Massive Wildfires Ravage Alberta, Canada

oil sands, Canada
Wildfires have shut down tar sand operations north of Fort McMurray, Alberta, Canada

Drought conditions in 2015 left Alberta, Canada, parched. Combined with recent winds and high temperatures, this has led to a massive, intense wildfire in the oil city of Fort McMurray, forcing evacuation of more than 80,000 people, and burning about 1,500 homes. Authorities said there have been no known casualties from the blaze, but that fatalities were reported in at least one vehicle crash along the evacuation route.

On Tuesday, the municipality of Wood Buffalo announced mandatory evacuations and closed all southbound routes. Residents fled to safer ground north of the of the area, where they spent Wednesday night in arenas, hockey rinks and oil work camps that often ran short of supplies, Reuters reports.

The fire is now five times its initial size and spreading south, taking it farther away from the massive tar sands area. Shell Nexen, Suncor and other oil sands operators have curtailed or shut down operations to protect pipelines and help evacuate employees and nearby residents, according to the Washington Post.

The wildfires in Canada illustrate a continuing trend of increasingly severe wildfires that in the United States caused a record 10.1 million acres to be burned in 2015, surpassing the previous high of 9.8 million acres in 2006, Mark Crawford reported in last month’s issue of Risk Management. It was the fourth year in the past decade in which more than nine million acres burned. According to the U.S. Forest Service, the 2015 wildfire season was the costliest on record, with more than $2 billion spent fighting fires.

Environmental scientists at the Harvard School of Engineering and Applied Sciences said in 2013 that rising temperatures could lengthen wildfire seasons, increasing burn areas and smoke from fires.

Meanwhile, current weather reports for Alberta have raised hopes, as the forecast calls for cooler temperatures and possible rain.

Alberta hotspots

California and New York Agree to $15 Minimum Wage

Yesterday, the governors of California and New York reached agreements with state lawmakers to become the highest-paid minimum wage states in the country with an increase to $15 an hour. A minimum wage bill passed the California legislature on Thursday, and Gov. Jerry Brown said he will sign the measure on Monday. Late that night across the country, Gov. Andrew Cuomo reached a tentative agreement with New York’s top legislators to do the same with the state’s base wage.

According to the AP, President Barack Obama, who first proposed an increase to the $7.25 federal minimum wage in 2013, applauded the states’ actions and called on the Republican-controlled Congress to “keep up with the rest of the country.”

Currently, California and Massachusetts are tied for the highest state minimum wages at $10 an hour, while New York’s current rate is $9. Only Washington, D.C., at $10.50 per hour, is higher.

From the Department of Labor, here’s a look at how your state measures up:state minimum wage laws

Both California and New York plan to phase in the new rates, which will impact about 2 million employees in each state. In California, the increases would start with a boost from $10 to $10.50 on Jan. 1, and businesses with 25 or fewer employees would have an extra year to comply. Increases of $1 an hour would come every January until 2022, although the governor could delay these increases in the event of significant budgetary or economic downturns.

Cuomo originally proposed a simpler adjustment in New York: three years in New York City and six years in the rest of the state. Negotiations with local lawmakers who expressed concern the sharp increases would “devastate” business owners produced a more gradual approach. The AP reported, “In New York City, the wage would increase to $15 by the end of 2018, although businesses with fewer than 10 employees would get an extra year. In the suburbs of Long Island and Westchester County, the wage would rise to $15 by the end of 2022. The increases are even more drawn out upstate, where the wage would hit $12.50 in 2021, then increase to $15 based on an undetermined schedule.”

These changes come as considerable progress for the “Fight for 15” movement to raise minimum wages across the country. As Will Kramer reported in Risk Management magazine, debates over income inequality in the United States and the “Fight for 15” movement have gathered strength over the past five years. Many credit the Occupy Wall Street movement that began in New York City’s Zuccotti Park in September 2011 with spurring the increased focus on wealth and economic inequality, particularly the divide between the 99% and the 1%.

The impacts have been gaining further momentum recently. Kramer explained, “As of mid-2015, Seattle, San Francisco and Los Angeles have begun phasing in a $15 minimum wage. Democratic presidential candidate Sen. Bernie Sanders introduced Congressional legislation to raise the federal minimum wage to $15 per hour. What was once considered inconceivable has become more and more commonly accepted as a necessary and even moral imperative for many American businesses.”

