July 25, 2019

Recent legal developments could have significant ramifications for owners, builders, designers, insurers, and those living in areas at risk for injury and damage to property resulting from the failure to adapt to climate change.

In federal court in Boston, a judge has allowed a lawsuit alleging multiple climate change-related counts to proceed by denying an oil company’s motion to dismiss. The pending lawsuitConservation Law Found. v. ExxonMobil Corp., filed in 2016, alleges, among other things, that Exxon violated Clean Water Act permit requirements for its petroleum storage terminal in Everett, Mass., by failing to use “good engineering practices” to plan for the risk of extreme weather events.

Judge Mark Wolf of the U.S. District Court for the District of Massachusetts ruled recently that while certain counts alleging long-term climate change harm were properly dismissed, counts that allege Exxon’s failure to consider “imminent risks” from extreme weather may proceed.

The ruling followed Wolf’s decision last fall, in which he dismissed several other counts but gave CLF an opportunity to amend its complaint and focus on short-term climate-related harm and hazards. 

According to the amended complaint, “the Terminal is likely to discharge and/or release pollutants into surrounding waters, groundwater, the community, and the air because it has not been designed to withstand flooding associated with storm events and storm surge, tides, sea level rise, and increasing sea surface temperatures.” (Since Judge Wolf’s ruling, the parties have been briefing and arguing motions based on a variety of other procedural issues such as whether the case should be stayed pending EPA reviews.) 

Cases Seeking Redress

The lawsuit is one of several important cases seeking redress from oil and gas companies for climate change-related claims. For example, in 2017 the CLF filed a case in Rhode Island against Shell Oil Co. alleging it failed to address potential climate change-related impacts in its stormwater pollution prevention plan required by the Clean Water Act. The Shell facility is located by the Providence River.

CLF alleges Shell, in its stormwater plan, has not taken into account sea-level rise and the increased magnitude and frequency of storm events. This case is awaiting decision on the briefing of various procedural defenses, including whether a proper legal claim has been stated and whether jurisdiction in federal court is proper.

Although lawsuits such as these are directed at the Environmental Protection Agency and involve Clean Water Act permit issues, if any of them are successful, they could represent game-changing liability risks for a multitude of potential defendants involved in planning and building projects.

Many professionals would say that, currently, there is substantial uncertainty over the applicable standard of care that professionals are required to provide. This uncertainty derives largely from outdated, inadequate, and backward-looking weather data sources, building codes that are not definitive (or that are even inhibiting), and lack of coordinated federal and state efforts.

However, as such issues are resolved and as definitions of “good engineering practices” are provided by regulatory bodies, industry groups, and even ongoing lawsuits, it may only be a matter of time until more run-of-the-mill “common law” negligence and breach-of-contract claims are brought by those who perceive themselves as damaged by storms, wildfires, or other events tied to climate change.

Potential Risk Management Concerns

This possibility raises several risk management concerns for project owners, builders, design professionals, project managers, and consultants. Such project participants must be wary of assuming unintended and impossible-to-perform climate change risks and responsibilities they are ill-equipped to assume and manage.

Proper attention must be paid to contract language and scope descriptions and limitations. In many instances companies simply do not have the in-house resources and localized data to identify and manage climate change risks and would be well advised to engage climate change experts as sub-consultants.

These efforts in turn may require expenditures, training, and other risk management efforts not originally contemplated by project budgets, and accordingly, there may be pressures that lead to reluctance to adapt.

One thing appears likely though: If project owners, design professionals, builders, consultants and insurers don’t adapt to climate change, litigation may well do it for them.

 

Reproduced with permission from Copyright [2019] The Bureau of National Affairs, Inc. (800-372-1033) www.bna.com

This article contains material of general interest and should not be construed as legal advice or a legal opinion on any specific facts or circumstances. Under applicable rules of professional conduct, this content may be regarded as attorney advertising.