Yesterday was a banner day for offshore wind farms in the mid-Atlantic.  Promoters and advocates received a favorable environmental assessment, a new form and two calls for nominations. 

The Environmental Assessment.  Secretary Ken Salazar of the Department of the Interior gave wind developers a big boost when he announced the Department's decision to move forward with government leases of offshore areas for wind farms. This comes at a crucial time for wind turbine manufacturers; Danish turbine giant Vestas A/S announced last month that it would be closing one factory, laying off ten percent of its work force in light of the recession and increased competition from China, and considering additional layoffs in the United States. 

The Department's finding of "no significant impact" from activities related to site assessment such as geotechnical surveys or the installation of meteorological towers opens the door to the gathering of data without completion of a further environmental impact statement.  Completion of the environmental assessment is not a green light for all projects, but it is estimated that it will take two years off the planning and construction schedule.  Specific projects still will need to complete an environmental impact statement.  One issue, for example, may be birds. The red knot, an intercontinental migrating species of sandpiper, flies almost twenty thousand miles each year from Brazil to Canada and back, stopping off for saltwater taffy along the Delaware Bay. Birdkill is a substantial problem for wind farm operators. Efforts to put the red knot on the federal endangered species list will only make solving that problem harder.

New Jersey, Delaware, Maryland and Virginia are all excited about the potential opportunities. Governor McDonnell (a Virginia Republican) wants to make Virginia the Energy Capital of the East Coast.   Governor O'Malley (a Maryland Democrat) noted:  “We need the energy. We have the resources. We need the jobs, and we need a more renewable and cleaner, greener future for our kids.”  

The Lease Form.  To streamline the issuance of wind farm leases on the Outer Continental Shelf the Department's Bureau of Ocean Energy Management put together a "first-of-its-kind" lease form, BOEM Form 0008.  Comments were solicited last fall and they were limited.  One that was significant was that lessees should make available data they collect.  Certain wind data could be kept as proprietary and confidential.  The Form is silent on that subject.  Notwithstanding, the wind energy industry is enthusiastic about the Form.  Comments by The Offshore Wind Development Coalition felt that with 15 offshore wind projects on the blocks in the U.S., the Form "will provide an essential ingredient for continued progress."     

The Calls.  The Department of Interior also issued a "Call for Information and Nominations" for almost 80,000 acres approximately 10 miles off Ocean City, Maryland, and for a little more than 110,000 acres 23 miles off Virginia Beach, Virginia.   The Calls solicit any additional lease nominations and request public comments about "site conditions, resources and other existing uses of the identified area that would be relevant to BOEM’s potential leasing and development authorization process."  An earlier solicitation of interest for Maryland obtained nine "indications of interest" for commercial leases.  This interest is local, interstate and international.  The achievement of Maryland is the result of sustained effort to get to this point.  Since 2009, in a "state interagency marine spatial planning process" the Maryland Department of Natural Resources (DNR) worked  with "resource experts, user groups, The Nature Conservancy (TNC), Towson University and the Maryland Energy Administration (MEA) to compile data and information about habitats, human uses, and resources offshore Maryland."

Offshore wind farms are coming. "Blow the man down" is a 19th Century sea shanty chronicling the rough life of a mate aboard sailing packets plying the North Atlantic.  It may be time to update the reference.

NOAA reported that 2011 was one for the record books:  12 weather and climate-related disasters each causing over $1 billion in damage.  One might expect (or hope) that a national climate change policy would be coming into place to prevent repeating or setting a new record.  One would be disappointed.  U.S. climate policy is "uncertain," to quote Michael Morris, CEO of American Electric Power, "dysfunctional" is the word applied by Resources for the Future, "hamstrung" is how the chief UN climate change negotiator and Executive Secretary of the UNFCCC, Christiana Figueres, calls it.  

We don't disagree with these viewpoints; they are accurate.  But if a response to climate change is the goal, it is worse than these commenters are acknowledging because not only has Congress shown that it is incapable of getting anything done, other avenues are not delivering either.  As the year expires we thought it might be helpful to sift through the year's detritus and assess  the status of attempts to reduce carbon dioxide emissions, distinct from overt attempts like passing laws and adopting regulations.

