The Environmental Protection Agency (EPA) issued the Final Mandatory Reporting of Greenhouse Gases Rule today.  The rule requires reporting of greenhouse gas (GHG) emissions from large sources and suppliers in the United States. According to EPA, it is intended to collect accurate and timely emissions data to inform future policy decisions.  EPA's Web site provides: 
 See http://www.epa.gov/climatechange/emissions/ghgrulemaking.html for the rule.

The following post was authored by Paul Jones.

The American Recovery and Reinvestment Act (Act) established a new 30 percent investment tax credit for clean technology and advanced energy manufacturers.  On August 13, 2009, the U.S. Treasury Department and the U.S. Department of Energy (DOE) announced that the application period for companies to apply for $2.3 billion in tax credits opens on August 14, 2009.  Applicants must file the preliminary application by September 16, 2009, followed by final applications by October 16, 2009.

According to the announcement, the Internal Revenue Service (IRS) will certify or reject applications by January 15, 2010, and notify the certified projects with the approved amount of their tax credit.  Award recipients can expect to receive acceptance agreements from the IRS by April 16, 2010.

So, what types of businesses might be eligible for this credit?  Essentially, manufacturers of clean technology (including wind turbine gears, carbon sequestration property, solar panels, energy storage systems, etc.).

Read the entire alert regarding the tax credit for advanced energy manufacturers.

Lee Lurton - – Panel Member at the July 9 CEO Breakfast and Discussion
President, Benefit Concepts of Indiana Inc.

Benefit Concepts of Indiana Inc. is an employee benefits broker/consultant with over 100 small to medium sized clients, mostly in the central Indiana area.  There were several areas of the CEO survey that I found particularly interesting and wanted to comment on in this blog.

Comments Regarding Raising Capital:
More of our clients are in survival mode and trying less to raise capital. Few need additional capital for expansion of their business, and the ones who are in the survival mode do not qualify for bank loans.

Comments Regarding Indiana’s Economic Climate:
Thanks in part to the Indiana Economic Development Commission (IEDC) I believe the problems we have here are smaller than the states surrounding us. Indiana is certainly much more "small business friendly" since Mitch Daniels became governor and appointed Mickey Maurer as the first head of the IEDC.

Comments Regarding Talented Managers: 
In difficult economic times good business decisions are more critical than when profits are good and mistakes can be absorbed with good margins. Even a small mistake (bad business decision) in difficult times can have a catastrophic effect on a small business. Being part of the human resource team, we believe that for most businesses their human capital is their most valuable asset. Talented managers are essential at any time, but critical in difficult economic times.

Comments Regarding the Survey Finding that Large Businesses are Cutting Costs in the Current Economic Climate and That Small Business are Seeking to Increase Revenue: 
Upon getting an advance copy of the survey, I did my own small, informal survey and called a few of our clients. This, in addition to conversations with many clients over the last several months leads me to believe that small businesses are cutting costs, just like the larger firms in the survey. One example is of a commercial woodworking firm who told me that when bidding on a project in the past they would expect to bid against four to five competing firms. Now that number may be as high as 20 competing for the same job. Margins were expected to be three to five percent, now with margins lowered to 0 percent they are winning few, if any bids. As a result, for the first time they have closed their production lines for four weeks this summer. Most of our clients are having a difficult time increasing revenue and have been forced to cut costs. This includes any business related to the construction industry, auto, manufacturing and even the service industries.  The majority are taking a very conservative approach to revenue forecasts and many are deciding what additional cost cutting measures may become necessary if the economy does not rebound in the next two to three quarters.

Incentives are on the rise for businesses to provide "green" products and services.  Many consumers are willing to pay a premium for products that are environmentally friendly, and businesses have taken notice.  Buzzwords such as "organic," "recyclable" and "hybrid" are used to distinguish a product from its competitors.  Even the government has increased its focus on encouraging companies to provide environmentally friendly products and services by offering a wide array of tax incentives available to companies and consumers.  It is not surprising that many companies have responded to these incentives by embarking on green marketing campaigns.

However, companies engaged in green marketing are not only increasing their profits, but also their risk.  Lawsuits and class actions accusing companies of "greenwashing" - marketing the environmental friendliness of a company's product in a false or misleading way - have sprung up across the nation.  These lawsuits have been filed against companies in a variety of industries and trades, including construction companies, retailers, automakers, candy makers and manufacturers of cleaning supplies.

In addition to these consumer actions, the Federal Trade Commission (FTC) has also increased its scrutiny of green marketing.  In June 2009, the FTC filed suit against Kmart, Tender Corporation and Dyna-E International for making false and unsubstantiated claims that their products were biodegradable.  The FTC alleged that these claims did not conform with environmental marketing guidelines contained in the "Green Guides," a set of regulations used by the FTC to determine whether a company's environmental marketing constitutes consumer fraud.  A revised version of these guides will be released later this year and will address the changes and growth in green marketing over the past ten years.

Although green marketing is a potentially invaluable tool, companies should ensure that they understand and minimize the risks that are associated with its use.  For further information regarding green marketing and ways to manage its risk, please contact Michael McNally or Jacob Cox in Ice Miller LLP's Competitive Business Practices Litigation Practice Group and members of the Firm's Green Industries Initiative.

