND THE UNITED STATES

Sara Imperiale & Wang Pian Pian*

TABLE OF CONTENTS

Introduction ............................................................................................... 436

I. The Waste Disposal Problem in China ................................................. 437

II. Defining Community Participation ..................................................... 440

III. Participation through EIAs in China .................................................. 443

A. Relevant EIA Laws and Regulations .............................................. 443

B. Implementation Challenges ............................................................ 445

C. Chinese Case Studies ...................................................................... 448

1. High Participation Capacity Community: Panyu, Guangzhou

Province ...................................................................................... 448

2. Low Participation Capacity Community: Haian, Jiangsu Province

.................................................................................................... 449

IV. Participation through EIAs in the United States ................................ 450

A. Relevant EIA Laws and Regulations .............................................. 450

B. Implementation Challenges ............................................................ 452

C. United States Case Studies .............................................................. 454

1. High Participation Capacity Community: Houston, TX ............. 454

2. Low Participation Capacity Community: Kettleman City, CA ... 454

V. Environmental Justice Implications & Recommendations ................. 455

* This article was funded by the United States Agency for International Development

(USAID) and Vermont Law School’s U.S.-China Partnership for Environmental Law. The article was

written as part of a Joint Research Fellowship Program. Sara Imperiale is a 2013 J.D. and Master of

Environmental Law and Policy Candidate at Vermont Law School. Wang Pian Pian is an L.L.M. student

at Pace University School of Law and a graduate of Sun Yat-sen University’s Juris Master program.

The authors wish to thank Dean Mark Latham for his guidance throughout the writing process and the

faculty and staff of the U.S.-China Partnership for Environmental Law for providing this opportunity.

DISCLAIMER: The authors’ views expressed in this publication do not necessarily reflect the views of

USAID or the United States Government.


A. Environmental Justice: Not in My Backyard (NIMBY) ................. 455

B. Recommendations ........................................................................... 457

1. Make Use of the Courts ............................................................... 458

a. Environmental Public Interest Litigation ................................ 458

b. Tort Liability ........................................................................... 459

2. Stakeholder Gatherings ............................................................... 459

a. Collaborative Problem Solving ............................................... 460

3. Partnerships with NGOs and Other Third-Party Advocates ........ 461

Conclusion ................................................................................................ 462

INTRODUCTION

China’s economic boom has brought millions out of poverty, but comes

at a cost to the environment, and many citizens have found themselves

without protection from severe air, water, and soil pollution. Incidents of

social disorder, often in response to environmental fears, are growing across

China, with 87,000 public protests reported in 2005 alone.1 As a way to

stem the growing tide of protests, over the past decade, the Chinese

government has officially embraced “participation” as a means to improve

environmental protection, creating laws and regulations granting citizens

rights to participate in the environmental decision making process.2

In spite of the comprehensive language of these new participatory laws

and regulations and signs of increased participation broadly among the

population, a divide has emerged among Chinese communities regarding

their capacity to participate. This divide hinges primarily on socioeconomic

status, which shapes both when and why Chinese communities participate.3

Similar to the U.S. experience with its respective environmental impact

assessment (EIA) law, external factors shape Chinese communities’

capacity to make full and effective use of their participatory rights.

Questions of capacity become especially important when the right to

participate is obscured by insufficiencies in the law in conjunction with

systemic disregard for community participation.

1. Allison Moore & Adria Warren, Legal Advocacy in Environmental Public Participation in

China: Raising the Stakes and Strengthening Stakeholders, 8 CHINA ENV’T SERIES 3 (2006), available

at http://www.wilsoncenter.org/sites/default/files/CEF%208%20Full%20Publication.pdf.

2. Id.

3. Wanxin Li, Jieyan Liu & Duoduo Li, Getting Their Voices Heard: Three Cases of Public

Participation in Environmental Protection in China, 98 J. ENVTL. MGMT. (forthcoming May 2012).

2013] Community Participation & Environmental Justice in China 437

This paper will use a comparative analysis of China and the United

States to explore the correlation between socioeconomic factors and the

capacity of communities to participate in the environmental decision

making process, focusing on when during the regulatory process the

community’s voice is heard. Part I will provide an overview of waste

disposal in China and explore the increasing need for alternatives to

traditional landfills. Part II will seek to define “community participation” as

a distinct but related offshoot of the more commonly referenced theme in

China of “public participation.” Part III and IV will outline the relevant EIA

laws in China and the United States, respectively, utilizing case studies to

highlight the discrepancies in the types of community participation often

seen between low- and middle-income communities in both nations.

Finally, Part V will tie together the environmental justice implications of

this pattern of disparate access to participation platforms, and will make a

series of recommendations based upon the lessons learned from the United

States’ and China’s experience with the participatory process. These

recommendations will seek to achieve a more egalitarian EIA process,

measuring success as the ability of communities to participate meaningfully

in an original and thoroughly completed EIA.

I. THE WASTE DISPOSAL PROBLEM IN CHINA

China’s development has brought about unprecedented growth in

municipal solid waste (MSW), with no other country ever experiencing “as

large and as fast an increase in solid waste quantities.” 4 “As China’s

economy barrels onward, waste, a byproduct of prosperity, is piling up.”5 In

China, MSW by definition includes household, industrial, and hazardous

waste.6 MSW generation has increased rapidly in the last few decades, from

31.3 million tons in 1980 to 113 million tons in 1998.7 From 1979 to 2010,

the average annual growth of MSW in China has been approximately

7.08%.8 In 2004, China surpassed the United States as the world’s largest

4. Dong Qing Zhang, Soon Keat Tan & Richard M. Gersberg, Municipal Solid Waste

Management in China: Status, Problems, and Challenges, 91 J. ENVTL. MGMT. 1623, 1623 (2010).

5. Violet Law, As China’s Prosperity Grows, So Do Its Trash Piles, CHRISTIAN SCI.

MONITOR (July 28, 2011), http://www.csmonitor.com/World/Asia-Pacific/2011/0728/As-China-s-

prosperity-grows-so-do-its-trash-piles.

6. RUOFEI LI & SIBEI LIU, MUNICIPAL SOLID WASTE MANAGEMENT IN CHINA 23 (2010),

available at

http://www.rucsdigitaleprojektbibliotek.dk/bitstream/1800/5513/1/Municipal%20Solid%20Waste%20M

anagement%20in%20China.pdf.

7. Zhang, Tan & Gersberg, supra note 4, at 1624.

8. LI & LIU, supra note 6, at 8.


waste generator in spite of having a lower per capita MSW generation rate.9

By 2030, it is expected that “China’s annual solid waste quantities will

increase by another 150%—growing from about 190 million tons in 2004 to

over 480 million tons.”10

“MSW disposal in China is predominantly by means of landfill because

it is cost-effective and it can accommodate large fluctuations in the amount

and type of waste.”11 The current treatment ratio consists of 91.4% reliance

on landfills and 6.4% on incineration, with the remainder going to compost

and recycling.12 Hahn Chu, the environmental affairs manager of Friends of

the Earth Hong Kong notes: “As the government has tried to foster

recycling enterprises, the scale of those enterprises is no match [for] the

sheer volume of trash being generated day in and day out.”13 At these ratios

and with urban China’s history of increased and fast-paced development,

landfill overload has become a serious problem. “It is no doubt that the

present disposal situation is expected to deteriorate as China experiences

rapid urbanization. Housing developments are now increasingly encircling

the existing dumps and the environmental degradation associated with

[them] is directly affecting the population.” 14 Due to high population

density, high real estate values, and the subsequent challenge of finding

new sites that are located at a “reasonable distance from collection areas,”

landfills are becoming less economically viable. 15 Many landfills have

already closed ahead of their planned operational life, and reached capacity

before expected, 16 and all of Beijing’s remaining thirteen landfills are

expected to be full by 2014.17 The capital is not an isolated case, with the

largest landfill in Guangzhou also handling more than three times its

intended capacity.18

One option being widely considered to address the lack of available

landfill space and China’s ever-growing MSW production is increasing the

country’s use of incineration. 19 MSW incineration technology was

originally introduced in China at the end of the 1980s, and underwent rapid




12. Id.

13. Law, supra note 5.


15. Id.

16. Id.


18. Wang Ru, The Burning Issue, CHINA DAILY (July 28, 2009),

http://www.chinadaily.com.cn/cndy/2009-07/28/content_8479490.htm.



development in the 1990s.20 “More than 30 large and middle-scale cities

already have or are constructing MSW incineration plants. By 2006, there

were about 70 MSW incinerators and the total capacity had reached 33,010

ton[s][per] day.”21

A primary benefit of waste incineration is saving space; “during the

incineration process, 90% of the waste volume and 75% of the waste

weight [can] be reduced.” 22 Additional benefits include complete

disinfection of MSW and energy recovery.23 It is also a mature technology,

well integrated into the waste management systems of developed countries

like Denmark and Japan, suggesting that China could similarly adopt safe

incineration mechanisms.24 According to Professor Nie Yongfeng of the

College of Environmental Science and Engineering at Tsinghua University

in Beijing:

[Incineration] is the only practical way at present to curb the crisis

[of landfill overload]. Incineration technology has become mature

and safe, and has been adopted in many developed

countries . . . . The incinerator plant is an ideal waste-to-energy

facility that generate[s] renewable electricity or heat.25

As with many technologies, however, there are still a variety of risks

associated with incineration, including potentially toxic dioxin and air-

borne mercury emissions. Additionally, incineration causes “considerable

volumes of solid residues [including] bottom ash, grate sifting, fly ash, and

air pollution control . . . residue, which are generated at different points in

the process of MSW incineration.”26 Dioxins, a type of persistent organic

pollutant, have been linked by the World Health Organization to

impairment of the immune system, nervous system, and endocrine system.27

According to Zhao Zhangyuan, a retired expert formerly with the State

Environmental Protection Administration (SEPA),28 “[m]ost incinerators in

China lack proper management due to cost cutting. The garbage is often not

burned completely, so emissions of dioxins are inevitable.”29


21. Id.




25. Wang Ru, supra note 18.

26. Zhang, Tan & Gersberg, supra note 4, at 1627, 1629.


28. In March 2008, SEPA’s name was changed to the Ministry of Environmental Protection

(MEP).



Apart from human health concerns, some of the purported benefits of

MSW incineration exist only minimally in Chinese application. “In

comparison with developed countries, the net caloric value of MSW in

China is far too low for waste heat utilization and poorly suited to

incineration because of the high concentration of food waste and the

moisture content.” 30 China also does not recycle the byproducts of the

incineration process, including bottom ash, as consistently as other

countries, reducing the value of that benefit in the overall calculation.31 In

light of these problems, negative public response to plans to increase the

use of incineration facilities further underscores that “the use of incineration

technology . . . is by no means a perfect tonic to the nation’s ills.”32

II. DEFINING COMMUNITY PARTICIPATION

While the Western environmental movement blossomed in the 1960s

under pressure from U.S. and European citizens expressing discontent over

visible air and water pollution, the Chinese experience has traditionally

taken an alternative route.33 Guided primarily by the “mass line” method of

leadership in which public participation was integrated into a top-down

management scheme, the government was required to solicit the opinions of

communities, but in a way that differed tremendously from participation

structures founded on the rights of individual citizens.34 According to Pan

Yue, former Vice Minister of China’s Ministry of Environmental Protection

(MEP), “public participation means that common people have the right to

participation in the decision making process of public policy.” 35

Transitioning from the top-down mass line method to public participation

as so defined, means making the significant transformation to a rights-based

standard.36

A new development in China’s rights-based participation trajectory is a

move from broad “public participation” terminology toward a more

narrowly focused “community participation” standard. Reaching back to

the 19th century, the term “community” first appeared in Ferdinand


31. Id.


33. SIMON POWELL, MA JUN, INA POZON & XIE HONGZING, CHINA GREENING: THE

EMERGING ROLE OF THE PUBLIC 3 (2008), available at http://www.ipe.org.cn/Upload/Report-Public-

Role-EN.pdf.

34. Id.

35. Pan Yue (潘岳 ), Huanjing Baohu yu Gongzhong Canyu (环境保护与公众参与 )

[Environmental Protection and Public Participation], 13 Qianyan Luntan (前沿论坛) [THEORY FRONT]

12, 13 (2004).

36. Id.


Tonnies’ essay Community and Society.37According to Tonnies, community

is “a social group that is formed by those people that share the same values,

intimate relationships, and help each other.”38 Chinese scholars expanded

on these themes, defining communities as sharing the three elements of a

particular space, common connections, and social interaction.39 However,

“in China, the term community has always been ambiguous and had a low

profile during the decades when the Communist Party banned sociology.”40

With the reemergence of sociological studies in the late 1970s, Chinese

governance has put an administrative gloss on the notion of community. In

1986, the Ministry of Civil Affairs provided an official definition for urban

areas, equating community with either “a Street—the lowest level of formal

urban administration—or a neighborhood-level[,] semi-governmental

grassroots unit, known as the Residents’ Committee, which is overseen

directly by the Street.” 41 The Opinion on Promoting Nationwide Urban

Community Construction, issued in 2000 by the Ministry of Civil Affairs,

set forth reform principles for controlling urban community size to render

governance more effective. 42 “The reform focused on the relationship

between the Street-Residents’ Committee to render the Residents’

Committee a core community organization and to enable the community to

become independent from the urban administration.”43 Seeking to facilitate

the transfer of social welfare responsibilities from the central government to

local communities, the reform principles aim to control the size of urban

communities in order to be helpful to the management, service, and self-

governance of a community, and to be favorable to developing and sharing

resources.44 The Opinion also seeks to define community by outstanding

regional features that ensure the residents have a sense of belonging and

identification, suitable population intensity of 1000–3000 houses, and a

37. FERDINAND TONNIES, COMMUNITY AND SOCIETY 7 (Lin Rong-yuan trans., Beijing: The

Commercial Press 1999).

38. Id.

39. ZHENG HANG-SHENG, SHANGCHENG MODE: INVESTIGATION RESEARCH ON CHINESE

SPECIAL HARMONIOUS COMMUNITY CONSTRUCTION 19 (Beijing: World Publishing Company 2010).

40. Qingwen Xu, Community Participation in Urban China: Identifying Mobilization Factors,

36 NONPROFIT & VOLUNTARY SECTOR Q. 622, 626 (2007).

41. Id. at 627.

42. Opinion on Promoting Nationwide Urban Community Construction (promulgated by the

Min. of Civil Affairs, Dec. 13, 2000) (China).

