mrThere has been much debate about the relationship between international trade, and intellectual property, the environment, biodiversity protection, and climate change. The Obama Administration has pushed such issues into sharp relief, with its advocacy for sweeping international trade agreements, such as the Trans-Pacific Partnership. There has been much public concern about the impact of the Pacific Rim Treaty upon the protection of the environment. In particular, there has been a debate about whether the Trans-Pacific Partnership will promote dirty fracking.

Will the Trans-Pacific Partnership transform the Pacific Rim into a Gasland?

1. The United States

In the United States, there has been much public debate about the regulation of hydraulic fracturing – known as ‘fracking’.

The intrepid documentary film-maker Josh Fox has made a series of films, Gasland, which raise concerns about the impact of fracking upon air, water, and land. He also charted the larger impacts of the gas industry upon the environment, society, government, and the economy:

His work has highlighted the impact of the Bush Administration providing regulatory loopholes for the gas industry, which exempted them from proper environmental regulation.

Josh Fox has depicted the development of a strong civil society movement against fracking, which spread around the world. At the recent United States municipal elections, a number of Colorado cities approved bans or moratoriums on fracking.[1] Over a hundred municipalities in the United States have approved similar controls in such of fracking.

There has been a concern that foreign investors can challenge such regulations under investment clauses in the Trans-Pacific Partnership. The environmental group – The Sierra Club – has been concerned about the use of investment clauses to challenge public regulation in respect of energy, the environment, and climate change. The Sierra Club warns of an increase in dirty fracking:

The Trans-Pacific Partnership may allow for significantly increased exports of liquefied natural gas without the careful study or adequate protections necessary to safeguard the American public. This could mean an increase of hydraulic fracturing, or fracking, the dirty and violent process that dislodges gas deposits from shale rock formations. It would also likely cause an increase in natural gas and electricity prices, impacting consumers, manufacturers, workers, and increasing the use of dirty coal power.[2]

Michael Brune, the dynamic leader of the Sierra Club has argued: ‘With our jobs, our access to clean air and water and our environment at stake, we deserve a say in the way these trade rules are being written.’[3]

Sharon Kelly has commented that the Trans-Pacific Partnership could also be a boost for the export of natural gas.[4] She warned: ‘A trade agreement being secretly negotiated by the Obama administration could allow an end run by the oil and gas industry around local opposition to natural gas exports’. Kelly observed: ‘The shale gas rush has caused a glut in the American market thanks to fracking, and now the race is on among industry giants to ship the liquefied fuel by tanker to export markets worldwide, where prices run far higher than in the U.S.’ The Trans-Pacific Partnership has predicted to relax regulatory controls over the export of natural gas. Kelly feared: ‘This will mean that exports to any partner countries will automatically be given a stamp of approval, without having to undergo the public hearings that are otherwise required.’ In particular, there is a concern that the Trans-Pacific Partnership will be used to promote the export of natural gas to Japan.[5]

In addition to questions about environmental regulation, there have also been matters raised about the role of intellectual property in respect of fracking. [6] Daniel R. Cahoy, Joel Gehman, and Zhen Lei have written an important paper called ‘Fracking Patents: The Emergence of Patents as Information-Containment Tools in Shale Drilling’ for the Michigan Telecommunications and Technology Law Review. The paper observed: ‘Our analysis reveals that at the very moment when the use of hydraulic fracturing was becoming more widespread, visible, and controversial, patenting activity related to the practice began to rise.’ The work also worries whether patent law is being used to contain and suppress information about fracking, rather than provide for full disclosure and dissemination of such information.

There has been a similar concern in the debate in respect of trade secrets and fracking. In a United States District Court case in Pennsylvania, Dr. Alfonso Rodriguez has lost a case against fracking gag order over access to trade secrets.[7]

Such disputes raise questions about whether intellectual property law should promote research and development into extractive industries, such as fracking.

2. Canada

There has been particular disquiet about the use of state-investor clauses to challenge environmental regulations in Canada.[8]

In 2011, the Quebec National Assembly introduced and passed Bill 18, and placed a moratorium on fracking below the St. Lawrence River in order to allow for a full and timely evaluation of the public health and environmental impacts of such activity.