Modern agriculture is affected by more than just traditional farm policy - in other words, the statutes and programs that offer financial supports and incentives for production agriculture.  Today, new and changing policies and regulations require different strategic and business planning considerations.  Agriculture policy now is inextricably linked to rural, energy, trade, climate change, nutrition, transportation and infrastructure policies not to mention food safety, financial services and environmental regulations. 
 
This increasingly important set of policy priorities coupled with a new political administration in Washington, D.C. with a strong will to act suggest that the agriculture industry be prepared for something other than the status quo.  In just the last few weeks, several announcements and actions that connect the Environmental Protection Agency (EPA), the US Department of Agriculture (USDA), the Congress, the court system and the agriculture industry support this view. 
 
Consider the following:
 
1.  EPA's greenhouse gas endangerment finding  After a thorough scientific review ordered in 2007 by the U.S. Supreme Court, the EPA issued last week a proposed finding that greenhouse gases contribute to air pollution that may endanger public health or welfare. The gases in question are: carbon dioxide, methane, nitrous oxide, hydro fluorocarbons, per fluorocarbons and sulfur hexafluoride. 
 
As the proposed endangerment finding states, "in both magnitude and probability, climate change is an enormous problem. The greenhouse gases that are responsible for it endanger public health and welfare within the meaning of the Clean Air Act."  The report continues, "the science clearly shows that concentrations of these gases are at unprecedented levels as a result of human emissions, and these high levels are very likely the cause of the increase in average temperatures and other changes in our climate." 

Many industries send out warning signals at the first sign of "over-regulation" and agriculture is no exception.  This specific finding is a slippery slope for agriculture - especially the livestock industry that could be subject to new permit requirements for structure construction or modification and ultimately naturally occurring methane emission fees per animal to the tune of $175 per dairy cow, $87.50 per beef cow and $21.87 per hog (according to the American Farm Bureau Federation).  

In response, Nebraska Senator and former Secretary of Agriculture Mike Johanns has co-sponsored legislation that would protect animal agriculture from any greenhouse gas regulations promulgated by EPA.  Citing the significant economic value his state reaps from commercial red meat production, Johanns suggests this "cow tax" could cost Nebraska's farmers and ranchers tens of thousands of dollars per farm per year.
 
Before the finding takes effect, EPA is required to hold it open for public comment for 60 days and then issue proposed regulations which again would be subject to a public comment period. So EPA’s “deliberative process” could take another two years or more. Meanwhile, last week's announcement will increase pressure on Congress to move ahead on climate change legislation.

2.  Comprehensive climate change legislation  Climate change is near the top of the legislative agenda. In the Senate, Energy and Public Works Committee Chairman Barbara Boxer (D-CA) says she’ll do her best to work with anyone who seeks to move legislation quickly.  The House Energy and Commerce Committee is holding hearings now on a draft released by Chairman Rep. Henry Waxman (D-CA) and Rep. Ed Markey (D-MA) that proposes a mandatory cap-and-trade system to reduce greenhouse gas emissions.

The House Agriculture Committee wants a seat at the table on climate change, too. Committee staffers are currently reviewing stakeholder responses to a 29-question survey regarding the role of agriculture and forestry in a carbon reduction program. The input will be used in “crafting principles that could be part of any subsequent legislation,” explained Ag Committee Chairman Collin Peterson, who says the panel will launch its own hearings on the issue in the next few weeks.

3.  EPA does not appeal court decision on pesticide applications  The U.S. Justice Department recently announced it will not appeal a federal court decision that could eventually require farmers to seek permits from the EPA for all pesticide applications and open the door to citizen lawsuits.  The U.S. Court of Appeals 6th Circuit issued the decision on the case, National Cotton Council vs. EPA, in January, nullifying an earlier EPA ruling that allowed chemical applications to be regulated under existing federal pesticide regulations. Instead, the pesticides applied in or near waterways will now be classified under the Clean Water Act. The change, if allowed to stand, carries significant implications for agriculture as a user of pesticides unable to completely control runoff caused by rainfall. 

A wide range of other beneficial pest control activities could be subjected to lawsuits from activists claiming that the use of pesticides is prohibited under the Clean Water Act unless authorized by permit.  This is of great concern to mosquito control officials and pest managers for forests, recreational waterways, irrigation canals and parks. 

In a March 6, 2009 letter, Agriculture Secretary Tom Vilsack asked EPA Administrator Lisa Jackson to seek a rehearing and request reversal of the 6th Circuit's decision. Senate Agriculture Committee Chairman Tom Harkin, (D-IA) and Ranking Member Saxby Chambliss (R-GA) weighed in with a similar letter.  But those requests were rebuffed, and the EPA has indicated they would be requesting a two-year implementation plan for the ruling. 

