Oregon State Bar Bulletin — NOVEMBER 2008

Climate change is driving some of the most dynamic activity — and presenting some of the biggest dilemmas — the environmental law sector has experienced since its emergence during the 1960s. As a growing number of Americans join the sustainability movement and demand greater corporate commitment to environmental protection, state and federal governments are struggling to keep up with the physical, business and legal infrastructure necessary to implement eco-friendly improvements.

And, the recent presidential elections promise to further alter the legislative and regulatory landscape related to climate change, according to Oregon legal professionals who specialize in the field.

Heather Brinton, assistant director of the University of Oregon law school’s Environmental and Natural Resources Law Program, says the country is at a point where environmental, natural resources and energy law are experiencing a major transformation because of climate change.

"We, as a field, are really beginning to realize that transformation, and I expect it to grow," she says. "There are major litigation efforts that are occurring at multiple levels of government, and in some ways, I think lawyers are evaluating what tools exist under current federal and state law and that’s what this litigation is about."

At the same time, Brinton says, legislators at the state and federal levels are evaluating the tools they have and how those tools can be applied to address issues raised by climate change.

"Environmental law in 10 years will look tremendously different than it looks today," she says. "That’s why this is an amazing time to be looking at the field and to be a part of what’s going to occur as we try to figure out what to do with these circumstances."

A Chance to Grow
Tonkon Torp partner Jack Isselmann, who specializes in government relations and public policy, sees climate change law becoming a larger part of his practice. A growing number of his clients are involved in renewable energy production and equipment manufacturing related to that field. Among other things, he helps clients pursue the increasing number of state and federal tax credits available.

From a public policy perspective, climate change law offers a chance to help develop ways to encourage such projects.

"There’s just a range of policy being discussed and it’s certainly in the very early stage, so there’s an opportunity to influence policy development and implementation," Isselmann says. "However, there is both the opportunity and the challenge that comes with a lack of substantial history behind these policies."

Stoel Rives partner Bill Holmes says he enjoys the ways in which climate change law pushes him to learn more, as an attorney and beyond.

"It’s very fast paced and it gives me an opportunity to combine my interest in science and technology with the practice of law," he says. "It’s just fascinating — it’s a really exciting field to be in right now."

His work for clients includes: accumulating property for renewable energy projects; negotiating leases and obtaining permits; establishing interconnection agreements to plug into the power grid; figuring out transmission problems; crafting power purchase agreements and project financing; obtaining production tax credits for wind energy; drawing up the contracts required for the construction and design of facilities; establishing turbine supply agreements; and buying and selling companies involved in renewable energy.

The challenges lie in "getting things done yesterday" for his clients, Holmes says.

"It’s a very complex area, a very interesting area, but the clients we work with tend to want things done very quickly," he says. "They want the deals to be negotiated and signed, but the deals are very complicated."

Pratice Demands Diversity
A growing number of Oregon firms are establishing specialty groups, consisting of a cross section of practice areas, to encompass the range of legal issues presented by climate change. Richard Glick, an environmental attorney since the late 1970s, is a partner at Davis Wright Tremaine and a member of its energy practice group.

"Our energy practice at Davis Wright is almost exclusively renewable energy, which is an interesting development and is quite recent," he says, noting this includes hydropower and solar, geothermal and wind energy. Hydropower played a large role early in Glick’s career and, through the renewable resource projects he deals with today, has brought him
full circle.

Glick’s practice is a mix of clients who want to build facilities and need his help through the siting and permitting process, to other clients who require legal advice on regulatory overlays for emerging technologies in which there is no regulatory framework available yet.

As an example, one of Glick’s clients wants to build a carbon capture and storage facility, which would capture emissions from oil refineries or natural gas production, pipe it, inject it into underground storage areas made up of stable geologic formations, and allow its reuse while simultaneously stopping greenhouse gas emissions.

However, there are challenges associated with such
cutting-edge projects. "Regulatory agencies haven’t seen these types of projects before, so they are uncertain and they are cautious," Glick says. "The public also can be extremely cautious about these kinds of development — that NIMBY mindset can be very strong."

For example, wind projects are becoming increasingly controversial because people don’t want them developed near residential areas.

"They used to be so remote and enviro-friendly and people supported the idea of wind turbines, but now more projects intrude on people’s view," he says. "People can see them because they are enormous — they are very large and imposing sorts of structures, so people are complaining about them now."

Geothermal power projects also can stir up the public’s ire. They use mirrors to focus sunlight on water contained in tubes. When the water boils, it creates steam that serves as an alternative source of power. "That kind of thing is wonderful but it takes up a lot of land, so people are resistant to that," Glick says.

With an equal set of opportunities and challenges, climate change law consistently provides a compelling and complex set of issues. "There’s lots going on right now and it’s kind of an exciting time," Glick says.

Sussman Shank’s Sustainability Group includes Heather Kmetz, Skip McKallip Jr. and Patrick Rowe. Kmetz is a business and tax attorney, McKallip is an environmental attorney who specializes in business litigation, and Rowe specializes in environmental litigation and renewable energy.

The trio agrees that many of the companies they work with have learned that sustainability is no longer just a good public relations move, but a crucial economic consideration.

"What’s new this year is this tremendous economic imperative that four- and five-dollar-a-gallon gas has brought to the forefront," McKallip says. "All of our transportation clients are looking at fuel as an added expense and looking at alternatives, not just from an environmental standpoint but from an economic survival standpoint."

