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Black Swans and the 40th Annual Conference on Environmental Law

by Sam Capasso, Student Guest Blogger currently at 40th Annual Conference on Environmental Law in Salt Lake City in Salt Lake City, UT

ABA SEER’s three-day 40th Annual Conference on Environmental Law in Salt Lake City concluded this afternoon. David Hayes, Deputy Secretary of the Department of the Interior, set out what was arguably the unifying theme of the conference: “black swans.” The term refers to the topic of Nassim Taleb’s book, The Black Swan: The Impact of the Highly Improbable, which points to the common practice of discounting low probability, high impact events such as the creation of the internet and the events of 9/11. Hayes claimed the BP Deepwater Horizon oil spill was a black swan, a categorization echoed by Richard Lazarus on the final day of the conference in his enlightening keynote address of the challenges and findings of his work on the National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling. This black swan arose out the demand for energy and the consequences of meeting that demand and there are bound to be more black swans resulting from it, but the problem of black swans, and risks more generally, was referenced in the panels on environmental risk management, climate adaptation, and the current crisis at the Fukushima Daiichi nuclear power plant in Japan and implicated in the discussions of the use of coal and renewable energy.

Despite the problems that black swans pose, one point which came through the presentations is that we know they are out there and so we can prepare for their occurrence. Businesses and governments may not be able to prepare for the specific risks, but they can develop plans and procedures to deal with those emergency moments. One example of this was the response to the BP oil spill. Though the failure of the blowout preventer at Deepwater Horizon may have been a black swan, the response system set forth in the Oil Pollution Act allowed the effected governments to respond to the unfolding disaster. According to the panelists of the discussion entitled, “Gulf Oil Spill: One Year Later” and Richard Lazarus in his discussion on the findings of the National Commission, the command structure, despite its flaws, worked very well to quickly address an incredibly difficult problem. Response structures such as this may be increasingly important to deal with the black swans released by climate change.

Perhaps the most worrying and likely progenitor of risks is climate change. Though the specific impacts of climate change, such as the timing of massive storms or droughts, are unknown, governments can prevent or mitigate the magnitude of these impacts. The climate adaption panelists illustrated that there are many risks which have been identified and have the potential to be addressed such as heat waves, flooding, sea level rise, droughts, and species migration. Preparing adaptation and resiliency measures will mitigate the magnitude of these hazards. The panelists explained that, though more attention should be given to adaptation, there is activity in the field. Cities and counties across the country are developing plans and the federal government has established an Interagency Climate Change Adaptation Task Force which is developing tools to help communities adapt to the specific climate impacts they will face.

It should be noted that black swans are not necessarily natural events; some black swans are man-made, as regulation can be for business. A single instance of regulatory non-compliance has the potential to bankrupt a firm and may result from a simple oversight or a failure to achieve goals as expected. In separate panels, Kevin Leighy from Duke Energy, Richard Walje from Rocky Mountain Power, and Caroline Choi from Progress Energy touched on business’s underlying desire for regulatory certainty. The panelists of the environmental risk management session stressed the role of counsel in identifying and assessing all forms of risk. From these presentations, it was evident businesses are concerned about the risk and consequences of non-compliance with regulation, perhaps even more than they are about the costs incurred by the regulation itself. Such a consideration could inform the game-changing regulation of greenhouse gases.

Any action to prepare for the unexpected will need to be couched within the evolving framework of environmental law. A panel consisting of former EPA General Counsels Don Elliot, Jon Cannon, and Roger Martella, as well as current General Counsel Scott Fulton, sought to identify the issues confronting what Martella called the “Second Era of Green.” Among the issues identified were a need to move from discrete problem solving to resolving systemic problems such as climate change and watershed pollution; ensuring environmental justice; preparing for the emerging “open society” and its demand for transparency and precise information; and fixing the expanding partisan divide.

The ultimate take-away message of the conference was lawyer’s are expected to deal with risks and ask the hard questions necessary to protect their clients. As with costly planning for events which may not happen for decades, addressing risks in the present can prevent future disaster and save everyone a lot of hardship.

