Category: HELR Blog

Navigating with an Ocean Liner: The Clean Water Rule, Trump’s Executive Order, and the Future of “Waters of the United States”

By Kacy Manahan, Lewis & Clark Law School *

This post is part of the Environmental Law Review Syndicate.

I. Introduction

The scope of the Clean Water Act’s jurisdiction has been controversial throughout the statute’s history. Reconciling the extent of Congress’ Commerce Clause authority with the reality of vast hydrological connections across the United States has been an unenviable task delegated to the United States Environmental Protection Agency (EPA) and the United States Army Corps of Engineers (the Corps). This post is a comprehensive, though certainly not exhaustive, examination of EPA’s and the Corps’ efforts to define the jurisdictional scope of the Clean Water Act. The issue is once again embroiled in litigation, and regulation is in the hands of an Administration seeking to depart substantially from prior policies. For that reason, I also discuss potential outcomes of the litigation and President Trump’s Executive Order.

II. History of the “Waters of the United States” Rule

In 1972, Congress amended the Federal Water Pollution Control Act to create what we know today as the Clean Water Act.[1] For the first time, federal jurisdiction based on the Commerce Clause power extended beyond traditional navigable waters, as the Act defined “navigable waters” to mean “waters of the United States, including the territorial seas.”[2] EPA and the Corps (the Agencies) share regulatory authority under the Act, however, EPA has ultimate authority to interpret the term “navigable waters.”[3]

A. The Regulatory Evolution of Waters of the United States

The first substantive definition of “waters of the United States” came from EPA’s Office of General Counsel in 1973.[4] EPA believed that removal of the word “navigable” from the definition evidenced congressional intent to regulate “pollution of waters . . . capable of affecting interstate commerce.”[5] The definition included navigable waters, tributaries of navigable waters, interstate waters, and interstate lakes, rivers, and streams used by interstate travelers for recreational purposes, for commercial fishing, or for industrial purposes.[6] EPA issued an official regulatory definition shortly thereafter, changing the final three categories of jurisdictional waters to intrastate waters used by interstate travelers for recreational purposes, for commercial fishing, or for industrial purposes.[7]

The Corps issued its regulatory definition in 1974, covering “those waters of the United States which are subject to the ebb and flow of the tide, and/or are presently, or have been in the past, or may be in the future susceptible for use for purposes of interstate or foreign commerce.”[8] In 1975, the United States District Court for the District of Columbia determined that Congress’ intent in defining “navigable waters” as “waters of the United States” was to assert “federal jurisdiction over the nation’s waters to the maximum extent permissible under the Commerce Clause of the Constitution” and that the term was “not limited to the traditional tests of navigability” as they appeared in the Corps’ definition.[9] The Corps was ordered to publish new regulations based on this interpretation.[10]

Ultimately, after some political controversy,[11] the Corps published an interim final rule aligning with EPA’s regulation.[12] Notably, the Corps definition included wetlands, intrastate waters used for agricultural production, and other waters that, on a case-by-case basis, may be determined by the Corps to “necessitate regulation for the protection of water quality” as defined in EPA’s guidelines.[13] In 1977, the Corps published its final definition distinguishing its jurisdiction under the Act from its jurisdiction under older laws such as the Rivers and Harbors Act.[14] The 1977 definition included five categories of waters including a Commerce Clause-based category: “All other waters of the United States not identified in Categories 1–3, such as isolated lakes and wetlands, intermittent streams, prairie potholes, and other waters . . . the destruction of which could affect interstate commerce.”[15]

The Commerce Clause category, once codified, was adopted by EPA in later regulations.[16] This basis for jurisdiction remained on the books until the latest attempt at defining “waters of the United States” in 2015.[17] By 1982, the Agencies had matching regulatory definitions (the 1982 Rule).[18]

B. Challenges to the 1982 Rule in the Supreme Court

Over the decades, the 1982 Rule faced repeated challenges in court. However, three Supreme Court rulings have fundamentally defined the jurisdiction of the Clean Water Act, influencing the Agencies’ interpretation of the 1982 Rule, and ultimately straining that interpretation to the point where revision was necessary.

1. Riverside Bayview

United States v. Riverside Bayview Homes, Inc.[19] (Riverside Bayview) originated as an enforcement action against defendants who commenced filling wetlands located on their property before the Corps took action on their permit application.[20] The issue before the Court was whether the defendants’ land fell within the Clean Water Act’s jurisdiction.[21]

The Court noted that the language, legislative history, and underlying policy of the Clean Water Act regarding its jurisdictional reach was ambiguous.[22] Based on this ambiguity, the Court analyzed the reasonableness of the Corps’ assertion of jurisdiction over adjacent wetlands.[23] The Court determined:

In view of the breadth of federal regulatory authority contemplated by the Act itself and the inherent difficulties of defining precise bounds to regulable waters, the Corps’ ecological judgment about the relationship between waters and their adjacent wetlands provides an adequate basis for a legal judgment that adjacent wetlands may be defined as waters under the Act.[24]

In deferring to the Corps, the Court upheld the 1982 Rule as permissible under the Clean Water Act.


In Solid Waste Agency of Northern Cook County v. United States Army Corps of Engineers[25] (SWANCC), the petitioner was a municipal corporation seeking to develop a parcel of real estate for use as a balefill (a type of landfill).[26] Based on a finding that migratory birds utilized gravel pits on the parcel, the Corps asserted jurisdiction, and denied the petitioner’s applications for a section 404 permit.[27]

The controversy in this case arose from language in the preamble to a Federal Register publication by the Corps suggesting that “other waters” as defined in the 1982 Rule included waters utilized by migratory birds.[28]

Distinguishing this case from Riverside Bayview, the Court planted the seed of the now-familiar “significant nexus” standard.

It was the significant nexus between the wetlands and “navigable waters” that informed our reading of the CWA in Riverside Bayview Homes. Indeed, we did not “express any opinion” on the “question of the authority of the Corps to regulate discharges of fill material into wetlands that are not adjacent to bodies of open water . . . .” In order to rule for respondents here, we would have to hold that the jurisdiction of the Corps extends to ponds that are not adjacent to open water. But we conclude that the text of the statute will not allow this.[29]

This statement arguably eliminated the entire category of “other waters” from the jurisdictional scope of the Clean Water Act. A narrower interpretation of the holding focuses on the Migratory Bird Rule. The Court chose to read the Clean Water Act “to avoid the significant constitutional and federalism questions raised by respondent’s interpretation,” meaning the Migratory Bird Rule, and therefore gave the Corps no deference.[30] The Court held that the “other waters” provision “as clarified and applied to petitioner’s balefill site pursuant to the ‘Migratory Bird Rule’ exceeds the authority granted to respondents under § 404(a) of the CWA.”[31]

The Corps interpreted this holding narrowly by issuing guidance advising regulators to no longer assert jurisdiction based on the presence of migratory birds, but to “consult legal counsel” if a water body in question might be connected with interstate commerce.[32]

3. Rapanos

In 2006, the Supreme Court issued its decision in Rapanos v. United States.[33] This decision vacated and remanded two decisions from the United States Court of Appeals for the Sixth Circuit upholding the Corps’ assertion of jurisdiction based on a “significant nexus” standard,[34] however, the contemporaneous opinion was fractured and no majority opinion emerged.[35] Justice Scalia authored the plurality opinion, joined by Chief Justice Roberts and Justices Thomas and Alito.[36] Chief Justice Roberts and Justice Kennedy wrote concurring opinions.[37] Justice Stevens authored the dissenting opinion, joined by Justices Souter, Ginsburg, and Breyer.[38]

In this 4–1–4 split, five justices agreed that the lower court decisions should be vacated.[39] Four justices agreed that the lower court decisions should be affirmed.[40] Eight justices agreed that Scalia’s test would confer jurisdiction.[41] Five justices agreed that Kennedy’s test would confer jurisdiction.[42] Since both tests were approved by a majority of the justices, a definitive test for determining the appropriate connection between traditional navigable waters and other hydrological features was once again eluded.

i. Justice Scalia’s Plurality Opinion

The plurality simplified the jurisdictional inquiry by focusing on the word “waters”, which appears in both sections 502(7) and 502(12).[43] The plurality examined a dictionary definition of “waters” and concludes that based “[o]n this definition, ‘the waters of the United States’ include only relatively permanent, standing or flowing bodies of water.”[44]

The plurality noted that the Court in Riverside Bayview found the line between waters of the United States and dry land to be ambiguous, and therefore deferred to the Corps’ determination.[45] Without pointing to any particular language from SWANCC, the plurality stated that in SWANCC the Court rejected the notion that ecological considerations can provide an independent basis for jurisdiction.[46] Based on this assumption, the plurality added a second requirement to its jurisdictional test: “[O]nly those wetlands with a continuous surface connection to bodies that are ‘waters of the United States’ in their own right, so that there is no clear demarcation between ‘waters’ and wetlands, are ‘adjacent to’ such waters and covered by the Act.”[47]

The plurality’s test therefore requires a determination that 1) the “adjacent” water is relatively permanent, and 2) that there is a continuous surface connection to the “adjacent” water.[48]

ii. Justice Kennedy’s Concurrence

In his concurring opinion, Justice Kennedy’s view of the “significant nexus” standard suggests that it is more than an indicator of “adjacency”—he found that Riverside Bayview stood for the proposition that “the connection between a nonnavigable water or wetland and a navigable water may be so close, or potentially so close, that the Corps may deem the water or wetland a ‘navigable water’ under the Act.”[49] Justice Kennedy characterized SWANCC as standing for the inverse: if there is “little or no connection” between a nonnavigable water and a traditional navigable water, then that water is not jurisdictional.[50]

His concurrence discusses how a “significant nexus” may be established: “[W]etlands possess the requisite nexus, and thus come within the statutory phrase ‘navigable waters,’ if the wetlands, either alone or in combination with similarly situated lands in the region, significantly affect the chemical, physical, and biological integrity of other covered waters more readily understood as ‘navigable.’”[51]

iii. Aftermath of Rapanos

Because there is no single “logical subset” from which a clear rule can be divined, courts have disagreed on how to apply the law. Nonetheless, most courts agreed that a water was jurisdictional under the Act at least where Justice Kennedy’s significant nexus test was satisfied, and no court has held that a water is jurisdictional only if it meet’s the plurality’s “continuous surface connection” requirement. [52] In 2008, the Agencies issued a guidance document instructing regulators as to what waters were now considered jurisdictional considering the Supreme Court’s opinion.[53]

III. The Current Status of the 2015 Clean Water Rule

Accepting Justice Kennedy’s invitation to clarify CWA jurisdiction through a new rulemaking,[54] the Agencies promulgated the final Clean Water Rule (2015 Rule) on June 29, 2015.[55] Several states, industry groups, and environmental stakeholders challenged the 2015 Rule on the day of promulgation.[56] One day before the effective date, a district court judge in North Dakota granted a temporary injunction in favor of state petitioners.[57] Meanwhile, the Agencies sought to transfer nine district court cases for centralized pretrial proceedings.[58] The United States Judicial Panel on Multidistrict Litigation denied the government’s motion based on a lack of discovery or questions of fact.[59] By the end of 2015, over one hundred parties had filed twenty-three petitions for review in the courts of appeals, and almost one hundred parties had filed seventeen district court complaints.[60]

A. The Sixth Circuit’s Jurisdictional Ruling

Many petitions originating in the courts of appeals were consolidated in the Sixth Circuit.[61] Determining that state petitioners had demonstrated a substantial possibility of success on the merits, the court issued a nationwide stay of the Clean Water Rule which remains in place today.[62] Several petitioners then moved to dismiss their own petitions due to lack of jurisdiction.[63] Before a panel of judges, petitioners and intervenors argued that the Clean Water Act’s judicial review provision, section 509(b)(1), should be read narrowly to exclude the 2015 Rule from its scope.[64] The federal defendants, on the other hand, argued that either sections 509(b)(1)(E) or 509(b)(1)(F) could be used to invoke court of appeals jurisdiction.[65]

Judge McKeague, delivering the opinion of the court, agreed with federal defendants that section 509(b)(1)(E) applied because the 2015 Rule “indirectly produce[d] various limitations on point-source operators and permit issuing authorities.”[66] Furthermore, § 509(b)(1)(F) applied as well, since the extension of jurisdiction found in the 2015 Rule “indisputably expand[ed] regulatory authority and impact[ed] the granting and denial of permits in fundamental ways.”[67] Judge Griffin, concurring in the judgment, did so only because of circuit precedent.[68] Therefore, petitioners’ and intervenors’ motions to dismiss were denied, and the Sixth Circuit retained jurisdiction based on section 509(b)(1)(F).[69]

B. The Supreme Court Case

Sixth Circuit intervenor National Association of Manufacturers petitioned the Supreme Court for writ of certiorari in September 2016.[70] The Court granted the petition on the following issue:

[W]hether the Sixth Circuit erred when it held that it has jurisdiction under 33 U.S.C. § 1369(b)(1)(F) to decide petitions to review the waters of the United States rule, even though the rule does not “issu[e] or den[y] any permit” but instead defines the waters that fall within Clean Water Act jurisdiction.[71]

At the time of this writing, opening briefs are due to be filed on April 27, 2017[72]

IV. President Trump’s Executive Order and the Future of Rulemaking and Litigation

The election of Donald Trump undoubtedly ushered in the beginnings of a seismic shift in federal environmental policy. On February 28, 2017, President Trump signed an Executive Order directing the Agencies to review the 2015 Rule for consistency with the following policy: “It is in the national interest to ensure that the Nation’s navigable waters are kept free from pollution, while at the same time promoting economic growth, minimizing regulatory uncertainty, and showing due regard for the roles of the Congress and the States under the Constitution.”[73] The Agencies are next directed to “publish for notice and comment a proposed rule rescinding or revising the rule, as appropriate and consistent with law.”[74] Finally, the Order mandates that the Agencies “shall consider interpreting the term ‘navigable waters,’ . . . in a manner consistent with the opinion of Justice Antonin Scalia” in Rapanos.[75] A rule defining “waters of the United States” in accordance with this Order would represent a significant and unprecedented narrowing of Clean Water Act jurisdiction. Notably, this Executive Order has no immediate regulatory effect. However, for the remainder of this post, the discussion will assume that the Agencies share the interests of the State petitioners, and will seek a litigation strategy leading to the collapse of the 2015 Rule.

As a result of the Executive Order, the federal respondents in National Ass’n of Manufacturers v. United States Department of Defense sought to hold the Supreme Court briefing schedule in abeyance. This motion was denied, however, after facing opposition from several parties.[76]

A. Potential Outcomes of Current Litigation

Based on federal respondent’s failure to convince the Court to hold briefing in abeyance, it is likely that the Court will decide the jurisdictional issue before the 2015 Rule’s revision or rescission. Once litigation returns to the Sixth Circuit or the district courts (depending on the ruling), it is unclear whether a court will decide the merits of the 2015 Rule. If the Agencies take regulatory action either before or shortly after the litigation becomes active again, those who petitioned for review of the 2015 Rule may find their petitions mooted.

A two-part test determines mootness: a case is moot if “(1) it can be said with assurance that there is no reasonable expectation that the alleged violation will recur, and (2) interim relief or events have completely and irrevocably eradicated the effects of the alleged violation.”[77] “When both conditions are satisfied it may be said that the case is moot because neither party has a legally cognizable interest in the final determination of the underlying questions of fact and law.”[78] Undoubtedly, the Agencies’ action in rescinding or revising the rule would qualify as “interim relief or events,” but there is a question of whether a rescission means that “no reasonable expectation that the alleged violation will recur,” or in the event of a revision, whether it has “completely and irrevocably eradicated the effects of the alleged violation”.[79] Additionally, an exception to mootness occurs when a petitioner demonstrates that: “(1) the challenged action was in its duration too short to be fully litigated prior to its cessation or expiration, and (2) there [is] a reasonable expectation that the same complaining party [will] be subjected to the same action again.”[80]

As an example, if the Agencies rescind the 2015 Rule without immediately replacing it with a new rule, the “capable of repetition yet evading review” exception may apply regarding certain claims. In another scenario, if a revision of the 2015 Rule presents many of the same issues, then the effects of the alleged violations are not completely and irrevocably eradicated and litigation may continue. On the other hand, if the Agencies are not prepared to rescind or revise the 2015 Rule upon resumption of litigation, and they attempt to argue that the case is moot by virtue of the Executive Order’s expression of intent alone, it is unlikely that such an argument will meet the Davis test for mootness.

Precedent from the United States Court of Appeals for the Ninth Circuit suggests that if the Agencies cannot immediately revise or rescind the rule, they may have another option—a consent judgment. In Turtle Island Restoration Network v. United States Department of Commerce[81] (Turtle Island), the court held that no Administrative Procedure Act[82] (APA) rulemaking procedure was necessary when environmental plaintiffs and federal defendants entered into a consent decree vacating a portion of a final rule, temporarily reinstated the previous rule, and remanded the rule to the agency to reconsider a new rule.[83] Industry defendant-intervenors appealed the consent decree and cited the United States Court of Appeals for the District of Columbia Circuit’s decision in Consumer Energy Council of America v. Federal Energy Regulatory Commission[84] (Consumer Energy) for the proposition that notice and comment is required prior to repeal.[85] The Ninth Circuit distinguished Consumer Energy by finding the concerns motivating the agency in that case to be different from those raised during the original rulemaking and noting that no party in that case had suggested repeal as a remedy.[86] In Turtle Island, the environmental plaintiffs sought repeal for reasons that they had raised during the initial rulemaking.[87] The court also noted that no substantive changes were made to the rule—repealing the provision at issue simply reinstated the prior rule.[88]

In a more recent Ninth Circuit opinion, the court simultaneously reaffirmed its holding in Turtle Island while limiting the types of consent decrees that may alter a regulation:

It follows that where a consent decree does promulgate a new substantive rule, or where the changes wrought by the decree are permanent rather than temporary, the decree may run afoul of statutory rulemaking procedures even though it is in form a “judicial act.” […] We therefore hold that a district court abuses its discretion when it enters a consent decree that permanently and substantially amends an agency rule that would have otherwise been subject to statutory rulemaking procedures.[89]

Together, Turtle Island and Conservation Northwest v. Sherman create the following positive rule: If a consent decree repeals or vacates an agency action, the legal effect is to restore the status quo, and if this restoration is temporarily subject to further agency action—the substance of which remains within the agency’s discretion—then the consent decree may be upheld.[90]

Entering a consent decree may be an attractive option if federal defendants see it as the quickest escape route from litigation. However, petitioners who prefer the 2015 Rule to the prior rule will likely object to the decree. If objection is unsuccessful, the court may consider whether all petitioners’ claims have been mooted by the terms of the consent decree.

B. Possible Regulatory Actions

Shortly following the issuance of President Trump’s Executive Order, the Agencies published a notice of their intent to engage in a rulemaking consistent with that Order.[91]

It is unlikely that they will accomplish this task quickly. Considering the nine-year gap between Rapanos and the final 2015 Rule, the prospect of a final rule occurring within the current administration is questionable. In the meantime, the Agencies may attempt to use a guidance document similar to the 2008 guidance issued after Rapanos. A guidance document based on the plurality in Rapanos will be less susceptible to challenge if implemented while the 1982 Rule is in force, as opposed to the 2015 Rule, which relies heavily on the “significant nexus” test. However, any guidance document that substantively changes the legal meaning of a regulation may be set aside by a court if challenged.[92]

Therefore, if the federal defendants are unable to dispose of the 2015 Clean Water Rule via litigation, they may attempt to revoke the 2015 Rule without immediately replacing it. Such a revocation may be subject to challenges based on procedure, substance, or both. If the Agencies fail to utilize APA notice and comment procedures in revoking the 2015 Rule, a court could invalidate the revocation.

In Consumer Energy, federal defendants argued that their revocation of the rule at issue rendered the case moot.[93] However, the court held that the Federal Energy Regulatory Commission’s revocation order was invalid because the agency did not follow APA rulemaking procedures: “The value of notice and comment prior to repeal of a final rule is that it ensures that an agency will not undo all that it accomplished through its rulemaking without giving all parties an opportunity to comment on the wisdom of repeal.”[94] Substantive challenges to a revocation, rescission, or revision are discussed in the following section.