1. Tax emissions - Some will remember our blog on the federal lawsuit brought by Mirant Corp. against Montgomery County challenging the County's tax on carbon emissions which fell only on Mirant. The County challenged the federal court's jurisdiction and won before the federal district court. In June, however, the Fourth Circuit reversed.  With that Montgomery County folded its tent and abandoned its carbon tax.

2. Favor renewable energy - The inexorable scrutiny of the markets has proved the undoing of several former high-flying renewable energy ventures. Most well-known is the debacle with Solyndra LLC, whose well-publicized collapse generated scrutiny by the FBI and Congress. Others that have failed with less limelight in 2011 include numerous solar companies (Solar Millennium, Stirling Energy Systems, Evergreen Solar, Spectrawatt), as well as ventures in wind (Skycon), energy storage (Beacon Power), and biofulels (Range Fuels).

3. Impose liability for emissions of carbon dioxide - The results here are mixed.  Everyone points to American Electric Power v Connecticut for the principle that for greenhouse gas liability claims the federal common law of nuisance has been displaced by federal regulation. They could equally point to Connecticut v AEP before the Second Circuit for the principle that the political question doctrine does not bar these types of claims or to the Fifth Circuit panel in Comer v Murphy Oil USA that held similarly.  However, even if the cases are permitted to move forward, they face daunting problems in proof of causation.

4. Force state action to regulate carbon dioxide - We blogged last May and just this month about the tidal wave of litigation unleashed by Our Children's Trust, an Oregon environmental group that had orchestrated a dozen suits asserting the defendant States had an obligation under the public trust doctrine to restrain carbon dioxide emissions, as well as regulatory petitions in about 40 jurisdictions. 

Time has not been good to OCT. First, its petitions have been denied by at least 23 agencies (Arkansas, Connecticut, Georgia. Hawaii, Idaho, Illinois, Iowa, Louisiana, Maine, Maryland, Michigan, Nevada, New Hampshire, North Dakota, Ohio, Oklahoma, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, and Wyoming).  Where OCT filed lawsuits, three states (Arkansas, Minnesota and New Mexico) responded with motions to dismiss.  The lawsuit against Montana was dismissed. In the federal lawsuit, the plaintiffs lost a motion to transfer.

5. Reach regional agreements - With great fanfare the Regional Greenhouse Gas Initiative was launched in 2005. Despite a recent study that claims significant economic benefit to the states in RGGI, its future success is unclear. New Jersey pulled out, New Hampshire tried to leave but the governor vetoed the bill. In New York, there is a court challenge. 

6. Voluntarily trade carbon dioxide emissions credits - The only carbon exchange in North America came to an end in 2010 when the Chicago Climate Exchange closed its doors.  A shadow of its former self, the CCX now registers verified emission reductions based on a comprehensive set of established protocols.

7. Develop carbon capture and storage - The most prominent project in the US came to a halt in July when American Electric Power concluded not to build a full-scale CCS plant at its Mountaineer, West Virginia plant. As noted above, AEP explained its decision as based on the uncertainty of US climate policy.  The lack of direction in American climate change response hurts business. AEP walked away from a $300 million Department of Energy match.  It didn't help that the Virginia consumer advocate, in successfully arguing against including CCS costs in the rate base, asserted:  “Any potential benefit is speculative and outweighed by the enormous cost of the pilot project.”

Some may think no policy is the best policy.  We think otherwise.  Climate change is happening.  There will be a response.  All will benefit if that response is choreographed over time, rather than rushed into when political consensus ultimately concludes that something must be done NOW.  Maybe in 2012?  Happy New Year. 

Yesterday was a good day for renewable fuels enthusiasts and not because someone figured out how to make ethanol cocktails from pond scum.  In Houston American renewable fuel use literally took off on its maiden flight and in Washington the Supreme Court denied certiorari in a suit brought by the oil industry challenging the USEPA's regulations promulgating a revised renewable fuels standard.

