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Continued Efforts to Bolster Wireless Infrastructure as California Officials Brace for Wildfire Season

California has been plagued by devastating wildfires over the past two summers, with the 2018 Camp Fire the deadliest and most destructive on record. Now that summer has officially started in 2019, officials are bracing for a possible string of new fires, with Governor Gavin Newsom telling officials to “prepare for the worst” in a recent meeting with emergency managers. In a discussion of what to expect for future California wildfire seasons, Chris Field, the Perry L. McCarty Director of the Stanford Woods Institute for the Environment, stated:

The combination of climate change, increasing development in the wildland-urban interface, and fuel accumulation from decades of fire suppression dramatically increases the risk of fires that are large and catastrophic. Former California Governor Jerry Brown described the situation as a “new abnormal.” We need to recognize that, in California, we face the real risk that every fire season will be among the most destructive, or even the most destructive, on record.

Federal, state, and local officials, utilities, and residents, among many others, are now grappling with how to best prepare for this “new abnormal.” Efforts range from the U.S. Forest Service and the California Department of Forestry and Fire Protection’s fast-tracked forest management projects to Governor Newsom’s June 2019 proposal to create a $21 billion fund to compensate future wildfire victims. One big piece of the puzzle is strengthening wireless infrastructure to ensure that residents are connected to loved ones and vital services in the event of a disaster, particularly as the number of households without landlines continues to grow.

Senate Bill 670

As discussed in this blog previously, cellular service has a number of vulnerabilities that can cause it to falter during an emergency. During wildfires, one of the key risks for wireless infrastructure is physical damage and burning of underground and pole-mounted fiber lines. Gaps in cellular service can prevent residents from being able to reach 911 or receive crucial emergency notifications. This disruption of service is particularly dangerous in the face of a rapidly moving wildfire. Legislation aiming to address part of the problem is currently winding its waythrough the California legislature: Senate Bill 670, authored by State Senator Mike McGuire (D-Healdsburg).

The proposed legislation would require telecommunications companies to report outages impacting customers’ ability to access 911 or receive emergency notifications to the California Office of Emergency Services (Cal OES) within 60 minutes of discovering the outage. Cal OES would then forward this information to local first responders so that they can identify any residents cut off from service. In 2018, certain Butte County residents received no official warning of the coming Camp Fire due to damaged cellular towers, with Sonoma County residents facing similar problems in 2017. The gap in communications was compounded by ineffectual use of wireless alert systems at the local level. Senator McGuire also authored Senate Bill 833, establishing statewide emergency alert protocols and regulations, which former Governor Jerry Brown signed in September 2018.

Concerns Regarding Power Supplies for Wireless Infrastructure

In May 2019, the Public Advocates Office (formerly the Office of Ratepayer Advocates), an independent organization within the California Public Utilities Commission (CPUC) that advocates on behalf of utility ratepayers, filed a legal motion urging the agency to act immediately to ensure that communication systems work during emergencies. As stated in a press release accompanying the motion:

[T]he Public Advocates Office seeks to better protect Californians during emergency situations by asserting that communication providers need to (1) ensure that calls and data be transmitted, without delay, during times of emergencies, (2) install backup generators or battery power at wireless facilities in high fire threat areas to reduce outages, (3) develop plans for alternative methods needed to support 9-1-1 call centers; (4) and take steps to improve their emergency alert and warning systems.

The Wireless Infrastructure Association has responded, pointing to regulatory hurdles inhibiting the expansion of cell sites to accommodate additional power sources and network redundancy. It has asked the Federal Communications Commission (FCC) to collaborate with local governments to prioritize and streamline the approval process.

FCC’s Examination of Disaster Response and Recovery

Meanwhile, the FCC, on June 13, 2019, held the first meeting for the recently re-chartered Broadband Deployment Advisory Committee (BDAC), which will examine, in part, ways to boost wireless infrastructure during disasters and other emergencies. The committee will study how to accelerate the deployment of high-speed broadband access, focused on the following three areas:

  • Disaster Response and Recovery Working Group. Measures to improve resiliency of broadband infrastructure before a disaster occurs, and strategies that can be used during and after the response to a disaster to minimize broadband network downtime.
  • Increasing Broadband Investment in Low-Income Communities Working Group. New ways to encourage the deployment of high-speed broadband infrastructure and services to low-income communities.
  • Broadband Infrastructure Deployment Job Skills and Training Opportunities Working Group. Ways to make more widely available and improve job skills training and development opportunities for the broadband infrastructure deployment workforce.

Working in tandem with the BDAC, the FCC, in November 2018, launched a re-examination of the Wireless Resiliency Cooperative Framework, a voluntary commitment by mobile carriers focused on restoring communications during disasters and other emergencies, originally approved in 2016. The move was a response to major disruptions in wireless service following Hurricane Michael in the Florida Panhandle, but it is intended as a broader examination of wireless services in the event of a disaster.

 

© 2010-2019 Allen Matkins Leck Gamble Mallory & Natsis LLP
For more on mobile & wireless infrastructure, please see the Communications, Media & Internet page on the National Law Review.

EPA Acts to Increase Supply of Clean Drinking Water in U.S. Virgin Islands

WASHINGTON (September 23, 2017) — The U.S. Environmental Protection Agency (EPA) today issued an order to the Federal Emergency Management Authority (FEMA) and the Department of Defense (DOD) that provides direction on supplying of clean drinking water in the U.S. Virgin Islands in response to impacts to the island’s drinking water system from Hurricane Maria and Hurricane Irma.

The order authorizes FEMA and DOD to install and operate temporary water treatment units that will provide a supply of clean drinking water. U.S. Virgin Islands public water systems are currently not in operational condition. The lack of clean alternative water supplies has created the potential for significant public health impacts. USVI public water systems have been significantly impacted by Hurricanes Maria and Irma and subsequent flooding, including by a loss of electrical power, and are not yet fully able to provide adequately treated water to meet the needs of those affected areas.

