The Hunton & Williams LLP global Climate Change Law and Policy practice assists clients with challenges and opportunities emerging from regulatory and corporate responses to climate change. In this multifaceted practice, attorneys litigate climate change-related matters in the United States, assist clients with carbon reduction projects and trading around the world, and support the development of corporate institutional climate policies and strategies. The practice's strong government relations group closely tracks legislative and regulatory developments at state, federal and international levels and advises clients in the US, the European Union, and elsewhere in the world on climate policy issues. Hunton & Williams also has experience advising public companies on the disclosure of climate-related risks as part of their obligations under US Securities and Exchange Commission rules and the Public Company Accounting Reform and Investor Protection Act of 2002 (Sarbanes-Oxley Act). The firm's climate change practice spans four distinct areas:
- Carbon Projects, Finance and Trading
- Regulatory Compliance
- Policy Monitoring and Lobbying
Areas of law implicated in the regulation and reduction of greenhouse gas emissions include tax, capital markets, trade, corporate, property, administrative, tort, criminal, finance and environmental. A multidisciplinary approach is essential to anticipating and successfully managing the risks inherent in this field.
As a full-service firm, Hunton & Williams is experienced in all these substantive areas of law, and possesses the strategic, policy development, political, technical and financial skills to know how to implement the best course of action for a company contemplating a voluntary or compliance-driven greenhouse gas reduction strategy. The firm's network of 19 global offices and ties to local counsel with climate change experience in numerous other jurisdictions offers a seamless opportunity to meet most corporate climate change needs. This service was recognized when Hunton & Williams was recently given top rankings by Chambers Global, Chambers USA and Chambers Europe for its climate change practice and was voted "Best Law Firm" for US Emissions Markets by the readers of Environmental Finance magazine.
Based on client and industry interviews, Chambers Global described the firm's Climate Team as "making a big splash," and a "frequent choice for clients and in-house counsel seeking climate change expertise." Chambers Europe noted the practice is "particularly well regarded for its skill in carbon trading" and Chambers USA noted the firm's "fantastic Clean Air Act practice and historic experience of cap and trade systems" as well as its "great reputation for climate litigation." Chambers Global also points to the "'distinguishing factor' of Hunton & Williams to be its 'prompt and practical advice on a whole variety of climate change issues.'"
Carbon Projects, Finance and Trading
Hunton & Williams' active Carbon Projects, Finance and Trading team assists both regulated entities and financial actors entering and participating in the growing global carbon markets. The team represents several of the world's leading originators and developers of greenhouse gas emission reduction projects acting both on a voluntary basis and under the purview of the Kyoto Protocol's Joint Implementation (JI) and Clean Development Mechanism (CDM).
Clients also actively trade European Union Allowances (EUAs); Emission Reduction Units (ERUs) and Certified Emission Reductions (CERs) within the European Union's Emissions Trading Scheme (EU ETS). Team lawyers regularly draft customized primary and secondary emission reduction purchase agreements (ERPAs) and also have extensive experience working with standardized ISDA, IETA and EFET forms.
The firm is active in both the primary and secondary greenhouse gas emission reduction credit and allowance markets, representing originators, aggregators, buyers and sellers in the primary market, and brokers, trading houses, hedge funds, investment banks, government bodies and compliance purchasers in the secondary markets. The team regularly represents US and foreign-based entities participating in both the compliance and voluntary carbon markets for hedging, speculative, and pre-compliance purposes.
Many clients operate in industrialized and developing countries alike and are affected by the laws, regulations, and business cultures of multiple jurisdictions. The team's global practice frequently works with clients to make cross-border carbon projects and trades seamless transactions and helps clients meet the challenges posed by a varied and ever-changing patchwork of both climate-related laws and business opportunities.
Companies that are not subject to emission reduction obligations are seeking to gain experience, skills, contacts and other benefits from reducing or offsetting their greenhouse gas emissions.
Many carbon offset projects create viable, diversified investment opportunities, particularly for energy and electric generating companies. Renewable energy is emerging as a significant component of energy companies' portfolios and firm lawyers have worked in several aspects in this field, including structuring and financing power projects, and advising on renewable energy certificate (REC) trading and ownership. The firm's renewable energy practice directly complements the climate change practice.
