Source: http://climatelawyers.com/category/Regulation.aspx?page=4
Timestamp: 2019-04-23 08:47:23+00:00

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Columbia Law School convened a panel on hydraulic fracturing ("fracking") yesterday. One of the subtopics was its effect on climate change mitigation. Professor Michael Gerrard laid out the pluses and minuses. On the plus side: burning natural gas yields about one-half the amount of carbon dioxide as burning coal for the same amount of energy. This has been demonstrated by the 9% drop in United States CO2 emissions in the 5 years from 2007 to 2011. Confirming Professor Gerard's statistics is a recent report by the Center for Climate Energy Solutions, Leveraging Natural Gas to Reduce Greenhouse Gas Emissions. On the minus side: natural gas is composed in substantial part of methane, a much more potent greenhouse gas than carbon dioxide, and methane leakage occurs in the production, processing and distribution of natural gas; the low price of natural gas depresses the market for nuclear, solar, wind and other greenhouse-gas-free energy sources; and natural gas greenhouse gas emissions, while better than coal, are still greenhouse gas emissions. Theoretically, one could assess scientifically this fracking algebra. But, as might be imagined, the future of fracking is not likely to be determined based on a balancing of pluses and minuses. Politics will be central and for the moment those politics are distinctly local. Fracking's future in many places hinges on the ability of local zoning authorities to zone fracking out of the local community. On Tuesday, the New York Court of Appeals was asked to join this fray, when fracking supporters filed a petition for review. In the case, In re Norse Energy, a panel of the Appellate Division considered a local zoning ordinance that banned "all activities related to the exploration for, and the production or storage of, natural gas and petroleum." Petitioner Norse Energy argued the ordinance was preempted by the express terms of ECL 23-0303 of New York's Oil, Gas and Solution Mining Law, which provides that "[t]he provisions of this article shall supersede all local laws or ordinances relating to the regulation of the oil, gas and solution mining industries; but shall not supersede local government jurisdiction over local roads or the rights of local governments under the real property tax law." The panel concluded that this language was meant to address the details of mining, but did not reach the traditional power of a community over land use. Accordingly, there was no express preemption. The court further found that there was no implied preemption either. In our view, reasonable minds could differ. But also in our view, the Appellate Division decision does not matter yet; it would have been appealed by whichever side lost. The Court of Appeals, if it takes the case, will have to engage in statutory construction. We cannot read the tea leaves there. We hope, however, that the Court keeps the future in mind. More than 170 municipalities in New York have enacted some sort of limitation on fracking within their borders. The Oil, Gas and Solution Mining Law forbids activities that lead to "waste," defined to include: "The locating, spacing, drilling, equipping, operating, or producing of any oil or gas well or wells in a manner which causes or tends to cause reduction in the quantity of oil or gas ultimately recoverable from a pool under prudent and proper operations, or which causes or tends to cause unnecessary or excessive surface loss or destruction of oil or gas." A patchwork of municipalities with zoning ordinances barring fracking, will be physically juxtaposed with a patchwork of municipalities permitting fracking. After some time, proponents undoubtedly will have the technical data to support the conclusion that "waste" is occurring and with those facts will return to seek enforcement of a statute forbidding regulation of the "locating ... of any oil or gas well" that causes "reduction in the quantity of oil or gas ultimately recoverable." The Court should consider how its decision now will affect that future situation (unless, of course, New York's legislature acts first).
