All posts tagged 'force majeure'

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

The Sun No Longer Shines on Solar Panel Maker Solyndra LLC - Bankruptcy and the FBI

September 9, 2011 07:36
by J. Wylie Donald
Well, it was only a matter of time before renewable energy hit the mainstream. By which we mean that the bloom comes off the road as the rubber hits the rose.  Yesterday the FBI raided the headquarters of bankrupt Solyndra LLC, which formerly "led the way to a brighter future", to quote President Obama (4:00).  It seems that some questions have arisen over its bankruptcy filing and whether it misled the government in the procurement of loan guarantees. Those questions are the focus of a criminal investigation. What is the taxpayers' share?  Potentially over half a billion dollars. Solyndra is not the only clean energy darling to fail. Evergreen Solar, Inc. has gone under.  As has Spectrawatt.  (We could add wind, biomass and others.)  A niche legal practice is building somewhere. What practitioners should take from all this, and a central feature of our perspective, is that the new risks and opportunities in the climate change and renewable energy space, are ineluctably accompanied by the old risks and opportunities. The art and craft of what we as lawyers do is the melding of the old with the new. To focus on solar, a key feature of a solar project is the renewable energy credit or REC. Lawyers on both sides should be focusing on where those will end up in a bankruptcy and who will have claims to them.  Is it just another asset, or do its features merit special consideration.  If a REC is an executory contract, perhaps the ostensible owner owns very little after a bankruptcy filing.  Another key feature, will be the tax credit. How will that be treated?  Who gets paid by the loan guarantee (such as in Solyndra's case)? And we advise against just muddling through. We were on a wind farm deal where the other side proposed to include climate change (i.e., a change that would result in less wind) as a force majeure. A good idea, unless you understand how a force majeure clause works:  upon the occurrence of the force majeure event, one has to give notice in a specified period declaring the event.  Counsel obviously had never thought how the client would discern that climate change had occurred such that notice should be given. Because that moment cannot be precisely determined, inevitably such notice will be deemed late or premature and the defense to performance avoided. We point all this out as a caution.  Contracts, like roses and like roads, need to be tended to.  A failure to understand the subject matter fully may result in something undesirable (like a mixing of metaphors), or even harmful (like the loss of a valuable asset).

Renewable Energy | Solar Energy

Predicting Sea Level Rise - The Arctic Council Raises the Ante

May 16, 2011 20:27
by J. Wylie Donald
Last Thursday Secretary of State Hilary Clinton and other prominent diplomats signed the first ever treaty under the auspices of the Arctic Council; specifically, the member nations addressed Arctic search and rescue, made necessary by the increasing traffic in the formerly ice-locked realm caused by the reality of Arctic warming. Less noticed, perhaps, was the release of a report by the Council's Arctic Monitoring and Assessment Program (AMAP).  Among other things, the report, Snow, Water, Ice and Permafrost in the Arctic, forecasts up to a 5-foot rise in sea level by the turn of the century. This is real news because the earlier report in 2007 by the Intergovernmental Panel on Climate Change forecast an increase only one-third as large. We hesitated to report the AMAP conclusions because the last thing a law firm wants to be called is an alarmist, always sounding the air raid siren when a blip appears on the radar.   But, by the same token, counsel's fundamental role is to assist clients in addressing risks. That there are extreme views on almost any subject does not mean that the subject should be ignored. And the views here are not extreme.  Climate change is occurring. Prudence dictates that the effects be considered and addressed. The AMAP report is a product of the environmental assessment arm of the Arctic Council, an 8-nation group that considers how to promote sustainable development and environmental protection in the Arctic. The report picks up where the IPCC left off, when it forecast a sea level rise of between 7 and 23 inches by 2100. Left out of the IPCC analysis was the effect of the melting Antarctic and Greenland ice sheets because the science was undeveloped. Four years later, the Arctic Council has filled in that void and reached a startling result. According to the report's executive summary, the warming of the Arctic is having a dramatic effect. "A nearly ice-free summer is now considered likely for the Arctic Ocean by mid-century."  A "Key Finding" was that "global sea level is projected to rise by 0.9–1.6 m by 2100."  Translating, that is a sea level rise of between 3 and 5 feet by the end of the century. Shipping companies are salivating at the prospect of a straight shot over the roof of the world from Europe to Asia. Investors in the Panama Canal are less enthusiastic. What does all this mean for those considering their waterfront risks far south of the Arctic Circle?  Quite a bit actually.  The EPA offers some sobering data on its website. A two foot rise in sea level would eliminate almost 10,000 square miles of land (that is, an area exceeding all of Massachusetts). Damage from storms in a world with a 3-foot higher sea level would be 2 or 3 times as large. The salinization of coastal aquifers from salt water intrusion from rising sea levels threatens water supplies in Florida and south Jersey. It may seem like there is little that can be done if one is unwilling to abandon the shore.  But that would be a very shortsighted view.  Investors, lenders, developers and businesses involved with real estate near the shoreline should be considering the following 1. What interest in land should one acquire - a fee simple or a conventional 30-year lease?  The lessee, without a single additional word in its lease, may be protected from rising sea levels by the covenant of quiet enjoyment. The fee owner, on the other hand, bears all of the risk of a rising mean high water mark. 2. How effective are one's contracts' force majeure clauses?  Will performance be excused if one's facility is submerged?  What about if the local infrastructure goes underwater?  Does a condemnation action by governmental authorities trigger the provision? 3. Where exactly is mean high water?  Where will it be if the predicted rise occurs even in part?  What is the significance of that for the investment expectations of all involved? 4. What is the effect of a state statute that establishes the seaward property line at something other than the sea?  If this sounds nonsensical, it is the law in Florida, as confirmed by the U.S. Supreme Court in Stop the Beach Renourishment, Inc. v Florida DEP.  Florida's statutory "erosion control line" converted many beachfront properties, into beachview properties. And no, there was no compensable "taking." There are certainly others. The point is not to run about shouting "The sky is falling!". The point is to consider thoughtfully the possibility that the sky may fall and whether there is anything that can be done about it.

Climate Change | Climate Change Effects | Rising Sea Levels | Sustainability

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

© 2017 McCarter & English, LLP. All Rights Reserved. disclaimer
navbottom image