The concept of “climate change” captures what is expected to be the defining environmental issue of the 21st Century. Characterized by complex and evolving science, the concept defies simple explanation. Yet measures to address issues connected with climate change — such as the best way to generate “clean energy” or to promote “green” or “sustainable” business practices — are likely to affect how decisions are made by individuals, business concerns and governments for decades to come. Many of these decisions will require experienced and insightful legal advice to protect client interests and to ensure compliance with a complex and evolving set of laws, regulations and related business considerations.

The delivery of effective legal advice on climate change and sustainability issues requires a multidisciplinary approach. Quarles & Brady draws on a team of attorneys from its environmental, real estate, corporate, utility, finance, intellectual property and litigation practices with the technical, financial and legal expertise necessary to address clean energy and climate change considerations relevant to each client.

Renewable Energy

Infrastructure

Sustainability, Green Practices and General Business Solutions

Utilities and Carbon Regulation

Our significant experience in each of these areas enables us to provide timely and effective legal advice in virtually all aspects of this evolving field, both individually and taken together in some combination unique to client interests and demands. 

Renewable Energy

A significant focus in the initiative to combat climate change is the growing interest in the development of alternative and renewable sources of energy. Most of the electricity used to light our streets, run our homes and power industry is generated by the combustion of coal and natural gas. Likewise, most of the world’s transportation sector, including airlines, shipping and motorized freight, cannot operate without liquid fossil fuels.

One way to reduce carbon emissions associated with the combustion of fuels is to replace coal and natural gas with renewable electric-generating capacity — such as wind, solar, biomass or possibly geothermal — and to replace liquid fossil fuels with renewable alternatives — such as ethanol, butanol, bio- or renewable diesel or renewable petroleum products produced by aqueous phase reformulation.

We have significant experience in this new and creative wave of energy generation as follows:

• Advising clients regarding the development of five large wind farm projects located in Wisconsin, Illinois and Arizona, including:
  
  
  • Assisting a large investor-owned utility to obtain a Certificate of Public Convenience and Necessity from the Wisconsin Public Service Commission for the construction of an 88-turbine, 145-MW wind farm in Wisconsin. As part of this process, we identified required federal, state and municipal approvals.
    
    
  • Providing due diligence to the lender underwriting the construction of a 133-turbine, 200-MW wind farm in Wisconsin, which also included an evaluation of the need for and completeness of efforts to obtain relevant federal, state and local approvals.
    
    
  • Preparing the application for a Certificate of Public Convenience and Necessity from the Wisconsin Public Service Commission for a proposed 90-turbine, 207-MW facility, making the case that the proposed generating capacity is the most cost-effective way to achieve compliance with a state Renewable Portfolio Standard.
    
    
  • Performing due diligence for the primary lender for a large wind farm project in southeastern Arizona.
    
    
  • Representing a wind farm developer in connection with a challenge to a proposed wind farm in Illinois based on Endangered Species Act and Migratory Bird Treaty Act concerns.
  
  
• Providing the real estate, environmental, financing, tax and regulatory legal support for the construction and operation of a solar generation facility adjacent to a gas turbine power plant in southern Arizona.
  
  
• Preparing the preliminary environmental legal analysis for the siting of a large solar power plant on an Indian reservation in northwestern Arizona.
  
  
• Providing the licensing and other environmental legal support for the construction and operation of a large cogeneration power plant in the area of Yuma, Arizona.
  
  
• Assisting a developer in identifying the necessary permits and other approvals for the construction of a 45 MW thermal solar power project in Arizona.
  
  
• Assisting a developer in navigating the approval process under tribal laws, to approve the construction and operation of a thermal solar addition to an existing electric generating station located on tribal land.
  
  
• Assisting a utility in identifying necessary regulatory approvals relating to the conversion of an existing 40-MW coal-fired power plant to combust 100% biomass and providing advice relating to obtaining an air pollution control permit for that facility.
  
  
• Providing environmental and public utility regulatory advice for the construction of a biomass-fueled power plant to be located adjacent to an existing manufacturing facility, which will consume the electricity or steam energy generated by the biomass plant.
  
  
• Assisting with the development of an Arizona venture utilizing a proprietary method for conversion of waste and virgin vegetable oils to biodiesel, including:
  
  
  • Identifying and obtaining necessary environmental permits.
    
    
  • Obtaining two rounds of corporate financing for construction and operation of the initial production facility.
    
    
  • Providing ongoing corporate legal advice.
  
  
• Advising a 40 million gallon nameplate ethanol plant and a 110 million gallon nameplate ethanol plant in Wisconsin, which — in addition to ethanol — produce wet and dry distiller’s grains, corn germ, bran and condensed distiller solubles as well as carbon dioxide. Our representation includes advice regarding:
  
  
  • Formation of the companies and preparation of organizational documents, including agreements among the owners as to equity and governance.
    