Tags: hydraulic fracturing, hydrofracking, Dryden, Otsego, Norse Energy, Anschutz, ECL 23-0303, "Oil, Gas & Solution MIning Law"
If the State dropped a notice in the mail advising you that 10% of your property was going to be condemned without compensation, you would immediately hire a lawyer, seek out the press and raise holy **** about the trampling of individual rights, justice and the Constitution. That is the situation in which Delaware contemplates finding itself, but the Constitution is no salve. Rising sea levels of between 0.5 and 1.5 meters are predicted to inundate between 8% and 11% of the state's land area by 2100. Delaware, however, is not one to tear its clothes and beat its chest in lamentation; instead, it is acting. Last July, the Delaware Sea Level Rise Advisory Committee published Preparing for Tomorrow's High Tide: Sea Level Rise Vulnerability Assessment for the State of Delaware. Besides providing background about sea level rise and the methodology of vulnerability determinations, it looked at 79 resources in the state and assessed the impact of rising sea levels. Sixteen of those resources were assessed as being of high concern statewide. To quote the Executive Summary: "Within those potentially inundated areas lie transportation and port infrastructure, historic fishing villages, resort towns, agricultural fields, wastewater treatment facilities and vast stretches of wetlands and wildlife habitat of hemispheric importance." "[E]very Delawarean is likely to be affected by sea level rise through increased costs of maintaining public infrastructure, decreased tax base, loss of recreational opportunities and wildlife habitat, or loss of community character." From roads to wetlands to tourism, Delaware now has a basis to marshal its resources, and its polity, and move forward into the next phase: adaptation planning. The United Nations Framework Convention on Climate Change defines "adaptation" thus: "Adaptation refers to adjustments in ecological, social, or economic systems in response to actual or expected climatic stimuli and their effects or impacts. It refers to changes in processes, practices, and structures to moderate potential damages or to benefit from opportunities associated with climate change." Delaware's focus is to "identify ways that government, businesses and citizens can adapt their policies and business practices to reduce the impact of seal level rise on our state's citizens, economy, and natural resources." The committee has wasted little time in taking action on the vulnerabilities identified in July. As reported in Delaware Online, last Thursday the committee offered up for public comment this question: "whether property owners selling inside boundaries where seas are predicted to rise will have to disclose that vulnerability to potential buyers." Hearings will begin in February. Currently, disclosure of a property's location in a flood zone is required, but flood zones are based on the historical record. Requiring a disclosure about a prediction for the future is new. One can quickly see a few of the implications. First, all things being equal, some will be dissuaded from purchasing, demand will drop and prices will fall. How much and when is anybody's guess. Second, the drawing of the sea-level-rise boundary may be intensely litigated. Indeed, we have already seen one ocean front property rights case, Stop the Beach Renourishment v. Fla. Dep't of Envtl. Protection, 130 S. Ct. 2592 (2010), make its way all the way to the Supreme Court. Third, realtors, real estate lawyers and other professionals involved in shore transactions will be pleased by this development as the liability for non-disclosure will be much harder to pin on them. An injured property owner likely will find it difficult to assert an adviser's failure to disclose the risk was the proximate cause of his or her injury. See J. Wylie Donald, Getting Ahead of Storm Surge, Especially in the Era of Climate Change. Fourth, and perhaps most significantly, this small step will set the stage down the road when questions of compensation arise for individuals and entities harmed by rising sea levels. Buyers with such a disclosure in their contracts will be hard-pressed to claim ignorance. That in turn is likely to figure into the public discussion of fairness and the right to compensation. Of course, the committee's raising the point for discussion does not mean anything is going to change. But, with the dialogue initiated, we expect that this issue will no longer be quietly ignored. In any event, we look forward to further discussion in February.
Will Climate Change Considerations Affect Rebuilding After Sandy? The Short Answer is Yes.
