Legislation

Connecticut Introduces Bill to Incorporate Climate Change Strategic Retreat into Coastal Zone Management Act

March 4, 2012 20:48
by J. Wylie Donald
Apocryphally, the emperor of the Eternal City took out his violin while the city was consumed in a conflagration. In lay terms, Nero fiddled while Rome burned.  Some would like to draw the analogy to climate change policy in the United States, held up based on principles, or partisanship, or grandstanding or blind denial.  Whatever the reason, the climate for making climate change policy has grown decidedly colder since the heady days of 2008 when even the Republican party was on board.    Nevertheless, some are not waiting until prediction becomes reality.  For example, lawmakers in Connecticut, which opened the 2012 legislative session on February 8, have the opportunity to address one of the issues caused by a changing climate:  rising sea levels. Two bills introduced in the General Assembly focus on the changing shore. The first, Raised Bill No. 5127, is at first glance an inconsequential revision to the definition of the high tide line. Currently, Connecticut defines mean high tide as "a line or mark left upon tide flats, beaches, or along shore objects that indicates the intersection of the land with the water's surface at the maximum height reached by a rising tide."  Conn. Gen. Stat. Section 22a-359(c).  It can be determined by, among other things, a line of oil, a line of scum, "a more or less continuous deposit of fine shell", vegetation lines or tidal gauge.  Id.  Some (including the authors of 5127) might conclude that for regulatory and enforcement purposes that is a little vague. So the proposed bill seeks something a little more rigorous. But if you thought it would be something simple like the Greenwhich Meridian or an atomic clock, you would be mistaken.  Under the proposed bill, Connecticut would look to the location of the topographical elevation of the highest predicted tide for the period  beginning in 1983 and ending in 2001, referenced to the most recent National Tidal Datum Epoch as published by the National Oceanographic and Atmospheric Administration (NOAA) and described in terms of feet of elevation above the North American Vertical Datum of 1988. Raised Bill No. 5127(c).  This elevation is specified for each municipality along the Connecticut littoral.  Id. While this change advances the science of seashore delineation and has been adopted by others, e.g., Fla. Stat. 177.27, other states are still content to rely on a subjective view of the beach.  E.g.,  Rev. Code Wash.  90.58.030(2)(c).  So what is driving the change in Connecticut? If one turns to the next Raised Bill before the General Assembly one will have the answer.  Raised Bill No. 5128 proposes revisions to the Coastal Zone Management Act.  Section 2 adds a new definition, "Rise in sea level," that is keyed to the North American Vertical Data.  The definition goes on to report that the rise in Connecticut coastal sea level is projected to occur "at an average rate of not less than 2.4 inches per decade, ..."  Id. "Rise in sea level" is important because 5128 makes clear why precise delineation is going to matter.  New subsection (b)(1)(K) to Conn. Gen. Stat. 22a-92 seeks "to encourage a fair and orderly legal process to foster strategic retreat of property ownership, over a period of several decades, for coastal lands that have a likelihood of being lost due to erosion and coastal lands that contain structures that are subject to repetitive damage."  Napoleon from Moscow.  Lee from Gettysburg.  The 21st Century's strategic retreat may last far longer and cost far more than anything in the history books.  The Delaware Department of Natural Resources and Environmental Control described "strategic retreat" as the "remov[al] of oceanfront buildings as the shoreline erodes to maintain a beach width or certain distance between buildings and the water. An effective strategic retreat plan would involve systematic removal of structures as the beach migrates inland and the buildings become threatened by waves and surf."  Jim Titus at EPA described it as "minimizing hazards and environmental impacts by removing development from the most vulnerable areas."  However one describes it, DNREC's further comment is worth noting:  "there are no easy solutions or clear implementation strategies to accompany the issue of strategic retreat while accomplishing the  management goal of preserving and maintaining recreational and protective beaches. Strategic retreat requires hard decisionmaking, funding, and firm commitment by the Administration and the Legislature if it is to succeed."  Accordingly, the Connecticut Legislature should take note:  this is not going to be a walk in the park.  Nevertheless, assuming the political hurdles can be overcome, strategic retreat will undoubtedly become part of the climate change response.  Kudos to Connecticut for not fiddling around. 

