The U.S. Overseas Private Investment Corporation (OPIC) and the U.S. Export-Import Bank (Ex-Im) recently settled litigation seeking to require OPIC and Ex-Im to account for carbon dioxide emissions in connection with projects they support. Plaintiffs, the City Council of Boulder, Colorado, Friends of the Earth, Greenpeace, and the cities of Arcata, Oakland and Santa Monica, California, filed the lawsuit in the U.S. District Court for the Northern District of California (Docket No. C 02-4106 JSW) in August 2002.  Plaintiffs alleged that OPIC and Ex-Im provided assistance, in the form of loans and loan guarantees and insurance, to projects around the world that contribute to climate change without complying with National Environmental Policy Act (NEPA) requirements.

On March 30, 2007, in a ruling on cross-motions for summary judgment, the Court held that OPIC had not established that it was exempt from NEPA and rejected defendants’ claims that the lawsuit sought extraterritorial application of NEPA.  The Court found, however, that it could not determine as a matter of law whether the “illustrative projects” plaintiffs used for summary judgment constituted major federal actions under NEPA.  The Court also declined to rule on whether those projects were “cumulative actions” requiring a single Environmental Impact Statement.  The Court reasoned that because the projects involve substantial non-federal activity, the record was insufficient to allow the Court to determine the degree of control over the projects exercised by OPIC and Ex-Im.

The court rejected OPIC and Ex-Im’s argument that “the impacts of global warming on the domestic environment … are too remote and speculative to be considered for purposes of NEPA.”  In support of this ruling, the Court noted that the defendants did not dispute the allegation that the projects emitted GHGs, and the defendants had made statements in their own reports suggesting that GHGs contribute to global warming.  The Court noted, however, that it could not rule on the issue of causation until it determined whether the projects would have gone forward without OPIC or Ex-Im assistance.

Incentivized by these rulings and a Court Order requiring the parties to participate in settlement discussions, OPIC and Ex-Im entered a settlement with the City of Boulder.  According to the Acting City Attorney, the settlement requires OPIC to:

• treat all projects resulting in emissions of more than 100,000 tons of CO₂ (presumably, annually) as “Category A” projects, which will be subject to NEPA equivalency environmental impact analysis
• report annually on the GHG emissions attributable to Category A projects, including posting the information on its website
• substantially increase its support for projects promoting renewable energy for a 2 year period by establishing a revolving investment fund of at least $250 million and shall apply preferential financing terms to renewable projects
• reduce GHG emissions associated with projects that emit more than 100,000 tons of CO₂ per year by 20% over the next 10 years (this is consistent with an internal goal adopted by OPIC in 2007)
• propose energy efficiency requirements for its environmental handbook
• encourage all applicants to explore opportunities to use renewables in project design (this is also consistent with one of OPIC’s previously-adopted guidelines)
• pay Friends of the Earth and Greenpeace $100,000

The terms applicable to Ex-Im are somewhat different, given the different nature of Ex-Im’s activities and its existing NEPA rules.  Under the proposed settlement, Ex-Im will be required to:

• implement a staff directive to provide the Ex-Im Board of Directors with CO₂ emissions information to use in its decision-making process
• issue a record notice for all “Category A and Category B” fossil fuel projects stating whether a NEPA review is necessary and the basis for that determination
• working with plaintiffs, develop and implement a carbon policy, including a renewable loan guarantee program of $250 million
• subject to the concurrence of the U.S. delegates to the OECD, promote consideration of climate change issues within OECD and among its members
• pay Friends of the Earth and Greenpeace $100,000.

In recommending that the City Council approve the settlement, the Acting City Attorney noted that the “situation concerning global warming has changed significantly since the litigation was initiated,” and that the plaintiffs had accomplished their primary goals in the lawsuit - to establish standing and to establish that the use of federal dollars to finance projects abroad that emit GHGs is a sufficient nexus to trigger NEPA review.

The settlement will require court approval.

For further information about this topic, please contact Akin Gump.