C. Evaluating the “Protest at the Beach”

environmental protection. A TV documentary about poisoned wetlands, though unrelated to this development, galvanizes environmental activism across the region, focusing on protection of coastal areas. More citizens begin marching in the streets. They even shut down construction at the site for several days. Government ministers begin arguing in the press about the project, with some in favor and some against. One of the project’s defenders argues that the environmentalists are just “out to score political points.”

Eventually, officials determine that the protest movement is presenting a national social, political, and electoral issue. The Minister of the Environment asks her staff to revisit the Citizens’ Assessment. In response, she receives a memo explaining that “this Ministry has never used the novel methods in the Citizens’ Assessment, and they are not consistent with accepted international guidelines.” With political pressure mounting and a deadline looming to approve the next phase of construction, regulators appear to be looking for more time. They ultimately deny a construction permit for the next phase of the project, citing some (seemingly small) errors and omissions in the developer’s application. The developer is told to resubmit their application with the errors corrected, but the project in the meantime is delayed by several months.

From there, things begin to deteriorate. Environmental regulators issue a report about the impact of coastal development on certain wildlife habitats, and ask all developers in the area to submit further information about mitigation efforts. This report, for the first time, cites data collected in the Citizens’ Assessment. The developers initially attempt to work with regulators to identify additional mitigating measures, but these efforts are met with non-committal responses and delay.

Finally, after construction has been halted for more than a year, the developers’ construction permit is denied. The Notice of Denial cites a provision of the Buildings Law, which allows construction permits to be denied for reasons of safety to building occupants and those nearby. The Notice states that this provision allows permits to be denied if a project is “unsafe to the surrounding area’s natural environment and wildlife.” To support its findings, the Notice cites the Citizens’ Assessment. The area is then rezoned to prevent further development permanently.

C. Evaluating the “Protest at the Beach”

It is far less clear how a case like the above would fare under a second-generation treaty like CETA. The investor will argue that the denial was not regulation for “legitimate public welfare objectives.”64 Instead, the investor will claim, the shifting grounds for decision, the novel interpretations of local law, and the unreasonable delay were all “manifestly arbitrary” and a “fundamental breach of due process.”65 The delay, the permit denial, and ultimate rezoning, the investor would argue, were each so severe as to be “manifestly excessive,” and interfered with the “distinct, reasonable investment-backed expectations” created by regulators’ earlier assurances. In fact, the investor would argue, the provisions of the CETA themselves show that this series of decisions, far from being legitimate regulation, was the kind of politically motivated regulatory behavior from which the CETA is meant to provide protection.

Should the investor be entitled to compensation in this case? The above facts may read to investors as a politically motivated, arbitrary decision. But environmental activists would likely view

64 See CETA art. 8.9.

65 See CETA art. 8.10.2.