43. Qingwen Xu, supra note 40, at 627.

44. Jiao Li-li, (焦莉莉), Chengshi Jumin Shequ Canyu Dongli ji Yingxiang Yinsu Yanjiu—Yi

Baotou shì S Shequ Wei ge an Yanjiu (城市居民社区参与动力及影响因素研究—以包头市S社区为

个案研究) [Study on Urban Community Participation Power and Relevant Influencing Factors: A Case

Study of S Community in Baotou 5] (2007) (unpublished Ms.D. Dissertation, Chongqing University)

(on file with Chinese author).


common use of thoroughfares including streets, roads, and lanes.45 While

the individual resident is the primary actor in community participation,

“there exist other subjects as well, including various community [non-

governmental organizations] (NGOs) and other institutions that are located

in the community.”46

“The recent interest in community participation throughout the world is

premised on the perceived benefits that community participation brings to

programs in terms of added efficiency, sustainability, and collective

community power.”47 The form that community participation takes, and the

success that it may have in producing sustained betterment, is intimately

related to the country’s social, political, and economic environment. 48

Among Western societies, those of higher educational and income levels,

are more likely to participate in community affairs than those of lower

socio-economic status. 49 Studies in China, however, have found that

motives for participation vary according to the objectives of the community

action, with community safety, social services, and environmental

improvement tending to attract more community participants.50

In the environmental context, the public can participate at three

different stages.51 Before decisions are made, the public can participate in

environmental assessments intended to identify potential environmental

impacts of a contemplated action in order to reveal their preferences and

interests.52 When a decision has been made to proceed with a project, EIA

mechanisms become relevant, and the government is required to notify the

public and solicit opinions, often through public hearings.53 Finally, when

projects have been completed and pollution or other environmental harms

have actualized, “the public can redress their grievances by suing polluters

in the courts or . . . complaining to the mass media or the government, or

taking the issue in[to] their own hands to protest.”54 As highlighted by the

case studies in Parts III and IV of this paper, and as discussed in Part V, the

45. Id.

46. Yang Gui-hua (杨贵华), Zhuanhuan Jumin de Shequ Canyu Fangshi Tisheng Jemuin de zi

Zuzhi Canyu Nengli (转换居民的社区参与方式提升居民的自组织参与能力) [Change the Mode and

Enhance the Capability: A Study of Self-Organizing Capacity in Urban Communities], FUDAN (复旦学

报) FUDAN J. 127, n.1 (2009).

47. Qingwen Xu, supra note 40, at 622–23.

48. Id. at 624.

49. Id.

50. Id. at 625.

51. Li, Liu & Li, supra note 3.

52. Id. at 4.

53. Id.

54. Id.


stage of community participation in facility siting decisions can frequently

be correlated with the socioeconomic status of the community.55

III. PARTICIPATION THROUGH EIAS IN CHINA

A. Relevant EIA Laws and Regulations

The transition to embracing participation in China began in earnest in

2003 when the Law on Environmental Impact Assessment (EIA Law) came

into effect, representing a watershed moment in China as the country’s first

law to require public participation in any decision making process. 56

“Although EIAs had existed in China—at least conceptually—since 1973,

prior to 2003, the public had been effectively absent from the process.”57

Until China’s Environmental Protection Act was enacted in 1979, the EIA

process was not statutorily mandated and was a mere administrative

function.58 Even under the Environmental Protection Act, however, EIA

procedures were not stipulated in detail.59

The EIA Law continued to progress and, in 1998, the Regulations on

the Environmental Management of Construction Projects required

solicitation of “the views of the units and residents of the locality wherein

the construction project is located.”60 The Regulations on Environmental

Management further specified that construction projects of all sizes be

subject to EIAs and that “the detail of the environmental impact report

varies, respectively, with the likelihood that the proposed project will cause

significant environmental harm.”61 For projects having a potentially major

environmental impact, developers must prepare an environmental impact

report (EIR), the most comprehensive type of documentation. 62 Projects

55. See infra Parts III.C, IV.C, V.A.; Li, Liu & Li, supra note 3.

56. Law on Environmental Impact Assessment (promulgated by the Standing Comm. Nat’l

People’s Cong., Oct. 28, 2002, effective Sept. 1, 2003) (China); Jesse L. Moorman & Zhang Ge,

Promoting and Strengthening Public Participation in China’s Environmental Impact Assessment

Process: Comparing China’s EIA Law and U.S. NEPA, 8 VT. J. ENVTL. L. 281, 282 (2007).

57. Moorman & Zhang, supra note 56.

58. Id. at 297.

59. Bo-sin Tang, Siu-wai Wong & Milton Chi-hong Lau, Social Impact Assessment and

Public Participation in China: A Case Study of Land Requisition in Guangzhou, 28 ENVTL. IMPACT

ASSESSMENT REV. 57, 59 (Apr. 15, 2007), available at

http://www.ucdenver.edu/academics/colleges/Engineering/research/CenterSustainableUrbanInfrastructu

re/LowCarbonCities/Documents/Bo-sin%20Tang/Social%20Impact%20Assessment.pdf.

60. Jianshe Xiangmu Huanjing Baohu Guanli Tiaoli (建设项目环境保护管理条例 )

[Regulations on the Environmental Management of Construction Projects] (promulgated by the State

Council, Nov. 29, 1998) art. 15 (China).

61. Moorman & Zhang, supra note 56, at 298.

62. Id. at 300.


with a light potential environmental impact require only an environmental

impact form (EIF), and projects deemed to have an even lower potential

environmental impact only require an environmental impact registration

form (EIRF), without any further assessment.63

The 2003 EIA Law essentially built on the processes implemented by

the 1998 construction regulation, with two important additions.64 “First, it

expands the EIA mandate to encompass government plans as well as

construction projects. . . . [T]he EIA Law adds a Strategic Environmental

Assessment (plan-based) overlay to the existing EIA process . . . .” 65

Second, and more importantly for the scope of this paper, the EIA Law

requires that the public participate in the process.66 Article 11 of the EIA

Law requires that the project drafting organ “hold evidentiary meetings or

testimony hearings or adopt other forms of soliciting opinions on the

environmental impact report from relevant work units, experts and the

public” prior to submitting the plans for approval.67 Additionally, Article 21

requires that the drafting organ explain its decision to adopt or reject public

comments: “explanations of adoption or rejection of the opinions of

relevant work units, experts and the public shall be attached to the

environment impact report submitted . . . for approval.”68

Seeking to enhance participation in the EIA process, the Provisional

Measures on Public Participation in Environmental Impact Assessment,

enacted in 2006, built on the existing public participation framework by

making disclosure of basic information regarding the project and the

contact details of the developers and EIA institution “a fundamental

requirement.”69 “Prior to the implementation of the Provisional Measures,

there was no legal requirement of notice to the public in the EIA process.

The general public was not normally informed of any forthcoming projects

since only limited public participation, if any, might occur after the drafting

of the EIA reports.”70 The Provisional Measures required the disclosure of

contact information and basic background information within seven days of

the project developer being hired. 71 An improvement over the general

requirements set forth by the EIA Law and building off the Provisional

63. Id.

64. Tang, Wong & Lau, supra note 59, at 60.


66. Id.

67. Law on Environmental Impact Assessment, supra note 56, at art. 11.

68. Id. at art. 21.

69. POWELL, MA, POZON & XIE, supra note 33, at 23.

70. Yuhong Zhao, Public Participation in China’s EIA Regime: Rhetoric or Reality?, 22 J.

ENVTL. L. 89, 103 (2010).



Measures, Article 11 of the subsequent Measures on Open Environmental

Information (for Trial Implementation) required disclosure of seventeen

different categories of information prior to the submission of an EIA

report.72 The details requiring disclosure under the Open Environmental

Information measures include:

(1) A description of the potential environmental impacts and a

summary of preventive or meditative measures including emergency

plans;

(2) Information on the acceptance of the EIA documents;

(3) Comments and complaints issued by the public and subsequent

investigations;

(4) Information on the collection of pollution fees and administrative

penalties; and

(5) Disclosure of enterprises that have a history of “serious” pollution

accidents or events.73

B. Implementation Challenges

In part, the laws seem to be working to awaken the public

consciousness and encourage participation even in the absence of ideal

implementation conditions. “Since 2002, the number of complaints to the

environmental authorities has increased by 30% every year, reaching

600,000 in 2004; while the number of mass protests caused by

environmental issues has grown by 29% every year.”74 Additionally, the

first ten months of 2009 saw as many Environmental Administrative

Reconsideration cases as the total number for 1997–2007. 75 However,

“[w]hile noticeable progress has been made to facilitate public participation

in the EIA process, the public still finds it extremely difficult to provide

meaningful input that could have real impact on the ultimate decision made

by the government.”76 As Pan Yue noted, this challenge arises because

“details of the conditions and procedures for public participation have not

yet been clearly stipulated. That is to say, faced with a specific problem, the

72. Measures on Open Environmental Information (for Trial Implementation) (promulgated

by the State Envtl. Prot. Admin., Feb. 8, 2007, effective May 1, 2008) art. 11 (China).

73. Id.

74. Ma Jun, How Participation Can Help China’s Ailing Environment, CHINA DIALOGUE

(Jan. 31, 2007), http://www.chinadialogue.net/article/show/single/en/733-How-participation-can-help-

China-s-ailing-environment.

75. Lei Xie, Environmental Justice in China’s Urban Decision-Making, 3 TAIWAN IN COMP.

PERS. 160, 161 (2011).

76. Yuhang Zhao, Assessing the Environmental Impact of Projects: A Critique of the EIA

Legal Regime in China, 49 NAT. RESOURCES J. 485, 498 (2009).


public still does not know how to participate . . . The public cannot find a

way to participate.” 77 Exacerbating this problem, the laws make no

provisions for public involvement under some project scenarios. The type

of EIA document required for a proposed project is pre-determined, without

public input, by a SEPA-published catalogue describing categories of

projects. Under the EIA Law, a full EIA process is not necessary for

projects only requiring an EIRF with anticipated “low-impact” to the

environment, meaning “this requirement amounts to little more than a

check-the-box formality.”78

The struggle for meaningful involvement manifests itself in the absence

of public participation in the initial stages of project design, “where the

public has little opportunity to access information regarding proposed

projects or participate in the decision-making process.”79 Under the 2006

Provisional Measures, for instance, the public is technically permitted to

submit concerns and suggestions prior to the EIR submission, but “at this

stage it is difficult for concerned citizens to raise informed questions.

Extensive information disclosure and public participation takes place within

a very limited space of time before the draft EIR is submitted to

environmental agencies for approval.” 80 According to the EIA Law

requirements, the public has only ten days to comment on a proposed

project.81 “Since 2006, an increasing number of proposed projects have

begun making initial disclosures and posting abridged additions of the EIA

report; however, these disclosures are often very brief and lack essential

details.”82 SEPA “expressly rejected the public right of access to full EIA

documents,” excluding them from the “‘government information’ required

to be disclosed” under China’s two disclosure laws.83 “Without access to

accurate and reliable project information, the public is placed at a great

disadvantage. An opportunity to comment does not necessarily lead to

meaningful public input.”84 Further, Chinese reports find that there are still

many infrastructure projects that have not implemented the EIA process

properly or at all:

77. Pan, supra note 35.



80. Id. at 23.

81. Id. at 25.

82. Id.

83. The disclosure laws include the Measures on Open Environmental Information (for Trial

Implementation) and the Regulations on Disclosure of Government Information. Assessing the

Environmental Impact of Projects, supra note 76, at 500.

84. Id.


According to a 2006 survey on new projects under

construction . . . the rate of EIA implementation is low and

violation of environmental rules is rampant. While provinces claim

that the EIA was implemented at a rate of 86.9%, the central

government’s own audit found that the rate was much lower in

provinces such as Shanxi, Guangdong, Guizhou, Yunnan and

Gansu, at well below 50%.85

This problem of implementation is exacerbated by the fact that in cases

where the EIA rules are violated or ignored, neither the EIA Law itself nor

the Provisional Measures provide any means for seeking legal redress.86

Even disregarding the challenges created by the language of the EIA

Law and its regulations, a variety of cultural and social challenges underlie

the ineffectiveness of the EIA process. In spite of increased public reporting

to attract investment, many local governments have adopted a policy of

“pollute now, clean up later.”87 Development zones and industrial parks are

created where environmental standards can be lowered, and some major

polluters have even been classified as “eco-friendly” to prevent the

environmental authorities from making spot checks.88 “At the start of 2007,

SEPA announced a further 82 projects, with a total investment value of

over 112 billion Yuan, had been found in serious breach of the EIA law and

regulations on the integration of health and safety measures into project

design.”89 Many officials, particularly at the local level, perceive the EIA

process to be an obstacle rather than an incentive, “and do not consider [the

rules to be] capable of adding value to the development process.”90

In terms of including the public in the EIA process, the assumption

exists in many Chinese cities “that the public still lacks the knowledge and

capacity to participate in policy formulation and decision making. Such an

assumption has led to an ‘expert-cult’ phenomenon in Chinese development

planning, especially in . . . environmental protection.” 91 Bolstered by the

loose definition of “the public” in the EIA Law and the discretion given to

project proponents to determine who represents the potentially affected

population,“it is common to treat the views and comments of experts and

even relevant local government bureaus as ‘public’ opinion.” 92 With regard


86. Id.

87. Ma, supra note 74.

88. Id.

89. Id.

90. Tang, Wong & Lau, supra note 59, at 68.

91. Id. at 60.

92. Public Participation in China’s EIA Regime, supra note 70, at 109.


to experts, “participation” often takes the form of a review so they can

provide technical comments to the project proponents.93 Representatives of

government departments have also admitted that public participation is

sometimes ignored because of the perception that “involving the general

public places risks on achieving anticipated quantitative economic targets,”

increasing costs and time delays which directly impact promotion

opportunities among officials.94 The mechanisms available to communities

to counteract the often-failed EIA system in China vary widely, often

according to socioeconomic status, as highlighted by recent developments

surrounding waste incineration facilities in two communities.