West Virginia today and Virginia yesterday became the seventh and eighth states to obtain the benefits of a federal Major Disaster Declaration in connection with Superstorm Sandy. They follow New Jersey, New York, Connecticut, Rhode Island, Maryland and Delaware. What does that mean? Money. Lots of money. A key question will be whether that money goes to improving the resilience of the community for the next severe storm. As the FEMA announcements point out, eligible state and local governments may obtain: • Payment of not less than 75 percent of the eligible costs for removing debris from public areas and for emergency measures, including direct federal assistance, taken to save lives and protect property and public health • Payment of not less than 75 percent of the eligible costs for repairing or replacing damaged public facilities, such as roads, bridges, utilities, buildings, schools, recreational areas and similar publicly owned property, as well as certain private non-profit organizations engaged in community service activities.• Payment of not more than 75 percent of the approved costs for hazard mitigation projects undertaken by state and local governments to prevent or reduce long-term risk to life and property from natural or technological disasters. However, if improvements are desired, “[f]ederal funding for such improved projects shall be limited to the Federal share of the approved estimate of eligible costs." 44 CFR 206.203(d). Discerning readers will have latched on to “eligible costs” as the essential criteria of the payments. What are they? The Robert T. Stafford Disaster Relief and Emergency Assistance Act, 42 U.S.C. 5121-5207, makes that clear and it is not a good result. Under the Stafford Act, eligible costs are “[based on] the design of the facility as the facility existed immediately before the major disaster; and (ii) in conformity with codes, specifications, and standards … applicable at the time at which the disaster occurred.” 42 USC 5172(e)(1)(A). In other words, to put it in the words of Sean Reilly, a Board member of the post-Katrina Louisiana Recovery Authority, “Under the Stafford Act, you pretty much are relegated to building it back the way it was. You get the depreciated dollar, and you get a vision that says, 'OK, that was a 40-year-old building; let's rebuild a 40-year-old building.'” But surely improved building codes or zoning requirements are covered? They are, but only if they were in place before the calamity. The regulations provide: “For the costs of Federal, State, and local repair or replacement standards which change the predisaster construction of facility to be eligible, the standards must: [among other things, be] formally adopted and implemented by the State or local government on or before the disaster declaration date.” 44 C.F.R. 206.226(b)(3)(i). One might justifiably be concerned that states and communities are being condemned to repeat the mistakes of the past. But there is a path to succor: hazard mitigation by the FEMA Regional Director. “Hazard mitigation” is “any cost effective measure which will reduce the potential for damage to a facility from a disaster event.” 44 CFR 206.201(f). Under the regulations, the Regional Director is authorized to “require cost effective hazard mitigation measures not required by applicable standards. The cost of any requirements for hazard mitigation placed on restoration projects by FEMA will be an eligible cost for FEMA assistance.” 44 CFR 206.226(c). That is, pre-disaster rules and codes are not the only game in town. If a state or municipality rebuilding from Superstorm Sandy wants federal dollars to help it anticipate the exigencies of the future, the FEMA Regional Director must be part of the dialogue. The future is a changing climate. Thus, the dialogue will almost certainly include climate change adaptation. Indeed, the Natural Resources Defense Council and the National Wildlife Federation filed a petition in October seeking to have FEMA explicitly require that climate change be considered in the preparation of state hazard mitigation plans. Connecticut and California already do so and FEMA Administrator Fugate appears to be on board. As he stated in February of this year: "When I talk about climate resilience, I’m talking about how we need to forcefully communicate the risk we face in not building resilience to climate change at the local level, which might not have been in anyone’s experience previously …. We cannot afford to continue to respond to disasters and deal with the consequences under the current model. Risk that is not mitigated, that is not considered in return on investment calculations, oftentime steps up false economies. We will reach a point where we can no longer subsidize this.” A premise of the NRDC and NWF petition is that "If states receive federal funds for their disaster mitigation efforts, national taxpayers have a right to demand that the states engage in thoughtful planning to reduce the ultimate federal cost." We think few would disagree with that. We likewise think, as the petitioners do, that climate change needs to be part of the plan.
