Category: Environmental Law

0

Homeownership, Flood Insurance, and Stupid Land Uses: The Kolbe Decision

First, thanks to Concurring Opinions for inviting me back.  It’s been years.  What took you so long? 

I plan to spend some of my month’s effort here discussing coastal land use and disasters and the law.  In light of Superstorm Sandy and likely future megastorms, and given climate change and sea level rise, I can’t help noting that, whatever is going on with managing CO2 levels at a global scale, one class of disasters results from what I have come to call in conversation (and now in writing) Stupid-A** Land Use Decisions (SALUD).   We build houses in harm’s way.  I’ve written about the folly of allowing homes on the parts of barrier islands that are most likely to flood or wash away, noting in passing the folly of building homes on scenic hillsides subject to rock- and mudslides.  In the news lately, there’s much about the costs of rescuing homes built in forests that are just waiting to catch fire.  At some point, we have to disincent SALUD, or at least insist that the full cost of risk and rescue and rebuilding be reflected in the market cost of building in Stupid-A** places, and let that expense disincent.  It’s very hard to do.  As my own dear New Jersey Governor Chris Christie said after Superstorm Sandy, we will rebuild!

 Which brings me to the case I’m discussing today.  It came down last Friday. The case is Kolbe v. BAC Home Loans Servicing, LP (1st Cir. No. 11-2030, Sept. 27, 2013) (en banc), 2013 WL 5394192.  It is a First Circuit en banc decision, on a 3-3 vote, failing to reverse the District of Massachusetts, which granted a motion to dismiss a putative class action seeking an interpretation of a form mortgage contract provision concerning flood insurance.  Warning, I’m not an expert in all of the doctrinal areas involved, so please forgive if I miss something, but boy, is it interesting. 

The provision in dispute is Covenant 4, a three-sentence paragraph required by the Department of Housing and Urban Development (HUD) to be included in all single family dwelling mortgage contracts insured by the Federal Housing Administration (FHA).  Covenant 4 was established by a regulation promulgated in 1989 after notice and comment rulemaking.  It allows a lender to require that the homeowner purchase insurance for “any hazards . . . in the amounts and for periods that the Lender requires.”  Covenant 4 also requires the borrower to insure against loss from floods to the extent required by the Secretary of HUD.  HUD requires flood insurance whenever a property is located in a “special flood hazard area,” the most risky category under the National Flood Insurance Program (NFIP) classification scheme.  HUD requires flood insurance at least equal to the outstanding balance of the mortgage, that is, the lender’s stake in the property, but there is a cap of $250,000.  Thus, as to hazard (but not flood), the lender clearly has authority under Covenant 4 to require further hazard insurance.  But it is, arguably, unclear whether Covenant 4 empowers the lender to require a homeowner to purchase additional flood insurance.  Perhaps the provision of Covenant 4 referring to requirements by HUD insulates the homeowner from lender requirements as to purchasing flood insurance.  Perhaps Covenant 4’s authorization for lenders to require additional hazard insurance includes flood insurance, because floods are a type of hazard.  That’s the interpretation question. Read More

1

Agencies in the Cathedral?

AgenciesAreas of law dominated by government agencies haven’t taken advantage of the rich literature on property rules and liability rules, which are “workhorse concepts that permeate every corner of the economic analysis of law.” In their 1972 article Property Rules, Liability Rules, and Inalienability: One View of the Cathedral, Calabresi and Melamed observed that there are fundamentally two types of remedies: (1) property rules, such as injunctions or disgorgement, which aim to deter, and (2) liability rules, like compensatory damages, which aim to compensate. This framework has paid rich dividends in areas like torts, property, IP, contracts, and conlaw — but seems to have bypassed areas of law dominated by agencies.

Government agencies’ remedies can be classified as either property rules or liability rules. For example, if a business has a permit from the EPA but violates the permit’s conditions, the remedy could be either taking away the permit (a property rule), or requiring proportional compensation (a liability rule). Similarly, if a broker has a license from the SEC and violates securities law, the remedy could be either yanking the license (a property rule), or requiring compensation for the harmed parties (a liability rule).

I apply the property rule and liability rule framework to my favorite agency — the IRS — in a forthcoming Virginia Law Review article. When a taxpayer violates a tax-law requirement, the remedy can be either yanking the taxpayer’s favorable tax status (a property rule), or requiring compensatory additional tax (a liability rule). Counterintuitively, anecdotal evidence shows that property-rule remedies may be less effective at deterring violations, because the threat of political and media blowback may make the IRS unwilling to impose a draconian property-rule remedy. As a result, when Congress protects a requirement with the property-rule remedy of yanking a favorable tax status, politically-powerful or sympathetic taxpayers are rarely deterred from violating the requirement. The IRS doesn’t dare impose it. Surely similar problems plague enforcement by other agencies.