C. Challenging a New Rule

The oft-cited Motor Vehicle Manufacturers Ass’n of the United States v. State Farm Mutual Automobile Insurance Co.[95] stands for the proposition that “an agency changing its course by rescinding a rule is obligated to supply a reasoned analysis for the change beyond that which may be required when an agency does not act in the first instance.”[96] This case arose when the Reagan Administration, in a nationwide deregulation effort, rescinded a rule requiring auto makers to install either airbags or passive restraints.[97]

However, in Federal Communications Commission v. Fox Television Stations, Inc.[98] (Fox Television), the Court clarified its ruling: “[O]ur opinion in State Farm neither held nor implied that every agency action representing a policy change must be justified by reasons more substantial than those required to adopt a policy in the first instance.”[99] The Court explained that the distinction being made in State Farm was between a § 706(1) review of a failure to act and a § 706(2)(A) review of agency action, not initial and subsequent agency action as in a rulemaking and rescission.[100]

Describing the support required for a change, the Fox Television Court highlighted that an agency must “[1)]display awareness that it is changing position,” and it is sufficient if the record shows that “[2)] the new policy is permissible under the statute, [3)] that there are good reasons for it, and [4)] that the agency believes [the new policy] to be better.”[101] The fourth element is similar to a free space in bingo—the agency’s change in policy “adequately indicates” its belief that the new policy is better.[102]

Fox Television says an agency must “provide a more detailed justification than what would suffice for a new policy created on a blank slate”: When 1) “its new policy rests upon factual findings that contradict those which underlay its prior policy” or 2) “when its prior policy has engendered serious reliance interests that must be taken into account.”[103] In these scenarios, “a reasoned explanation is needed for disregarding facts and circumstances that underlay or were engendered by the prior policy.”[104]

Although it seems relatively easy for an agency to justify a change in policy based on the Fox Television standard, a question remains regarding what role the extensive scientific record used to justify the 2015 Rule may play in challenging a new rule.[105]

Ninth Circuit precedent emerging from the Bush-era “Roadless Rule” provides useful guidance for how a court may handle a changed policy. In a case regarding the “Tongass Exemption” to the Roadless Rule, the court held that the United States Department of Agriculture’s 2003 Record of Decision (ROD) adopting the Tongass Exemption (which was based on the 2001 Roadless Rule Final Environmental Impact Statement) was arbitrary and capricious based on a Fox Television analysis of the change in policy.[106] In the 2001 ROD for the Roadless Rule, the agency found that “the long-term ecological benefits to the nation of conserving these inventoried roadless areas outweigh the potential economic loss to southeast Alaska communities from application of the Roadless Rule.”[107] In the 2003 ROD for the Tongass Exemption, however, the agency reversed its policy based on “concern about economic and social hardship that application of the roadless rule’s prohibitions would cause in communities throughout Southeast Alaska.”[108]

The Ninth Circuit found that the agency “made factual findings directly contrary to the 2001 ROD and expressly relied on those findings to justify the policy change.”[109] The court was careful to note that agencies are entitled to give more weight to certain concerns, but may not “simply discard prior factual findings without a reasoned explanation.”[110] The finding at issue was the necessity of the Roadless Rule to maintain important roadless area values.[111] The 2001 ROD made this finding, but the 2003 ROD found that the Roadless Rule was unnecessary because roadless values were protected by the Tongass Forest Plan.[112] The agency concluded that the sufficiency of the Forest Plan struck a new balance in its analysis, causing socioeconomic concerns to outweigh the benefits of the Roadless Rule’s protections.[113] The court found that the 2003 ROD violated the APA because the agency provided no reasoned explanation for “why an action that it found posed a prohibitive risk to the Tongass environment only two years before now poses merely a ‘minor’ one.”[114]

However, the Agencies may reevaluate their policy choices based on the facts available to them if the statute permits the resulting rule. In National Ass’n of Home Builders v. United States Environmental Protection Agency,[115] the D.C. Circuit rejected petitioners’ argument that the amendment of a rule was invalid because the promulgating agency merely revisited old arguments rather than basing its amendment on new facts or circumstances.[116] The court held that “a reevaluation of which policy would be better in light of the facts” is permissible, as Fox Television made clear that “this kind of reevaluation is well within an agency’s discretion.”[117]

The court also rejected petitioner’s contention that “because the [r]ule eliminates a provision that was consistent with congressional intent, the Court should not defer to EPA in making such a decision.”[118] The court held that “the fact that the original [rule] was consistent with congressional intent is irrelevant as long as the amended rule is also permissible under the statute.”[119] However, it was also emphasized that EPA found the rule’s amendment to promote “to a greater extent, the statutory directive.”[120] The court noted that “it was hardly arbitrary or capricious for EPA to issue an amended rule it reasonably believed would be more reliable, more effective, and safer than the original rule.”[121]

Again, assuming that any new rule will be promulgated pursuant to the Executive Order, the rule will likely follow the standard enunciated by the late Justice Scalia in Rapanos. A petitioner may have an uphill battle in arguing that such a policy is not permitted by the Clean Water Act—not only is the plain language of the Act uncommonly vague, but an interpretation crafted by a Supreme Court justice and accepted as sufficient to establish jurisdiction by a majority of the Court is uncommonly valid. However, those who wish to see a more protective rule may be able to argue congressional intent despite the D.C. Circuit’s holding in National Ass’n of Home Builders—since EPA, in that case, believed its new regulation increased conformity with the purpose of the statute rather than deviated from it.[122]

V. Conclusion

Although it is difficult to see clearly into the future, those who have studied or practiced administrative law know that APA notice and comment rulemaking requires substantial resources. To develop an administrative record supporting a rule based on Justice Scalia’s plurality in Rapanos may take years. Once the rule is final, it will face opposition from many directions. In the case of Clean Water Act jurisdiction, a change in the regulatory landscape affects a wide swath of interests—state sovereignty, landowner rights, industry flexibility, human health, conservation, and recreation. Considering that even a guidance conforming with Justice Scalia’s test could be subject to judicial review, there seems to be no tool that the Trump Administration can utilize to rapidly change the regulatory landscape of the Clean Water Act. In the words of former President Barack Obama, “the federal government and our democracy is not a speedboat, it’s an ocean liner.”[123]

* Kacy Manahan is a clinical student at Earthrise Law Center at Lewis & Clark Law School where she assists in representing Respondent Waterkeeper Alliance in National Ass’n of Manufacturers v. United States Department of Defense before the Supreme Court of the United States. She is the 2017–2018 Symposium Editor for Environmental Law, and can be reached at

[1] Federal Water Pollution Control Act Amendments of 1972, Pub. L. No. 92-500, 86 Stat. 816 (codified as amended at 33 U.S.C. §§ 1251–1388 (2012)).

[2] Clean Water Act, 33 U.S.C. § 1362 (2012); Stephen P. Mulligan, Cong. Research Serv., R44585, Evolution of the Meaning of “Waters of the United States” in the Clean Water Act 1 (2016).

[3] See 33 U.S.C. § 404 (2012) (describing the duties of the Corps and EPA in permitting discharge of dredged or fill material); Administrative Authority to Construe § 404 of the Federal Water Pollution Control Act, 43 Op. Att’y Gen. 197 (1979).

[4] Office of Gen. Counsel, U.S. Envtl. Prot. Agency, Meaning of the Term “Navigable Waters” (Feb. 6, 1973), reprinted in Office of Gen. Counsel, U.S. Envtl. Prot. Agency, A Collection of Legal Opinions: December 1970–December 1973, at 295 (1975).

[5] Id.

[6] Id.

[7] See National Pollutant Discharge Elimination System, 38 Fed. Reg. 13,528, 13,529 (May 22, 1973) (current version codified at 40 C.F.R. § 230.3 (2016)).

[8] Permits for Activities in Navigable Waters or Ocean Waters, 39 Fed. Reg. 12,115, 12,119 (Apr. 3, 1974) (current version codified at 33 C.F.R. § 328.3 (2016)); see also 33 C.F.R. § 209.260 (1974)) (providing detailed information regarding how navigability was determined).

[9] Nat. Res. Def. Council, Inc. v. Callaway, 392 F. Supp. 685, 686 (D.D.C. 1975).

[10] Id.

[11] Mulligan, supra note 2, at 9.

[12] Compare Permits for Activities in Navigable Waters or Ocean Waters, 40 Fed. Reg. 31,320, 31,324–25 (July 25, 1975) (the Corps’ definition), with 40 C.F.R. § 125.1(p) (1974) (EPA’s definition at the time of the Corp’s promulgation).

[13] 40 Fed. Reg. at 31,324–25.

[14] Rivers and Harbors Act of 1899, 33 U.S.C. §§ 401–418, 502, 687 (2012); Regulatory Programs of the Corps of Engineers, 42 Fed. Reg. 37,122, 37,127 (July 19, 1977); Mulligan, supra note 2, at 10 n.64.

[15] 42 Fed. Reg. at 37,127–28, 37,144 (codified at 33 C.F.R. § 323.2(a) (1978)); Mulligan, supra note 2, at 10.

[16] See Consolidated Permit Regulations, 45 Fed. Reg. 33,290, 33,424 (May 19, 1980) (codified at 40 C.F.R. § 122.3 (1981)).

[17] Mulligan, supra note 2 at 10.

[18] 40 C.F.R. § 122.3 (1982), Interim Final Rule for Regulatory Programs of the Corps of Engineers, 47 Fed. Reg. 31,794, 31,810 (July 22, 1982).

[19] 474 U.S. 121 (1985)

[20] Id. at 124.

[21] Id. at 126.

[22] Id. at 132.

[23] See generally Chevron U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837 (1984) (establishing a two-part test to determine whether to grant an agency deference in interpreting a statute).

[24] Riverside Bayview, 474 U.S. at 134.

[25] 531 U.S. 159 (2001).

[26] Solid Waste Agency of N. Cook Cty. v. U.S. Army Corps of Eng’rs, 998 F. Supp. 946, 948 (N.D. Ill. 1998), aff’d, 191 F.3d 845 (7th Cir. 1999), rev’d, 531 U.S. 159 (2001).

[27] Id.

[28] Final Rule for Regulatory Programs of the Corps of Engineers, 51 Fed. Reg. 41,206, 41,216–17 (Nov. 13, 1986).

[29] SWANCC, 531 U.S. at 167–68 (2001) (citation omitted) (alteration in original).

[30] Id. at 174.

[31] Id. (citation omitted).

[32] Matthew B. Baumgartner, SWANCC’s Clear Statement: A Delimitation of Congress’s Commerce Clause Authority to Regulate Water Pollution, 103 Mich. L. Rev. 2137, 2147–48 (2005).

[33] Rapanos v. United States, 547 U.S. 715 (2006).

[34] United States v. Rapanos, 376 F.3d 629 (6th Cir. 2004); Carabell v. U.S. Army Corps of Eng’rs, 391 F.3d 704 (6th Cir. 2004).

[35] Rapanos, 547 U.S. at 757.

[36] Id. at 718.

[37] Id. at 757 (Roberts, CJ., concurring); id. at 759 (Kennedy, J., concurring in judgment).

[38] Id. at 787 (Stevens, J., dissenting). Justice Breyer also wrote a separate dissent. Id. at 811 (Breyer, J., dissenting).

[39] Id. at 757 (plurality opinion); id. at 787 (Kennedy J., concurring in judgment).

[40] Id. at 810 (Stevens, J., dissenting).

[41] Id.

[42] Id.

[43] Id. at 732 (plurality opinion). Section 502(7) defines “navigable waters to mean “the waters of the United States, including the territorial seas.” 33 U.S.C. § 1362(7) (2012). Section 502(12) defines “discharge of a pollutant” to mean “any addition of any pollutant to navigable waters from any point source.” Id. § 1362(12).

[44] Rapanos, 547 U.S. at 732.

[45] Id.

[46] Id. at 741–42.

[47] Id. at 742.

[48] Id.

[49] Id. at 767 (Kennedy, J., concurring in judgment) (emphasis added).

[50] Id.

[51] Id. at 779–80.

[52] E.g., United States v. Robison, 505 F.3d 1208 (11th Cir. 2007) (applying Justice Kennedy’s test because it is the least disruptive to prior case law); United States v. Gerke, 464 F.3d 723 (7th Cir. 2006) (same); United States v. Donovan, 661 F.3d 174 (3d Cir. 2011) (finding jurisdiction under either Justice Kennedy’s or Justice Scalia’s test); United States v. Bailey, 571 F.3d 791 (8th Cir. 2009) (same); United States v. Johnson, 467 F.3d 56 (1st Cir. 2006) (same); United States v. Cundiff, 555 F.3d 200 (6th Cir. 2009) (finding jurisdiction in situations where at least Justice Kennedy’s test would be met); N. Cal. River Watch v. City of Healdsburg, 496 F.3d 993 (9th Cir. 2007) (same).

[53] U.S. Envtl. Prot. Agency & U.S. Dep’t of the Army, Clean Water Act Jurisdiction Following the U.S. Supreme Court’s Decision in Rapanos v. United States & Carabell v. United States (Dec. 2, 2008),


[55] Clean Water Rule: Definition of “Waters of the United States”, 80 Fed. Reg. 37,054 (June 29, 2015).

[56] E.g., Complaint, Texas v. U.S. Envtl. Prot. Agency, No. 3:15-cv-00162 (S.D. Tex. June 29, 2015); Complaint, North Dakota v. U.S. Envtl. Prot. Agency, No. 3:15-cv-00059-RRE-ARS (D.N.D. June 29, 2015); Complaint, Murray Energy Corp. v. U.S. Envtl. Prot. Agency, No. 1:15-cv-00110-IMK (N.D.W. Va. June 29, 2015).

[57] North Dakota v. U.S. Envt’l Prot. Agency, 127 F. Supp. 3d 1047, 1060 (2015)

[58] In re Clean Water Rule: Definition of “Waters of the United States,” 140 F. Supp. 3d 1340, 1340–41 (J.P.M.L. 2015).

[59] Id. at 1341.

[60] Federal Defendant’s Notice of Appeal of Ruling at 2 n.1, North Dakota v. U.S. Envtl. Prot. Agency, No. 3:15-cv-00059-RRE-ARS (D.N.D. Nov. 24, 2015), 2015 WL 10642813.

[61] Murray Energy Corp. v. U.S. Dep’t of Def. (In re U.S. Dep’t of Def.), 817 F.3d 261, 264 (6th Cir. 2016), cert. granted sub nom. Nat’l Ass’n of Mfrs. v. Dep’t of Def., 137 S. Ct. 811 (2017).

[62] Ohio v. U.S. Army Corps of Eng’rs (In re Envtl. Prot. Agency), 803 F.3d 804 (6th Cir. 2015).

[63] Murray Energy Corp., 817 F.3d at 264.

[64] Id. at 265; 33 U.S.C. § 1369(b)(1) (2012).

[65] Murray Energy Corp., 817 F.3d at 266, 270–71. Section 509(b)(1)(E) provides review of the Administrator’s action “in approving or promulgating any effluent limitation or other limitation under section 1311, 1312, 1316, or 1345 of this title.” 33 U.S.C. § 1369(b)(1)(E) (2012). Section 509(b)(1)(F) providing review of the Administrator’s action “in issuing or denying any permit under section 1342 of this title.” Id. § 1369(b)(1)(F).

[66] Murray Energy Corp., 817 F.3d at 270.

[67] Id. at 272.

[68] Id. at 275 (Griffin, J., concurring in judgment) (citing Nat’l Cotton Council of Am. v. U.S. Envt’l Prot. Agency, 53 F.3d 927 (6th Cir. 2009)). In National Cotton Council of America, the Sixth Circuit held that section 509(b)(1)(F) authorizes review of regulations governing the issuance of permits. 53 F.3d at 933.

[69] Murray Energy Corp., 817 F.3d at 274 (majority opinion).

[70] Petition for a Writ of Certiorari, Nat’l Ass’n of Mfrs. v. U.S. Dep’t of Def., No. 16-299 (U.S. Sept. 2, 2016), 2016 WL 4698748.

[71] Id.

[72] Nat’l Ass’n of Mfrs (U.S. Apr. 6, 2017) (No. 16-299) (order further extending the time to file Petitioner’s Brief on the Merits to April 27, 2017).

[73] Restoring the Rule of Law, Federalism, and Economic Growth by Reviewing the “Waters of the United States” Rule, Exec. Order No. 13,778, § 1, 82 Fed. Reg. 12,497 (Mar. 3, 2017).

[74] Id. § 2(a).

[75] Id. § 3.

[76] Nat’l Ass’n of Mfrs, 2017 WL 1199467 (U.S. Apr. 3, 2017) (mem.) (order denying motion of federal respondents to hold the briefing schedule in abeyance).

[77] Los Angeles County v. Davis, 440 U.S. 625, 631 (1979) (citations and quotation marks omitted).

[78] Id.

[79] Id.

[80] Murphy v. Hunt, 455 U.S. 478, 482 (1982) (quoting Weinstein v. Bradford, 423 U.S. 147, 149 (1975) (per curiam)). This exception is commonly known as the “capable of repetition, yet evading review” exception. Id.

[81] 672 F.3d 1160 (9th Cir. 2012).

[82] 5 U.S.C. §§ 551–559, 701–706, 1305, 3105, 3344, 4301, 5335, 5372, 7521 (2012).

[83] 672 F.3d at 1164.

[84] 673 F.2d 425, 446 (D.C. Cir. 1982).

[85] Turtle Island, 672 F.3d. at 1168 (citing Consumer Energy, 673 F.2d at 446).

[86] Id. at 1169.

[87] Id.

[88] Id.

[89] Conservation Nw. v. Sherman, 715 F.3d 1181, 1187 (9th Cir. 2013).

[90] Turtle Island, 672 F.3d at 1167–69; Conservation Nw., 715 F.3d at 1187.

[91] Intention to Review and Rescind or Revise the Clean Water Rule, 82 Fed. Reg. 12,532 (Mar. 6, 2017).

[92] See Appalachian Power Co. v. U.S. Envtl. Prot. Agency, 208 F.3d 1015 (D.C. Cir. 2000).

[93] Consumer Energy, 673 F.2d at 445.

[94] Id. at 446.

[95] 463 U.S. 29 (1983).

[96] Id. at 42.

[97] Id. at 36–38.

[98] 556 U.S. 502 (2009).

[99] Id. at 514.

[100] Id. at 515.

[101] Id.

[102] Id.

[103] Id.

[104] Id. at 516.

[105] See generally Office of Research & Dev., U.S. Envtl Prot. Agency, EPA/600/R-14/475F, Connectivity of Streams and Wetlands to Downstream Waters: A Review and Synthesis of the Scientific Evidence (2015),

[106] See Organized Vill. of Kake v. U.S. Dep’t of Agric., 795 F.3d 956, 969 (9th Cir. 2015).

[107] Id. at 967 (internal quotations omitted).

[108] Id. (internal quotations omitted).

[109] Id. at 968.

[110] Id.

[111] Id.

[112] Id.

[113] Id.

[114] Id. at 969.

[115] 682 F.3d 1032 (D.C. Cir. 2012).

[116] Id. at 1037–38.

[117] Id. at 1038.

[118] Id. at 1036 (internal quotations omitted).

[119] Id.

[120] Id. at 1039.

[121] Id.

[122] Id.

[123] The President’s News Conference, 2016 Daily Comp Pres. Doc. 777, at 8–9 (Nov. 14, 2016).

Funding Adaptation: Financing Resiliency Through Sea Level Derivatives


By Sevren Gourley, J.D. Candidate Class of 2017, University of Virginia School of Law.*

This post is part of the Environmental Law Review Syndicate.

Coastal municipalities are struggling to address the uncertain future risks created by sea level rise. Conventional models of ex ante protection and ex post relief are both too costly and often insufficient to mitigate the impacts of climate change. Sea level derivative instruments provide an alternative model for financing adaptation projects that allow municipalities to transfer the risk of climactic uncertainty to parties willing and able to take a counter position. Two sea level derivative instruments—a sea level default swap and a nuisance flooding futures contract—are proposed. They are designed to reduce the risk that a given sea-level rise adaptation project will be either under or over protective while providing additional capital for project development. Due to the lack of a ready counterparty with obvious need to hedge, markets for these sea level derivatives may be susceptible to excessive speculation. However, trading would be subject to regulation by the Commodity Futures Exchange Commission—facilitating a funding adaptation for coastal municipalities.

I. Introduction

Regardless of public debate on the anthropogenicity of climate change, the existence of sea level rise is not in dispute. Although models have predicted that the U.S. economy will receive a net benefit as global temperatures rise,[1] the costs of sea-level fluctuation will be born disproportionately by coastal governments facing local impacts. Nuisance flooding—tidal flooding of private property and public infrastructure caused by an exceedance of historic tide levels—has become commonplace in coastal municipalities and is projected to increase in frequency.[2] In addition, there is a strong correlation between sea level fluctuation and storm related property damage. Even modest sea level rise magnifies storm impacts. Climate prediction models project a range of future increases in coastal storm surge frequency and intensity.[3] This is likely to hit coastal communities hard.