EPA is monitoring environmental and public health conditions across the U.S. Virgin Islands and Puerto Rico and is working closely with federal, territorial and local officials to ensure impacts from the hurricanes are addressed in order to protect public health.

Read this article on the EPA website here.

This post was written by the United States Environmental Protection Agency © Copyright 2017
For more Environmental & Energy Legal Analysis go to the National Law Review

Litigation After Devastation: The Legal Storm Surge

Bridges crumbling in Texas. Houses turned to toothpicks in the USVIs. Newly-formed rivers ravaging the streets in South Florida. The devastating destruction from the recent hurricanes that have pummeled the U.S. has uprooted many peoples’ homes and lives, but we have only begun to feel the impact of the surge.

Massive relief efforts have begun, national fundraising, news coverage, responsive legislation, and building codes to name a few. A litigation surge is swelling as well. We have seen several types of cases and class actions churn from a hurricane’s aftermath. Here are some of the types of cases, coverage issues, and expert needs you may see after the storm.

Property Damage and Meteorological Causation

Insurance companies insuring the Southern United States are bracing for the waves of claims that will soon be flooding in. Just as it was following Hurricanes Katrina, Ivan, and Sandy, the hotly-debated issue of whether the damage was caused by wind or water will be the likely focus. While most homeowner insurance policies will cover water damage that was caused by a roof or window that was compromised by wind and allowed water intrusion, most do not cover water that rises from the ground level and enters the home. Experts will be relied upon to determine how water got into a structure, even when it is entirely obliterated.

Insurance companies and attorneys will be looking for experts in meteorology, often with advanced degrees and testifying experience, who can opine on the types of weather conditions that might have existed at a given time in a given place (i.e., Key West when Hurricane Irma struck). The experts could come from academia or environmental institutes and societies. They will be asked to review various data points and speak on weather conditions at a particular time and place to support causation for insurance coverage. Structural engineers will also be needed, preferably with experience in standard insurance practices, procedures, and protocols in evaluating damage caused by hurricanes. They will need to have an understanding of insurance claims handling and will be asked to review various reports and data, some from other engineers, discussing damage caused to structures by the hurricane and opine as to whether or not the reports and data are accurate.

Structural Failures and Faulty Design/Construction

While many large, concrete commercial buildings and bridges are designed to withstand 150+ mph winds and flooding,  they can still be left severely damaged after a storm blows through. Structural failure of buildings, roofs, bridges, and roadways that were expected to withstand hurricane winds will lead to litigation over damage caused by the failure. Structural engineers with expertise in the types of structures at issue, likely licensed engineers, will be needed to examine damage patterns through photos, video, or via a post-storm on-scene inspection. They will also need to use meteorological wind information to determine the cause of the failure and the quality of the design or construction.

Class Actions for Coverage Determinations

Often, the core issues in insurance-related storm damage cases are similar across a wide span of policyholders. These cases will vary depending on the coverage matter at issue, but the most sought-after experts will be familiar with insurance claims standards, protocols, and policy interpretation. Construction experts may also be needed to opine on the necessity and extent of certain repairs required after a storm. Also, standard practices and interactions between contractors and insurance companies during the re-build process will come into question. Class actions may be filed as well, simply as placeholders to toll certain claims-filing deadlines or allow broader bad faith discovery against insurance companies who refuse to pay mass claims.

Litigation Over Price-Gouging

One of the worst scenarios to follow a storm is wide-scale price-gouging and scamming by companies trying to capitalize on the desperation and vulnerability of storm victims. Before the storm, many people preparing for power outages or evacuation will see unfair spikes in essentials such as water and gas. After the storm, shady contractors and tree-removers often flood in, lie about their licensing and credentials, and charge exorbitant fees while performing shoddy, haphazard work, or no work at all. Many states, including Florida, have made it a crime for any service provider to offer or sell essential commodities for an amount that “grossly exceeds the average price” during the thirty days following a declaration of emergency. In the days before Hurricane Irma’s approach, many reported price-gouging for essentials such as water, ice, batteries, and gas when thousands of Floridians were stocking up or evacuating. Class actions alleging price-gouging will likely occur following the storm. Experts in standard industry pricing, manufacture costs, and storm clean-up and repair may be called in to opine on the “average price” of certain essential commodities and post-storm services.

In the wake of Hurricanes Harvey and Irma, we are gearing up for the incumbent waves of litigation and expert requests we anticipate will follow. What types of cases, class actions, and expert needs are you expecting?

This post was written by Annie Dike of IMS ExpertServices, All Rights Reserved. © Copyright 2002-2017
For more legal analysis go to The National Law Review

Hurricanes and Act of God Defenses

Maritime contracts for services generally include clauses for performance, demurrage, deviation, termination, and suspension. Performance may be affected by an Act of God or Force Majeure clause and event. A typical Force Majeure clause reads as follows:

Except for the duty to make payments hereunder when due, and the indemnification provisions under this Agreement, neither Company nor Contractor shall be responsible to the other for any delay, damage or failure caused by or occasioned by a Force Majeure Event as used in this Agreement. “Force Majeure Event” includes: acts of God, action of the elements, warlike action, insurrection, revolution or civil strife, piracy, civil war or hostile action, strikes, differences with workers, acts of public enemies, federal or state laws, rules and regulations of any governmental authorities having jurisdiction in the premises or of any other group, organization or informal association (whether or not formally recognized as a government); inability to procure material, equipment or necessary labor in the open market acute and unusual labor or material or equipment shortages, or any other causes (except financial) beyond the control of either Party. Delays due to the above causes, or any of them, shall not be deemed to be a breach of or failure to perform under this Agreement.