Climate Change | Climate Change Litigation | Legislation | Rising Sea Levels

2011: Notwithstanding Extreme Weather, US Climate Policy Does Not Move Forward

December 30, 2011 22:01
by J. Wylie Donald
NOAA reported that 2011 was one for the record books:  12 weather and climate-related disasters each causing over $1 billion in damage.  One might expect (or hope) that a national climate change policy would be coming into place to prevent repeating or setting a new record.  One would be disappointed.  U.S. climate policy is "uncertain," to quote Michael Morris, CEO of American Electric Power, "dysfunctional" is the word applied by Resources for the Future, "hamstrung" is how the chief UN climate change negotiator and Executive Secretary of the UNFCCC, Christiana Figueres, calls it.   We don't disagree with these viewpoints; they are accurate.  But if a response to climate change is the goal, it is worse than these commenters are acknowledging because not only has Congress shown that it is incapable of getting anything done, other avenues are not delivering either.  As the year expires we thought it might be helpful to sift through the year's detritus and assess  the status of attempts to reduce carbon dioxide emissions, distinct from overt attempts like passing laws and adopting regulations. 1. Tax emissions - Some will remember our blog on the federal lawsuit brought by Mirant Corp. against Montgomery County challenging the County's tax on carbon emissions which fell only on Mirant. The County challenged the federal court's jurisdiction and won before the federal district court. In June, however, the Fourth Circuit reversed.  With that Montgomery County folded its tent and abandoned its carbon tax. 2. Favor renewable energy - The inexorable scrutiny of the markets has proved the undoing of several former high-flying renewable energy ventures. Most well-known is the debacle with Solyndra LLC, whose well-publicized collapse generated scrutiny by the FBI and Congress. Others that have failed with less limelight in 2011 include numerous solar companies (Solar Millennium, Stirling Energy Systems, Evergreen Solar, Spectrawatt), as well as ventures in wind (Skycon), energy storage (Beacon Power), and biofulels (Range Fuels). 3. Impose liability for emissions of carbon dioxide - The results here are mixed.  Everyone points to American Electric Power v Connecticut for the principle that for greenhouse gas liability claims the federal common law of nuisance has been displaced by federal regulation. They could equally point to Connecticut v AEP before the Second Circuit for the principle that the political question doctrine does not bar these types of claims or to the Fifth Circuit panel in Comer v Murphy Oil USA that held similarly.  However, even if the cases are permitted to move forward, they face daunting problems in proof of causation. 4. Force state action to regulate carbon dioxide - We blogged last May and just this month about the tidal wave of litigation unleashed by Our Children's Trust, an Oregon environmental group that had orchestrated a dozen suits asserting the defendant States had an obligation under the public trust doctrine to restrain carbon dioxide emissions, as well as regulatory petitions in about 40 jurisdictions.  Time has not been good to OCT. First, its petitions have been denied by at least 23 agencies (Arkansas, Connecticut, Georgia. Hawaii, Idaho, Illinois, Iowa, Louisiana, Maine, Maryland, Michigan, Nevada, New Hampshire, North Dakota, Ohio, Oklahoma, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, and Wyoming).  Where OCT filed lawsuits, three states (Arkansas, Minnesota and New Mexico) responded with motions to dismiss.  The lawsuit against Montana was dismissed. In the federal lawsuit, the plaintiffs lost a motion to transfer. 5. Reach regional agreements - With great fanfare the Regional Greenhouse Gas Initiative was launched in 2005. Despite a recent study that claims significant economic benefit to the states in RGGI, its future success is unclear. New Jersey pulled out, New Hampshire tried to leave but the governor vetoed the bill. In New York, there is a court challenge.  6. Voluntarily trade carbon dioxide emissions credits - The only carbon exchange in North America came to an end in 2010 when the Chicago Climate Exchange closed its doors.  A shadow of its former self, the CCX now registers verified emission reductions based on a comprehensive set of established protocols. 7. Develop carbon capture and storage - The most prominent project in the US came to a halt in July when American Electric Power concluded not to build a full-scale CCS plant at its Mountaineer, West Virginia plant. As noted above, AEP explained its decision as based on the uncertainty of US climate policy.  The lack of direction in American climate change response hurts business. AEP walked away from a $300 million Department of Energy match.  It didn't help that the Virginia consumer advocate, in successfully arguing against including CCS costs in the rate base, asserted:  “Any potential benefit is speculative and outweighed by the enormous cost of the pilot project.” Some may think no policy is the best policy.  We think otherwise.  Climate change is happening.  There will be a response.  All will benefit if that response is choreographed over time, rather than rushed into when political consensus ultimately concludes that something must be done NOW.  Maybe in 2012?  Happy New Year. 