    
  • Debt financing for the companies, which has included senior construction loans, an industrial development bond issue and working capital facilities.
    
    
  • Construction and engineering contracts in connection with the construction of the plants.
    
    
  • Environmental issues, including review of air permits and addressing Notice of Violation issued to the facilities.
    
    
  • Numerous commercial contracts, including contracts with the ethanol, carbon dioxide and by-product marketers; license agreements (including a license agreement for a corn fractionation plant) and various leases and other commercial contracts.
    
    
  • Tax advice concerning the construction of the plant and ongoing operations.
  
  
• Assisting clients in obtaining patent protection for clean energy inventions, including:
  
  
  • Prosecuting patent applications for aqueous reformulation technologies to produce petroleum alternatives directly from sugar-containing feedstocks.
    
  • Prosecuting patent applications relating to solar troughs, bacterial fuel cells and liquefaction of carbon waste products.
  
  
• Assisting public bodies in applying for IRS Clean Renewable Energy Bond (“CREB”) credit allocations and serving as bond counsel for debt issuances to finance CREB-qualifying projects, which include wind, geothermal, solar, landfill/trash and biomass projects.
  
  
• Advising on issues relating to work authorization, foreign travel, green card sponsorship and fast-track processes for highly educated and highly skilled foreign national renewable energy experts, managers and executives.

These examples reflect our ability to guide a project from concept to completion or to work on individual components like project financing, intellectual property rights, commercial contracts and environmental permits.

Infrastructure

In addition to the siting and development of renewable and lower-emitting generation sources, our attorneys have assisted utility clients and transmission companies with the extensive planning required to repair, replace and expand infrastructure supporting the generation and delivery of energy from these sources. Also, one of the most significant barriers to the use of renewable energy is the lack of transmission line infrastructure to transmit the power from where it is produced to where it is used. These are highly complex matters involving stakeholders with competing interests, including land owners, utility customers and local, state and federal regulators. Our work in this regard includes the following representations:

• Pacific Gas & Electric National Energy Group (NEG), to obtain a right-of-way for a 500-KV line, approximately 10 miles in length, across land owned by the State of Arizona, the Bureau of Land Management and private property owners.
  
  
• Miller Brewing Company, in the acquisition, and later the disposition, of approximately a 150-mile corridor for a natural gas pipeline in Upstate New York, including all title and survey work.
  
  
• Environmental groups in Illinois, negotiating with railroads to acquire abandoned rights-of-way running through a variety of governmental districts (including counties, townships, cities and villages and park districts). We negotiated intergovernmental agreements with these entities for the purchase of their respective portions of the pathway, including a commitment to develop them in common with other entities and owners.

Ave Bie, former chair of the Public Service Commission of Wisconsin, directs our practice in this specialty. Ave has broad government experience, coupled with an extensive knowledge of the interworkings of government regulation and licensing, particularly as they affect infrastructure and line siting.

Sustainability, Green Practices and General Business Solutions

Another focus is the growing number of ways that climate change considerations factor into business transactions. The ongoing discussion of activities contributing to global warming and climate change has resulted in a growing interest in “sustainability” in general. “Sustainability” centers on the ability of consumers to meet resource and energy needs today without compromising the ability of future generations to do the same. This has lead to the proliferation of products and activities claiming to be “green.”

Many companies find that their customers expect sustainable business practices. Some require their suppliers and others with whom they do business to adopt efforts promoting sustainability. Others are required by their shareholders to disclose and manage their greenhouse gas emissions. As a result, companies are working to determine the carbon footprints of their products, to disclose annual carbon emissions and to certify that their construction projects use environmentally sound business practices. Even basic purchase/sale agreements and other commercial contracts must now often address issues relating to emission reductions, energy efficiency credits and other aspects of business commitments to sustainability.

Examples of our recent experience include the following:

• Drafting the first Energy and Climate Change report for a Fortune 500 transportation sector corporation.
  
  
• Lobbying the State of Arizona regarding the proper legal approach required to adopt a state climate change action plan and to prepare regulations to implement the Western Climate Initiative.
  
  
• Advising a manufacturing facility regarding the potential for securing future voluntary emissions reductions credits relating to a restructuring and change in operation at a facility.
  
  
• Assisting startup “cleantech” companies with obtaining financing and assisting private equity sources in evaluating potential investments in cleantech companies.
  
  
• Advising Arizona’s largest manufacturer regarding implementation of a cleaner energy/reduced carbon footprint program at multiple manufacturing plants in Arizona.
  
  
• Participating in E-Verify to obtain work authorization for foreign nationals at renewable energy companies doing business with the State of Arizona and the Federal Government.