A. Act of God

Act of God or Force Majeure is a defense to many contractual obligations, including performance, deviation, and demurrage. It may also be the basis to suspend or terminate a maritime agreement for cause. It is defined as an abnormal natural event that is overwhelming and cannot be forestalled nor controlled. Skandia Ins. Co., Ltd. V. Star Shipping, AS, 173 F.Supp. 2d 1228 (S.D. Ala. 2001) (Hurricane Georges cargo claim). It is also a defense to certain tort claims like collisions and allisions occurring during a storm. Petition of U.S., Heide Shipping & Trading v. S.S. Joseph Lykes, 425 F.2d 991 (5th Cir. 1970) (vessel break-away in Hurricane Betsy).

When plead, a party must demonstrate that it was prudent in predicting and attempting to avoid the impact of the overwhelming and unexpected natural event and took reasonable precautions under the circumstances. A failure to perform or third party tort damages are not subject to an Act of God defense if the failure results from human agency, neglect or an unseaworthy condition. Compania DeVapores Ins. Co., SA v. Mo-Pac R.R. Co., 232 F.2d 657 (5th Cir. 1985) (cargo claim for failure to take reasonable steps to guard against wind storm).

Following Hurricane Katrina, the U.S. District Court for the Eastern District of Louisiana held that a category 4 or 5 hurricane was an Act of God sufficient to bar a tort claim by a marina owner against the owner of a vessel that broke away from her berth, drifted and hit another vessel. The defense of Act of God applied because, 1) the accident was due exclusively to abnormal natural events without human interest, and (2) there was no intervening negligent behavior by the vessel owner. J.W. Stone Oil Dist., LLC v. Bollinger Shipyard, 2007 WL 2710809 (E.D. La. 2007). Judge Lemmon held in Stone Oil that hurricanes are considered as a matter of law to be an Act of God and defensible unless there is an intervening and contributing act of individual negligence. This obligation includes taking reasonable precautions based upon all available information.

In Simmons v. Lexington Ins. Co., 2010 WL 1254638 (E.D. La. 2010), aff’d., 401 Fed. Appx. 903 (5th Cir. 2010), J),  the courts similarly considered whether reasonable precautions had been taken by a marina to protect a sailboat during Hurricane Katrina under both Louisiana and maritime law. The Court reviewed other Katrina cases, including Conagra Trade Group, Inc. v. AEP Memco, LLC, 2009 WL 2023174 (E.D. La. 2009), and Coex Coffee Int’l., Inc. v. Dupuy Storage & Forwarding, LLC, 2008 WL 1884041 (E.D. La. 2008). (Katrina’s unprecedented flooding and devastation was an Act of God defense.) In Conagra, supra, Judge Fallon was asked to review a contract of affreightment for a cargo of wheat aboard a barge that sunk. Memco was found not negligent in delivering its barge of cargo to an affected berth several days before the weather forecast accurately predicted the landfall of Katrina.

In re S.S. Winged Arrow, 425 F.2d 991 (5th Cir. 1970), affirmed that where a vessel had been sufficiently moored based upon the anticipated path of Hurricane Betsy, the Act of God defense applied to relieve its owner of  tort damages resulting from its breakaway. From a review of the case law involving severe weather events, it is apparent that Act of God defenses will be granted as a defense to both third party tort claims and also contractual claims for failure to perform where reasonable decisions and precautionsunder the circumstances have been made.

B. Performance Clauses

Clauses for demurrage, detention or laytime usually involve delays in the loading or unloading of cargo or the delivery of goods and materials. Laytime is the period of time allowed for loading and unloading. Demurrage and detention are sums paid to compensate for time lost related to the delivery of equipment or cargo. Demurrage begins to run after the passage of laytime or the agreed time of delivery and performance. Damages are awarded for failure to perform. Deviation is an obligation to maintain a proper course in ordinary trade and to timely arrive at the agreed destination. All deviation clauses are subject to certain liberties. Any deviation may affect insurance and hire.

Typically a contract for maritime services can be terminated for cause or for convenience. Similarly, parties may negotiate terms to suspend performance, which would suspend payment of hire and performance of services. A suspension clause is typically an off-hire clause where the contract terms remain but no hire is paid. Usually a vessel owner will be compensated and reimbursed for certain additional expenses if a contract is terminated for convenience. An Act of God clause excuses delays in performance, but in most cases serves to either suspend performance or terminate the contract for cause as between the parties.

Similar defenses are also statutorily allowed under COGSA. Under the COGSA “perils of the sea” defense, a carrier and vessel are not liable for cargo damage proximately caused by an Act of God where the carrier is not independently negligent and its vessel seaworthy when confronted with an unexpected and abnormal event of nature. 46 USC 1304(2) (c) & (d) ; J.Gerber & Co. v S/S SABINE HOWALDT 437 F.2d. 580 (2nd Cir. 1971); Taisho Marine & Fire Ins. Co. v. Sea-Land ENDURANCE 815 F. 2d. (9th Cir. 1270).

C. Conclusion

The purpose of an Act of God clause in a contract or asserted as a defense to a maritime tort is to relieve a defendant from liability for performance and damages where there was an extreme natural event. Whether a particular storm or natural event is considered an ACT OF GOD is a question of fact. The factors to be considered in accessing an ACT OF GOD/FORCE MAJEURE include the intensity of the natural event and whether the conditions would normally be expected. In order to avail oneself of the ACT OF GOD defense a defendant must show a causal connection between the loss and the peril as well as defendant’s freedom from fault.

This post was written by Grady S. Hurley of Jones Walker LLP © 2017

For more legal analysis go to The National Law Review

Contingent Business Interruption Coverage: Insuring the Far-Reaching Effects of Tropical Storm Harvey

Manufacturers and producers are keenly aware of the value provided by business interruption coverage. Typically, this coverage is sold to companies as one of several coverages under their commercial property insurance package. Business interruption coverage is generally triggered by physical damage to a company asset (e.g., a manufacturing plant), which causes a suspension of business activities resulting in a loss of business income.

Tropical Storm Harvey has forced manufacturers and producers across Southeastern Texas to shut down operations while repairing their damaged facilities. These companies will turn to their business interruption carriers to recoup their business income lost during this period. However, for companies doing business in that region, but physically located outside the reach of Harvey, business interruption coverage may not protect them from lost profits caused by the storm.

