Climate Change Effects

"I believe in science." And then what?

July 29, 2016 11:39
by J. Wylie Donald
I am sure you heard Hillary explain last night why she is going to take action on climate change. "I believe in science." We weren’t so articulate when we counseled last week to “Go to the Data,” but she figured it out. No plagiarism issues either.

Climate Change Effects | Florida | Legislation | Regulation | Rising Sea Levels | Weather

Zika Transmission in New York, and Now in Florida - Some Legal Thoughts

July 19, 2016 22:30
by J. Wylie Donald
In eight years of climate change blogging we think we have uniformly been able to steer clear of the prurient and the provocative, the lewd and the lascivious. But then came word last Friday from New York that the New York City Department of Health and Mental Hygiene had confirmed the zika virus – now endemic in Central and South America and the Caribbean and blamed for birth defects including microcephaly -- had been transmitted from a female to her male sexual partner. I checked with my censors. No, I couldn't go there (the CDC does). But not for the reasons you think.

Climate Change Effects | Florida

Climate Change Opinions Don't Help Business; Data Do

July 15, 2016 07:04
by J. Wylie Donald
We try to stay away from politics on the blog, so we were reluctant to take up the Sierra Club’s recent report concluding that if Donald Trump became president he would be unique among world leaders in his refusal to acknowledge climate change. Business Insider went one better back in January when it republished numerous tweets by Mr. Trump captioning climate change as a hoax, bull***, mythical and non-existent.

Climate Change Effects | Florida | Rising Sea Levels | Utilities

Top 6 at 6 - Climate Change Legal Highlights of the First Six Months of 2015

July 24, 2015 03:50
by J. Wylie Donald
Some might say that the Clean Power Plan is all one needs to talk about in any highlights article on recent climate change legal issues. When final the CPP will expand the scope of the Clean Air Act profoundly, impact the electricity business fundamentally, restrict the coal industry severely and raise electricity rates for consumers by more than just pennies.

Carbon Dioxide | Climate Change Effects | Florida | Legislation | Regulation | Rising Sea Levels | Supreme Court | Utilities | Year in Review

How the Supreme Court Just Delayed the Clean Power Plan

July 1, 2015 21:40
by Tricia Caliguire
The Supreme Court’s decision in Michigan v. EPA holding that the Environmental Protection Agency should have considered costs when making the decision to regulate mercury emissions from power plants (the “MATS Rule”) may have put the brakes on the late-summer release of the final Clean Power Plan (“CPP”), the regulations limiting CO2 emissions from power plants – but not because EPA failed to consider the costs. They did, just not the right ones.

Carbon Emissions | Climate Change | Climate Change Effects | Renewable Energy

Houston Flooding and Lawyers - A Climate Change Informed View

May 27, 2015 09:57
by J. Wylie Donald
"After a natural disaster, such as a hurricane, litigation often follows to determine who will pay for the consequences." Mariner Energy, Inc. v. Devon Energy Prod. Co., 690 F. Supp. 2d 558 (S.D. Tex. 2010) (considering contractual responsibility for property damage after Hurricane Rita).

Climate Change | Climate Change Effects | Climate Change Litigation | Insurance | Weather

Floods in Texas, Flood Mapping, Flood Dollars

May 25, 2015 01:12
by J. Wylie Donald
Floods on the Rio Blanco these past few days demonstrate the link to climate change, but not in the way you think. It was a horrible Memorial Day weekend in Hays County, Texas. At least three people died from the worst flooding seen since 1922. The Rio Blanco crested at 43 feet, 30 feet over flood stage. Over 400 homes were destroyed and the interstate (I-35) was under water.

Climate Change Effects | Regulation | Weather

Florida’s Solar Conundrum

March 31, 2015 09:40
Despite ranking third in the nation for rooftop solar potential, the "Sunshine State" is 13th in cumulative solar capacity installed (dreary New Jersey is 3rd). This is the result of a state without a renewable energy portfolio standard (RPS) that does not permit power purchase agreements (PPAs) (Florida is one of only five states that explicitly prohibits anyone other than the big utilities from selling power). Depending on whom you ask, Florida's lack of solar infrastructure is either caused by the "monopoly" held by the State's big power companies, or the simple viewpoint that solar is a silly alternative when you compare cost to the comparatively cheap prices from more conventional generation sources. Well, the debate is scheduled to be settled soon... Environmentalists in Florida are pushing for a constitutional amendment initiative to place solar choice on the November 2016 ballot. The purpose of the ballot proposal is to expand solar choice by removing barriers that limit solar ownership models. If approved, the ballot measure would allow homes and businesses to install solar and sell excess energy they generate back into the grid. Curiously enough, much of the focus on this particular ballot proposal has been on the unlikely alliances that are now supporting the measure. Tea Party conservatives and aggressive libertarians (who advocate for free-market principles through energy choice) find themselves aligned with fundamental environmentalists and progressive liberals (who advocate for cleaner energy solutions). Opponents of course oppose taxpayer subsidies and consumer mandates. Regardless of one's viewpoint, an amendment permitting third-party sales in Florida will immediately result in a tremendous boom to the Sunshine State's solar industry. If that road is opened, expect a sea of solar developers to begin canvasing I-95 for opportunities from the Panhandle to the Keys.