The costs of relief and repair can easily exceed municipal or even state government capacity because flooding often involves widespread correlated loss. Currently, ex post flood response spending falls under the Disaster Relief Fund overseen by the Federal Emergency Management Agency (“FEMA”).[4] Expenditures from the Disaster Relief Fund have been increasing as weather events causing more than one billion dollars in damage become more frequent.[5] In addition, the National Flood Insurance Program (“NFIP”)—a public-private partnership that federally backs insurers willing to cover flood damages—has struggled under its massive debt to the U.S. Treasury in recent years.[6] The inability of NFIP to charge actuarial risk premiums to insureds and the increasing magnitude of sea level related weather damages have pushed the program to the brink of failure.[7] NFIP is currently indebted to the U.S. Treasury for more than twenty-three billion dollars and has net exposure in excess of 1.2 trillion dollars.[8] In addition, problems with claim settlement following Hurricanes Katrina and Sandy have eroded public confidence in NFIP.[9]

Adaptation projects that mitigate flood risk are economically preferable to ex post disaster relief through FEMA and/or NFIP. One widely accepted estimate approximates that each dollar spent on hazard reduction saves society an average of four relief dollars.[10] Again, the challenge is local. Municipalities have been slowed by the political drag of raising large sums of money for projects that deal with uncertain future risks. For example, the City of Miami Beach, Florida, has developed a storm water management plan to raise streets, install water pump systems, and build up sea walls to mitigate the impacts of nuisance flooding.[11] The plan comes with a price-tag of 400 million dollars and a lot of uncertainty, two factors that have generated political pushback.[12] Although the Miami Beach plan builds in a 10 million dollar adjustment for uncertain increases over predicted absolute sea level, the adjustment could be an unnecessary over-protection or it could be insufficient to cope with sea level rise within the 20-year lifespan of the project.[13] Its wisdom remains uncertain.

Federal funds are available to assist States with funding adaptation projects, but these expenditures often fall short of providing all of the support needed to implement desired adaptation strategies for coping with more extreme sea level outcomes.[14] First, these funds often come out of the same bucket used to fund disaster relief in high-risk areas, relief criticized as an unwelcome drain on federal sea-level adaptation support.[15] Second, they often provide too little. For example, contrast the Obama Administration’s pledge of 100 million dollars to assist with implementation of a sea level adaptation in Norfolk, Virginia, with the city’s 1.2 billion dollar sea level adaptation “wish list.”[16]

Coastal municipalities, as well as others along tidal waterways, are stuck. They need to be able to access capital for adaption projects but avoid spending unnecessary funds on preempting sea level predictions that never materialize. Predicting the impact of climate change on sea level is only possible within certain ranges due to the complexity of climate variables—inevitably, some adaptation projects will be over-protective and some will be under-protective.[17] Derivative contracts that “commoditize” sea levels[18] would provide a financing vehicle for adaptation projects that effectively shift this uncertainty risk onto willing counterparties. This gets municipalities away from reliance on federal grants, avoids overreliance on ex post flood relief, and limits the political pushback that may attend large-scale bond-financed projects. To illustrate how this might work, we now turn to derivative contract design.

II. Two Sea-Level Derivatives Proposed

The idea for sea level derivatives has been around for several years. Writing shortly before the enactment of the Dodd-Frank Act, Daniel Bloch and others proposed a climate default swap wherein counterparties receive a payout in the event sea level reaches a pre-defined trigger level.[19] Bloch’s proposal is an adaptation of a weather swap of the sort that has been traded since the late 1990s.[20] In these swaps, parties with interests subject to climactic uncertainty trade financial positions with counterparties, so that the costs of the exchange to the party seeking to shed risks are paid for by the economic benefits of a favorable climactic outcome. In the sea level context, a coastal interest could sell the risk of higher than anticipated relative or absolute mean sea levels (“MSL”)[21] by taking premiums from the counterparty under an agreement to pay the counterparty in the event an agreed upon MSL is reached. Bloch’s climate default swap, and related climate default “bond,” would allow municipalities to avoid under-protective adaptive measures by transferring the risk that a given proposal is over-protective to willing private counterparties.[22] Ideally, such counterparties would have a reciprocal risk so that they would be hedging against a lower than expected sea level rise.[23]

As a simplified example of how a Bloch style sea level default swap would work, consider a municipality seeking to build a sea wall. The municipality knows with high certainty that it needs to build the first six feet because storm surges will frequently reach this height under the most conservative models. But beyond this, sea level rise projection variability makes it less clear that the municipality should build any higher. The municipality bears the risk that each extra inch of sea wall could be an unnecessary expense. So it executes a swap. The counterparty pays a premium to the municipality up front, financing the additional inches on the sea wall, in exchange for a payout in the event MSL reached a certain level within a specified period. Economically, the costs of the extra inches (plus interest) should equal the economic value of the flood avoided. So if the MSL trigger is reached and the municipality pays out, that cost is offset by the gain of staying dry created by those extra inches. If the MSL trigger is not reached, the municipality does not payout and the counterparty takes a loss. Under a “bond” type structure for a sea level default swap, a storm surge trigger could be used and reset at the beginning of each coupon period, with coupon payments by the municipality offset by the value of economic loss avoided. Redemption value adjustment may be necessary to ensure that the value of the “bond” swap tracks the real world value of flood avoidance.

Sea level default swaps do not completely hedge against the risk that adaptation projects are under-protective. The sea level could wildly exceed expectations, thus triggering a pay out and leaving the municipality to deal with flood damages—albeit lessened by the adaptation project. Or flood events could occur due to storm surges or project failures that do not involve the MSL trigger. Nuisance flooding futures are a way to hedge against this risk by commoditizing floods in the same way that markets have commoditized weather. Rather than heating degree days or cooling degree days, a futures contract can be executed on nuisance flooding inch days (“NFIs”)—quantified as the amount of flooding along vertical and horizontal metrics over an agreed upon bound. However, NFI futures suffer from two immediate problems. First, risk mitigation untethered to adaptation projects may pull capital investment away from innovation.[24] Further, this sort of loss relief is a less efficient use of capital than the loss prevention that would be facilitated by public adaptation projects.[25] Second, it is less likely that a counterparty would take a long position on NFIs for hedging than for sea level default swaps, potentially fostering a speculative market on flooding.[26] Notwithstanding these shortcomings, NFI futures can provide an alternative or supplement to conventional flood relief to guard against the risks of under-protection. To the extent that the absence of an obvious counterparty for NFI shorts and sea level default swaps fosters speculation, the applicable regulatory framework should be considered.

III. Regulatory Considerations

Sea level default swaps and NFI futures would be subject to regulation by the Commodity Futures Trading Commission (“CFTC”) under the Commodity Exchange Act (“CEA”). The CEA grants the CFTC exclusive jurisdiction over transactions involving swaps or contracts of sale of a commodity for future delivery.[27] The threshold question for regulation is therefore whether these instruments are based on an underlying “commodity” within the meaning of the CEA.[28] If so, municipalities seeking to finance adaptation projects through sea level default swaps or seeking to hedge against under-protection through NFI futures must be aware of the regulatory significance attached to such actions.

These instruments are based on an underlying financial “commodity” within the meaning of the CEA. Similar to weather-based derivatives, the underlier of these instruments is the occurrence of an independent measurable event—absolute or relative MSL in the case of a swap, and NFI in the case of a futures contract. The CFTC has repeatedly found that these kinds of intangible underliers are valid bases for futures contracts, even though there is no ready spot market for them and they may not be directly traded, because they represent some measure of an economic event that can be hedged against by contract.[29]

Regulation of these instruments is first scoped by how the commodity is characterized. The underlier of these instruments, as indexed measures of water levels, should be considered a financial commodity because it cannot be physically delivered and is not subject to the shared risks attending most physical commodities, such as supply fluctuation, damage, theft, or deterioration.[30] This characterization as a financial commodity accurately represents the translation of MSL or NFIs into economic gain or loss, even though the rise or fall of water is an event occurring in the physical world. Because these instruments are based on financial commodities, they are subject to CFTC jurisdiction and do not qualify for the exemptions attending to contracts for future sale or delivery of physical commodities. The regulatory import of the CFTC’s jurisdiction is further scoped by how these instruments are characterized and by whom they are exchanged.

A. Sea Level Default Swaps

Sea level default swaps, although used to finance adaptation projects, are simply the exchange of economic streams between parties.[31] Section 1a(47) of the CEA defines a “swap” to include any agreement or contract providing for payment “dependent on the occurrence, nonoccurrence, or the extent of the occurrence of an event or contingency associated with a potential financial, economic, or commercial consequence . . . .”[32] Swaps are also defined to include instruments that provide a basis for the exchange of payments based upon indices and/or quantitative measures.[33] “Mixed swaps”—swaps that appear to fall within the jurisdiction of both the CFTC and the Securities and Exchange Commission (“SEC”)—are subject to joint regulation.[34]

Sea level default swaps should be used only to finance adaptation projects,[35] raising the question of whether these can be characterized as bonds traditionally regulated by the SEC.[36] However, these instruments should not be characterized as bonds or other debt securities simply because they are used to finance public projects and are issued by a traditional issuer of bonds. Sea level default swaps do not entitle a borrower to repayment, but rather entitle a long position party to settlement in the event of MSL default. In addition, these instruments cannot be characterized as “security-based” because the underlier is a commodity, not a security or security-based index. Nor can they be characterized as a forward for commodity option contract that would be excluded from CFTC regulation.[37] Sea level default swaps are subject to exclusive CFTC jurisdiction.

The CFTC’s regulations on swaps are authorized and informed by the 2010 Dodd-Frank Act’s[38] reforms to the CEA. The regulations check the conduct of contract participants by requiring swap agreements to either be cleared and subject to regulation by an exchange facility, or traded off-exchange exclusively among “eligible contract participants.”[39] Considering the geographic and project specific factors that must be considered in crafting sea level default swaps to finance municipal climate adaptation, it is likely that these transactions—at least at the outset—would be off-exchange.[40] In this realm, CFTC regulations target participant conduct more than the contract terms.

“Eligible contract participants” are broken down into sub-categories with particular regulatory import. Municipalities are classified as “special entities”[41] and are provided with enhanced protections under Dodd-Frank to ensure that they receive unbiased independent advice before entering into swap transactions.[42] “Swap dealers” or “major swap participants”—which may include the financial institutions best positioned to enter into sea level default swaps with municipalities—would have to reasonably believe that coastal municipalities have truly independent representatives with sufficient knowledge to evaluate transactions, provide written representations as to fairness on that basis, act in the best interest of the municipality, and make all appropriate disclosures to the municipality.[43] The regulations do not make clear whether an eligible contract participant who is not defined as a swap dealer or major market participant[44] would have the same obligations towards a municipal counter-party. However, reporting and record keeping requirements would still apply.[45] These regulations limit the pool of eligible counterparties and would appear to shield municipalities from overtly predatory speculators.

B. NFI Futures

Futures contracts on NFIs would be based on a standardized indexed measurement that correlates to economic losses caused by flooding related to sea-level rise. These contracts would allow municipalities—or even private property owners—to hedge against the under-protection of public adaptation projects. Although actual delivery is not contemplated, these are contracts for the future delivery of a financial commodity and are thus subject to regulation by CFTC.[46] Unlike sea level default swaps, these futures are well-suited to standardization and trade on exchanges, even though they are based on local measures.[47] This exchange access would deepen the pool of market participants and ideally allow coastal interests to better assess flood exposure through the price discovery function of futures trading.[48]

To allow for the trading of NFI futures on an exchange, contracts would be standardized and would need to be cleared by the CFTC.[49] Contract markets may not list contracts that are readily susceptible to manipulation, and the fact that these futures are based on an intangible commodity may raise some concern.[50] The NFI indices will have to be developed as standardized, independent, and verifiable sources of information to ensure veracity.[51] Past experience with futures pricing data has shown that self-reporting or phone call surveys are susceptible to manipulation.[52] To maintain integrity, a localized NFI index should be based on data pulled from scientific monitoring devices rather than the reporting of local residents. This should hinder attempts to manipulate that cannot also be excused as potentially legitimate market activity.[53] NFI futures contracts can thus be designed to pass muster with the CFTC, harness price discovery benefits, and hedge against under-protective adaptation projects.

IV. Conclusion

Sea level derivatives provide a promising path for funding climate adaptation. Use of these derivatives to hedge against risks inherent in sea level rise adaptation projects is warranted in light of the mounting expense and uncertainty of adaptation as well as the increasing inability of NFIP and FEMA to mitigate flood loss. Two derivative instruments, sea level default swaps and flooding futures are proposed as vehicles to shift the risks of under-protection and over-protection onto willing and able private parties. However, the lack of an obvious counterparty need to hedge may lead to heavy speculation. This carries with it the risks that counterparties may be over exposed and that markets will be susceptible to manipulation. But these transactions would be subject to CFTC regulation either on or off an approved exchange market. They should and must be structured to comport with those regulations to avoid the problematic incentives of an overly speculative market. The uncertainty of future sea level rise demands we adapt our cities. The economic reality of flooding demands we adapt our finances. Municipalities can strategically use derivative contracts to meet these needs, funding adaptation.

* Editor-in-Chief of the Virginia Environmental Law Journal, J.D. Candidate, Class of 2017, University of Virginia School of Law.

[1] See, e.g., Robert Mendelsohn et al., Country-Specific Market Impacts of Climate Change (2000).

[2] William V. Sweet & Joseph Park, From the Extreme to the Mean: Acceleration and Tipping Points of Coastal Inundation From Sea Level rise, 2 Earth’s Future 579–600 (2014).

[3] Claudia Tebaldi et al., Modelling Sea Level Rise Impacts on Storm Surges Along US Coasts, 7 Envtl. Res. Letters 8–9, 014032 (2012); see also Adam B. Smith & Jessica L Matthews, Quantifying Uncertainty and Variable Sensitivity within the U.S. Billion-dollar Weather and Climate Disaster Cost Estimates, 77 Nat. Hazards 1829 (2015).

[4] Cf. Bruce R. Lindsay, Cong. Research Serv., R43537, FEMA’s Disaster Relief Fund: Overview and Selected Issues (2014).

[5] Daniel J. Weiss & Jackie Weidman, Disastrous Spending: Federal Disaster-Relief Expenditures Rise Amid More Extreme Weather, Ctr. for Am. Progress (Apr. 29, 2013, 9:03 AM),; Brad Plumer, The Government is Spending Way More on Disaster Relief Than Anybody Thought, Wash. Post (Apr. 29, 2013), The National Oceanic and Atmospheric Administration documented 15 weather events causing losses in excess of one-billion dollars in 2016. Billion-Dollar Weather and Climate Disasters: Overview, NOAA, (last visited Mar. 2, 2017).

[6] Rawle O. King, Cong. Research Serv., R40650, National Flood Insurance Program: Background, Challenges, and Financial Status 1 (2012).

[7] U.S. Govt. Accountability Office, GAO-17-317, High Risk Series: Progress on Many High-Risk Areas, While Substantial Efforts Needed on Others 619 (2017).

[8] King, supra note 6, at 13; Meghan Milloy, How to Stop the U.S. Flood Insurance Program From Drowning in Debt, The Hill (Jan. 13, 2017 9:00 AM),

[9] Frontline: Business of Disaster (PBS television broadcast May 24, 2016).

[10] Multihazard Mitigation Council, Nat’l. Inst. of Building Sci., (last visited Mar. 2, 2017).

[11] City of Miami Beach, Storm Water Management Master Plan Executive Summary ES-8–9 (2012).

[12] Jessica Weiss, Miami Beach’s $400 Million Sea-Level Rise Plan is Unprecedented, But Not Everyone Is Sold, Miami New Times (Apr. 19, 2016),

[13] City of Miami Beach, supra note 11, at ES-5, ES-8.

[14] See The Role of Mitigation in Reducing Federal Expenditures for Disaster Response: Hearing before the Subcomm. on Emergency Management, Intergovernmental Relations, and the District of Columbia of the S. Comm. on Homeland Security and Governmental Affairs, 113th Cong. 2, 6–8 (2014) (statement of David Miller, Associate Administrator, Federal Insurance and Mitigation Administration).

[15] Justin Gillis & Felicity Barringer, As Coasts Rebuild and U.S. Pays, Repeatedly, the Critics Ask Why, NY Times (Nov. 18, 2012),

[16] Justin Gillis, Flooding of Coast, Caused by Global Warming, Has Already Begun, NY Times (Sept. 3, 2016),

[17] Daniel Bloch et al., Climate Hedging Explained 6 (2010), available at Note that this uncertainty also may have negative implications for municipal bond credit ratings, although impacts to date have been negligible. See Larry Levitz et al., Sea Level Rise May Challenge Some Local US Governments, Fitch Ratings (Sept. 16, 2015 5:11 PM),

[18] To “commoditize” in this sense is to designate as an underlying commodity solely to facilitate risk transfer through derivative contracts. Weather derivatives are one example of this: parties exchange weather derivatives but it is not possible to produce, buy, or sell the underlying weather. Cf. Felix Carabello, Market Futures: Introduction to Weather Derivatives, Investopedia, (last visited Mar. 31, 2017).

[19] Daniel Bloch et al., Cracking the Climate Change Conundrum with Derivatives, 2(5) Wilmott J. 271 (2010).

[20] History of the Weather Market, Weather Risk Management Assoc., (last visited Mar. 2, 2017).

[21] “Relative mean sea level” is a standardized measure of mean sea level increase—the sea level halfway between mean levels of high and low water—relative to a point the continental shelf, whereas “absolute mean sea level” measures the actual mean sea level regardless of whether surrounding land is rising or falling. Climate Change Indicators: Sea Level, EPA, (last visited Mar. 7, 2017).

[22] Daniel Bloch et al., Applying Climate Derivatives to Flood Risk Management, Wilmott Mag. (Nov. 2011), at 88–91.

[23] Consideration of these risks is beyond the scope of this post, but they may include property developers positioned to benefit from sea level rise or parties in other sectors that may benefit from climate change in some other way. See supra note 1 and accompanying text.

[24] David Ravensbergen, At the Limits of the Market: Why Capitalism Won’t Solve Climate Change, Desmog Canada (Aug. 29, 2013 9:58 AM),

[25] See supra note 10 and accompanying text. Note that Bloch’s climate default instruments can also be used for non-adaptive but necessary public expenses such as funding easement purchases to move coastal property owners away from flood prone areas. Bloch et al., supra note 22, at 95.

[26] For heating or cooling degree days, there are ready counterparties who need to hedge against the opposite outcome—farmers and energy companies compliment each other. See Travis L. Jones, Agricultural Applications of Weather Derivatives, 6(6) Int’l. Bus. & Econ. Res. J. 53, 56–57 (2007). For NFIs, it is difficult to imagine a robust market for counterparties that are not speculators beyond local repair and construction interests.

[27] 7 U.S.C. § 2(a)(1)(A) (2012).

[28] Id. §§ 1a(9), (47).

[29] See U.S. Commodity Futures Trading Comm’n., Opinion Letter (June 14, 2010),, at 2–4 (approving contracts of certain media derivatives) (preempted by Dodd-Frank).

[30] See Statutory Interpretation Concerning Forward Transactions, 55 Fed. Reg. 39,188 (Sept. 25, 1990).

[31] See supra notes 17, 19, 21 and accompanying text.

[32] 7 U.S.C. § 1a(47)(A)(ii).

[33] Id. at §1a(47)(A)(iii). Weather swaps fall within this category.

[34] Id. at § 1a(47)(D); 15 U.S.C. § 78c(68)(D); 17 C.F.R. § 240.3a68-4 (2016); see also Dodd-Frank Wall-Street Reform and Consumer Protection Act, Pub. L. No. 111-203, 124 Stat. 1376, 1642 (Jul. 21, 2010).

[35] Sea level default swaps used otherwise may be characterized as a sort of flood insurance, excluded from regulation as a swap but inevitably plagued by the same problems as the NFIP because the effect of correlated loss is multiplied by the sector’s inefficient use of capital. See supra notes 4–9.

[36] 15 U.S.C. § 78c(a)(29).

[37] These instruments are based on financial commodities and the predominant feature is not delivery. See Athena Velie Eastwood et al., A New Era of Energy Regulation, 8 Appalachian Nat. Resources L.J. 1, 6–11 (2013); Terence Healey, Joseph Williams, & Paul J. Pantano, Jr., Energy Commodities: The Netherworld Between FERC and CFTC Jurisdiction, 33(3) Futures & Derivatives L. Rep. 1, 11–14 (2013).

[38] 124 Stat. 1376.

[39] 7 U.S.C. § 7(e). “Eligible contract participant” is defined to include municipalities and financial institutions. Id. at § 1a(18).

[40] Note, however, that Bloch and others have proposed Gaussian pricing models that may assist valuation and facilitate market access. Daniel Bloch et al., Pricing Climate Derivatives with Nonlinear Models, Wilmott Mag. (Mar. 2012), at 46.