4.  EPA seeks public comment on raising the ethanol blend level to E15  EPA's broad reach into agriculture also is evident in its renewable fuel mandate authorities.  EPA is currently seeking public comment on a waiver application submitted by representatives of the ethanol industry to authorize up to 15 percent ethanol blends with gasoline.  The 30-day comment period will run through at least May 20, 2009. By law, the EPA is required to grant or deny the request no later than December 1, 2009.  Since 1978, the limit has been a 10 percent volume ethanol blend (E10) for conventional (non flex-fuel) vehicles.

According to the EPA release, the applicants contend that increasing the blend rate is needed to bring greater investment to next generation biofuels technologies and commercialization.  And the higher blend rate is arguably critical to fulfilling the 2007 Energy Independence and Security Act's renewable fuel mandates.  Opponents (typically environmental and consumer groups and small engine and car manufacturers) counter that the increased blend rate might damage pollution control equipment, reduce air quality, and undermine vehicle and equipment performance and warranties.

5.  New environmental and climate position at USDA   Agriculture Secretary Vilsack announced last week the creation of a new environmental and climate position in his inner office.  Robert Bonnie will serve as Senior Advisor to the USDA Secretary for Environment and Climate.   Referencing that two out of the three key goals of President Obama for USDA are tied to the environment, Vilsack will rely on Bonnie to help guide broad natural resource and climate policy and program decisions.  Bonnie has worked for the Environmental Defense Fund (EDF) for over 14 years with extensive experience in carbon credit programs and conservation initiatives for endangered species.

Independently, each of the above should be important to agriculture, but taken collectively they are evidence of an intensifying regulatory landscape for the industry.  Every part of agriculture - from crop and livestock production, food processing and manufacturing to alternative energy production - is affected by these developments.  Increasingly, EPA will be shaping environmental and climate policy that directly affects agriculture.  Climate change legislation and related programs will be developed and implemented - it's not a matter of if, but when and what form.  Agriculture must communicate with the new political and policy leaders, engage in the policy formation and influence more beneficial rather than harmful outcomes for the industry.
 

Serendipitous timing or well-planned launch, the Energy Systems Network (ESN) launched today at a press conference attended by Governor Daniels. The ESN is an economic development initiative for the clean-technology sector. ESN is the latest economic development initiative under the Central Indiana Corporate Partnership, which also houses Conexus (the manufacturing/logistics initiative) and BioCrossroads (life sciences). The dialogue on clean energy received a boost this week with the introduction of the Waxman-Markey comprehensive energy legislation. Playing off the theme that carbon-capture legislation is coming, even as early as this session, Jim Rogers, Duke Energy President and CEO, highlighted the need for clusters addressing energy technology by saying that groups like the ESN need to connect and convene in order to solve the energy issues facing not only our generation, but generations to come. Highlighting his Princeton, Ind., roots and his grandson at Purdue, Mr. Rogers stated that Indiana has the configuration of technology companies, know-how and passion to turn energy vision to reality. Committing $1M in funds from Duke over three years, Duke is a partner, with IPL and others, in one of the first ESN initiatives announced, the power plug-in initiative, to create a vehicle system connected to the smart grid. Allison Transmission, Cummins and EnerDel lead the contributors to a Hoosier heavy hybrid program for medium and heavy duty trucks. Governor Daniels reminded the audience that there are not enough BTUs from these sources to replace coal, so don't think Indiana is not going to be a player in the energy economy, but that these technologies are an important supplement and a driver of jobs and the economy in Indiana. An all-star board including Mr. Rogers, Mike Hudson of I-Power, President Dr. Cordova of Purdue, Charles Gassenheimer of EnerOne and others joined the Governor and Mr. Rogers at the event. Joe Loughrey, formerly of Cummins, announced that he will chair the ESN.

When you are raising money for your company, a private placement memorandum (PPM) can be used to provide information to potential investors to help them evaluate the merits of an investment in your company.  It is intended to disclose material information to potential investors about the securities you are selling, your company and its business, in particular, the risk factors associated with an investment in your company.  A PPM is not always required for full legal compliance with securities regulations, but it is a useful way to show that you provided all material information to investors.  Generally, each PPM will include a business plan, risk factors, a description of how you intend to use the proceeds of the offering, a capitalization table and a description of the closing process for the investment.

However, there is no "one size fits all" PPM.  They will vary according to the company's size, industry, development stage, offering size and other factors.  Therefore, it is important that a company offering securities retain competent legal counsel to assist with preparing the PPM and conducting the offering.

Business Plan

The business plan section lets you educate potential investors about your company's strengths and weaknesses.  This section should describe the products and services offered by your company, the needs of the market place, the risks which may be posed by actual and potential competitors, your strategic plans with respect to innovation, marketing and financing, and the overall business environment in which your company will operate during the term of the investment.  In most cases, the business plan section is drafted by you and reviewed by legal counsel.  One of the major purposes of legal counsel's review is to ensure that the PPM, taken as a whole, is not misleading to potential investors.

