McCarter & English, LLP : Climate Change Blog

Friday, June 26, 2009

U.S. House Narrowly Passes Climate Legislation

Climate legislation has a long way to go before becoming federal law, but Congress took a major step in enacting the nation’s first global warming bill now that the House of Representatives narrowly passed the measure on a 219-212 vote on Friday.

The American Clean Energy and Security Act cleared the House and the initiative is now in the hands of the Senate.

Nicknamed the “Waxman-Markey” bill named after its sponsors, Rep. Henry A. Waxman, Chairman of the House Energy and Commerce Committee, and Rep. Edward J. Markey, Chairman of the House Select Committee on Energy Independence and Global Warming, House Democratic supporters argue that the bill will revitalize the economy by creating millions of new jobs, improve national security by reducing dependence on foreign oil, and reduce greenhouse gas emissions claimed to cause global warming.

“Today we have taken decisive and historic action to promote America’s energy security and to create millions of clean energy jobs that will drive our economic recovery and long-term growth,” said Waxman. “After more than three decades of being held hostage to the influence of foreign energy suppliers, this legislation at long last begins to break our addiction to imported foreign oil and put us on a path to true energy security.”

“Today the House has passed the most important energy and environment bill in our nation’s history,” said Markey. “Scientists say that global warming is a dangerous man-made problem. Today we are saying clean energy will be the American-made solution. This legislation will create jobs by the millions, save money by the billions and unleash investment in clean energy by the trillions.”

Passage of the legislation by the House became possible this week after Congressional negotiators agreed to change certain provisions to meet the demands of Agriculture Committee Chairman Collin C. Peterson, who pressed for the Agriculture Department, rather than the Environmental Protection Agency, to regulate farm and forestry projects intended to offset carbon dioxide emissions from industrial sources.

Here’s a summary of the key provisions of the legislation:

Establishes a national renewable portfolio standard, requiring electric utilities to meet 20% of their electricity demand through renewable energy sources and energy efficiency by 2020.
Invests $190 billion in new clean energy technologies, energy efficiency and renewable energy ($90 billion in new investments by 2025), carbon capture and sequestration ($60 billion), electric and other advanced technology vehicles ($20 billion), and basic scientific research and development ($20 billion).
Mandates new energy-saving standards for buildings, appliances, and industry.
Reduces carbon emissions from major U.S. sources by 17% by 2020 and over 80% by 2050 compared to 2005 levels. Also makes investments in preventing tropical deforestation and other measures to achieve significant additional reductions in carbon emissions.
Protects consumers from energy price increases.

For business and industry, enactment of the legislation in the House is a positive step toward helping to remove regulatory uncertainty and establishing a unified national framework that would likely supersede a patchwork of state and regional initiatives to regulate greenhouse gas emissions. In addition, the national renewable portfolio standard offers the renewable energy industry and consumers a consistent national approach to promote clean energy investments.

For now, industrial sources of greenhouse gas emissions will have to wait and see what the Senate does with the legislation and how the conference committee eventually reconciles the two approaches.

Posted By Stephen J. Humes At 9:00 PM •

Dueling Perspectives on Anthropogenic Climate Change -- They Do Not Matter to Business

Today Kimberley Strassel of The Wall Street Journal editorial board published an opinion piece declaring that the scientific debate regarding climate change has come "roaring back to life." See Kimberley A. Strassel, The Climate Change Climate Change, The Wall Street Journal at A13 (June 26, 2009). The piece catalogs new research, politicians, opinion polls, and academics challenging the science of global warming. To give you the flavor of the essay: "Al Gore and the United Nations (with an assist from the media) did a little too vociferous a job smearing anyone who disagreed with them as 'deniers'" and "Peer-reviewed research has debunked doomsday scenarios about the polar ice caps, hurricanes, malaria, extinctions, rising oceans."

For balance, and also this week, The New Yorker profiles NASA scientist, James Hansen, the "father of global warming," who was muzzled by the Bush White House ("Hansenized" to the cognoscenti), and who takes a diametrically opposed view to the Journal piece: "A stark scientific conclusion, that we must reduce greenhouse gases below present amounts to preserve nature and humanity, has become clear." Elizabeth Kolbert, The Catastrophist, The New Yorker 39, 41 (June 29, 2009) (yes, we are writing about it before its publication date).

We are not scientists here at the blog. But we try to understand what our learned brethren are saying and this is our take. There are two issues. First, is climate change occurring? There is no dispute about that. The ice caps are melting, the subtropical arid zones are expanding, average global temperatures are rising. The Intergovernmental Panel on Climate Change has thoroughly cataloged all this. Second, is climate change anthropogenic? If there is a dispute, it is only about the role of humanity in the climate change process.