For example, say a company owns a manufacturing facility in California where it assembles cars. The manufacturer purchases its engines from a company located in the flood-ravaged portions of Texas. If the Texas company is unable to build and deliver engines to California, the manufacturer might be unable to assemble cars for days, possibly weeks. Any business income losses incurred by the California company are unlikely to trigger standard business interruption coverage because the California manufacturing facility did not suffer any physical damage. To fill the gap, manufacturers and producers often purchase contingent business interruption coverage (CBI).

CBI coverage is, in effect, an extension of business interruption coverage to the business activities of suppliers and customers. If an upstream supplier or downstream customer suffers an interruption in business activities, CBI coverage should kick in to reimburse the policyholder for certain lost profits. CBI coverage can be written on specific properties owned by suppliers or customers and/or on a blanket basis.

The value of CBI coverage may vary depending on the precise language of the coverage grant.

Compare Millennium Inorganic Chems. Ltd. v. National Union Fire Ins. Co., 744 F.3d 279, 285-86 (4th Cir. 2014) (CBI coverage was expressly limited to “direct contributing properties” therefore, the presence of an intermediary between policyholder and supplier precluded coverage) to Archer-Daniels-Midland v. Phoneix Assur. Co., 936 F. Supp. 534, 544 (S.D. Ill. 1996) (CBI coverage was not limited to “direct suppliers,” therefore, CBI coverage was appropriate despite an intermediary in the supply chain).

There are a myriad of issues that arise when a company tenders a claim for CBI coverage, all of which need to be carefully considered on a case-by-case basis. For manufacturers and producers that rely on companies in Southeastern Texas, CBI coverage may become vital.

This post was written by Joshua B. Rosenberg of BARNES & THORNBURG LLP© 2017

Federal Immigration Resources Assisting in Hurricane Response in Texas

U.S. Customs and Border Protection (CBP) is deploying staff and equipment for search and rescue efforts and to work at local, state, and federal emergency operations centers in Texas in response to Hurricane Harvey.

Hurricane Harvey hit Texas just as the state’s plan to outlaw sanctuary cities is about to go into effect.  Texas also has joined other states in threatening to sue President Donald Trump if he does not phase out DACA starting on September 5th.

Some of Houston’s more than 500,000 undocumented immigrants reportedly are afraid to seek shelter, fearing deportation.

To encourage undocumented workers in need of assistance to come into shelters, FEMA issued a statement, “Hurricane Harvey Rumor Control,” asking “all persons to follow the guidance of local officials and seek shelter regardless of their immigration status.”

ICE and CBP explained that:

It is not conducting immigration enforcement at relief sites such as shelters or food banks. In the rare instance where local law enforcement informs ICE of a serious criminal alien at a relief site that presents a public safety threat, ICE will make a determination on a case-by-case basis about the appropriate enforcement actions.

In an effort to assuage fears, the Mayor of Houston has offered to personally represent any individual facing deportation after seeking disaster relief.

In the meantime:

  • 50 CBP agents are staffing a U.S. Coast Guard Emergency Operations Center in Robstown, Texas

  • CBP is providing assistance to border patrol agents in Corpus Christi

  • CBP aircraft from Tucson are in Texas, along with 12 aircrew members, 5 support personnel and 3 agents certified in swift-water rescues

  • CBP’s Air and Marine Operations sent 4 hoist-capable Blackhawks to Houston to help with rescues

  • 50 Tucson area Special Operations Detachments agents are supporting public safety operations

Once the immediate danger subsides, workers will be needed to participate in the billion-dollar rebuilding effort. “Eduardo Canales, director of the South Texas Human Rights Center, said the state is at risk of losing much-needed low-wage workers – cleaners, cooks, carpenters and landscapers – who because of the crackdown may not stick around to help Texas communities recover from the storm.” Even before the hurricane, there was concern that undocumented workers would be leaving the state because of perceived anti-immigrant sentiment.

Beyond the emergency rescue and relief efforts, international trade and travel also has been affected and CBP is coordinating with the U.S. Coast Guard and port authorities to resume operations as soon as possible.

This post was written by Meredith K. Stewart of Jackson Lewis P.C. © 2017

For more legal analysis go to The National Law Review

EPA Ready to Support FEMA, State Efforts on Hurricane Harvey

EPA has an organized emergency response program for responding to man-made and natural disasters and is positioned to support the Federal Emergency Management Agency (FEMA), state, local, and tribal partners in response to Hurricane Harvey.

“I am in regular contact with EPA Region 6 and want to commend them for their leadership and preparation,” said EPA Administrator Scott Pruitt. “EPA is closely coordinating with state and regional partners, and we have teams standing by to support FEMA.  EPA is ready to respond to anything that may occur due to Hurricane Harvey.”

EPA headquarters emergency operations center is monitoring the storm closely and making preparations to activate in order to support states and regions affected by the storm.

EPA’s Region 6 office in Dallas is taking action to ensure that Superfund sites are secured in advance of the storm, to assist approximately 300 public drinking water system rapid assessments, and to seamlessly integrate emergency response activities with Texas, Louisiana, and other federal response agencies.

EPA supports hurricane preparedness and response in a number of ways, including:
•    Addressing Fuel Shortages: The Clear Air Act allows EPA Administrator Pruitt, in consultation with Energy Secretary Perry, to waive certain fuel requirements to address shortages that occur as a result of the storm. If Administrator Pruitt determines that extreme and unusual fuel supply circumstances exist in a state or region as a result of the hurricane, a temporary waiver can help ensure an adequate supply of gasoline is available in the affected area, particularly for emergency vehicles. EPA has an experienced team standing by to expedite handling of any fuel waiver requests by the states.