[41] 17 C.F.R. § 23.401(c) (2016).

[42] The PFM Group, How New SEC Municipal Advisor Rules Impact Swap Advisors 1–2 (2014).

[43] 7 U.S.C. § 6s(h).

[44] See 17 C.F.R. §§ 1.3(ggg), (hhh).

[45] See 7 U.S.C. §§ 6r(a)(3)(C), (b)–(c).

[46] 7 U.S.C. § 6.

[47] City specific heating or cooling degree days provide a ready example.

[48] Cf. Sharon Brown-Hruska, Comm’r, U.S. Commodity Futures Trading Comm’n., The Functions of the Derivative Market and Role of the Market Regulator, Speech at the 2006 Planalystics GasBuyer Client Conference (May 18, 2006), available at

[49] 7 U.S.C. § 6; 17 C.F.R. § 38.4.

[50] See 17 C.F.R. § 38.200.

[51] Gary Gensler, Libor, Naked and Exposed, NY Times (Aug. 6, 2012), (opining that derivative markets work best where the underlier is observable and integrity can be verified). This is not foolproof; it still may be possible for an unscrupulous trader to physically manipulate the underlier by somehow inducing flood or otherwise move the value of the futures contract. See, e.g., Commodity Futures Trading Commission v. Amaranth Advisors LLC, 554 F. Supp. 2d 523, 528–30 (S.D.N.Y. 2008) (discussing “marking the close” manipulation); Ryan Jacobs, The Forest Mafia: How Scammers Steal Millions Through Carbon Markets, The Atlantic (Oct. 11, 2013), (discussing how intangible commodities like carbon credits are susceptible to hacking and scams).

[52] E.g., Chip Cummins, Traders’ Gas-Price Data Are Getting a Closer Look, Wall Street J. (Nov. 13, 2002), (discussing problems with basing the Platts index on information volunteered by interested parties).

[53] This is necessary due to the difficulty in establishing intent where legitimate market explanations exist in enforcement actions. See In the Matter of Indiana Farm Bureau Cooperative Assoc., CFTC No. 75-14, 1982 CFTC LEXIS 25 (Dec. 17, 1982) (specific intent not established where legitimate explanation existed); see also Cargill v. Hardin, 452 F.2d 1154, 1170–71 (8th Cir. 1971) (factual specific evaluation of market actions could not be

considered ordinary and were evidence of intent to manipulate).

[ELRS] Climate Change Regulation Through Litigation: New York’s Investigation of ExxonMobil under the Martin Act

By Chris Erickson, Junior Editor–Michigan Journal of Environmental and Administrative Law at University of Michigan Law School.

This post is part of the Environmental Law Review Syndicate. Click here to see the original post and leave a comment.

In November 2015, New York Attorney General Eric Schneiderman began an investigation into whether ExxonMobil made public statements about climate change that conflicted with its own internal research.[1] Schneiderman issued a subpoena to ExxonMobil ordering production of documents related to its internal climate change research and the use of that research in making strategic decisions.[2] This investigation differentiates itself from previous climate change litigation by attempting to hold companies responsible for their contributions to climate change using laws unrelated to climate change. If New York is successful in its investigation, it could signal a new wave of climate change litigation centered on issues tangentially related to climate change.

The current investigation pursues a different strategy than past approaches to climate change litigation. Climate change litigation against greenhouse gas (“GHG”) emitters usually involves violations of federal law (such as the Clean Air Act or the National Environmental Policy Act).[3] If a GHG emitter has not violated any federal or state environmental law, plaintiffs bringing an action against a GHG emitter face the difficult task of proving tort law nuisance claims.[4] Avoiding this, New York’s investigation aims to hold GHG emitters accountable by attacking something more tangible: disclosures to investors.[5] The Martin Act, a New York statute, gives broad power to the attorney general to investigate companies for finance-related “deception, misrepresentation, concealment, suppression, [or] fraud.”[6] Investigating large GHG emitters under the Martin Act allows New York to confront the problem of climate change without the difficulties of pursuing a climate change nuisance claim under tort law.

New York has been leading the movement for an increase in the disclosures companies must make about their internal climate change research. Before its current investigation, New York settled with Xcel Energy and Dynegy, Inc. in 2008 and AES Corp. in 2009, after investigating their omissions of climate change risks in SEC filings.[7] As part of the settlement agreements, the energy companies agreed to disclose their potential financial exposure due to climate change, the incorporation of their internal climate change research and projections into their overall strategic plans, and the companies’ efforts to reduce, offset, or limit their GHG emissions.[8]

Following these settlements, the federal government also sought to provide investors with information about companies’ financial exposure to various aspects of climate change.[9] In 2010, the SEC began to require companies to make certain climate change related disclosures.[10] These disclosures include the impact of climate change regulations, climate change’s effect on business trends (e.g. decreased consumer demand for goods that produce significant GHG emissions), and climate change’s physical effects (e.g. rising sea levels threatening property).[11]

These new SEC regulations give New York and other states an additional basis to investigate GHG emitters; however, it is unclear whether this government-led form of litigation will become a standard form of litigation for regulating the conduct of GHG emitters. The evolution of cigarette litigation provides insight. Individuals and families led the initial two waves of litigation but were unsuccessful due to skepticism about the emerging scientific research and vigorous opposition from cigarette companies.[12] State governments, and not individuals, assumed the lead in the third wave of litigation and sued tobacco companies for the costs of treating people with tobacco-related illnesses.[13] This approach was successful, resulting in $246 billion in settlements and the disclosure of millions of documents about the health risks of cigarettes and the deceptive marketing of cigarettes.[14]

Like cigarette litigation, climate change litigation also faces political hurdles. Congress and the attorneys general of Alabama and Oklahoma opposed New York’s investigation into ExxonMobil.[15] Lamar Smith, Chairman of the House Space, Science, and Technology Committee, subpoenaed both Schneiderman and Massachusetts Attorney General Maura Healey, seeking information regarding their investigations of ExxonMobil.[16] Both Smith and the attorneys general criticized the investigation as an infringement on the First Amendment protections that allow ExxonMobil and other companies to disagree about the science of climate change.[17]

Other states seeking to investigate GHG emitters using an approach similar to New York’s may face additional restrictions. The Martin Act gives the Attorney General of New York powers that are not available to many other attorneys general.[18] The Martin Act differs from other fraud statutes because the attorney general does not need to prove intent to demonstrate liability.[19] It also allows multiple remedies. While injunctive relief was the original remedy, the Martin Act now allows the attorney general to bring criminal or civil charges.[20] Of the seventeen attorneys general supporting New York’s investigation into ExxonMobil, only Massachusetts Attorney General Maura Healy has similarly issued a subpoena. [21]

New York may broaden its investigation as it receives more information from ExxonMobil. Potential targets include organizations that both publicly question climate change research and receive funding from GHG emitters.[22] Discrepancies between the public statements of these organizations and the internal documents of the companies providing them funding could offer more proof for attorneys general seeking charges. Because many of the large GHG emitters have funded the same climate change denying organizations (such as the Global Climate Coalition), the investigation into these organizations could ensnare other GHG emitters in similar Martin Act investigations.[23]

New York’s investigation is still young, and there is little certainty about the outcome. If successful, the investigation could encourage other states to pursue similar investigations into ExxonMobil and other large GHG emitters. Climate change litigation may follow a similar path to cigarettes and other toxic torts, in which the increasing scientific evidence does not result in litigation success until the evidence becomes “overwhelming.”[24] Until climate change science becomes overwhelmingly accepted, litigation involving residual considerations, such as fraudulent misrepresentations to investors, may be the most effective legal option for affecting companies’ contributions to climate change.

[1] Clifford Krauss, Exxon Mobil Investigated for Possible Climate Change Lies by New York Attorney General, N.Y.Times, Nov. 5, 2015, at A1.

[2] Bob Simpson, New York Attorney General Subpoenas Exxon on Climate Research, Inside Climate News, (last visited Jan. 22, 2017).

[3] Richard Dahl, A Changing Climate of Litigation, 115 Environmental Health Perspective, no. 4, A204, A206 (2007).

[4] See Douglas A. Kysar, What Climate Change Can Do About Tort Law, 41 Environmental Law, no. 1, 10739, 10739 (2011).

[5] Justin Gillis and Clifford Krauss, Exxon Mobil Investigated for Possible Climate Change Lies by New York Attorney General, N.Y.Times, Nov. 5, 2015, at A1.

[6] N.Y. Business Law § 352 (McKinney 2016).

[7] Assurance of Discontinuance Pursuant to Executive Law §63(15), In the Matter of Xcel Energy Inc., (2008) (No. 08-012) [available at]; Assurance of Discontinuance Pursuant to Executive Law §63(15), In the matter of Dynegy, Inc. (2008) (No. 08-132) [available at]; Assurance of Discontinuance Pursuant to Executive Law §63(15), In the Matter of AES Corp., (2008) (No. 09-159), 2009 [available at].

[8] See Id.

[9] Commission Guidance Regarding Disclosure Related to Climate Change, 75 Fed. Reg. 6,297, (Feb. 2, 2010) (to be codified at 17 C.F.R. pt. 211, 231, 234).

[10] Id.


[12] Lincoln Caplan, Will the “Tobacco Strategy” Work Against Big Oil?, News Desk, The New Yorker, Nov. 17, 2015,

[13] Id.

[14] Id.

[15] Laurel Brubaker Calkins, Oklahoma, Alabama Accuse NY of Stifling Climate Debate, Bloomberg, (last visited Jan. 22, 2017).

[16] David Hasemyer, State Attorneys General Subpoenaed by Rep. Lamar Smith for Exxon Fraud Probe, Inside Climate News, (last visited Jan. 22, 2017).

[17] This argument appears misguided as it does not address whether ExxonMobil committed actionable fraud or deception, as determined by the Martin Act, by not disclosing internal information about climate change.

[18] See Nicholas Thompson, The Sword of Spitzer, Legal Affairs, May–June 2004,

[19] State v. Rachmani Corp., 525 N.E.2d 704, 708 (N.Y. 1988).

[20] Assured Guar. (UK) Ltd. v. J.P. Morgan Inv. Mgmt. Inc., 962 N.E.2d 765, 768 (N.Y. 2011).

[21] See David Hasemyer, Exxon Widens Climate Battle, May Depose 17 State AGs Over Investigations, Inside Climate News, (last visited Jan. 22, 2017).

[22] Clifford Krauss, More Oil Companies Could Join Exxon Mobil as Focus of Climate Investigations, N.Y.Times, Nov. 7, 2015, at B3.

[23] See Id.

[24] Richard Dahl, A Changing Climate of Litigation, 115 Environmental Health Perspective, no. 4, A204, A204 (2007).

[ELRS] Enough Horsing Around

By Joseph Godio, Senior Editor–Georgetown Environmental Law Review


New York City is a city thought by many to be one of the most incredible, majestic, and beautiful cities in the world.  Its prominence and prosperity has grown just like the skyline, continuously reaching new heights.  Ironically, one of the most beautiful places in New York City, Central Park, is also home to one of the most ugly and archaic realities of not just the city, but of the country.  Walking through midtown Manhattan you will find iconic buildings, thousands of business professionals and tourists, and incredible culture.  The ugliness that you will also find is animal cruelty, on full display.

There is a large horse and carriage industry in New York City and carriage drivers are able to exploit horses for upwards of fifty dollars for a short twenty-minute ride.[1]  Under the Animal Welfare Act, horses do not receive any federal protection.[2]  As such, day in and day out, horses are treated in an inhumane manner by the carriage industry in New York City.[3]  The American Society for the Prevention of Cruelty to Animals (“ASPCA”), stated “[t]he life of a carriage horse on New York City streets is extremely difficult and life threatening . . . carriage horses were never meant to live and work in today’s urban setting.”[4]

Carriage horses are forced to work in a harsh environment, foreign to their natural habitat.  They work roughly nine hours per day, seven days a week, walking on hard pavement, pulling a carriage weighing hundreds of pounds, and inhaling unhealthy air from cars, buses, and taxis.[5]  Among the many effects of working in this unnatural environment are incidents where horses will react by taking off at full speed into the busy city streets.[6]  These horses are denied the their fundamental needs to live healthy lives, such as pasture time to “graze, stroll and socialize freely on grass.”[7]


The protection of horses was a central campaign policy used by Mayor Bill de Blasio in his 2013 Mayoral campaign.[8]  Mayor de Blasio gained support of animal rights activists because of his political stance on the issue.[9]  In January of 2016, an “agreement in concept” was announced by Mayor Bill de Blasio’s office, which would have significantly reduced the horse carriage industry.[10]  The agreement would have shrunk the horse and carriage industry from its current size of two hundred and twenty horses down to ninety-five by 2018.[11]  The agreement would have required the building of a new stable in Central Park, which would have been large enough to house seventy-five horses at the time.[12]

In order to effectuate and implement the agreement and plan, the City Counsel needed to approve the deal.  Unfortunately, in February of 2016, the New York City Counsel did not simply reject the vote, rather they canceled the vote altogether.[13]  The legislation failed as a result of the Teamster’s union pulling support for Mr. de Blasio.[14]  When the Teamsters pulled out, the legislation no longer had the sufficient number of votes for it to pass.  After the cancelation of the vote, a carriage driver and spokesman for the industry, Ian McKeever, stated to reporters, “It’s a great day for the horse and carriages.”[15]  However, for the horses, it meant the continuation of inhumane treatment, starvation and borderline torture.

Currently, most carriage horses are housed in Clinton Park Stables, which is a building located on 52nd Street near the Hudson River.[16]  Most of the stalls inside the Clinton Park Stables are eight feet by ten feet.[17]  However, according to customary and humane housing for horses, the ideal stall size for a horse of one thousand pounds or larger is twelve feet by twelve feet.[18]  For more “compact breeds,” such as ponies, the ideal size is ten feet by ten feet.[19]  This necessarily entails another level of inhumane treatment of these horses.  When they are not subject to the harsh life on the job, they retire to a stall that is too small for house their large frames.

In addition to ill-equipped housing, horses are treated inhumanly throughout the course of their lives.  Even as the horses grow tired, sick and old they are still required to work long excruciating hours every day.[20]  They often suffer from respiratory ailments as a result of breathing exhaust fumes on a daily basis, and typically develop extreme leg issues from traversing the city streets on hard, unforgiving surfaces all day.[21]

In many instances, these issues go untreated.  On September 14, 2006, a horse that had worked pulling carriages through New York City for nearly two decades, collapsed in Central Park.[22]  After the horse collapsed, the carriage driver began to whip the defeated horse repeatedly in attempts to get the horse to stand up and continue working.[23]  A crowd, terrified, gathered around urging the carriage driver to stop.[24]  Eventually, a police trailer took the horse away to her stable, and the horse died early the next morning.[25]  Similarly, in April of 2014, a carriage driver falsified records to force an “old, asthmatic” horse to continue working.[26]  The horse was involved in a horse-carriage accident in September 2013, and the carriage deriver was previously charged with working horses for more than twelve hours in a twenty-hour period.[27]

As another example, on February 23, 2015, a horse was found in his stall unable to stand up.[28]  Thereafter, it was discovered that the horse had suffered a fractured leg and was later euthanized.[29]  In another event, in December of 2013, a carriage driver was charged with cruelty to animals after he was discovered to be working a horse that was “visibly inured and struggling to pull the weight of the carriage.”[30]  A veterinarian later found that the horse had “thrush—an infection of the hoof that, if left untreated, can lead to permanent lameness and sometimes even require euthanasia.”[31]  These are just a few examples of the multiple pages of reports of inhumane treatment of these horses that occur far too often.

The horses are not the only living beings at risk due to the horse and carriage industry.  Horses are prey animals and, therefore, have a “highly developed flight drive that is easily triggered when they are startled by an unexpected or threatening stimulus.”[32]  In other words, the loud, busy and chaotic streets of New York City seems like the worst place for an extremely sensitive thousand pound animal to be.

There have been over thirty carriage horse accidents in the past few years alone.  Many of these instances involve horses being “spooked,” from which their natural reaction is to take off running.[33]  On June 9, 2014, something in the city spooked a horse and he bolted through the city streets.[34]  An innocent bystander attempted to stop the horse by grabbing its reins and was then dragged by the horse.[35]  On October 19, 2014 a witness videos shows a spooked horse bolting up 11th avenue in Manhattan, running full speed through busy a busy intersection.[36]  In another incident involving a bolting horse, occurring on October 28, 2011, a witness described the incident, “The horse took off at top speed and could not be stopped.  He could have easily trampled a pedestrian.”[37]  Had the horse trampled an innocent pedestrian, who would have been to blame?  In our society, it is more likely than not that the media would have depicted the horse as out of control, where it was merely acting instinctively, but in the wrong environment.

Therefore, having horses in an over populated New York City is incredibly dangerous to all that are in the area.  At any moment, a horse may be spooked and may take off, putting everyone in its path at risk of serious injuries, if not death.  The risk to public safety does not end there, however.  Spending about nine hours a day on the job, horses naturally defecate on the same streets they traverse.  There are two hundred and twenty horses in the horse and carriage industry in New York City.[38]  Making matters worse, “carriage drivers often do not clean up after the horses, leaving waste and rotting debris.”[39]  Therefore, city health officials have an additional burden to regularly monitor the horses for diseases to ensure that they are not carrying disease that could be transmitted to other animals, or to humans.[40]


Given the fact that previous efforts by Mayor de Blasio and animal rights activists have failed, a different approach is needed to effectuate a change in the exploitation of horses in New York City.  I will propose two approaches that will result in a cleaner environment in the streets of New York City, as well as eliminate the inhumane treatment of horses.  The first approach that I propose will result in the end of the horse and carriage industry through a phase-out process, and is likely to be met with the strongest opposition, as it is the more ambitious approach.  The second approach will still allow the operation of the industry, but will reduce the number of horses allowed, as well as increase the standards of horse keeping, ensuring that they are treated humanely.


Too drastic of a change, too quickly, will not only be logistically difficult to implement, but also will result in the displacement of many workers that rely on the industry for income.  Therefore, the first approach that I propose is a phase-out process by which carriage drivers will still be able to operate for a certain amount of time, but after which operation will be in violation of the law.  This process will be implemented through newly promulgated regulations and a strict permit process.

Under this approach, beginning January 1, 2018, no more permits will be issued to operate a horse a carriage.  After this date, those with current and up to date permits will be allowed to continue operation.  Those with said permits will be legally allowed to continue operation until July 1, 2019.  After this date, any operation of horse and carriage will be in direct conflict with the law and will be subject to minimum fines of $5,000, confiscation of the horse and any additional penalties imposed by law.  This approach is similar to the workings amortization periods with non-conforming uses in the context of zoning laws.


In the alternative, this more lenient approach is more of a compromise.  It will have the effect of minimizing the possibility that horses are treated inhumanely, will reduce the number of horses used in the city, but will still allow for the operation of the industry.  This approach, like the approach of Mayor de Blasio previously discussed, will reduce the number of horse in the New York City horse and carriage industry from two hundred and twenty to seventy-five.

In addition, these seventy-five horses will be placed on a rotation system and will, by law, only be allowed to serve a maximum of six months of service every three years.  This will help to ensure that the polluted air, hard concrete, and busy Manhattan streets will have as little impact on the longevity of the life of the horse as possible.  Furthermore, this rotation will ensure that large, full-grown horses are not subject to living in stalls that are too small for the majority of their lives.  Finally, this compromise will require that carriage operators attain a higher level of horse training, will be subject to city inspections of housing arrangements for the horses, and will be subject to high fines and relinquishment of license after only one violation.


In recent years the debate over the horse and carriage industry in New York City has grown more and more contentious.  Meanwhile, these horses are treated inhumanely, subject to harsh working conditions, and, the public is put at risk.  Through either of the approaches I have proposed, we can begin to protect horses and make the streets of New York City a more sanitary environment.  Implementation will be met with strong opposition, but that cannot deter action.  Mistreated horses cannot speak for themselves and tell us the pain that they go through, but the record of inhumane treatment speaks volumes.  If we stand by and allow this inhumane treatment continue, that too, speaks volumes about us as a society.

[1] Inside A Stable Where Central Park’s Carriage Horses Live, Business Insider, (last visited May 12, 2016).

[2] The Cruelty of Horse-Drawn Carriages, PETA (last visited May 13, 2016).

[3] Carriage Horses, The Humane Society of the United States, (last visited May 13, 2016).

[4] Cruel and Inhumane Horse Drawn Carriages, NYCLASS, (last visited May 11, 2016).

[5] Id.

[6] Id.

[7] Id.

[8] Michael M. Grynbaum, New York City Announces Deal on Carriage Horses in Central Park, NY Times, (last visited May 14, 2016).