ABA SEER’s three-day 40th Annual Conference on Environmental Law in Salt Lake City concluded this afternoon. David Hayes, Deputy Secretary of the Department of the Interior, set out what was arguably the unifying theme of the conference: “black swans.” The term refers to the topic of Nassim Taleb’s book, The Black Swan: The Impact of the Highly Improbable, which points to the common practice of discounting low probability, high impact events such as the creation of the internet and the events of 9/11. Hayes claimed the BP Deepwater Horizon oil spill was a black swan, a categorization echoed by Richard Lazarus on the final day of the conference in his enlightening keynote address of the challenges and findings of his work on the National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling. This black swan arose out the demand for energy and the consequences of meeting that demand and there are bound to be more black swans resulting from it, but the problem of black swans, and risks more generally, was referenced in the panels on environmental risk management, climate adaptation, and the current crisis at the Fukushima Daiichi nuclear power plant in Japan and implicated in the discussions of the use of coal and renewable energy.

Despite the problems that black swans pose, one point which came through the presentations is that we know they are out there and so we can prepare for their occurrence. Businesses and governments may not be able to prepare for the specific risks, but they can develop plans and procedures to deal with those emergency moments. One example of this was the response to the BP oil spill. Though the failure of the blowout preventer at Deepwater Horizon may have been a black swan, the response system set forth in the Oil Pollution Act allowed the effected governments to respond to the unfolding disaster. According to the panelists of the discussion entitled, “Gulf Oil Spill: One Year Later” and Richard Lazarus in his discussion on the findings of the National Commission, the command structure, despite its flaws, worked very well to quickly address an incredibly difficult problem. Response structures such as this may be increasingly important to deal with the black swans released by climate change.

Perhaps the most worrying and likely progenitor of risks is climate change. Though the specific impacts of climate change, such as the timing of massive storms or droughts, are unknown, governments can prevent or mitigate the magnitude of these impacts. The climate adaption panelists illustrated that there are many risks which have been identified and have the potential to be addressed such as heat waves, flooding, sea level rise, droughts, and species migration. Preparing adaptation and resiliency measures will mitigate the magnitude of these hazards. The panelists explained that, though more attention should be given to adaptation, there is activity in the field. Cities and counties across the country are developing plans and the federal government has established an Interagency Climate Change Adaptation Task Force which is developing tools to help communities adapt to the specific climate impacts they will face.

It should be noted that black swans are not necessarily natural events; some black swans are man-made, as regulation can be for business. A single instance of regulatory non-compliance has the potential to bankrupt a firm and may result from a simple oversight or a failure to achieve goals as expected. In separate panels, Kevin Leighy from Duke Energy, Richard Walje from Rocky Mountain Power, and Caroline Choi from Progress Energy touched on business’s underlying desire for regulatory certainty. The panelists of the environmental risk management session stressed the role of counsel in identifying and assessing all forms of risk. From these presentations, it was evident businesses are concerned about the risk and consequences of non-compliance with regulation, perhaps even more than they are about the costs incurred by the regulation itself. Such a consideration could inform the game-changing regulation of greenhouse gases.

Any action to prepare for the unexpected will need to be couched within the evolving framework of environmental law. A panel consisting of former EPA General Counsels Don Elliot, Jon Cannon, and Roger Martella, as well as current General Counsel Scott Fulton, sought to identify the issues confronting what Martella called the “Second Era of Green.” Among the issues identified were a need to move from discrete problem solving to resolving systemic problems such as climate change and watershed pollution; ensuring environmental justice; preparing for the emerging “open society” and its demand for transparency and precise information; and fixing the expanding partisan divide.

The ultimate take-away message of the conference was lawyer’s are expected to deal with risks and ask the hard questions necessary to protect their clients. As with costly planning for events which may not happen for decades, addressing risks in the present can prevent future disaster and save everyone a lot of hardship.

2 Comments

  1. Greg

    Great write-up. Nice to meet you at the conference. Sorry I had to take off early. Flying standby is cheap but can be a hassle, especially on a busy travel weekend (lots of skiers). I had to get to the airport early only to not get on a flight until 5 p.m.

    • Capasso, Samuel J.

      Not a problem Greg. I would like to hear what you got out of the off-shore wind discussion or any of the other panels you attended. If you would like, I could add it as a supplement to this post.

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