4.  Climate Risk - It has been a common theme for this blog that acceptance of climate change will occur not because of science, but because of the responses of business entities that recognize that climate change denial is not in their best interest.  But it is also a theme that until there is an actual identified business reason to take an action, businesses will not go out on a limb.  Standard & Poor’s exemplifies our thinking.  In March it issued a short report, Climate Change is a Global Mega-Trend for Sovereign Risk.  In the report S&P concludes “the evidence suggests that it is probably safe to expect that for most national economies, other things being equal, climate change will negatively impact national welfare and economic growth potential.  Observations corroborating this expectation could lead Standard & Poor’s to lower sovereign ratings on the most affected sovereigns.”  That is, “we see a potential problem but we aren’t ready to act just yet.”  Notwithstanding S&P's failure to move today, this pronouncement does communicate to the buyers of sovereign debt that they had better pay attention to climate change as it may be material to their investment.

With the release of EPA’s proposed regulation of CO2 from existing sources on June 2, there has been a lot of speculation that states will look to cap-and-trade schemes as a means of complying with EPA’s mandate that the states reduce CO2 emissions by 30% of 2005 levels by 2030. The Regional Greenhouse Gas Initiative (RGGI) provides an existing market-based framework for states in the northeast, and maybe nationwide, to implement cap-and-trade on an interstate basis. RGGI is currently a voluntary, interstate greenhouse gas emissions trading platform among Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island and Vermont.

For New Jersey, which was in RGGI at one time but withdrew under the Christie administration, the new EPA regulations, assuming they become final in substantially the same form, give it the opportunity to re-think its decision to withdraw several years ago. So far, the New Jersey regulators have indicated that they are not willing to re-join RGGI, even as means of complying with the new EPA regulations. There are certainly other means for the state to achieve the emissions reductions called for by the EPA regulations such as limits with no trading, or mandates on use of non-CO2-emitting generation such as solar, wind and nuclear. However, the cap-and-trade structure provided by programs like RGGI offers sources the economic incentives for voluntary reductions even beyond what is called for by the EPA regulations. Time and pressure from the regulated community may change this position over the next several years – wait and see.

Pennsylvania’s situation is even more intriguing. There is a Pennsylvania gubernatorial election this November. Pennsylvanians will vote either to keep the incumbent Republican, Tom Corbett, or to replace him with Democratic candidate, Tom Wolf. At the Pennsylvania Environmental Council’s Annual Philadelphia Dinner on Wednesday night, both candidates spoke to the mixed crowd of representatives of environmental groups, government and industry. Governor Corbett did not mention either RGGI or the proposed EPA CO2 emissions regulations, but he did signal his continuing support for natural gas production in the Commonwealth through fracking as a means to provide cleaner energy for Pennsylvania, and his belief that environmental stewardship is important but must be “balanced” with economic considerations. Mr. Wolf, on the other hand, unequivocally stated that, if elected Governor, he will “bring RGGI to Pennsylvania!” Several members of the crowd clapped enthusiastically, while everyone else remained quiet in anticipation of the dinner which had yet to be served. It will be interesting to see whether this limb that Mr. Wolf climbed (jumped) out on will sustain the weight of five more months of what is sure to be a heated campaign. There is a very good potential that this issue will become an important hot button in the election.

We have written many times about the flawed design of the nation's flood maps in an era of climate change.  And spoken about the potential for claims against professionals for failure to consider the effects of climate change in what they do.  On April 16, 2014 those two ideas manifested in a 143 page lawsuit filed in Cook County, Illinois asserting that local governments are at fault for flood damage that insurance companies had to pay for.  Illinois Farmers Insurance Co. v. The Metropolitan Water Reclamation District of Greater Chicago (attached).  Let us explain.

Flood maps are based on the historical record. Lots and lots of data over lots and lots of years, with one major underlying assumption:  the past is a reasonable basis for predicting the future. But what if it is not?  In that case a 100-year flood plain may actually be a 50-year or 25-year flood plain, or perhaps a 200-year flood plain. One can't know, absent some effort to predict the future.

This issue is not limited to FEMA flood maps. Storm water systems are sized based on the predicted 20-year or 50-year or even 100-year storm event. We have seen that terminology before and it signifies a similar result:  culvert sizing and flood protections suffer from the same defect as flood plain mapping - a retrospective view is not enough.  One might theorize that civil engineers, planners, and others involved in the design, construction and operation of stormwater systems have a duty to recognize this state of affairs and incorporate climate change effects into their activities.