C. Chinese Case Studies

1. High Participation Capacity Community: Panyu, Guangzhou Province

In coordination with the Eleventh Five-Year Plan for Intermediate

Waste Disposal, the Panyu district in Guangzhou Province was officially

selected as the location for city’s next waste incineration facility. 95 In

September 2009, a local newspaper, citing unofficial sources, revealed

plans for the new facility to the Panyu community.96 An upper-class, white-

collar neighborhood, the residents of Panyu began to conduct online

research, and grew panicked to learn of the water, air, and sound pollution

created by a similar facility built in another district in Guangzhou three

years earlier.97 Opposition erupted in response both to health concerns and

“the government’s hard stance in trying to bulldoze through the project.”98

Panyu residents “wrote proposals to relevant government departments,

printed T-shirts with slogans, and demonstrated in front of the local

supermarket. . . . [O]thers participated enthusiastically in a special section

on Jian-Wai-Jiang, the community forum . . . titled ‘The Waste Incineration

and Environmental Protection.’”99

93. Da Zhu & Jiang Ru, Strategic Environment Assessment in China: Motivations, Politics,

and Effectiveness, 88 J. ENVTL. MGMT. 615, 624 (2008).

94. Terry H.Y. Li, S. Thomas Ng & Martin Skitmore, Public Participation in Infrastructure

and Construction Projects in China: From an EIA-Based to a Whole-Cycle Process, 36 HABITAT INT.

47, 50 (2012).

95. Carrie Yang, Waste Incineration and Environmental Protection Project, TECHNOLOGY

FOR TRANSPARENCY NETWORK, (Feb. 23, 2010),

http://transparency.globalvoicesonline.org/project/waste-incineration-and-environmental-protection-6.

96. Id.

97. Id.

98. James Pomfret, Hundreds in South China Oppose Waste Incinerator, REUTERS, (Nov. 23,

2009), http://www.reuters.com/article/2009/11/23/us-china-environment-incinerator-

idUSTRE5AM0JS20091123.

99. Yang, supra note 95.


The residents’ mobilization attracted the attention of traditional media,

prompting the Panyu Municipal Government to hold a press conference

intended to dispel pressure from the continuous reports.100 In response to

protests, officials ensured no action would be taken prior to completion of

an EIA, but affirmed that the waste incinerator was still the best option to

address the waste demands of Panyu’s 2.5 million residents. 101 On

November 5, 2009, despite government reassurances, the Guangdong

Shengqing Research Center found that “97.1% of Panyu residents were

opposed to the incinerator project, and almost all of them would [request] a

second environmental evaluation if the project passed.”102 On November

23, more than a thousand residents gathered outside the district’s City

Administration Department building with banners and masks to continue

protesting.103 On December 20, the Party Committee Secretary of Panyu

came to the community to speak with the residents. During the visit, he

informed the community “that construction of the incinerator project had

come to a halt.”104

2. Low Participation Capacity Community: Haian, Jiangsu Province

On the other side of the spectrum is the Haian community in Jiangsu

Province, representative of many communities in China that do not have

ready access to the same platforms of participation available in Panyu. Built

in 2006, the Haian Waste Incineration Plant operated without facility

approval or discharge permits from the city’s environmental protection

agency, unbeknownst to Haian residents. 105 In 2008, SEPA released a

document setting the safe residential distance from incinerator facilities at

300 meters, while the Haian facility continued to operate in close proximity

to residents, inspiring the nation’s first suit against a MSW incinerator.106

Xie Yongkang was born on May 12, 2008 with brain paralysis and

epilepsy, but the boy’s lower-class family gave no thought to what caused

his disability until his father encountered a flyer advocating for demolition

of the incinerator.107 Operational throughout Mrs. Xie’s pregnancy with

100. Id.

101. Pomfret, supra note 98.

102. Yang, supra note 95.

103. Id.

104. Id.

105. Wang Xiaoqing (记者王晓庆), Zhongguo Lese Fenshao di yi an (中国垃圾焚烧第一案)

[The First Case of China MSW Incineration], CAIXIN CENTURY (Nov. 28, 2011),

http://magazine.caixin.com/2011-11-26/100331655.html.

106. Id.

107. Id.


Yongkang, the Haian Waste Incineration Plant was only 190 meters away

from the Xie’s home.108 Inspired by the flyer, Mr. Xie grew convinced there

was a connection between the two to three millimeters of dust in the

residents’ yards, the deaths of domestic animals, and the increase in

premature births and cancer deaths.109 In 2010, he sued the incineration

facility on behalf of his son in Haian County Court.110

As with most environmental litigation in China, proving causation

presented a difficult hurdle for Mr. Xie’s case.111 On appeal, however, the

Nantong City Intermediate Court adopted a more relaxed approach to

causation, shifting the burden of proof to the defendant facility to

demonstrate its activity “would not lead to the harm” alleged.112 Despite

this victory, the family’s lawyer continued to express reservations about the

ultimate outcome, noting the resistance of local protectionism would

continue to provide obstacles to compensation. 113 Long after Mr. Xie’s

lawsuit went to court and the media began covering Yongkang’s story,

dozens of Haian villagers continued to live within 300 meters of the site of

the incinerator.114

IV. PARTICIPATION THROUGH EIAS IN THE UNITED STATES

A. Relevant EIA Laws and Regulations

As in China, the plain language of the U.S. EIA law suggests a

consistent, guaranteed outlet for meaningful community participation in

siting decisions and other projects with potential environmental impact.115

Broadly declaring that “it is the continuing responsibility of the Federal

Government to use all practicable means . . . to the end that the Nation

may . . . assure for all Americans safe, healthful, productive, and

aesthetically and culturally pleasing surroundings,” the 1970 National

Environmental Policy Act (NEPA) is seen as the genesis of all modern

federal environmental law.116 “The basic policy of NEPA is to assure that

all branches of government give proper consideration to the environment

prior to undertaking any major federal action which significantly affects the

108. Id.

109. Id.

110. Id.

111. Id.

112. Wang Xiaoqing, supra note 105.

113. Id.

114. Id.

115. 42 U.S.C. § 4321 (2006);

116. Id. § 4331(b); BARRY E. HILL, ENVIRONMENTAL JUSTICE: LEGAL THEORY AND PRACTICE

3 (2009).


environment.”117 To that end, the NEPA process begins with a preliminary

assessment of the likelihood that a proposed federal action will have a

significant environmental impact, and thereby require a more detailed

Environmental Impact Statement (EIS).118 This preliminary assessment is

called an Environmental Assessment (EA). An agency is not required to

prepare an EIS if it makes a finding of no significant impact (FONSI). Once

the agency makes the FONSI avaialable to those directly affected by the

federal action, the NEPA process ends.119 If an EIS is required a Notice of

Intent (NOI) is issued to provide the public with a description of the

proposed project and its alternatives, and clarify the scope of the EIS.120

The Council on Environmental Quality (CEQ), a three-member

advisory panel within the Executive Office, provides regulations to clarify

the procedural processes of NEPA. 121 These regulations dictate the

participation requirements of an EIS:

A draft EIS, once prepared, is to be furnished to any person,

organization, or agency that is involved with the proposed action,

or upon specific request. The agency preparing the EIS is required

to solicit comments from affected parties, experts, and the public,

who are usually afforded no less than forty-five days to review and

comment on the draft.122

While the regulations leave discretion to the relevant federal agency

regarding the public comment period, the regulations instruct “that [public]

hearings might be appropriate where there is substantial controversy or

interest surrounding the proposed action.”123 When an agency plans a public

hearing for a draft EIS, the document must be made available to the public

at least fifteen days prior to the hearing.124

After the time for public comment on the draft EIS has concluded, the

agency completes a final EIS, “addressing all substantive comments by

either amending its analyses, or by explaining why a particular comment

does not warrant agency response.”125 The agency then files the final EIS

with the U.S. Environmental Protection Agency (EPA), and distributes it

117. HILL, supra note 116, at 3, n. 11.


119. Id. at 291–92.

120. Id. at 292; POWELL, MA, POZON & XIE, supra note 33, at 22.


122. 40 C.F.R. § 1506.10(c) (2011).


124. Id.

125. Id. at 293


once more to interested parties and the public.126 A final decision cannot be

made by the agency on a proposed action “until at least thirty days after the

EPA has public notice of the final EIS in the Federal Register, or 90 days

after the draft EIS is made public, whichever is later.”127 Once a decision

has been made, the EIS is finalized through a public Record of Decision

(ROD), stating, “‘whether all practicable means to avoid or minimize

environmental harm from the alternatives selected have been adopted, and

if not, why they were not,’” thereby ensuring public notification through the

final stage of the process.128

B. Implementation Challenges

Despite the language of NEPA and its regulations, there is a history of

U.S. citizens, particularly those coming from more vulnerable

socioeconomic or minority backgrounds, struggling to ensure equal

implementation and enforcement of the law’s protections.129

A prevailing assumption in this country has been that pollution is a

problem faced equally by everyone in society . . . [however,]

whether by conscious design or institutional neglect, communities

of color in urban ghettos, in rural “poverty pockets,” or on

economically impoverished Native-American reservations face

some of the worst environmental devastation in the nation.130

This environmental devastation has stemmed in large part from the fact

that hazardous waste sites, incinerators, and other pollution-generating

facilities are disproportionately located in or near minority and low-income

communities.131 Some literature even argues that environmental and land

use laws “have provided more environmental benefits to the white and

affluent while providing fewer benefits to or worsening the environmental

conditions of the poor and communities of color” due to the laws’ failure to

consider distributional consequences.132 “To the extent that distributional

consequences were considered, it was assumed that reducing aggregate

pollution levels would make everyone better off. When distributional

126. 40 C.F.R. § 1506.9 (2011).


128. Id. at 294.

129. HILL, supra note 116, at 4.

130. Id. at 7.

131. Id. at 9.

132. Alice Kaswan, Environmental Justice: Bridging the Gap Between Environmental Laws

and “Justice,” 47 AM. U. L. REV. 221, 268 (1997).


issues were raised, federal institutions declined to consider the connection

between environmental protection and race or other socioeconomic

issues.” 133 The historically white and upper-class nature of the

environmental movement and the ongoing challenges associated with

minority and low-income status in the United States help to further explain

why even with NEPA’s strong public paritipation language, certain voices

remain left out of environmental politics and planning.134

These disempowered communities disproportionately struggle with

poverty, unemployment, inadequate housing, and poor health. Such

overwhelming and cumulative constraints help explain the continued

underrepresentation of low-income communities of color in environmental

activism.

These communities cannot afford the luxury of being primarily

concerned about the quality of their environment when confronted

by a plethora of pressing problems related to their day-to-day

survival. Within this context, [minority and low-income]

communities become particularly vulnerable to those who advocate

the siting of a hazardous waste facility as an avenue for

employment and economic development.135

The limitations these burdens place on less affluent communities also

restrict economic mobility. Minority and low-income communities do not

have the same resources or opportunities “to vote with their feet” and

relocate away from unhealthy environments. 136 This stifles local opposition

to polluting industries, which can manifest in a false choice between

economic opportunity and community health.137 Communites assume that

with these industries will come new employment opportunities, an

increased tax base, and civic improvements; in reality, however, these

economic benefits rarely materialize. 138 Finally, the siting of pollution-

generating facilities creates a positive feedback loop, as areas dominated by

such activities attract further environmentally degredative development.139

133. Id. at 260.

134. HILL, supra note 116, at 14–15.

135. Id.

136. Id. at 19.

137. Robert D. Bullard, Environmental Justice in the 21st Century, EJRC.EDU,

http://www.ejrc.edu/ejinthe21century.htm (last visited Jan. 27, 2013).


139. Id.


C. United States Case Studies

1. High Participation Capacity Community: Houston, TX

A landmark dispute in the United States took place in 1979 when

African American homeowners began the fight to keep a landfill out of

their suburban, middle-class Houston neighborhood. 140 Residents

established the Northeast Community Action Group (NECAG) and filed a

class action suit to prevent the facility’s construction.141 Plaintiff’s were

ultimately unable to demonstrate racial discrimination to establish the

injunction.

Eight years after the NECAG suit, the Commission for Racial Justice

produced a study titled Toxic Waste and Race in the United States: A

National Report on the Racial and Socio-Economic Characteristics of

Communities with Hazardous Waste Sites. While the study found race “to

be the most potent variable in predicting where these facilities were

located,” the Houston community demonstrates the level of activism that

can be independently achieved under accommodating socioeconomic

conditions, even in a predominantly colored community.142

2. Low Participation Capacity Community: Kettleman City, CA

Further West in 1979, a toxic waste landfill was built in a primarily

Spanish-speaking, immigrant farm worker community in Kettleman City,

California. 143 Trucks filled with chemical waste passed daily through the

town center in order to reach the facility.144 In the mid-1980s, the U.S. EPA

found the landfill to be in repeated violation of its permit, charging the

company with fines for faulty record keeping and leakage into water

supplies. 145 In 1990, the same company proposed building a hazardous

waste incineration facility not far from the landfill to take advantage of the

preexisting dump.146 As the permitting process for the new incineration

facility began, meetings, hearings, and technical information were provided

to the Kettleman community only in English.147

140. Bullard, supra note 137.

141. Id.

142. Id.

143. Stop: Kettleman City, INVISIBLE5.ORG,

http://www.invisible5.org/index.php?page=kettlemancity (last visited Jan. 27, 2013).

144. Id.

145. Id.

146. Id.

147. Id.


At this point, Greenpeace’s Southwest Toxic Campaign Coordinator

was alerted to the company’s expansion plans, and through local contacts,

reached out to community members.148 With support from Greenpeace and

other outside organizations, the Kettleman community organized to oppose

the planned incinerator. “In February 1991, a lawsuit filed by California

Rural Legal Assistance on behalf of the community coalition El Pueblo

Para el Aire y Agua Limpio formally stated that the permit process violated

the rights of residents” because none of the information was provided to the

community in their language. 149 By 1994, through the efforts of

environmental non-profits, the Kettleman community, and two successful

lawsuits filed by California Rural Legal Assistance, the company eventually

abandoned its incinerator facility plans, although the original landfill

continued to operate.150

V. ENVIRONMENTAL JUSTICE IMPLICATIONS & RECOMMENDATIONS

A. Environmental Justice: Not in My Backyard (NIMBY)

As highlighted by the case studies in both China and the United States,

when participation is marginalized, the opportunities available to the

community often depend as much on its capacity to participate as on its

desire to participate.151 This reality raises important environmental justice

implications.

As a community-based movement, environmental justice seeks to

address the disproportionate burdens of environmental degradation borne

by low-income communities of color. With regard to participation,

environmental justice means “‘the fair treatment and meaningful

involvement of all people regardless of race, color, national origin, or

income with respect to the development, implementation, and enforcement

of environmental laws, regulations, and policies.’”152 Six factors are said to

contribute to environmental injustices: “(1) relative lack of political power;

(2) economics; (3) lack of participation in the environmental movement; (4)

racism; (5) NIMBY; [and] (6) segregated housing and immobility.”153 As

148. Debating Risk & Environmental Jusice in Kettleman City: Conflict in the Siting of a

Hazardous Waste Incinerator, WASHINGTON.EDU.,

http://courses.washington.edu/alisonta/pbaf590/pdf/Kettleman-City-Case-A.pdf (last visited Jan. 27,

2013).