Climate Change Effects | Renewable Energy | Solar Energy | Utilities | Florida | renewable portfolio standard | solar finance

EPA COMMENTS SUGGEST EMPHASIS ON CREATIVITY AND INTERNALIZING EXTERNALITIES IN CLIMATE STRATEGY

October 14, 2014 06:29
by Jameson Tweedie
The American Bar Association's Section of Energy, Environment and Resources held its Fall Conference last week.  Noteworthy from a climate perspective were the keynote address by Environmental Protection Agency Administrator Gina McCarthy, along with comments by other officials within President Obama's Administration with specific responsibility on climate issues—including Samantha Medlock, Deputy Associate Director for Climate Preparedness (White House Council on Environmental Quality); Hilary Tompkins, Solicitor (Department of the Interior); Cynthia Giles, Assistant Administrator, Office of Enforcement and Compliance Assurance (EPA); and Lorie Schmidt, Associate General Counsel of Air and Radiation (EPA).  Two repeated themes have particular resonance on climate issues. First was a repeated focus on the role of government to level the playing field.  Emphasized, for example, was the EPA’s effort to strongly enforce existing regulations and permits to eliminate competitive advantages that environmental rule-breaking gains individuals or companies over their rule-abiding competitors—in other words, to internalize the externalities associated with environmental rule-breaking.  Or, as Administrator McCarthy put it, to make compliance the efficient decision.  An analogous focus was evident on reducing the advantage the Administration believes heavy carbon-emitting companies gain over their lower-carbon competitors.  Ms. Schmidt, in particular, made clear the Administration's intent, in the wake of the authority left to the EPA by the Supreme Court in Utility Air Regulatory Group v. EPA, 573 U.S. ___ (2014), to continue imposing carbon limits on all applicable large emission sources. All indications are that the Administration is looking for opportunities to expand the reach of carbon emission limits beyond just those large sources.  The goal of leveling the carbon playing field across sources would undoubtedly have been simpler in many respects through a nationwide carbon tax or cap-and-trade system.  Indeed, John Cruden (current President of the Environmental Law Institute and nominee to head the Department of Justice’s Environment and Natural Resources Division), quoted former Secretary of State George Shultz who expressed the pressing need to put "all forms of energy production on an even playing field" by internalizing the externalities associated with carbon emissions and other pollutants.  But, with a national carbon tax or cap-and-trade system a congressional nonstarter, the Administration is left seeking a piecemeal set of solutions that, taken together, can achieve its climate goals.  This challenge seemed to lead naturally into the second theme of Administration personnel:  the need for creative solutions.  While by no means limited to climate change (for example, this was also reiterated in CERCLA and other enforcement contexts), the need for creative solutions seems particularly apt in the broad climate context facing the Administration.  That is, congressional impasse on top of stalled or snail pace efforts to reach an international framework.  Within these parameters, any significant short term climate change efforts are left to state and local action, to action within the corporate world (as former EPA head William Reilly was quoted, CEOs are the "unsung heroes" of the environmental movement, making environmental progress cost competitive) and to administrative action.  Ms. Medlock particularly pointed out the burden likely to fall on state and local government to devise innovative, cost-effective solutions to build resiliency along the coasts to the double challenge of rising sea levels and the increased storm intensity and storm surges which climate change is predicted to bring.  (Evidencing the Administration’s focus on this issue, Administrator McCarthy headed directly from the Conference to an event on Miami Beach highlighting the rising seas and extreme tides facing South Florida.)  As recent reports have indicated, while climate change impacts will be unevenly spread, no region will be spared its share of challenges, whether they be sea level rise and storm surge, flooding or drought, extreme temperatures or otherwise.  Without a doubt, creativity is required.

Carbon Emissions | Climate Change | Climate Change Effects | Rising Sea Levels

Super Models Are Looking Better Than Ever - What Does That Mean For Insureds?