On April 18 and 19, 2013 heavy rains in Cook County and elsewhere resulted in flooding.  Insurance companies paid millions on the claims.  Now Illinois Farmers Insurance Co. and others are seeking to recover those millions in the form of a class action on behalf of other insurers and property owners against the water reclamation district and municipal and county governments.  Of itself, that would not be particularly interesting.  But the allegations vault this case, and six other similar cases, to the top of the climate change litigation pantheon. 

The central theme in the complaint is that the local governments are at fault for flooding caused by mis-operated stormwater systems:  the “common, central and fundamental issue in this action is whether the Defendants have failed to safely operate retention basins, detention basins, tributary enclosed sewer and tributary open sewers/drains for the purpose of safely conveying storm water within Defendants' territorial jurisdictions"  ¶ 27. 

The defendant governments allegedly knew their systems were undersized.  In anticipation of heavy rains, they would pump down reservoirs and tunnels.  Climate change set the context:   "During the past 40 years, climate change in Cook County has caused rains to be of greater volume, greater intensity and greater duration than pre-1970 rainfall history evidenced, rendering the rainfall frequency return tables employed by the Reclamation District and each Named Municipal Defendant inaccurate and obsolete." ¶ 48. Plaintiffs assert that the climate change effects are admitted:  "In or around 2008, the Reclamation District, the County of Cook, the City of Chicago and other Municipal Defendants adopted the scientific principle that climate change has caused increases in rain fall amount, intensity and duration during a rain in Cook County as evidenced by their adoption of the Chicago Climate Action Plan. " ¶ 49.  

Next comes the allegation of knowledge of the specific hazard:  "This defendant knew that because of climate change causing increased rainfall, this defendant had to increase stormwater storage capacity of its stormwater sewer system(s) to prevent sewer water invasions." ¶ 51.  Thus, the local governments were alleged to be on notice that their infrastructure was insufficient to prevent harm to individuals and businesses.  The final point was that, notwithstanding this notice, in the face of a heavy rain (heavy, but not out of the ordinary based on either the historical record or a climate model), the governments failed to take steps to remedy the defect (i.e., the lack of storage capacity and conveyance capacity to address the rainfall).

With that prelude, plaintiffs allege three counts:  negligent maintenance of the stormwater system by failing to utilize temporary stormwater protection systems, failure to remedy a known dangerous condition (where stormwater invasions had occurred before), and an unlawful “taking” in that the governments had (it is alleged) appropriated the property of others for diversion and retention basins, etc.

This is a complaint we knew was coming, although we will candidly admit that we did not anticipate the plaintiffs. An insurance company as the plaintiff raises an interesting question.  Is the insurance industry intent on cannibalizing itself?  If Illinois Farmers prevails, it will start to establish a standard of care for both design professionals whose work is impacted by climate change, and for those who rely on such professionals.  Third parties injured by the failure of a stormwater system may bring claims against entities responsible for the systems.  So we will have theories of liability that will trigger liability policies, errors and omissions policies, and even directors and officers policies.  If all of them subrogate, like Illinois Farmers did, it takes no imagination to see the mess that will be created.  Even without subrogation, if the theory is successful, it will cut wide and deep.  It is surprising that an insurer would advocate for it.  

20140416 Illinois Farmers Ins. v. Metro. Water Reclamation Dist. of Greater Chicago.pdf (4.58 mb)

Would an 80% premium steer you away from an energy source that was low-carbon, naturally abundant in the United States, not subject to the vicissitudes of weather, incapable of nuclear meltdown and accompanied by a well-established infrastructure?  Suppose the premium was only 40%?

Hearings last week before the House Energy and Commerce Committee’s Subcommittee on Oversight and Investigation explored that topic in connection with the development of carbon capture and storage technology. In prepared remarks Dr. Julio Friedmann, Deputy Assistant Secretary for Clean Coal with the Department of Energy, delivered an update on the status of CCS.

Coal fuels approximately 40% of the nation's energy needs.  "Because it is abundant, the clean and efficient use of coal is a key part of President Obama's all-of-the-above energy strategy."  A central component of the President's program is the Clean Coal Research Program, which " is designed to enhance [the nation's] energy security and reduce environmental concerns over the future use of coal by developing a portfolio of cutting-edge clean coal technologies."  To accomplish this the Department of Energy is focusing on research to capture carbon dioxide directly from the fuel stream (pre-combustion), from the stack gas (post-combustion) and from combustion in nearly pure oxygen (oxy-combustion, which yields nearly pure CO2 and water, which are easily separated). 

Dr. Friedmann went on to discuss the Regional Carbon Sequestration Partnerships, which are investigating the viability of CCS projects in a variety of circumstances.  "Together, the Partnerships form a network of capability, knowledge, and infrastructure that will help enable geologic storage technology to play a role in the clean energy economy. They represent regions encompassing 97 percent of coal-fired CO2 emissions, 97 percent of industrial CO2 emissions, 96 percent of the total land mass, and essentially all the geologic storage sites that can potentially be available for geologic carbon storage.”

