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The most pressing issues facing corporate counsel regarding new environmental liabilities, risks, and opportunities, and how corporate legal departments are responding to those challenges, was the topic of a session at the InsideCounsel SuperConference being held May 20-21 in Chicago.
The discussion was led by Gabrielle Sigel, Co-Chair of Jenner & Block’s Climate and Clean Technology Law Practice; John R. Allison, Assistant General Counsel, 3M Company; William J. Donohue, Associate General Counsel, Environment, Health & Safety, Exelon Business Services Company; and Greg Munson, General Counsel, WRS Infrastructure & Environment, Inc.
Ms. Sigel opened the discussion with an overview of the variety of new environmental liabilities and emerging issues, including climate change, facing corporate counsel. With respect to climate change she said that while corporations for the most part are eager for a regulatory scheme that offers “uniformity” and “certainty,” in-house counsel currently face a patchwork of state regulations and no federal regulatory framework. In addition, with a new presidential administration in the U.S. within the year and increased international pressure to regulate emissions that can cause global warming, Ms. Sigel said that corporate counsel need to know and advise their companies on the liability and disclosure risks, the impact on community relations, and the business opportunities climate change issues present. Ms. Sigel also noted a wide variety of other emerging environmental issues, including expanded tort and cost recovery liability, new scientific developments, and new regulatory initiatives, which should be monitored and addressed by in-house counsel.
Mr. Donohue addressed how Exelon has made efforts to stay ahead of inevitable climate change regulations. “Climate change is corporate change,” he noted, and said that reviewing and adapting a company's business practices and operations now will best position it for the certain regulation in the years to come. He recommended that in-house counsel stay abreast of the issues as they evolve and to begin to inventory and report their company’s GHG emissions.
Mr. Munson discussed the wide variety of climate change-related regulatory approaches currently being implemented by states, noting that the majority of states either have implemented or are in the process of adopting climate change related legislation. In addition, he said companies should look into regional groups that have agreed upon a set of voluntary parameters that companies can utilize to begin the process of accounting for and limiting carbon emissions. In the absence of a uniform, national approach, Mr. Munson said such regional groups, such as the Regional Greenhouse Gas Initiative in the northeast and the Western Climate Initiative in the western United States, offer companies a way to approach the issue with a more widely accepted set of rules and offer insights into the emerging consensus on how specifically companies can manage their carbon footprint.
Addressing environmental risks other than climate change, Mr. Allison discussed how environmental risks need to be addressed when handling international transactions. Knowing the environmental regulations as they apply to a target company is key in any acquisition, Mr. Allison said. For instance, he noted that in Argentina over 75 facilities had been shut down in recent years, because the environmental rules in that country had evolved and are now more stringent. In another example, he noted that in China, there is an increased focus on air quality and waste disposal, and the laws in the country are also continuing to evolve. Mr. Allison said that the bottom line for in-house counsel handling international transactions is that they must be mindful of higher expectations of multinationals to meet local environmental laws wherever they are doing business.