Risk Factors

The risk factors section of the PPM is a specific description of some of the risks that may be associated with your company, the industry and the particular terms of the offering.  If well drafted, the risk factors section can provide useful protection against some potential claims by investors.  Although the actual risk factors for your company will depend on your company's specific business and activities, there are some fairly standard disclosures found in most PPMs.  For example, a "development stage" company will likely include in its PPM the following as risk factors:  lack of revenue, losses and financing requirements, product development risks, technological risks, manufacturing and distribution risks, dependence on key employees, competition, regulatory risks, potential inability to exercise a redemption right, dilution, no market for shares, and difficulty of determining an appropriate offering price.  The company should also include any other risks relevant to its particular business.

Use of Proceeds

The PPM should include a section that describes how you intend to use the proceeds of the offering.  Naturally, you will want to retain some flexibility regarding the use of the funds, but the investors will likely require at least a general breakdown of uses.  The use of proceeds section might list product development, acquisition of new technologies, facilities expansion, hiring of new employees or general working capital requirements as possible applications of the proceeds.  The key to this section is to strike the delicate balance between flexibility for your company and certainty for the investor.

Capitalization

The capitalization section describes the capital structure of your company.  The capitalization section should include a capitalization table which will allow a potential investor to determine how much of the company he will own (or how much of the company's debt he will own).  The capitalization table should reflect both the actual debt and shareholders' equity of the company prior to the offering, as well as the adjusted figures reflecting the completion of the offering on the terms contemplated in the PPM.

Closing Process

The closing process or subscription procedure (as some refer to it) can be foreign and confusing for investors.  Therefore, it is helpful to provide investors some guidance in the PPM regarding how the closing will proceed.  You can require that a minimum amount of money be raised before you will proceed with the offering.  If that is the case, the PPM should disclose the minimum aggregate capital commitments. After any applicable minimum is met, qualified investors generally have to complete and return a subscription agreement which obligates them to buy the securities, along with a check for the amount of the purchase price (payment may also be made by wire transfer), by a date specified in the subscription agreement.  Sometimes the subscription agreement is included with the PPM.

The investor may also be required to complete and return an "accredited investor" questionnaire to allow the company to comply with certain exemptions from the securities laws.  If required, the questionnaire is typically attached to the subscription agreement. 

After the company has received all signed documentation and funds, it should provide the investor signed counterparts of the documentation.  The company may also provide the investor share or unit certificates or promissory notes, if applicable, and signed copies of the company's governing documents.  If the company is making the private offering pursuant to certain registration exemptions, after the closing it may need to file various documents, including Form Ds and U-2 Uniform Consents to Service of Process, with the state and federal authorities where the investors are located.

President Obama set out his priorities regarding his vision of a clean energy future. In a press release prior to meetings with "clean energy entrepreneurs and leaders of the research community" the president stated that it was time to make investments in cutting-edge research that will establish the foundation for America's future economic prosperity. The press release included the follwoing:

FACT SHEET: INVESTING IN OUR CLEAN ENERGY FUTURE

Today, President Obama will meet with clean energy entrepreneurs and leaders of the research community to discuss his strategy for building a clean energy economy and creating the industries and jobs of the future.

The American Recovery and Reinvestment Act (ARRA) and his FY10 budget dramatically increase investment in cutting-edge research, the development and deployment of clean energy technologies, and incentives for private sector research and development (R&D).  These investments will establish the foundation for America’s future economic prosperity, reduce our dependence on foreign oil, and help combat climate change.

The ARRA includes $39 billion in energy investments at the Department of Energy and $20 billion in tax incentives for clean energy, including:

• The creation of an advanced research agency for energy, modeled after the Defense Advanced Research Projects Agency which developed the Internet.
• Support for Energy Frontier Research Centers, which could lead to breakthroughs in energy storage, super-efficient engines, and solar cells as cheap as paint.
• Supporting U.S. manufacturing of advanced batteries needed for plug-in hybrids, renewable energy backup, and other applications.
• $1.2 billon for research infrastructure for the Department of Energy’s national labs, which is being announced by Secretary of Energy Steven Chu today at Brookhaven National Laboratory. 

The  president’s 10-year budget also proposes almost $75 billion to make the Research and Experimentation Tax Credit permanent, stimulating private-sector investment in R&D and keeping the U.S. economy at the cutting-edge of 21st century technologies:

• Studies have shown that every dollar of tax benefit stimulates as much as an additional dollar of private R&D spending in the short term and two dollars in the long term.  Every one dollar of R&D adds two dollars of benefit to our economy and society as a whole.
• Two-thirds of benefits of the credit are attributable to salaries of U.S. workers performing U.S.-based research, and the credit stimulates R&D spending by more than 11,000 small, medium and large firms.
• The credit has been extended 13 times with some extensions lasting just six months, and has also been allowed to lapse for almost a year - undermining its effectiveness because companies can't count on it. 

Several of the technologies in the program today will be on display, highlighting the importance of R&D investment in building a clean energy economy, including:

• Orion Energy "Apollo Light Pipe:" The Apollo Light Pipe collects and focuses sunlight, bringing natural light indoors without consuming electricity and replacing traditional lighting for large portions of the day.  Coca-Cola and Sysco have installed this system, saving enough energy to power over 500 homes for a year.
• Solyndra Solar Panel: Solyndra is the first recipient of the DOE Loan Guarantee recovery program, announced last week.  Their solar panel is a unique cylindrical design that maximizes direct sunlight and absorption. 