Last, Dr. Friedmann addressed the commercialization of CCS.  This has two components:  the operation of CCS facilities, and the utilization of the captured CO2.  The idea behind utilization in activities such as enhanced oil recovery and algae production is to "provide a technology bridge" which can smooth the  " transition to the deployment of the large-scale, stand-alone geologic sequestration operations that will ultimately be needed to achieve the much larger emissions reductions required ..."  As for those operations, Dr. Friedmann acknowledged dozens of projects, including 5 he listed by name, where CCS is being tested in commercial environments.

But the real interest of the committee, at least as reported in the trade press, was in cost. As reported  in Power and Power Engineering International,  Dr. Friedman  advised that implementing CCS "looks something like a 70% or 80% increase on the wholesale price of electricity."  Second generation technologies could cut that in half. But half is still a 40% increase.

Some might pull the plug on CCS right now.  If it is going to raise the price by 40%, that is simply too much.  To our mind, however, that is antediluvian thinking.  Regulation of carbon dioxide emissions is already happening. Climate change is not taking a wait-and-see approach. Inexorably the earth warms, the oceans rise, the world of yesterday is not the world of tomorrow. CCS has a place at the energy banquet. 

Further, before turning off CCS, it is useful to consider the costs of the alternatives.  The Energy Information Administration has calculated the "levelized" cost of various energy sources. "Levelized cost is often cited as a convenient summary measure of the overall competiveness of different generating technologies. It represents the per-kilowatthour cost (in real dollars) of building and operating a generating plant over an assumed financial life and duty cycle."  Two things relevant here come out of the EIA table.  First, among dispatchable power (i.e., power that can respond when it is needed), with or without CCS, the most cost-effective power source is natural gas.  Second, when non-dispatchable power is included, even with CCS, coal is more cost-effective than offshore wind and both photovoltaic and thermal solar. 

In other words, if the issue is solely cost, coal loses to natural gas and the effect of CCS does not change the outcome.  If the issues are non-cost values, then coal with CCS comes to the table with green credentials, high power density, dispatchable output, good jobs, national security bona fides, and installed infrastructure, many of which coal's renewable competition cannot match. 

Tomorrow bald and golden eagles will sleep less soundly.  On January 8 the Fish and Wildlife Service’s new rule revising the regulations for permits for the taking of golden eagles and bald eagles goes into effect.  According to the FWS, “This change will facilitate the responsible development of renewable energy and other projects designed to operate for decades, while continuing to protect eagles consistent with our statutory mandates.”

Eagles and other migratory birds are a substantial threat to wind projects and not because they will cause turbine blades to fail.  Rather, turbine blades (and to a lesser extent, towers, guy wires, transmission lines and other constructions in the air space) can be lethal to birds.  This poses a serious problem for wind energy companies as birds are legally protected by the Migratory Bird Treaty Act (16 U.S.C. §§ 703-712) and eagles further protected by the Bald and Golden Eagle Protection Act (16 USC §§ 668-668d). 

Duke Energy Renewables, Inc. recently ran afoul of these requirements at its 176 turbine Campbell Hill and Top of the World wind projects in Wyoming, where at least 14 golden eagles died between 2009 and 2013.   In November Duke accepted a plea agreement in “the first ever criminal enforcement of the Migratory Bird Treaty Act for unpermitted avian takings at wind projects.”  It included:

• Fines - $400,000 
• Restitution - $100,000 to the State of Wyoming
• Community Service - $160,000 payment to the National Fish and Wildlife Foundation for eagle preservation projects
• Conservation funding - $340,000 to a conservation fund for the purchase of land or conservation easements
• Probation – five years
• Compliance Plan – implementation of a plan at a cost of $600,000 per year with “specific measures to avoid and minimize golden eagle and other avian wildlife mortalities at company’s four commercial wind projects in Wyoming.”
• Permit – required application for a Programmatic Eagle Take Permit.

The last is directly tied to tomorrow’s rule.  “Take” is defined in the regulations as “pursue, shoot, shoot at, poison, wound, kill, capture, trap, collect, destroy, molest, or disturb.” 50 CFR § 22.3.  “Programmatic take” is “take that is recurring, is not caused solely by indirect effects, and that occurs over the long term or in a location or locations that cannot be specifically identified.”  Id.  The regulations at 50 CFR § 22.26 provide for permits to take bald eagles and golden eagles when the taking is associated with, but not the purpose of, an otherwise lawful activity.  Programmatic permits authorize take that “is unavoidable even though advanced conservation practices are being implemented.”  The new rule commentary notes that permits may authorize “lethal take … such as mortalities caused by collisions with wind turbines, powerline electrocutions, and other potential sources of incidental take.”