You've just weathered a post-tropical cyclone. Your garage is flattened. Do you have a hurricane deductible? Or will your regular deductible apply? The answer can be worth thousands of dollars as a hurricane deductible is not a fixed amount but is calculated based on a percentage of your home’s insured value. These questions loom large as the process of recovery from what-was-at-one-time-known-as Hurricane-Sandy gathers steam and homeowners get the lights back on. The news services and trade press have been all over this topic in the last few days with the governors of New York, New Jersey, Pennsylvania and Connecticut (as well as their Departments of Insurance) weighing in and advising that hurricane deductibles cannot be applied because the storm that started in the south as a hurricane, was no longer a hurricane when it arrived in their respective states. Would that it were so easy. All you need to determine the meaning of your policy is the ipse dixit of the governor. Not quite. What actually was going on was this: the governor was getting advice from his department of insurance, which in turn had reviewed the weather reports and the hurricane deductible form or regulation that had been approved months or years ago. New Jersey for example issued an executive order, which referenced the applicable regulation. N.J.A.C. 11:2-42.7 provides: "This deductible applies, as described below, in the event of direct physical loss to property covered under this policy, caused directly or indirectly in the event of a hurricane named by the National Weather Service or its successor from which sustained hurricane force winds of 74 miles per hour or greater have been measured in New Jersey by the National Weather Service (regardless of whether the sustained hurricane-force winds reach the risk insured under the policy) and shall replace any other applicable deductible in that event.” New York hasn’t codified its hurricane deductible rule and the policy language very much matters. In the case of one insurer in New York, for example, for a hurricane deductible to apply, a number of things are necessary. One needs A windstorm of tropical origin; Winds of 74 miles per hour or greater;Those winds must by confirmed by the National Weather Service at a landfall in specified counties. Because Sandy could not muster 74 mile per hour winds as it entered New York, the hurricane deductible could not be applied. But suppose the winds had reached 74 mph, what then? It gets complex fast. First, according to NASA Sandy packed tropical storm force winds across almost 1000 miles. The hurricane deductible under this insurer’s policy applies to any insured property “regardless of [its] specific location.” So, all that is needed is a trace of a hurricane in Montauk at the tip of Long Island and the good citizens of Albany could be facing hurricane deductibles for whatever windstorm loss occurs as the tropical storm ultimately demises, regardless of how violent the winds were (or weren’t). Second, the deductible applies 12 hours before the hurricane gets there and “ends 12 hours after a hurricane …” – whatever that means. Third, maybe you don’t care about the hurricane deductible because your policy is only triggered by a Category 2 storm or requires that the hurricane force winds be within your county. Fourth, or maybe you are at the opposite end of the spectrum and your policy applies the deductible if hurricane force winds are in any county in New York, not just coastal counties, or worse, if hurricane force winds are in a contiguous state. The point is that the terms of your policy matter and they may vary widely. The Department of Financial Services in New York put together a table outlining all the permutations of coverage. We assume that one is likely to have to pay for the differences where more risk is shifted to the insurer. And these wide differences can get even wider as one changes states. Maryland, for example, requires by statute that the hurricane deductible may only apply “beginning at the time the National Hurricane Center of the National Weather Service issues a hurricane warning for any part of the State where the insured's home is located and ending 24 hours following the termination of the last hurricane warning issued for any part of the State in which the insured's home is located.” Md. Insurance Code § 19-209(b). In plainer English, the hurricane warning has to be for the county where your home is, not just any place in Maryland. (With regard to Sandy, the Maryland Insurance Administration echoed what the governors were doing. Bulletin 12-24 advised that hurricane deductibles would not apply because "The National Hurricane Center of the National Weather Service did not issue a hurricane warning for the State of Maryland.") Florida, as might be expected, has its own rules. A hurricane deductible can only apply per calendar year, and can be a fixed amount, or 2%, 5% or 10% of the home’s value. The hurricane period is extended out to 72 hours after the last hurricane warning. Hurricane deductibles are ubiquitous but they are not all the same. Even where the language is mandated by state law, insurers can always provide more coverage than is required. You should check that, but also check the premium. Florida’s hurricane deductible popped up after Hurricane Andrew in 1992. Its calendar year requirement was enacted after Charley, Frances, Ivan and Jeanne wreaked their havoc in 2005. Connecticut revised its hurricane deductible law following Hurricane Irene. The meteorologists tells us Sandy was a unique megastorm: a tropical storm, combined with a winter storm, combined with frigid Canadian air, combined with a high tide. Unique or no, we expect revisions to state hurricane deductible laws as a result.