Carbon Dioxide | Carbon Emissions | Climate Change | Climate Change Litigation | Legislation | Regulation | Renewable Energy | Weather | Year in Review

The Debt Ceiling Furor Will Change the Climate of Climate Change Responses

July 27, 2011 19:12
by J. Wylie Donald
We hope you don't come to this blog for stock tips but it doesn't take John Bogle to know that the debt ceiling impasse and the budget furor do not bode well for renewable energy stocks.  Citing the debt crises and oversupply, here is how one report put it:  "One of the biggest losers on the day was the PowerShares WilderHill Clean Energy Portfolio (PBW) which slumped by 1.4% to open up the week."  So where else is the national obsession on the nation's debt going to take a bite out of responses to climate change.  We tracked down a few subjects. Carbon Dioxide Regulation - Efforts by House Republicans to defund USEPA's steps to regulate carbon dioxide resulted most recently in H.R. 2584, the proposed Department of the Interior, Environment, and Related Agencies Appropriations Act of 2012.  Section 453 provides, among other things, that "None of the funds made available under this Act shall be used--(1) to prepare, propose, promulgate, finalize, implement, or enforce any regulation pursuant to section 202 of the Clean Air Act (42 U.S.C. 7521) regarding the regulation of any greenhouse gas emissions from new motor vehicles or new motor vehicle engines that are maufactured after model year 2016 to address climate change; ..."   This is not a new tactic.  It is probably fair to say that what is in the works now at EPA is not what will be the final word. Tax Credits - Under § 1603 of the American Recovery and Reinvestment Tax Act renewable energy project developers may take cash payments in lieu of the investment tax credits.  The Treasury reports over 7000 projects funded to the tune of $6.4 billion, resulting in total investment of $21.6 billion.  Although the credits do not expire until October 2012, some think they are under the gun right now.  Ethanol - The most subsidized part of the renewable energy mix, ethanol producers and corn farmers received a stern message on June 16 when Senator Dianne Feinstein obtained a symbolic vote (73-27) in favor of ending ethanol subsidies on July 1.  The White House promised a veto and the proposal has not gone anywhere in the House. Energy Efficiency - Congress can't figure out the debt ceiling mess but remains expert at creative bill naming.  H.R. 2417, the Better Use of Light Bulbs (BULB) Act, passed overwhelmingly, but didn't take effect because of the procedural rule adopted to permit a vote, which required a supermajority.  The bill would have repealed certain provisions of the Energy Independence and Security Act of 2007 that prescribed energy efficiency standards for incandescent lamps (among other things). We are sure there are others.  Notwithstanding that the Energy Independence and Security Act of 2007 passed both houses of Congress by wide margins, the winds of change are now blowing hard and furiously.  Where all these programs will be when the furor over the debt ceiling subsides is unknown, but no one can dispute that the climate has changed.

Carbon Emissions | Climate Change | Legislation | Renewable Energy

American Electric Power v. Connecticut: 8-0 the Supreme Court Rules Federal Common Law is Displaced