[9] Id.

[10] Id.

[11] Id.

[12] Id.

[13] J. David Goodman and Michael M. Grynbaum, Mayor de Blasio’s Carriage-Horse Plan Falters in City Counsel, NY Times, (last visited, May 15, 2016).

[14] Id.

[15] Id.

[16] Supra Inside A Stable Where Central Park’s Carriage Horses Live note 1.

[17] Id.

[18] Karen Briggs, Stall Design, The Horse, (last visited, May 18, 2016).

[19] Id.

[20] Supra The Cruelty of Horse-Drawn Carriages note 2.

[21] Id.

[22] Incidents Involving Horse-Drawn Carriages, PETA, (last visited May 18, 2016).

[23] Id.

[24] Id.

[25] Id.

[26] Id.

[27] Id.

[28] Id.

[29] Id.

[30] Id.

[31] Id.

[32] Supra Carriage Horses note 3.

[33] Id.

[34] Supra Incidents Involving Horse-Drawn Carriages note 22.

[35] Id.

[36] Id.

[37] Id.

[38] Supra New York City Announces Deal on Carriage Horses in Central Park note 8.

[39] Supra Cruel and Inhumane Horse Drawn Carriages note 4.

[40] Id.

Our Money is Safe, but the Planet Is Not: How the Carbon Bubble Will Cause Havoc for the Environment, but Not the Stock Market

By Breanna Hayes, Managing Editor, Vermont Journal of Environmental Law

I. Introduction

Human use of fossil fuels dates back to prehistoric times.[1]  Before the Industrial Revolution, humans mostly relied on wood, wind, and water as energy sources.[2]  But as the Industrial Revolution progressed, humans developed a dependence on fossil fuels.[3]  In addition, the advancements of the Industrial Revolution allowed for the human population to grow rapidly.[4]  Combined, these facts indicate that, not only were humans developing a greater dependence on fossil fuels, but also there were more humans on earth than ever before.  With a greater number of humans, fossil fuel dependence was even more severe.

While humans blindly relied on fossil fuels for centuries, by the 1940s scientists began predicting the impact that fossil fuels would have on the environment.[5]  In 1949, M. King Hubbart made a prediction known as “Hubbart’s Peak.”[6]  According to this prediction, fossil fuels would peak in the 1970s.[7]  Hubbart further predicted that despite the peak in fossil fuels, humans would still have a rising demand for energy.[8]  According to Hubbart’s predictions, the energy sector would need to replace fossil fuels with renewable energy sources to meet the demand.[9]  As predicted, oil peaked in 1971, with other fossil fuels soon to follow.[10]  Yet, by the time the world began to acknowledge Hubbart’s peak, fossil fuels had “become so firmly interwoven into human progress and economy, that changing this energy system would drastically alter the very way we have lived our lives.”[11]  While the transition will be difficult, many nations around the world have begun to move away from fossil fuels.[12]  A major victory in the movement from fossil fuels was the Paris Agreement, which has been ratified by more than 100 countries.[13]  In the Paris Agreement, countries committed to, “holding the increase in the global average temperature to well below 2°C above pre-industrial levels and pursuing efforts to limit the temperature increase to 1.5°C above pre-industrial levels, recognizing that this would significantly reduce the risks and impacts of climate change”[14]

While world governments are progressing towards greener energy to combat climate change, a problem arises in the energy industry.  Publicly traded energy companies are a considerable market force,[15] despite demand for fossil fuels continuing to decrease and the demand for renewable energy sources rising.[16]  In 2015, even though fossil fuel prices were at a multi-year low, “over half of global power capacity additions in 2015 came from wind, solar, hydro and nuclear.”[17]  Additionally, the Paris Agreement, formulated in December 2015, creates the expectation that policy-makers will advance progressive ideas to help countries meet the agreed-upon two degree Celsius cap.[18]  An obvious way to mitigate this change is for energy companies to start diversifying portfolios to include renewable sources.[19]  However, timing is key for both the market and the climate.  Concerning the market, “If [companies] move too quickly, money could be left on the table from their fossil fuels business. But too slowly, and they could miss their window of opportunity.”  On the other hand, the world has a very restricted carbon budget if it is going to honor the two degree Celsius cap embodied in the Paris Agreement.[20]

This article focuses on the window of time that companies have to shift from fossil fuels to renewable energy. The article provides a quick overview of public companies and the use of stock.  Then, the article discusses the “Carbon Bubble” and how it compares and contrasts to both the dotcom and housing market bubbles. Finally, the article discusses the environmental impact of the energy industry’s financial choices.

II. Background: Brief Overview of Public Companies

Public companies differ from private companies in two ways.  First, public companies trade stock on the public stock exchange and second, public companies make regular, legally required disclosures to the Securities Exchange Commission (SEC).[21]  By selling stock on the public stock exchange, any person can purchase stock in a company.  In addition to individual citizens, institutional investors—such as pension funds, insurance companies, and mutual funds—may purchase public stock.[22]  The SEC requires publicly traded companies to make regular disclosures to protect both individual and institutional investors.[23]  According to SEC, public companies must “disclose meaningful financial and other information” so there can be a “common pool of knowledge for all investors to use to judge for themselves whether to buy, sell, or hold a particular security.”[24]

When a company decides to sell stock to the public, multiple factors determine the price for the stock and the price can fluctuate constantly.  Regardless of what a person pays for a share of stock, they are entitled to the same thing—a share of the company’s equity.  The company’s equity can be determined by a simplified formula.  All companies have assets and liabilities.  Assets are the fixed infrastructure and inventory the company can liquidate, and liabilities are the debts a company owes.  Because a company’s equity is subordinate to its debts, equity can be determined by subtracting the liabilities from the assets.  The equity is then divided by the amount of stock the company issued. For example, if a company owns $50 million worth of assets and has $20 million in liabilities, the company’s equity would be $30 million.  If the company issued 2 million shares, each share would be worth $15 of the equity.

As mentioned, a stock’s price is not locked in to its current value of equity.  Rather, many factors, such as investor enthusiasm may alter the price. [25]   If investors believe that the company will grow, stock may sell higher than it is worth in equity.  Yet, a problem arises when stock price increases rapidly but the assets of the company do not catch up.  When assets’ prices appreciate beyond their value, a market bubble emerges.[26]   For example, “Investors may bid up the price of an asset in the belief that its price will continue to rise and when the ever-higher price results in an ever-smaller number of buyers, the price eventually declines rapidly.”[27]  Inevitably, the bubble bursts and the price drops.[28]

Some are concerned that energy companies are creating a bubble.[29]  The concern stems from how energy companies value assets.  Energy companies consider reserves of fossil fuels as assets.[30]  But, in light of current political and social action regarding climate change, many believe that energy companies will not be able to utilize all fossil fuel reserves that are now considered assets of the companies.[31]

III. The Carbon Bubble

Prior to the Paris agreement, nearly 200 countries signed the Cancun Agreement, which embodied an international commitment to keep the global temperature from rising more than two degrees Celsius from pre-industrial levels.[32]  The Cancun Agreement additionally acknowledges the possible need to further restrict global warming to 1.5 degrees Celsius.[33]  In November 2011, Carbon Tracker Initiative (CTI), a nonprofit think tank, used the Cancun Agreement as a reference point and pioneered the concept of “the Carbon Bubble.”[34]   Relying on the assertion that the world would limit carbon usage within the bounds of the Cancun Agreement, CTI calculated that the world’s energy budget was about one-third of what energy companies had in reserves.[35]  The other two-thirds would be “stranded assets.”  CTI defined stranded assets as:

Fossil fuel energy and generation resources which, at some time prior to the end of their economic life (as assumed at the investment decision point), are no longer able to earn an economic return (i.e. meet the company’s internal rate of return), as a result of changes in the market and regulatory environment associated with the transition to a low-carbon economy.[36]

CTI further calculated, that by 2011, the world had already used a third of its usable energy budget.[37]

CTI also asserted that the carbon bubble could pose financial risks to investors.  The report states that:

The current system of market oversight and regulatory supervision is not adequate to send the required signals to shift capital towards a low carbon economy at the speed or scale required. The current short-term approach of the investment industry leaves asset owners exposed to a portfolio of assets whose value is likely to be seriously impaired.[38]

CTI further criticized the energy industry for continuing to use invested money to explore for more fossil fuel reserves, despite the fact that the reserves already located would exceed the carbon budget.

IV. The Other Bubbles: Housing and Dotcom

To understand the possible effects of a carbon bubble, it is useful to look at the two most recent economic bubbles: the dotcom and housing bubbles.  The dotcom bubble occurred from 1995-2001 and revolved around the growing tech industry catalyzed by the advent of the internet.[39]  The housing bubble began to grow in 2000 and burst in 2006 after banks and other originators approved more and more subprime and nonprime mortgages.[40]  The distinguishing factor between the housing bubble and the dotcom bubble is the was the impact on the economy.  The housing bubble had a heavy impact on the economy, while the dot com bubble did not.[41]

In the 1990s, the internet became increasingly integrated into everyday life.  In response to growing dependence on the internet, many online retail companies began springing up.[42] Investors enthusiastically invested in companies that were taking advantage of the internet frontier.[43] Investor enthusiasm was so high, some companies saw stock prices double within one day of an IPO.[44]  The flow of investments fueled the “dotcom bubble.”[45]

The intense investor enthusiasm made stock prices rise[46] however, some companies were losing as much as $10 million to $30 million per quarter.[47]  Due to these unsustainable losses, many internet-based companies folded.[48]  Between March and April of 2000, roughly a trillion dollars worth of investments were lost.[49]

Just as the dotcom bubble popped, the housing bubble began to grow.[50]  In the early 2000s, banks and other originators approved more subprime and nonprime loans.[51]  These mortgages were high risk because approved borrowers often had low credit scores or were charged rates and fees higher than they were unqualified for.[52] Some mortgage loans had risks layered, including those where potential repayment issues were deferred by permitting “adjustable” payments.[53] Such structures allowed borrowers to select monthly payments that were lower than the fully amortized rate.[54] This meant that borrowers could make no principal payments and just send in a fraction of the interest accruing each month, for the first few years. With this type of adjustable rate mortgage, the principal balance would grow.[55] The rates would reset in a few years to the fully amortized rates, and then monthly payments would spike to a level that many borrowers could not afford. After banks and other originators approved subprime mortgages, banks would pool these mortgages and use them to back securities that they would then sell to investors, including other banks.[56]  Certain slices of these mortgage-backed securities were sometimes repackaged into new pools that also issued securities.[57] This scheme worked to help supply needed credit to the housing market while borrowers could afford their payments. However, when payments spiked and many borrowers defaulted, the mortgage-backed securities began to decline in value. Some banking firms that held mortgage-linked securities in their portfolios began to collapse.[58]

The burst of both the dotcom and housing bubbles caused a loss of roughly $6 trillion in household wealth.[59]  While both bubbles caused similar losses, the housing bubble burst had a much greater effect on the rest of the economy than the dotcom bubble did.[60]  The housing bubble had a stronger effect on the economy because of the population impacted.[61]  When the dotcom bubble burst, the majority of investors were wealthy and less indebted.[62]  Even though those investors lost money, they still had disposable income.  In contrast, the people who felt the shock of the housing bubble were mostly low-income homeowners.[63]  The bubble was fueled by subprime and nonprime loans that many people could not afford to repay.  As a result, most of these people’s income went into trying to pay their mortgages and save their homes.[64]  Unlike the wealthy, albeit unlucky, investors who lost wealth in the dotcom bubble, the homeowners impacted by the housing bubble could not afford to continue retail spending.[65]  Consequently, the economy felt a much greater shock from the housing bubble burst than the previous dotcom bubble burst.

V. The Carbon Bubble Mirrors the Dotcom Bubble on a Financial Scale

It is unlikely that the carbon bubble will have the same detrimental effect on the economy that the housing bubble had.  This is because the carbon bubble differs from the housing bubble in two significant ways.  First, the carbon bubble is not fueled by debt, subprime or otherwise.  Second, the carbon bubble is more similar to the dotcom bubble because the people who will most likely feel the shock are wealthy investors who will be able to absorb the loss without halting retail spending.

In the housing crisis, the assets that were overvalued were the mortgage-backed securities.  Borrowers could not repay high-risk loans, so there was no capital to fund the mortgage-back securities.  On the other hand, there are still high consumption rates of fossil fuels.[66]  Whereas the housing bubble was built on unsustainable loans, the carbon bubble is forming around anticipated legislation.  The carbon bubble is not forming from industry’s inability to provide reserves, rather anticipatory need for regulation.

Another factor that fueled the housing bubble was government intervention.  The government promoted home ownership, leading more people to borrow money.[67]  In contrast, governments are not promoting fossil fuel usage. The recent election of Donald Trump to the Presidency may impact how “stranded” the energy company assets really are.  During the Obama Administration, the United States made strides toward greener energy, which included signing the Paris Agreement.[68]  The President-Elect Donald Trump has pledged to withdraw from the Paris Agreement and has supported the use of fossil fuels.[69]  Therefore, the United States may not provide restrictive legislation that would burst the carbon bubble.  Nevertheless, while a pro-fossil fuel administration in the United States may delay the shock, it will still come.  The United States is only one of the countries that ratified the Paris Agreement.  While fossil fuels may have a market in the United States under a Trump Administration, the global market will still decrease.

The carbon bubble will most likely affect the economy similarly to the dotcom bubble.  If the shares plummet, those affected will be mostly wealthy or institutional investors. For example, according to the Forbes Global 2000 list of the World’s Biggest Public Companies, ExxonMobil ranked as number 9 and Chevron ranked number 28.[70]  The companies also ranked first and third respectively for public companies in oil and gas operations.[71]  Of the 4.15 billion outstanding ExxonMobil shares, company insiders own over 500 million and institutions own over 2 billion.[72]  Similarly, of the 1.89 billion outstanding Chevron stock, corporate insiders own approximately 75 million and institutional investors own more than 1.18 billion shares.[73]  While personal wealth would be lost if energy stock plummeted, it would not have the same detrimental effect on retail spending as the housing bubble did.

Furthermore, stockholders are holding the companies accountable for their practices.  Recently, ExxonMobil shareholders agreed to the “prudent use of investor capital in light of the climate change related risks of stranded carbon assets.”[74]  Also, some shareholders are bringing a securities class action alleging that ExxonMobil materially misrepresented its assets[75] (although currently, the class is not yet certified[76]). Shareholders can use these avenues to assist legislators in holding these companies to the carbon budget.

VI. The Environment Will Still Suffer

While the carbon bubble is unlikely to wreak havoc on the economy, the threat to the environment is still very real. In fact, the lack of effect on the economy may increase the threat to the environment.  If the world is committed to keeping global temperatures below two degrees Celsius, as of 2013, 60-80 percent of fossil fuel reserves must stay under the ground.[77]  The use of fossil fuels and the transition to renewables may not lead the world to a financial crisis, but if the transition is not quick, the world may face an environmental crisis.  If energy companies are too slow in transitioning from fossil fuel to renewable sources, they will overspend on the carbon budget.  If that happens, the likelihood of global temperatures exceeding the agreed on cap of two degrees Celsius increases. [78]  There are many effects that rising temperatures could have on the environment, including shrinking glaciers, loss of sea ice, accelerated sea level rise, longer and more intense heat waves, shifts in plant and animal ranges, trees flowering sooner, etc.[79] Many of these effects are already documented.[80]

If these changes continue, communities will feel the impact.  The effects could be health-based, social, or cultural due to a change in the availability of natural resources.[81] According to the Environmental Protection Agency,

Climate change may especially impact people who live in areas that are vulnerable to coastal storms, drought, and sea level rise or people who live in poverty, older adults, and immigrant communities. Similarly, some types of professions and industries may face considerable challenges from climate change. Professions that are closely linked to weather and climate, such as outdoor tourism, commerce, and agriculture, will likely be especially affected.[82]

While energy companies are inflating the carbon bubble by burning carbon and contributing to these environmental effects, it is unlikely that courts will hold companies liable.[83]  This is because, without a federal cause of action, it is challenging to prove causation.[84]  Since climate change is a global problem, it is challenging to prove that individual companies caused certain environmental issues.

VII. Conclusion

There is reason to be concerned about the carbon bubble, but that reason is not the stock market.  Most likely, the carbon bubble will not have the effect on the economy that the housing market did.  This is because, on the financial side, either the companies will divest from fossil fuels or the people who will be affected by the carbon bubble burst will be wealthy enough to absorb the shock.

On the other hand, if companies continue to burn carbon and inflate the carbon bubble, people will feel the environmental effects on a societal level.  Natural resources may become scarcer, cultural ways of life may fade due to lack of resources and communities may be destroyed due to harsh storms.  The impact on communities will not come from a stock market crash;  it will come from environmental catastrophes.

[1] A Brief History of Coal Use, U.S. Dep’t of Energy, (last visited Nov. 16, 2016).

[2] Eric McLamb, The Ecological Impact of the Industrial Revolution, Ecology Glob. Network, (Sept. 18, 2011)

[3] Id.

[4] Id.

[5] Id.

[6] Id.

[7] Id.

[8] Id.

[9] Id.

[10] Id.

[11] Id.

[12] Lorraine Chow, 150 Days and Counting, Costa Rica Gets All its Electricity From Renewables, EcoWatch, (Sept. 7, 2016); Justin Gillis, A Tricky Transition from Fossil Fuel: Denmark Aims for 100 Percent Renewable Energy, NYTimes, (Nov. 10, 2014) (discussing Denmark’s commitment to wind energy);  Justin Gillis, Sun and Wind Alter Global Landscape, Leaving Utilities Behind, NYTimes, (Sept. 13, 2014) science/earth/sun-and-wind-alter-german-landscape-leaving-utilities-behind.html (discussing Germany’s commitment to renewable energy, the largest industrial power to do so.)

[13] Paris Agreement- Status of Ratification, UNFCCC, (last visited Nov. 21, 2016).

[14] The Paris Agreement, art. 2(1)(a), Nov. 4, 2016.

[15] See The World’s Biggest Public Companies, Forbes, (last visited Nov. 21, 2016) (listing ExxonMobil, PetroChina, Chevron, Total, Sinopec, and Royal Dutch Shell in the top 50 public companies).

[16] Tara Schmidt, 2016: Time for Energy To Reinvent Itself?, Forbes, (Dec. 15, 2015)

[17] Id.

[18] Id.

[19] Id.

[20] Carbon Bubble, Carbon Tracker Initiative, (last visited Nov. 11, 2016).

[21] Public Companies, SEC (last visited Nov. 21, 2016).

[22] What We Do, SEC (last visited Nov. 21, 2016).

[23] Id.

[24] Id.

[25] Id.

[26] Jonathon D. Glater, Student Debt and the Siren Song of Systemic Risk, 53 Harvard J. on Legislation 99, 121 (2016).

[27] Id.

[28] Id.

[29] Duncan Clark, Why Can’t We Give Up Fossil Fuels, The Guardian, (Apr. 17, 2013 12:49PM)

[30] Id.

[31] Id.

[32] Juliet Eilperin & William Booth, Cancun Agreements put 193 nations on track to deal with climate change, The Washington Post(Dec. 11, 20100

[33] The Cancun Agreement, art. 139(a)(iv).

[34] Carbon Bubble, Carbon Tracker Initiative, (last visited Nov. 11, 2016).

[35] Id.

[36] Key Terms, Carbon Tracker Initiative, (last visited Nov. 21, 2016).

[37] Carbon Bubble, supra, note 34.

[38] Unburnable Carbon, Carbon Tracker Initiative, 18 (2011).

[39] Ben Geier, What Did We Learn From the Dotcom Stock Bubble of 2000?, Time, (Mar. 12, 2015).

[40] Jennifer Taub, Other’s People Houses,  140-145181-183

[41] Steven Gjerstad & Vernon L. Smith, From Bubble to Depression?, The Wall Street Journal, (Apr. 9, 2009); Amir Sufi & Atif Mian, Why the Housing Bubble Tanked the Economy and the Tech Bubble Didn’t, FiveThirtyEight, (May 12, 2014)

[42] Geier, supra note 38.

[43] Id.

[44] Id.

[45] Id.

[46] Id.

[47] Id.

[48] Id

[49] Id.

[50] Taub, supra note 39, at 166.

[51] Id.

[52] Id.

[53] Id.

[54] Consumer Handbook on Adjustable Rate Mortgages, The Federal Reserve Board, 4,

[55] Id.

[56] Taub, supra note 39, at 156.

[57] Id. at 157.

[58] Id. at 185.

[59] Amir Sufi & Atif Mian, supra note 40.

[60] Id.

[61] Id.

[62] Id.

[63] Id.

[64] Id.

