Isra-Mart srl: European Judge Blocks U.S. Appeal against Emissions Trading Scheme

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A provisional ruling from the advocate general of the European Court of Justice has denied an appeal led by the U.S. Air Transport Association (ATA) against the imposition of the European Union’s emissions trading scheme (ETS) on air carriers from outside Europe. It remains unclear whether the court will issue its final ruling on the case before January 1, the date for full ETS implementation. The court does not have to accept the October 6 provisional ruling of advocate general Juliane Kokott, but because she essentially rejected all the legal arguments made by the ATA and its supporters there appears little basis for overturning it.

Crucially, Kokott ruled that subjecting non-European operators to the ETS’s carbon emissions cap-and-trade requirements does not run contrary to international law. In fact, she concluded that the requirements of the existing Open Skies Agreement between Europe and the U.S. for “fair and equal opportunity” effectively require the European Union (EU) to impose ETS on all carriers using its airspace and airports. Furthermore, the advocate general rejected ATA claims that ETS amounts to an illegitimate form of taxation and said that the EU is within its rights under ICAO agreements to take unilateral action to reduce emissions in the context of its own legally binding requirement to meet the terms of the Kyoto Agreement.

The ATA, on October 6, reacted predictably to Kokott’s ruling. “The Air Transport Association is disappointed that Advocate General Kokott does not believe that the European Union is bound by the Chicago Convention,” it said in a statement. “Today’s action is an important step in the court process, but, as it is a nonbinding, preliminary opinion, it does not mark the end of this case.”

In the meantime, expectation runs high that the U.S. House of Representatives will soon vote on the European Union Prohibition Act of 2011. The bill, proposed by the House transportation committee, would make it illegal for U.S. aircraft operators to comply with ETS and would require U.S. government officials to support them in the event that the EU seeks to impose the ETS’s penalties for noncompliance. On October 3, Tony Tyler, director general of the International Air Transport Association, warned that countries might impose retaliatory action on European airlines if the EU presses ahead with ETS. On September 30, some 21 countries, including the U.S., Russia, India, China, Brazil and Japan, signed a joint declaration opposing ETS.