•    Monitoring Public Water Systems: Water systems can be severely impacted during hurricanes due to storm surge, flooding, or loss of power. EPA Region 6 has developed a tracking system for us to identify systems in the storm’s pathway. About 300 public drinking water systems are in the path (red zone) of hurricane Harvey in Texas. Both Texas Commission on Environmental Quality and Louisiana Department of Hospitals have uploaded their potentially impacted systems into Response Manager, which enables planning for rapid assessments to restore water systems after the storm passes and flood waters recede. Following the storm, and if the state requests federal assistance, EPA conducts damage assessments of both drinking water and wastewater systems to identify impacts to critical assets and assist in the recovery.

•    Securing Superfund Sites: EPA assesses conditions at the NPL Superfund sites in the storm’s pathway and tasks each Superfund National Priorities List (NPL) remedial site manager to assess conditions and make on-site preparations for high winds and heavy rainfall.  Following the storm and receding floodwaters, EPA conducts rapid assessments to identify damage at sites and initiate cleanup plans if necessary. Any on-site activities at sites located in the storm’s path are ceased until the all clear is given and on-site equipment is secured.  In addition, freeboard for lagoons or ponds is increased to accommodate forecasted rainfall if possible. After a hurricane makes landfall and any flooding recedes, the EPA remedial managers will conduct assessments of each Superfund NPL site to ensure no damage has occurred.

•    Assessing Conditions at Major Industrial Facilities: EPA assesses conditions at the major industrial facilities in the storm’s pathway to identify potential impacts and countermeasures. Following the storm and receding floodwaters, spills and releases are reported to the National Response Center. NRC notifies US Coast Guard or EPA based on preapproved jurisdiction boundaries. EPA conducts follow up inspections and damage assessments in response to reports within EPA jurisdiction.

As EPA prepares to support FEMA and its local and state partners, it continues to focus its message on the importance of public safety. For information and updates from EPA, please visit EPA’s emergency response website, www.response.epa.gov/Hurricaneharvey2017.

This post was written by the United States Environmental Protection Agency © Copyright 2017
For more Environmental Law analysis, go to The National Law Review

Superstorm Sandy and the Remediation of Water Damage, Mold Growth and Bacterial Threats

GT Law

As business slowly returns to normal in areas of the East Coast impacted by Superstorm Sandy, property owners are confronting questions about how best to address water damage, prevent or remediate mold and microbial growth, and address bacterial threats from potentially contaminated flood waters.  When water damage, flooding, or moisture intrusion events occur, there are a number of important considerations to take into account to address potential or actual mold, microbial, and bacterial threats:

1. Prompt Action is Essential

  • Quick action is the key to preventing water damage from becoming a significant mold, microbial or bacterial problem.
  • Act quickly to stop any ongoing source of water intrusion, evaluate the source and extent of water damage, mold-impacted building materials, and bacterial threats, and prepare an appropriate plan of action.
  • Analyze insurance policies early in the process and put carriers on notice of any water damage, mold growth, and bacterial threats promptly.  Many insurance policies require prior approval of selected consultants and contractors, as well as remedial scopes of work developed for the impacted property.
  • Determine whether there are notice obligations under existing loan agreements, management, partnership, joint-venture agreements, and leases with tenants.

2. Retain Qualified Professionals

  • Consider retaining a qualified environmental consultant with a licensed Certified Industrial Hygienist (CIH) on staff. Often, a CIH can best determine the source and extent of water damage and the appropriate scope of work to prevent or remediate mold and bacterial growth.
  • Avoid the mistake of hiring only a remediation contractor. A more prudent approach is to engage a third-party consultant or CIH to conduct an assessment of water/moisture and mold/bacteria-impacted building materials, develop the appropriate scope of work for remediation, and monitor the performance of such work by a carefully selected remediation contractor.
  • The third-party consultant/CIH should confirm that all water damage and related mold and bacterial growth have been appropriately remediated in accordance with the developed scope of work and prevailing industry standards. This provides an important double-check on the quality of the remediation.

3. Consider Carefully Whether Indoor Air Sampling is Necessary or Appropriate

  • A thorough visual assessment with moisture metering conducted by a qualified CIH is the most effective way to confirm whether mold and/or conditions conducive to mold are present, and ultimately whether mold has been remediated successfully.
  • Sampling methods for mold are not standardized and often yield highly variable results. Indoor air sampling often leads to results that are difficult to interpret, or that indicate a problem when there is none. The quantity of mold spores in air can vary greatly depending upon the season, the weather conditions, and the time of day, regardless of whether indoor mold growth actually is present.
  • There are no regulatory standards against which to compare air sampling results for health or environmental assessments. In many cases, the objective should be to demonstrate that there is a lower concentration of mold spores in indoor air than in outdoor air.
  • Before any post-mold remediation indoor air confirmation sampling is conducted, the third-party consultant/CIH should confirm via a thorough visual assessment and moisture metering that all water damaged and/or mold-impacted building materials have been remediated in accordance with the site-specific scope of work and prevailing industry standards, and that no excessive moisture or visible mold growth remains.

4. Document Assessment Findings, Remediation, and Results of Confirmation Sampling

  • It is essential to document that the assessment and remediation work conducted was thorough, and that all impacts resulting from the water intrusion event have been successfully remediated. Maintaining such documentation will help avoid future obstacles in financing, leasing and sale transactions.
  • The third-party consultant/CIH should prepare an assessment report that documents the initial assessment findings and recommendations for remediation.  Once the remediation has been completed by a qualified contractor, the consultant/CIH should prepare a second, final report documenting that the conditions identified in its assessment report were remediated in accordance with its recommendations, that no mold or bacterial growth, or conditions conducive to mold or bacterial growth, remain, and that no further investigation or remediation is necessary.

5. Communicate with Building Occupants

  • It is important to maintain open lines of communication with building occupants, and to provide information regarding the remedial measures being taken and the timetable for completion.
  • Avoid the temptation to hide the problem from building occupants, and the reluctance to provide bad news.  Sharing information with building occupants in most cases actually reduces the potential for and significance of third-party claims. It would be prudent to discuss this process with legal counsel.
  • Document any complaints received from building occupants and users, and all actions taken in response thereto, and establish a protocol for responding to information requests and complaints. If such  a  protocol is established, stick to it.