The program will highlight success stories from R&D investments in the lab to job creation. Paul Holland, the vice chairman of the board and lead investor for Serious Materials, will introduce the president and share the story of Serious Materials, the leading energy-saving building materials company in the U.S.

• Serious Materials has four plants in California, Colorado, Pennsylvania, and plans to reopen the old Republic Windows plant in Chicago this Spring.
• Earlier this month, Serious Materials re-opened a previously shuttered plant in Pennsylvania, and is hiring back over 100 union workers in the next couple of months.
• Serious Materials’ products exceed current Energy Star standards by up to 400 percent and can reduce heating and cooling energy costs by up to 50 percent.  Five percent of U.S. energy use is lapsed through inefficient window glass.

President Obama set out his priorities regarding his vision of a clean energy future. In a press release prior to meetings with "clean energy entrepreneurs and leaders of the research community" the president stated that it was time to make investments in cutting-edge research that will establish the foundation for America's future economic prosperity. The press release included the follwoing:

FACT SHEET: INVESTING IN OUR CLEAN ENERGY FUTURE

Today, President Obama will meet with clean energy entrepreneurs and leaders of the research community to discuss his strategy for building a clean energy economy and creating the industries and jobs of the future.

The American Recovery and Reinvestment Act (ARRA) and his FY10 budget dramatically increase investment in cutting-edge research, the development and deployment of clean energy technologies, and incentives for private sector research and development (R&D).  These investments will establish the foundation for America’s future economic prosperity, reduce our dependence on foreign oil, and help combat climate change.

The ARRA includes $39 billion in energy investments at the Department of Energy and $20 billion in tax incentives for clean energy, including:

• The creation of an advanced research agency for energy, modeled after the Defense Advanced Research Projects Agency which developed the Internet.
• Support for Energy Frontier Research Centers, which could lead to breakthroughs in energy storage, super-efficient engines, and solar cells as cheap as paint.
• Supporting U.S. manufacturing of advanced batteries needed for plug-in hybrids, renewable energy backup, and other applications.
• $1.2 billon for research infrastructure for the Department of Energy’s national labs, which is being announced by Secretary of Energy Steven Chu today at Brookhaven National Laboratory. 

The  president’s 10-year budget also proposes almost $75 billion to make the Research and Experimentation Tax Credit permanent, stimulating private-sector investment in R&D and keeping the U.S. economy at the cutting-edge of 21st century technologies:

• Studies have shown that every dollar of tax benefit stimulates as much as an additional dollar of private R&D spending in the short term and two dollars in the long term.  Every one dollar of R&D adds two dollars of benefit to our economy and society as a whole.
• Two-thirds of benefits of the credit are attributable to salaries of U.S. workers performing U.S.-based research, and the credit stimulates R&D spending by more than 11,000 small, medium and large firms.
• The credit has been extended 13 times with some extensions lasting just six months, and has also been allowed to lapse for almost a year - undermining its effectiveness because companies can't count on it. 

Several of the technologies in the program today will be on display, highlighting the importance of R&D investment in building a clean energy economy, including:

• Orion Energy "Apollo Light Pipe:" The Apollo Light Pipe collects and focuses sunlight, bringing natural light indoors without consuming electricity and replacing traditional lighting for large portions of the day.  Coca-Cola and Sysco have installed this system, saving enough energy to power over 500 homes for a year.
• Solyndra Solar Panel: Solyndra is the first recipient of the DOE Loan Guarantee recovery program, announced last week.  Their solar panel is a unique cylindrical design that maximizes direct sunlight and absorption. 

The program will highlight success stories from R&D investments in the lab to job creation. Paul Holland, the vice chairman of the board and lead investor for Serious Materials, will introduce the president and share the story of Serious Materials, the leading energy-saving building materials company in the U.S.

• Serious Materials has four plants in California, Colorado, Pennsylvania, and plans to reopen the old Republic Windows plant in Chicago this Spring.
• Earlier this month, Serious Materials re-opened a previously shuttered plant in Pennsylvania, and is hiring back over 100 union workers in the next couple of months.
• Serious Materials’ products exceed current Energy Star standards by up to 400 percent and can reduce heating and cooling energy costs by up to 50 percent.  Five percent of U.S. energy use is lapsed through inefficient window glass.

Update GHG Rule Published April 10th

The EPA's proposed Mandatory GHG Reporting Rule was published in the Federal Register on Friday, April 10, 2009.  There will be a second hearing on April 16, 2009 in Sacramento, CA (Sacramento Convention Center, 1400 J Street, Sacramento, CA 95814). Comments must be in to EPA by June 9, 2009.

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The Environmental Protection Agency, on March 10, 2009, issued a proposed rule for a mandatory federal greenhouse gas reporting program. The new reporting requirements would apply to suppliers of fossil fuels and industrial chemicals, manufacturers  of motor vehicles and engines, as well as direct emitters of greenhouse gases with emissions equal to or greater than a threshold of 25,000 metric tons per year.   The EPA estimates that approximately 13,000 facilities would be covered under the reporting program.