149. Stop: Kettleman City, supra note 143.

150. Id.

151. Li, Liu & Li, supra note 3, at 18.

152. Colin Carrol, Editorial, NIMBY Suits: The Crutch of the Unskilled Environmental

Advocate, VT. J. ENVTL. L. (Oct. 10, 2003), available at http://www.vjel.org/editorials/ED10038.html.

153. Id.


noted in a comparative study of three infrastructure projects in China,

ownership of private property, social affiliations, and a variety of other

socio-economic factors dictate access to public participation in

environmental decision-making.154 In the case of middle class communities

like those highlighted in Panyuand Houston, concentrated costs but

dispersed benefits often fostersthe attitude of “not in my backyard.”155

The NIMBY phenomenon occurs when “affluent communities with

resources to resist the siting of facilities in their communities have shifted

the siting efforts of industry to other communities.”156 Sociologist Robert

D. Bullard has commented that “‘Somewhere Else, USA’ often ends up

being located in poor, powerless, minority communities.”157 The NIMBY

attitude among middle-class communities works in concert with the

interests of industry, which often seeks the path of least resistance, targeting

areas less likely to express opposition to siting.158 Because low-income

communities of color often lack the same resources or government and

industry contacts sustaining proactive organizing in affluent communities,

polluting facilities end up there. 159 “Under conditions of social and

economic inequality, only some people . . . will have the clout and the

funding to get the powers that be to pay attention to their NIMBY

claims.”160 While less affluent communities are occasionally successful in

preventing polluting industry projects from being built, this success is often

both temporary and reliant on support from individuals and organizations

outside of the community.161

154. Li, Liu & Li, supra note 3.

155. Id. at 17.


157. Id.

158. Vicki Been, What’s Fairness Got to Do with It? Environmental Justice and the Siting of

Locally Undesirable Land Uses, 78 CORNELL L. REV. 1001, 1002 (1993).


160. Kyle Powys Whyte, Why Not Environmental Injustice?, 13 ETHICS, PLACE & ENV’T. 333,

333 (2010).

161. In halting dam construction on the Nu River, the national media and scientists were the

primary sources of opposition.

[T]he local residents failed to take a side and organize themselves to engage in the

debates. They were remotely located from each other in the mountains and organizing

would have incurred high time and financial costs in communicating and traveling,

especially when the level of Internet literacy was low among those farmers and

herders. Thus, facing loosely organized and weak opposition from the local people, the

idea of developing hydropower on the Nu River was picked up again early this

year . . . .

Li, Liu & Li, supra note 3, at 13; see infra Part IV.C.2.


B. Recommendations

While there may be means to address the waste issue in China more

directly through recycling or other waste reduction initiatives, the reality is

that incineration facilities will be a major part of the Chinese waste disposal

landscape in coming years. Rather than demand an alternate reality, this

paper sought to unearth the reasons for the lack of meaningful participation

in the existing system.

Bridging the current divide between government and private sector

perceptions of community participation, and achieving the goal of

meaningful, participatory environmental decisionmaking requires a series

of changes to the existing EIA process in China. 162 The following

recommendations seek to improve the quality of community participation in

the EIA process under the existing legal and regulatory scheme, rather than

calling for the implementation of a new law that would likely carry just as

many promising, but ultimately toothless, protections for communities.

By comparing the challenges that face comprehensive implementation

of EIA laws in China and the United States, it is clear that important

differences exist between the political and cultural systems. Many of the

shortfalls in China can be traced back to the “traditional Chinese culture of

compliance and its associated autocratic mode of governance and decision-

making.” 163 Under this regime, “the social interests of the mass were

unilaterally determined by the state. Individuals were required to ‘sacrifice’

their personal interests for the national/collective interests when the former

came into conflict with the latter.”164 As a result, there remains an ongoing

tension between the limitations placed on participation in the political

process and the legislated requirement for participation in EIAs.165 This is a

marked departure from Western views, where “individual rights must not

be trespassed or sacrificed for the interests of others.”166 Recognizing that

these important differences in Chinese culture often prevent identical

application of techniques used by communities in the United States, a

variety of mechanisms can still be applied by Chinese communities to

increase their participatory capacity, ultimately achieving a more

meaningful EIA process.

162. Li, Ng & Skitmore, supra note 94.

163. Id. at 52.

164. Tang, Wang & Lau, supra note 59, at 68.

165. Li, Ng & Skitmore, supra note 94, at 52.

166. Tang, Wang & Lau, supra note 59, at 68.


1. Make Use of the Courts

In the United States, public participation laws were largely treated as

voluntary “until lawyers took cases to court to enforce the public’s

participation rights. In such cases, the experience of going through the

required steps . . . can cause disclosure of valuable information and educate

the public about its legal rights.” 167 Courts can be a crucial force in

changing agency behavior in order to better integrate community opinion,

and there has been a growing awareness among Chinese citizens that this

option is available to seek remedies. 168 At present, the restrictive

interpretation of standing under Chinese administrative law places a high

bar to community members or NGOs seeking judicial review of EIAs.169

Despite the challenges created by the Chinese judicial system, increasing

use of the courts will likely improve the quality of participation across all

communities.

a. Environmental Public Interest Litigation

Defined as the ability of “any citizen, social group, or national

department to bring a lawsuit in its name to protect the public interest,” this

option is largely inaccessible under Chinese environmental law, where only

the direct victims have the ability to bring a civil lawsuit.170 Pan Yue argues

for achieving environmental public interest litigation by gradually

broadening the scope from direct victims of environmental issues to

environmental protection departments, to qualified environmental

protection organizations, and finally to the general public.171 The public

prosecutor’s office has expressed interest in environmental public interest

litigation, which could provide an important outlet and investigative

authority through which communities could appeal even absent judicial

reform. 172 “Judicial review of the administrative approval of EIA

documents can provide an additional check on agency behavior and

improve the quality of the approval process . . . this would significantly

strengthen the role and function of EIA as a regulatory tool.”173

167. Moore & Warren, supra note 1, at 17.

168. Assessing the Environmental Impact of Projects, supra note 76, at 519–20.

169. Id. at 521.

170. Pan, supra note 35.

171. Id.


173. Assessing the Environmental Impact of Projects, supra note 76, at 521.


b. Tort Liability

Following the example of the Xie family in the Haian case study, an

alternative method for accessing the courts is to individually or communally

seek compensation for harms caused by the polluting facility. This outlet is

particularly promising in light of the intermediate court’s decision in Mr.

Xie’s case to revaluate causation, shifting the burden to the polluting

facility to demonstrate that it has not caused harm. 174 While judicial

precedent does not hold the same weight in China as it does in the United

States, this is still a promising step forward for those seeking redress.

In the short term, this method may perpetuate the environmental justice

issues raised by low participation capacity communities only being able to

act, or participate, after harm has already been caused. However, the

evolution in judicial understanding of major legal hurdles like causation

may prompt a more widespread shift toward a reliable judicial check on

agency action. A community’s bargaining power would be substantially

enhanced if all stakeholders knew in advance of litigation that the facility’s

proponents would have to prove that the facility’s pollution was innocuous.

The outcome of other suits for liability may effectively force a more

balanced relationship between low participation capacity communities and

project proponents without requiring a drastic increase in technical

expertise or resources from the community members. Such a trend would

also weave a cooperative strand through the otherwise dispersed low

capacity communities in China, potentially increasing the participatory

capacity of each.

2. Stakeholder Gatherings

In an effort to move away from the formal expertise-dominated

approach thriving in China, community members must be recognized as

experts in their own right, with the experience of living with environmental

hazards.175 Improving the community’s participation status to one of full

partner instead of a requirement on a checklist means fostering co-planning

relationships and site-specific community groups.176 This recommendation

will be difficult for communities to implement absent willingness from

project proponents. The attention siting issues are receiving in light of the

recent flood of protests, however, should work in the communities’ favors

174. Wang Xiaoqing, supra note 105.

175. Eileen Gauna, The Environmental Justice Misfit: Public Participation and the Paradigm

Paradox, 17 STAN. ENVTL. L.J. 3, 54 (1998).

176. Id.


by reshaping the cost-benefit analysis done by project proponents, and

placing a premium on community acceptance.

a. Collaborative Problem Solving

While public hearings by name have been part of the Chinese landscape

for several years, concern with finding “harmonious” solutions to public

conflicts177 means this forum currently exists as another mechanism that

works for well-connected individuals to the detriment of low participation

capacity communities. 178 Before the EIA process begins for a specific

project, “community residents should be able to meet with officials to

discuss existing risks and potential non-compliance by [existing] facilities

located within their community.”179 The informal nature of these gatherings

allows for less technical, more reciprocal communication and education,

creating an environment where common-sense solutions can develop early

on to avoid conflict and litigation later.180

Collaborative problem solving is “a process involving interdependent

parties identifying issues of mutual interest, pooling their energy and

resources, address[ing] their differences, charting a course for the future,

and allocating implementation responsibility among the group.” 181 This

approach is often seen as valuable by NGOs and community stakeholders

because collaboration offers an alternative to litigation, which can be

dragged out and deplete their resources, particularly when up against major

industry players. 182 Similarly, “companies have come to believe that

proactive and progressive community outreach can . . . allow them to

operate and maintain their business profitably in communities where there

had previously been negative relationships.”183 “Because the emphasis is on

concrete, feasible contributions to community quality of life rather than

abstract principles, the goals for each participant are workable,” and the

community is more meaningfully engaged in the process.184 Ultimately, the

goal of collaborative problem solving is for communities to be approached


178. Yan Haichao, NGO Observation: Can the Government and the Public Achieve a Win-Win

Situation?, CHINA GREEN NEWS, Nov. 17, 2010,

http://eng.greensos.cn/ShowArticle.aspx?articleId=674.

179. Gauna, supra note 175, at 67.

180. Id.


182. Id.

183. Id.

184. Id. at 109.


differently, “through participatory processes sensitive to their bargaining

position and cumulative burdens.”185

3. Partnerships with NGOs and Other Third-Party Advocates

In order to facilitate the development of collaborative problem solving

initiatives, low participation capacity communities should partner with

NGOs and other third-party advocates. Studies have found that “increasing

the role of third-party advocates, including public and private lawyers,

nongovernmental organizations (NGOs), and lay advocates in supporting”

community participation can help overcome a variety of obstacles.186 While

government and private sector organizations frequently find the suggestions

made by community members to be of questionable value, NGOs, as

captured through interviews, consistently counter this position, arguing for,

at minimum, a legitimate communication channel through which the public

can be heard.187 This suggests an inherent support for participation among

Chinese NGOs, making them a particularly valuable resource for low

participation capacity communities.

The potential roles of NGOs and other third parties with relevant

expertise can be wide and varied depending on the needs of the community.

First, NGOs can provide training, technical support, and guidance for all

stakeholders: government, private sector, and community groups alike.188

Behind the scenes of many of the most infamous environmental protests in

high participation capacity communities were “‘folk scientists’ who were

able to translate the complicated information into a language [the rest of the

community] could understand.” 189 Similar support is needed in low

participation capacity communities, and NGOs or other third parties can fill

this niche. Such technical understanding also includes access to important

communication outlets like online forums in addition to more traditional

public hearings. Third-party advocates can help strengthen these official

channels for raising concerns and help communities to access them

effectively. 190 Finally, NGOs’ access to communication resources can

encourage and improve information sharing. 191 By demanding public

disclosure of EIA reports in forums familiar to low capacity community

partners, disclosure becomes a legitimate information sharing mechanism

185. Whyte, supra note 160, at 334–335.


187. Li, Ng & Skitmore, supra note 94.


189. Yan, supra note 178.


191. Id. at 17–18.


rather than a mere technicality being met to achieve compliance with the

law. Particularly as relates to low capacity communities, then, the role to be

filled by NGOs and other third-party advocates is immense and can help

reshape the playing field of community participation in China. As summed

up by Ma Tiannan of the Friends of Nature NGO:

We have the central government, a just judicial system and non-

governmental and non-profit organizations. If a variety of social

forces play their roles well, it will not be difficult to find a detached

neutral third party to mediate or arbitrate a dispute, and it will not

be difficult to find a wise and balanced solution to minimize the

social cost of settling a conflict, instead of letting public opinion

conduct the fight single-handedly.192

CONCLUSION

Much like the experience in the United States in the years following the

enactment of NEPA, China is struggling to effectively implement its new

EIA law and regulations. Exacerbated by the historical context of a

centralized government focused on the whole of society rather than

individual rights, the growing pains associated with implementing China’s

wholly new participation guarantee manifests itself in the conflicts that

have emerged over waste incinerator siting.

While all communities seek to protect their livelihoods, homes, and

families from the potentially harmful effects of MSW incineration, a clear

delineation has formed between high participation capacity communities

and their low capacity counterparts. High capacity communities have used

their resources and access to government and media to protest successfully

against the siting of waste incineration facilities in their neighborhoods.

The NIMBY attitude manifested in this response, however, has the

unfortunate side effect of pushing development with concentrated costs, but

dispersed societal benefits, into communities lacking the resources to

combat it.

The goal in China, as in the United States, should be a more egalitarian

process that defines success universally across communities as the ability to

participate meaningfully in an original and thoroughly completed EIA

process. Taking guidance from the U.S. experience, the recommendations

set forth in Part V of this paper seek to outline mechanisms for

192. Newsletter, Ma Tiannan, Friends of Nature, Xiamen PX (Paraxylene) Event Demonstrates

Positive Effects of Public Participation in Environmental Protection, (Winter 2007), available at

http://fon.org.cn/content.php?aid=9943.


disempowered communities in China to increase their participation capacity

under the existing EIA law and regulations, and in the contextual setting of

Chinese society. In order to fulfill its promise, participation in China must

be accessible and meaningful for all communities, not only those with the

resources to make their NIMBY claims heard.

