Climate Change and Its Potential Impacts on Professional Lines (PLUS Journal Archive)

The unseasonably warm winter we’re experiencing (at least in Minnesota) brings to mind preview of an article from Issue XXIII, Volume 8 of the PLUS Journal (August 2010). In it,  authors  J. Randolph Evans and Christina M. Carroll look at the potential professional liability exposures relating to global climate change. From the article:

The Lull Before the Storm: Climate Change and Its Potential Significant and Imminent Impacts on Professional Lines

In the coming years, insurers may face increasing claims arising out of engineers, architects, consultants, and accountants’ performance of climate change-related work. Green building — which refers to the use of environmentally preferable practices and materials in the design, location, construction, operation, and disposal of new buildings [iii] — may be at the center of many of these future claims. Green building is hot and in high demand in part because it may reduce the need for fossil fuels and thereby lower GHG emissions. A recent Intergovernmental Panel on Climate Change Report found that buildings represent the greatest opportunity for considerable GHG emissions reductions with an economic benefit as opposed to loss.[iv]

 

While green building presents a new opportunity for industry and insurers, it also could mean more claims. For example, if a professional fails to take promised steps to mitigate GHGs in a “green building” project, causing a loss of LEED certification or loss of tax benefits, the client may have a suit against the professional. Already, there has been at least one lawsuit related to failures of a contractor to deliver a LEED-certified green building.[v]

 

Climate change-related claims also could arise out of a wide variety of other professional activities. As EPA, states, and non-profits demand disclosure of GHG emissions, professionals will be called on to account for or calculate GHG emissions for corporate clients for reports to EPA or other federal or state authorities. Companies will rely on these professionals to help prepare reports pursuant to the EPA GHG Reporting Rule [vi] and in connection with preparation of environmental impact statements (EISs) related to obtaining permits for projects at the state and local level. Many states are now requiring that climate change impacts are considered in EIS reports.  If professionals make mistakes in the course of reporting or preparing EISs, their customers may file claims against them. Professionals also could be subject to liability if there are problems arising from misrepresentations or mistakes made in connection with installation of emissions reduction solutions and possibly handling of carbon credits. Lawyers who fail to identify climate change as an issue in advising clients also may be subject to claims. Professionals facing these various claims may seek E&O coverage.

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Footnotes:

[iii] Commission for Environmental Cooperation, Green Building in North America: Opportunities and Challengesat 4 (2008).

[iv] Id. at 34.

[v] Counter-Complaint, S. Builders, Inc. v. Shaw Dev., LLC, Case No. 19-C-07-011405 (Md. Cir. Ct. Somerset County Feb. 16, 2007).

[vi] EPA, Mandatory Reporting of Greenhouse Gases, 74 Fed. Reg. 56,260 (Oct. 30, 2009).