Check out more from Kramer’s article on the growing debate over income inequality and its implications for businesses in Risk Management.


U.S. Sues VW

VW logo

The U.S. Justice Department on Monday sued Volkswagen in federal court in Michigan for illegally installing faulty emission control devices in about 600,000 vehicles. The lawsuit, filed on behalf of the U.S. Environmental Protection Agency (EPA), accuses VW of four counts of violating the U.S. Clean Air Act, including tampering with the emissions control system and failing to report violations.

According to a Reuters review of the U.S. complaint, VW could face fines of up to $37,500 per vehicle for each of two violations of the law, up to $3,750 per “defeat device,” and another $37,500 for each day of violation.

Risk Management magazine reported in December 2015 that the affected EA 189 diesel engines were installed in more than 11 million Volkswagen and Audi vehicles manufactured between 2009 and 2014. The company announced on Oct. 22 that it was also looking into whether the software might be in earlier versions of its latest EA 288 diesel engine, potentially adding millions more to the total.

Regulators across the globe, including in India, South Korea and Germany, are conducting their own investigations, as are attorneys general in all 50 U.S. states. The Justice Department has been seen as the only agency that might hold executives personally accountable, according to The New York Times.

The government is seeking a number of penalties against the company, including fines and further actions to mitigate the emission of harmful pollutants. A federal court will determine what actions the company must take to reduce emissions and a dollar figure for the penalty.

VW (VOWG_p.DE) shares fell as much as 6% to a six-week low on Jan. 5, the biggest drop yet on Germany’s blue-chip DAX index, Reuters said.

Are Critical Infrastructure Issues Finally Being Addressed?

The recent collapse of an Interstate 75 overpass in Cincinnati, killing a worker and injuring a truck driver, is yet another reminder of the plight of America’s infrastructure, which is estimated to require billions of dollars to bring up to 2015 standards.

The bridge that collapsed had been replaced and was being torn down as part of an extended project to increase capacity on a congested, accident-prone section of the interstate, according to the Associated Press.

President Obama, speaking today in Saint Paul, Minnesota, outlined several proposals, including launching a competition for $600 million in competitive transportation funding and investing in America’s infrastructure with a $302 billion, four-year surface transportation reauthorization proposal, according to a press release from the White House. Obama also plans to “put more Americans back to work repairing and modernizing our roads, bridges, railways, and transit systems, and will also work with Congress to act to ensure critical transportation programs continue to be funded and do not expire later this year.”

More and more, states are finding ways to fund infrastructure repair. New York Gov. Andrew Cuomo, for example, in his State of the State address, proposed $3 billion in loans and grants for infrastructure upgrades, including $1.3 billion for the Thruway and the new Tappan Zee Bridge, which is under construction. The money, he said, would come from a a $5.4 billion windfall from bank settlements.

A report by the American Society of Civil Engineers (ASCE), “Failure to Act: The Impact of Current Infrastructure Investment on American’s Economic Future,” found that the cascading impact of putting off repairs affects the entire economy. The report concluded that, between 2013 and 2020, there will be an investment gap of about $846 billion in surface transportation.

At risk are a number of bridges and overpasses. According to Risk Management magazine:

“Right now, 11% of our bridges across the country are rated structurally deficient and another 13% are considered functionally obsolete,” Andrew W. Herrmann, 2012 president of the American Society of Civil Engineers (ASCE) and principal with Hardesty & Hanover LLP, an infrastructure engineering firm. “This means they were designed to an older standard, so they may not have the same lane widths or turning radius or may have been designed to carry lesser loads.”

Deterioration of the nation’s infrastructure jeopardizes public safety, threatens quality of life, and drains the U.S. economy. “If they have to start closing down, restricting or putting mileage postings on bridges, the economy will be affected,” said Herrmann, who served on the advisory council for the 2003, 2005 and 2013 report cards and chaired the council for the 2009 edition.

“Bridges are the most pressing need in the infrastructure overall. You can have all the roads and highways you want, but if you don’t have the bridges to cross the rivers and intersections, it slows everything down.”

He observed that, from a bridge engineer’s perspective, investments need to be made to keep bridges in good repair. The Federal Highway Administration (FHWA) estimates that it needs $20.5 billion annually to eliminate the nation’s backlog of bridge repairs by 2028, but only $12.8 billion has been budgeted. The challenge, then, for federal, state and local governments is to increase investments in bridges by $8 billion annually.