6. Don’t Cut Corners

  • Avoid the temptation and resist any contractor recommendations to simply clean porous building materials such as drywall, insulation and carpeting. The wiser approach is to remove and replace porous materials, and limit cleaning to non-porous materials. While this approach can increase demolition and replacement costs, it more effectively reduces the risk of future mold and bacterial growth and related remediation costs and thirdparty claims.
  • Evaluate incidental regulatory requirements, such as whether proper abatement of asbestos containing materials or lead paint is required in connection with the remediation project, and have any such work conducted by qualified professionals.
  • Clean and maintain HVAC systems, replace air filters, drip pans, etc., during remediation. Following these general guidelines can greatly reduce the risk that water damage becomes a significant loss or source of liability. Additional information helpful in responding to water damage, mold and bacterial growth is available from the New York City Department of Health and the U.S. Environmental Protection Agency via the links below:

©2012 Greenberg Traurig, LLP

Insurance Coverage For Superstorm Sandy Claims

The National Law Review recently featured an article by Michael J. Canning of Giordano, Halleran & Ciesla, P.C. regarding Insurance Claims for Superstorm Sandy:

 

Superstorm Sandy has devastated the New Jersey Shore and other parts of New Jersey, causing untold damages to personal residences and businesses.  For those individuals and businesses fortunate enough to have insurance coverage, particularly flood insurance coverage, steps should be taken immediately to protect your rights under your insurance policies.  The first step in the process is to identify what insurance policies you may have which may respond to the loss.  Individuals should look to their homeowner’s policies for damage to their home and to their automobile policies for damage to their automobiles.  Businesses should look primarily to their business owners or commercial property policies.  Both businesses and individuals should examine any excess or umbrella insurance policies they may have.

Once policies are identified, claims should immediately be reported to your insurers.  The fastest and simplest way of providing notice is through your insurance broker, which should be done in writing with the request that your broker provide notice to your insurer.  You should request that your broker provide you with a copy of the notice it provides to the insurer.  Most insurance agents are extremely helpful in processing claims and assisting insureds with their claims.  Notice can also be given directly to your insurer and many insurers are setting up mobile claim units at which claims can be reported.

There are different coverages available under different types of policies as discussed below.  While many policies contain standard terms and conditions, each policy has its own language and must be carefully reviewed to determine the specific coverage provided under that specific policy.  The discussion of insurance policies below is based on fairly standard language which appears in many policies but it must be emphasized that you need to review the specific language in your policy which may significantly increase or decrease the coverage provided to you.

Business Owners or Commercial Property Coverage

Sandy has caused incalculable damage to businesses.  These damages include damage to a company’s real property, its personal property and its loss of business.  There may be coverage for such losses under a company’s business owner’s policy or commercial property policy.  Business owner’s policies or commercial property policies should be carefully reviewed to determine what coverages are provided and what limits of coverage are available.

1.                  Nature of Coverage Provided:

There are generally two types of coverages provided under business owners or commercial property policies.  The first is “all risk” coverage which provides coverage to the insured’s property for all risks of direct physical loss or damage.  This is a broader form of coverage and typically is more expensive to obtain.  Under an all risk policy, there will be coverage for direct physical loss or damage to the insured’s property irrespective of the cause of loss, subject to the exclusions in the policy.

The second form of coverage is “named” peril coverage.  This provides more narrow protection than the all risk coverage and provides coverage for risk of direct physical loss or damage caused only by specifically listed perils in the policy.  Under this more limited coverage, there is coverage for direct physical loss or damage only if caused by the listed peril in the policy.  As in an all risk policy, the coverage provided is subject to the policy’s exclusions.

The most significant exclusion for Sandy-related claims will be the flood exclusion.  A typical flood exclusion defines flood to mean a general and temporary condition of partial or complete inundation of normally dry land areas due to:  (a) flood, surface water, rising water, waves, tides, tidal water, storm surge, tsunami, overflow of any body of water or their spray, all whether wind driven or not; or (b) water that backs up from any sewer or drain, or water that leaks or flows from below the surface of the ground.  Where a policy contains a flood exclusion, damage caused solely by the flood, as defined in the policy, may be excluded.

However, there is a critical distinction between damage caused by wind, which is normally covered under an all risk policy or a named peril policy, and damage caused by flood.  A storm such as Superstorm Sandy may have damages caused by both flood and wind.  To the extent the damage to the insured’s property is caused by wind, there should be coverage under the policy, subject to other exclusions, even if a flood causes additional or separate damage.  By way of example, the wind may knock a tree down onto the insured’s property causing physical damage to the property.  Rain may penetrate the property as a result of the damage caused by the tree.  This damage would likely be covered as wind is a covered cause of loss and the damage to the property, including the water damages, resulted from the wind.  However, if during the same storm a tidal surge caused water to flood other portions of the property, that damage may not be covered if there is a flood exclusion.

If a dispute arises between you and your insurer as to whether damage to your property is caused by wind or flood, it may be necessary to retain an expert in the area of cause and origin of insurance losses to determine what damage was caused by wind compared to damage caused by flood.  Additionally, eyewitness testimony will be helpful so you should speak with any of your neighbors, employees or other persons who may have witnessed how your business property has been damaged.  The same applies to individuals seeking coverage under their homeowner’s or flood policies.

2.                  Coverages Provided Under a Business Owner’s Policy or Commercial Property Policy:

Business owner’s policies and commercial property policies typically contain coverages for damage to buildings, for business personal property, and for business income / extra expense.  Other additional coverages may also be provided and the policy must be carefully reviewed for such additional coverages.

a.                  Coverage for Buildings.

The declarations page of the policy will identify which buildings owned by the insured are covered under the policy.  Values are normally provided for the buildings.  The policies may provide coverage for either the replacement cost of the structure or for the actual cash value of the structure.  The policy should be reviewed carefully to determine what type of coverage is provided for damage to the property.  If there is a covered loss, the insurer will pay the claim up to the policy limits for building coverage identified on the declarations page.  Photographs or videotape should be taken of all damage to the structure.

b.                  Coverage for Business Personal Property.