In 2012, the United States energy company Lone Pine Resource Inc. notified the Canadian Government that it would challenge the moratorium on fracking in Quebec’s St Lawrence River under an investment clause Chapter 11 of the North American Free Trade Agreement (NAFTA). The full complaint was filed on the 6th September 2013.[9] Lone Pine objected to the ‘arbitrary, capricious, and illegal revocation of the Enterprise’s valuable right to mine for oil and gas under the St. Lawrence River by the Government of Quebec without due process, without compensation, and with no cognizable public purpose.’ The company complained that ‘Lone Pine and the Enterprise have suffered significant damages as a result of Canada’s [alleged] violation of Chapter Eleven of NAFTA.’

The company has brought this investment action at the same time as it has sought to restructure itself in bankruptcy.[10]

Martine Châtelain, president of Eau secours!, the Quebec-based coalition for a responsible management of water, argued: ‘Based on the principle of precaution, Quebec government’s response to the concerns of its population is appropriate and legitimate’.[11] The President maintained: ‘No companies should be allowed to sue a State when it implements sovereign measures to protect water and the common goods for the sake of our ecosystems and the health of our peoples.’

Stuart Trew of the Council of Canadians maintained that ‘Quebec’s moratorium on fracking is legal and supported strongly by the public’. He maintained that ‘corporate profit should never get in the way of environmental and public health safeguards’. Stuart Trew insisted: ‘It’s outrageous to even think that we may have to pay Lone Pine not to drill in the St. Lawrence River’. Trew contended: ‘Trade rules shouldn’t be used to appease the whims of dirty oil and gas companies.’

Ilana Solomon of the Sierra Club observed: ‘My right to clean water, clean air, and a healthy planet for my family and community has to come before Lone Pine’s right to mine and profit’.[12] She warned: ‘This egregious lawsuit – which Lone Pine Resources must drop – highlights just how vulnerable public interest policies are as a result of trade and investment pacts.’ She observed: ‘Governments should learn from this and other similar cases and stop writing investment rules that empower corporations to attack environmental laws and policies.’ Highlighting the case study of Lone Pine Resources, Ilana Solomon has warned against the inclusion of investment clauses in the Trans-Pacific Partnership.

TPP’s Impact on the Environment from Global Trade Watch on Vimeo.

Elizabeth May, the leader of the Green Party of Canada, has expressed concerns about investor-state provisions being used to challenge sustainability or environmental protection measures in Canada – such as the action by the US energy company Lone Pine Resources against Quebec’s moratorium on fracking.[13] She observed: ‘Such cases represent clear barrier to environmental protection and regulation in Canada.’ Her preference was that the Trans-Pacific Partnership should not include investor clauses’.

May maintained: ‘At minimum, I would insist that any inclusion of investor-state arbitration clauses into the Trans-Pacific Partnership Free Trade Agreement include clearly stated exceptions against claims of expropriation for any laws or regulations pertaining to environmental, social, or labour policies that a future government may want to pursue.’ She noted: ‘Yet while better than nothing, even here such exceptions present unacceptable risks to Canadian’s sovereign, democratic rights to govern ourselves, including in environmental protection.’

3. Australia

In his excellent book, What the Frack?, investigative journalist Paddy Manning charts the conflicts in Australia over unconventional resources:

‘In Australia, where coal seam gas has taken off in the space of a decade, the land is the battleground: grazing country, cropping country, state forest, water catchment areas, rural-residential and even urban areas. Nowhere appears to be off-limits for this new industry that has coined a new vernacular: ‘gas mining’.’

Manning observed that ‘two key technological breakthroughs in America have opened up huge new possibilities in unconventional gas extraction: horizontal drilling and hydraulic fracturing, often shortened to ‘hydro-fracking’ or just ‘fracking’.

Ian Macfarlane, the new industry minister for the Coalition Conservative Government, has been a great supporter of coal seam gas. He has argued that mining companies should extract all the possible resources:

‘We’ve got to make sure that every molecule of gas that can come out of the ground does so. Provided we’ve got the environmental approvals right, we should develop everything we can’.[14]

In Australia, the issue of whether farmers can ‘Lock the Gate’ to mining companies has united farmers, environmentalists, and climate change activists. The Lock the Gate movement has demanded greater regulation of coal, and coal seam gas in order protect agriculture, farming, the environment, and the climate.

