EU Advocate General Finds US Airlines Inclusion in EU ETS Compatible with International Law

On October 6, 2011, the European Court of Justice Advocate-General released an opinion that the 2008 European Union (E.U.) directive requiring foreign airlines to participate in the E.U. Emissions Trading System (ETS) is compatible with international law. In 2009, American Airlines, Continental Airlines, United Airlines and the Air Transport Association filed suit in the U.K. court claiming that E.U. directive requiring that all foreign airlines participate in ETS breaches international law. Though the directive takes effect on January 1, 2012, airlines are not yet required to the buy emissions certificates for 15 percent of their current emissions to meet 97 percent of their 2004-2006 emission levels required by the directive until April 2013.

The Obama Administration supports the airlines’ stance that the inclusion of the airlines ETS infringes on state sovereignty. Wendell Albright, Director for the State Department’s Office of Aviation Negotiations stated, “The European Union is imposing this on U.S. carriers without our agreement, “It is for the U.S. to decide on targets or appropriate action for U.S. airlines with respect to greenhouse gas emissions.” Many U.S. lawmakers are similarly opposed the airlines inclusion in ETS, as evidence by legislation in the House of Representatives prohibiting U.S. airlines from participating in ETS.

The airlines’ primary legal argument is taxing emissions for entire international flights, rather than just the portions in the European Union, violates customary international law that states have sovereignty over their own airspace and waters. Further, the E.U. breached commitments under international agreements by unilaterally imposing aviation policy. The airlines allege that the Chicago Convention, the 1944 agreement establishing the UN International Civil Aviation Organization (ICAO), and the E.U.-U.S. Open Skies Agreement of 2007 require international aviation policy to be handled through ICAO and forbid charging international airlines fees for entering or existing a country.

The E.U. maintains that requiring foreign airlines to participate in ETS is consistent with international law because it is not imposing a duty or tax, but merely requiring the participation in a cap-and-trade system to reduce emissions. The environmental groups Earthjustice and Environmental Defense Fund have intervened in support of including US airlines in ETS.

European Court of Justice Advocate-General opinion is not binding, but such opinions influence the deliberations of the European Court’s Grand Chamber that will ultimately make the ruling on whether E.U. directive violate international law. The Grand Chamber is expected to make its ruling in early 2012. Given that a decision by the European Court in favor of the airlines would invalidate a major E.U. directive and a significant component of E.U. climate change policy, some view it as unlikely that the European Court will find the directive violates international law. Following to the European Court’s ruling, the case will go back to the High Court of England and Wales, which will decide how to interpret the Court of Justice ruling.

If the European Court rules against the US airlines, the airlines have two options for seeking resolution of the issue: the airlines could bring the issue before the International Civil Aviation Organization (ICAO), which has a forum for resolving such disputes, or urge the US to seek resolution under the Open Skies Agreement.

University of Maryland Professor Robert Percival stated that the decision could set “interesting precedents” in international law where states can unilaterally impose restrictions on other states to address climate change.

Written by:  Shani S. Harmon, GIELR Staff

One response to “EU Advocate General Finds US Airlines Inclusion in EU ETS Compatible with International Law

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