In National Petrochemical Refiners Association and the American Petroleum Institute v. EPA, the plaintiffs asserted the EPA's final rule, Regulation of Fuels and Fuel Additives: Changes to Renewable Fuel Standard Program, 75 Fed. Reg. 14,670 (Mar. 26, 2010), was invalid because it "violate[d] statutory requirements setting separate biomass-based diesel volume requirements for 2009 and 2010; [was] impermissibly retroactive; and it violate[d] statutory lead time and compliance provisions."  630 F.3d 145, 147 (D.C. Cir. 2010).  From those arguments, one might justifiably conclude that watching paint dry would be far more exciting than this opinion; we will leave it to others to explicate.  E.g., see the case comment in the Texas Journal of Oil, Gas and Energy Law Blog. In any event, the court of appeals denied all of petitioners' arguments and left EPA's rulemaking completely intact.  The Supreme Court saw no reason to step in. 

What does the standard mean in the real world?  It is huge.  Among other things, according to the EPA's website it raised the mandated volume of renewable components in motor vehicle fuel from 9 billion gallons in 2008 to 36 billion gallons by 2022.   And it "appl[ied] lifecycle greenhouse gas performance threshold standards to ensure that each category of renewable fuel emits fewer greenhouse gases than the petroleum fuel it replaces."  In other words, if one measures all the greenhouse gases emitted in the production of, for example, one gallon of corn-derived ethanol, fewer gases would be emitted than in the production of one gallon of gasoline.

But the standard is not huge for airlines.  It only applies to motor vehicle fuel. 42 U.S.C. § 7545(o)(1)(C)(i).  Nevertheless, airlines are starting to line up for renewable fuels.  A case in point is the news story in yesterday's Houston Chronicle, Algae helps power flight to Chicago.  The gist of the story is that a United Airlines Boeing 737 lifted off from George Bush Intercontinental Airport for Chicago with a fuel tank filled with a blend derived from algae and conventional aviation fuel.  Passengers noted nothing different despite participating in history.  As stated by United:  "the first U.S. airline to fly passengers using a blend of sustainable, advanced biofuel and traditional petroleum-derived jet fuel."  More details are provided in the press releases from Solazyme (the biofuel manufacturer) and United. The blend was 40/60 algae to conventional fuels, complied with the ASTM D7566 specification for aviation fuel, and is a "drop-in replacement[] for petroleum-based fuel, requiring no modification to factory-standard engines or aircraft."  Tomorrow Alaska Airlines takes off with used cooking oil product in its tanks. The price for this "green" fuel?  One internet source puts it at between $17 and $26 per gallon. 

Is this cutting edge?  For the United States, yes, for Europe not at all. Lufthansa flies 8 flights daily to and from Hamburg and Frankfurt using 50% biofuel in one engine. The press release goes on to explain the single engine:  "next to reducing CO2 emissions, the main aim of this long-term operational trial, [is] to examine the effects of biofuel on the maintenance and lifespan of aircraft engines."  That is, the two engines will be torn down to the last o-ring at the next overhaul and compared, providing valuable data for future operations.

Both United and Lufthansa emphasize the role renewable fuel has in their sustainability initiatives.  Good public relations and potential competitive advantage may be reason enough to incorporate biofuels.  But besides green-ness can $17 per gallon be justified? It might be if it could reduce costs elsewhere, and faithful readers have already figured out where that might be. As we reported recently, the EU will start imposing carbon emission fees on flights originating or terminating in the European Union. Bio-fueled flights can get credits and reduce their fees.  With that, a little innovation, some economies of scale, and some luck, we might soon find ourselves enjoying a little pond scum at 30,000 feet.

Notwithstanding the bad press garnered recently by some clean technology business models that relied on government largesse (most notably the failure of Solyndra LLC and its accompanying half-billion dollar government guarantee), government funding of "green" is not going away.  Last Thursday, ECOTotality announced the award of a five year $26.4 million contract with the Department of Energy to continue to test and evaluate advanced vehicles.  

As stated by ECOTotality, "The primary goal of the Advanced Vehicle Testing and Evaluation project is to provide key data for technology modeling, and research and development programs, by benchmarking and validating the performance of light-, medium-, and heavy-duty vehicles."  So ECOTotality is testing; is anyone buying?  The predictions are that quite a few will be. 