Anyone working in any agency-dominated area of law could consider how the property-rule/liability-rule framework fits into their area.

1

Surveillance You Might Dig

NOAA’s video of green patterns earth shows how visualization helps show what data may indicate. The assertion that the visualization and data analysis helps understand weather, fire seasons, fertile areas, droughts, and more are tantalizing. If true at some level, this surveillance seems cool.

0

Double deference

I know that I am supposed to be caught up along with everyone else in the same-sex marriage cases, but I am still distracted by Decker v. Northwest Environmental Defense Center, decided last week at the Supreme Court. In a separate opinion designed to push the buttons of what Scotusblog’s John Elwood called Supreme Court nerderati, Justice Scalia again called for the reconsideration of the principle of Auer deference. Auer says that just as courts should defer to agencies’ reasonable interpretations of ambiguous provisions in their organic statutes, so should they defer to agencies’ reasonable interpretations of ambiguous provisions in regulations that they themselves promulgate. Chief Justice Roberts and Justice Alito suggested that they would also be open, in a different case, to reconsidering Auer.

Read More

0

Fossil Cycad National Monument: An Anniversary, of Sorts

Almost exactly fourteen years ago, around the time I began law school, I attended an informal presentation by an esteemed history professor at Yale, Robin Winks. The presentation was part of a series with the theme “Works in Progress.” Professor Winks told me and the dozen or so other attendees that his work in progress involved a book that would detail his visits to every single unit—more than 300 of them—within  the National Park system.

Professor Winks’ punctilious nature compelled him to visit not only currently recognized parks, monuments, and historic sites, but also those that had been decommissioned, transferred to another authority, or abolished outright. (National parks and monuments are creatures of statute and executive order, and therefore can of course be abolished by legislative act. Here is a list of parks and monuments that have met this fate.) In doing so, he tracked down and surveyed what remained of the one abolished monument that I knew well from my days as a seasonal ranger: Fossil Cycad National Monument, in South Dakota.

Fossil Cycad National Monument had a short, sad life. A prehistoric cycad resembled a modern palm tree, and served as Dinosaur Chow back in ancient times.  Discovery of a large bed of fossil cycads in the southern Black Hills in the late 1800s led to the designation of a monument there in 1922. (Then, as now, there were no strict criteria for qualification as a national park or monument, leading to dubious designations like the gone, and rarely remembered, Sully’s Hill National Park in North Dakota. A similar dynamic sometimes appears with sports halls of fame, where early selections for enshrinement sometimes seem ill-considered once time passes, and the criteria for inclusion become more settled. Fossil Cycad and Sully’s Hill represented, essentially, the Candy Cummings and Tommy McCarthy of the national park system.) As it turned out, however, no one really cared that much about a bunch of fossilized palm trees. No visitor center was ever built on the site, and no caretaker was appointed to ward off looters. Not that there was all that much to loot; as it turns out, all of the cycads visible from the surface were probably already gone by 1922, when President Harding created the monument.

And so, precisely 55 years ago–on September 1, 1957–Fossil Cycad National Monument was officially abolished by an act of Congress. Today, what was once Fossil Cycad National Monument is indistinguishable from the surrounding ranch land.  And unfortunately, we’ll probably never get to read Professor Winks’ impressions of the site. He died in 2003, before he published his book. I’ve often wondered what became of Professor Winks’ notes relating his journeys; I would love to read them, if they still exist.

War on Disclosure: Recent Fronts in Health Care

Corporations are fighting disclosure requirements in many fields.  Two notable fronts have recently opened in health care:

1) Fracking has been controversial in part because secret chemicals may end up compromising water supplies.  Pennsylvania has now limited doctors’ ability to speak about their concerns:

Under a new law, doctors in Pennsylvania can access information about chemicals used in natural gas extraction—but they won’t be able to share it with their patients. . . .Pennsylvania law states that companies must disclose the identity and amount of any chemicals used in fracking fluids to any health professional that requests that information in order to diagnosis or treat a patient that may have been exposed to a hazardous chemical. But the provision in the new bill requires those health professionals to sign a confidentiality agreement stating that they will not disclose that information to anyone else—not even the person they’re trying to treat.

Protection of property rights uber alles appears to be the guiding principle here.  If only the doctors wanted to market drugs, maybe their free speech rights would trump the frackers’ trade secrecy privileges.

2) FDA User-Fee Bills recently approved by the House and Senate could seriously limit access to data about drugs.  The House bill is particularly worrisome:

The Food and Drug Administration Reform Act of 2012, H.R.5651 . . . would keep potentially important health and safety information away from the public. Section 812 would, according to a letter to leaders of the House Oversight and Government Reform Committee penned by several [advocacy] groups, deny the public access to information relating to drugs obtained by the U.S. Food and Drug Administration (FDA) from any government agency — local, state, federal, or foreign — if that agency has requested that the information be kept confidential.