June 20, 2011 20:25
by J. Wylie Donald
The moment we have been waiting for since 2004 (when the first climate change liability case was filed) finally arrived. The Supreme Court today rendered its opinion in American Electric Power Co., Inc.. v. Connecticut.  As many predicted following oral argument, the use of the federal common law of nuisance to limit carbon dioxide emissions simply is not a viable theory because it has been displaced by the Clean Air Act and the EPA's steps to implement the Act. For those who have not yet read the opinion, it is straightforward. Following the Supreme Court's 2007 decision in Massachusetts v. EPA, the EPA undertook to begin the regulation of carbon dioxide emissions. AEP at 2.  Within the framework of the Clean Air Act it issued its "Endangerment Ruling" (76 Fed. Reg. 66496), and then adopted final rules regulating emissions from light-duty trucks, initiated a joint rulemaking covering medium and heavy-duty vehicles, began phasing in requirements for best available control technology for major greenhouse gas emitters, and commenced a rulemaking on emissions from fossil-fuel fired power plants. Id.at 2-3.  That rule is due to be final in May 2012.  Id.at 3. With those steps, and the comprehensive activities authorized under the Clean Air Act (id. at 10-11), the Court applied the simple test:  "whether congressional legislation excludes the declaration of federal common law is simply whether the statute 'speak[s] directly to [the] question' at issue." Id.at 10. The Court held:  "the Clean Air Act and the EPA actions it authorizes displace any federal common law right to seek abatement of carbon-dioxide emissions from fossil-fuel fired power plants." Id. The Court responded to arguments that the EPA was only beginning to regulate but had not yet finished the process by emphasizing that it was the "delegation [that] displaces federal common law.". Id.at 12 (emphasis added). That is, even if the EPA chose not to regulate carbon dioxide emissions, "the federal courts would have no warrant to employ the federal common law of nuisance to upset the agency's expert determination." Id. Some may recall that the political question doctrine was front and center in the decisions below. See id. at 5-6.  Here, however, the Court mentions it only indirectly.  In describing the "prescribed order of decisionmaking" (i.e., expert agencies and then federal judges), "the expert agency is surely better equipped to do the job than individual district judges issuing ad hoc, case-by-case injunctions." Id.at 14. Notwithstanding the apparently simple rule and its application, we do not expect AEP to end climate change liability litigation.  State nuisance law (which plaintiffs pleaded) remains. Although the Court offered no opinion on such a theory's efficacy, it did give a hint of where it might land:  "the Clean Water Act does not preclude aggrieved individuals from bringing a 'nuisance claim pursuant to the law of the source state.'" Id. at 15-16 (citing International Paper Co. v. Ouellette, 479 U. S. 481 (1987)). Accordingly, the case was remanded to the Second Circuit. Further, the significance of Justice Sotomayor's recusal (which we called in an earlier post) manifested itself. The Court split 4-4 on the issue of standing (which compelled it to hear the case on the merits).  Id. at 6.  This jurisdictional dispute could surface in the future when Justice Sotomayor is included in the full panel. She presumably would be in favor of broader standing, which is likely to support more claims of aggrieved climate change plaintiffs. Last, the Court offered some helpful commentary for future carbon-dioxide liability insurance coverage cases.  We have written often on how carbon dioxide should not fall within the meaning of pollution in a comprehensive general liability policy's pollution exclusion.  The Court appears to agree.  In discussing the scope of legislative activity needed to preempt federal common law, the Court stated:  "Congress could hardly preemptively prohibit every discharge of carbon dioxide unless covered by a permit. After all, we each emit carbon dioxide merely by breathing." Immediate effects of the decision will be filings by the defendants in the Kivalina v. ExxonMobil case before the Ninth Circuit for dismissal.  Undoubtedly the justices deciding Steadfast Insurance Co. v. AES Corp. will read the decision; how it will affect them is hard to say.  It should have no effect on the multiple climate change lawsuits orchestrated by Our Children's Trust.  And over the long term, it likely will have the effect of forcing plaintiffs' to come up with new climate change liability theories.  That will not be necessary, of course, if (as has been suggested) Congress acts to remove carbon dioxide from EPA's jurisdiction.  In that case, we just might find AEP revived.