The Department of Energy and others have put together $230 million to promote the development of electric vehicle infrastructure in six states (Washington, Oregon, California, Arizona, Texas and Tennessee) and the District of Columbia.  The EV Project, as it is called, is a significant venture and one in which ECOTotality is heavily involved.  This month marks the beginning of the third and final year of the project. 

How many drivers are we talking about?  Initially, the numbers are small, but the upside is not.  To quote ECOTotality again:  "The ultimate goal of The EV Project is to take the lessons learned from the deployment of these first 8,300 EVs, and the charging infrastructure supporting them, to enable the streamlined deployment of the next 5,000,000 EVs."   As of the end of September the lead electric vehicles in this country are Nissan's LEAF, with sales of approximately 7,000 and General Motors' Volt, at a little more than half that.   So there is a ways to go.

But we are confident that we will get there.  Although justifications for shifting to electric vehicles include minimizing carbon emissions and energy independence, the reason the switch will happen is cost.  The advantage over the internal combustioin engine is immense.  According to General Motors:   "The Volt should cost less than 2 cents per mile to drive on electricity, compared with 12 cents a mile on gasoline at a price of $3.60 a gallon." 

Which leads to the most interesting part of the story:  the companies that are part of all this.  Besides electric utilities and state and local governments, partners in the EV Project include, among others, retailers (IKEA, Sears, Macy's, Best Buy), property managers (Jones Lang Lasalle), restaurants (Cracker Barrel), hotels (Loews), oil companies (BP), and supermarkets (FredMeyer).  The business model is simple.  With a high-speed charging connection, a customer's EV can be recharged to 80% in about 30 minutes.  Enough time for a quick lunch or a little shopping.  And if the customer will be there longer (like at work or overnight), then there is a further opportunity.  Practitioners should take note.  Even if EV's are not here yet, the leases and zoning approvals that one is negotiating now could be set up to ensure that the opportunity will be available, but only if one is thinking about it. 

It was a sobering moment Friday. Two executives of Solyndra LLC, after being honored by the President, receiving vast sums of money from investors, and earning kudos and accolades from industry and government,  asserted their Fifth Amendment right against self-incrimination and refused to testify before a congressional committee investigating the solar cell manufacturer's bankruptcy and potential improprieties in the procurement of loan guarantees.  We are not privy to the corporate planning but are comfortable stating that that was definitely not in the business plan.

A more successful business model (for the moment anyway) appears to be that of cellulosic ethanol entrepreneur Mascoma Corporation, which on Friday filed its S-1 in anticipation of its IPO seeking $100 million in investment. As one blogger reported:  "the numbers continue to look strong, and the timelines continue to point toward commercial volumes of cellulosic ethanol in the 2013-14 time frame, at affordable prices."  We shall see. 

Mascoma describes itself as follows:  "Using its proprietary consolidated bioprocessing, or CBP, technology platform, Mascoma has developed genetically-modified yeasts and other microorganisms to reduce costs and improve yields in the production of renewable fuels and chemicals."   While the holy grail is commercial success using any biomass resource, Mascoma is hedging its bets and touting application of its "bugs" to ethanol producers. It asserts that its "consolidated bioprocessing" is better than current processes and that it can help ethanol manufacturers produce more cheaply. This resort to established product lines is becoming a trend. An article in Scientific American, The False Promise of Biofuels by David Biello, reports that many in the biofuel area, where the lack of success in commercialization of biofuel applications has been discouraging, are seeking to use their proprietary technologies in other areas such as pharmaceuticals and cosmetics.