[65] Id.

[66]Fossil Fuels Still Dominate U.S. Energy Consumption Despite Recent Market Share Decline, U.S. Energy Information Administration, (last visited Dec. 10, 2016).

[67] Glater, supra note 26, at 125.

[68] The United States Formally Enters the Paris Agreement, The White House, (Sept. 3, 2016)

[69] Here’s How Soon Donald Trump Could Pull Out of a Historic Climate Change Deal, Fortune, (Nov. 10, 2016); Ashley Parker & Coral Davenport, Donald Trump’s Energy Plan, More Fossil Fuels and Less Rules, NYTimes, (May 26, 2016)

[70] The World’s Biggest Public Companies, Forbes, (last visited Nov. 27, 2016).

[71] PetroChina ranked second, however information on stock distribution was unavailable. Id.

[72] ExxonMobil Corporation, Yahoo Finance, (last visited Nov. 27, 2016).

[73] Chevron Corporation, Yahoo Finance, (last visited Nov. 27, 2016).

[74] XOM Return Capital to Shareholders to Avoid Stranded Assets in 2016, Ceres, (last visited Nov. 27, 2016).  

[75] ExxonMobil Corporation, Rosen L. Firm, (last visited Nov. 27, 2016).

[76] Id.

[77] Unburnable Carbon 2013: Wasted Capital and Stranded Assets, Carbon Tracker Initiative, (Apr. 2013)

[78] Id.

[79] The Consequences of Climate Change, NASA, (last visited Nov. 27, 2016).

[80] Id.

[81] Climate Impacts on Society, Envtl. Prot. Agency, (last visited Nov. 27, 2016).

[82] Id.

[83] AEP v. Connecticut, 564 U.S. 410 (2011)

[84] Id.

The Legislative History of the National Park Service’s Conservation and Nonimpairment Mandate

By Caitlin Brown, UC Berkeley School of Law, Class of 2017


The National Park Service manages over 84 million acres of land divided between 413 different sites, and in 2015 alone, served 307.2 million visitors.[1] Their management goals are based on the 1916 National Park Service Organic Act (“the Act”). Section 1 of the Act defines the Park Service’s purpose as “to conserve the scenery and the natural and historic objects and the wild life therein and to provide for the enjoyment of the same in such manner and by such means as will leave them unimpaired for the enjoyment of future generations.”[2] How are conservation and impairment from section 1 of the Act defined in the legislative history? How did these concepts originally enter the legislation, and what did Congress think the implications of the standards were? Professor Eric Biber of Berkeley Law posed these questions to me to assist with his research for an article he wrote with Elisabeth Long Esposito, The National Park Service Organic Act and Climate Change.[3] Given that 2016 is the centennial of the National Park Service’s founding by the Organic Act, a deep dive into the legislative history of the National Park Service seemed timely.

In the legislative history, Congress never explicitly defined conservation or impairment. However, the concerns of the Congressmen and the experts who influenced the legislation allow inferences about what these provisions mean. Generally, one can interpret these terms by reference to the differences between National Parks and National Forests. In comparison to National Forests, managed for consumptive use of their resources, National Parks were to be preserved for their scenic value and protected for the benefit of future generations.

As the Park Service manages millions of acres of land vulnerable to the impacts of climate change, these questions are important.[4] The Organic Act and subsequent amendments could offer leeway to Park Service managers as they try to respond to those impacts. Because neither the Organic Act nor its amendments set out specific management directives, I searched the legislative history for any evidence from the debates, conferences, and hearings that was useful in interpreting the extremely broad language of section 1. Ultimately, nothing in these documents prohibits active management by the Park Service to conserve and protect against the effects of climate change.

I. Documents Researched

My research encompassed the legislative history of the National Park Service including hearings beginning in 1912 on what would become the 1916 Organic Act, the 1970 General Authorities Act, and the Redwood Amendments in 1978.  I read the related hearings, reports, and floor debates to better understand the usage and meaning of conservation and impairment as terms in the Act.

II. Discussion and Analysis

  1. 1912-1914: Laying the Groundwork for the Organic Act

The Secretary of the Interior and the American Civic Association[5] first suggested the mandate to prevent detrimental uses of the parks[6] in a proposed bill in 1912.[7] The hope was that this section would define “clearly and definitely the purposes for which the public parks [should] be maintained and . . . to prohibit any uses which would be detrimental to these purposes.”[8] The language of the proposed bill read:

That the parks, monuments, and reservations herein provided for shall not at any time be used in any way contrary to the purpose thereof as agencies promoting public recreation and public health through the use and enjoyment by the people of such parks, monuments, and reservations, and of the natural scenery and objects of interest therein, or in any way detrimental to the value thereof for such purpose.[9]

This ‘purpose’ language, however, did not quite accomplish Congress’s goal of clarity because it did not specify any detrimental uses or create a hierarchy when any of the enumerated purposes conflicted.

However, the legislative history in 1912 explained how the parks, monuments and reservations differed from other public lands, which in turn provides a glimpse into the purpose of the parks.  For example, the Secretary of Agriculture, James Wilson, emphasized the difference between national forests and national parks, namely that national forests “should be managed with a view to their fullest possible development and use, in order that the industries dependent upon them may secure necessary supplies.”[10] Conversely, “the national parks should be managed with a view to preserving their scenic interest and furnishing a recreation ground for the people, only allowing such use of their resources as may be necessary to improve and protect them.”[11] He recommended against including “large bodies of heavy timber” because “there would ultimately be a pressure on the park bureau to cut it on a commercial basis.”[12] However, if parks had to be in “timber country,” they should still be managed with “reference to their scenic beauty.”[13] This recommendation makes it clear that the scenic beauty of parks was to be put ahead of commercial use.  It was for this reason that Secretary Wilson also recommended amending section 4 of the bill which, at the time, allowed for the Secretary of Interior to:

[S]ell or dispose of dead or insect-infested timber and of such matured timber as in his judgment may be disposed of without detriment to the scenic or other purposes for which such parks, monuments, or reservations are established, grant leases and permits for the use of the lands the development of the resources, or privileges for the accommodation of visitors in the various parks, monuments, and reservations herein provided for, for periods not exceeding twenty years.[14]

His amendment struck the language above and only allowed the Secretary of Interior to:

[G]rant leases and permits for such use of the land and such development of its resources as may be necessary for the improvement and protection of such parks, monuments, and reservations, or for privileges for the accommodation of visitors to the various parks, monuments, and reservations herein provided for, for periods not exceeding twenty years.[15]

He narrowed the Secretary of Interior’s authority because he believed the original language authorized “a fuller use than should be allowed.”[16] Under the original bill the Secretary could have authorized harvest of mature timber and only had to explain that in his judgment it was not detrimental to the park. Wilson’s amendment flipped the requirement to only allow timber harvest (or other uses of resources) when it was necessary to improve and protect the parks.

Similar inferences can be drawn from the testimony of the Chief Forester of the Department of Agriculture in 1914 when discussing the Grand Canyon. At that time the Grand Canyon was a National Forest. However, it was recognized that it should be a National Park instead. The Chief Forester noted that the Department of Agriculture was working “with the Interior Department in getting methods and outlining boundary lines,” preparing for it to become a National Park.[17] The Forest Service was already “administering it with reference to its park features” so that when it became a park it would “go right along without any change of policy” and there would not be “any shacks along the rim.”[18] This discussion suggests that the conservation and nonimpairment purposes meant allowing parks to retain their wild characteristics—their “park features”—and remain free of scenery marring structures. In addition to these references in the 1912 and 1914 hearings, the general tone indicates it was obvious that the parks were special and different and needed particular management.[19] Neither these bills nor their legislative history defined the difference between these management practices in any detail.

The driving force, instead, behind these bills leading up to the passage of the Organic Act was not to clearly define conservation and nonimpairment to guide future Park Service leaders, but rather to “to bring the administration of the various parks and monuments under one head, thus substituting uniformity of law and administration for the present disorganized condition.”[20] It is therefore unsurprising that much of this early legislative history concerns the administrative organization and funding of the park system, rather than the meaning of particular terms.[21]

  1. 1916: The Organic Act

In 1916, unified administration of the Park Service and the challenge of making that happen were still the driving force behind the bill.[22]  However, this was also when Congress incorporated language regarding the fundamental purpose of the Park Service:

[It s]hall be determined the fundamental object of the aforesaid parks, monuments, and reservations is to conserve the scenery and the natural and historical objects therein and to provide for the enjoyment of said scenery and objects by the public in any manner and by any means that will leave them unimpaired for the enjoyment of future generations.[23]

This language, framed by Frederick Law Olmstead, was included to “explain what the parks were for.”[24] In testimony, J. Horace McFarland, President of the American Civic Association, discussed what this language meant to him. However, he never specifically defined conservation or impairment; instead his statements allow inferences to be drawn about what these terms meant to him.  He considered establishing the Park Service to be of utmost importance because the purpose of the parks was “unrelated to any other purpose carried out by any other bureau or department in the whole Government scope or service.”[25] The parks were the “Nation’s pleasure grounds and the Nation’s restoring places” while the forests were “the nation’s wood lots.”[26] The national parks needed to be “dignified by a separate handling” in order to be “freer from the assaults of selfishness.”[27] And the “two ideas of the parks” (conservation and enjoyment by the public) should never be weakened, only strengthened.[28] Once again, in distinguishing between the National Parks and National Forests, it is clear that parks were different and special.  It was of the utmost importance to “preserve for [the people] wide spaces of fine scenery for their delight” and “perpetual enjoyment.”[29]

Glimpses into what the purpose of the Park Service meant to Congress can be found in the House Public Lands Committee’s discussion of conservation of wildlife and the protections of national monuments and reservations.  Because the parks were free of “public lumbering” and “protected by law from hunting of any kind,” they alone “had the seclusion and other conditions essential for the protection and propagation of wild animal life” and would become “great public nature schools.”[30] Further, the national monuments and reserves were to be “administered in connection with the national parks, which they strongly resemble.”[31] The “protection and preservation” was “of great interest and importance, because a great variety of objects, historic, prehistoric, and scientific in character, are thus preserved for public use intact, instead of being exploited by private individuals for gain and their treasures scattered.”[32] These discussions recognize conservation and nonimpairment of resources for future generations as the purpose of the Act, despite the lack of express definitions.

In later versions of the bill, Congress slightly changed the fundamental purpose language to “[to] conserve the scenery and the natural and historic objects and the wild life therein and to provide for the enjoyment of the same in such manner and by such means, as will leave them unimpaired for the enjoyment of future generations.”[33] In this committee report, the purposes of the park service are further defined in relation to the management of national forests: “It was the unanimous opinion of the committee that there should not be any conflict of jurisdiction as between” the two departments which could hinder the management of the parks “set apart for the public enjoyment and entertainment” as opposed to the forests which were “devoted strictly to utilitarian purposes.”[34] This “segregation of national park[s]” required “the preservation of nature as it exists.”[35] As such, the conservation and nonimpairment standards were what set the parks apart from the national forests. The discussion of this difference in the legislative history was as close as Congress got to defining the terms.

  1. 1969-1970: The General Authorities Act

The General Authorities Act of 1970 was not a “glamorous bill” and was intended to clarify that the National Park System’s fundamental purpose extended to all of the different areas managed by the Park Service and not just the parks and monuments.[36] Between 1916 and 1970 the concept of the national park system had “broadened to include battlegrounds and historic places, as well as areas primarily significant for their outdoor recreation potential.”[37] The aim of the bill was to make sure that all park system units were “appropriately administered so that the long-term interests of the public [could] be served.”[38] Congress reiterated that the “objective of the national park system [was] to conserve and protect for the edification and enjoyment of the American public—now and in the future—areas and places of national significance.”[39] Again, this bill offered no definition of conservation.

  1. 1977-1978: The Redwood Amendment

The Redwood Amendment reaffirmed Congress’s support that decisions by the Park Service would be based on the criteria provided by 16 U.S.C. § 1—the conservation and nonimpairment language—and that this language would also guide courts when resolving conflicts between “competing private and public values and interests in the areas surrounding Redwood National Park and other areas of the National Park System.”[40] Surprisingly, this transboundary reach was not disputed by the minority views published in the report.[41]

The amendment added the following language to the end of the General Authorities Act:

Congress further reaffirms, declares and directs that the promotion and regulation of the various areas of the National Park System . . . shall be consistent with and founded in the purpose established by the first section of the Act of August 25, 1916, to the common benefit of all the people of the United States. The authorization of activities shall be construed and the protection, management and administration of these areas shall be conducted in light of the high public value and integrity of the National Park System and shall not be exercised in derogation of the values and purposes for which these various areas have been established, except as may have been or shall be directly and specifically provided by Congress.[42]

It was necessary to reaffirm the purpose of the National Park System because the committee was “concerned that litigation with regard to Redwood National Park and other areas of the system may have blurred the responsibilities articulated by the 1916 Act creating the National Park Service.”[43] “Accordingly,” the committee reported, the “Secretary is to afford the highest standard of protection and care to the natural resources within . . . [the] National Park System. No decision shall compromise these resource values except as Congress may have specifically provided.”[44] While not specifically identifying this as the conservation and nonimpairment mandate, it can be inferred as such given that conservation and nonimpairment were the purposes of the National Park Service defined in section 1 of the Act.

Congress meant for the Redwood Amendment to establish “once and for all that the administration of our great park resources is a preeminent responsibility of the United States.”[45] Further, it “elevates and strengthens the management standards establishing the National Park Service in 1916 to requirements of law.”[46] And, importantly for Park Services managers, the Redwood Amendment “insures that management decisions affecting our park system must square with this standard and that competing interests not consistent with the first section of the act
of August 25, 1916, may only be approved if specifically authorized, either previously or through subsequent legislation, by Congress.”[47] In sum, the Redwood Amendment clarified that Congress intended for Park Service managers to have authority to manage the lands for conservation and nonimpairment in order to comply with the legally-mandated management standards.


The Organic Act and subsequent legislation granted the Secretary of Interior authority to manage the National Parks System consistently with the fundamental purpose language. Neither the statute nor the legislative history defines the terms “conservation” or “impairment” clearly.  The Redwood Amendment’s legislative history comes closest to explaining the intent behind these mandates, offering guidance for both Park Service managers and courts when considering disputes between public and private interests and always putting conservation before a detrimental use unless specifically directed by Congress.

When considering the impacts of climate change on the National Parks, the legislative history behind the conservation and nonimpairment mandate supports active management to conserve and protect all units within the Park Service. At the time the Act was passed, the legislators could not have contemplated the potential impacts of climate change. Instead, they planned protection for the parks against detrimental human uses. But it is from the legislators’ protective language that Park Service managers can justify their authority to protect against the detrimental impacts of climate change.

[1] Nat’l Park Serv., National Park Service Overview (2016),

[2] 16 U.S.C. § 1 (1916) (codified at 54 U.S.C. § 100101(a)) (emphasis added).

[3] Eric Biber & Elisabeth Long Esposito, The National Park Service Organic Act and Climate Change, 56 Nat. Resources J. 193, 208 n.84 (2016). My research was used to support the point that “[i]f any lesson can be drawn from the Organic Act’s legislative history, it is probably that Congress intended the Park Service to have broad discretion to protect the scenic nature of its lands, and prioritize protection of scenery over other goals (such as commercial timber harvesting).” Id. at 208.

[4] This was the framing for Professor Biber and Ms. Esposito’s article. Biber & Esposito, supra note 3.

[5] The American Civic Association (“the ACA”), led by J. Horace McFarland, promoted “the beautification of cities and the preservation of national treasures, such as Niagara Falls and Yosemite’s Hetch Hetchy Valley.” Ellen Terrell, John Horace McFarland: Unsung Hero of the National Park Service, Library of Congress (August 25, 2016) McFarland and the ACA promoted creation of the National Parks Bureau—which would become the National Park Service—arguing that national management of the parks was critical to protect them. See John Horace McFarland, Address of Mr. J. Horace McFarland, 1911 Proceedings of the National Parks Session of the American Civic Association 10;view=1up;seq=5.

[6] When I use the word ‘parks’ in this memo, I am referring to all the different types of units the Park Service managed at the time of the legislation (in 1916, for example, National Parks, National Monuments and National Reservations).

[7] S. Rep. No. 62-676, at 1­–2 (1912). It was at this time, too, that the Secretary of Interior and the ACA recommended, “the name of the organization should be the National Park Service instead of Bureau of National Parks.” Id. at 1.

[8] Id. at 2.

[9] Id. at 1.

[10] Establishment of a National Park Service: Hearing on H.R. 22995 Before the H. Comm. on the Public Lands, 62nd Cong. 5 (1912).

[11] Id.

[12] Id.

[13] Id.

[14] Id. at 3 (emphasis added). Section 4 of this version of the bill would eventually become section 3.

[15] Id. at 5 (emphasis added).

[16] Id.

[17] National Park Service: Hearing on H.R. 104 Before the H. Comm. on the Public Lands, 63rd Cong. 77 (1914).

[18] Id.

[19] See S. Rep. No. 676 (1912); Establishment of a National Park Service: Hearing on H.R. 22995 Before the H. Comm. on the Public Lands, 62nd Cong. (1912); National Park Service: Hearing on H.R. 104 Before the H. Comm. on the Public Lands, 63rd Cong. (1914).

[20] S. Rep. No. 62-676, at 2 (1912).

[21] See, e.g., Bureau of National Parks: Hearing on S. 3463 Before the H. Comm. on Public Lands, 62nd Cong. (1912) (explaining why the Service needs an engineer and an assistant attorney; issues with salaries of these positions); Establishment of a National Park Service: Hearing on H.R. 22995 Before the H. Comm. on the Public Lands, 62nd Cong. (1912) (lack of coordination between the parks and consistent appropriations means that facilities and roads are not well developed); National Park Service: Hearing on H.R. 104 Before the H. Comm. on the Public Lands, 63rd Cong. (1914) (the parks all have similar needs but are not managed as one unit leading to very expensive local administration).

[22] Congressmen were particularly upset at the lack of visitors to the western parks after the 1915 Panama-Pacific International Exposition in San Francisco. Instead of returning by way of Yosemite and Glacier, “75 percent of them returned by the Canadian Pacific thanks to the very efficient advertising which Canada [had] done.”  National Park Service: Hearing on H.R. 434 and H.R. 8668 Before the H. Comm. on the Public Lands, 64th Cong. 35 (1916). They took it as a personal affront and attributed it to a lack of a National Park Service, which Canada had, which would have been coordinated enough to lure people to the American parks: “the Canadian national parks, because of their exploitation and because of the things that had been done to make them ready for the comfort and convenience and safety of the tourists, drew the great, wholesale travel. . . That meant thousands upon thousands of dollars of cold American cash for Canada, to be credited to its parks.” Id. at 6. See also S. Rep. No. 64-662 (1916) (discussing why Park Service is necessary and appropriations needed); 53 Cong. Rec. 12, 150 (1916) (hiring decisions given to Secretary of Interior rather than Congress).

[23] National Park Service: Hearing on H.R. 434 and H.R. 8668 Before the H. Comm. on the Public Lands, 64th Cong. 52 (1916) (emphasis added).

[24] Id.

[25] Id. at 53.

[26] Id.

[27] Id. Selfishness was seen as a threat because “[t]he places of scenic beauty do not increase, but, on the contrary, are in danger of being reduced in number and diminished in quantity, and the danger is always increasing with the accumulation of wealth, owing to the desire of private persons to appropriate these places.” Id. at 54.

[28] Id. at 54.

[29] Id. (quoting the British ambassador in November 1912).

[30] Id. at 43-44.

[31] Id. at 46.

[32] Id.

[33] H.R. Rep. No. 64-700, at 1(1916).

[34] Id. at 3.

[35] Id.

[36] 116 Cong. Rec. 24,955 (1970); see also A Bill Relating to the Administration of the National Park System: Hearing on H.R. 14114, Before the H. Subcomm. on National Parks and Recreation of the Comm. on Interior and Insular Affairs, 91st Cong. (1969).

[37] S. Rep. No. 91-1014 (1970); see H.R. Rep. No. 91-1265 (1970).

[38] S. Rep. No. 91-1014 (1970).

[39] Id. at 1–2.

[40] S. Rep. No. 95-528, at 8 (1978).

[41] See id. at 50-57.

[42] Id. at 24.

[43] Id. at 14.

[44] Id.

[45] 124 Cong. Rec. H2017 (daily ed. March 14, 1978) (statement of Rep. Burton).

[46] Id.

[47] Id.

