The Attorney General of Nebraska, Mike Hilgers, has initiated legal action against First Street, a private company that produces climate scorecards, claiming that its practices have negatively impacted Nebraska’s real estate market.
According to the lawsuit, First Street utilizes flawed or incomplete data to generate climate-risk scores which have been featured on significant real estate websites, disadvantaging homeowners in Nebraska. It is reported that major investment firms like BlackRock, Vanguard, and State Street collectively own a substantial share—around 19% to 25%—in the parent companies of these platforms that disseminate the scores, based on findings from the American Energy Institute and Consumers’ Research.
Hilgers expressed that “First Street’s inaccurate data and analysis has harmed everyday Nebraskans who are seeking to sell and buy homes. My office won’t stand idly by while an external company uses dubious data to further its climate agenda at the cost of Nebraska homeowners,” he stated in a message to the Daily Caller News Foundation.
He continued, “For many Nebraskans, their homes are often their most significant investment, crucial for their financial stability and housing options, and my office will strive to safeguard these investments against outside influences that disregard the interests of Nebraskans.”
This lawsuit follows a broader push for federal authorities and Congress to assess First Street’s climate scores and their repercussions on the residential property market.
Molly Vogt, a senior fellow at the American Energy Institute, commented that “First Street’s unregulated and unchecked climate risk scores have manipulated home values for far too long, and Attorney General Mike Hilgers is right to intervene and protect Nebraskans.”
Both First Street and the investment firms, including BlackRock, Zillow, State Street, and Vanguard, did not respond right away to inquiries from the Daily Caller News Foundation. The lawsuit alleges that First Street assigns individual properties a score between one and ten related to risks of floods, fires, winds, air quality, and heat, claiming these ratings are “peer-reviewed,” “scientifically validated,” and “accurate,” which is contested in the legal filing.
First Street’s risk scores have been integrated into major real estate websites like Zillow, Realtor.com, Homes.com, and Redfin, providing potential buyers with localized predictions about risks like flooding and wildfires. It’s noted that these scores often diverge significantly from the official flood maps provided by FEMA.
Hilgers indicated that “First Street is profiting at the cost of the value of homes in Nebraska.” He criticized the company for offering misleading and frequently erroneous speculations that drive down property values and increase challenges for residents. He demanded that such deceptive practices cease.
A previous report from the American Energy Institute and Consumers’ Research highlighted the lack of an official appeals process for homeowners when First Street’s scores conflict with federal flood designations. As an example, a property valued at $6.2 million was assigned a flood-risk score of 9 out of 10, despite being located in FEMA’s Zone X, an area generally considered at minimal risk for flooding.
Will Hild, Executive Director of Consumers’ Research, remarked, “Now First Street will have to respond for misleading consumers and presenting faulty climate data regarding real estate values. Climate activists should not influence the assessment of homeowners’ properties.”
The lawsuit acknowledges that while predictive models, like those from First Street, do have some inherent inaccuracies, it contends that the company misleads consumers by not sufficiently revealing the models’ deficiencies and by urging reliance on fundamentally flawed forecasts.
These predictions come to the attention of homebuyers through platforms such as Zillow, which points users to First Street for property-specific flood, wildfire, and other climate risk information. First Street offers free scores on a scale of one to ten but charges for more detailed insights.
According to the lawsuit, First Street identifies more than double the number of properties as facing a 100-year flood risk compared to government statistics, with discrepancies concentrated around smaller waterways. Hilgers noted that scientific studies have shown First Street’s models suggest higher loss probabilities and damages than other existing models.
The lawsuit brings to light the ongoing issues surrounding these climate-risk assessments, illustrating the potential negative implications they could have on homeowners in Nebraska.
