7 Things to Know About Defective Products & Product Liability Cases

Searcy Denney Scarola Barnhart & Shipley

If you have questions about a product defect or product liability in general, below are seven things to know about defective products and product liability law.

  1. What is Product Liability Law?

Product liability law addresses how injured parties may recover for damages they sustained from a defective product. Typically, the responsible party in a product liability case is anyone in the product’s chain of distribution, including but not limited to:

  • The product manufacturer
  • The manufacturer of parts of the product
  • The party that assembles the product or installs it
  • The distributor of the product
  • The retail store selling the product directly to the consumer

Product liability law is based on state law and is often brought under the following causes of action:

2. How Can a Product Be Defective?

There are various ways a product can be defective, including:

  • Manufacturing Defects: These types of defects typically occur while the product is in the manufacturer’s care.
  • Marketing Defects: These types of defects involve problems with how a product is marketed, which may include issues with the labeling of the product, a lack of warnings or instructions, etc.
  • Design Defects: These defects are caused by a flaw in the design of the product itself, such that the product is defective from the start.

3. What Are Examples of Defective Products?

There are thousands of different products that are defective, causing millions of injuries each year. That said, it would be impossible to name every type of defective product. However, below are some examples of products that have had serious defects that may be surprising:

  • Essential oils. This is a product commonly used by consumers that you would not expect to be harmful. However, in recent news, this product has been recalled in some instances after the Centers for Disease Control and Prevention determined that certain bottles of room spray contained rare and dangerous bacteria that causes melioidosis – a potentially fatal condition.
  • Off-road motorcycles. Off-road motorcycles are supposed to be fun for riders to use during their outdoor adventures. However, if the bike is defective, this activity could be dangerous. Recently, the U.S. Consumer Product Safety Commission (CPSC) recalled some of these motorcycles because the retaining clips on the front brake caliper pin were falling out. This could cause the front brakes to fail, posing a crash hazard to the bike’s rider.
  • Defective battery. Sometimes the lithium battery inside many commonly-used products such as phones, video cameras, or even remote-controlled cars can be faulty, causing severe injuries.
  • LED Projectors. When you think of a defective product, rarely would an LED projector come to mind. However, the CPSC has recently recalled some LED projectors because they can malfunction and overheat, posing a fire hazard.
  • Jogging Strollers. Your baby’s safety is a top priority. Most parents would not expect their child’s life to be in danger when taking their baby for a stroll. However, on October 7, 2021, the CPSC recalled some jogging strollers due to a product defect. The stroller’s front wheel bearing could fail or detach in some situations, posing a fall and injury hazard.
  • Wood Stools. When sitting on a stool in your kitchen, you typically would not expect to be in danger. However, some wood stools have been recalled recently due to the stool breaking during use, posing fall and injury hazards. The CPSC recalled some stools in October 2021, recommending that consumers immediately stop using the recalled items and return them to the store where they were purchased for a full refund.
  • Youth ATVs. Recently, the CPSC recalled some youth ATVs because the vehicles failed to comply with federal mandatory ATV safety standards, posing a risk of severe injury or death to children.
  • Oversized Outdoor Reclining Chairs. When you are relaxing outside in your reclining chair on a warm summer day, the last thing you expect is the chair to suddenly collapse, causing you injuries. However, the CPSC has recently recalled several reclining outdoor chairs because they could break or collapse when weight is applied, posing a fall hazard. Reports of injured parties were sent to the retailer of the chair. The CPSC recommended that consumers immediately stop using the recalled chairs and return them to the nearest retail store for a full refund.
  • Oil and Vinegar Cruets. When you are sitting down with your family enjoying a nice Italian dinner, and you go to grab the oil and vinegar cruet to add a nice flavor to your salad, you typically would not expect to be lacerated by the cruet (which is a small container). However, in September 2021, the CPSC recalled about 26,150 cruets because the glass portion can break during use, posing laceration hazards.
  • Defective power or chain saw. Be careful to inspect your power or chainsaw before use, and do your research. In December 2020, the CPSC recalled 10-inch corded chain saws with extension poles because the chainsaw can start unexpectedly without the operation of the switch when the extension cord adapter is connected upside down. This could pose serious laceration hazards. The CPSC recommended that consumers stop using the recalled chainsaw immediately and contact the manufacturer for a free repair kit.

4. How to Conduct a Product Recall

When a product is defective, and a party in the product’s distribution chain, such as the manufacturer, distributor, or retailer, among other responsible parties, learns that the product is faulty, the responsible party may need to conduct a product recall. The CPSC provides guidelines on how to conduct a recall.