Businesses now recognize that how they plan for climate change impacts their market value, Rowe adds.

"Many companies are trying to stay on top of that and anticipate it while developing their business model," he says. "Shareholders are asking their corporate boards questions like, ‘What are you doing to address climate change?’ A few years ago, that wasn’t such an issue."

Many businesses are considering whether to incorporate environmental factors into their corporate bylaws as a proactive means of preventing litigation. Shareholders, so far, have yet to blame a company’s losses on a failure to report operational impacts on the environment. However, that scenario isn’t such a long shot, Kmetz says.

"I don’t think that’s such a far-fetched concept, so I’m encouraging corporate boards and officers to consider adding these policies," she says, noting such policies could range from sustainability reports presented during annual shareholder meetings to sustainability components as part of a larger business model. It’s a proactive strategy, but it’s not without risk.

"It’s a double-edged sword because you don’t want to put something out there that increases your liability, but you also want to incorporate these policies that focus on the triple bottom line," she says. "It doesn’t mean our clients are putting this into their corporate bylaws, but we’re having the discussion."

States Lead the Way
Several states, Oregon among them, also are attempting to take a proactive stance to address global warming. In 2007, Oregon, Washington and California adopted renewable portfolio standards for utilities, which require utilities to purchase a percentage of their power from renewable sources.

In August 2007, Gov. Ted Kulongoski signed House Bill 3543, which set 2010 as the deadline for Oregon to halt increases in its greenhouse gas emissions and reduce those levels to 75 percent below 1990 levels by 2050. The bill also created the Oregon Climate Change Research Institute, which will be administered by Oregon State University and will foster climate change research, serve as a clearinghouse for such information and provide technical assistance to local governments.

In addition, HB 3543 established the Oregon Global Warming Commission which, as part of its comprehensive, statewide effort to address climate change and its associated impacts, will explore the possibility of a multistate carbon cap-and-trade system and other market-based means of meeting the emission reduction goals. Kulongoski has charged the group to develop recommendations for policymakers for the 2009 legislative session that will further Oregon’s efforts to take action against global warming.

State agencies are implementing programs to address climate change as well. The Oregon Department of Environmental Quality offers a Clean Deal Engine Program, which provides tax credits and grants for the replacement of older diesel engines with biodiesel engines and other cleaner engines. And the Oregon Department of Energy’s Renewable Energy Working Group is exploring incentives for renewable energy, how energy-efficiency measures can be adopted into the regulatory environment and how it might be adapted to better accommodate renewable energy.

"We have a long ways to go — there is a lot of good spirit and good policy direction, but the actual, concrete elements of it are down the road," Glick says.

Not surprisingly, the federal government is a large bump in the road. The Securities and Exchange Commission is still attempting to define its reporting rules for businesses and accounting standards when it comes to greenhouse gas emissions. And a federal tax credit for renewable energy production must be renewed annually and is set to expire in December. Holmes says uncertainty about whether the tax credit will be renewed each year negatively and unnecessarily impacts a market that could generate scores of well-paying jobs and revenues if allowed to do so.

"You spend a lot of time, energy and black ink figuring out how to deal with the loss of that tax credit if it expires, and it’s frustrating because it doesn’t have to be like this," he says. "If Congress would just extend the tax credit for five years, we would have some stability and the cost of renewable energy would go down. Now you’ve got an industry that is going in fits and starts because nobody knows what will happen if the production tax credit expires.

"That doesn’t happen in the fossil fuel industry. It would be interesting to see what would happen if the oil industry operated that way," Holmes says.

The physical infrastructure isn’t in place at the federal level either, Holmes adds, referring to a nationwide transmission system for alternative forms of energy.

"We would expect that a lot of wind energy would blossom in the United States if we had a more robust transmission system. You’ve got places that are incredible resources — the Dakotas, Nebraska, the Midwest and California — but how do you get that wind from where it’s blowing to where it can power the lights in a city?" he says.

"We could go a long way toward energy dependence and clean energy if the transmission system were in place. It’s one of those logjams. You look at it and you know the answer, but politically it’s just not happening," Holmes says.

Several states are actually suing federal agencies in an effort to implement more aggressive climate change initiatives. Several states joined Massachusetts in suing the U.S. Environmental Protection Agency over the EPA’s position that greenhouse gasses are not subject to the same regulations as other pollutants under the Clean Air Act. In Massachusetts v. Environmental Protection Agency, the Supreme Court ruled that the EPA does have the authority to regulate greenhouse gases under the act, and that the agency could not refuse to exercise that authority based on the agency’s policy preferences. 549 U.S. 497 (2007).

In a similar strategy, Oregon and 13 other states joined California last summer in suing the EPA for delaying action on California’s request for authority to regulate greenhouse gas emissions for cars and light trucks sold in the state.

Legal challenges can only go so far, though, Holmes says.

"We can help solve a lot of those problems from a legal perspective, but there are limits to what we can do," he says. "It will be interesting to see what the next administration will do with this stuff."

Most echoed Holmes’ sentiment and said little is likely to happen on the environmental policy front until the new president takes office. As the next administration begins its work, it’s a safe bet the legislative and regulatory landscape regarding global warming will shift quickly — and climate change law will follow suit.

Melody Finnemore is a Portland-area freelance writer and a frequent contributor to the Bulletin.

© 2008 Melody Finnemore

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