Climate Change Litigation – Will Property Insurers Take the Lead?

Posted on April 24, 2014 by Ralph Child

Common law litigation seeking relief from petrochemical companies for causing climate change has been much touted but little successful.

The insurance industry has been warning of huge coming losses due to climate change, but has not taken aggressive action to force change.

Until now? 

In a lawsuit filed in Illinois state court on April 16, 2014, some property insurers sued the City of Chicago and a host of regional and municipal water managers for failure to provide adequate stormwater storage.  The class action suit alleges that the plaintiffs’ insureds would not have suffered so much flood damage from a 2013 storm had the defendants exercised better planning and construction to deal with foreseeable storms. 

Notably, the plaintiff insurers rely heavily on the 2008 Chicago Climate Action Plan.  The plan recognized that climate change would cause increased amounts, durations and intensities of rainfall.  Plaintiffs allege that despite the foreseen problem and having had adequate time and opportunity, the defendants failed to make the recommended and necessary improvements, leading to the injuries to the insureds’ properties.

Certainly this suit faces many challenges.  Courts are slow to override state and local governments’ complicated budgeting choices.  Moreover, courts may be ill-equipped to oversee projects such as Chicago’s Deep Tunnel Project, which was commissioned in the 1970s to address metropolitan flooding, stormwater and sewage.  After more than $3 billion so far, itwill not be completed until at least 2029.

Also, query whether such litigation will help or hurt state and local efforts to adapt to climate change.  It could deter honest forecasting of what it will take.

Still, this lawsuit could augur a new wave of common law climate change litigation – a category involving well-funded plaintiffs with provable arguments for proximate cause of real damages.

Yes, Another Blow, but not a Knockout

Posted on August 28, 2013 by Ralph Child

A recent post from Mary Ellen Ternes characterized the August 23, 2013 decision in EME Homer City Generation as another blow to EPA’s ability to enforce against long ago violations of the requirement to obtain New Source Review.

The Third Circuit’s decision certainly is a blow to EPA’s NSR enforcement initiative, but not nearly a knock-out.

First, the decision depended on the fact that neither the Clean Air Act or Pennsylvania’s EPA-enforceable State Implementation Plan expressly requires a major source to operate in compliance with the results of a New Source Review.  But some states do have that requirement in their EPA-enforceable SIPs, as the Third Circuit recognized in distinguishing other cases.  In such states, major sources that did not go through NSR as allegedly required at the time of construction or modification should still anticipate potential EPA enforcement via the SIP. 

Second, even where it is not illegal to operate in compliance with NSR, the question is still open whether the government may obtain injunctive relief anyway.  In United States v. United States Steel Company (N.D. Indiana), the Court held on August 21, 2013 that no penalties could be imposed at law because there is no federally enforceable requirement in Indiana to operate in accordance with the results of an NSR.  Yet the Court went on to  hold that the United States still can seek injunctive relief against a plant that allegedly violated the NSR requirement.  The Court reasoned that because the sovereign is not subject to laches, the government remains able to invoke the Court’s equitable powers and to seek an injunction to correct the violation.

On to the Seventh Circuit?

Climate Change: Emerging Law of Adaptation

Posted on January 2, 2013 by Ralph Child

An earlier post noted that adaptation to climate change is inevitable and is finally emerging as a priority for public policy.  Long overshadowed by campaigns to prevent or slow global warming, federal and state initiatives and efforts by many professionals have resulted in efforts to start to collect data and promote serious planning for ocean rise and other effects of climate change.

Storm Sandy has more than reinforced that trend: it has established a much wider recognition that planning, design, engineering and regulatory decisions must incorporate the expected impacts of climate change and can no longer rely on historic weather and temperature conditions.  That shift will have broad implications throughout the legal system, amounting to an emerging law of adaptation to climate change that is distinguishable from the emerging law of greenhouse gas controls. 

As often is true, the legal academy is in the vanguard – there is a surge of law review articles and also a recent compilation published by the ABA.

For example, utility regulators have broad authority to require public service companies to prudently operate and maintain their systems.  It is common for regulators to require emergency response plans, and, in some states, to impose significant penalties for overly delayed restoration of service after storm events. 

Now, regulators are likely to require utilities also take account of changes because of global warming effects, not just based on historic conditions.  Environmental groups recently petitioned NY regulators to so require. 

But how exactly can this step be done?  Modeling of the timing and extent of climate change effects can only produce broad ranges and generalities and are indefinite about effects at particular locations.  What retrofitting is needed to assure reliable service to far future ratepayers and at what expense to current ratepayers? Ratepayers, regulators and utility stockholders will not reach agreement without significant dispute.

Existing zoning for flood plains should be modified to account for climate change.  Making those changes will trigger large disputes as previously settled expectations are overturned.  Until the rules are changed, are zoning bodies tied to outdated flood control maps incorporated into their regulations, or can they consider supplemental, updated information? 

Environmental impact reviews for proposed projects typically address the effects of a project on the environment.  Now must they consider the effects of the environment on the project?  How?   It will be litigated.