EPA indicated that in developing the program they considered work underway in many states and regional initiatives as well as voluntary programs.  Seventeen  states have developed, or are developing, mandatory GHG reporting rules. Reporting requirements have taken effect in 12 states as of 2009, the remaining are set to begin in 2010 or 2011. However, the proposed rule includes manufacturers of mobile sources and engines as required to report emissions from the vehicles and engines they produce, generally in terms of an emission rate, which is not typical in the reporting schemes considered by the agency.

The gases covered by the proposed rule are carbon dioxide (CO2), Methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFC), perfluorocarbons (PFC), sulfur hexaflouride (SF6), and other fluorinated gases including nitrogen trifluoride (NF3) and hydrofluorinated ethers (HFE).  The public has 60 days to comment on the proposed rule after it is published in the federal register. Comments are likely to address the mobile source requirement, the cost associated with the frequency and verification of reports included in the proposal and the thresholds for reporting.

The stimulus bill modifies several federal tax laws affecting tax-exempt bonds including creating a two percent safe harbor and creating a new type of tax-credit bond called Build America Bonds.  Recovery zone economic development bonds and manufacturing bonds and a number of other bond provisions are outlined in the stimulus bill.

Read more about the impact on municipal finance.

Blog written by Paul Jones.

Congress is in the process of passing economic recovery legislation that would (if enacted) expand existing, and establish new, tax incentive programs to further those goals.  Specifically, the American Recovery and Reinvestment Tax Act (the Act) contains several provisions that would provide expanded or additional sources of funds for green projects.  If enacted in its current form, the Act would, among other things:

• Establish a 30% credit for investment in facilities that manufacture advanced energy property;
• Extend Code Section 45 renewable energy production tax credits by increasing the placed in service date for three years (through 2012 for wind and 2013 for other qualified facilities);
• Allow temporary election to claim 30% investment credit under Code Section 48 in lieu of the Code Section 45 production tax credit; and
• Expand the volume for Clean Renewable Energy Bonds (CREBs); and
• Expand the volume for the recently established Qualified Energy Conservation Bonds (QECBs), which like CREBs, are tax credit bonds.

The Act contains several other provisions, including those that would expand the New Markets Tax Credit program, revise certain tax-exempt bond limitations, and provide relief for cancellation of debt income.

Read the full text of an Ice Miller alert which contains more details on the points above.

According to the summary of the American Recovery and Reinvestment Bill by the Committee on Appropriations (Obey, D-WI, Chair) action, and action now, is needed to pull the economy out of a "crisis not seen since the Great Depression." The bill contains targeted efforts to have clean, efficient American energy, summarized by the Committee as:

CREATE JOBS WITH CLEAN, EFFICIENT, AMERICAN ENERGY
To put people back to work today and reduce our dependence on foreign oil tomorrow, we will make investments aimed at doubling renewable energy production and renovate public buildings to make them more energy efficient. America’s energy shortcomings present a huge opportunity to put people to work in ways that will transform our economy.

• Reliable, Efficient Electricity Grid: $11 billion for research and development, pilot projects and federal matching funds for the Smart Grid Investment Program to modernize the electricity grid making it more efficient, secure and reliable and build new power lines to transmit clean, renewable energy from sources throughout the nation.
• Renewable Energy Loan Guarantees: $8 billion for loans for renewable energy power generation and transmission projects.
• U.S. General Services Administration (GSA) Federal Buildings: $6.7 billion for renovations and repairs to federal buildings including at least $6 billion focused on increasing energy efficiency and conservation. Projects are selected based on GSA’s ready-to-go priority list.
• Local Government Energy Efficiency Block Grants: $6.9 billion to help state and local governments make investments that make them more energy efficient and reduce carbon emissions.
• Energy Efficiency Housing Retrofits: $2.5 billion for a new program to upgrade HUD sponsored low-income housing to increase energy efficiency, including new insulation, windows and furnaces. Funds will be competitively awarded.
• Energy Efficiency and Renewable Energy Research: $2 billion for energy efficiency and renewable energy research, development, demonstration, and deployment activities to foster energy independence, reduce carbon emissions and cut utility bills. Funds are awarded on a competitive basis to universities, companies and national laboratories.
• Advanced Battery Loans and Grants: $2 billion for the Advanced Battery Loan Guarantee and Grants Program, to support U.S. manufacturers of advanced vehicle batteries and battery systems. America should lead the world in transforming the way automobiles are powered.
• Energy Efficiency Grants and Loans for Institutions: $1.5 billion for energy sustainability and efficiency grants and loans to help school districts, institutes of higher education, local governments and municipal utilities implement projects that will make them more energy efficient.
• Home Weatherization: $6.2 billion to help low-income families reduce their energy costs by weatherizing their homes and make our country more energy efficient.
• Smart Appliances: $300 million to provide consumers with rebates for buying energy efficient Energy Star products to replace old appliances, which will lower energy bills.
• GSA Federal Fleet: $600 million to replace older vehicles owned by the federal government with alternative fuel automobiles that will save on fuel costs and reduce carbon emissions.
• Electric Transportation: $200 million for a new grant program to encourage electric vehicle technologies.
• Cleaning Fossil Energy: $2.4 billion for carbon capture and sequestration technology demonstration projects. This funding will provide valuable information necessary to reduce the amount of carbon dioxide emitted into the atmosphere from industrial facilities and fossil fuel power plants.
• Department of Defense Research: $350 million for research into using renewable energy to power weapons systems and military bases.
• Alternative Buses and Trucks: $400 million to help state and local governments purchase efficient alternative fuel vehicles to reduce fuel costs and carbon emissions.
• Industrial Energy Efficiency: $500 million for energy efficient manufacturing demonstration projects.
• Diesel Emissions Reduction: $300 million for grants and loans to state and local governments for projects that reduce diesel emissions, benefiting public health and reducing global warming. This includes technologies to retrofit emission exhaust systems on school buses, replace engines and vehicles, and establish anti-idling programs. 70% of the funds go to competitive grants and 30% funds grants to states with approved programs. Last year EPA was able to fund only 27% of the applications received.