Internet commentators draw parallels between Mascoma and Solyndra based on the government support each received. Frankly, we find it not much of an insight. Government support is an enticement for investors.  If you have it, it will be easier to locate private financing. If you don't, it is just the opposite.  Still, federal and state involvement is eye-opening.    Mascoma's S-1 reveals that it has yet to turn a profit over the past five years and in fact has lost almost $140 million so far. It has been able to do this with a little over $100 million in private investment, $30 million in debt and $34.5 million in revenue. Eighty-six percent of Mascoma's revenue in 2010 came from government sources, which is substantial; government grants exceed $65 million.  The Department of Energy has provided separate grants of $20 million and $4.3 million, New York's Energy Research and Development Authority and Michigan's Strategic Fund have contributed $14.8 million and $20 million, respectively, in return for facilities in each state. A few million ($6.3 MM) has come from the BioEnergy Science Center at UT-Battelle. And somehow, for less than a million dollars, the Province of Alberta has a commitment for the construction of a facility in Alberta.
 
We hesitate now as we write our conclusion, for fear of jinxing Mascoma. We hope and trust that the its economic trajectory is 180 degrees from that followed by Solyndra. But just in case, we offer this small bit of advice: pay close attention now to the D&O policy. The next shoe to drop for Solyndra and its officers and directors will be lawsuits alleging various forms of misfeasance as individuals and entities that were financially burned seek to shift their loss.  We could write much regarding D&O policies. It will suffice here to counsel for focusing on pursuing coverage extensions for government investigations and for a requirement of "final adjudication" in any species of fraud exclusion.  The market is reportedly soft (except for Chinese reverse mergers) and there is no time like the present to establish the most favorable coverage terms.  Stated differently, when your executives are taking the Fifth and the litigation sharks are circling is no time to be parsing your coverage.

Well, it was only a matter of time before renewable energy hit the mainstream. By which we mean that the bloom comes off the road as the rubber hits the rose. 

Yesterday the FBI raided the headquarters of bankrupt Solyndra LLC, which formerly "led the way to a brighter future", to quote President Obama (4:00).  It seems that some questions have arisen over its bankruptcy filing and whether it misled the government in the procurement of loan guarantees. Those questions are the focus of a criminal investigation. What is the taxpayers' share?  Potentially over half a billion dollars.

Solyndra is not the only clean energy darling to fail. Evergreen Solar, Inc. has gone under.  As has Spectrawatt.  (We could add wind, biomass and others.)  A niche legal practice is building somewhere.

What practitioners should take from all this, and a central feature of our perspective, is that the new risks and opportunities in the climate change and renewable energy space, are ineluctably accompanied by the old risks and opportunities. The art and craft of what we as lawyers do is the melding of the old with the new.

To focus on solar, a key feature of a solar project is the renewable energy credit or REC. Lawyers on both sides should be focusing on where those will end up in a bankruptcy and who will have claims to them.  Is it just another asset, or do its features merit special consideration.  If a REC is an executory contract, perhaps the ostensible owner owns very little after a bankruptcy filing.  Another key feature, will be the tax credit. How will that be treated?  Who gets paid by the loan guarantee (such as in Solyndra's case)?

And we advise against just muddling through. We were on a wind farm deal where the other side proposed to include climate change (i.e., a change that would result in less wind) as a force majeure. A good idea, unless you understand how a force majeure clause works:  upon the occurrence of the force majeure event, one has to give notice in a specified period declaring the event.  Counsel obviously had never thought how the client would discern that climate change had occurred such that notice should be given. Because that moment cannot be precisely determined, inevitably such notice will be deemed late or premature and the defense to performance avoided.

We point all this out as a caution.  Contracts, like roses and like roads, need to be tended to.  A failure to understand the subject matter fully may result in something undesirable (like a mixing of metaphors), or even harmful (like the loss of a valuable asset).

We hope you don't come to this blog for stock tips but it doesn't take John Bogle to know that the debt ceiling impasse and the budget furor do not bode well for renewable energy stocks.  Citing the debt crises and oversupply, here is how one report put it:  "One of the biggest losers on the day was the PowerShares WilderHill Clean Energy Portfolio (PBW) which slumped by 1.4% to open up the week." 

So where else is the national obsession on the nation's debt going to take a bite out of responses to climate change.  We tracked down a few subjects.