And from our perspective as lawyers trying to assess the risks and opportunities of climate change, the first issue is reason enough to pay attention. Lawsuits alleging climate change liability have been filed. "Green" building is the rage. Shareholders demand climate change disclosures. If you are a shipping company moving goods from Europe to Japan, a polar shipping route is an opportunity that has to be addressed. Travelers have increased risk from mosquito-borne diseases, including malaria, dengue fever, Japanese encephalitis, chikungunya fever and yellow fever. (Ms. Strassel, please see Taking the Bite Out of Travel, Wall Street Journal (June 10, 2009)). The list can go on and on.

Even on the issue of anthropogenic causation, businesses must address the the current popular and political discourse. Some will be proactive a la Duke Energy CEO Jim Rogers’ “If you don't have a seat at the table, you'll wind up on the menu,” or Novacem Ltd. with its investment in new CO2-absorbing cement. Others will simply seek to take advantage of new energy efficiency grants or become entrepreneurs in new areas such as selling renewable energy to Mr. Rogers' utility. These and other steps to address an environment anticipating restrictions on carbon dioxide emissions, all encompass risks and opportunities that exist now regardless of whether a particular "doomsday scenario" is scientifically accurate.

Whether climate change is anthropogenic is an important question, but the fact of climate change and its impact on business can be addressed in many respects without regard to the answer to that question. Thoughtful business-people will do so.

Posted By J. Wylie Donald At 7:05 AM • Comments (0)

Thursday, June 04, 2009

When is an Atmospheric Gas a Pollutant? A District Court Answers: When it is Like Carbon Monoxide

We have written here before how carbon dioxide, ubiquitous and naturally occurring, should not be considered a pollutant. (See June 27, 2008 Blog.) A federal court in Texas recently considered in the context of a hazardous material exclusion another gas found naturally in the atmosphere: argon. In Colony National Insurance Company v. Specialty Trailer Leasing, Inc., Case 2:09-cv-00005-J, the Northern District of Texas concluded that argon involved in an industrial asphyxiation constituted a pollutant within the meaning of a hazardous material exclusion in a general liability policy. Accordingly, coverage for the insured was denied on a motion for summary judgment.

In the case, three workers were asphyxiated in a cargo hold when argon from the insured's "tanktainer" allegedly leaked out and displaced the air the individuals needed to breathe. The insured argued that "argon gas, being a naturally-occurring element present in the air we breath, is not a pollutant." Order at 2 (June 2, 2009). The insurer felt otherwise and asserted that argon was a "pollutant" because it was a "solid, liquid, gaseous or thermal irritant or contaminant, including vapor, soot, fumes, acids, alkalis, chemicals and waste." Id.

The court agreed with the insurer, relying primarily on a Fifth Circuit decision addressing a release of carbon monoxide. Order at 5 (citing Nautilus Ins. Co. v. Country Oaks Apts., Ltd., 2009 WL 1067587 (5th Cir. 2009)). In finding support, the district court stated: "The question before the Fifth Circuit, much like the question before this Court, is whether a naturally appearing inert gas is a pollutant for the purposes of an insurance policy exclusion."

We question this analysis. High school chemistry teaches us that argon is an inert gas. Carbon monoxide never is classified as such. Further, as is apparent from a review of Nautilus, the appropriate analysis is whether argon constitutes an irritant or contaminant. The Fifth Circuit concluded that carbon monoxide was an irritant because an irritant is a "substance that produces a particular effect, not one that generally or probably causes such effects." Nautilus at *4 (citation omitted). Accordingly, the appropriate analysis is whether argon produces a particular effect (and, we would add, the effect must be biological to constitute irritation). That is a nice question and one the Colony National court did not acknowledge. As an inert gas, argon is unlikely to produce any effect. What produces the effect is the absence of oxygen, not the presence of argon. Whether such a circumstance is the legal equivalent of "irritant," we leave for further analysis, which the district court did not do.

We will expect to see Colony National cited by insurance companies for the proposition that a naturally-occurring gas (such as carbon dioxide) can be a pollutant within the meaning of an insurance policy's pollution exclusion. Even if one ignores the glaring differences between Colony National's asphyxiation in an enclosed space by an industrial gas and the alleged and attenuated indirect effects to the environment (such as are alleged in Kivalina v. ExxonMobil) of a naturally-occurring atmospheric constituent at levels well within the geohistorical record (such as carbon dioxide), Colony National is a weak reed on which to rest the insurer's argument. The irritant/contaminant showing must be made and Colony National does not provide that analysis.

Posted By J. Wylie Donald At 9:50 PM • Comments (0)