See the entire Committee on Appropriations summary. We'll all be watching Congress as they consider the bill in the next few weeks and its environmental and green provisions. Stay tuned for action!

The following blog was written by Beth Bechdol, director of Agribusiness Strategies at Ice Miller LLP.

The CEO survey focused, in part, on education, and the message from CEOs and executives seems to be mixed.  Undergraduate and graduate education, both public and private, is perceived to be very strong.  On the other hand, public elementary and secondary education is perceived to be weak.  When asked to rate eight different educational programs that train people to work in those specific industries, "agriculture" ranked the highest indicating a positive perception of Indiana's higher education institutions.

 

There is no doubt agriculture and its related industries are an important part of the state's economy.  According to the USDA National Agriculture Statistics Service office at Purdue University, Indiana is home to 58,800 farms covering approximately 15 million acres of farmland.  In 2007, cash receipts to Indiana farmers for all crops sold were $5.2 billion and $2.6 billion for livestock.  Indiana's forest and hardwood industry also contributes a very significant $17 billion each year to the State's economy.   

 

Agribusiness today is no longer defined though as just crop and livestock production.  Today it encompasses everything from specialty crop and hardwood production to input manufacturing, food processing and retail services, and distribution/logistics.  The industry is also rapidly adopting breakthrough innovations in the form of biotechnology, information and satellite technology and alternative energy production, requiring even more attention to education at all levels simply to keep up with these advancements.  And, the production of agriculture takes place in  today's global marketplace, forcing all of us to understand how Indiana and US agriculture fit and compete in that system.   

 

Indiana's strong colleges and universities each have a critical role in educating the next generation of agribusiness leaders to ensure our industry remains the most competitive and productive in the world.

Tina Vujovich is the Vice President, Marketing & Environmental Policy at Cummins Inc.

Getting large organizations working toward a common initiative is not an easy task.  The habit to keep doing what we have always been doing is much easier than figuring out how to do things in a different way.  However, there is great power in alignment.  In fact, I am certain that at large companies it is the only way to make major changes, and moving to a more energy efficient operation is one of those big initiatives  which requires alignment.

Alignment starts at the top.  As much as we would like to think that grass roots, bottom up efforts at a new initiative are successful, there is nothing like having the top of the organization on board.  But "on board" does not mean a tacit approval of the initiative.  It means a very active, visible and supportive behavior.  At Cummins, this happens only after a strong business case for the initiative is established.

Cummins jumped with both feet into the environmental energy efficiency initiative about two years ago.  We decided that the debates on Climate Change and greenhouse gases were over, and if nothing were done with the consumption of fossil fuels and the production of GHG the world as we know it will change markedly, and thus sustainability of Companies such as our own would diminish.  So, we made the leap and made a commitment to the USEPA Climate Leaders Program.  We committed to reduce greenhouses gas intensity by 25% from 2005 to 2010.

The business case for Cummins was an obvious one.  For our facilities -- over 250 of them worldwide -- our efforts to get them more energy efficient would result in lower utility costs!  For our products -- the majority of which are involved in producing power -- our efforts to improve energy efficiency translates to lower operating costs for our customers!  Once we had our top management convinced of the business case, their energy went quickly from challenging the initiative to putting their unwavering support behind it.

Aligning the organization was the next step.  Cummins has long held that our ability to design, develop and manufacture products for an environmentally regulated market is a capability with a worldwide competitive advantage.  All of our employees know well our mission statement which says that we "demand that everything we do leads to a cleaner, healthier and safer environment."  Moving the organization to the next environmental frontier of greenhouse gas control and energy efficiency was easy -- particularly when it comes with a payback to our bottom line and to our customers.  Important to note is that not all projects in this initiative gets implemented.  Every project must pass our financial hurdles.  In other words, if the payback is not reasonable, the project is not done.  But the interest in succeeding in this initiative has caused us to get very creative and industrious in the projects so that they do produce a satisfactory payback.

Now, about one and a half years into our six year commitment we are well over half way to our Climate Leaders goal.

