Settlement Acknowledges Global Repercussions of Fossil Fuels


During the eight environmentally dismal years of the Bush administration, environmental advocates learned how to effectively use the U.S. court system to aid their cause.  We saw this with a number of lawsuits including the Supreme Court’s ruling in Massachusetts v. EPA that carbon dioxide and other greenhouse gases are pollutants that can be regulated under the Clean Air Act.

Now Greenpeace, Friends of the Earth and 4 cities, including my very own hometown of Santa Monica, California, have settled a suit of almost 7 years (Friends of the Earth, Inc., et al. v. Spinelli, et al.) that will force two U.S. government run financing agencies, Export-Import Bank of the United States and the Overseas Private Investment Corporation, to take into account the effects of their overseas projects on climate change.

The suit alleged that these two agencies illegally provided more than $32 billion in financing and insurance to fossil fuel projects over 10 years without assessing whether the projects contributed to global warming or impacted the U.S. environment, as they were required to do under the National Environmental Policy Act (NEPA). As a result, the fossil fuel projects financed by these agencies from 1990 – 2003 cumulatively caused the equivalent of 8% of the world’s annual carbon emissions.

Under last week’s settlement, the Export-Import Bank has agreed to develop a carbon policy and take CO2 emissions into account when evaluating fossil fuel projects and the Overseas Private Investment Corporation agreed to set a goal of reducing greenhouse gas emissions of their funded projects by 20 percent over the next ten years. They also both committed to increasing investment in renewable energy projects.

I spoke about the settlement with Adam Radinsky, Head of the Consumer Protection Unit for the Santa Monica City Attorney’s Office. He explained that Santa Monica became involved in the law suit because the city was able to testify to very specific affects of climate change on the city’s economy, including Santa Monica’s strong dependence on its temperate climate to draw tourism.  “There was evidence even 6 years ago that Santa Monica would suffer in tourism within a number of decades due to climate change and that changes in sea level would have an effect on Santa Monica’s coastal infrastructure including the Pier, its beaches, and the Palisades bluffs. Even 6 years ago, the science was very clear that with climate change come increases in a variety of extreme weather incidence. All of these will have negative impacts on the Santa Monica local economy.”

Santa Monica was also in a unique position to argue the merits of the case from a financial standpoint having to do with a very important and innovative piece of infrastructure. The Santa Monica Urban Runoff Recycling Facility (SMURRF), established in 2001, is the first and only prototype in the country for water processing of dry weather runoff at the coastal level. SMURRF was built according to historic sea level statistics and with sea levels rising due to climate change, the surface tidal flow will go further inland and the intake pipes will take in salt water, creating big problem for the facilities effectiveness.

“We were very pleased with the outcome,” said Radinsky. “It was a very important result but the case had an important ruling long before final settlement back when the 9th Circuit Court of Appeals upheld the right of the 6 parties to sue under NEPA even though the projects took place over seas. They issued that ruling on the evidence that climate change is a global issue. This was the first court holding of its kind at the appellate level and set the precedent of the right to sue under NEPA without there being a direct project in the U.S.”

“The settlement is a very good result since the stakes couldn’t be higher given the issues,” Radinsky continued. “All we have been asking for since the beginning of the first Bush term was to have greater transparency so that watch dog organizations could do their job informing the public and pressuring government to do the right thing. Both these agencies have agreed on transparency and carbon emissions reductions.”

Michelle Chan, Senior Policy Analyst at Friends of the Earth concurs that it was a positive outcome. “This settlement is a substantial victory for our climate. It will force federal agencies to move away from fossil fuel projects and account for the climate impacts of their lending.” Next step; get private banks like Bank of America to do the same.

One comment
  1. Global Patriot

    It’s long overdue that our government and financial policies treat the planet in a holistic way. Every action causes a reaction, the those effects must be understood when making investment decisions.

    The old habit of turning a blind eye, or worse, claiming “it’s not my problem” must die a quick death. Everything that happens is, in the end, everyone’s problem. We can only pray that this new found sensibility will last beyond the next four years.

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