Carbon Dioxide Regulation - Efforts by House Republicans to defund USEPA's steps to regulate carbon dioxide resulted most recently in H.R. 2584, the proposed Department of the Interior, Environment, and Related Agencies Appropriations Act of 2012.  Section 453 provides, among other things, that "None of the funds made available under this Act shall be used--(1) to prepare, propose, promulgate, finalize, implement, or enforce any regulation pursuant to section 202 of the Clean Air Act (42 U.S.C. 7521) regarding the regulation of any greenhouse gas emissions from new motor vehicles or new motor vehicle engines that are maufactured after model year 2016 to address climate change; ..."  
This is not a new tactic.  It is probably fair to say that what is in the works now at EPA is not what will be the final word.

Tax Credits - Under § 1603 of the American Recovery and Reinvestment Tax Act renewable energy project developers may take cash payments in lieu of the investment tax credits.  The Treasury reports over 7000 projects funded to the tune of $6.4 billion, resulting in total investment of $21.6 billion.  Although the credits do not expire until October 2012, some think they are under the gun right now. 

Ethanol - The most subsidized part of the renewable energy mix, ethanol producers and corn farmers received a stern message on June 16 when Senator Dianne Feinstein obtained a symbolic vote (73-27) in favor of ending ethanol subsidies on July 1.  The White House promised a veto and the proposal has not gone anywhere in the House.

Energy Efficiency - Congress can't figure out the debt ceiling mess but remains expert at creative bill naming.  H.R. 2417, the Better Use of Light Bulbs (BULB) Act, passed overwhelmingly, but didn't take effect because of the procedural rule adopted to permit a vote, which required a supermajority.  The bill would have repealed certain provisions of the Energy Independence and Security Act of 2007 that prescribed energy efficiency standards for incandescent lamps (among other things).

We are sure there are others.  Notwithstanding that the Energy Independence and Security Act of 2007 passed both houses of Congress by wide margins, the winds of change are now blowing hard and furiously.  Where all these programs will be when the furor over the debt ceiling subsides is unknown, but no one can dispute that the climate has changed.

We’ve previously written in this blog concerning regulatory uncertainty and its impact on investment or growth of renewable energy.  One example of how this has recently played out is in the early retirement of Exelon’s Oyster Creek nuclear facility in New Jersey.  Setting aside any philosophical debate with regard to whether nuclear is a form of energy that should be lauded as a resource that generates no carbon dioxide emissions, we focus here on the issue of regulatory uncertainty, the dilemma that arises when an agency leans toward choosing one means of technology as a panacea to a potential harm to the environment, and the unintended impact of such regulation on another area of environmental concern. 

Regulatory uncertainty and the potential increased environmental compliance costs of anticipated state and federal regulation forced the owners of Oyster Creek to agree to shut down the 645 MW nuclear facility in 2019, ten years before its renewed license to operate expires.  In April 2009, Exelon won a 20-year license extension for Oyster Creek.  Not all power plants are required to use cooling towers, let alone particular types of cooling towers.  Cooling tower regulations are currently being considered by the EPA and NJ DEP as a way to protect aquatic species in the rivers, oceans and lakes that provide cooling water to power plants.  A component cited by Exelon in its decision to close the plant early was the NJ DEP’s attempt to compel construction and operation of a cooling tower at Oyster Creek within seven years, which Exelon said would be cost prohibitive. 

To what extent should a regulatory agency dictate the means or methods to be employed in achieving certain environmental results?  With regard to the federal scheme, rule 316(b) of the Clean Water Act has allowed power plant operators to use what is the “best technology available” to capture water for plant cooling purposes.  EPA’s rulemaking is expected to set significant new national technology-based performance standards to minimize adverse environmental impact. 

Although the proposed rule has not yet been issued (it is expected in February 2011, to be followed by a final rule in July 2012), the EPA’s anticipated rule, coupled with the inability of plant operators to consider other factors (such as climate change, impact on water use, land use, and cost) may have unintended consequences.  After all, while requiring particular kinds of cooling towers on all existing power plants may benefit some aquatic life, the forced early retirement of multiple nuclear plants will also result in increased carbon emissions.  And, if predictions are true, rising sea levels associated with increased carbon dioxide levels will likely harm far more aquatic life as rivers become more saline, wetlands are drowned, and abandoned infrastructure falls into the sea.

