Indian Power Plant Pollution Case Goes to U.S. Supreme Court
In a case with potential landmark implications, a lawsuit brought by a group of Indians against a power plant built in Gujarat, India, is going to be heard by the U.S. Supreme Court.
The suit was filed on behalf of lead plaintiff Budha Ismail Jam, three other residents, a local trade union that represents the rights of fishermen, and the town of Navinal Panchayat. The defendant is the International Finance Corporation (IFC), The World Bank’s private lending company. The plaintiffs claim the Tata Mundra Ultra Mega Power Plant, a 4,150-megawatt coal-fired plant that was funded by a $450 million loan from the IFC, has “impoverished communities and local farmers who have had their way of life fundamentally threatened or destroyed by the Tata Mundra Plant."
The plant is located in the Kutch district, Gujarat, India. It became fully operational in 2013. Tata Power, an Indian company and part of the giant conglomerate Tata Group, owns the plant, but they have been essentially trying to give the plant away due to its substantial debt and continued financial losses.
The IFC is headquartered in Washington, D.C.
Navinal Panchayat, the town named as one of the plaintiffs in the case, is home to approximately 3,000 residents whose primary sources of employment are farming, fishing and animal rearing.
According to the case filing, “The IFC states that its mission is to carry out investment and advisory activities with the intent to ‘do no harm’ to people and the environment. The Tata Mundra Plant is thus a mission failure. The project has already done substantial harm to local people and the environment, and if compensatory, remedial and preventive measures are not promptly taken, plaintiffs will be further injured, their livelihoods destroyed and the local environment irreparably harmed, all in further violation of the IFC’S mission.”
The lawsuit goes on to say that the IFC provided its financing for the plant despite allegedly knowing the coal-fired plant and pollutants associated with its construction and operation would cause significant harm to the environment. The plant currently consumes between 12 and 13 million tons of coal each year. In operation, it takes in seawater to help cool it and then throws out heated water as a waste by-product, which kills marine life.
The lawsuit says that as a critical funder in designing, building and operating the plant that should never have been funded and built, the IFC “failed to take sufficient steps or exercise due care to prevent and mitigate harms to the property, health, livelihoods and way of life for many people who live near the Tata Mundra Plant.” The case goes on to state that during the plant’s design process, the initial approved design
was changed so the intake and outfall channels made the environmental impact worse. It says that the IFC had full knowledge that the project was “expected to have significant adverse social and/or environmental impacts that are diverse, irreversible or unprecedented.” It goes on to say that “the thermal pollution discharged into the sea by the Tata Mundra Plant’s cooling system has fundamentally degraded the local marine ecosystem where traditional fishing communities have fished for generations, resulting in the decline of critical fish stocks and other marine resources and threatening plaintiffs’ means of supporting themselves and their families.” The case further notes that “construction of the Tata Mundra Plant and the intake and outfall channels has closed off access routes to traditional fishing grounds, substantially increased the travel time and costs for fishing families and caused sea water intrusion into the groundwater along the Mundra-mandvi area where plaintiffs and other members of the proposed class live.”
The 56-year-old lead plaintiff Jam, who is a fisherman himself, said the decline in fish catch, caused by the plant, has affected his work so much that he and his family of a wife, five sons, their wives and 10 grandchildren may all have to move away in order to bring in sufficient income to live.
With the facility fully up and running, the total air pollutants the plant gives off are higher than the standards the IFC has set for itself. They also exceed what Indian law requires. Because of other ecological damage caused by the plant, the water in the region is now so salty with contaminants that it is not safe for people to drink or able to be used with irrigation systems by local farmers. Hot water exiting the plant’s cooling system has lowered the number of fish that used to be present near the shoreline.
The fish workers’ trade union filed a complaint about the plant in 2011. The Office of the Compliance Advisor Ombudsman (CAO) then determined that the IFC did not properly investigate the environmental and social risks caused by the plant when it was funded and had oversight responsibility for the plant’s development. It neglected to ensure that the plant met environmental standards, did not make sure pollution was within requirements and did not properly consider what might happen to the region’s residents when the plant was complete.