Carbon Dioxide | Climate Change Litigation | Legislation | Supreme Court

2011 Hurricane Season - Will Florida's Insurer of Last Resort Be Up To It?

May 31, 2011 14:21
by J. Wylie Donald
On the eve of hurricane season, we ponder what would happen if an irresistible force met an immovable object.  To make this concrete, we consider the effect of a Hurricane Katrina-like storm impacting Florida's property insurance program, the centerpiece of which is the actuarially unsound, tax-exempt, non-profit corporation, and insurer of last resort, Citizens' Property Insurance Corporation. The Atlantic hurricane season begins tomorrow. The forecasters at the University of Colorado Hurricane Center predict 16 named storms.  Historically, that is an above average crop. Their methodology is not controversial. After gathering oceanic and atmospheric data - such as sea surface temperature, atmospheric pressure, and wind shear -  in February and March, they then compared those conditions to the historical record and identified the previous seasons that had similar conditions.  All but one (2006) had an above average hurricane season. The distinguishing feature for the exception was that it did not have neutral or La Niña conditions in the Pacific (i.e., El Niño dominated).  The effect of that is to minimize the wind shear in the upper atmosphere, which permits hurricanes to build.    How does an increased hurricane incidence translate to landfalls in the United States?  The forecasters predict an increased probability of landfall.  Of particular note is the ominous comment:  “Except for the very destructive hurricane seasons of 2004-2005, United States coastal residents have experienced no other major landfalling hurricanes since 1999. This recent 9 of 11-year period without any major landfall events should not be expected to continue.”  And what would happen should that probability become reality? One place with a particularly bad outcome may be Florida.  The largest property insurer in the state is Citizens' with over 1.3 million policies insuring $462 billion worth of property.  That is approximately 18 percent of the residential market.  Citizens' estimates that its exposure for a once-a-century storm is $23.4 billion. It has reserves and potential reinsurance of $11.75 billion. That leaves a gap of $11.65 billion.  (For reference, a NOAA report based on inflation-adjusted dollars puts Hurricane Andrew's cost at over $43 billion; the 2004 quartet of Charley, Frances, Ivan and Jeanne cost over $45 billion.)  How can this be?  An analysis done in support of HB 1243 in the Florida House of Representatives gives some insight: Citizens' premiums are less than those charged by private insurers - If the premium in the private market for comparable coverage is 15% or more than Citizens' would charge, Citizens' coverage is available to a homeowner.  Citizens' portfolio of risks are not low-budget - If the value of the property is up to $1 million, or $2 million in designated windstorm areas, Citizens' coverage is available to a homeowner. Citizens' insureds can (and do) shop their other coverages in the private market - In designated windstorm areas, property owners can buy non-wind coverage from private insurers and windstorm coverage from Citizens'. Citizens' rates are not actuarially sound - Citizens rates are required to be actuarially sound but were frozen at 2005 levels for all of 2007, 2008 and 2009. Rate increases are capped. Citizens is not required to be solvent - Citizens does not have to meet the solvency requirements of traditional insurers. If this sounds like a recipe for disaster, many in Florida recognize it as such.  Companion bills to reform Citizens' were introduced in the Florida Legislature this spring.  HB 1243 and SB 1714 had the support of an "unlikely coalition" of industry, environmental groups, tax watchdogs and free market advocates.  Notwithstanding this diverse support, and the documented flaws in the current program, both bills died at the end of the legislative session.  Citizens' form and operations may be immovable given political realities. Florida will lurch into tomorrow's hurricane season keeping its fingers crossed and hoping that this year's cyclonic trajectories all steer clear of the Sunshine State.  If that hope is not borne out, then the irresistible force of 150 m.p.h. winds may demonstrate that immovable political realities are not.

Insurance | Legislation | Weather

Legislative Initiatives to Reduce Stormwater Runoff, Part 2

March 16, 2011 13:48
Yesterday we discussed the proposed legislative response in New Jersey to the problems of flooding and stormwater management.  Some have speculated that increasing frequency and severity of flooding and stormwater is a by-product of climate change, and certainly these events are consistent with climate change.  Other studies have pointed to the decreasing amount of pervious cover in urban areas as increasing stormwater runoff.  Regardless of the causes, the problem is quite real.  Although the legislation is pending in New Jersey the problems are not unique to this State nor to the United States.  This post will examine another of the five companion bills.  This proposed law would have the greatest impact upon the design and development of private projects.  A3680: Requires any projects subject to municipal land use approvals to incorporate green or blue roofs. In New Jersey this bill would have the most wide-reaching implications for private development.  The bill would require that all new construction projects for which approvals are required under New Jersey’s Municipal Land Use Law, which would include most new construction projects in the State, particularly in developed urban areas, incorporate Green or Blue roofs, unless the applicant can demonstrate that it would not be feasible to build with such a roof. The bill further requires the Department of Environmental Protection (“DEP”) to develop, within one year, rules and regulations concerning incorporation of Green or Blue roofs to limit the release of stormwater runoff.  One interesting, but un-answered question, revolves around the statutory mandate that requires such roofs unless an applicant demonstrates to the DEP that such roofs are not feasible for a particular project.  This may be the result of the legislative sponsors failing to recognize that most municipal land use applications are approved at the local level, and not by DEP even though some projects require DEP approvals in order to receive municipal approvals.  Perhaps the statute should be revised to require an applicant to demonstrate to the body that is reviewing a land use application why it would not be feasible to build such a roof in accordance with the criteria established by DEP.The bill provides an incentive for those projects that require some form of DEP approval because it requires the DEP give priority consideration to any permit or authorization that it must issue for a project that incorporates Green or Blue roofs.  This bill seeks to achieve compliance with the desired goal by using both the “carrot” and the “stick”.  The motivation for this series of companion bills is certainly meritorious.  One of the sponsors of the bills, assemblyman John McKeon, set forth the rationale: “We know that there’s a problem with water discharge and an overburdened sewer system.  So green roofs and blue roofs are a way to systemically discharge water so that it goes out in a regimented manner and doesn’t end in the overflow that ends in all the problems that we have with pollution”.Tomorrow, more about positive financial incentives for Green or Blue roofs.