Under the current rule, a take permit was good for only 5 years, which inserted much uncertainty into wind farm projects.  The new rule permits wind energy developers to obtain a take permit that runs for 30 years, 50 CFR § 22.26(i), which “better correspond[s] to the operational timeframe of renewable energy projects.”  The risk that a wind project will cause unforeseen harm to eagles during this much longer period is mitigated by a new requirement for 5 year reviews, in which the FWS “will determine if trigger points specified in the permit have been reached that would indicate that additional conservation measures ... should be implemented to potentially reduce eagle mortalities, or if additional mitigation measures are needed.”  Id. at § 22.26(h).  Additional actions that might be taken as the result of the review could be permit changes, including implementation of additional conservation measures and updating of monitoring requirements.  Id.  Even suspension or revocation of the permit is possible.  Id.

That the FWS is serious about protecting eagles is demonstrated by the enforcement action against Duke.  But the FWS also recognizes that development is necessary.  The 30 year permit period appears to be a reasonable compromise (unless one is an eagle).

2013 has drawn to a close; here is our take on the top six climate change legal stories in the last six months.
 
1.  Climate Change Assessments - Blockbuster legislation may have been evaded once more but that has not stopped those in the trenches. Assessments of climate change risk are becoming more routine. For example, the September 2013 Record of Decision for the Gowanus Canal Superfund Site required assessment of “periods of high rainfall, including future rainfall increases that may result from climate change” in implementing certain aspects of the cleanup remedy.  Another example was provided by the Department of Housing and Urban Development, which in November required in its second round of community block grants for disaster relief that prospective grantees consider in their Comprehensive Risk Analysis “a broad range of information and best available data, including forward-looking analyses of risks to infrastructure sectors from climate change and other hazards, such as the Northeast United States Regional Climate Trends and Scenarios from the U.S. National Climate Assessment, the Sea Level Rise Tool for Sandy Recovery, or comparable peer-reviewed information."  Even the Nuclear Regulatory Commission looked at climate change with regard to its September draft generic environmental impact statement for the long-term continued storage of spent nuclear fuel. 

2.  Low Carbon Fuel Standards - In Rocky Mountain Farmers Union v. Corey the Ninth Circuit reversed several district court rulings limiting under the “dormant Commerce clause” the California Air Resources Board’s Low Carbon Fuel Standard.  Although the Commerce clause of the Constitution, U.S. Const., art. I, § 8, cl. 3. “does not explicitly control the several states,” it "has long been understood to have a ‘negative’ aspect that denies the States the power unjustifiably to discriminate against or burden the interstate flow of articles of commerce.’” Rocky Mountain at 31 (citation omitted). California’s Low Carbon Fuel Standard supported carbon dioxide emission reduction “by reducing the carbon intensity [i.e., the amount of carbon dioxide emitted per unit of energy produced] of transportation fuels that are burned in California.”  It thus potentially burdened producers of ethanol in the Midwest and petroleum producers outside California, but that did not matter.  Specifically, the court held that the LCFS was not facially impermissibly discriminatory in favor of ethanol, was not improperly extraterritorial and did not discriminate against petroleum fuels.  Accordingly, California is still on its path to a reduction in the carbon intensity of its fuels by 10% by 2020, as mandated by the 2006 Global Warming Solutions Act.

3.  The Cost of the Grid - On November 14, the Arizona Corporation Commission ruled that Arizona's net metering program should spread the cost of maintaining a reliable grid among all of Arizona Public Service's customers, including its rooftop solar customers. Up to that point rooftop solar customers were paid for the electricity they provided to the grid at retail rates, without any adjustment for the cost of the grid. The Commission concluded that this resulted in a "cost shift" from customers that were paying for the grid, to rooftop solar customers, who weren't.  APS put on a good case demonstrating that rooftop solar customers were substantially benefitting from the grid by drawing power at night, during cloudy weather and during the periods of daylight when solar power production did not exceed the customer's needs. Many have criticized solar power as unfairly subsidized. In Arizona at least, one of those subsidies is being addressed.

4.  New Carbon Dioxide Emission Standards - Following over 2.5 million comments, EPA rescinded its proposed rule governing carbon dioxide emissions from new coal-fired power plants.  In its place it proposed on September 20 a rule setting CO2 emission standards for new large natural gas power plants (1,000 lbs/MW-hr), new small natural gas power plants (1,100 lbs/MW-hr), and new coal-fired power plants (1,100 lbs/MW-hr).  From our perspective, the most significant facet of this new rule is that it actually will apply to plants that are being built.  The withdrawn proposed rule only applied to new coal plants, which EPA concluded would not be built anyway before 2030.  Equally significant, as pointed out in EPA’s news release  on the proposal, is that “EPA has initiated outreach to a wide variety of stakeholders that will help inform the development of emission guidelines for existing power plants.”