With regard to our products, we are just as aggressive about energy efficiency.  Even before definitive legislation is structured, we are already developing plans for significant fuel efficiency gains from our products.

At Cummins, we have found that the secret to a successful environmental energy efficiency initiative was all about having the right mission, articulating a clear business case, and getting the alignment of the organization behind the initiative.  It has worked well for us, and we expect to continue this effort long after our Climate Leader's goal is met.

Only in that way can we expect to sustain ourselves in this very competitive and energy consuming environment.

Steve Corwell is the Senior Vice President of Corporate Affairs for IPL.

All of us desire to breathe cleaner air, and indeed, as a result of modifications that Indiana utilities have made to electricity generating facilities over the past several years, customers are benefiting from cleaner air, but at a cost.  In the case of IPL alone, over the past five years, we have spent over $400 million on the installation of emission reduction equipment, reducing sulfur dioxide (SO2), nitrous oxide (NOx) and Mercury (Hg) by approximately 97 percent, 90 percent, and 40 percent, respectively.

As we face potentially significant green house gas regulation in Washington, available mitigation technologies are more limited and therefore, achieving meaningful targets will be expensive. Coupled with these costs, further, more restrictive, NOx, SO2 and Hg regulations are likely, and many utilities are, or soon will be, embarking on the next major power plant construction program to meet their customers' growing needs for electricity. At the same time, the cost of Indiana spot coal has risen more than 75 percent in the last six months, as that coal is more and more influenced by world coal demand.

As we look to comply with the increasing costs of cleaner air, it will be important that we educate customers about both the benefits and costs of cleaner air and our increasing demands for electricity. Through education, we will be able to help our customers understand that clean air has a price and a proper balance must be found.

By Paul M. Jones, Jr. 

 

After a friendly hour of networking, Gerry Dick quickly got to work with the group that had assembled to discuss “going green in Indiana.”  Based on the topics discussed, the color “green,” though at times prevalent, was not the only color harkened in one’s imagination.  Grey, black, brown, white and blue were colors often more reflective of the imagery as the discussion raced from the blank pavement surfacing the entire Indianapolis landscape when looking out across the city from several floors up in an office tower to the coal which predominantly powers our state.  From the riveting discussion of “trash-to-gas” potential in Indiana to white reflective roofs, one of which will soon grace the Keep Indianapolis Beautiful headquarters, and to the Colts and the opportunities presented by the Super Bowl in just four short years.  Those were just a few of the colors, images and topics covered by the enthusiastic group. 

 

What seemed to materialize in the course of conversation was evidence of both Indiana’s leadership and Indiana’s potential.  On one hand, Indiana is a leader or will soon be a leader in the United States for wind development, biofuels, cellulosic fuels, hybrid battery technology and a host of cleantech industries.  On the other hand, when compared to other states (or countries), Indiana lacks a renewable portfolio standard (like many  other states), an attractive state tax credit (like Iowa or Ohio) to foster both solar, wind and biomass development and manufacturing of components like solar panels, wind turbines, etc., and by and large Indiana as a whole, while increasingly attentive to these issues, lacks education and/or the will to make changes in behavior that have been made (or forced) in other states.   

 

There was some debate over the tension between allowing market forces to control versus using government revenues and/or mandates to speed things along.  Politics aside, great ideas flowed and opportunities are clearly here in the Hoosier state.  The challenge is how to bring resources, education and the will to accomplish the possibilities, but we seem to be on the right track.

The Green Commission reconvened on Thursday, April 24th after a hiatus during the transition of administrations in city government. The commission hosted Deputy Mayor Nick Weber who spoke on the role of green development in for the city. Deputy Mayor Weber was followed by Department of  Public Works (DPW) Director David Sherman who outlined the goals of the DPW, including water conservation, energy conservation though fleet management and a study of city groups to see how the city can be made greener.  Tim Method then outlined the primary green steps the city plans to take in 2008, including:

 

1. Energy efficiency and conservation and the implementation of an energy conservation policy city-wide;

2. Purchasing by the city of eco-friendly products and implementing purchasing policies;

3. Traffic light conversion to LED;

4. Green building practices;

5. Decreasing fuel consumption (fleet management practices);

6. Reviewing public transportation options and strategies;

7. Internal city-wide recycling programs; and

8. Natural resource area focus - stormwater design manual and CSO long-term control plan.

 

The commission also heard updates from community and green commission members including the new Indianapolis Chamber of Commerce Green Business Initiative (6 companies, including Ice Miller LLP have met the criteria as a green business), the Indiana Sustainability Alliance (look for a new event hosted by a major manufacturer on its green practices), Keep Indianapolis Beautiful (planning on moving into its new headquarters in June) and Eli Lilly (discussing the green aspects of its Day of Service).

 

The commission agreed that its next steps would be to have the work groups convene to determine the top 1 - 3 priorities in each area so that the commission can establish the key implementation steps and recommend those to the mayor's office for consideration. The commission plans to meet in June to discuss the priorities. Interested parties can contact Tim Method at DPW to join the list serve to receive updates on the commission.