by Grace Kurdian

Today the Environmental Protection Agency (EPA) started to close the loop on the regulation of greenhouse gases set in motion in April 2007 when the Supreme Court issued its seminal decision, Massachusetts v. EPA, 549 U.S. 497 (2007), and ruled that the agency may not decline to regulate greenhouse gases, but instead must determine whether such gases from new motor vehicles cause or contribute to air pollution and endanger public health. The Supreme Court decision received much attention at the time, in part because it uncharacteristically took sides in the 'debate' on global warming, strongly suggesting that there is no debate and that "respected scientists" agree that there is a relationship between the documented rise in global temperatures and the significant increase in the atmospheric concentration of carbon dioxide. Nearly two years later, we come full circle as the EPA today announced a proposed rule citing its obligations in light of Massachusetts v. EPA, tracing its authority under section 202 of the Clean Air Act, setting forth distinct findings regarding greenhouse gases (GHGs), and establishing the groundwork for regulating such GHGs under the Clean Air Act.

"Air pollutant" is defined in section 302(g) of the Clean Air Act as any "air pollution agent or combination of such agents, including any physical, chemical, biological, radioactive … substance or material which is emitted into or otherwise enters the ambient air." Without much analysis on this definitional issue, the EPA's Proposed Endangerment and Cause or Contribute Findings for Greenhouse Gases under section 202 of the Clean Air Act (Proposed Rule) then states that "[GHGs] fit well within this capacious definition" as physical, chemical substances that are emitted into the atmosphere.

Having stated that greenhouse gases constitute air pollutants within the meaning of the Act, the Proposed Rule focuses on the prerequisites for regulation. Section 202(a) of the Clean Air Act establishes a 2-part precursor to regulatory action: whether air pollution may reasonably be expected to endanger public health and welfare (the endangerment finding) and whether emissions of any air pollutant from new motor vehicles cause or contribute to this air pollution (the cause or contribute finding). The EPA's Proposed Rule makes the two required findings that will allow the EPA to regulate GHG emissions from new motor vehicles pursuant to the Clean Air Act - allowing for the regulation of such gases even if other climate change or emissions legislation is not passed by Congress.

The endangerment finding of the proposed rule declares that the concentrations of six critical GHGs, specifically carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), and sulfur hexafluoride (SF6) threaten public health and welfare. The EPA is proposing to define the six GHGs collectively as air pollutants in the endangerment determination because "they share the same relevant properties regarding their effect on the global climate and the associated changes throughout the climate that can result." If evaluated separately, the proposed rule notes that the EPA would consider each of the six GHGs as contributing to air pollution and to climate change based on its review of historic data and reports. As noted in the proposed rule, the "case for finding that [GHGs] in the atmosphere endanger public health and welfare is compelling and, indeed, overwhelming."

The cause or contribute finding of the proposed rule declares that combined emissions of CO2, CH4, N2O, and HFCs from new motor vehicles and motor vehicle engines contribute to the concentrations of these critical GHGs, posing a threat (through climate change) to public health and welfare. While analyzing the six GHGs collectively as well as individually, the rule again proposes to define the collective group of six GHGs delineated above as a single air pollutant to allow for an evaluation of GHGs on a CO2-equivalent basis, such as how the United States and other parties report their annual emissions of the six GHGs in CO2-equivalent units under the United Nations Framework Convention on Climate Change. This portion of the Proposed Rule, and particularly the question of whether subsequent regulations following from this rule would establish standards for the emissions of all six GHGs as a group and/or in smaller classes requires further attention from both interested parties and the EPA. As pertains to emissions from mobile sources pursuant to section 202(a)(1) of the Clean Air Act, one of the scientific findings is that emissions of GHGs from on-road vehicles regulated by section 202(a) of the Clean Air Act are responsible for 24% of total GHG emissions in the United States (a factor weighed heavily by the EPA in making its contribution finding) and for more than 4% of total GHG emissions.

