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In early 2007, the Intergovernmental Panel on Climate Change released the most comprehensive assessment of climate change to date and concluded “unequivocally” that climate change is occurring and that human activity is its primary cause. On a local, regional, national and international level, governments and businesses are analyzing various voluntary, legislative and regulatory alternatives to addressing climate change. This analysis is complicated by the global nature of the movement and impact of greenhouse gas emissions, as well as the broad economic implications for regulating these emissions. Regulators face a difficult challenge to reduce emissions while minimizing economic harm and fairly allocating societal costs of emission reductions and any harm associated with climate change. And, as is often the case where human activity is believed to cause damages, tort lawyers are right in the mix. Five years ago, few voices predicted that climate change would grow into a significant legal practice area. Now, after dire predictions of climatic catastrophes, a worldwide scientific and political focus on the impact of climate change, an Academy Award and a Nobel Prize, many have embraced climate change as the next emerging practice area. Lawyers, investment analysts, insurers and interest groups predict waves of litigation that could eclipse tobacco and asbestos lawsuits. Law firms have responded by reshuffling their personnel and breathlessly heralding the formation of “multidisciplinary” climate practices. Are we witnessing the growth of a major new practice focused on the potential liabilities, legal risks and opportunities of climate change? Or is this the next Y2K? Climate cases filed and resolved to date offer some hints as to the future of climate litigation, but no clear answers. So far, litigation generally has fallen into three categories: tort-based litigation seeking damages and injunctive relief that would limit future greenhouse gas emissions; litigation seeking to force or strengthen government regulation of greenhouse gases; and challenges by groups subjected to government regulation of greenhouse gases. A few high-profile cases appeared to give credence to predictions that large-scale climate litigation was on the way. State attorneys general filed separate public nuisance lawsuits against power companies and automobile manufacturers, alleging that greenhouse gas emissions from their activities and products contribute to global warming and harm the states’ environment, economies and citizens. And Mississippi property owners sued oil, coal and chemical companies, alleging their activities contributed to climate change and magnified the effects of Hurricane Katrina. All three of these cases were dismissed outright on the basis that that they raised nonjusticiable political questions reserved for the legislative and executive branches. The AEP court explained, “[t]he explicit statements of Congress and the executive on the issue of global climate change in general and their specific refusal to impose the limits on carbon dioxide emissions Plaintiffs now seek to impose by judicial fiat confirm that making the ‘initial policy determination[s]‘ addressing global climate change is an undertaking for the political branches.” Although the political question doctrine has, so far, blocked climate-based tort claims, plaintiffs have been more successful in litigation seeking to force the federal government to consider and address the political questions raised by climate change. In a 2002 letter to President Bush, 11 states criticized perceived federal inaction on climate issues and warned that “states and others are beginning to review their litigation options.” States have followed through on this warning in lawsuits challenging either the lack of regulation, or the perceived inadequacy of regulation. For example, in Massachusetts v. EPA, the U.S. Supreme Court ruled that Massachusetts had standing to challenge the EPA’s decision not to regulate carbon dioxide emissions as pollutants under the Clean Air Act, and that the EPA is authorized by the act to regulate such emissions for new motor vehicles. Last month, the 9th U.S. Circuit Court of Appeals rejected federal fuel economy standards covering light trucks and SUVs and directed the National Highway Traffic Safety Administration to reconsider the standards, taking into account the potential benefits of lower greenhouse gas emissions. And California just sued the EPA to try to force the agency to decide California’s 2-year-old request to waive federal pre-emption and allow California to enforce tailpipe carbon dioxide standards. Climate litigation also has been brought by those whose activities or products are subject to climate-related regulations. As an example, automobile manufacturers challenged the California emission regulations that are the subject of the aforementioned lawsuit by California against the EPA. Following a trial on the merits, a Vermont court upheld the regulations. On the regulatory side of the spectrum, it is a sure bet that litigation will continue and may grow exponentially as federal and state governments craft programs that target greenhouse gas emissions or sources of those emissions. There are many federal, regional and state climate change regulatory initiatives currently moving ahead with the strong backing of government and industry leaders. Practitioners who keep an eye on percolating regulatory issues can project likely future areas of litigation, whether in challenging regulations or in interpreting and enforcing those regulations. For example, a number of states (including California) have petitioned the EPA to regulate greenhouse gas emissions from ships and airplanes. These petitions are signed by state attorneys general, suggesting that future litigation may be in the works if the EPA does not act on the petitions. Private litigants also will continue to turn to litigation as part of their effort to force companies, and government, to address climate change issues. As discussed above, the first wave of tort-based climate litigation has met some obstacles. But plaintiffs are persistent and legal theories evolve. Given the potential stakes, we expect to see the same level of plaintiff creativity that has arisen in the worlds of tobacco and asbestos, among other mass