Climate Change | Flood Insurance | Legislation

Legislative Initiatives to Reduce Stormwater Runoff, Part 1

March 15, 2011 05:53
Yesterday I had a negative experience that caused me to think about some of the practical consequences of climate change.  Instead of taking my usual route home, I and many others were forced to use an alternate route because a major state highway was closed due to flooding from an adjacent river.  This condition will exist for several days, and its occurrence has been increasing in frequency and severity within the last ten years.  Worse than that inconvenience to me and other drivers is the flooding of homes and business that occurs with greater regularity in my area of New Jersey including the communities of Wayne, Little Falls, and Fairfield.Is anyone thinking about potential legislative solutions to our storm water problems?  The answer in New Jersey is, “yes Virginia”.  Three primary sponsors in the New Jersey Assembly have introduced five companion bills that are aimed at improving our storm water management and greening our built environment.  We will examine each of these bills in turn over the next few days.  They could provide guidance to other States considering how to respond to this increasing problem.   All of the proposed bills provide various incentives for Green roofs or Blue roofs.  A “Green roof” is one that includes, among other things, a growth medium and a vegetation layer of drought resistant and hardy plant species, designed to improve stormwater management.  A “Blue roof” is constructed with mechanical controls, such as gravel beds, perforated pipes, or rooftop detention systems, that drain stormwater to improve stormwater management. A3679:  Requires incorporation of Green or Blue roofs on new State buildingsBill A3679 would require any new building, facility or structure having at least 15,000 square feet in total floor area that is constructed for the sole use of a State governmental entity to include a functioning Green roof or Blue roof.The bill directs the Division of Property Management and Construction to consult with the Department of Environmental Protection to ensure that designs for such roofs comply with this Act.  As currently drafted the law would be effective one year after passage, allowing appropriate lead time for all concerned parties to comply with this fundamental design shift.A3681: Requires Green or Blue roofs on new buildings using State, EDA, or Schools Development Authority FundsThis bill is nearly identical to A3679 in terms of substantive requirements.  However, it expands the scope of the legislation to include any new construction projects that are funded by the State, or that are funded by the NJ Economic Development Authority, or any schools that are built through the Schools Development Authority.  The number of such structures that are built each year is almost always greater than the number of structures that are built for the exclusive use of State government.  As the bill states, in most instances projects that use Green or Blue roofs will also achieve operational cost savings from increased energy efficiency.  The question that some might raise in this context, or with respect to other green building mandates, is whether the costs of construction to comply with the heightened standards will increase, thereby decreasing the number of projects can be built.  That is a topic of much debate that is beyond the scope of this series.  Tomorrow, more about the wide reach of this body of legislation.

Climate Change | Flood Insurance | Legislation

A Welcome Holiday Present: One Year Extension of the Solar Energy Tax Grant in Lieu of Credit