The Importance of GIS in Emergency Management

By Monika Holser, UCLA School of Law, Class of 2018 

GIS (geographic information system) is a computer system for “capturing, storing, checking, and displaying data related to positions on the Earth’s surface.”[1]  It allows multiple layers of information to be displayed at once, enabling one to visualize and understand relationships on a map.[2]  Different types of information can be overlaid in the program regardless of their original format or source.[3]  According to ESRI, GIS is described as the “go-to technology” for location-based decisions and is fundamental in understanding the current and future issues involving geographic space.[4]

The modern growth of geospatial technology positively interacts with, and influences all aspects of disaster management – such as mitigation (modeling hazards and vulnerability to develop strategies), preparedness (formulating emergency response and evacuation plans), response (executing such plans), and recovery (assessing damages, rebuilding, preventing recurrence, and educating the public).[5]  Considering we cannot prevent natural disasters, it is important to determine potential hazards and where they stand in relation to our communities.  As a visualization tool, GIS can assist in locating, identifying, and understanding relationships between areas of social vulnerability and potential hazard exposure.  For example, available U.S. census data can be layered onto a map to include the distribution of age, income, ethnicity, housing quality, transportation capacity, etc.[6]  This information can be used to create appropriate mitigation strategies, to identify how or where certain areas should be evacuated, or even how first responders (law enforcement, medical personnel, fire service etc.) should approach certain areas during a disaster.[7]

Furthermore, with advances in GIS and computer technology today, individuals and communities can potentially use the increasingly accessible tools to manage their own knowledge and community data.[8]  If promoted within communities, GIS can be utilized to communicate risks and hazards to the population with no requisite specialized knowledge.[9]  Currently, many communities and homeowners lack the knowledge and motivation to take appropriate cautions or mitigate potential hazards.  Having access to personalized and compelling visuals may ameliorate the issue, while providing local governments invaluable information for disaster management and preparedness.[10]

Challenges and Future Steps – A Look at FEMA Flood Mapping

First and foremost, data is the most essential element of GIS mapping – the program itself merely creates a visual display of the inputted data.[11]  Without accurate data, the program cannot produce accurate depictions of the desired information or relationships between them.  Therefore, the greatest challenge is the weakness of current data, or the lack of data in general.  Although currently improving, there is also a deficiency of readily available GIS software, and more importantly, a failure in the communication/utilization of GIS and the information it can provide.[12]

Considering the significant role GIS already plays in emergency management, I believe the government, as well as local governments, should be allocating funds to improve each of these three issues.  First, to increase data collection and to improve the accuracy of existing data, second, to promote the use of GIS software by communities, and third, to improve the accessibility and communication of the information produced.  In regards to these aspects, I would like to discuss the ongoing Federal Emergency Management Agency (FEMA) flood mapping as part of the National Flood Insurance Program (NFIP).

The NFIP was created to provide a means for homeowners to financially protect themselves from flood events – flood insurance is offered to property owners if the community participates in the NFIP and meets floodplain management ordinances established by FEMA.[13]

FEMA’s flood hazard mapping program, Risk Mapping, Assessment and Planning (MAP), identifies flood hazards and assesses risks of certain areas.[14]  This mapping is used to create the Flood Insurance Rate Maps (FIRMs), the basis of NFIP regulations and insurance requirements.[15]  The FIRMs are then used to determine insurance premiums and set minimum floodplain standards for communities based on the assessed risks of the particular location.[16]   Currently, the NFIP states that it is working towards updating the accuracy of flood maps and providing policyholders with information to better understand the program.[17]

1. Improving Accuracy of GIS Data

In cost-benefit analysis, hazard mapping is found to have positive net benefits, thereby indicating that it is beneficial to work towards improving the accuracy of our mapping.[18] A study conducted by FEMA in 2000 found that when considering all costs (flood data updates, map maintenance, new mapping, conversion to new standards, and customer service), the flood maps created a benefit of 1.33 billion dollars, with a cost of 799 million.[19] Currently, flood maps are used an estimated 30 million times a year by government agencies, FEMA contractors, lenders, insurance agents, land developers, community planners, property owners, realtors, and by others for risk assessment, land management, mitigation, and disaster response.[20]  With this in mind, it is clear that the accuracy of these maps is vital and relevant to widespread decisions.

For example, improving the accuracy of FEMA’s flood maps is predicted to directly affect the insurance rates and land use.[21]  More accurate estimates of flood risk allow appropriate insurance premiums to be calculated for certain areas and particular structures.[22]  The accuracy of price may also increase the understanding and trust of flood risk, and therefore encourage and ensure insurance coverage.[23]  In connection to land use, the correctly priced insurance premiums accurately reflect risk, and in turn, reduce the development of land in high-risk areas.[24]  Improvements in accuracy can add restrictions to properties that should have been designated at-risk (reducing future losses of life and property), and conversely, lifting restrictions in areas that were incorrectly designated at-risk (lowering costs and mandatory improvements, enabling the land to be used in other ways).[25]  In fact, FEMA’s website includes an option to contest floodplain boundaries if homeowners believe their properties were incorrectly identified in high-risk areas – increasing accuracy of flood maps may therefore reduce the contesting of boundaries and save time, money, and effort of all parties.

Learning from the NFIP and FEMA’s FIRM flood maps, we can see that it is indeed beneficial to invest in data collection for GIS use in emergency management.  This can be applied to any context, rather than solely floods and national flood insurance – perhaps to fire or earthquake risks, or anything relevant to a community’s planning.

2&3. Promoting Use of GIS Software and Improving Communication of Risks

Little research has been done to show how to effectively communicate risk to the public through hazard maps.[26]  However, previous studies have shown that in particular, there are issues with communicating via FEMA’s FIRM flood maps.[27]  Taking it upon myself to investigate the FEMA website, I found it very difficult to navigate and understand.  There is an overwhelming amount of information and it is unclear how or who it is intended to be used by.  Through the Flood Map Service Center ‘Search by Address’ page, a homeowner can simply type in their address to pull up an interactive flood map, National Flood Hazard Layer (NFHL).  This is where the seemingly simple task becomes complicated.  I downloaded the map corresponding to my current apartment address only to find that I had absolutely no idea what I was looking at, or what any of the data meant.  I then managed to locate an FAQ page on the website, linking a 54 page document available for download titled, “How to Read a Flood Insurance Rate Map Tutorial.”  It is quite possible that I did not spend enough time attempting to read and understand the guidance provided by the FEMA webpage, but it is clear why a homeowner or individual with little to no experience in this area would fail to understand the implications of the data.

Furthermore, FEMA’s in-house mapping software, HAZUS, is available to the public for download.  HAZUS, utilizing GIS systems, is described as a “nationally applicable standardized methodology that estimates potential losses from earthquakes, hurricane winds, and floods.”[28]  Looking to download and examine the software, I found that it requires ESRI’s ArcGIS program to run, and that the FEMA site directs users to ESRI where it can be purchased.  From this, I can assume that the HAZUS program is primarily used by and targeted towards local governments, rather than individuals and homeowners.  Although this makes sense, it again limits the accessibility of invaluable information that can be provided – and even local governments may choose not to pursue the costs of analyzing the public data through GIS mapping (costs of the program and of individuals educated to use the program, time to overlay data, etc.).

Again, based solely off of FEMA’s FIRM maps and HAZUS program, we can see that the accessibility of GIS programs, as well as the communication of risk information, is at issue.  As suggested by Susan Cutter, a Geography Professor at the University of South Carolina, emergency managers should look to community partners such as universities to assist with mapping and analysis needs.[29]  From personal experience, she describes the ongoing partnership between the University of South Carolina and the South Carolina Emergency Management Division, allowing the two to work towards a common goal – students can gain experience, while the organization can utilize the resources produced.[30]  She further suggests that if costs of the program or ability to use a program are at issue (such as ESRI ArcGIS), other mapping tools or platforms may be available.[31]  For example, I downloaded QGIS, a free GIS program rather than the common, but pricey ArcGIS.


Starting with FEMA, and moving towards states and local governments, GIS investment should be prioritized for use in disaster management.  Funds ideally should be directed towards increasing data and improving accuracy of that already existing, towards making GIS programs available for use (or finding assistance through partnerships), and towards promoting the communications of risk assessment with the public.














[1] GIS, National Geographic Society, (last visited Nov. 1, 2016).

[2] Id.

[3] Id.

[4] What is GIS, ESRI, (last visited Nov. 1, 2016).

[5] T.J. Cova, GIS in Emergency Management in Geographical Information Systems: Principles, Techniques, Applications, and Management 845-858, 850 (1999).

[6] Disaster Preparedness and Recovery, Emergency Management, (last visited Nov. 1, 2016).

[7] Alexandra Enders & Zachary Brandt, Using Geographic Information System Technology to Improve Emergency Management and Disaster Response for People with Disabilities, 17 J. of Disability Pol’y Stud. 223-29, 224 (2007).

[8] Phong Tran et al., GIS and Local Knowledge: A Case Study of Flood Risk Mapping in Viet Nam in Disasters 152-169, 155 (2009).

[9] Id. at 153.

[10] Id.

[11] Enders & Brandt, supra note 7, at 224.

[12] Cova, supra note 5, at 856.

[13] Flood Insurance Reform, FEMA, (last visited Nov. 1, 2016).

[14] National Flood Insurance Program: Flood Hazard Mapping, FEMA, (last visited Nov. 1, 2016).

[15] Id.

[16] Flood Insurance Reform – Mapping Flood Hazards, FEMA, (last visited Nov. 1, 2016).

[17] Flood Insurance Reform, FEMA, (last visited Nov. 1, 2016).

[18] Committee on FEMA Flood Maps et al., Mapping the Zone: Improving Flood Map Accuracy 79 (2009).

[19] Id. at 82.

[20] Id. at 79.

[21] Id. at 80-81.

[22] Id. at 81.

[23] Id.

[24] Id. at 80.

[25] Id.

[26] Id. at 91.

[27] Id.

[28] Hazus-MH Overview, FEMA, (last visited Nov. 1, 2016).

[29] Disaster Preparedness and Recovery, Emergency Management, (last visited Nov. 1, 2016).

[30] Id.

[31] Id.

Judging a Book by its Cover: The Tension between Evidentiary Gatekeeping and Compensatory Theories of Tort

By Julie Amadeo, J.D. 2016, New York University School of Law. This article has been adapted from a larger work.

I. Introduction

Human minds are primed to jump to conclusions. Call them intuitions, or things we just know, our ability to draw conclusions is a survival instinct, developed over many years of evolutionary progress. Now assume a man has been largely healthy his entire life. Maybe this man is a line worker at a factory, or a firefighter, or even just a soccer player. Suddenly, he learns that he has a fatal disease that will cause him to suffer for various years before finally killing him. He sees his co-workers falling ill with the same sickness and they all begin to think it must be something they were doing in common. Perhaps it was the chemicals they produced at work, or something burning in the fires, or maybe the turf they played on. But, there’s no evidence of this, it is just a hunch. Producing conclusive scientific evidence is costly and would take years. Perhaps the only way of getting any sort of evidence is to sue the employer, or products producer which would lead to discovery and possible answers. The man approaches a lawyer who is well known in the field of toxic harms and asks him to take on his case. The lawyer, however, declines and informs the man because of the lack of epidemiological – human study—evidence available on the topic, his case would likely be decided in favor of the defendant on summary judgment and he would never get the closure he is looking for.

II. Wrestling with Epidemiological Evidence

Epidemiology is a method of scientific study which measures the “distribution and determinants of disease frequency and occurrence in humans.”[1] In litigation, epidemiological evidence is generally used for the purpose of proving causation.[2] Historically, epidemiology was not a necessary feature of toxic harms cases, for example in Ferebee v. Chevron Chemical Co. the court took the stance that “on questions such as these, which stand at the frontier of current medical and epidemiological inquiry, if experts are willing to testify that such a link exists, it is for the jury to decide whether to credit such testimony.”[3] The court ultimately held that there was sufficient evidence for the jury to find that the defendant in this case was at fault.[4] However, courts have taken many different approaches to the ways they evaluate and admit epidemiological evidence. Importantly, there seems to be a distinction in the way courts treat epidemiology with respect to mass tort claims and cases where there is either negative or sparse epidemiological evidence to wrestle with.[5]

In a post-Daubert world of evidence, epidemiology is nearly universally accepted as the most reliable form of evidence for demonstrating a toxic harm. However, epidemiological evidence is not easy to come by. Often the only studies that have been performed are studies done by the defendants in the case, which of course are favorable. This desire for epidemiological evidence is born out of the need for evidentiary rules to help the judge move her docket: they provide efficiency and reliability in the courtroom. In contrast, tort law has developed with the aim of providing deterrence to bad actors and compensating victims of negligent acts. These two different legal systems are at odds when rules that help judges move their dockets also impair the ability for the tort system to evenly sort out and find negligent actors and make them pay the victims they have harmed.

Alternative solutions to the tort system, particularly administrative systems of dispute resolution, seem to hold promise for sorting out the tension between the two systems. An administrative system provides a mechanism for sorting out good evidence from the bad, and sorting out toxic from not toxic products, prior to the dispute resolution process. In contrast with a compensation fund system, which merely compensates victims without really providing the deterrence effects that tort law provides, an administrative system would deter negligent actors by putting them on notice that their product has been noted as toxic. Additionally it would compensate victims and also provide a cheaper way for them to get their “day in court” as they would not have to necessarily prove causation.

III. Artificial Turf: A Case Study

In 2008, the Attorney General of California brought suits against the Beaulieu Group and Fieldturf USA to enjoin their use of lead in artificial turf that was sold within the state of California.[6] Strikingly, the state of California had accepted over a decade prior to this suit being brought that lead was toxic and could lead to cancers and other health issues.[7] Because the State had already named lead as toxic, the plaintiff was able to conclusively state in the complaint that lead could lead to various illnesses and could definitely state the various methods of exposure humans would be submitted to by lead being present in the product.[8] In this case, the suit resulted in a settlement,[9] and while a large part of the desire to settle likely derived from the fact that the Attorney General brought the suit on behalf of the People of California, there was also a likely calculation relating back to the strength of the previously accepted science and thus the strength of the case. Perhaps, it is something like this type of certainty or strength of the evidence that the rules that have been developed regarding the admissibility of expert evidence and  epidemiological evidence specifically, are attempting to strive toward, in particular with respect to an argument regarding the efficiency of the dispute. Where defendants are sure that they will be found negligent in tort they will be more likely to resolve the issues out of court, or perhaps even refrain from the behavior where they uncover strong epidemiological evidence outside the universe of a lawsuit.

Artificial turf has come under fire for various toxic and environmental harms, broadly defined, in recent years. For example, in the world of sports, artificial turf has long been vilified for causing unprecedented and beyond normal injuries in athletes at an increased statistical rate when compared to natural grass.[10] Harkening back to claims of efficiency and deterrence, it has been argued that the best way to deter manufacturers of artificial turf from promoting the product is to embroil these manufacturers in litigation and hold them accountable for injuries.[11] However, attempts to bar the use of this turf by the National Football League Players Association in the 1970’s were undermined by insufficient medical data.[12] This was in face of a study done for the NFL by the Stanford Research Institute in 1974, demonstrating that natural grass is safer to play on than artificial turf, across the board.[13] Yet the U.S. Consumer Product Safety Commission still found that “based on evidence presently available, the use of artificial turf as a surface cover for athletic playing fields does not present an unreasonable risk of injury.”[14] Recently, the same year that the California Attorney General was granted an injunction against artificial turf companies for their use of lead, the same agency evaluated various samples of artificial turf and found that the “evaluation showed that newer fields had no lead or generally had the lowest lead levels.”[15] The discrepancy between the results, on the same or similar issues, before different law making bodies within the United States demonstrates why the rules which have developed on the admissibility of epidemiological evidence are important despite the various criticisms of them. For courts to deliver consistent results regarding issues of toxic harms, there needs to be a standard measuring stick. However, the issue remains that science and the law have different ideas of causation, and thus what science finds unsafe and what the law finds unsafe might differ. In the above scenario, California was able to go around the toxic harm tort causation issue by passing legislation. It remains to be seen whether a legislative command is always necessary to resolve possibly ambiguous causal issues in toxic harms. Perhaps, there are other alternatives either within the court system, or in an alternative dispute arena that would allow these issues to be resolved in a way that is both “fair” as well as practically effective.

A. Artificial Turf and Cancer

Another area of contention in the world of artificial turf is a potential link between the rubber tire crumbs used in the product and cancer. Recently, many concerned citizens have noticed and pointed out a correlation between cancer and artificial turf, especially among young athletes.[16] Crumb rubber was a solution created by engineers in the 1990’s as a method of recycling old rubber tires that were no longer useful.[17] This recycled material is then used to fill the artificial turf and provided stability and shock prevention to the turf.[18] However, since this solution arrived, studies have been done demonstrating that the tire crumbs, or crumb rubber, is laden with carcinogenic toxins.[19] The main problem is that despite this finding there is still a dearth of research on crumb rubber and its side effects, particularly when it comes to the human population.[20]

The Environment and Human Health organization produced a report based on studies done by various organizations on this issue.[21] Of these studies, only one of them is epidemiological.[22] This study, produced by the California Office of Environmental Health Hazard Assessment found that the levels of toxicity in artificial turf with crumb rubber filling were relatively low.[23] However, this study and others done by the same agency on crumb rubber, were funded by CalRecyle, the California state agency in charge of finding methods of recycling used rubber tires.[24] This presents a conflict of interest that neither Rule 702 nor the Daubert doctrine, and much less the current jurisprudence on epidemiological evidence, deals with. Courts would look to the epidemiological evidence provided and likely would conclude that there was insufficient evidence to present to a jury.[25] Yet, outside the courtroom, various agencies involved admit that there is a lack of sufficient evidence to draw the conclusions about the toxicity of the crumb rubber that have been drawn. In 2013, chairman of the Consumer Product Safety Commission, Eliot Kaye admitted that there was not enough evidence to draw conclusions as to safety.[26] This is the same commission which previously issued a press release stating this turf is safe in 2008.[27]

The Consumer Product Safety Commission is not the only agency that is calling for more research to be done on artificial turf and crumb rubber. In 2016, the Environmental Protection Agency, in conjunction with the Consumer Product Safety Commission and the Centers for Disease Control and Prevention as well as Agency for Toxic Substances and Disease Registry launched an action plan to study these issues.[28] Despite this, any argument brought before a court of law regarding the lack of evidence on this issue would fail, because it is not the job of the courts to decide which chemicals are toxic, it is merely the job of the court to proportion blame when issues arise out of negligent actions. Thus, it is not surprising that a lawsuit brought by the San Francisco Bay Chapter of the Sierra Club alleging that the San Francisco Recreation and Park Department did not do sufficient research on the issue of crumb rubber to determine that the toxicity in the artificial turf met the acceptable levels of toxins set by the local government ended in an unfavorable result.[29] On appeal, the Court of Appeals found that the report done in advance of the Beach Chalet project that was the center of the Sierra Club’s suit was adequate.[30]

Although, some might argue that given what is known and what is not known about the state of toxins within artificial turf and the crumb rubber that is used to fill it, a rule of evidence that does not allow information about this type of uncertainty is broken, the court’s stance on epidemiological evidence allows the court to manage a docket of cases and legal decisions about scientific problems in an efficient manner. Ultimately, it is the role of the legislature in conjunction with the scientific community to make policy decisions about what the acceptable amount of risk is when it comes to daily human interaction with toxins. Unfortunately, this leaves concerned citizens, and injured parties waiting for the holes in the science to be filled in by government actors and other nonprofit organizations in order to receive compensation for the issues that have been caused by the toxins. However, the resolution of the issues with regard to the presence of lead in artificial turf sheds some light on alternative solutions to the issue of toxic harms outside of the courtroom.

Again, the various cases dealing with artificial turf sheds light on the tension between evidentiary gatekeeping and compensatory theories of tort. While it is undeniable that more research could be done on artificial turf, toxicity studies have been done that demonstrate a baseline issue. Viewing these facts from the perspective that courts and court dockets must optimize efficiency, perhaps it makes sense that no compensation for plaintiffs can be awarded until a cut and clear chain of causation can be examined via the widely accepted epidemiology. However, in a system where companies are often influenced by risk of litigation and are the most able to study the products they offer to the public, having a compensatory tort system that precludes valid expert evidence on theories of reliability forecloses the court as a venue for certain plaintiffs and allows companies to get away with actions that might be unsavory. In this sense, the amount of litigation surround artificial turf, which is only beginning to lead to further research, represents a system failure wherein strict evidentiary gatekeeping encourages scant scientific research of potentially harmful consumer products.