The Proposed Rule derives support for the findings by citing the scientific work and assessment reports of the US Climate Change Science Program and the Intergovernmental Panel on Climate Change. Referencing such scientific work and the unprecedented levels (in modern times) of the noted GHGs in the atmosphere that have resulted in global warming, the Proposed Rule analyzes the global impacts of climate change and how it can implicate national security issues. For example, increased destabilization and risk of violence in certain countries may be attributable to environmental degradation and greater scarcity of resources such as water.

Upon official publication in the Federal Register (see docket EPA-HQ-OAR-2009-0171), which has yet to occur, there will be a public comment period of 60 days. Public hearings (to be held on May 18, 2009 in Arlington and May 21, 2009 in Seattle) also provide an opportunity for comment. No proposed regulations are included with the proposed endangerment finding, but the significance of the Proposed Endangerment and Cause or Contribute Findings for Greenhouse Gases under section 202(a) of the Clean Air Act is hard to overstate: while the Administration's preference may be for comprehensive federal legislation to address climate change and clean energy, if Congress fails to act, EPA's action today sets the stage to allow for the EPA's regulation of GHGs from motor vehicles under the Clean Air Act, even if that means taking an Act first enacted in 1963, and conforming it to address substances beyond the contemplation of its creators. For entities who may be subject to future regulation by the EPA's action, this is the time to consider the potential implications of the Proposed Rule and to prepare comments for the EPA, or even to seek Congressional action to the extent that a comprehensive climate bill would be more favorable than the EPA's proposal to regulate GHGs using its authority under the Clean Air Act.

For a pre-publication copy of the Administrator’s Proposed Endangerment and Cause or Contribute Findings for Greenhouse Gases under the Clean Air Act, go to:  http://epa.gov/climatechange/endangerment.html

I am heading next week for the Orange County Convention Center for the annual convocation of insurance professionals that is RIMS. We will be there just a few weeks before the Green Cities Convention at the same locale. In the meantime, maybe I could mix the two subject areas and see what comes out - like, what are the insurance issues associated with a green roof?

A green roof (aka vegetative roof, eco-roof, living roof) is a roof made of vegetation and a growing medium, overlain on a waterproof membrane. Some roofs are meant to be visited and act as gardens. Others, so-called "extensive" roofs, are pretty much left alone save for an annual application of fertilizer and some weeding. The benefits of green roofs are asserted to be a reduction of heating and cooling costs and stormwater runoff, dissipation of the "heat island" effect, absorption of sound and creation of wildlife habitat.

I turned to Westlaw to assess what kinds of problems building owners with green or vegetative roofs had turned over to their insurance carriers. I was pleasantly surprised when six cases showed up on Westlaw, only to be disappointed when the "hits" were about cases where roofs were literally green (plus an unfortunate case involving one Martha Green Roof).

Can we nevertheless anticipate the problems? Ignoring issues that might arise because the roof was not built according to plan, or the structure was not properly designed, what coverage concerns are there going to be if, for example, the building burns? First, and most obviously, most property policies either exclude landscaping or have a tiny sublimit. To avoid arguments about what is a roof and what is shrubbery, specific coverage ought to be purchased or an endorsement manuscripted.

Second, the cost to replace the green roof is likely to be more (perhaps substantially more) than the cost of a standard asphalt roof. What are the terms of the replacement coverage?

Third, as noted, green roofs provide heating, cooling and stormwater managment benefits. Will your extra expense coverage pay the extra heating or cooling costs while the roof is revegetated? Perhaps more significantly, if your premises are now in violation of stormwater requirements, will your policy cover those expenses?

Other issues that might surface are business interruption (if it takes longer than usual to put the green roof back in service, will that affect the restoration period?) and debris removal (if segregation and recycling are required, will that be paid for?). It seems apparent that coverage will not be simple.

Fortunately, insurance companies are stepping up to the task. By way of example, Fireman's Fund has developed its GreenGard program, which covers green construction, green renovation and green re-building. FM Global has brought its property expertise to bear and has identified appropriate designs and construction and maintenance techniques. Travelers and Liberty Mutual have endorsements to protect green roofs. Other insurance companies are also increasing their offerings.

It is a good thing that more and more green roofs are going to be covered. Particularly since more and more of us are going to be covered by green roofs.