December 23, 2010 07:39
The renewable energy industry got a nice holiday present this year. On December 17, 2010, President Obama signed into law H.R. 4853, the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (the "Tax Relief Act"). Included among the panoply of tax cuts is a tax grant extension cheered by the renewable energy industry. Section 707 of the Tax Relief Act extends by one year the deadline for commencing construction of specified energy property, such as solar facilities, to be eligible to receive a grant of 30% of the cost of the property from the U.S. Treasury under Section 1603 of the American Recovery and Reinvestment Act of 2009. The property will be eligible for the grant if it is placed in service during 2009, 2010, or 2011, or if it is placed in service after 2011 and before the energy credit termination date (January 1, 2017, for solar facilities) if construction began before January 1, 2012. The extension of the tax grant in lieu of credit will allow those interested in developing solar facilities to continue to take advantage of the grant for another full year rather than work to beat the clock to demonstrate compliance by the end of 2010. Projects now under way that are expected to be placed in service in 2011 no longer have to meet Treasury's safe harbor for commencement of construction (demonstrating 5% of construction) by December 31, 2010. The safe harbor and its requirements, however, will be relevant in 2011 for projects expected to be placed in service after 2011. As participants in solar transactions plan their activities for 2011, they should be mindful of the steps that need to be taken by December 31, 2011, to document and maintain eligibility for any projects expected to be placed in service between 2012 and 2017, by either commencing construction or meeting the 5% safe harbor. Due to the sluggish credit markets and economy in 2009, the grant in lieu of credit program was not as great a stimulus to the development of renewable energy projects as some had initially expected. This grant extension brings welcome news to the solar industry and to any large energy user that may want to reduce its energy costs by developing and installing a solar facility. It evidences Congress' continued commitment to the development of alternative energy projects and should result in the development of many more viable projects and the creation of jobs related to the construction and installation of solar energy facilities.  

Climate Change | Legislation | Renewable Energy | Solar Energy

Looking Forward and Looking Back - Some Climate Change Response Perspectives and Predictions

December 2, 2010 07:44
by J. Wylie Donald
Another year done, another time to look back and to look forward. In the climate change space, the increasing tempo of regulation was halted, but that does not mean that there were not significant events. We catalog a few with accompanying predictions of the future:Without a doubt the big legal action this year will be the United States Supreme Court's decision in Connecticut v. American Electric Power, where States and public interest organizations seek to vindicate their ability to sue on a "carbon dioxide as public nuisance" theory. One should expect the Ninth Circuit to hold off an any decision in Kivalina v. ExxonMobil until after the Supremes render their decision. And climate change plaintiffs will husband their resources until the lay of the legal landscape is clear before filing any new suits. Our crystal ball, however, also hints that clarity may not be forthcoming. Justice Sotomayor has recused herself - there may be effectively no decision if the Court comes out 4-4. Hand-in-hand with climate change liability lawsuits goes climate change liability insurance coverage. That too is being litigated at an ultimate appellate venue. In Steadfast Insurance Co. v. The AES Corp., the Virginia Supreme Court will consider whether for the purposes of the duty to defend, an occurrence is alleged in Kivalina. Although Virginia is not the most popular of coverage litigation venues, that Steadfast is the first climate change coverage case ensures that the decision will be significant.While these are heady times for courts and litigators, those ready for the legislative "fix" for climate change will not find succor in 2011. Cap-and-trade advocates became quieter and quieter in the days leading up to the November 2010 mid-term elections. We win no points for our prescience when we predict that there will be no new federal legislation regulating carbon dioxide emissions in the coming year. Quieter even than domestic cap-and-trade supporters are those in favor of some international regime. COP 16 in Cancun achieved very little. It established a $100 billion Green Climate Fund, without any provisions to fund it. It did not extend the Kyoto Protocol, which expires in 2012. And China and the United States (the two largest greenhouse gas emitters) are still not part of any global climate change plan. COP 17 takes place in Durban, South Africa at the end of next year. With an American presidential race beginning, it is hard to imagine the Administration will butt heads with its Republican adversaries on anything contentious or innovative proposed at Durban. Even if legislation is going nowhere, that does not mean the administrative agencies will be quiet. The FTC Green Guides have proposed revisions to address carbon neutrality and renewable energy claims. Expect the proposals to be acted on in 2011. The SEC's guidance on climate change disclosure surfaced in February 2010. The guidance specifically requires analysis of domestic and international regulation. In light of the shift in the climate-change-regulation pendulum, it will be interesting to see if any reporting company states that it expects less restrictions, rather than more restrictions. And of course USEPA's greenhouse gas reporting rules required the first set of data to be turned in at the end of 2010, which undoubtedly will initiate further regulatory rules. Private parties will go where the money is, which will continue to be in heavily subsidized renewable programs. Will the Republican Congress recognize the market dislocations engendered by these subsidies and cut them? Or will different influences like jobs or constituents continue to make their presence felt? If the December enactment of the Tax Relief Act (which provided an extension of the 30% tax grant for renewable projects) is any guide, if a project can be supported with a tax subsidy, rather than a government payment, it will continue. And what can we say about the weather? 2010 was an above average hurricane year, but fortunately for the United States, damage was minimal. The hurricane experts at Colorado State University predict an equally busy year for 2011. Pay up those premiums. Best for the New Year!