According to Rick Herz, Earthrights International’s litigation coordinator, “While the IFC is likely to argue that it is immune from suit, no institution should be above the law in a case where the risks were so obvious from the start and the failure to act so damaging. The lawsuit seeks compensation for harm to property and economic livelihoods and asks [that] the court order the IFC to enforce the provisions of the loan agreement which were intended to protect local communities and the environment to minimize future harm.”
The case is coming to the U.S. Supreme Court precisely because of the argument about immunity that Herz mentioned. In a lower court ruling at the D.C. Circuit in 2017, the IFC argued for – and the court agreed – the case that the suit should be barred on the basis of the International Organizations Immunities Act.
Lawyers representing Jam and the other plaintiffs then filed a writ of certiorari with the U.S. Supreme Court for it to review the lower court’s decision. When the Supreme Court rules, it could have landmark implications. The ruling should read on whether the International Organizations Immunities Act protects corporations like the IFC for foreign financing support the same way in which governments are typically protected by the Foreign Sovereign Immunities Act.
If that happens, the ruling could force a very necessary raising of the bar for accountability for organizations such as the IFC and its parent, The World Bank.
When direct foreign aid is provided by the United States to a foreign country for infrastructure development such as power plants, roads and telecommunications projects, the environmental impacts and the human rights and displacement implications of the project are generally part of the considerations for the projects. There is no such requirement for organizations like the IFC, The World Bank or even individual companies who may be involved in the actual construction of such plants provided the work is all done outside U.S. borders.
The World Bank, the organization involved with the Tata Mundra Plant, unfortunately has a track record of lending without enforcing appropriate standards regarding environmental protections and human rights. One big example is the Yanacocha gold mine in Peru, a project owned and operated by U.S.based Newmont Mining Corporation and built using loans provided by The World Bank. The construction required using explosives to break apart hills and then applying toxic chemicals to extract the gold ore. Since it started operations in 1993, the mine is still on record as being the biggest gold mine in South America, with a total yield of over 35 million ounces of gold. It has also delivered over $2.75 billion in tax revenues and royalties to the Peruvian government since that
time. However, it has also unleashed major pollution into the groundwater in the form of heavy metals and produced at least one major dump of mercury from a truck associated with the project. Animals and people in the area have become badly sickened, and many have died from the contamination.
According to a study conducted by the International Consortium of Investigative Journalists and the Huffington Post, The World Bank is investing more than ever in large projects that are potentially highly damaging and prone to risks, both to the environment and to the people who live near the projects. That study showed that in the period from 2009 to 2013, The World Bank and the IFC have funded 239 of these high-risk, high-payoff projects, including dams, copper mines and oil pipelines. The rate of funding is twice the level it was in the five years before 2009. The projects are also increasingly being carried out in locations where the federal governments do not tend to enforce regulations and where the laws are not so strict.
The same study also noted that during the period between 2004 and 2013, The World Bank made a total of $455 billion in investments. During that time, a total of 3.4 million people lost their homes, lost their land or had their jobs taken away because of roads, power plants and other projects funded by the organization. It is true that the project managers in many cases did provide some compensation for what happened to the people, but it is equally true that many received nothing or were forcibly removed from their properties without any court or government action to protect them.
The sheer magnitude of the inhuman and ecologically destructive lending provided by The World Bank and the IFC alone is one reason this Supreme Court case could have such far-reaching implications. If the fish workers and farmers of Navinal Panchayat, India, win their case with the U.S. Supreme Court, it could open the doors to many other such lawsuits around the world.
For those who brought the case forward, a win with the Supreme Court is not the end, since all that would be determined there is a jurisdictional dispute. The real fight to determine liability and damages and to get monies back in the hands of the community that has been forever harmed at the hands of those who run the IFC and The World Bank is still several steps ahead.
The AMERO and other people’s regional digital currencies will help provide an alternative to environmentally destructive development.