On the 1st October 2013, Lock the Gate and the Australian Fair Trade and Investment Network have put out a joint statement[15], expressing ‘their strong opposition to clauses in trade agreements which would enable foreign investors to sue governments for damages in international tribunals if government regulation is seen to ‘harm’ their investment’. Drew Hutton, the President of Lock the Gate, observed: ‘Investor State Dispute Settlement would reduce the ability of governments to regulate the activities of foreign companies even if these activities have a negative impact on health and the environment.’ He worried: ‘This would prevent governments from responding to community concerns about Coal Seam Gas mining (CSG)’.

Hutton was particularly concerned about the precedent of the Lone Pine energy company using ISDS clauses in the North American Free Trade Agreement to sue the Canadian Quebec provincial government for $250 million over a moratorium on fracking. He noted that ‘farmers and community members in NSW and Victoria have influenced their state governments to review the environmental impact of CSG mining and to consider regulation’. Hutton concluded: ‘If Australia agrees to include ISDS in trade agreements, governments could be sued for millions of dollars for responding to community concerns.’

Isabel McIntosh from Lock the Gate has expressed concerns about the impact of the Trans-Pacific Partnership on the public regulation of coal and coal seam gas:

A trade agreement with investor–state dispute settlement provisions that are being discussed for the Trans Pacific Partnership Agreement will lock the door on our electoral democracy. The restrictions imposed could tie the hands of government to regulate in areas such as foreign investment in farmland and the expansion of coal and CSG. It is this regulation on CSG and coal that is critical: we campaign, the government then plays catch up as the power shifts into the community’s hands and the voices of independent experts lead the conversation. But if a trade agreement is signed that puts the power in the hands of overseas companies, then it’s over.

McIntosh worries that ‘the Trans-Pacific Partnership Agreement will protect the rights of corporate investors at the expense of democratic governance’. She is concerned that the mining industry ‘want to jeopardise land and water security for the short-term – and diminishing – profits of fossil fuels’. In her view: ‘If the mining industry is allowed to carry out its business plan, the planet tanks’. McIntosh comments: ‘Whether through invasive mining or the impact of catastrophic climate change, Australia’s agricultural land will diminish to a fraction of what it is now.’

Considering the Trans-Pacific Partnership and the Lone Pine Resources case, Richard Denniss of the Australia Institute observed that the matter of free trade and fracking could divide and fracture the Conservative Government – a coalition of the Liberal Party and the National Party – in Australia: ‘The issues of coal seam gas and free trade are combining to create a perfect storm for the National Party, and in turn, the Coalition government.’[16] He commented: ‘The problem for Tony Abbott and Warren Truss is that CSG forces the Coalition partners to decide whether they are on the side of farmers or the mining industry.’ Denniss noted that ‘the issue of foreign investment forces them to choose whether they are on the side of free trade or Australian sovereignty.’ He concluded: ‘Both issues could end up splitting the Coalition, and if they don’t, they will likely deliver more National Party seats to the Palmer United Party, Katter’s Australian Party or independents willing to put their constituents’ interests first.’

4. New Zealand

There has also been controversy in New Zealand over the Conservative Government’s push to mine Middle Earth, with the end of the filming of series of The Hobbit.[17]

The New Zealand Sustainability Council has observed that ‘The environment will be a major loser under terms put forward for the latest free trade deal.’ The Council is alarmed that the mechanism of investor-state dispute clauses ‘would give foreign companies the ability to sue a government in an offshore tribunal if that company believed its reasonable investment expectations (such as its profits or asset values) had been breached’. The Council worries that such a regime ‘ends up privileging foreign companies over local communities and local companies who do not have such rights to sue.

Conclusion

The Trans-Pacific Partnership poses significant threats to the environmental protection of the air, water, and land in the Pacific Rim. There has been a groundswell of support for public regulation of fracking in the United States, Canada, Australia, and New Zealand. However, trade agreements, with investment clauses, could be used to challenge such regulation. The environmental writer George Monbiot has warned of the dangers of investment clauses in trade deals:

Investor-state rules could be used to smash any attempt to save the NHS from corporate control, to re-regulate the banks, to curb the greed of the energy companies, to renationalise the railways, to leave fossil fuels in the ground. These rules shut down democratic alternatives. They outlaw left-wing politics.[18]

Joseph Stiglitz, the Nobel Prize winner in Economics, has similarly warned that such agreements would ‘significantly inhibit the ability of developing countries’ governments to protect their environment from mining and other companies.’[19] That is a particularly acute concern for developing countries in the Pacific Rim.