Following House passage, mirror bill introduced into US Senate to block US airlines from participating in EU ET

Thu 8 Dec 2012 – Following the adoption of the H.R. 2594 bill in the US House of Representatives late October, Senator John Thune has introduced a mirror bill in the Senate. The bill instructs the US Secretary of Transportation to prohibit US civil aircraft operators from participating in what it describes as the EU’s unilaterally established scheme, similar language to that of H.R. 2594. The move was welcomed by trade body Airlines for America, formerly the Air Transport Association, who estimate the EU ETS will cost US airlines and passengers more than $3.1 billion between 2012 and 2020. The EU ETS issue is to be discussed at a regular meeting coincidentally being held today of EU and US representatives under the US-EU bilateral Open Skies air transport agreement. Meanwhile, the EU’s Connie Hedegaard yesterday said the legislation would not be changed.
In a majority Democrat Senate, Thune is a Republican ranking member of the Commerce Committee’s Aviation Operations, Safety and Security Subcommittee.

“The idea that the European Union has the right to tax American air passengers and carriers flies in the face of our country’s sovereignty,” commented Thune. “I reject this proposed European tax and will work with my colleagues in Congress and countless concerned stakeholders to block this tax.”

The European Union Emissions Trading Scheme Prohibition Act of 2011 maintains the EU’s extraterritorial action is inconsistent with international law, including the Chicago Convention and the US-EU air transport agreement, and infringes United States sovereignty. This action, it adds, undermines efforts to develop a unified, worldwide approach to reducing aircraft greenhouse gas emissions “and has generated unnecessary friction within the international civil aviation community to reduce such emissions.”

The bill states: “The Secretary of Transportation shall prohibit an operator of a civil aircraft of the United States from participating in any emissions trading scheme unilaterally established by the European Union in any case in which the Secretary determines the prohibition to be, and in a manner that is, in the public interest.” It also calls on the DOT Secretary, the FAA Administrator and others to conduct international negotiations on the issue.

Lobbying by the aviation industry over the EU ETS has been intense and the bill is being supported by a coalition of 14 US aviation and travel associations plus the International Air Transport Association (IATA).

“We commend Senator for his leadership in joining the Administration and his colleagues in the House of Representatives in opposing the application of the EU ETS to US airlines, as it is both illegal and bad policy,” said Airlines for America (A4A) President and CEO Nicholas Calio.

“Subjecting airlines to the EU’s unilateral system will be counterproductive to helping the environment, result in the loss of US jobs, and hamper airlines’ ability to invest in new aircraft and continue their extensive efforts to reduce their environmental impact.”

A4A, together with airlines American and United/Continental, have brought a case against their inclusion in the EU ETS and is currently awaiting judgement in the European Court of Justice. A ruling will be delivered on December 21, although a preliminary opinion by the Advocate General has already found in favour of the EU legislation.

A number of US environmental groups sided with the EU in the case, including the Environmental Defense Fund (EDF). Commenting on the proposed Senate bill, Pamela Campos, an attorney with EDF, said: “We are disappointed to see this news. This is a bad move for the environment, the American economy, and American airlines. Our Congressional leaders should not be turning American companies into scofflaws.

“The timing of the bill, just before the Joint Committee meeting, is not a coincidence. It is difficult to imagine any US airline executive wanting to be placed in such a square regulatory conflict, and we continue to see this legislative action as pressure on the EU to back down. The better approach is for the United States to build on the EU’s efforts and provide leadership in working with our allies to establish a broader system for reducing pollution from airplanes.”

The row between the US and the EU over the EU ETS has reached the highest levels of government. The issue was raised by President Obama on November 28 at a US-EU meeting with European Commission President José Manuel Barroso in Washington.

Speaking yesterday at the COP 17 climate talks in Durban, EU Climate Commissioner Connie Hedegaard said there was “no way” the EU would back down and change legislation that includes aviation in its ETS. Jo Leinen, Chairman of the European Parliament’s Environment Committee called the passing of the H.R. 2594 House bill “arrogant and ignorant”.

Hedegaard was also responding to new negotiating text proposed by India and released yesterday at the Durban talks that proposes the banning of developed countries from imposing unilateral measures against goods and services from developing countries. Indian environment minister Jayanthi Natarajan said the EU’s unilateral imposition of a “carbon tax” on aviation was a “disguised trade action taken in the name of the climate”.

In London on Tuesday, Paul Gretch, Director of International Aviation at the US Department of Transportation, warned of a damaging trade war over the EU ETS, with the possibility of retaliatory measures by the United States, regardless of legislation by Congress (