Tough Love: Florida Continues to Improve Its Hurricane Coverage But Will It Be Enough?
We have been rather tough on Florida and its insurer of last resort, Citizens Property Insurance Corporation, over the years (not that they pay any attention to climatelawyers.com). But Citizens has deserved it. Here is what its president, Barry Gilway, has had to say about the current state of affairs: Citizens is close to being able to cover a major hurricane, the kind that strikes once every 100 years. ... Citizens has the ability to pay $19.5 billion in claims – close to the roughly $22 billion maximum expected damage from a 100-year storm. But more than $5 billion, or about a fourth of the claims-paying funds, are from loans that would have to be paid back. Close to being able to cover? Close to the maximum expected damage? Loss payments to be covered by loans? Not the most fiscally conservative program on the planet and certainly not one that would be approved by any insurance regulator that wanted to keep her job. Tough love coming from somewhere though is having an effect. This year continues big fiscal change at Citizens, demonstrated again just this past Thursday, when the Florida Office of Insurance Regulation (OIR) 1) announced a significant depopulation (i.e., transfer of policies) at Citizens, and 2) tentatively approved a proposal for low-interest loans to private insurers. This follows steps by Citizens to pursue a vigorous reinsurance program, cede the largest catastrophe bond ever placed, and restrict its obligations by dropping coverage for carports and screened enclosures, limiting personal liability coverage and raising deductibles. Citizens has also taken a lot of heat for conducting reinspections of homes claiming wind-storm mitigation features qualifying for premium discounts. When the features don’t satisfy the inspectors’ standards, the discounts are removed, an approximately one billion dollar boost to the bottom line. Depopulation is the Florida Legislature’s term. Under that authority, 150,000 policies were just approved for removal from Citizens, roughly ten percent of the 1.4 million policies provided by Citizens. But depopulation is not mandatory. Instead, the Florida Legislature settled on incentives to convince private insurers to step in. A private insurer can get up to $100 from Citizens’ for each risk the insurer takes on. F.S.A. 627.3511(2). Perhaps more importantly, the insurer can be excluded from assessments for the next three years. F.S.A. 627.3511(3). Mandatory ssessments, for those who don’t recall, are the secret sauces relied upon in Florida to balance the books in the event Citizens’ resources are not sufficient to pay claims. One has to imagine that the reduced coverages and rising rates for Citizens’ policies may be of moment in a policyholder’s decision to shift insurers. And it is the policyholder’s decision; he or she does not have to agree to leave Citizens. As for the low-interest loans, this alternative route to depopulation is being pushed by insurers and their investors. They seek “surplus notes” (last-to-get-paid instruments) from Citizens and guarantees of premium. In exchange, the companies would commit to: • Renew the assumed policies for at least 10 years after the expiration of the current policy term.• Limit rate increases, for renewal offers from January 1, 2013, through January 1, 2016, to no more than 10 % per policy per year (consistent with Citizens' current 10% glidepath).• Provide substantially the same coverage for the first three years as that provided by Citizens. All of these may be steps in the right direction but caution is still the word. First, Citizens is subject to a rate increase cap of 10%. Media advisories issued by the OIR indicate that Florida insurers seeking rate increases in 2012 were looking for increases in excess of 17% (Universal – 22%, Cypress – 17.7%, Sunshine State – 17.8%). Even if someone agrees to depopulate himself because rates are better at the new insurer, there is no guarantee they will remain better. One researcher has written: "Over the past five years, indeed, nearly all “depopulated” policies have ended up back in Citizens and as liabilities for Florida’s taxpayers." Second, Florida’s insurance market is substantially a world unto itself. A presentation to the Cabinet by the OIR shows this clearly (at 3). Citizens has 24% of the coverage, other Florida domestic carriers 60% and non-domestic carriers have 16%. That lack of diversity should give one pause. Over 80% of the coverage is written by Florida companies. Tough love is effecting change in Florida. It remains to be seen whether it will be enough.