5.  The Fifth Assessment Report of the Intergovernmental Panel on Climate Change – The IPCC’s Working Group I issued The Physical Science Basis, its part of the Fifth Assessment Report.  Working Groups II and III will publish in 2014.  Among other things WG I concluded:  "Unequivocal evidence from in situ observations and ice core records shows that the atmospheric concentrations of important greenhouse gases such as carbon dioxide, methane, and nitrous oxides have increased over the last few centuries."  "The temperature measurements in the oceans show a continuing increase in the heat content of the oceans.  Analyses based on measurements of the Earth's radiative budget suggest a small positive energy imbalance that serves to increase the global heat content of the Earth system.  Observations from satellites and in situ measurements show a trend of significant reductions in the mass balance of most land ice masses and in Arctic sea ice. The ocean's uptake of carbon dioxide is having a significant effect on the chemistry of sea water."  But if one remains skeptical, this consensus view of the world’s leading climate scientists should not cause one alarm, the climate change skeptics have not thrown in the towel.  For example, according to one website, “climate science as proclaimed by the IPCC is a morass where what is scientific knowledge cannot be easily separated from speculation and what is wrong.”  One won't find seafarers plying the Northern Sea Route in the skeptic camp, however.  Russia logged a record year of transits in 2013 (over 200), up from just 4 in 2010. 

6.  Climate Change Liability Lawsuits - For the first time since 2005, when Comer v. Nationwide Mutual Insurance was filed, there is no climate change liability lawsuit on the docket anywhere. All have been defeated. Comer was the last to succumb, with its opportunity to file a petition for certiorari expiring on or about August 14.  The IPCC Fifth Assessment establishes climate change is not going away, but we will have to wait to see if anyone is going to attempt to make someone pay for it.

The Congress may be dysfunctional but the administrative agencies are still moving the ball.  A case in point is last week’s Christmas present from EPA to the carbon capture and storage community.  On December 17 EPA issued its final rule, Hazardous Waste Management System: Conditional Exclusion for Carbon Dioxide (CO2) Streams in Geologic Sequestration Activities.  In so doing, EPA provided “regulatory clarity to help facilitate the implementation of [CCS] technology in a safe and responsible way.”

Carbon capture and storage is a technology with three distinct steps: 

1. “the capture and compression of the CO2 stream from fossil-fuel power plants or other industrial sources,”
2. ”[the transportation of] the CO2 stream (usually in pipelines as a supercritical fluid) to an on-site or off-site location,” and
3. “inject[ion] underground for purposes of sequestration.”

The new rule addressed the third element.  The rule had been foreshadowed by a 2010 recommendation from the government’s Interagency Task Force on Carbon Capture and Storage.  The Task Force, instituted by President Obama, “was charged with proposing a plan to overcome the barriers to the widespread, cost-effective deployment of CCS within ten years,” and in its report assessed the progress and impediments to developing carbon capture and storage as a viable technology to combat climate change.  Among other things, the Task Force recommended that EPA ““propose a Resource Conservation and Recovery Act (RCRA) applicability rule for CO2 that is captured from an emission source for purposes of sequestration.”  The goal was a final rule by 2011.  EPA was only two years late, which in the current climate should probably be considered timely.

Carbon dioxide is not a listed RCRA waste.  Nevertheless there was concern that substances derived from the source materials and the capture process could render the carbon dioxide stream a characteristic RCRA hazardous waste.  Accordingly, RCRA regulations potentially applied.  EPA concluded, however, that RCRA regulation was not necessary because the stream being injected already was being regulated by Department of Transportation requirements for pipeline operations and EPA permitting requirements for underground injection in UIC Class VI injection wells.  “[E]limination of exposure routes through these requirements, which are implemented through a [Safe Drinking Water Act] UIC permit, will ensure protection of human health and the environment such that RCRA subtitle C regulation would be duplicative and unnecessary.” “The UIC Class VI requirements are designed to ensure that the CO2 streams (which may include low concentrations of hazardous constituents) remain isolated in the injection zone and confined by confining zones in an appropriate, well-characterized geologic setting that is continuously monitored to ensure that the CO2 streams remain in the injection zone. “

Thus, advocates for CCS should be heartened that EPA has removed a potential impediment to deployment of CCS.  But the realities of CCS implementation may make all this for naught.  The Task Force report notes that ”the incremental costs of new coal-fired plants with CCS relative to new conventional coal-fired plants typically range from $60 to $95 per tonne of CO2 avoided.”  With no federal program limiting CO2 emissions, the incentive to incur such costs is vanishingly small.  EPA acknowledges this in its comments:  “based upon current market conditions and the existing regulatory framework (i.e., lack of Federal legislation), it appears unlikely that there would be any significant expansion in CCS management for CO2 over the next several years.”   Simply stated, lack of RCRA regulation is not going to be the trigger that unleashes  a wave of CCS projects.

