Posted on 05/17/2007 8:18:09 AM PDT by Incorrigible
By ALISON GRANT
CLEVELAND — Even slight global warming — or the mere threat of warming — poses legal risks to companies, as governments and courts ratchet up rules about heat-trapping greenhouse gases, environmental lawyer David Nash says.
Will companies end up defendants in lawsuits charging them with adding to climate change? Will institutional shareholders push to make their factories less polluting? Is the United States headed to a Kyoto-style ``cap-and-trade'' system where companies buy and sell carbon emissions like stocks?
The intersection of climate change and law came to the fore last month in a surprise ruling by the U.S. Supreme Court. The justices said, in a 5-4 decision, that the Environmental Protection Agency has the authority to regulate carbon dioxide emissions from cars and trucks, a main contributor to greenhouse gases.
The ruling ran counter to the Bush administration's claim that the EPA had no leeway to regulate carbon dioxide under the Clean Air Act. Now, it's a matter of when, not if, the EPA sets standards to control auto pollution.
All this has gotten the attention of lawyers like Nash who are building niche practices based on the warming threat and the legal services they say are needed to guard against it.
"From our point of view as a law firm, it doesn't matter really what you believe in the (global warming) debate,'' Nash said. "We tell clients what the law is. And we help clients learn about what the law looks like it's going to be.''
Nash's 12-lawyer Cleveland boutique firm is among a handful of firms nationwide advertising themselves as practitioners in climate change law. More are expected to follow because of expanding state and local regulations, investor lawsuits and the Supreme Court decision.
Nash sees his client base as manufacturers and utilities that are significant energy consumers or producers, make or sell products for use overseas or have stakeholders demanding that they reduce greenhouse gas emissions.
"More U.S. companies realize that climate change is an enormous business issue that they need to manage immediately,'' said Mindy Lubber, president at the non-profit Ceres, which published a 2006 report that analyzed how several industries are addressing the risks. The Ceres network of investors and environmental organizations works with companies and institutional investors to improve environmental standards.
The Supreme Court's ruling increases the risks and opportunities from greenhouse gases, Nash said.
Opportunities?
Yes, a company already can parlay its reduction of greenhouse gas emissions into financial gain — a scenario playing out at the four-year-old Chicago Climate Exchange. There, companies such as Motorola, Ford and DuPont buy and sell greenhouse gas units like so many wheat or gold commodities.
The exchange represents about 12 percent of the country's large industrial emitters of non-vehicle greenhouse gases, Chairman and Chief Executive Richard Sandor said.
The exchange taps a competitive demand among U.S. industries to create a cap-and-trade program, he said, in anticipation of expected policy changes. Companies traded 10.3 million tons of carbon last year, and 7.5 million in the first quarter of 2007.
Carbon trading will mushroom if the United States moves full-tilt to a cap-and-trade system. Under the system now in place in nations that adopted the Kyoto Protocol, a cap is set on allowable carbon pollution; power plants and companies that exceed targets must offset the excess by buying "credits'' from companies that beat their limits.
The Supreme Court's decision is a blend of sweeping proclamation and narrow legal reasoning that opens the door for states to mandate limits on greenhouse gases, said Tracy Hester, who teaches "Climate Change Litigation'' at the University of Houston Law Center.
Jonathan Adler expects the ruling to create a surge in climate change law like the dramatic rise in environmental work spawned by the 1980 Superfund bill. Once legal questions got hammered out, Superfund matters were folded into existing transactional and real estate practices, he said.
A lot of the new demand will be driven by the regulatory climate, not the Earth climate, the Case Western University law professor said. "When you know how to solve the problem, you don't need as many lawyers to work on it.''
***
Lawyers say climate change is already stirring up a host of environmental legal issues. Here's some of what they mean:
Carbon trading: Buying and selling carbon emission credits involves contracts and financial expertise in an area of law so new that the legal nature of the credits is not even settled. Lawyers David Nash and John Fahsbender said courts will be sorting through whether carbon credits are property rights, a security like stocks, a license or something else.
Litigation: Environmental attorneys will prosecute and defend against climate change liability cases. At least one lawsuit filed after Hurricane Katrina said that the ferocity of the storm and the destruction were caused in part by climate change.
Regulatory confusion: Most policy experts think the United States will move toward a cap-and-trade system on carbon emissions or a carbon tax. Even without federal action, companies and utilities may find themselves facing a slew of local and state regulations.
Insurance changes: It's unclear how the risk associated with climate change can be insured. But lawyers say companies are wise to start thinking about their exposure.
Financial statements: Companies may have to state their greenhouse gas emissions to meet financial disclosure requirements of the Securities and Exchange Commission. Directors and officers may face increased liabilities if climate change information is missing.
Public policy: Lawyers familiar with climate change issues will monitor and advise clients on emerging laws and regulations, and lobby governments on policy changes.
(SOURCES: McMahon DeGuilis, University of Houston professor Tracy Hester, Pillsbury Winthrop Shaw Pittman; Marsh "Climate Change: Business Risks and Solutions.'')
(Alison Grant is a reporter for The Plain Dealer of Cleveland. She can be contacted at agrant(at)plaind.com.)
Not for commercial use. For educational and discussion purposes only.
More fallout from the Supreme Court decision on Global Warming.
And Sandor, CEO of the Chicago Climate Exchange, is a pal of Al Gore to no one's surprise I'm sure.
Yeah, I’d be interested too when I heard that the intel agency would be contributed $47 billion toward global warming, the biggest boondoggle of today.
Is the United States headed to a Kyoto-style ``cap-and-trade’’ system where companies buy and sell carbon emissions like stocks?
A ponzi scheme? or blackmail
A company can ‘purchase’ carbon credits to offset their pollution and claim to be ‘carbon neutral’ without changing a thing.
Another chance for the Breck Girl types to clean out more pockets.
No such thing as an "act of God" anymore. Now hurricanes are actionable.
Time for a lawyer joke.
Q;Why don’t buzzards eat dead lawyers?
A;Professional courtesy.
bttt
My Question for the day. Have we all gone nuts?
Just regressing. Not that much different from the days when pagan priests would sacrifice virgins to the pacify the gods.
I hear that George Soros is behind the whole carbon credit thing.
Dad asked the shyster behind the table if he knew the difference between a tragedy and a Damn Shame.
Lawyers. No Sense of Humor.
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