When the Republican National Committee made the decision to call off Day 1 of the Republican Convention as Hurricane Isaac threatened the Gulf littoral, some thought it was an appropriate comeuppance for Republican obstruction of climate change legislation. We won't pass such judgments. Our focus here is all about addressing climate change; we leave it to others to assess the blame. What we have noticed, however, is a rising swell of concern in the electorate about climate change, which might start to cause the Republicans some concern. To be sure, this is only anecdotal, and filtered through climatelawyers.com's prism. Still, sometimes it is meet to consider other viewpoints. We start with a Superfund site community meeting we attended a few months ago. The site is near the ocean and one citizen asked whether the proposed remedy considered rising sea levels. EPA's answer was non-commital. We next stopped in at a public meeting hosted by the Maryland Public Service Commission to consider electric service reliability. The citizenry turned out en masse to excoriate Baltimore Gas and Electric. Overflowing the hearing room, they questioned BGE's ability to handle the increasingly more severe weather (record blizzards in 2010, Hurricanes Irene and Lee in 2011 and the June 29, 2012 derecho - a new storm word in most vocabularies). We took away a new thought: extreme weather can trash not only your facilities; it can also trash your reputation if you are not prepared to deal with it. And this is so whether one believes climate change is the cause of the problem or not. And what do we know about extreme weather? National Geographic delivered a frightening cover story on the subject in the September 2012 issue. We can't do justice to the article here but note a few unequivocally disturbing facts: "As the oceans warm, they're giving off more vapor. ... During the past 25 years satellites have measured a 4 percent average rise in water vapor in the air column. The more water vapor, the greater the potential for intense rainfalls." This followed a description of the "once-in-a-millenium" flood in Nashville in 2010, which received over 13 inches of rain, more than twice the previous record. And Nashville wasn't alone; the article mentions record floods in Rio de Janiero. Pakistan and Thailand. "Extreme events ... are happening more frequently than they used to." From floods to droughts to heat waves, "Losses from such events helped push the cost of weather disasters in 2011 to an estimated $150 billion worldwide, a roughly 25 percent jump from the previous year." These losses are characterized in the article by the Reinsurance Association of America as "extraordinary." More ominously: "The past is not prologue to the type of weather we're about to see." The article concludes that climate change is part of the cause of this demonstrably increasing extreme weather. National Geographic's circulation is about 5 million monthly in the United States. Query weather that means 5 million voters that believe something ought to be done about it? Extreme weather is not the only climate change effect that is impacting individuals. The News Journal, "serving Delaware daily since 1871," ran a 3-part front-page series last Sunday, Monday and Tuesday on the effects of climate change on Delaware and Maryland. One can look at the predictions of Delaware's losses in the next century: • All of Delaware’s 73,400 acres of tidal wetlands, and 98 percent of its tidal marsh • Up to 15,000 Sussex County homes or businesses; 18,000 statewide, including 5 percent of identifiable commercial properties. • 44 percent of the state’s parks, refuges, conservation areas and otherwise protected land. • 5 percent of roads and bridges, including 6 percent of evacuation routes. • 6 percent of railroad lines, including areas around Wilmington’s Amtrak station. Or one can look at the effects that are being felt now: A farmer near Milford is watching salt-water brine kill his crops a mile inland from Delaware Bay. Homeowners in Kitts Hummock have been told by the State that the beachfront community should "go back to nature" "it's not cost-effective to save." The Blackwater National Wildlife Refuge in Maryland is losing an acre a day to erosion and inundation. The salt marsh habitat is, or is becoming, open water. James Island has lost 160 acres to Chesapeake Bay. Smith Island, one of two inhabited islands in the bay, is likely to be entirely submerged should sea level rise another foot. The series notes: "those who don't see or feel the weight of the evidence are finding the facts harder to ignore." The News Journal, the paper of record in Delaware, thinks climate change is worthy of the front page three days running. The smart money is on those - Republican or Democrat - who have a plan to address it; those whose plan is to deny it are going to get wet, or worse.