- Negotiate ISDA, IETA and EFET and bespoke carbon trading documentation on behalf of several major financial institutions and trading houses to enable trading EUAs, CERs, ERUs and AAUs;
- Draft and advise on ERPAs for primary and secondary transactions of greenhouse gas emission reductions around the world under the CDM and JI mechanisms of the Kyoto Protocol, and in the voluntary markets;
- Represent leading CDM project developers, consultancies, and brokers;
- Advise on the trading and development of financial and physical carbon-related products on all the major global carbon exchanges;
- Draft primary and secondary voluntary emission reduction purchase agreements for purchase and sale of verified emission reductions (VERs) using the Voluntary Carbon Standard and other voluntary standards for use both in US and European markets;
- Advise on the tax consequences of trading carbon in the United States;
- Advise on the efficient structuring, documentation and operation of several major carbon funds and carbon-related investment funds;
- Advise major US companies on options for hedging and investing in carbon assets in anticipation of future regulation of greenhouse gas emissions in the United States;
- Advise US companies on pre-compliance carbon purchase strategies and options;
- Structure the merger of two carbon asset management companies;
- Advise on the partial acquisition of a carbon offset project developer;
- Advise on the listing of several carbon-related firms on the Alternative Investment Market (AIM) of the London Stock Exchange; and
- Assist with the project financing of many renewable energy projects around the world and the transaction of attendant greenhouse gas emission reductions.
A comprehensive carbon projects, finance and trading experience list is available upon request.
Governments at all levels increasingly are seeking to regulate the emission of greenhouse gases. Many US states already have enacted legislation to address climate change, such as California’s Global Warming Solutions Act of 2006 that aims to reduce statewide emissions to 1990 levels by 2020. Several cap-and-trade bills are working their way through the US Congress, and the US Environmental Protection Agency is assessing the implications of regulating carbon dioxide under existing environmental laws and regulations. In addition, new or expanded regulatory programs to promote low-carbon energy technologies, carbon capture and storage, and other climate-related technologies are being introduced at federal and state levels.
Worldwide, the European Union introduced a mandatory emissions trading system in 2005 and is working to extend its limits on carbon dioxide emissions to 2020. At the international level, negotiations are underway on a new climate change treaty to take effect after the Kyoto Protocol’s first commitment period ends in 2012. Although the outcome is still uncertain, countries are attempting to reach a new agreement by the end of 2009.
Hunton & Williams lawyers help clients prepare for and efficiently manage compliance with the emerging laws and regulations dealing with greenhouse gas emission reductions, including with the Kyoto Protocol, the European Union’s Emissions Trading Scheme, the US Regional Greenhouse Gas Initiative, California’s A.B. 32 and the Western Climate Initiative. The firm also provides strategic assistance to clients from all jurisdictions in assessing the relevant regulatory and trading regimes and addressing their potential impact on corporate and governmental operations.
The firm counsels major industrial clients on the environmental implications of the Sarbanes-Oxley Act of 2002 and US SEC disclosure requirements. Hunton & Williams lawyers recognize the growing corporate trend to disclose climate risks and help clients design and implement environmental management systems that capture the information necessary to allow them to determine whether and how to disclose climate-related information and to respond to shareholder concerns about climate change.
- Advise carbon project developers on Kyoto Protocol, Clean Development Mechanism (CDM) and Joint Implementation (JI) procedures for completing projects and generating resulting certified emission reductions (CERs) and emission reduction units (ERUs);
- Advise US companies on the possible impact of regulation of greenhouse gas emissions under the Clean Air Act in the aftermath of Massachusetts v. EPA;
- Advise US electric utilities on state and regional variations in regulating greenhouse gas emissions;
- Advise US companies on the reporting of greenhouse gas emissions and reductions under various state, regional, federal and private registry programs;
- Advise on the operation of and business implications of the European Union’s Emissions Trading Scheme (EU ETS), including issues with cross-border trading of EUAs, CERs, ERUs and AAUs; and
- Advise carbon project developers and buyers of CERs and ERUs of compliance procedures under various national rules.
