Attitudes toward environmental regulation may be changing at the federal level. But don’t expect states and individuals to give
polluters a pass.
RISK FOCUS: ENVIRONMENTAL
Changes in Energy Regulation
The powers of states
to bring action
in the case of an
By Susannah Levine
Even as the Trump administration takes steps to ease environmental regulations and defund the Environmental Protection Agency, insurance and environment experts expect little change in companies’ environmental stewardship or long-term responsibilities. “I expect companies to stay the course of social and environmental
responsibility,” responding to their own corporate cultures, the long-tail nature
of environmental claims, tort law and regulations by each state’s Department
of Environmental Protection (DEP), said Tom Williams, head, environmental
liability, North America, Allianz Global Corporate & Specialty.
“Underwriters will still look for companies to take environmental and health
and safety programs seriously,” said Marcel Ricciardelli, lead environmental
insurance underwriter, Allied World.
“We look for a history of robust environmental risk management.”
The long-tail nature of environmental liability, said Avram J. Frankel, principal,
Integral Consulting Inc., an international science and engineering firm, helps
incentivize companies to support strong environmental programs.
“Administrations may end in four years, but environmental liability keeps on
Long policy terms “lock underwriters into risk for the long term,” said Ken
Burrell, managing director, Synapse Services LLC. Most of his clients plan accordingly,
with 10 to 15 year business plans — exceeding even a two-term administration —
that include budgets for environmental controls and risk management.
In addition, he said, “reputational risks are high considerations in business
decisions, regardless of regulatory enforcement. Companies don’t want blowback
from a blowout.”
WHAT REGULATIONS MAY CHANGE?
“Expect a focus on the Clean Water Act and Clean Air Act,” Burrell wrote in
an email. “If budgets are reduced, there will be fewer resources for enforcement,
but reduced regulatory enforcement will not necessarily reduce exposure to loss. If
enforcement wanes, expect an increase in litigation from private citizen suits in an
effort to drive action.”
The EPA takes the lead in some regulatory arenas, Frankel said, and states lead
in others. In some cases, the EPA delegates authority. Enforcement varies by state.
Past administrations’ inconsistent environmental track records confound
predictions in this one, he said. New restraints are unlikely under President
Trump, who declared in February that environmental regulations are “out of
“It appears that much, if not all, pending rulemaking could be suspended under
this administration,” Frankel said.
Final rules take years to promulgate, he said, and normally take years to undo.
For example, the Stream Protection Rule — which seeks to protect waterways
from coal mining residue and which Congress rolled back in February by
invoking the seldom-used Congressional Review Act — was the result of eight
years of review and analysis by the states and scientific bodies, said Pat Parenteau,
senior counsel, professor of law,
Vermont Law School in a National
Public Radio interview.
The speed at which Congress acted
to undo the Stream Protection Rule
introduces “a brave new world for
environmental regulation at the federal
level,” Frankel wrote in an email.
“We appear to be in a new era, and
it will be entirely up to the states to
regulate these matters.”
Also “in peril,” said Kevin
Haas, partner at Clyde & Co., an
“Presumably, the pendulum
will swing in the other
direction in the next
—Kevin Haas, partner, Clyde & Co.
• The long tail of environmental
liability outlives presidential
• Congress acted very quickly to
undo the Stream Protection Rule.
• Reputational risk in the event of
environmental damage is a real