Arbitrary and capricious. Familiar words to anyone involved in regulatory activity. But also applicable to calendars, which willy-nilly cut off a series of events and ascribe them to one solar cycle, as if the sun gave two hoots. As we perused the various "Climate Change: Year in Review" reviews that crossed our desk last January, we concluded 365 days are arbitrary and one year capricious in assessing what is important to resurrect and re-discuss. We further concluded that a 12-month look-back is too long. So, for what it is worth, here is one of six months. 1. Cap-and-Trade in the U.S. - On January 1 the Western Climate Initiative (WCI) (or what remains of it) initiated its long-anticipated cap-and-trade program for greenhouse gas emissions. Notwithstanding the lack of support from other WCI members, California and Quebec are moving forward with a cap-and-trade program. California's and Quebec's mandated reporting rules applied to stationary sources emitting at or above 25,000 metric tons of CO2e per year. On May 9 coordination between the two programs was announced initiating the 45-day public comment period. The first auction will be held in November and then, on January 1, 2013, enforcement begins when covered entities must participate. It is obviously too soon to tell how successful the California program will be, but when the world's eighth largest economy takes an initiative, it is likely to have impact elsewhere, particularly when it is the only program in the nation. 2. Greenhouse Gas Liabilities and Insurance Coverage - We didn't think there would be anything to say this year about coverage for GHG liabilities. After all, in the only case in litigation the Virginia Supreme Court issued its opinion in AES Corp. v. Steadfast Insurance Co. in September 2011 and concluded that there was no "occurrence" triggering coverage made in the allegations pleaded by the Native Village of Kivalina against AES Corporation. But then the Court granted a motion for reconsideration in January and many puzzled as to what was going on. Apparently nothing as the Court reiterated its previous conclusions in an April 20, 2012 opinion. The decision will be significant in Virginia because it may have upset coverage in more conventional cases, as the concurring opinion of Justice Mims suggests. As for the rest of the nation, it is one decision, on one issue, on one set of facts. The case is important because it is the first, but we will be surprised if it provides guidance anywhere else. As for greenhouse gas liability that is a story unto itself. Like something out of a Steven King novel, the Comer v. Murphy Oil case refuses to pass quietly into the night. This is the case that was dismissed by the Southern District of Mississippi, reversed by the 5th Circuit, vacated by the 5th Circuit en banc when it accepted rehearing and then reinstated as dismissed when the 5th Circuit's quorum dissolved. Following a denial of a request for a writ of mandamus from the U.S. Supreme Court, the Comer plaintiffs re-filed their complaint against over 100 electric utilities, oil companies, chemical companies and coal companies alleging their GHG emissions were responsible for the ferocity of Hurricane Katrina. And the Southern District of Mississippi dismissed the plaintiffs again on March 20. And plaintiffs appealed again. We don't expect the case to be finally at rest until the Supreme Court denies certiorari, or accepts it (perhaps in order to address the Ninth Circuit's much-anticipated decision in Native Village of Kivalina v. ExxonMobil, which has been pending for over six months since oral argument). 3. Natural Gas: The Bridge Fuel - With the combining of two technologies, hydraulic fracturing and horizontal drilling, a resource of unprecedented volume is "changing the game" of energy. "Annual shale gas production in the US increased almost fivefold, from 1.0 to 4.8 trillion cubic feet between 2006 and 2010. The percentage of contribution to the total natural gas supply grew to 23% in 2010; it is expected to increase to 46% by 2035." Thus reported the Energy Institute at the University of Texas in February in a 400+ page tome entitled Fact-Based Regulation for Environmental Protection in Shale Gas Development. Momentously, the UT researchers report "there is at present little or no evidence of