It's not secession like Colorado but three Maryland counties are staging their own Fort Sumter. This past Tuesday the Carroll County Council  received a notice from the State that the County did not appear to be meeting its obligations under the 2012 Stormwater Management – Watershed Protection and Restoration Program Act.  Penalties of $10,000 per day were threatened. Frederick and Harford Counties have received similar letters.  The County fathers (and mothers) have been nonplussed. As quoted in the Baltimore Sun, Frederick County Commissioner Billy Shrive responded:  "I've been dealing with bullies since I was in kindergarten, and I don't tolerate it."

Under the Act (Md. Env. 4-202.1) Baltimore City and the 9 Maryland counties and with the most significant runoff into the Chesapeake Bay were obligated to take steps to mitigate their stormwater discharges. One requirement was to put in place a funding mechanism for such improvements (the stormwater remediation fee, or the rain tax, depending on your perspective). Carroll County declined to establish any mechanism. Frederick County set a fee of one cent per real estate parcel. Harford County set what appeared to be a reasonable fee, but then whacked off 90% of it pending further study. The State was not amused - hence the letters and threats.

What is this so-called rain tax?  Each county is permitted to set up its own parameters but basically the idea is to address the amount of stormwater runoff a property generates and assess a fee accordingly.  As set forth in the statute, the fee is to be "based on the share of stormwater management services related to the property and provided by the county or municipality."  A county may set a flat fee, set a fee based on impervious surfaces, or use some other method. 

In Baltimore City the essential element is the amount of impervious surfaces on a property. Simply stated, that is roofs and pavement, but it also could include gravel roads and decks, but not include graveled settling basins or decks that drain to landscaping below.  The City is using aerial photographs as the basis for calculation of impervious surface square footage. This is converted to Equivalent Residential Units to establish the fee.

There are lots of things knowledgeable Maryland practitioners can do to help their clients navigate the intricacies of the Act. Indeed, they can make their clients real money.  At a Maryland Bar Association Environmental Law Section meeting yesterday a consultant explained how over $100,000 was saved for one client in pushing for exemptions, credits and applicable definitions.

But there was a larger lesson as well that would apply to any jurisdiction where storm sewers exist. A representative of Blue Water Baltimore noted that with climate change, the 100-year storm is now the 25-year storm. This is a common mantra and useful to keep in mind even if inaccurate. The 100-year storm is now the 25-year storm in some places. In other places it is now the 200-year storm. This is because with climate change some places will become drier and some wetter.  For practitioners counseling their clients, in becoming-wetter locales one should be paying attention to the age of the storm sewer infrastructure and considering whether it is sized for increased flows; also of importance is the effect of an infrastructure failure on the business plan. In becoming-drier locations one should apply converse thinking and further be skeptical of assessments or assertions of the need for oversized storm sewers. 

Creedence Clearwater Revival asked "Who'll Stop the Rain?" We submit it is the wrong question.  Stormwater creates problems because of its velocity and its volume.  Modern society packs down and covers the earth so that rain cannot percolate in and thus, for example, a small stream carrying stormwater is greatly amplified.  To mitigate velocity and volume is going to cost money.  Thus a better question would be:  Who'll Pay for the Rain?   

Yesterday, Governor Jack Markell issued Executive Order No. 41, “Preparing Delaware for Emerging Climate Impacts and Seizing Economic Opportunities from Reducing Emissions.”  In many climate change discussions there exists an implied or overt assumption that society must choose between the economy and the climate.  Consistent with a theme that has resurfaced throughout his tenure as Governor, in Executive Order No. 41 Governor Markell explicitly rejects that choice:  “initiatives to responsibly reduce greenhouse gas emissions and prepare Delaware for climate impacts present significant economic development and employment opportunities in infrastructure construction, energy efficiency, clean energy, and advanced transportation.”

Executive Order No. 41 consists of three main components.  First, it establishes a Governor’s Committee on Climate and Resiliency (the “Committee”).  The composition of the Committee itself is noteworthy as it is clear this effort is not “mere puffery,” rather the Committee will include many of the key cabinet heads, including the Secretaries of the Departments of Natural Resources and Environmental Control (“DNREC”), Agriculture, Transportation, Health and Human Services, Safety and Homeland Security, and State, as well as the Directors of the Delaware Economic Development Office, the Office of Management and Budget, the Delaware State Housing Authority, and the Office of State Planning Coordination.