torts. Even if plaintiffs can overcome the political question doctrine, however, additional challenges remain. Proving causation presents perhaps the largest obstacle to climate change tort litigation. While there is broad scientific agreement that human activity has contributed to global warming, it is unclear whether current scientific evidence is sufficient to meet traditional evidentiary causation thresholds. In other words, it will be a challenge to isolate a particular defendant’s emissions from a century’s inventory of greenhouse gas emissions, link those emissions to climate change, and link that change to a plaintiff’s alleged injuries. But difficult causation issues have been overcome before and common law is at times shaped to address complex causation scenarios. If and when the political branches establish statutory or regulatory standards for greenhouse gas emissions, or some other legal framework that might set a standard against which to judge a defendant’s emissions, the political question hurdle could be lowered or eliminated. Still, yet-to-be-crafted regulatory programs might pre-empt tort claims or otherwise foreclose private rights of action. In addition to common law tort claims, legal theories related to climate change will be tested in a range of practice areas including environmental enforcement, securities, insurance coverage, unfair business practice/fraud and international trade. Environmental enforcement cases will depend on the form of future regulatory programs and are likely a few years down the road. In the securities arena, there is a growing focus on climate change. Investor groups have made climate change a major focus, attempting to force greater disclosure by publicly traded corporations of climate-related risks through shareholder resolution and other pressure. In September 2007, a coalition of investors, state officials and environmental organizations petitioned the Securities and Exchange Commission to clarify that “material climate-related information must be included in corporate disclosures under existing law.” The coalition also asked the SEC to “enforce existing disclosure requirements relating to material risks, such as climate change, which are underreported.” Petitions could well give way to litigation as shareholders are asked to focus on the adequacy of climate risk disclosures, including competitive risks and opportunities tied to climate change, physical risk to a company’s operations, and regulatory risks with potential financial implications for corporations. A similar collection of risks is also on the mind of insurers, for whom climate-related liabilities may present the largest range of litigation. Insurers face risks and possible litigation in areas ranging from property damage and business interruption from adverse weather events, to exposure to climate-based litigation of all kinds against insureds by third parties, to potential environmental liabilities created by regulatory programs that tie regulatory costs to past emissions. In the area of unfair business practices/fraud, some commentators have suggested that plaintiffs will focus on public corporate statements about climate and a corporation’s impact on climate versus corporate actions on climate, or data that contradict “green” marketing claims. Finally, on the international side, issues are likely to arise given the competitive implications of a global patchwork of climate regulation. Disputes could involve companies and countries affected by the stringency of climate regulation, or attempts to limit the importation of products into countries with greenhouse gas regulations where those products are manufactured in unregulated countries. Given the nascent, and somewhat uncertain direction, of climate change litigation, companies face difficult questions about how to weigh and limit future litigation exposure. Law firms similarly face questions about how to best marshal their resources to assist clients in addressing emerging issues that may or may not be enduring practice areas, or might have a short shelf life. It is critical to monitor and, where appropriate, participate in, the development of climate change regulation. Regulatory programs will dramatically affect a company’s business, as well as litigation exposure. For example, California is at the forefront of the development of U.S. greenhouse gas regulations. An understanding of the early phases of the regulatory process is a key part of climate readiness. A regulated entity that does not participate in or understand all of the work that leads to a particular proposal will be at a significant disadvantage if it decides to participate in the process only at the time of a judicial challenge to the regulation. Climate law is not a practice in itself; it is a legal and political issue that implicates multiple practice areas, including regulatory and administrative practice, environmental and general commercial litigation, government enforcement, complex tort, insurance coverage, securities, and international trade. As a result, both law firms and their clients must carefully evaluate and understand the many component parts of climate change to properly and proactively take action to assess the risks � and opportunities � for each company. Rapid legal and regulatory developments in the areas of climate litigation and regulation suggest that climate litigation is here to stay and will not fizzle like Y2K. Plaintiffs lawyers are busy developing liability theories on behalf of private litigants and classes of litigants, to attempt to recover property and personal injury damages from companies who emit greenhouse gases. The dismissal of several of these cases on nonjusticiability grounds was an initial blow, but additional waves of litigation will follow as regulatory, political and scientific actions are better defined. As a result, lawyers and their clients must be flexible in responding to changing litigation risks and opportunities. This article originally appeared in The Recorder , a publication of ALM. � Gil Keteltas and Joanne Lichtman are partners in Howrey LLP’s global litigation group in its Washington, D.C., and Los Angeles offices, respectively. In addition to general commercial litigation, they represent their clients in environmental, product liability and complex tort litigation.

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