Presentation - Climate Change Update, and the Resurgence of Common Law Nuisance in Climate Change Cases

Posted on November 3, 2010 by David Farer

Climate Change Update, and the Resurgence of Common Law Nuisance in Climate Change Cases

Panelists:

Michael B. Gerrard, Center for Climate Change Law, Columbia University Law School

Pamela M. Giblin, Baker Botts

R. Kinnan Goleman, KG Strategies
 

Moderator: Karen Crawford, Nelson Mullins Riley & Scarborough 

New Jersey Follows Massachusetts into the World of Licensed Environmental Consultants and Privatized Cleanup Oversight

Posted on July 9, 2009 by David Farer

On May 7, 2009, New Jersey enacted the Site Remediation Reform Act (S.1897/A.2962). SRRA, with its new Licensed Site Remediation Professional (“LSRP”) Program, is having a far-reaching impact on the way transactions and redevelopment projects are being planned and handled in New Jersey.

 

Following the Massachusetts Licensed Site Professional program, SRRA establishes a licensing procedure for consultants and contractors to be certified as LSRPs and overseen by a licensing board. 

 

In most cases New Jersey DEP will no longer be required or authorized to review and approve investigation and cleanup plans in advance, or to issue No Further Action letters and Covenants Not To Sue when cleanups have been wrapped up. Instead, LSRPs will determine the propriety and conclusion of investigations and cleanups, and will issue the final sign-off document, which is now to be known as a "Response Action Outcome" ("RAO"). LSRPs – rather than DEP – will determine the required amount of any financial assurance, and will determine when and to what extent the financial assurance can be reduced as a cleanup progresses. 

 

Once the LSRP issues the RAO, the party conducting the cleanup will be deemed to have received a Covenant Not to Sue by operation of law. Following an LSRP’s issuance of an RAO, DEP will have three years to audit the LSRP’s work, though the bases for DEP to invalidate an RAO are limited.

 

By August 7, 2009, a temporary licensing program must be operational, and by November 7, DEP must issue interim rules for implementing the new law. Once the interim rules and temporary licensing program are in place, all new projects subject to the state's cleanup laws – including transaction-triggered investigations and cleanups under the state's Industrial Site Recovery Act – will be overseen by LSRPs rather than DEP, unless they fall into specific exceptions such as sites ranked most highly on a new ranking system to be established by DEP under the reform law.

Parties currently under DEP oversight for existing cases will have up to three years to switch over to the LSRP program.

 

Pursuant to the reform law, DEP is directed to establish a permitting program for institutional and engineering controls, with specific financial assurance requirements. (New Jersey has not adopted the Uniform Environmental Covenants Act.)

 

The state's innocent purchaser protections are modified so that LSRP-certified work is deemed equivalent to that overseen and approved by DEP.

 

DEP is directed to establish, within a year, "presumptive remedies" for cleanups of residential properties, schools and day care facilities. Such projects are to be cleaned up to unrestricted use standards, or pursuant to a presumptive remedy, with certain exceptions available on a case-by-case basis.

 

The reform law also alters reporting obligations in situations where spills and discharges are discovered. Until now, it has been the responsibility of a property owner or operator – not a third party such as a consultant or potential purchaser – to report discovery of contamination to DEP, except as to spills or discharges from regulated underground storage tank systems. Under SRRA, however, LSRPs will now have specific affirmative obligations to report knowledge of contamination directly to DEP in a variety of settings. 

DEP has been gearing up for the new program. Aside from its current efforts in development of the interim rules and temporary licensing procedures, DEP is also in the process of developing standard operating procedures, applications, fees and forms, and guidance documents covering subjects such as mandatory timeframes and presumptive remedies.

An Update on AIG Environmental and the Current Environmental Insurance Market

Posted on January 6, 2009 by David Farer

Significant management changes announced this week by AIG Environmental, and further news in the wake of that announcement, may further impact the changing environmental insurance market. 

 

Joe Boren, longtime Chairman and CEO of AIG Environmental, and John O'Brien, President of the Company, have both resigned. On January 5, AIG Commercial Insurance issued a statement that Russ Johnston has been named President and CEO of AIG Environmental, and that Kim Hanna is now Executive VP and COO of the Company.

 

Over the past ten years, environmental insurance products have been utilized as a key component in many brownfield redevelopment projects and real estate transactions, and have become a common risk-reduction tool in the real estate and manufacturing sectors.

 

Most recently, the leading players in the environmental insurance market have been AIG Environmental, XL Environmental and Ace, with AIG most active in writing cost-cap and pollution legal liability ("PLL") policies for real estate transactions and brownfields projects. Zurich has also played an important role in the market, although historically the company has been particularly risk-adverse. Chubb has been writing PLL policies, but not cost-cap policies.

 

In recent months, however, Zurich has been indicating an enhanced interest in considering the underwriting of projects and transactions that they might previously have declined. Chubb has also expressed an interest in growing its PLL portfolio.

 

Additionally, in the aftermath of AIG's statement on the management changes, the Bermuda-based insurer Ironshore, Inc. announced on January 6 that Joe Boren and John O'Brien have joined a newly established Environmental Insurance division of Ironshore in New York City, with Boren as CEO and O'Brien as President.

 

The impact of AIG’s recent and highly publicized financial woes, and the ensuing reductions in the ratings of AIG's insurance companies, have generated a good deal of speculation about the future of AIG Environmental and whether the Company would maintain its aggressive underwriting of brownfields projects and real estate deals.

 

It is yet to be seen whether the financial problems of the parent company and   management-level changes at AIG Environmental are leading to an overall change in approach, but with XL and Ace still in the market, Zurich and Chubb expressing a greater interest in underwriting, and Ironshore opening a new environmental division with experienced management, there may be more options available to those seeking such policies, and greater competition on policy terms and pricing.