groundwater contamination from hydraulic fracturing of shales at normal depths." The reference to "normal depths" acknowledged that in December 2011 the EPA linked contamination in Pavilion, Wyoming to shallow fracking operations. In March 2012, however, EPA agreed to conduct further testing. And then in May, a personal injury tort case, Strudley v. Antero Resources Corp. et al., No. 2011-CV-2218 (2d Jud. Dist. Ct. Col. May 9, 2012), brought against fracking operators in Colorado was thrown out because plaintiffs could not muster adequate proofs of specific causation. Despite some intense opposition, fracking is moving forward. What does all of this have to do with climate change? Natural gas when burned emits half the carbon dioxide of coal. Accordingly, some argue that natural gas is the bridge to a low-carbon future. If so, then fracking builds that bridge. 4. Innovative Climate Change Legal Theories - Last spring the sound and the fury were intense as the environmental organization Our Children's Trust unleashed several dozen regulatory petitions and a dozen lawsuits across the nation. The goal: establish the public trust doctrine as applicable to the atmosphere and use it to implement greenhouse gas regulation. It appears that all of that is signifying nothing. Over two dozen petitions were denied in 2011 and two lawsuits were dismissed (Montana and Colorado). It did not get any better in 2012. The first six months of this year delivered only bad news to OCT. State courts dismissed lawsuits in Alaska, Arizona, Minnesota, Oregon, and Washington. The federal court in the District of Columbia did the same. Plaintiffs took a voluntary dismissal in California. To be sure, OCT has filed appeals (the one in Minnesota is scheduled to be argued on July 18). Having failed to convince a single court so far, we think we are safe in predicting an uphill battle. 5. Power Plant Performance Standards - On April 13, 2012, a scant seven months before the presidential election, the EPA published in the Federal Register standards of performance for all new fossil fuel-fired electricity-generating units requiring them to meet an electricity-output-based emission rate of 1,000 lb of carbon dioxide for every megawatt-hour of electricity generated. The only plants that can meet this standard without implementing costly carbon capture and storage technology are natural gas plants. Thus, the administration took a strong stand against coal-based generation. Or it is all smoke and mirrors. As EPA notes in the proposed rule, because of the glut of natural gas made available by fracking, there is little likelihood of a new coal-powered plant before 2030. Notwithstanding, industry groups have filed a half-dozen lawsuits seeking to derail the rule. 6. EPA's Greenhouse Gas Regulatory Program - Less than a week ago USEPA and its GHG program got a firm "thumbs up" from the D.C. Circuit. Inundated with over two dozen appeals of various USEPA GHG regulations, the Endangerment Finding, the Tailpipe Rule, the Tailoring Rule and the Timing Rule (for citations see The DC Circuit Locks in USEPAs GHG Regulations Sort Of). The court turned away every challenge, sometimes on the merits and sometimes on procedural grounds such as standing. There is much that deserves comment not the least of which are the differences between the states with California, Connecticut, Delaware, Illinois, Iowa, Maine, Maryland, Massachusetts, New Hampshire, New Mexico, New York, North Carolina, Oregon, Rhode Island, Vermont, and Washington, lining up on one side, and Alabama, Florida, Indiana, Kansas, Kentucky, Louisiana, Nebraska, North Dakota, Oklahoma, South Carolina, South Dakota, Texas, Utah, and Virginia lining up on the other. To focus more on legal matters, several challenges were turned away on standing. For example, neither states nor industry groups could challenge the Tailoring Rule as they did not allege the requisite injury. Because the Tailoring Rule benefits small businesses (who are not required to comply with certain GHG emission requirements), it would appear that the door may remain open for parties who allege competitive injury (i.e., non-regulated entities gain a competitive advantage). In the meantime, do not expect Congress this election year to touch the issue.

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