Second, the Committee, chaired by the Secretary of DNREC, shall develop a “an implementation plan to maintain and build upon Delaware’s leadership in responsibly reducing greenhouse gas emissions,” as well as recommendations for actions by agencies and local governments.  The plan and recommendations must be delivered to the Governor by the end of 2014, with the implementation plan updated annually thereafter.  Noteworthy are the requirements which Governor Markell mandates for the plan, overtly rejecting the notion that advancing the economy and planning for, and reducing, climate change must be at odds.  The plan “shall ensure that efforts have a positive effect on the State’s economy, including advancing the strategy of securing cleaner, cheaper, and more reliable energy, improving public health outcomes, increasing employment in Delaware, strengthening Delaware’s manufacturing capabilities, and enhancing Delaware’s overall competitiveness” (emphasis added).  This mandate that the climate change plan achieve positive economic results is framed by the plain acknowledgment of the significant risks facing Delaware from climate change and sea level rise.  These risks include that:

• Delaware has the “lowest average land elevation in the United States and significant population living along 381 miles of shoreline,” putting Delaware at risk for coastal erosion, storm surge, flooding, saltwater intrusion, and tidal wetland losses.
• Delaware’s critical infrastructure is at risk from climate change.
• Delaware’s groundwater aquifers are at risk from saltwater intrusion.
• Delaware’s $8 billion agriculture industry “could be significantly impacted by increasingly variable temperatures, precipitation, extreme weather events, and droughts.”
• Delaware’s $6 billion tourism industry is vulnerable to climate change and sea level rise.

The Governor makes clear his belief that mitigating climate change and pursuing economic growth are not mutually exclusive.  Indeed, he plainly considers the joint goals of positive economic and climate outcomes as a logical next step from the successes already achieved in Delaware, including Delaware’s role within the Regional Greenhouse Gas Initiative, Delaware’s reduction of greenhouse gas emissions “by more than any state in the nation (29.7% from 2000 to 2010),” and Executive Order No. 18, which sought to reduce the climate change impacts of State Government, and which the Governor asserts not only significantly reduced the climate-related impacts of State Government, but at the same time “result[ed] in millions of dollars of savings.”

Third, and likely with the most immediate on-the-ground consequences (rather than future planning), Executive Order No. 41 requires that “all state agencies shall adhere” (emphasis added) to certain flood hazard mitigation and sea level rise adaptation requirements.  These include:

• Requiring all state agencies to “incorporate measures for adapting to increased flood heights and sea level rise in the siting and design of projects for construction of new structures and reconstruction of substantially damaged structures and infrastructure” to avoid and minimize flood risks, and, wherever “practical and effective” shall use natural systems or green infrastructure to “improve resiliency to flood heights, erosion, and sea level rise.”
• Requiring structures within Federal Emergency Management Agency (“FEMA”) special flood hazard areas to be “designed and constructed with habitable space at least 18 inches above current base flood elevation” and, in addition, requiring structures within areas designated by DNREC to be vulnerable to sea level rise inundation to be “designed and constructed to account for sea level changes anticipated during the lifespan of the structure” (emphasis added).
• Requiring all state agencies to “consider and incorporate the sea level rise scenarios set forth by the DNREC Sea Level Rise Technical Committee into appropriate long-range plans.”

Only time will tell whether Governor Markell can achieve his dual goals of climate change action and economic growth, but Executive Order No. 41 demonstrates that he is well aware of the challenges and confident in his administration’s ability to achieve both goals.  His experience in the private sector and his economic track record since taking office in 2009, in the midst of the Great Recession, indicate that his climate change policies, and his optimism that they can be positive forces for economic growth, are based on pragmatism, science and economics, not ideology.

Can a community condemn shorefront cottages where the beach has eroded at 8 feet per year and the cottages interfere with emergency responders traveling along the beach?  Based on the Fourth Circuit's decision at the end of last month in Sansotta v Town of Nags Head we just don't know. What we do know is that a municipality cannot play both ends of the law against the middle to address the problem.