August 20, 2014 20:19
by J. Wylie Donald
A recent article in August’s Best’s Review, The Rise of the Super Models, by Kate Smith (not Kate Upton, sorry), caught our eye.  A lot is going on in the world of computer catastrophe modeling.  First, demand by insurers and reinsurers is up and modeling firms are “broadening the scope of risks and regions that they model, with RMS, AIR Worldwide and CoreLogic EQECAT all set to release new models this year.”  Among other things, all of the top 3 modeling firms are releasing U.S. inland flood models.  This blog has been hard on FEMA and the Corps of Engineers, criticizing the backward-looking nature of flood plain mapping.  It looks like the tools to remedy that deficiency will soon be at hand. Second, modeling firms are shifting from open models to open platforms, which “offer more choice by providing access to models created by third-party suppliers.”  According to Ms. Smith, a catalyst for this change is Oasis Loss Modeling Framework, Ltd., an insurance industry-founded and -funded organization.  According to Oasis’s webpage, “Barriers to entry have restricted the ability of the insurance community to exploit large elements of available research in hazards and vulnerability.”  Such barriers include costs and knowledgeable personnel.  The goal then was to create an “open marketplace for models and data leading to much wider access to understandable tools for catastrophe risk assessment.”  Open platforms (think Linux) can have great benefits; nevertheless, some are skeptical of Oasis’s practicality in that it is not available for off-the-shelf use, is optimized for an expensive IBM platform, and runs slowly on other platforms, among other things.   The implications for policyholders of all this modeling are three-fold:  first, rates; second, policyholders’ own business decisions; and third, others' views of those business decisions. As insurers better understand the risks associated with particular locations their rates will be adjusted accordingly. This can be a good thing if insurers determine they have overestimated the risk, or if other insurers jump into that market and drive prices lower. But it will be a bad thing if the risk was underestimated and prices rise, or insurers flee a particular market as has regularly happened in Florida and other states.  Indeed, at least one state has seen high court approval of the use of models to limit insurance offerings in high risk areas. Modeling can also be a boon to business planning. What does the future likely hold for a particular location? Will water supplies hold up?  Is the flood map reliable or is it outdated?  Is the company compounding its exposure by yet another franchise or mall development in a particular region?  There is no reason that modeling expertise need be restricted to insurance and reinsurance companies.  Other businesses can benefit.  However, as pointed out in Super Models, “Models are not a perfect science; there are subjective opinions involved.”  Accordingly, businesses should be cautious. And what if a business does not bring modeling into its business planning? It is likely that if things go awry and the unpleasantness is substantial and can be attributed to an inadequate forecast, an injured party will assert the failure to model the future was negligent.  A case in point is In re PXRE Group, Ltd., Sec. Litig., 600 F. Supp. 2d 510 (S.D.N.Y. 2009), aff’d, 357 Fed. Appx. 393 (2d Cir. 2009), where a reinsurance company found its failure to rely on a particular model was the gravamen of a class action plaintiff’s security fraud suit.  PXRE was a thriving reinsurance company, whose business was conditioned on maintaining an A- rating.  Unfortunately, Hurricanes Katrina, and then Rita, and then Wilma, devastated certain portions of the Gulf Coast to its reinsureds’ detriment.  PXRE stepped in and paid on its reinsurance contracts but the losses kept increasing.  It relied on models to reassure the investment community that it remained financially sound in order to raise money.  The models it relied on, however, turned out to be inaccurate, and ultimately PXRE's rating crumbled and it succumbed to the unprecedented losses.  The class action ensued. Plaintiff claimed, among other things, that PXRE should have relied on a higher estimated loss ($40-60 billion by RMS) rather than valuations of $30-40 billion touted by PXRE’s own models as well as by ISO and Air Worldwide.  The district court opinion gives a lengthy dissertation on the standards to be applied in a securities fraud case on a motion to dismiss and concluded that PXRE was not reckless in its reliance.  More germane to the issue here, is that PXRE was able to defend itself because it had relied on models.  Granted, modeling was part of PXRE’s business and, no doubt, a lack of modeling would have been reckless.  But, is a prudent non-insurance business going to eschew modeling on the theory that no one else in its industry relies on them.  If models are becoming more widely available, as suggested by Super Models, the path of the prudent business is, at the very least, to consider whether modeling has something to offer. 

Climate Change Effects | Flood Insurance | Insurance

McCARTER & ENGLISH CLIMATE CHANGE AND RENEWABLE ENERGY PRACTICE GROUP

The business case for the development of renewable energy projects, from biodiesel and ethanol to wind, solar, and distributed generation, is more compelling than ever as tax and regulatory incentives combine to attract investments. Emerging issues in environmental law and increasingly recognized principles of corporate social responsibility are encouraging public companies to voluntarily reduce greenhouse gas emissions, install clean energy alternatives, and invest overseas in projects under the Kyoto Protocol to respond to climate change concerns.

Click here for more information and a list of our group members.

MONTH LIST

© 2016 McCarter & English, LLP. All Rights Reserved. disclaimer
navbottom image