Most business owners or commercial property policies provide coverage for personal property owned by the insured.  The amount of coverage for such personal property is normally identified in the declarations page.  Upon a covered loss, the insured should carefully document and inventory all the personal property which it has lost for which it will be submitting a claim.  The insured will be required to submit a sworn proof of loss in which the insured must identify under oath all of the property it claims to have been damaged for which it is seeking insurance coverage.  Photographs or videotapes should be taken of all damaged personal property.  Unless required to do so for safety or health reasons, the damaged personal property should not be discarded until the adjuster appointed by the insurer has come to inspect your property.  If you discard any damaged property for which a claim is submitted, the insurer may disclaim coverage.  In New York policyholders can submit photographs of damaged property as proof of loss of the property.

c.                   Business Interruption Coverage.

This coverage protects the insured against loss of income resulting from damage to the insured property.  Business interruption coverage is often subject to complex deductibles and co-insurance provisions which must be carefully reviewed.  The insured should work carefully with its attorney and broker in presenting the business interruption claim.  Outside professionals, including accountants or professional adjusters, may be of assistance in presenting such a claim to the insurer.  Some of the costs incurred in calculating the business interruption loss by professionals such as accountants may be recoverable under the policy, but fees for attorneys and public adjusters typically will not be covered.

As an incentive to insureds to move quickly to restore the insured property so that business operations can commence as soon as possible, insurers will normally pay the insured’s reasonable expense to restore operations.

If there is no direct physical damage to the insured’s property, then the business interruption coverage may not apply.  However, some policies provide coverage for a business interruption loss resulting from damage to a utility service caused by a covered cause of loss.  Many businesses lost power and were unable to conduct business without sustaining any physical damage to their property.  If the business owners or commercial property policy includes a utility service – direct damage endorsement, or similar type of endorsement, there may be limited coverage for a business interruption loss caused by damage to a power supply service, including utility-generating plants, switching stations, substations, transformers and transmission lines, by wind damage.  The policy must be reviewed to determine if such coverage exists and in what amount.  Typically the amount is less than the coverage provided where there is direct physical damage to the insured’s property.

d.                  Coverage for Damage Resulting From Acts of Civil Authority.

Some policies provide this coverage which provides that when a covered cause of loss causes damage to property other than the insured’s property, the insurer will pay the loss of business income and extra expense caused by action of civil authority that prohibits access to the insured’s premises.  This coverage, if it is provided in the policy, may require that:  (1) access to the area immediately surrounding the damaged property is prohibited by civil authority as a result of the damage and the insured’s property is within that area but not more than five miles from the damaged property; and (2) the action of civil authorities is taken in response to dangerous physical conditions resulting from the damage or continuation of the covered cause of loss that caused the damage, or the action is taken to enable a civil authority to have unimpeded access to the damaged property.

e.                   Debris Removal.

Many policies provide additional coverage for debris removal in which the insurer agrees to pay the reasonable expenses incurred to remove debris from the covered property caused by a covered cause of loss.  Typically there will be sub limits of coverage for this additional coverage which will be identified on the declarations page or a separate endorsement to the policy.  This may be a very significant coverage as a result of the substantial debris generated from Sandy’s destruction.

Business Excess and Umbrella Policies

Many businesses may have excess or umbrella property insurance coverage.  These policies should be carefully reviewed to determine whether they provide additional coverage beyond the coverage provided in the primary policy in addition to the increased limits of coverage which may be provided in the umbrella and excess policies.  The umbrella and excess policies typically “follow form” to the primary policy, which means they are normally subject to the same terms and conditions as the primary policy.  However, some excess or umbrella policies may contain additional exclusions which may not be excluded from the primary policy, including an exclusion for flood.  Both the primary and excess and umbrella policies should be carefully reviewed in this regard.

Individuals who have suffered damage to their homes and personal property will look primarily to their homeowner’s policies and flood policies, if they have such coverage.  For damage to your automobile, you should examine your automobile policy to determine if you have comprehensive insurance coverage.

Standard Homeowner’s Policy

1.                  Dwelling Coverage:

A standard homeowner’s policy typically covers damage to the insured dwelling up to the policy limits identified in the policy.  The declarations page of the policy should be reviewed to determine the limits of coverage available.  This coverage insures the residence premises identified in the declarations page and may include materials and supplies located on or next to the residence premises used to construct, alter or repair the dwelling.  There is typically no coverage for land, including the land on which the dwelling is located.

2.                  Other Structures:

There may be coverage under your homeowner’s policy for other structures which are set apart from the residence premises.  The declarations page will identify such other structures as well as the limits of coverage.

3.                  Personal Property:

A typical homeowner’s policy provides insurance coverage for personal property owned or used by an insured.  This coverage may include damage to property owned by others while the property is on the residence premises occupied by an insured.  There also may be limited coverage for an insured’s personal property located at an insured’s residence other than the residence premises listed in the declarations page.  However, this is a limited coverage which may be 10% of the limit of liability for the personal property coverage or $1,000, whichever is greater.  The declarations page must be reviewed for the limits of coverage.  There may be endorsements issued to the policy providing for greater limits of coverage for certain specified property such as specific scheduled jewelry.  Certain property, such as non-scheduled jewelry, furs, money, securities, watercraft, trailers, and certain portable electronic equipment may have special limits of liability, typically in amounts of $2,500 or less.

4.                  Loss of Use:

Standard homeowner’s policies provide coverage for loss of use.  The declarations page must be reviewed to determine whether such coverage is provided and, if so, in what limits.  The loss of use coverage includes the following coverages:

(a)                Additional Living Expense.  If the residence premises where you reside is not fit to live in as a result of a covered loss, the insurer will cover any necessary increase in living expenses incurred by you so that your household can maintain its normal standard of living.  Payment will usually be for the shortest time required to repair or replace the damage or, if you permanently relocate, the shortest time required for your household to settle elsewhere.