Hunton & Williams is playing a leading role in the litigation of climate change issues in the US courts. The firm represents clients in disputes involving governmental authority to regulate greenhouse gas emissions and in tort suits seeking monetary and injunctive damages for past emissions of greenhouse gases. Hunton & Williams has successfully defended electric utility companies in responding to these efforts.
- Native Village of Kivalina v. ExxonMobil Corp., No. C08-01138-SBA (filed Feb. 26, 2008). Hunton & Williams represents five electric utility companies in connection with a case brought by the City and Native Village of Kivalina, Alaska, in the US District Court for the Northern District of California against 23 energy sector companies. Plaintiffs claim that defendants' greenhouse gas emissions result in increased temperatures that allegedly have melted sea ice near the village, exposing it to storms and eroding the land on which it sits. Plaintiffs advance four legal theories: (1) public nuisance; (2) private nuisance; (3) civil conspiracy against some of the defendants; and (4) concert of action. Plaintiffs seek monetary damages for the cost of relocation, which they estimate to be between $95 million and $400 million.
- In re Deseret Power Electric Cooperative, PSD Appeal No. 07-03 (EAB, filed Oct. 1, 2007). Sierra Club challenged before the US Environmental Protection Agency's Environmental Appeals Board (EAB) EPA's issuance of a Prevention of Significant Deterioration (PSD) preconstruction permit to Deseret Power under the Clean Air Act on the ground that the permit did not impose emission limits for carbon dioxide. Sierra Club claimed carbon dioxide is a pollutant "subject to regulation" under the Act based on a statutory provision requiring monitoring and reporting of power plants' carbon dioxide emissions. Hunton & Williams filed an amicus brief on behalf of the Utility Air Regulatory Group in support of EPA and the permittee, arguing that nothing has occurred that triggers carbon dioxide emission controls under the PSD program, that EPA's interpretation of "subject to regulation" is entitled to deference and supported by case law, and that Sierra Club sought relief that exceeds the Board's authority. The EAB specifically requested Hunton & Williams to present oral argument on behalf of its client.
- Sunflower Electric Power Corp. v. Kansas Dept. of Health and Environment, Case No. 07-99567-A (Kansas Supreme Court). Hunton & Williams represents Sunflower Electric Power Company in connection with a PSD permit application to construct two new coal-fired electricity generating units at an existing facility in western Kansas. In October 2007, the Secretary of the Kansas Department of Health and Environment denied the application on the grounds that the carbon dioxide emissions from the proposed units constituted a substantial endangerment to health and the environment under Kansas law. Following Sunflower's challenge to the denial in the Kansas Court of Appeals, the Kansas Supreme Court acted sua sponte to assume jurisdiction over the case, where it is pending.
- Comer v. Murphy Oil USA, Inc., No. 07-60756 (5th Cir., appeal docketed Sept. 28, 2007). Mississippi residents claimed defendants' greenhouse gas emissions contributed to global climate change, intensified Hurricane Katrina, and resulted in hurricane-related damages to plaintiffs. Hunton & Williams worked on behalf of its clients and coordinated with other counsel to obtain dismissal of this state-law tort case. The US District Court for the Southern District of Mississippi dismissed the case with respect to all defendants in August 2007, holding that adjudication of the suits would violate the political question doctrine and that plaintiffs lacked legal standing. The plaintiffs have appealed that decision to the US Court of Appeals for the Fifth Circuit.
- Massachusetts v. EPA, 127 S. Ct. 1438 (2007). Hunton & Williams lawyers represented the Utility Air Regulatory Group as a respondent before the US Court of Appeals for the District of Columbia Circuit and the US Supreme Court supporting the US Environmental Protection Agency's denial of a rulemaking petition seeking limits under the Clean Air Act on motor vehicles' greenhouse gas emissions to address global climate change. EPA denied the petition on the grounds that the Act does not give it authority to regulate greenhouse gas emissions and that in any event it would decline to exercise such authority in the circumstances presented by the petition. The D.C. Circuit affirmed EPA's action, but, in a 5-to-4 decision, the Supreme Court reversed, holding that the Act's definition of "air pollutant" encompasses greenhouse gases and that EPA had not provided an adequate rationale for denying the petition. The Supreme Court and the D.C. Circuit have remanded the case for further consideration by EPA. Hunton & Williams attorneys are involved in remand proceedings and in advising clients of the implications of the Supreme Court's decision.