IMPROVING THE ENFORCEABILITY OF THE GENETICALLY

MODIFIED FOOD LABELING LAW IN CHINA WITH LESSONS

FROM THE EUROPEAN UNION

Yu Zhuang and Wenxuan Yu*

TABLE OF CONTENTS

I. Research Background and Goal............................................................. 466

A. Benefits and Risks of Genetically Modified Food Technology ...... 466

B. China’s GM Food Labeling Laws and the Dysfunction of

Enforcement .................................................................................... 468

C. What China Can Learn from the EU and Customize to China’s

Situation .......................................................................................... 470

D. Research Goal ................................................................................. 471

II. Overview of GM Food Labeling Laws in the EU and China ............... 471

A. Principles and Purposes of GM Food Labeling Laws in the EU and

China ............................................................................................... 471

B. Similarities and Differences Between the EU and China’s Legislation

......................................................................................................... 472

III. Review of the EU’s Evaluation Report of GM Food Labeling

Legislation .......................................................................................... 474

A. Consumer Knowledge and Choice ................................................. 475

B. Socio-Economic Impact on GM Food Price ................................... 475

IV. Analysis of China’s Social Conditions for the Enforcement of GM Food

Labeling Legislation ........................................................................... 476

A. Consumer Demand ......................................................................... 477

1. Consumer Concern and Consumer Choice ................................. 477

2. Cost of Implementation and Consumer Price .............................. 479

* Yu Zhuang, JD candidate, Dec. 2013, Vermont Law School; Wenxuan Yu, Associate

Professor at China University of Political Science and Law, Visiting scholar at U.S. Environmental

Protection Agency and Vermont Law School in 2011–2012. The authors wish to thank Professor

Jingjing Liu and Professor Samuel A. Bleicher for their comments on earlier drafts of this Article.


B. Market Conditions .......................................................................... 480

1. GM Food Varieties ...................................................................... 480

2. Fragmented Food Industry .......................................................... 481

V. Proposals for Improving the Enforceability of GM Food Legislation . 481

A. Threshold ........................................................................................ 482

1. Cost of Implementation and Benefits to Consumers ................... 482

2. Proposals for a Reasonable Threshold Level .............................. 483

B. Label Content .................................................................................. 483

1. Benefits to Consumers and Industry Concerns ........................... 483

2. Proposals for Specific Labeling Requirements ........................... 485

C. Coverage of Foods .......................................................................... 485

1. Conflicting Scope of Foods Covered by Legislation .................. 486

2. Proposals for a Reasonable Scope of Foods ................................ 487

D. Traceability ..................................................................................... 487

1. Purpose of Implementing Traceability ........................................ 487

2. Proposals for Experimental Steps with Further Revision and

Expansion .................................................................................... 488

E. Proposals for Improvements Beyond Legislative Measures to

Facilitate the Enforcement .............................................................. 489

1. Specific Statute for Biosafety ...................................................... 489

2. Authority Designation and Cooperation ...................................... 489

3. Efficient and Transparent Authorization Process ........................ 490

4. Consistent Labeling Requirements .............................................. 490

Conclusion ................................................................................................ 491

I. RESEARCH BACKGROUND AND GOAL

A. Benefits and Risks of Genetically Modified Food Technology

Genetically modified food (GM food) is a food that consists of,

contains, or is produced from genetically modified organisms (GMOs).1 “A

1. Council Regulation 1829/2003, of the European Parliament and of the Council of 22 Sept.

2003 on genetically modified food and feed, 2003 O.J. (L 268) 3 [hereinafter EU 1829/2003].

2013] Improving the Enforceability of GMO Food Labeling in China 467

[GMO] is an organism whose genetic structure has been altered by

incorporating a gene that will express a desirable trait.”2

GMO technology provides many societal benefits, but poses unknown

and unprecedented risks to human health and environmental safety.

However, GMO techniques could produce crops with new and beneficial

qualities. For example, GMO technology can produce vitamin enriched

products and crops that are resistant to pests, herbicides, disease, cold

temperatures, high salinity, and viruses.3 In terms of social benefits, GMOs

could reduce production costs by reducing chemical and mechanical inputs

during the planting, growing, and harvesting stages. GMO techniques could

also reduce pesticide use to protect the environment.4

Nevertheless, GMOs may present potential risks to human health. For

example, there is a possibility of undetected increase of a toxic component

in GM food, a risk of allergic reactions,5 antibiotic resistance,6 and other

unknown effects on human health. GMOs are also potential ecological and

environmental hazards because they may harm other organisms, reduce the

effectiveness of pesticides, and result in gene transfer to non-target species

through cross-pollination causing genetic pollution. Although the ecological

impacts resulting from the vast introduction of GMOs are still unknown,

such impacts may be most consequential to the maintenance of plant

genetic variability and may ultimately harm humanity’s continued health

and well being.7

George Wald, Nobel laureate in medicine and physiology and Higgins

professor of biology at Harvard University, spoke about the dangers of

genetically engineered foods:

Recombinant DNA technology [genetic engineering] faces our

society with problems unprecedented, not only in the history of

science, but of life on the Earth. . . . Now whole new proteins will

be transposed overnight into wholly new associations, with

consequences no one could foretell, either for the host organism or

their neighbors. . . . For going ahead in this direction may not only

2. Sereana Howard Dresbach et al., The Impact of Genetically Modified Organisms on

Human Health, OHIO STATE UNIV., http://ohioline.osu.edu/hyg-fact/5000/5058.html (last visited Feb. 2,

2013).

3. Deborah B. Whitman, Genetically Modified Foods: Harmful or Helpful?, CSA.COM (Apr.

2000), http://www.csa.com/discoveryguides/gmfood/overview.php.

4. Dresbach et al., supra note 2.

5. Id.

6. GMO Foods, GREENPEACE.ORG, http://www.greenpeace.org/canada/en/campaigns/ge

(last visited Feb. 3, 2013).

7. GMOs and Ecological Impacts, ENVTL. COMMONS,

http://environmentalcommons.org/gmo-impacts.html (last visited Feb. 14, 2013).


be unwise, but dangerous. Potentially, it could breed new animal

and plant diseases, new sources of cancer, novel epidemics.8

Facing the potential risks from GM food, the Cartagena Protocol on

Biosafety to the Convention on Biological Diversity (CPB) suggests using

labeling as one of the methods for the safe use of living modified organisms

as food or feed, or for processing.9

B. China’s GM Food Labeling Laws and the Dysfunction of Enforcement

In order to provide consumers the right to know and to prevent

potential risks of GM food, in May 2001 China’s State Council enacted its

first regulation for GMO safety management: Regulations on Agro-GMO

Biosafety Management (农业转基因生物安全管理条例).10 This regulation

is the core regulation for GMO safety management in China. It establishes

mandatory labeling requirements for all GMO sales. The requirements

include, for example, listing out the names of the main ingredients

containing GMO and the geographical regions of sales if required. The

regulation also prescribes the punishment of violations. The Ministry of

Agriculture under the State Council is responsible for both the

implementation and the enforcement of GMO labeling requirements.

In January 2002, in accordance with the Regulations on Agro-GMO

Biosafety Management, the Ministry of Agriculture enacted an

administrative rule: Management Measures on Agro-GMOs Labeling

(农业转基因生物标识管理办法 ) (MMAGL). 11 This rule specifically

targets GMO labeling. It authorizes the agencies under the Ministry of

Agriculture to supervise and manage the compliance of GMO labeling

requirements, including the review and approval of GMO labeling for

imported products. Moreover, this rule specifies detailed requirements for

8. George Wald, The Case Against Genetic Engineering, THE SCIENCES (Sept./Oct., 1976).

9. Cartagena Protocol on Biosafety to the Convention on Biological Diversity, Annex I & II

(2000), available at http://www.cbd.int/doc/legal/cartagena-protocol-en.pdf.

10. Nongye Zhuanjiyin Shengwu Anquan Guanli Tiaoli (农业转基因生物安全管理条例)

[Regulations on Agro-GMO Biosafety Management] (promulgated by the State Council on May 23,

2001, effective May 23, 2001), available at

http://vip.chinalawinfo.com/newlaw2002/slc/slc.asp?db=chl&gid=35608.

11. Nongye Zhuanjiyin Shengwu Biaozhi Guanli Banfa

(农业转基因生物标识管理办法) [Management Measures on Agro-GMO Labeling] (promulgated by

the Dep’t of Agric. on Jan. 5, 2002, effective March 20, 2002), available at

http://vip.chinalawinfo.com/newlaw2002/slc/slc.asp?db=chl&gid=38699 [hereinafter China

Management Measures on Agro-GMO Labeling].


labeling content and methods. Furthermore, it defines the first batch of food

products subject to the labeling regulation.

Almost ten years after the enactment of the MMAGL, the status of

enforcement is far from satisfying. Despite the mandatory GM food

labeling requirements, not all GM foods are labeled, and there is a lack of

standardization among GM food and GMO-free food labeling in China’s

food market. Even when food products have GM food labeling, the labels

are not clearly visible. In addition to the enforcement issues, the rulemaking

is outdated. The very narrowly defined first batch of products under the

MMAGL is insufficient to cover the broad range of GM food in the

market.12

Food with GM soybeans is one example. In 2007, China imported 37.8

million metric tons of soybeans, and the United States, Brazil and

Argentina accounted for thirty-six, thirty-three and twenty-nine percent,

respectively. 13 “The United States (85%) and Argentina (98%) produce

almost exclusively GM soybeans.”14 In 2007, sixty-four percent of Brazil’s

soybean crop was GM soybeans. 15 Therefore, a large percentage of

soybeans in China’s market are imported GM soybeans. A market survey

report conducted in Tianjin, China in 2008, however, revealed that none of

the soybeans or soybean powder had GM food labeling.16 The lack of GM

food labeling for soybeans or soybean powder in the market reveals

insufficient compliance with the MMAGL.

12. Duan Xiaoli (段晓丽 ), Woguo Zhuanjiyin Nongchanpin Biaozhi Zhidu De Wenti Ji

Wanshan (我国转基因农产品标识制度的问题及完善 ) [The Problems in China’s Labeling

Regulations for Genetically Modified Agriculture Products and the Improvements], 11 SHANXI CAIJING

DAXUE XUEBAO-GAODENG JIAOYU BAN (山西财经大学学报-高等教育版) [J. SHANXI FIN. & ECON.

U. HIGHER EDUCATION EDITION] 14 (2008) (China); see also Beijing Science and Technology News,

Zhongguo Jiangdui Zhuanjiyin Shengwu Anquan Lifa Huanbaobu Qicao Faan—Beijing Kejibao

Caifang Yu Wenxuan

(中国将对转基因生物安全立法环保部起草法案—北京科技报采访于文轩) [China Plans to Enact

Law for Biodiversity—Ministry of Environmental Protection Draft Legislation—Interview by Beijing

Science and Technology News with Wenxuan Yu Regarding the Draft of Biodiversity Legislation],

RENMIN WANG (人民网) [PEOPLE.COM.CN] (Jan. 7, 2011), http://env.people.com.cn/GB/13678194.html.

13. WEI CHEN ET AL., CHINA'S SOYBEAN IMPORTS—PRICE IMPACTS USING A PRODUCTION

SYSTEM APPROACH 1 (2010), available at http://ageconsearch.umn.edu/bitstream/56528/2/2010-

%20SAEA%20Paper%20%20%20China%E2%80%99s%20Soybean%20Imports.pdf.

14. Soybeans, GMO COMPASS, http://www.gmo-

compass.org/eng/grocery_shopping/crops/19.genetically_modified_soybean.html (last visited Feb. 14,

2013).

15. Id.

16. Wang Yong et al. (王永等), Tianjinshi Zhuanjiyin Shipin Biaozhi Xianzhuang Diaocha

(天津市转基因食品标识现状调查) [Investigation on Labeling of Genetically Modified Food in

Tianjin], 14 TIANJIN AGRIC. SCI. 9 (2008) (China).


The same survey report shows that ninety-six percent of the soybean oil

has GM food labeling,17 but there are eight different kinds of GM food

labeling for soybean oil among twenty-four products selected.18 For GMO-

free food labeling, there are fourteen different kinds of labels and most of

the GMO-free foods are not certified.19

Various reasons exist behind the lack of compliance and enforcement

of the MMAGL. One of the most important is the enforceability of the

legislation itself. There are several issues in terms of the enforceability in

the rulemaking. First, the zero percent tolerance without a reasonable

adventitious presence threshold is both unrealistic and misleading. An

adventitious threshold allows adventitious or technically unavoidable

presence of genetically modified material in foods.20 Second, the language

in the legislation provision that specifies labeling methods is vague. Third,

the coverage of products subject to labeling is both widely defined in the

provision and narrowly listed for the first batch of food subject to labeling,

and therefore causes confusion. Fourth, the legislation does not implement

traceability—it does not trace GMOs and products produced from GMOs at

all stages of their path to market through the production and distribution

chains, 21 even though traceability is a key to ensure the accuracy of

labeling.

C. What China Can Learn from the EU and Customize to China’s Situation

Since China opened its doors to the world in late the 1970s, it has been

striving to catch up with other countries in the development of various

areas, including technology, science, and legislation. In terms of legislation,

many Chinese laws are modeled after the laws of other countries in certain

aspects. For GM food labeling legislation, China’s legislation resembles the

EU’s legislation by adopting mandatory labeling requirements.22 Therefore,

the lessons from the EU’s GM food labeling laws will help China avoid the

problems encountered by the EU’s legislation and guide China in

improving its legislation.

17. Id.

18. Id. at 9, 10.

19. Id. at 10.

20. EU 1829/2003, supra note 1, at 3.

21. Regulation 1830/2003, of the European Parliament and of the Council of 22 Sept. 2003

Concerning the Traceability and Labeling of Genetically Modified Organisms and the Traceability of

Food and Feed Products Produced From Genetically Modified Organisms and Amending Directive

2001/18/EC, 2003 O.J. (L 268) 25, 26 (EC) [hereinafter EU 1830/2003].

22. Guillaume P. Gruère, Labeling Policies of Genetically Modified Food Lessons from an

International Review of Existing Approaches 1 (2007), available at

http://www.ifpri.org/sites/default/files/publications/pbsbrieflabeling.pdf.


While China’s GM food labeling legislation resembles the EU’s

legislation, China’s legislation, in certain aspects, is more stringent. For

example, in the MMAGL, the zero percent tolerance without adventitious

presence threshold is stricter than the 0.9% threshold in the EU’s

legislation. 23 These more stringent requirements reflect China’s

commitment to achieving the best legislation for GM food labeling, which

is definitely worthy of praise. The resulting legislation, however, is not

satisfying in terms of enforceability. One reason is that China does not

sufficiently customize its legislation to the country’s social conditions.

Hence, even if China has the best and the most stringent GM food labeling

laws, without the possibility of full enforcement, the law is only an empty

promise. In the end, the government will lose its credibility in failing to

enforce its legislation and trigger resentment and complaints from the

public.