Our attorneys also advise clients on the following:

• Emissions reductions and other “green” credits as part of transactional due diligence.
  
  
• Tax and capital market-related aspects of climate change planning and projects.
  
  
• Land use and green building (LEED) certification.
  
  
• The preparation of corporate climate change plans.
  
  
• The preparation of disclosures of annual greenhouse gas emissions.
  
  
• Efforts to lobby state and tribal governments regarding approaches to climate change regulation and approvals of proposed green energy projects.
  
• The delineation of “green” products and the preservation of rights regarding such products.
  
  
• Tribal, state and federal regulatory developments regarding proposed regulations related to climate change.
  
  
• Private placement memoranda for green and cleantech companies, and evaluating those memoranda for potential investors and other equity sources.
  
  
• Preparation of conservation easements on property held by land trusts and corporate entities.

Utilities and Carbon Regulation

Finally, there is a need to address greenhouse gases that contribute to global warming. Although the Kyoto Protocol focuses on carbon dioxide, methane, nitrous oxide, sulfur hexafluoride, hydrofluorocarbons and perfluorocarbons, tools have been developed to convert these emissions to an equivalent release of carbon dioxide, and efforts to control these releases are often referred to as “controlling carbon emissions.” The regulation of carbon emissions ranges from the direct regulation and permitting of coal-fired utilities and other boilers to development of cap-and-trade systems and carbon taxes and low carbon fuel standards as well as efforts to capture and isolate carbon emissions (known as “carbon sequestration”).

We have significant experience in carbon regulation, in both the utility and industrial sector, as follows:

• Advising utility and industrial clients on federal efforts to develop regulations to address the causes and impacts of climate change, including:
  
  
  • U.S. EPA’s efforts to issue an endangerment finding related to emissions of CO2 and greenhouse gases, including the proposal to regulate such emissions under the current provisions of the Clean Air Act set forth in the July 30, 2008 Advanced Notice of Proposed Rulemaking (ANPR);
    
    
  • U.S. EPA’s July 28, 2008 proposed revisions to the Underground Injection Control regulations, to address the injection of carbon dioxide underground for purposes of carbon sequestration and storage; and
    
    
  • U.S. EPA’s development of new standards and guidelines to protect watersheds, wetlands and other water infrastructure in light of climate change, including the Water program’s Response to Climate Change, released in draft form in March 2008.
• Advising utility and industrial clients regarding state initiatives to establish carbon trading schemes such as the Western Climate Initiative and the Midwest Governor’s Climate Initiative.
  
  
• Representing a utility client in obtaining necessary regulatory approvals relating to a $7 billion generation expansion program, including:
  
  
  • Construction of 1100 MW of natural gas-fired generation. We assisted the client in obtaining a Certificate of Public Convenience and Necessity for the construction of that facility and defended that authorization in subsequent judicial review proceedings. We also assisted the client during the development of the Environmental Assessment of the project required by state law and defended that assessment in subsequent judicial review proceedings in a proceeding brought in part to challenge the climate change impacts of the facility.
    
  • Construction of 1230 MW of supercritical pulverized coal-fired generation. We assisted the client in obtaining a Certificate of Public Convenience and Necessity for the construction of that facility, which included consideration of the impact of future carbon regulation scenarios on the economics of the project, and defended that authorization in subsequent judicial review proceedings. We also assisted the client during the development of the Environmental Impact Statement of the project required by state law and defended that assessment in subsequent judicial review proceedings. The air permit, wastewater permit and wetlands permit issued to the facility were challenged, and all three challenges were successfully resolved, allowing the project to go forward.
    
    
  • Obtaining Certificates of Authority to retrofit controls on 1400 MW and 1130 MW of existing coal-fired electric generating capacity. The first project was not challenged. We successfully defended the second project in the face of an administrative challenge regarding the alleged climate change impacts of the project as well as the impact of future carbon regulation scenarios on the economics of the project.
• Identifying and retaining consultants for industrial clients to evaluate potential impacts of cap and trade or carbon tax policies on their businesses.

In conjunction with our strong manufacturing and utility practices, we are well positioned to deal with even the most complex carbon management issues.

With broad and multidisciplinary experience, we are uniquely suited to assist our clients in resolving issues associated with clean energy, climate change and sustainability. Whether you have a discrete question or a major project requiring creative and comprehensive legal and business advice, Quarles & Brady is ready to partner with you on the critical issues arising under the broad concept of climate change.

For more information on how our Clean Energy, Climate Change and Sustainability Group can help you address issues related to Clean Energy, Climate Change and Sustainability, please contact Roger K. Ferland at (602) 229-5607 / , Cynthia A. Faur at (312) 715-5228 / , Ave M. Bie at (608) 283-2441 / , Peter A. Tomasi at (414) 277-5677 / or your local Quarles & Brady attorney.