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End of the Road for Common-Law Climate Claims? Ninth Circuit Rejects Climate-Based Damages Claim

September 24, 2012

In what may be the last gasp for tort-based claims based on release of greenhouse gases, the Ninth Circuit late last week issued an opinion rejecting a damages claim based on the federal common law of nuisance. Following the U.S. Supreme Court's 2011 opinion in American Electric Power Co. v. Connecticut, which held that federal action to control greenhouse gases under the Clean Air Act displaces lawsuits based upon the federal common law of nuisance, the Ninth Circuit concluded that no lawsuit can be brought under federal common law seeking damages for greenhouse gas pollution.

The case was brought by the Native Village of Kivalina, Alaska, a city of about 400 residents, mostly members of the Inupiat tribe, located 70 miles north of the Arctic Circle on Alaska's northwest coast. Kivalina's coastline is protected from fierce Arctic storms by sea ice that accumulates along the shore. With the decline of Arctic sea ice in recent years, however, much of the land underlying the village has been washed away. Asserting that the loss of sea ice is a the result of greenhouse gas emissions, Kivalina sued a large group of electric utilities, oil companies, and other major users of fossil fuels. Kivalina based its claim on the federal common law, arguing that the release of greenhouse gases across state lines constitutes a federal nuisance because that pollution damages the village's land.

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Spinning Carbon Into Gold: SMUD Issues Request for Carbon Offsets

August 6, 2012

Demonstrating the potentially huge opportunity California's carbon offset market may present for Pacific Northwest industries, the Sacramento Municipal Utility District ("SMUD") recently issued a Request for Offers seeking carbon offsets. Responses are due August 23.

As explained in more detail in our August 3 post, carbon offsets are one mechanism California entities can use to meet their obligations to reduce carbon emissions under AB 32, California's Global Warming Solutions Act. SMUD, along with a host of other California industries, will be subject to greehouse gas ("GHG") reduction targets starting in 2013 and ratcheting up in ensuing years in order to meet AB 32's aggressive GHG reduction goals.

Consistent with the rules governing the carbon offset market, SMUD is seeking offers for carbon offset credits from dairy farms, from destruction of certain ozone-depleting substances, from urban forestry projects, and from projects on U.S. forest lands. Industries able to meet the requirements for creating carbon credits by, for example, destroying dairy-produced methane in a biogas generator, could add a potentially significant revenue stream to their operation.

If you have any questions about the California cap-and-trade program or carbon offsets, please contact a member of GTH's Renewable Energy and Sustainable Technology practice group. We have years of experience in the energy industry, electricity and carbon trading, and related fields.

Carbon Trading Comes to California: New Opportunities for Northwest Dairies, Foresters, Municipalities, and Other Industries

August 3, 2012

After several fits and starts, California's Carbon Offset Market is ready to open for business. Because out-of-state entities willing to take steps to reduce or capture greenhouse gases ("GHGs") are eligible to participate in the Carbon Offset Market, the market represents a potentially significant opportunity for Pacific Northwest businesses. In particular, the Carbon Offset Market may create a significant new source of revenue for Pacific Northwest foresters and dairy farmers, and for businesses that handle foam insulation or refrigerants (utilities, builders, and recyclers are a few examples).

The Carbon Offset Market is part of the cap-and-trade program mandated by California's Global Warming Solutions Act (AB 32), which sets goals of cutting California GHG emissions to 1990 levels by 2020, and to 80% below 1990 levels by 2050. To meet these ambitious targets, AB 32 establishes, among other measures, a cap-and-trade program that requires major GHG-emitting facilities in California to meet increasingly-stringent limits on GHG emissions over the next three decades. Industries subject to the cap-and-trade program may use carbon offsets to meet up to eight percent of their AB 32 GHG reduction requirements. Initially, the offset program is available only for reductions of methane emissions at livestock operations, for forestry programs that capture and store carbon in living forests, and for programs to destroy ozone-depleting chemicals (which are also strong GHGs).

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