Also, as noted in an earlier post, the public trust doctrine might not serve to require regulatory agencies to regulate greenhouse gas emissions.  But will it successfully undergird a state’s assertion of authority to regulate activities on or affecting lands subject to the public trust in order to account for changes and threats to shorelines?  As beaches recede, will public trust lands start to incorporate currently private property?

The common law of property, too, will be affected.  A landowner can lose title to land if it slowly disappears by reliction due to changes in a water body’s natural behavior, whereas a sudden loss by avulsion allows the landowner to keep title and restore the land.  But what if the sudden loss is due to a storm event that is part of a slow rise in ocean levels?

Finally, at what point will it become clear that professionals must take account of global warming in designing structures or else experience risk of liability for unanticipated effects?

Adaptation to Climate Change: Emerging Priority

Posted on January 25, 2012 by Ralph Child

There is no alternative.  Whatever the causes, pace or impacts of climate change, people, cultures, economies and eco-systems will adapt to climate change as it occurs.  What’s in question is where, how much and when adaptation will occur and with what strategic planning, distribution of costs and injury.

To date, the inevitability of adaptation has been over-shadowed by the attention to efforts to prevent global warming.  Scary projections of flooded coastal cities and wholesale ecological change have been used more to support campaigns to reduce CO2 emissions than to promote serious planning for ocean rise and changed eco-systems.  Adaptation planning has not been the priority and has even seemed a cop-out.  But as hopes to prevent or slow climate change are not realized, adaption planning is emerging as a priority.

Indeed, behind the headlines efforts to plan for adaptation are already underway.  President Obama’s initial support for cap and trade got the attention.  But he also issued an Executive Order establishing a Climate Change Adaptation Task Force that is coordinating very significant federal efforts to gather data and plan for adaptation.   Many of those efforts are collected at EPA’s webpage on adaptation.  More than a dozen states have commissioned adaptation plans, e.g., the Massachusetts Climate Change Adaptation Report.  Some universities have developed programs focused on adaptation planning, e.g., UNC’s Center for Law, Environment, Adaptation and Resources (CLEAR).  Insurers and re-insurers, public authorities responsible for long-term infrastructure, and societies of professionals such as engineers and others are putting serious consideration into what adaptation will require over time by way of changed standards for public works and buildings. 

These efforts do not yet amount to a broad plan, but are laying the foundations for adaptation planning to seep broadly into capital planning and resource protection efforts across all facets of our economy.  Compulsory central planning is probably not a politically acceptable option – but the inevitability and breadth of adaptation efforts mean that millions of decision-makers still will plan for adaptation over time.

PCB-Containing Caulk: EPA Mixes Its Messages

Posted on September 22, 2010 by Ralph Child

EPA has issued an Advanced Notice of Proposed Rulemaking that broadly re-opens the question whether to authorize PCBs in caulk and under what conditions. EPA did not propose any new rules on the issue, but sought comments on what to do.   This balance of this post reviews EPA’s regulatory efforts on this issue and the comments on the ANPRM, and then summarizes some options for building owners while the agency ponders.

 

 

            Last year EPA announced that in “recent years” it had learned that many 1950 to 1978 buildings may contain caulking with PCB concentrations higher than 50 ppm, indeed often quite a bit higher. Linda Bochert’s post of November 3, 2009 linked to the EPA’s PCBs-in-caulk website, which the agency established to provide guidance for preventing exposures and conducting safe building renovations. 

 

 

            Last year’s guidance conspicuously avoided a central issue: EPA’s position on the legal status of PCB-containing caulk. EPA’s position actually is clear: PCBs at levels above 50 ppm in caulking are not authorized, hence are illegal to maintain. Yet EPA has never mounted a program to identify and remedy PCB-containing caulk, and last year’s guidance tacitly condones leaving PCBs in place indefinitely. So EPA de-emphasizes its legal interpretation. Quite possibly that is because EPA managers have not viewed PCB-containing caulking as causing actual health impacts whereas remediation certainly poses high costs and raises its own health risks.   

 

        

            The bottom line?  Clear-cut and sensible regulatory answers remain far in the future. Meanwhile EPA is sending mixed messages – PCBs in caulk are unauthorized but don’t overreact while we ponder. Building owners, prospective purchasers and contractors must sort out their own answers about what to do or not do.

 

Regulatory Background

 

            In truth, EPA long has had general awareness of PCBs in old caulk. If the concentrations are below 50 ppm, the caulk qualifies as an excluded PCB product and is not regulated by EPA. If the concentrations are higher, EPA considers the use to be illegal to maintain because EPA has never issued a use authorization for PCBs in building materials. 

 

 

            When over-50 ppm PCBs in caulk are reported to EPA, generally EPA has required remediation under TSCA’s rules. EPA New England (Region 1) has had a number of such matters. The Region also insists that cleanups must meet the requirements of the PCB spill regulations, which generally require cleanup in occupied buildings to levels well below 50 ppm.