B. Artificial Turf Outside the Tort System

There are two alternatives to remedies within the tort system: an ex ante administrative regulation system and a compensatory administrative system in the form of a victim’s compensation fund. Either system is designed to provide a solution to the problem presented by the admissibility of epidemiological evidence: causation.[31] However, whereas an ex-ante administrative regulation system is meant to deter and prevent toxic harms from occurring by identifying and prohibiting certain toxins from entering the market, an administrative compensatory system merely identifies and acknowledges harms that have occurred and compensates victims without the need for a full trial, though that process can take many forms. An administrative system could be designed in a variety of ways, however the benefits lie in the government assigning fault to actors without the need for trial.[32] Even outside a strict administrative system government involvement could take place in a variety of ways: as the settlement in the Beaulieu case suggests, actors are more likely to settle when a government actor is involved.[33] Government actors lend authority and facility to toxic harm suits by making it more likely that there will be injunctive relief and that negligent actors will settle suits.[34] Perhaps then, if government actors are required to fully accomplish the goals of tort law,[35] it would make sense to move fully from a system of tort to an administrative system where the government would decide fault based on a system of allocating the risk. Ex-ante government action is already taken in situations where certain types of behavior are regulated by administrative agencies.[36] Practically, an administrative system of allocating risk could be done either ex-ante, like regulation, or ex-post, like litigation.[37] However, in the case of toxic harms, because lack of proof and lack of notice tend to be issues, ex-ante processes may make the most sense in providing plaintiffs and potential litigants with swift and efficient justice.[38]

It has been argued that the tort system does little in terms of deterring, correcting, and compensating victims in the area of toxic harms due to the issues of causation that have largely been the focus of this paper.[39] Administrative systems of dispute resolution in the area of toxic harms would provide all the benefits that agencies are already lending to issues such as the artificial turf problem: specialist knowledge, independent investigations, flexibility with the ex-ante vs. ex-post view of the problems, as well as the ability to make policy decisions that are not within the ambit of the court.[40] There are various models of administrative systems including a tort and no-fault hybrid system, a narrowly tailored no-fault system, a broad no-fault system, a strict liability system, or a complex assessment of risk system.[41] These systems will be laid out briefly for the sake of comparing their various virtues and applying them to the case at hand.[42]

C. Models of Administrative Systems

The hybrid tort and no-fault administrative system is visible in the Price-Anderson Act that was promulgated with the purpose of promoting the development of nuclear testing and innovation in the scientific community.[43] The statute sets up a system where licensees under the statute must keep a certain amount of insurance and waive immunity from public liability.[44] The licensees are covered both by private insurers and by fees paid into a pool administered by the Nuclear Regulatory Commission.[45] Rabin suggests, that the hybrid characterization comes from the fact that the insurance model makes it a no-fault system, however the provision for private actors to bring a claim in order to receive compensation from the insurance creates a two-party system akin to torts.[46]

The model for the narrow no-fault system, according to Rabin, is the National Childhood Vaccine Injury Act of 1986.[47] The program lays out in a table a time period during which the injury related to the vaccine must occur in order of the victim to receive compensation.[48] This chart eliminates the question of causation. Thus a no-fault system is created where the “compensation fund is financed by an excise tax on each does of vaccine disbursed.”[49] This act was also promulgated with the purpose of stimulating private industry and insulating risky business for the public good from tort liability.[50]

An expansive no-fault system is modeled in both the Superfund Section 301(e) Student Group Report and the Environmental Law Institute Model Statute.[51] Due to the environmental nature of the case studies presented in this paper, we will focus on the Environmental Law Institute Model Statute (ELI Model). The ELI Model seeks to provide a truly regulated body of toxic chemicals by listing as one of its stated purposes “to reduce and prevent exposure to hazardous chemical substances or mixtures that cause or contribute to chronic or progressive diseases.”[52] The model sets up a strict liability system for substances or diseases covered within the proposed statute but leaves open a back door of discretion for the court to limit the liability of defendants if the defendants can show by a preponderance of the evidence that there were other factors involved in the plaintiffs illness.[53] The model allows for switching out of the administrative system back into the torts system, however Rabin notes that the lack of a possibility for switching from the torts system to the administrative system “once the hazardous nature of a product is well documented” is problematic.[54]

Clifford Fisher points out the many inefficiencies in the tort system when proposing his switch to a strict liability system: namely, that the burden of proof rests with the victim who likely does not have the access or resources to get the information they need to put on their case.[55] He goes so far to suggest, “the present system also creates a disincentive for risk-creators to act responsibly because it is not in their best economic interest to do so.”[56] In essence, he is suggesting that the tort system does not achieve deterrence of negligent actors nor compensation of victims in the realm of toxic harms. Instead, he suggests a strict liability system called an Environmental Compensation program, comparable to the Worker’s Compensation program where victims would file their claims to an insurance company.[57] This would allow the market to regulate the cost of risk, in so far as companies pay into the insurance system, which would incentivize risk takers to take the cost of that risk into account when planning business costs.[58] Fisher envisions, in addition to the deterrence effects afforded by companies paying into an insurance system, minimum health regulations that would help maintain socially acceptable levels of risk.[59] One last feature of Fisher’s proposal is to have a proportional liability system that “holds the risk-creator liable for the increased risk and for the losses of each victim of disease in the exposed population discounted by the probability that the risk-creator’s hazardous activity was the cause.”[60]

The most recent administrative system proposed is Albert Lin’s, which creates an internalized system of risk with federal levies imposed on sources of pollution.[61] Lin’s proposal would have the levies imposed be proportional to the amount of pollution released by sources.[62] The system does not supersede the tort system, but merely preempts claims that are foreseen and thus covered by the funds collected by the government.[63] However, his proposal does not allow individuals to opt out of the system, thus leaving the administrative system as the only recourse for the covered claims.[64] Lin’s proposal avoids the causation issue by awarding compensation for exposure to risk, not for injury in fact.[65] The last part to Lin’s proposal involves the use of database which would identify different toxins that would be covered under the administrative system; he suggests use of one of two already existing databases: the Agency for Toxic Substance and Disease Registry or the EPA’s Integrated Risk Information System.[66] While either of these databases would need to be updated with the help of the scientific community, Lin acknowledges that the informational needs of this system would be expansive.[67]

While an administrative system offers various tools to solve the problem of victims being compensated for their harms, they do not necessarily offer the best solution to this problem in terms of toxic and environmental harms. Certain no fault systems, such as the Price-Anderson Act and the National Childhood Vaccine Injury Act of 1986 were developed to encourage use of certain products which could be considered, or are, toxic.[68] In the case of environmental and toxic harms, the hope is to deter actors from using and abusing these chemicals rather than encourage them by giving them an easy out. The one improvement afforded by even an encouraging no fault system, is that a no fault system guarantees some compensation for victims, whereas a courtroom without epidemiological evidence guarantees failure. In an indirect way, a no fault system might require companies to think about the toxic harms they might be causing and weigh them, whereas as a court system that has created a loophole for these actors does not deter the behavior at all. Thus, although not fully resolving the tension between evidentiary gatekeeping and compensatory theories of tort, an ex-ante system relieves plaintiffs of evidence production that would allow for compensation without having to think about which evidence works best and then searching for that form of evidence among the research that is available on the topic.

Administrative systems such as the ELI model or Albert Lin’s proposal have heavy informational burdens. Thus, these proposals may suffer in areas such as environmental and toxic harms where the science is often catching up to the realities of plaintiffs’ situations. For example, in Lin’s proposal, if the harm has not yet been recognized by the database, the claim will then be kicked back into the court system, which defeats the purpose of creating a separate administrative system. These informational issues that are related to whether a claim goes into the administrative system or are litigated in tort create a dual system of treating claims that are relatively similar.

In the case of artificial turf, the administrative proposals would perhaps present a halfway solution to the problem presented by a need for epidemiological evidence. As the Beaulieu case demonstrates, if the toxin is recognized on a list either one presented by the administrative proposals, or one already in existence, then the administrative proposals for strict liability present a more manageable system that affords compensation without administrative costs in terms of evidentiary gatekeeping. However, in the case of crumb rubber, because more research on the issue is underway these systems just will not fix the current issue presented by the need for epidemiological evidence in order to put on a successful toxic harms case. In an ideal world, an administrative system proposal might have a wider statute of limitations window, not for latent harms, but for victims of harms that are newly discovered. So, if in five years a link were found between crumb rubber and cancer sufficient to put crumb rubber on the list for strict liability, a victim or victim’s estate could bring a claim at that time.

Another out of court solution to the issue of causation in environmental harms is the creation of victim compensation funds. Victim compensation funds have been used in situations of mass tort, for example September Eleventh, Agent Orange, and the Love Canal.[69] They are funds that pay out to victims of major accidents, natural disasters, and the like without respect to whether the insurer was the party at blame or not.[70] Typically, they shift the standard of care from negligence, used most often in the tort system, to strict liability, which is used sparingly.[71] A compensation fund can act similarly to an administrative system, for example having a no fault opt in system.[72] However, unlike administrative systems that typically have some criteria to be met before payout can occur, many compensation funds merely require victims to demonstrate they meet certain prerequisites, in order to keep evidentiary burdens low.[73] While the legal justifications for tort law include deterrence and compensation, the victims who file suits often begin seeking answers—but in the compensation fund system forego the answers they seek for compensation.[74] Administrative compensatory systems only present a solution to the tension between evidentiary gatekeeping and compensatory theories of tort if the evidentiary hurdles are less stringent than they are in a courtroom. Ex-ante administrative systems demonstrate a different approach to the acceptance of evidence; compensatory schemes, such as the September Eleventh fund, merely demonstrated the acceptance of causation where the cause is readily and easily ascertained. Thus, it is less clear that a compensatory scheme would provide a good solution or alternative to the tort system in the case of toxic harms.

Maritime law provides an example of a system which is a hybrid of the administrative system and compensation fund systems in the environmental realm, where the polluter pays the victims of its pollution[75] . However, as previously mentioned, this overlaps with administrative systems in many ways: polluter pays principle can be applied to civil liability cases, or the principle can be applied through an administrative trial.[76]

In the case of artificial turf, a compensation fund system may be different to plan and administer. For example, in the Benedictin cases, the medication that the scientists found and were published in the medical journals, demonstrated some fear and apprehension in the medical community that the drug was causing genital defects.[77] In the artificial turf cases this link in the scientific community is missing. In this manner, the compensation fund system is more similar to the actual tort system than an outside the tort system. Here, both suffer from an evidentiary causation problem: where there is missing information or linkage, the chances of compensation become slimmer and slimmer. Ultimately, it seems that between the administrative system and the compensation fund system, the administrative fund something is the better choice for smaller legal battles spread over many defendants with uncertainty.

IV. Conclusion

This paper has explored the tension between evidentiary rules that aim to foster reliability and efficiency with tort law whose purpose is to provide deterrence and compensation. There doesn’t seem to be one solution which would perfect the system to provide deterrence and reliability at the same time. What does seem apparent is that an administrative system, with a fact finding and research arm outside the dispute resolution system would provide a faster method of victims to be compensated for wrongs, and for those harms to be recognized widely without the need for epidemiological evidence in a court room. However, that conclusion presupposes that the administrators of a system would be proactive in researching potentially harmful chemicals, and also that findings that do not stem from epidemiology will be accepted.

The other potential solution to this issue would be to find a way in an adversary system for there to be a rule that allows evidence in which would not unfairly privilege one party over the other. However, since the rules are based on efficiency and reliability, not fairness, this does not seem to be relevant, nor would it function to improve the system. One question that begs to be asked is why not move from aims of reliability, efficiency, deterrence, and compensation to fairness? Firstly, those aims and justifications are attempting to get at versions of fairness. Secondly, it is impossible to be truly fair in a system where we entertain different versions of the same story and put decision making in the hands of impartial, but ultimately human jurors.

[1] Michael Dore, Law of toxic Torts §28:1 (3rd ed. 2015).

[2] James T. O’Reilly, 1 Toxic Torts Prac. Guide §4:6 (2015).

[3] Ferebee v. Chevron Chem. Co., 736 F.2d 1529, 1534 (D.C. Cir. 1984)

[4] Id. at 1539.

[5] David L. Faigmna, et. al., 3 Mod. Sci. Evidence § 23:4 (2016) (“Complete order cannot be imposed on the different positions taken by the courts as to whether the plaintiff must present epidemiological data on general causation. The two following distinctions, however, explain many apparent inconsistencies: (a) whether the case involves a mass tort or not; and (b) whether there is adverse epidemiology or no epidemiological evidence at all.”)

[6] Consent Judgment as to Defendant Beaulieu Group ¶ 2-15, ECF RG 08407310; Consent Judgment as to Defendant Fieldturf USA, Inc. ¶ 2-15, ECF RG 08-407310.

[7] Compl. ¶ 20, ECF 08407310; although the legislative history for this regulation was not accessible at the time of writing, the author notes that the inclusion of lead as a toxic chemical was likely the result of scientific study which would have been probative within the scope of this paper.

[8] Id. at ¶ 22.

[9] Michael D. Green, Expert Witnesses and Sufficiency of Evidence in Toxic Substances Litigation: The Legacy of Agent Orange and Benedictin Litigation, 86 Nw. U. L. Rev. 643, 646 (1992) (discussing types of evidence that can demonstrate causation and why epidemiology is particularly favorable).

[10] Allan Mazur and Jennifer Bretsch, Looking Back: Synthetic Turf and Football Injuries, 10 Risk: Health, Safety & Env’t 1, 2 (1999).

[11] Nicholas P. Ruggiero, Are the Rights of Athletes Swept under the Carpet?, 3 Seton Hall J. Sport L. 237, 243 (1993) (assuming that artificial turf is in fact harder on the bodies of athletes than natural grass and determining the best ways to deter the advocacy of the product).

[12] Brian J. Duff, Game Plan for a Successful Products Liability Action Against Manufacturers of Artificial Turf, 5 Seton Hall J. Sport L 223, 231 (1995) (pointing to NFLPA grievances filed with the U.S. Consumer Products Safety Commission).

[13] John Underwood, Just an Awful Toll, Sports Illustrated, Aug. 12, 1985,

[14] United States Consumer Product Safety Commission, CPSC Denies Petition on Artificial Turf and Lead Levels in Paint,, Sep. 3. 1976 (Feb. 17, 2016, 1:10 am),

[15] United States Consumer Product Safety Commission, CPSC Staff Finds Synthetic Turf Fields OK to Install, OK to Play On,, Jul. 30, 2008 (Feb. 19, 2016, 11:07 pm),

[16] Julie Foudy, Turf Wars: How Safe are the Fields where we Play?, ESPNW, Nov. 24, 2105 (Feb. 27, 2016, 7:23 PM), (opening with an anecdote about Coach Amy Griffith keeping a list of all of the athletes who have developed lymphoma cancers, which are rare for the age group of the athletes).

[17] Id.

[18] Julia Cheever, Beach Chalet Fake Grass Survives Appeal, Bay City News, Oct. 1, 2015 (Feb. 28, 2016, 7:52 PM),

[19] Environment and Human Health, Inc., Artificial Turf: Exposures to Ground up Rubber Tires – Athletic Fields, Playgrounds, Garden Mulch, Environment and Human Health, Inc. (Feb. 27, 2016, 7:44 PM), (discussing different studies which have found cancer to be linked to crumb rubber).

[20] Supra, Foudy.

[21] Supra, Environment and Human Health, Inc.

[22] This is based on the studies provided via hyperlinks that are still functioning on the EHHI’s website. They can be found here: See, Office of Environmental Health Hazard Assessment, Evaluation of Health Effects of Recycled Waste Tires in Playground and Track Products, Integrated Waste Management Board, January 2007 (February 28, 2016, 11:30 AM)

[23] Office of Environmental Health Hazard Assessment, Evaluation of Health Effects of Recycled Waste Tires in Playground and Track Products, Integrated Waste Management Board, January 2007 at 1-3 (February 28, 2016, 11:30 AM)

[24] Supra, Foudy.

[25] See generally, Magistrini v. One Hour Martinizing Dry Cleaning, 180 F. Supp. 2d 584 (D.N.J. 2002); Baldonado v. Wyeth, 2012 WL 1965408 (N.D. Ill. 2012).

[26] Supra, Foudy.

[27] Supra, United States Consumer Product Safety Commission.

[28] United States Environmental Protection Agency, Federal Research on Recycled Tire Crumbs Used on Playing Fields,, February 18, 2016 (Feb. 28, 2016, 2:00 PM),

[29] Sierra Club appeals Beach Chalet court decision that ignores critical safety hazards, Sierra Club Yodeler, Jan. 30, 2014 (Feb. 28, 2016, 6:34 PM),

[30] Julia Cheever, Beach Chalet Fake Grass Survives Appeal, Bay City News, Oct. 1, 2015 (Feb. 28, 2016, 7:52 PM),

[31] Robert L. Rabin, Some Thoughts on the Efficacy of a Mass Torts Administrative Compensation Scheme, 52 Md. L. Rev. 951, 952 (1993) (“Critics have argued, in essence, that the present tort system, designed to achieve corrective justice goals in simple two-party accidental harm cases, is not well-constituted to adjudicate effectively mass toxics episodes, where litigation involves identifying the sources of long-latent disorders, resolving a vast array of probabilistic causation issues, dealing with enormous numbers of parties widely distributed geographically, and other related complications.”).

[32] Id. at 954.

[33] See supra note 6, in this case the lawsuit was brought by the Attorney General of the state, but it was within the tort litigation system.

[34] James T. O’Reilly, 2 Toxic Torts Prac. Guide §28:3 (2015)

[35] Rabin, supra, at 952 (noting that torts are most effective when the damages are related to the injury, the claimants are involved in the litigation, costs are low, trials are speedy, and the award provides incentive for deterrence).

[36] Albert C. Lin, Beyond Tort: Compensating Victims of Environmental Toxic Injury, 78 S. Cal. L. Rev. 1439, 1461 (2005).

[37] Id. at 1462.

[38] Id.

[39] Id. at 1452-1459, 1465.

[40] Id. at 1465.

[41] Rabin, supra, at 955-962 (describing the administrative systems behind the Price-Anderson Act, National Childhood Vaccine Act of 1986, and Environmental Law Institute Model); Clifford Fisher, The Role of Causation in Science as Law and Proposed Changes in the Current Common Law Toxic Tort System, 9 Buff. Envtl. L.J. 35, 131 (2001) (describing a system that deals with the failure of causation in mass torts to bring sufficient deterrence); Lin, supra, at 1487 (describing a system where the government would use the newest forms of technology available to it to draw conclusions about risk assessment across a wide variety of industries).

[42] This section will utilize the methodology and theories laid out in the articles in note 113, supra.

[43] Rabin, supra, at 955; 42 U.S.C. § 2210 (2006).

[44] 42 U.S.C. § 2210 (2006).

[45] Id.

[46] Rabin, supra, at 955-57.

[47] Rabin, supra, at 958; 42 U.S.C.A. §300aa-33 (2003).

[48] 42 U.S.C.A. § 300aa-14 (1993, published by Westlaw 2015).

[49] Rabin, supra, at 960.


[51] Rabin, supra, 960; Jeffrey Trauberman, Statutory Reform of “Toxic Torts”: Relieving Legal, Scientific, and Economic Burdens on the Chemical Victim, 7 Harv.Envtl.L.Rev. 177, 250-96 (1983).

[52] Trauberman, supra, at 251.

[53] Id. at 258.

[54] Id. at 284-286; Rabin, supra, at 961-62.

[55] Fisher, supra, at 131.

[56] Id.

[57] Id. at 143.

[58] Id. at 144.

[59] Id.

[60] Id. at 150.

[61] Lin, supra, at 1486.

[62] Id. at 1487.

[63] Id. at 1488.

[64] Id.

[65] Id. at 1490.

[66] Id. at 1491.

[67] Id.

[68] See, infra.

[69] Kenneth S. Abraham,  Individual Action and Collective Responsibility: The Dilemma of Mass Tort Reform, 73 Virginia L. Rev. 845 (1987).

[70] Id.; Gillian K. Hadfield, Framing the Choice between Cash and the Courthouse Experiences with the 9/11 Victim Compensation Fund, 42 L. & Soc. Rev. 645, 647 (2008).

[71] Id. at 854-55.

[72] Rochelle Chodock, et. al. “Insuring” the Continued Solvency of Pharmaceutical Companies in the Face of Products Liability Action, 40 Tort Trial & Ins. Prac. L. J. 997, 1000 (2005) (proposing a compensation fund or private insurance fund that would support pharmaceutical groups).

[73]Hadfield, supra, 647 (describing how some victims would have preferred to use the court system to filling our a form).

[74] Jill Schachner Chanen, Accounting for Lives, 93 ABA J. 58, 59 (describing the story of the mother of one victim who acknowledged that she was giving up the answers she sought for compensation).

[75] Chen-Ju Chen, The Liability and Compensation Mechanism under International Marine Environmental Law, LOSI Conference Papers (2012).

[76] Id.

[77] Abraham, supra, 855.