D. Research Goal

Our research goal is to address the enforceability issue in China’s

current GM food labeling legislation. By combining the lessons from the

EU’s GM food labeling legislation and the analysis of China’s social

conditions, we have formulated proposals to improve the enforceability of

China’s GM food labeling legislation.

II. OVERVIEW OF GM FOOD LABELING LAWS IN THE EU AND CHINA

A. Principles and Purposes of GM Food Labeling Laws in the EU and

China

Currently, there are many different approaches to GM food labeling

legislation among countries. The three major producers and exporters of

GM crops (i.e. the United States, Argentina, and Canada) have adopted

voluntary labeling approaches.24 On the other hand, large importers that do

not produce GM crops (or produce GM crops in very limited areas), such as

the EU countries and China, have adopted mandatory labeling

requirements.25

23. Id.

24. Guillaume P. Gruère & S.R. Rao, A Review of International Labeling Policies of

Genetically Modified Food to Evaluate India’s Proposed Rule, 10 J. AGROBIOTECHNOLOGY MGMT. &

ECON., 1.6 (2007), available at http://www.agbioforum.org/v10n1/v10n1a06-gruere.htm.

25. Id.


Notwithstanding insufficient scientific data to permit a complete

evaluation of the risk of GM food, both the EU and China adopted the

precautionary principle to enable “rapid response in the face of a possible

danger to human, animal or plant health, or to protect the environment.”26

The precautionary principle uses GM food labeling as an approach to stop

distribution or order withdrawal from the market of likely hazardous

products. 27 Such labeling laws targets GM technology as a production

process because it assumes that the process itself poses unique risks. 28

Therefore, any product derived from GM crops must be labeled, regardless

of whether the product contains any traces of GM material.

Another purpose of GM food labeling is to protect the consumers’ right

to know. With the mandatory labeling of GM food, consumers will have

better knowledge of whether the product is a GM product, and consequently

make informed choices. International consumer organizations, like

Consumers International (CI) and its members, overwhelmingly support

mandatory labeling of GM food.29 Both the EU and China recognize the

consumers’ right to information and labeling as a tool for making an

informed choice. Therefore, they both require mandatory GM food labeling.

On the other hand, China has a strong national interest in developing

GMO technology to protect its national security in food supply. 30 For

example, due to water shortage, China is in urgent need of developing

drought-resistant GMOs.31 Therefore, China needs to balance the interests

between the consumers and the industries in enacting its GM food labeling

legislation.

B. Similarities and Differences Between the EU and China’s Legislation

In summary, both the EU and China require mandatory GM food

labeling. Both laws target GM technology as a production process and

require GM food labeling on products that contain or consist of GMOs, or

are produced from GMOs.

26. The Precautionary Principle, EUROPA.EU,

http://europa.eu/legislation_summaries/food_safety/general_provisions/l32042_en.htm (last updated

Dec. 4, 2011).

27. Id.

28. WENXUAN YU (于文轩 ), SHENGWU ANQUAN LIFA YANJIU (生物安全立法研究 )

[RESEARCH ON BIODIVERSITY LEGISLATION] 33 (2009).

29. Our Activity, CONSUMERS INTERNATIONAL CONSUMERS,

http://www.consumersinternational.org/our-work/food/key-projects/codex/our-activity (last visited Jan.

28, 2013).

30. Mu Xuequan, GM Food: Hope or Fear for the Chinese?, XINHUANET.COM (Oct. 16,

2010), http://news.xinhuanet.com/english2010/china/2010-10/16/c_13559695.htm.

31. Id.


The EU’s GM food labeling legislation regulates the traceability of

food and feed products produced from genetically modified organisms.32

The traceability implementation ensures that relevant GMO information is

available at each stage of the GM food production process and thereby

facilitates accurate labeling. Although China’s current GM food labeling

legislation—the MMAGL is also a process-based regulation, it did not set

up a sufficient mechanism to implement the traceability. 33 Therefore,

China’s MMAGL is missing a key element in implementing the full scope

of the precautionary principle.34

Moreover, the EU sets an adventitious presence threshold for

exemption. 35 This threshold makes the law enforcement feasible by

acknowledging the fact of the adventitious or technically unavoidable

presence of GM material in foods. Unlike the EU, China does not

acknowledge any adventitious presence threshold in the MMAGL.36

In addition, the EU defines specific details of labeling requirements and

covers a broad scope of products ranging from food to feed.37 In contrast,

the labeling requirements in China’s MMAGL are vague.38 The MMAGL

defines a limited list of food subject to regulation.39

Table: Summary of Key Elements in GM Food Labeling Legislation in the

EU and China

Key Elements The EU China

Mandatory GM Food Labeling Yes Yes

Process-based regulation Yes Yes

Traceability Yes No

Adventitious presence threshold

exemption

0.9% No

Labeling requirements Specific Vague

Scope of products Broad Narrow

32. EU 1830/2003, supra note 21, at 27 (Article 5—Traceability requirements for products for

food and feed produced from GMOs).

33. China Management Measures on Agro-GMO Labeling, supra note 11.

34. Beijing Science and Technology News, supra note 12.

35. EU 1830/2003, supra note 21, at 27 (Article 7—“not apply to traces of authorised GMOs

in a proportion no higher than 0.9% or lower thresholds established under the provisions of Article

30(2), provided that these traces are adventitious or technically unavoidable”).

36. China Management Measures on Agro-GMO Labeling, supra note 11.

37. EU 1830/2003, supra note 21, at 25, 26 (Article 2—Scope; Article 4—B. Labelling).

38. China Management Measures on Agro-GMO Labeling, supra note 11, § 7.

39. Id.


III. REVIEW OF THE EU’S EVALUATION REPORT OF GM FOOD LABELING

LEGISLATION

Because China’s GM food labeling legislation resembles the EU’s

legislation in many aspects, the lessons from the EU’s GM food labeling

laws will be valuable to help China avoid similar problems that the EU

encountered. The EU’s experience with GM food labeling legislation can

guide China’s own legislative improvements.

The EU is one of the leaders in GM food labeling laws and has

accumulated many years experience from its implementation. Since 1997,

the EU has made labeling of GM food mandatory in Regulation (EC) No.

258/97.40 Moreover, the EU is continuously reviewing its legislation for

improvement. In 1998, the EU released Regulation (EC) No. 1139/98 to

cover the labeling of GM maize varieties and GM soy varieties, which did

not fall under Regulation (EC) No. 258/97.41 In 2000, the EU released

Regulation (EC) No. 50/2000, which required all GM additives and GM

flavorings to be labeled.42 In 2003, the EU released Regulation (EC) No.

1829/2003 and Regulation (EC) No. 1830/2003. 43 Regulation (EC) No.

1829/2003 applies to both food and feed that contain GMOs or are

produced from or contain ingredients produced from GMOs.44 Regulation

(EC) No. 1830/2003 regulates both the traceability and labeling of

genetically modified organisms and the traceability of food and feed

products produced from genetically modified organisms.45

On October 28, 2011, the EU released its latest report, the Evaluation of

the EU legislative framework in the field of GM food and feed.46 Among the

evaluation of various regulations in GM food and feed, this report provides

the latest and most comprehensive evaluation of the EU’s GMO labeling

laws. There are two key issues in the EU’s GM food labeling legislation.

One is the function of labeling in balancing between consumer knowledge

40. European Parliament and Council (EC) No. 258/97 of 27 Jan. 1997, p. 1, art. 8.

41. European Council Regulation (EC) No. 1139/98 of 26 May 1998, p. 1–2.

42. GM Food & Feed—Labelling, EUROPA.EU,

http://ec.europa.eu/food/food/biotechnology/gmfood/labelling_en.htm (last visited Feb. 14, 2013).

43. Food and Feed (GMO), EUROPA.EU,

http://europa.eu/legislation_summaries/agriculture/food/l21154_en.htm (last visited Feb. 14, 2013).

44. Id.

45. Traceability and Labeling of GMOs, EUROPA.EU,

http://europa.eu/legislation_summaries/agriculture/food/l21170_en.htm (last visited Feb. 14, 2013).

46. FOOD CHAIN EVALUATION CONSORTIUM, EVALUATION OF THE EU LEGISLATIVE

FRAMEWORK IN THE FIELD OF GM FOOD AND FEED (2012), available at

http://ec.europa.eu/food/food/biotechnology/evaluation/docs/evaluation_gm_report_en.pdf; GMOs:

EU's Legislation on the Right Track, Evaluation Reports Conclude, EUROPA.EU,

http://europa.eu/rapid/press-release_IP-11-1285_en.htm (last visited Feb. 2, 2013).


and consumer choice.47 Another is the impact of the labeling requirements

on GM food price.48

A. Consumer Knowledge and Choice

The purpose of labeling laws is to provide the consumer with

information so he or she can make an informed choice. One of the problems

discovered in the EU’s evaluation report is that the EU’s consumers have a

lack of choice.49

In the late 1990s, to avoid the potential cost of lost sales and damage to

the brand image by manufacturing GM food, European food manufacturers

completely withdrew from GM food.50 Because of the limited quantity of

GM ingredients in food products at that time, the marginal cost of

reformulating with non-GM ingredients is lower than the potential cost of

losing market share.51 Consequently, the availability of GM labeled food

products in the EU is currently extremely limited. 52 The range of GM

labeled products consists primarily of soybean cooking oil and some

imported products. 53 There is no retailer’s brand of GM products. 54

According to the EU’s report, “[t]he main external factor limiting the

choice of the European consumers with respect to their purchases of GM

food is their availability in stores.”55 According to food chain operators, the

labeling legislation removed consumer choice and it does not facilitate an

informed consumer decision.56

B. Socio-Economic Impact on GM Food Price

“[A]s supply of non-GM raw materials has become more restricted,

however, the cost of segregation and Identity Preservation has increased.”57

Identity Preservation of non-GMOs is the practice of using technical and

managerial techniques to track and document the paths that non-GMO

47. FOOD CHAIN EVALUATION CONSORTIUM, supra note 46, at 97.

48. Id. at 107.

49. Id. at 101.

50. Id. at 107.

51. Id.

52. Id. at 113.

53. Id.

54. Id.

55. Id. at 115.

56. Id. at 101.

57. Id. at 110.


products move in the production process.58 “A fully integrated [Identity

Preservation] system might track and document a [non-GMO’s] seed

characteristics, initial planting, growing conditions, harvesting, shipping,

storage, processing, packaging, and ultimate sale to the consumer.”59 The

impact of increased cost is diluted in the final consumer prices.60 As for

GM food products in Europe, the food producers “made changes to their

supply chains before the introduction of the 2003 legislation[,] either in

response to pressure from non-governmental organizations and/or consumer

demand.”61 Therefore, the labeling provisions under Regulation (EC) No.

1830/2003 have limited direct impact on the food producers.62

For the feed supply chain, the effect on consumer price is more

substantial.63 There are initially both GM and non-GM segments.64 The

non-GM segment bears the additional costs of segregation and Identity

Preservation.65 The reductions in the availability of non-GM supply have

resulted in a substantial increase of segregation and Identity Preservation

costs.66 Therefore, for feed products, “the impact on consumer prices cannot

be seen as negligible anymore.”67

IV. ANALYSIS OF CHINA’S SOCIAL CONDITIONS FOR THE ENFORCEMENT

OF GM FOOD LABELING LEGISLATION

China is different from the EU in many social aspects. Chinese

consumers are relatively less concerned about GMOs in food safety as

compared to European consumers. Chinese consumers have lower income

levels than European consumers; therefore, the price difference between

non-GM food and GM food plays a more important role in Chinese

consumers’ choice between the two. Moreover, China’s food industry is not

strictly regulated, because of its vast numbers of small-scale food producers

and processors. In order to make legislation effective and enforceable,

China must customize its legislation to its own social conditions.

58. Identity Preservation, WIKIPEDIA.ORG, http://en.wikipedia.org/wiki/Identity_preservation

(last visited Feb. 14, 2013).

59. Id.


61. Id.

62. Id.

63. Id.

64. Id.

65. Id.

66. Id.

67. Id.


A. Consumer Demand

One of the main purposes of GM food labeling laws, like any food

labeling law, is to enhance the consumers’ rights to know and choose.

Therefore, legislation should be tailored to consumer demand. The key

questions about consumer demand are whether consumers are concerned

about GM food and whether consumers want to have choices between GM

and non-GM food.

Because the legislation implementation usually incurs substantial costs

for both the stakeholders (e.g. farms, distributors and food producers) and

the government, these costs will eventually be imposed on the end

consumers. Thus, the consumers’ acceptance of the premium price for non-

GM food is another important factor to consider when implementing GM

food labeling legislation.

In December 2010, Greenpeace issued two consumer survey reports on

GMOs and GM food in China. One report is based on surveys of the

consumers in Beijing, Shanghai, and Guangzhou (CBSG).68 Another one is

based on surveys of the consumers in Wuhan and Changsha (CWC). 69

Together, these two reports surveyed around 1,000 consumers between the

ages of eighteen and sixty-four. Both reports found similar results in many

key areas.

1. Consumer Concern and Consumer Choice

According to the reports, ninety-seven percent of CBSG and ninety

percent of CWC have heard about the concept of GMOs and GM food.70 Of

those who have heard of the concept, ninety-seven percent of the consumers

want to have GM food labeled, and sixty-two percent of CBSG and sixty-

68. GREENPEACE & QINGHUA DAXUE MEIJIE DIAOCHAO SHIYANSHI (清华大学媒介调查实

验室 ) [TSINGHUA UNIVERSITY MEDIA SURVEY LAB], ZHUANJIYIN ZUOWU JI SHIPIN XIAOFEIZHE

DIAOYAN BAOGAO (转基因作物及食品消费者调研报告) [CONSUMER SURVEY REPORT ON GMOS

AND GM FOOD IN BEIJING, SHANGHAI, AND GUANGZHOU] (2010), available at

http://www.greenpeace.org/china/Global/china/publications/campaigns/food-agriculture/2011/ge-

research-bsg-2011.pdf [hereinafter CHINA CONSUMER SURVEY REPORT BEIJING, SHANGHAI, AND

GUANGZHOU].

69. GREENPEACE & QINGHUA DAXUE MEIJIE DIAOCHAO SHIYANSHI (清华大学媒介调查实

验室 ) [TSINGHUA UNIVERSITY MEDIA SURVEY LAB], ZHUANJIYIN ZUOWU JI SHIPIN XIAOFEIZHE

DIAOYAN BAOGAO (转基因作物及食品消费者调研报告) [CONSUMER SURVEY REPORT ON GMOS

AND GM FOOD IN WUHAN AND CHANGSHA] (2010), available at


research-wch-2011.pdf [hereinafter CHINA CONSUMER SURVEY REPORT WUHAN AND CHANGSHA].