 

 

            Yet there is no obligation under TSCA for building owners to test for PCBs in caulk or to report exceedances to EPA. Many building owners ignore the issue, even if they are aware of the general possibility. So unauthorized caulk persists in many buildings, or goes away during renovations or demolition, awaiting potential discovery in unplanned circumstances. 

 

 

            That has led to a number of mini-crises, particularly for public school systems facing growing parental and school staff awareness.   PCBs in schools have been much discussed in New York and elsewhere. In January 2010 the New York City schools and EPA entered into an extensive consent order to evaluate school buildings and study ways to encapsulate or treat PCBs over a period of several years. 

 

    

            In practice then, EPA has sent mixed messages. It has commendably - albeit tacitly -recognized that immediate and costly removal of unauthorized PCBs in caulk usually is not warranted. Yet the use remains unauthorized.  Given the strictures of TSCA and the ill repute of PCBs, that remains unsettling for many building owners and prospective purchasers.

 

 

            Efforts to authorize PCBs in caulk: the 1994 NOPR

 

            The mixed messages from EPA and the issues of cost and health risks call out for clear cut regulatory answers, but also hamper EPA from issuing definitive regulations.   It has already tried and retreated before. 

 

 

            Specifically, in 1994 as part of unrelated PCB rule changes, EPA proposed to authorize PCBs in pre-TSCA building materials, with conditions, similarly to intact asbestos containing materials.   The NOPR included EPA’s conclusion that continued use at concentrations above 50 ppm did not pose a significant risk as long as the materials were in good condition. 59 Fed. Reg. 62788, 62810 (12/6/94).

 

The proposed conditions had many downsides from a building owner’s perspective, because leaving the materials in place, once discovered, would have then required:

 

·        Notice within 30 days to EPA and potentially exposed individuals;

·        Marking in a prominent location;

·        Quarterly air monitoring and wipe sampling for one year and annually thereafter until removal of the material;

·        Removal or containment (by encapsulation with a sealant) if wipe sampling or air monitoring showed exceedances of workplace standards;

·        24-hour notice to EPA of such exceedances;

·        Record-keeping.

 

EPA’s final rule issued deferred the issue while indicating EPA intended to issue a supplemental notice of proposed rulemaking and asking for further information on how much of a problem this is or not.  63 Fed. Reg. 35383, 35386 (6/29/98)

 

            The 2010 ANPRM and Comments

           

            Over a decade later, EPA has issued an ANRPM on unrelated PCB rule changes, and used it to request comments on whether EPA should reconsider the 50 ppm level for excluded PCB products. That request also specifically called for comment on whether EPA should issue a use authorization for PCBs in caulk.  ANRPM, 75 Fed. Reg. 17645, 17664 (April 7, 2010). The ANPRM did not, however, describe any revised levels or conditions that EPA might propose for PCBs in caulk. 

 

 

             Many of the comments on the APNRM on this issue call for more study, but otherwise reflect an unsurprising range of recommendations. Comments from the Children’s Environmental Health Network urged EPA to cease any thought of authorizing an increase in the 50 ppm level. Comments from the American Federation of Teachers recommended a “suspension” of the allowance of PCB-containing caulk below 50 ppm while research is done. Massachusetts DPH comments tracked EPA’s position of 1994 by recommending leaving intact caulk alone, and included its own recent guidance to that effect. MIT’s comments proposed a facility-specific and detailed risk management approach. Comments from the National Association of College and University Business Officials recommended issuance of a use authorization for intact materials, perhaps conditioned on an I&M program.

 

 

            Overall, the ANPRM attracted relatively few comments on this issue, by contrast with voluminous comments from the utility sector on other issues. The paucity of attention may mean that PCBs in caulk still have not reached a widespread awareness in the commercial real estate community, which provided exactly no comments. Or building owners just may prefer the status quo.

 

 

           

Continued Regulatory Uncertainty: Working Out Own Answers

               

                It seems likely that EPA will not be providing any new rules on this issue in the foreseeable future.  That leaves the regulated community to work out its own answers as best it can. 

 

 

                It appears that many building owners have determined not to look for PCBs in caulk, even in buildings where they might be expected.  There is no requirement to do so and there have been no reports of actual health impacts due to PCBs in caulk. 

 

 

                Other building owners have chosen to test for PCBs in caulk in order to reduce regulatory risk, but only when renovations or demolition are undertaken for other reasons.  Only if unauthorized PCBs are found then do they conduct remediation under the health and safety and disposal restrictions under the PCB rules. 

 

 

                Some prospective purchasers are including this issue in their due diligence, particularly if renovations are planned, and building attendant costs into the pricing.  But some do not, relying on the absence to date of regulatory requirements, regulatory pressure or health impacts.

 

 

                Some owners are writing requirements into construction contracts to make sure that contractors identify and handle any such caulking appropriately, similarly to contractual provisions for asbestos-containing materials. 

 

 

                Given EPA’s mixed message – PCBs in caulk are unauthorized but don’t overreact – each of those practices may be sensible. Building owners and prospective purchasers must choose their own paths based on their own policies and risk tolerance.