(b)               Fair Rental Value.  If a portion of the residence premises is rented to others and is not fit to live in as a result of a covered loss, the policy may cover the fair rental value of such premises plus any expenses that do not continue while it is not fit to live in.

(c)                Civil Authority Prohibits Use.  If a civil authority prohibits you from use of the residence premises as a result of direct damage to neighboring premises by a peril insured against, there may be limited coverage.  This coverage may include additional living expense and fair rental value described above, but for no more than two weeks.

5.                  Additional Coverages:

Many standard homeowner’s policies provide for additional coverages which must be identified on the declarations page, an endorsement or specifically provided for in the policy.  These additional coverages include:

(a)                Debris Removal.  The homeowner’s insurer will normally pay the reasonable expense for the removal of debris of covered property if a peril insured against that applies to the damaged property causes the loss.  This expense is included in the limit of liability that applies to the damaged property.  However, if the amount paid for the actual damage to the property plus the debris removal expense is more than the limit of liability for the damaged property, an additional 5% of that limit may be available for such expense under some policies.

In addition, some policies provide for payment of the reasonable expense, up to $1,000, for the removal from the residence premises of trees on the residence premises, or a neighbor’s trees which fell on the neighbor’s premises, provided there is damage to a covered structure or the trees block the driveway which prevent the use of a motor vehicle from entering or leaving the residence premises.

(b)               Reasonable Repairs.  If this additional coverage is listed on the declarations page, the insurer may pay the reasonable cost incurred by you for the necessary measures taken solely to protect covered property that is damaged by an insured peril from further damage.  However, this coverage does not increase the limit of liability that applies to the covered property.

As in a business owner’s or commercial property policy, the coverage provided under a homeowner’s policy may be on an “all risk” basis, which provides broad coverage for damage caused by any peril, subject to specific exclusions, or the more narrow “named peril” coverage, which provides coverage for loss caused by certain listed perils.  Normally damage from wind storm but not from flood are covered.  However, the coverage provided under the homeowner’s policy is subject to certain exclusions.  Unfortunately for Superstorm Sandy-related claims, many homeowners’ policies will exclude coverage for water or flood damage.  A typical exclusion in a homeowner’s policy will provide that the insurer does not insure for loss caused directly or indirectly by:  “Flood, surface water, waves, including tidal wave and tsunami, tides, tidal water, overflow of any body of water, or spray from any of these, all whether or not driven by wind, including storm surge.”  Alternatively a named peril policy may not list flood as a covered peril.  As with commercial policies, a careful distinction must be drawn between damages caused by water or flood, which may be subject to the above exclusion, and damages caused by wind.  As in the example above, homes which have had basements or other portions of the residence premises flooded by the storm surge may be subject to the water or flood exclusion if the storm surge was the sole cause of the damages.  However, if a tree was not knocked down by the winds and caused damage to the structure, then there would likely be coverage for the wind-caused damage.

Flood Insurance Coverage

Flood insurance may be obtained for certain homes.  Most flood policies are offered through the National Flood Insurance Program (“NFIP”).  However, private insurers may offer flood coverage which may provide more coverage with higher limits than provided for in policies issued through NFIP.  These policies provided coverage for damage to the residence premises and certain personal property caused by flood.  The coverage for damage to personal property may be more limited than that provided in a homeowner’s policy.  Where an insured owns a separate flood policy in addition to a homeowner’s policy, notice of claim should be given to both insurers as there may be wind-covered loss covered under the homeowner’s policy and flood-covered loss covered under the flood policy.

Deductibles

The coverage provided by the homeowner’s policies may be subject to certain deductibles which will be identified on the declarations page.  Most significantly with regard to Sandy, most policies contain a hurricane deductible which is typically in the amount of 2% of the limits of coverage.  However, Governor Christie has issued a proclamation that the storm was not a hurricane as defined in the policies and that therefore the hurricane deductibles will not apply.  This is a very favorable proclamation for insureds in New Jersey.  The governors in New York and Connecticut have issued similar proclamations.

Automobile Coverage

Unfortunately, many victims of Sandy have had their automobiles damaged or destroyed.  Automobile liability insurance is mandatory in the State of New Jersey so all insureds should have liability coverage which protects them in the event they cause injury to another person or property.  However there are other coverages available under an automobile policy which protect the insured for damage to their own vehicle.  These are separate coverages which are not mandatory and which must be purchased from the insurer.  These coverages include comprehensive insurance coverage which covers damage to an insured vehicle.  The declarations page of the automobile policy should be reviewed to verify that such comprehensive insurance coverage has been purchased and if so in what amount.  A deductible will likely apply.  If you have such comprehensive automobile insurance coverage and your automobile was damaged or destroyed, notice of the claim should immediately be reported to your automobile insurer.

Umbrella and Excess Policies

Umbrella and excess insurance coverage is generally coverage which is provided above the insurance coverage provided in a primary insurance policy.  These policies normally insure the same risk as the primary policy but provide greater limits of coverage.  However, these policies may also provide additional coverage beyond that provided in the primary policy.  Such umbrella and excess policies should be carefully reviewed to determine if there is additional coverage provided beyond that available in the primary homeowner’s policy, flood and automobile policies.

Lost Policies

Many individuals and businesses have lost their policies in the storm.  In that event you should contact your insurance broker who should have some record of your insurance coverage.

Claims For Benefits Under FEMA

In the event a homeowner or business owner either has no insurance coverage, or the insurance coverage does not provide flood coverage, you may be able to obtain the benefits provided by FEMA.  A memorandum which details the FEMA process can be viewed at www.ghclaw.com.  It is important that anyone seeking FEMA benefits immediately register with FEMA in order that a FEMA inspector can come to your property and determine whether you are eligible for FEMA benefits.

© 2012 Giordano, Halleran & Ciesla, P.C.