The renewable energy industry got a nice holiday present this year. On December 17, 2010, President Obama signed into law H.R. 4853, the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (the "Tax Relief Act"). Included among the panoply of tax cuts is a tax grant extension cheered by the renewable energy industry.

Section 707 of the Tax Relief Act extends by one year the deadline for commencing construction of specified energy property, such as solar facilities, to be eligible to receive a grant of 30% of the cost of the property from the U.S. Treasury under Section 1603 of the American Recovery and Reinvestment Act of 2009. The property will be eligible for the grant if it is placed in service during 2009, 2010, or 2011, or if it is placed in service after 2011 and before the energy credit termination date (January 1, 2017, for solar facilities) if construction began before January 1, 2012.

The extension of the tax grant in lieu of credit will allow those interested in developing solar facilities to continue to take advantage of the grant for another full year rather than work to beat the clock to demonstrate compliance by the end of 2010. Projects now under way that are expected to be placed in service in 2011 no longer have to meet Treasury's safe harbor for commencement of construction (demonstrating 5% of construction) by December 31, 2010. The safe harbor and its requirements, however, will be relevant in 2011 for projects expected to be placed in service after 2011. As participants in solar transactions plan their activities for 2011, they should be mindful of the steps that need to be taken by December 31, 2011, to document and maintain eligibility for any projects expected to be placed in service between 2012 and 2017, by either commencing construction or meeting the 5% safe harbor.

Due to the sluggish credit markets and economy in 2009, the grant in lieu of credit program was not as great a stimulus to the development of renewable energy projects as some had initially expected. This grant extension brings welcome news to the solar industry and to any large energy user that may want to reduce its energy costs by developing and installing a solar facility. It evidences Congress' continued commitment to the development of alternative energy projects and should result in the development of many more viable projects and the creation of jobs related to the construction and installation of solar energy facilities.

If you have been following along with the last two posts, you are now aware of the several ways one can trip up as one attempts to use "green" climate change attributes (specifically, claims regarding renewable energy, carbon offsets or carbon neutrality) to win customers or sell products. And the universe is bigger than simply climate change. The Green Guides promulgated by the Federal Trade Commission, address general environmental benefit claims; biodegrable, recyclable, compostable, refillable and recycled content claims; "ozone-friendly" claims; and claims about source reduction. See 16 C.F.R. § 260.7. There are numerous perils and you would like to think that a misstep in this area would not be without succor. And you would be right (in some circumstances).

Included in the general liability policies with which we are all familiar, is coverage for Advertising Injury. As its name implies, it can be a source of coverage for a marketing misstep. Typical insuring language provides that the insurer "will pay those sums that the insured becomes legally obligated to pay as damages because of 'personal and advertising injury' to which this insurance applies." ISO CG 00 01 12 07. These policies often also require the insurer to defend the insured against claims asserting advertising injury.

Advertising injury coverage is not triggered by the commonly known "occurrence." Instead, the operative event is an "offense" committed by the insured. These offenses are specifically enumerated in the definition of "personal and advertising injury." Pertinent here is the following offense set forth in the definition: "oral or written publication, in any manner, of material that slanders or libels a person or organization or disparages a person's or organization's goods, products or services."

It is easy to understand "oral or written publication," but is a misleading advertisement that does not even mention a competitor's name, a slander, a libel or a disparagement? In a case of first impression in California in 2007, a court of appeals panel found that it could be. Tosoh Set v. Hartford Fire Ins. Co., slip op. (Cal. Ct. App., April 30, 2007) Click here

. The court found that the "duty to defend was triggered by an allegation that [the insured] falsely claimed it alone had developed the detailed specifications and tolerances required for certain replacement component parts used in semiconductor manufacturing equipment, a statement that disparaged its competitors' products and services by implying they were measurably inferior." It does not require much ingenuity to imagine a claim that a certain item "made with renewable energy" constitutes disparagement of other manufacturers' products that are not so made. Likewise, a claim that a service was carbon neutral, might disparage services that were not. So coverage seems possible.