Insurance | Climate Change | Supreme Court | Legislation | Carbon Emissions

Highest Court Decisions Affirm Beach Replenishment is Avulsion - a Key Development in a World of Rising Sea Levels

September 23, 2010 08:57
by J. Wylie Donald
Last December 9 was the height of coincidences.  Both the United States Supreme Court and the New Jersey Supreme Court heard oral arguments on the same day in beach replenishment cases.  The fortuity did not continue.  Stop the Beach Renourishment, Inc. v. Florida  was decided by the U.S. Supreme Court in June.  It took the New Jersey Supreme Court over three months longer to decide City of Long Branch v. Liu, where the opinion came down just this past Tuesday.  Nevertheless, both decisions affirmed that beachfront ownership law would be determined based on common law rules.  More significantly, the State's interest in control of the beaches was found preeminent. In Stop the Beach, the Supreme Court considered the following facts:  shorefront property owners in Walton County, Florida, for many years had enjoyed unfettered access to the warm waters of the Gulf.  As part of its efforts to preserve Florida's beaches, the State had renourished (pumped tons of sand) onto the homeowners' beach, and then claimed that land for Florida.  In legal terminology, the property owners' property line changed from the common law mean high water line to a statutorily established erosion control line.  In other words, beach front property now meant that you fronted on a beach, rather than fronted on the ocean.  The homeowners challenged this development as an unconstitutional "taking" under the 5th and 14th Amendments to the Constitution. While the Court could not come to agreement on the meaning of taking in this context (a plurality opinion with two concurrences), the Court was unanimous that this particular circumstance was not one.  It concluded (as had Florida's Supreme Court) that Florida's common law treated the creation of a beach by replenishment as an "avulsion" and under the common law, the Court concluded, homeowners did not acquire ownership rights to such lands, although they did acquire (as Florida conceded) certain other rights (such as access across and an unobstructed view).  In Liu the facts were less sympathetic.  The Lius' upland property had been condemned and its value had been set by a trial.  The Lius also sought, however, to be compensated for the value created when New Jersey's beach replenishment program deposited sand on the Lius' beach and created more land.  Here too New Jersey's highest court found that beach replenishment constituted an "avulsion" and that because the Lius never owned the land below mean high water, they could not own the land created when sand was deposited beyond mean high water, even if that land rose above the surface and severed the Luis's contact with the ocean. Although neither decision addressed the rising sea level problem brought about by climate change, they are very likely to figure prominently in future controversies arising as communities attempt to deal with the submergence of the shore.  Both appellate courts found that beach replenishment constituted an avulsion:  “a sudden and perceptible loss or addition to land by the action of water or otherwise.”  Liu, at 14, “sudden or perceptible loss of or addition to land by the action of the water or a sudden change in the bed of a lake or the course of a stream,” Stop the Beach Renourishment at 3.  Since the common law did not permit property boundaries to be changed by an avulsion, all that was necessary for a decision in favor of the governmental defendants was a finding that beach replenishment constituted an avulsion, which is what the courts held.  One can envision a number of ways how that conclusion may not be obvious.  The courts creating the common law never considered that massive pumps at the bidding of the State would move the seabed.  Nor was it contemplated that governmental entities would be able, at their discretion, to convert littoral properties to land-locked properties.  But be that as it may, this is the law of the land. And as such, communities at the shore can take much solace that they will be able to act to preserve their communities by establishing beaches around their boundaries before they are engulfed.  And who is to say that such beaches may not morph into sand dunes, or even sand walls.  And will the common law permit seawalls and revetments to be constructed on the new lands, converting the former beachfront properties, into beach-view properties, then dune-view properties and ultimately into seawall view properties. The final chapter of this saga is not yet written.  What remains to be seen is whether in the future the littoral property owners at the beach will be as ineffective against the power of the State, as the courtiers in the fable of King Canute were against the rising tide.

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