Let us explain.  Nags Head is a shore community of about 2500 souls (soaring to 40,000 in the summer) on North Carolina's Outer Banks. Municipal ordinances provide that a building suffering storm damage or erosion damage may be a public nuisance where it is in danger of collapsing, where there is a likelihood of personal or property injury, or where the structure is on public trust or public land.  Nags Head Ordinance 16-31(6) (a), (b), (c).  A 2009 storm washed away much of the sand around six cottages leaving their septic tanks exposed. The Town declared the cottages nuisances under Ordinance 16-31(6)(b) and (c) and required their abatement. Demolition was the only way to satisfy the ordinance but the homeowners did not comply and the Town assessed fines accruing at $100 per day.  The homeowners sued. (Twenty other cottages were also declared nuisances resulting in at least two other suits. See Town of Nags Head v. Toloczko, 863 F. Supp. 2d 516 (E.D.N.C. 2012); Town of Nags Head v Cherry, Inc., 723 S.E.2d 156 (N.C. Ct. App. 2012).)
 
The suit was originally filed in state court with claims sounding in both state and federal law. The Town removed to federal court.  Both parties moved for partial summary judgment.  The trial court dismissed and the homeowners appealed.

The Fourth Circuit affirmed the trial court's dismissal of the equal protection and procedural due process claims; however, the court of appeals reversed the trial court's dismissal of the takings claim.

Fourteenth Amendment Procedural Due Process.  Due process requires that before one is deprived of life, liberty or property, a constitutionally fair process must be imposed. Here, while the homeowners asserted constitutionally protected interests in the money to pay the fines and the cottages themselves, the Town never deprived them of those interests. First, the fines were never paid. Second, the Town's "regulatory actions do not constitute a deprivation of property because they represent limitations on the use of property that 'inhere in the title itself, in the restrictions that background principles of the State's law of property and nuisance already place upon land ownership.'" Sansotta at 14.  "By acting to abate what it believed was a nuisance, the Town simply kept the Owners from using their property in a way that was prohibited by law." Id. at 15. 

Fourteenth Amendment Equal Protection. The homeowners asserted that they were treated differently than the 14 other cottages that were also located in the public trust area. This was true but it did not matter. The Town had a valid reason for treating the cottages differently:  they were closer to the ocean and obstructed the passage of emergency vehicles to a greater extent.  "Notwithstanding the Owners' contentions about all parts of the beach being valuable, different parts of the beach may present different issues with regard to public safety.  Hence, the difference in the locations of the cottages on the beach is a legitimate basis for treating them differently."  Id. at 20. 

Fifth Amendment Takings. The homeowners asserted that their property was taken without just compensation. However, the homeowners had not completed the process of pursuing their compensation claim under state law. This was fatal to a federal claim, which required that a "plaintiff must first have sought compensation 'through the procedures the State has provided for doing so.'" Id. at 21.  In state court, however, the homeowners could assert a taking, even though they had not completed the compensation process.  "[U]nder San Remo Hotel[, L.P. v. City & Cnty. of San Francisco, 545 U.S. 323, 346 (2005)], a plaintiff may bring a takings claim in state court without having already been denied compensation by the state, if he also brings his state-law claim for just compensation." Id. at 23.  And here was the rub:  the Town had removed the case from state court, where the homeowners takings claim was ripe. But in so doing, the Town asserted the claim became unripe in federal court. Id. at 24.

The Court of Appeals was not willing to "judicially condone[] manipulation of litigation." Id. at 25.  The requirement for a federal court to wait until the state court has ruled on a just compensation claim, was a "prudential" not a "jurisdictional" requirement.  State courts have more experience in land use matters than federal courts, but that "does not mean that federal courts are incapable of handling them."  Id. at 25.  "A defendant implicitly agrees with this conclusion when he removes a case involving such a state or municipal law to federal court."  Id. at 25-26. Thus, the court refused to apply the state court litigation requirement and reversed the trial court's dismissal of the takings claim. "Based on our conclusion that a state and its political subdivisions waive the state-litigation requirement by removing a case to federal court, the district court erred in dismissing the Owners' takings claim as unripe." Id. at 35.

We find three things of moment in this case and its decision:

First, Nags Head is just one small community on the Atlantic littoral beset by rising sea levels. Yet it has spawned at least three cases that have been litigated to the appellate level.  We can expect many more.

Second, the issues in the rising sea level cases are going to get right down to fundamentals. Constitutional rights will be invoked. This of course suggests the Supreme Court will get involved. We note that it already has.  See Stop the Beach Renourishment, Inc. v. Florida, 560 U.S. 2606 (2010).

Third, one of the homeowners' takings claim was based on "redefining private property as public land." Id. at 21 n.16. Observe that the states own the land below mean high water (or mean low water in some cases). As the oceans rise, the states' claims to more and more of the current landowners' shorefront will increase. Is it the case, then, that that is a taking?  If it is, then states better start setting aside some substantial funds to pay just compensation that they cannot avoid. 

The front cover of this month's National Geographic premiers Rising Seas, How They Are Changing Our Coast Lines.  In North Carolina, they are living (and litigating) that.