If that House provision survives the conference committee, there will be troubling implications for US patients and research subjects abroad.

0

The Yale Law Journal Online: Preventing Policy Default: Fallbacks and Fail-safes in the Modern Administrative State

The Yale Law Journal Online has published the third in a series of responses to Benjamin Ewing and Douglas A. Kysar’s recent article, Prods and Pleas: Limited Government in an Era of Unlimited Harm, which appeared in the November issue of The Yale Law Journal. In their article, Ewing and Kysar argue that the traditional constitutional model of “checks and balances” could be improved by incorporating “prods and pleas,” through which different government branches incentivize action from other branches. To set forth their argument, Ewing and Kysar explore federal climate nuisance litigation as an example and analyze how prods and pleas function in that arena.

In Preventing Policy Default: Fallbacks and Fail-safes in the Modern Administrative State, Daniel A. Farber argues that Ewing and Kysar place too much focus on common law. He writes that, with respect to climate change, “[t]he common law is simply not where the action is in today’s world.” Instead, he suggests that public law litigation and state legislative activity are more useful mechanisms for “fill[ing] the gaps created by congressional or presidential policy defaults.”

Preferred Citation: Daniel A. Farber, Preventing Policy Default: Fallbacks and Fail-safes in the Modern Administrative State, 121 YALE L.J. ONLINE 499 (2012), http://yalelawjournal.org/2012/02/21/farber.html.

Previous responses in this series:

Richard A. Epstein, Beware of Prods and Pleas: A Defense of the Conventional Views on Tort and Administrative Law in the Context of Global Warming, 121 YALE L.J. ONLINE 317 (2011), http://yalelawjournal.org/2011/12/06/epstein.html.

Jonathan Zasloff, Courts in the Age of Dysfunction, 121 YALE L.J. ONLINE 479 (2012), http://yalelawjournal.org/2012/02/14/zasloff/html.

0

A Commons Comedy Fueled by Data

Imagine you are a fisherman and haul in a catch with fish that are protected and that would get you in trouble. Quick! Hide it! Deny it! etc., right? Nope. The Times reports that a partnership among fishermen and the Nature Conservancy meant that this fisherman reported the catch so the overall area could thrive.

The story starts in the usual eco-group takes on industry way with the NC buying “out area fishing boats and licenses in a fairly extreme deal — forged with the local fishing industry — to protect millions of acres of fish habitat.” But the NC put the fleet back to work using a commons model.

Bringing information technology and better data collection to such an old-world industry is part of the plan. So is working with the fishermen it licenses to control overfishing by expanding closed areas and converting trawlers — boats that drag weighted nets across the ocean floor — to engage in more gentle and less ecologically damaging techniques like using traps, hooks and line, and seine netting.

The conservancy’s model is designed to take advantage of radical new changes in government regulation that allow fishermen in the region both more control and more responsibility for their operating choices. The new rules have led to better conservation practices across all fleets, government monitors say.

The challenges here were that “There wasn’t scientific information at that level that could match the fisherman knowledge.” Fisherman did not trust the NC, but when the NC bought some of the boats or permits from those who wanted to leave the industry, “The fishermen soon divulged which nurseries and rock formations needed to be protected and which areas where mature fish congregated should be left open. What resulted was a proposal that included large areas of closings — nearly 4 million acres — that most fishermen thought was fair. It was adopted easily by the fishery council in 2006.”

Now let’s look at the data magic. The NC uses a system called eCatch. According to the Times, fisherman were not sure about this reporting requirement “But fishermen have come to believe that the data will show patterns — for example, high catch rates of certain species after full moons along the edge of the shallow water shelf in July — that will help them all predict the danger zones. Independent fisherman have joined the risk pool and eCatch system because they see benefits. By handing out free iPads, the conservancy made the posting of real-time results almost effortless.”

And, it seems other areas are emulating this approach. “In Massachusetts, scallop fishermen, with the help of the University of Massachusetts, have developed a similar reporting program to avoid pulling in endangered yellowtail flounder.” Could lobster fishermen be far off from this method? Afterall at least with other seafood efforts the new method “yields profits and hardly any bycatch” (the term for catching sensitive species which can lead to market problems). And in what looks like another aspect of this commons comedy, in one case a family that sold its permit and leases it back at fair market value as long as the method “continues to use Scottish seining, which is far gentler to the ocean bottom than trawling is.”

Rather than the fight between nature groups and industry the fisherman offered a different picture: “The Nature Conservancy had identified that the small family boats were sustainable, and they wanted to help,” Mr. Fitz said. “We recognized that we needed help negotiating this increasingly confusing path into the future.”