70. Id. at 6; Soybeans, supra note 14; CHINA CONSUMER SURVEY REPORT BEIJING,

SHANGHAI, AND GUANGZHOU, supra note 68, at 18.


eight percent of CWC have strong concerns about GM food’s potential risk

on human health. Most of the consumers pay attention to the labels (often,

sometimes or occasionally), while twenty-nine percent of CBSG and fifteen

percent of CWC never check the labels.71 Therefore, a mandatory GM food

labeling legislation would satisfy the consumers’ demand to know.

In terms of GMO’s impact on food safety, thirty-three percent of CBSG

and forty-one percent of CWC think that GMOs have a strong or certain

negative impact on food safety.72 The 2011 European Commission asked

the EU respondents whether they think it is true that food derived from

GMOs is dangerous. 73 More than half (fifty-six percent) agreed that it

was.74 Accordingly, Chinese consumers seem to be less concerned about

GM food safety than European consumers.

As for the consumers’ attitude towards the food processing and

producing involving GMOs, only around twenty percent of CBSG and

thirty percent of CWC hold objections.75 When the consumers know that

the food they are purchasing is GM food, forty-two percent of CBSG and

twenty-six percent of CWC will continue to buy the same quantity; thirty-

seven percent of CBSG and forty-eight percent of CWC will continue to

purchase GM food, but with less quantity; and twenty-one percent of CBSG

and twenty-six percent of CWC will immediately stop purchasing such food

items.76 Thus, about eighty percent of Chinese consumers would continue

to purchase GM food if labeled.

In summary, most Chinese consumers want to have GM food labeling

because they want to know whether the food contains GMOs. Chinese

consumers are less concerned about GMOs in food safety as compared to

European consumers. Chinese consumers do not completely reject GM food

and want the choice between GM food and non-GM food. Therefore,

mandatory GM food labeling legislation in China will satisfy the

consumers’ rights to know, and give consumers the choice to purchase

either GM food or non-GM food.

71. CHINA CONSUMER SURVEY REPORT WUHAN AND CHANGSHA, supra note 69, at 9; CHINA

CONSUMER SURVEY REPORT BEIJING, SHANGHAI, AND GUANGZHOU, supra note 68, at 32.

72. CHINA CONSUMER SURVEY REPORT WUHAN AND CHANGSHA, supra note 69, at 17;

CHINA CONSUMER SURVEY REPORT BEIJING, SHANGHAI, AND GUANGZHOU, supra note 68, at 24.

73. FOOD CHAIN EVALUATION CONSORTIUM, supra note 46.

74. Id. at 142.



76. CHINA CONSUMER SURVEY REPORT WUHAN AND CHANGSHA, supra note 69, at 11–12;



2. Cost of Implementation and Consumer Price

The cost of GM food labeling implementation is an important factor to

consider. The cost depends on several factors, such as the level of

adventitious presence threshold, the coverage of products under regulation,

and the scope of traceability implementation. The more stringent the

regulation is, the bigger investment that non-GM food operators need to

spend on implementing the segregation and Identity Preservation. At the

same time, it will cost the government more to implement and enforce the

law by spending on testing facilities and personnel training. These costs

will eventually be reflected in the consumer price, mostly for non-GM food.

According to the EU’s evaluation report, the reductions in the availability

of non-GM supply have resulted in a substantial increase of segregation and

Identity Preservation costs for the non-GM segment of the feed industry.77

Accordingly, the impact on consumer prices could not be seen as

negligible.

In terms of Chinese consumers’ purchasing decisions in response to

price, there are noticeable differences between the two reports from

Greenpeace in China. Wuhan and Changsha are two medium-sized cities in

China with moderate income levels, while Beijing, Shanghai, and

Guangzhou are the biggest cities with the highest income levels in China.

When the non-GM food and GM food have the same price, fifty percent of

the consumers in Wuhan and Changsha (CWC) and sixty-one percent of the

consumers in Beijing, Shanghai, and Guangzhou (CBSG) prefer to buy

non-GM food.78 When the non-GM food is thirty percent more expensive

than GM food, thirty-three percent (down from fifty percent) of the CWC

and fifty-one percent (down from sixty-one percent) of the CBSG would

continue to choose non-GM food.79

Apparently, the income level and the price difference between non-GM

food and GM food play important roles in Chinese consumers’ choice

between GM and non-GM food. Similarly, according to the EU’s

evaluation report, a majority of consumers make purchasing decisions

primarily on price and brand considerations.80 Therefore, in order to make

the GM food labeling legislation enforceable, China’s legislature should

evaluate the implementation cost for government and the industry, as well






80. FOOD CHAIN EVALUATION CONSORTIUM, supra note 46, at 99 (noting that brand and

pricing are considered the most important information on the label).


as the cost eventually imposed on consumer price. By balancing the cost

with the benefit provided by the GM food labeling to consumers, the

legislation could provide customers with a meaningful and affordable

choice between GM food and non-GM food.

B. Market Conditions

In addition to the consumer demand, there are other market conditions

to consider in designing an enforceable legislation. The broader the market

to be regulated, the higher the cost will be to implement the regulation.

Moreover, the more fragmented and unregulated the food industry is, the

more difficult the implementation and enforcement will be.

1. GM Food Varieties

The cost of implementation of GM food labeling regulation will depend

on the number of GM food varieties in the market. Soybeans are one

example. From October 2007 to September 2008, China imported 37.8

million metric tons of soybeans, and the United States, Brazil, and

Argentina accounted for thirty-six percent, thirty-three percent, and twenty-

nine percent of Chinese soybean imports, respectively. 81 Eighty-five

percent of the United States soybean crop and ninety-eight percent of the

Argentinian soybean crop is genetically modified.82

In 2007, sixty-four

percent of Brazil’s soybean crop was genetically modified.83 As a result, a

high percentage of soybeans in China are GMOs. Soybeans are used to

produce soybean oil and numerous foods, food ingredients, and additives.

Lecithin extracted from soybeans, for example, is used as an emulsifier in

chocolate, ice cream, margarine, and baked goods. According to the

MMAGL, all the food products containing or consisting of, or produced

from soybeans are subject to the regulation.84 Consequently, there would be

a vast number of GM food varieties derived from GM soybeans requiring

GM labeling, and the full implementation will involve a huge cost.

81. CHEN ET AL., supra note 13, at 1.

82. Soybeans, supra note 14.

83. Id.



2. Fragmented Food Industry

Additionally, China’s food industry is not strictly regulated because of

its vast number of small-scale food producers and processors.85 Most of the

challenges in any kind of food regulation originate in the small-scale farms,

food processing plants, and small restaurants that are difficult to manage

and monitor effectively.86 In July 2007, the State Administration of Quality

Supervision, Inspection and Quarantine investigated 448,153 food

processors in China.87 Of all the investigated food producers, seventy-eight

percent had less than ten employees, about half of them had improper

licenses, and 36.6% of them had no license at all.88 They process foods

mainly from soybeans, rice, wheat, white wine, and soybean oil.89 The

numerous small farms combined with small food processors would become

major obstacles in implementing both GM food labeling and the

traceability. 90

V. PROPOSALS FOR IMPROVING THE ENFORCEABILITY OF GM FOOD

LEGISLATION

After reviewing the EU’s evaluation report on GM food labeling

legislation and analyzing China’s social conditions for GM food labeling,

we identified the following areas to improve China’s GM food labeling

legislation. Our proposals focus on the enforceability in the legislation

itself.

85. LINDEN J. ELLIS & JENNIFER L. TURNER, SOWING THE SEEDS: OPPORTUNITIES FOR U.S.-

CHINA COOPERATION ON FOOD SAFETY 3 (Qifang Tong, trans., 2008), available at


research-wch-2011.pdf.

86. Id. at 16.

87. Zhongguo Zhijian Zongju Fabu “Guanyu Jinyibu Jiaqiang Shipin Shengchan Jiagong

Xiaozuofang Jianguan Gongzuo de Yijian” Tuchu Sanxiang Jianguan Zhidu Quebao Shipin Anquan (国

家质检总局发布《关于进一步加强食品生产加工小作坊监管工作的意见》突出三项监管制度确

保食品质量安全) [Further Strengthening Food Production and Processing Small Workshops and

Supervision Work: Three Prominent Regulatory Systems to Ensure the Quality and Safety of Food],

GUOJIA ZHILIANG JIANDU JIANYAN JIANYI ZONGJU (国家质量监督检验检疫总局 ) [GENERAL

ADMINISTRATION OF QUALITY SUPERVISION, INSPECTION AND QUARANTINE OF THE PEOPLE'S

REPUBLIC OF CHINA] (July 11, 2007) [hereinafter, Further Strengthening Food Production and

Processing] http://www.aqsiq.gov.cn/zjxw/zjxw/zjftpxw/200707/t20070711_33419.htm.

88. Id.

89. Id.

90. ELLIS & TURNER, supra note 85, at 41.


A. Threshold

First, China’s GM food labeling legislation should set up a reasonable

adventitious threshold. An adventitious presence threshold for exemption

would make law enforcement feasible by acknowledging the adventitious

or technically unavoidable presence of genetically modified material in

foods.

Threshold levels for labeling of GM ingredients are set differently

across countries. Some countries, such as those in the EU, apply a 0.9%

threshold to each ingredient.91 Other countries apply the threshold only to

three to five major ingredients. For example, Japan sets a five percent

threshold for three main ingredients in each product and South Korea sets a

three percent threshold for the top five major ingredients in each product.92

The zero percent level of detection in China’s current GM food labeling

law does not acknowledge the adventitious or technically unavoidable

presence of GMOs in foods. Considering China’s current food market, a

zero percent level would result in almost all the products carrying a GM

food label. When it becomes impossible to achieve the zero percent

threshold level, the food producers may give up using GMOs completely

and leave the consumers with no GM food choice. Another possibility is

that the food producers may take the risk of falsely claiming GMO-free and

misleading consumers. Therefore, the zero percent threshold is both

unrealistic and infeasible. China should choose a reasonable adventitious

threshold for GM food labeling requirements.

1. Cost of Implementation and Benefits to Consumers

The threshold level directly impacts the cost of implementation. The

lower the threshold and the more ingredients to cover, the more difficult

and expensive testing will be to enforce the implementation. A low

threshold and a broad coverage of ingredients requires significant

expenditures on segregation, Identity Preservation, testing facilities,

personnel training, food processing techniques, and process

implementation. These additional costs will increase the consumer price for

both GM food and non-GM food, with non-GM food bearing more of the

burden. Considering the income level and the importance of the price factor

in Chinese consumers’ purchasing decisions, many consumers will lose

their choice of buying non-GM food because of the high premium price

91. GARY E. MARCHANT, ET. AL., THWARTING CONSUMER CHOICE: THE CASE AGAINST

MANDATORY LABELING FOR GENETICALLY MODIFIED FOODS 17–18 (2010).

92. Gruère & Rao, supra note 24.


they have to pay. Moreover, comparing the Greenpeace consumer survey

reports with the EU’s evaluation report, Chinese consumers are less

concerned about GMOs in food safety compared to European consumers.93

Therefore, a zero percent tolerance does not reflect Chinese consumers’

concern and demand and such a stringent requirement is unnecessary.

2. Proposals for a Reasonable Threshold Level

We propose that the Chinese GM food labeling legislation should

indicate a reasonable threshold level, taking into account the impact of

implementing a zero percent threshold on consumer prices. Because China,

Japan, and Korea share similar diet structure, the threshold levels from

Japan and Korea may be most appropriate for China’s GM food market.

Nonetheless, China's current food market is relatively less regulated than

Japan and Korea. Moreover, Chinese consumers have lower income levels

than the consumers in Japan and Korea. In order to balance the cost of

implementation and the benefit of labeling for consumers to make an

informed choice, a five percent threshold, like Japan, would be appropriate.

In addition, like Korea, China may consider it necessary to limit the

labeling requirement to the top five major ingredients in each product.

B. Label Content

Second, China’s GM food labeling legislation should set clear and

specific requirements for label content. The overall objective of mandatory

labeling requirements is to provide consumers with information and allow

consumers to make informed choices. In order to achieve this objective, a

clearly visible and standardized label is essential.

1. Benefits to Consumers and Industry Concerns

According to the Greenpeace reports, ninety-seven percent of CBSG

and ninety percent of CWC have heard about the concept of GMOs and

GM food.94 Nevertheless, only forty-eight of CBSG and forty-two percent


CHINA CONSUMER SURVEY REPORT BEIJING, SHANGHAI, AND GUANGZHOU, supra note 68, at 24; FOOD

CHAIN EVALUATION CONSORTIUM, supra note 46, at 142.




of CWC believe that they have seen GM food labels.95 One of the reasons is

that the current GM food labels are not clearly visible.

A market survey report conducted in Tianjin, China in 2008 revealed

that there are eight different kinds of GM food labels for soybean oil among

twenty-four products selected.96 For GMO-free labeling, there are fourteen

different kinds of labels and most of the GMO-free foods are not certified.97

These different kinds of GM food labeling and GMO-free food labeling are

confusing to consumers.

On the other hand, food manufacturers generally reject GM food

labeling because the labeling creates negative consumer perception in terms

of food safety. Consequently, such negative consumer perception will lead

to the loss of market share for GM food producers.

According to the Greenpeace reports, about thirty-three percent of

CBSG and forty-one percent of CWC think that GMOs have strong or some

negative impacts on food safety, while sixty-two percent of CBSG and

sixty-eight percent of CWC have strong concerns about GM food’s

potential risk to human health.98 Therefore, Chinese consumers do have

concerns about the risk of GMOs to their health, and the food

manufacturers’ worries of negative consumer perception are legitimate.

On the other hand, in terms of consumers’ reliance on the sources of

GM food safety information, forty-three percent of CBSG trust the

government (the highest percentage among other information sources), and

only twelve percent of CBSG trust food producers and food retailers.99

Thus, Chinese consumers trust the government on food safety regulation

more than they trust industry self-regulation.

In short, the complaints from food manufacturers about consumers’

negative perception of GM food are reasonable. Chinese consumers are

concerned but not certain about the potential negative impact of GMOs on

food safety and human health. Because Chinese consumers rely on the

government for GM food safety information, the Chinese government could

play an important role in balancing consumers’ concerns and industry’s

interests.