- New York v. EPA, No. 06-1322 (D.C. Cir., filed Apr. 7, 2006). Hunton & Williams represented the Utility Air Regulatory Group in supporting EPA’s decision that it lacked authority under the Clean Air Act to establish "new source performance standards" for greenhouse gas emissions from new and modified electric utility steam generating units. The US Court of Appeals for the District of Columbia Circuit remanded this case in light of the Supreme Court’s decision in Massachusetts v. EPA, described above, but rejected the petitioners' request (which was opposed by Hunton & Williams' client and other parties) that the court summarily reverse and vacate EPA's decision.
- Connecticut v. American Electric Power Co., 406 F. Supp. 2d 265 (S.D.N.Y. 2005), appeals pending, Nos. 05-5104-cv, 05-5119-cv (2d Cir.). Eight states and three land trusts filed lawsuits against five utilities alleging that the utilities' carbon dioxide emissions contribute to the "nuisance" of global climate change. Working jointly with other counsel, Hunton & Williams lawyers filed motions to dismiss these cases, arguing, among other things, that the suits impermissibly sought judicial relief that would circumvent policies set by the President and Congress to address global climate change concerns, in violation of constitutional separation of powers principles. Agreeing with the utilities' separation of powers argument, the district court dismissed the suits under the "political question" doctrine. Hunton & Williams and other counsel are defending the utilities in the plaintiffs' appeal to the US Court of Appeals for the Second Circuit, which in June 2006 heard oral argument in the litigation.
Policy Monitoring and Advocacy
Hunton & Williams plays an active role in monitoring international, regional, national, state, and local climate change policy developments and advocating on behalf of clients. The firm has a particular focus on US national and state-level climate initiatives, the policies of the member states of the European Union, and those of several countries in Asia. Hunton & Williams lawyers have experience working with the United Nations Framework Convention on Climate Change and the Kyoto Protocol as well as programs to develop alternatives to those international agreements. Firm lawyers previously have been employed at a senior level within the United States government in past climate negotiations and in senior capacities dealing with climate change on Capitol Hill. In addition to tracking international policy and regulatory developments, the firm advises clients on the US domestic legal and regulatory response to climate change concerns and energy and security issues. Hunton & Williams lawyers have been actively involved in the development of emerging greenhouse gas regulatory regimes in California and the rest of the Western United States.
Hunton & Williams has taken the lead in advising energy companies, insurance and re-insurance entities, and others on the risks and liability issues posed by carbon capture and storage (CCS) projects by organizing the CCS Alliance. The CCS Alliance was formed by companies and entities sharing a common interest in removing impediments to investment in and development of CCS technologies posed by risk and liability issues arising as a matter of law and public policy.
- Regularly brief companies on US regional and state policy and statutory developments with regard to climate change;
- Advise and comment on the development of California's landmark A.B. 32 - the Global Warming Solutions Act;
- Analyze optimal policy options and advise a major transportation company on strategies for reducing exposure to future regulation of greenhouse gas emissions in the United States;
- Draft response of major electric utility to April 2006 US Senate Energy and Natural Resources Committee conference on the design of a mandatory cap-and-trade program in the United States;
- Draft and submit comments to the US EPA and state environment agency rulemaking proceedings under the Underground Injection Control program regarding the injection and long-term storage of carbon dioxide for purposes of carbon capture and storage;
- Closely track bills addressing climate change in the states and the US Congress;
- Prepare position papers on liability regarding potential greenhouse gas regulation in various jurisdictions;
- Prepare comments and testimony relating to proposed US federal-level legislation on greenhouse gas emissions;
- Monitor and lobby on state and federal US legislation on greenhouse gas emission regulation and voluntary reduction programs, including the climate change programs in the 2005 Energy Policy Act and the Regional Greenhouse Gas Initiative;
- Monitor legislative and policy developments in the European Union's Emissions Trading Scheme;
- Monitor and lobby on other state and federal US legislation and regulation on renewable energy; and
- Regularly attend and monitor developments at the United Nations climate negotiations.