96. Wang Yong et al., supra note 16, at 5.

97. Id.


CHINA CONSUMER SURVEY REPORT BEIJING, SHANGHAI, AND GUANGZHOU, supra note 68, at 25–26.

99. CHINA CONSUMER SURVEY REPORT BEIJING, SHANGHAI, AND GUANGZHOU, supra note

68, at 36.


2. Proposals for Specific Labeling Requirements

Currently, the vague language in China’s GM food labeling legislation

(the MMAGL) contributes to the lack of consumer awareness of the

existing GM labels in the market and the nonstandard forms of labels.

Section 6 of the MMAGL specifies the language to be used for GM

food.100 Nonetheless, it does not correlate the GMO information with the

ingredients list. Our first proposal is to adopt the EU’s model: When the

food consists of more than one ingredient, the words “genetically modified”

or “produced from genetically modified [name of the ingredient]” should

appear in the list of ingredients in parentheses immediately following the

ingredient concerned. This approach helps the consumer find the GM

information easily and relates the GM information directly to other

information about the ingredients.

Section 7 of the MMAGL only requires the GM food label to be

“clearly visible.”101 This “clearly visible” requirement is vague. The GM

information should be treated with the same weight as other information

about ingredients. Thus, our second proposal is that China should adopt the

EU’s provision by requiring the GM label to be printed in text at least as

large as the text used for the ingredient label.

In terms of consumers’ concern about GMO’s impact on food safety

and human health, because consumers trust the government on safety

information, our third proposal is to add some government-certified texts in

GM food labels, for example: “The GMO ingredients are approved by the

government food safety agency.” Such a label will likely ease Chinese

consumers’ concerns on GM food. At the same time, it will alleviate the

negative consumers’ perception on GMO food safety, and as a result

encourage industry innovation in GMO technology.

C. Coverage of Foods

Our third proposal is to make the scope of foods required for labeling

consistent and expand the list of products subject to labeling to reasonably

reflect consumers’ demand and market conditions in China.

100. China Management Measures on Agro-GMO Labeling, supra note 11, §6.

101. Id. § 7.


1. Conflicting Scope of Foods Covered by Legislation

First, section 6, clause 3 of the MMAGL covers a very broad range of

foods that contain or consist of GMOs, or are produced from GMOs.102 It

includes highly processed foods.103 As mentioned earlier, in 2007, seventy-

eight percent of food processors in China hired less than ten employees and

about half of them had improper licenses, and 36.6% of them had no license

at all. 104 If the regulation requires processed foods to have GM food

labeling, this current highly fragmented and loosely regulated food

processing industry will make the implementation and enforcement of GM

food labeling nearly impossible.

Moreover, in section 8, clause 1, the MMAGL requires the fast food

industry and food retailers to put GM labels on food that is not pre-

packaged.105 Considering the vast number of small restaurants in China, it is

costly and difficult for government agencies to monitor them effectively on

GM food labeling. Additionally, some small local restaurants are simply

incapable of discovering whether their food contains GMOs or not.

On the other hand, in the MMAGL’s annex, the legislature provides the

first batch of seventeen food items subject to labeling regulation, which

covers the types of food that most likely contain GMO ingredients. 106

During the ten years since the MMAGL defined its first batch of food for

regulation, GMOs took more market share in the food supply chain, and the

number of GM food varieties is growing rapidly. Among these GM food

varieties, Chinese consumers are most sensitive to GM food for children.

Based on the Greenpeace consumer survey reports, seventy-eight percent of

CBSG and eighty-one percent of CWC prefer non-GM food for children,

and seventy-seven percent of CBSG and eighty-three percent of CWC

prefer non-GM rice cereal for babies.107 An effective legislation should

address the most acute concern of the public with the highest priority.

Therefore, the first batch of foods covered is not only too narrow to respond

to consumers’ demands, but also so outdated that it misses a vast number of

GM food varieties in the marketplace.

In summary, the extensive scope defined in the MMAGL’s provisions

and the limited number of foods in its annex seem to conflict with each

other. Neither of them is appropriate.

102. Id. § 6.

103. Id.

104. Further Strengthening Food Production and Processing, supra note 87.


106. Id.


CHINA CONSUMER SURVEY REPORT BEIJING, SHANGHAI, AND GUANGZHOU, supra note 68, at 27–28.


2. Proposals for a Reasonable Scope of Foods

In order to readjust the scope of products subject to GM food labeling,

China should balance consumers’ demand and the cost and difficulty in

implementation and enforcement.

First, China should narrow the scope of products in China’s GM food

labeling legislation to exclude highly processed foods. Second, China’s GM

food labeling law should require only big restaurant chains to implement

GM food labeling for their foods. Third, China should at least add baby

foods in the second batch of foods in the amended MMAGL. To prepare a

list of food varieties to respond to consumers’ demand effectively, the

Chinese government should conduct systematic and comprehensive

consumer surveys. Based on the survey results, China’s legislature would

then be able to make reasonable decisions on the candidate foods required

for labeling. Finally, China should resolve the confusion by adding a

connection between the provisions and the annex. For example, at the end

of each clause under section 6 of the MMAGL, the legislature should

mention: “This rule should be adopted in accordance with the list of foods

referred to in the annex.”

D. Traceability

Our fourth proposal is that China should conduct pilot implementation

of traceability to supplement the labeling requirements.

1. Purpose of Implementing Traceability

With numerous small-scale farms, food distributors, food processors,

and food retailers in China’s food industry, it is difficult to implement the

GM food labeling law even absent a traceability provision. A full

nationwide implementation of traceability will be an even more daunting

task, if not impossible. Therefore, China’s current GM food labeling

legislation does not require traceability, although traceability is a key to

ensure the accuracy of labeling.

Traceability ensures that relevant information concerning any genetic

modification is available at each stage of the production process of GM

food, and thereby facilitates accurate labeling. In addition, traceability is the

key in the implementation of the precautionary principle to prevent

potential risks of GMOs and to protect consumer safety. Therefore, it is

necessary for China to implement traceability to achieve an accurate GM

food labeling system. Furthermore, with traceability, China would be able


to trace back the potentially harmful GMOs and withdraw them from the

market when needed.

2. Proposals for Experimental Steps with Further Revision and Expansion

The MMAGL in the future should add traceability requirements, but

limit its application to certain food operators. China may experiment with

implementing traceability on big farms, national food distributors, large

food producers, and big restaurant chains. Based on the result of this pilot

implementation project of traceability, the legislature could later review,

revise, and improve the future requirements for traceability and gradually

expand its application.

In the pilot implementation project of traceability, China could use the

EU Regulation (EC) 1829/2003 as a reference to lay down the process for

traceability. First, GMO producers in China should include certain

information in writing on all GMOs that enter the market. Then food

operators must provide the GMO information in writing to the receiving

party. The information should indicate: (1) that the food contains or consists

of GMOs, and (2) an identifier unique to the GMO. This information must

then be transferred throughout the food and feed chain to the end user to

ensure that the GMO information is transmitted and retained along the

supply chain.108

There are many reasons for taking small incremental steps in

implementing traceability. First, by limiting the implementation scope of

traceability requirements, the legislation will not impose substantial costs

and unnecessary risk of failure in implementation, either on the agencies or

on the industries.

Second, the initial implementation of an untested law usually will

require a bigger investment of resources than the following implementation

after the legislation has developed to a mature stage. Mistakes are

unavoidable in the pioneering steps. Large corporations would have more

resources than small ones to take up such a task and therefore would be

suitable for pilot implementation.

Third, major corporations are industry leaders. After the big players set

up the standard of industry, small players tend to follow such standard.

Furthermore, small companies could follow the examples provided by the

big corporations to reduce the implementation costs.

Fourth, more and more urban residents in China purchase their food

from big supermarkets, because big names and brands in China usually

108. FOOD CHAIN EVALUATION CONSORTIUM, supra note 46, at 14–v.


mean more credibility.109 Therefore, the implementation of traceability in

big retailers will have a more substantial impact on the consumer food

market than the implementation by small players. Accordingly, China

should set high priority on implementing the traceability in big retailers

first.

Last but not least, large corporations are normally more strictly self-

regulated than small players. Therefore, large corporations are usually

easier for government agencies to monitor and regulate for compliance.

After accumulating sufficient experience from regulating the big players,

the agencies could develop effective monitoring and regulating approaches

adapted to small players in future implementation and enforcement.

E. Proposals for Improvements Beyond Legislative Measures to Facilitate

the Enforcement

In addition to our proposals focused on enforceability in legislation

itself, we propose the following improvements beyond legislative measures

to facilitate the enforcement.

1. Specific Statute for Biosafety

Currently, China has no specific statute regulating biosafety. The

current GM food related laws are only at the level of regulations and rules,

which has less authority than statutes. In order to have substantial and

comprehensive legal support for GM food labeling, China should enact a

specific statute for biosafety 110 to increase public participation, enhance

enforcement, and improve administration coordination.111

2. Authority Designation and Cooperation

The other issue in China’s current GM food labeling laws is that the

authorities of numerous ministries overlap each other but lack coordination

and cooperation. For example, the Ministry of Agriculture, the Ministry of

Commerce, and the Ministry of Health all issue regulations related to

109. Qu Chaoshi Goumai Shipin Geng Fangxin (去超市购买食品更放心) [Food Purchases in

Supermarket Provide More Reassurance of Food Safety], RENMIN WANG (人民网) [PEOPLE.COM.CN],

http://www.people.com.cn/GB/shenghuo/1089/2985084.html (last visited Mar. 19, 2013) (citing a Food

Safety Status Investigation Report issued by Chinese Ministry of Commerce in 2004).

110. Wenxuan Yu, supra note 28.

111. Wenxuan Yu & Jason Czarnezki, Challenges in China’s Natural Resource Conservation &

Biodiversity Legislation (Aug. 21, 2012) (Vt. Law Sch. Res. Paper No. 21-12), available at

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2133580.


biosafety, including rules for labeling. In order to establish an effective

enforcement structure for GM food labeling laws, China must designate one

leading authority in enforcing biosafety laws and provide a clear guidance

for other government entities to cooperate.

3. Efficient and Transparent Authorization Process

Another key finding in the EU’s evaluation report is that the

authorization process could be made more efficient and transparent.

Without improvement in the authorization process, trade disputes could

become more frequent and severe and affect more products, as more GMOs

are approved outside Europe.

The Chinese government could enhance the efficiency and transparency

of the authorization process by establishing precise requirements for the

submission of applications for GM food labeling. For example, China could

set up a detailed and clear guideline for local agencies to follow and

implement the application and authorization process. These improvements

will streamline the assessment process and avoid imposing an undue burden

on importing.

4. Consistent Labeling Requirements

In the EU’s GM food labeling legislation, there is some inconsistency

for labeling requirements for different categories of products. For example,

the EU’s legislation distinguishes between food produced from a GMO

(e.g., cornstarch made from GM corn) and food produced with a GMO

(e.g., alcohol made using GM yeast in the fermentation process and cheese

made with GM chymosin). The former is subject to the labeling

requirement; the latter is not, provided it contains no detectible GM

material. Apparently, the EU manufacturers produced largely cheese and

beers and these products are commercially important to many national

economies in the EU. Therefore, other countries outside the EU regarded

the distinction as protectionism and brought trade disputes against the

EU.112 What China could improve is to overcome protectionism suspicion

by applying labeling requirements consistently on all applicable GM food,

regardless of whether China is the main producer domestically or the

importer.

112. GARY E. MARCHANT ET AL., THWARTING CONSUMER CHOICE: THE CASE AGAINST

MANDATORY LABELING FOR GENETICALLY MODIFIED FOODS 17–18 (2010).


CONCLUSION

GM food labeling is an emerging issue related to environmental health

and food safety. Currently, due to the different political interests behind the

labeling requirements, there is no international agreement on standards.

Major exporters of GMO seeds and crops, like the United States, strongly

object to mandatory labeling requirements, worrying about the negative

consumer perception of food safety from the mandatory GM food labeling.

Countries where a large majority of consumers are concerned with the

safety of GM food, like those in the EU, are advocating for mandatory

labeling requirements. In July, 2011, Codex Alimentarius, the international

food safety advisory body, “resolved a 20-year debate by deciding to permit

voluntary labeling indicating the presence of GMOs.”113 “Codex . . . issued

new guidelines that will allow countries to adopt the labeling of GMO

products without a risk of legal challenge from other members of the World

Trade Organization (WTO) . . . .”114

Chinese policymakers are taking great initiative in implementing

comprehensive GM food labeling legislation to provide consumers the right

to know and prevent potential risks of GM food. China is, however, facing

challenges in enforcing this legislation. In order to make the law

enforceable, China should first improve the enforceability of its legislation.

In addressing the enforceability issue in its legislation, China should

consider the condition of its food industry and consumer demand, and

balance the cost and benefit to enable consumers to make informed choices.

In February 2012, the Legislative Affairs Office of the State Council in

China issued the Grain Law (Draft for Comments).115 According to the

Draft for Comments, genetically modified crops should comply with

national provisions.116 As specified in the Draft for Comments, China will

improve the management of GMOs.117 With China’s increasing attention to

the importance of the management of GMOs, a new demand to amend the

current MMAGL is foreseeable in the near future.

113. International Legislation Brings Changes to GMO Landscape, QUALITY ASSURANCE &

FOOD SAFETY (Nov. 30, 2011), http://www.qualityassurancemag.com/113011-qa-International-

Legislation-Brings-Changes-to-GMO-Landscape.aspx.

114. Id.

115. Guowuyuan Fazhiban Gongbu Liangshifa (Zhengqiu Yijian Gao) (Quan Wen) (国务院法

制办公布粮食法 (征求意见稿) (全文)) [The Legislative Affairs Office of the State Announced the

Food Law (Draft) (Full Text)], ZHONGGUOWANG (中国网 ) [CHINA WEB] (Feb. 21, 2012),

http://news.china.com.cn/txt/2012-02/21/content_24695064.htm.

116. Id.

117. Id.


The legislature should not resolve massive problems in one fell swoop,

but take “one step at a time, addressing itself to the phase of the problem

which seems most acute.”118 Based on this principle, our research focused

on the enforceability of the legislation and made several proposals to

improve China’s GM food labeling legislation. We hope that China can

achieve its ultimate goal of a full implementation and effective enforcement

of its comprehensive GM food labeling legislation by building on

incremental and reasonable steps.

118. Massachusetts v. U.S. Envtl. Prot. Agency, 549 U.S. 497, 524 (2007) (citing Williamson

v. Lee Optical of Okla., 348 U.S. 483, 489 (1955)).

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