The CPSC recommends that one of the best ways to ensure that a product recall effectively reduces the amount of injuries or damages sustained to consumers is for a company to have a product recall plan already in place prior to an issue arising and execute it as quickly as possible.

Generally, a recall plan should begin with a company following the applicable laws and reporting the product to the CPSC. Responsible parties have a legal obligation to immediately report the following information about their products to the CPSC:

  • A defective product that could cause an unreasonable risk, injuries, or death to consumers
  • A product that fails to comply with applicable consumer product safety rules or any other rule, regulation, standard, or ban under the Consumer Product Safety Act, or any other statute enforced by the CPSC
  • An incident in which a child (regardless of age) chokes on a marble, small ball, latex balloon, or other small part contained in a toy or game and that, as a result of the incident, the child dies, suffers a severe injury, ceases breathing for any length of time, or is treated by a medical professional
  • Certain types of lawsuits applicable to manufacturers and importers and subject to the time periods detailed in Sec. 37 of the CPSA

Failure of a responsible party to properly report this information to the CPSC may lead to civil and/or criminal penalties. According to the CPSC, a responsible party should follow the following advice: “When in doubt, report.”

Sometimes defective products are reported by the consumers themselves or other sources. Once the CPSC decides that a recall may be necessary, it will expect a responsible party to respond quickly to its request for information and work closely with the CPSC’s Office of Compliance to ensure a proper recall.

5. How Do I Report an Unsafe Product or Search for Them?

If you are a consumer and would like to report an unsafe product to the CPSC, or you would like to protect your family and search the CPSC’s product recall database to see if a product you are considering is unsafe, consult the CPSC’s web page located at saferproducts.gov.

6. What Should You Do After Being Injured by a Defective Product?

If a defective product injures you, first, you should take care of your injury and seek medical attention. Your health and safety are most important. After you have addressed your medical needs, you should consider the following to help prepare your product liability case:

  • Be sure to keep the product that causes your injuries. Keep the product as-is without attempting to fix or modify it. Do not throw it away.
  • Be sure to collect your medical records documenting your injuries and take photos of the injuries caused by the defective product.
  • Be sure to follow your doctor’s advice and follow the prescribed treatment plan to ensure your injuries are treated properly.
  • Do not talk about your situation on social media. This could harm your case.
  • Seek guidance or advice on your legal rights as soon as possible after sustaining your injuries.

7. How Do I Know If I Have a Viable Product Liability Case?

If you or a loved one were injured or died because of a defective product, you may have a product liability claim. The key to winning your case is to prove that the product’s defect was the manufacturer’s fault (or another responsible party such as the seller or distributor of the product). Consumers expect, and the law requires, products to be safe and not dangerous to those using them.

Even if a product was safe when it left the manufacturer, you might still have a claim against another party if its packaging hurt you, the product was damaged at some point after leaving the manufacturer and being purchased by you, or the product did not have sufficient warnings or instructions.

What Should Slip and Fall Accident Victims do to Prove Liability in their Case?

Searcy Denney Scarola Barnhart & Shipley

Slip and fall accidents in Florida are complicated and fact-dependent. Put another way, slip and fall accidents depend heavily on the actual facts of the claim. All such claims are different and unique in their own specific ways.

Further compounding the issue is the complexity of the laws in Florida, which means successful slip and fall claims require matching a series of actual facts that must be established to the specific laws. This reality requires an experienced attorney, like a Florida injury attorney at Searcy Denney, to navigate the nuances of a claim.

Slip and Fall Accidents in General

Slip and fall accidents are among the most common of all accidents. Slip and fall claims are based on the area of law referred to as “premises liability.” Premises liability claims revolve around accidents that are caused by unsafe conditions on another person’s property. So, for example, if you are at a museum and fall down a flight of stairs because of a defective handrail that breaks off into your hand, you may be able to hold the owner or manager of the museum responsible for your injuries.

In Florida, as with most states, successfully proving a slip and fall claim requires a victim to establish that:

  • The property owner/manager owed a duty of care
  • The property owner/manager breached that duty of care
  • The breach was the cause of the accident on the premises
  • The injuries suffered by the victim were the result of that accident

Proving Fault in a Slip and Fall Accident

Liability is essentially a synonym for fault — a term for fault that is often used in the legal arena. Proving fault is the keystone in establishing a successful slip and fall claim. The following lays out the steps for proving fault in a slip and fall claim in a general sense, including the steps that must be taken before fault can be established. However, establishing fault, in reality, requires a classification of what type of visitor has been injured (i.e., what the purpose of the visit was). In big-picture terms, a victim must:

Collect Evidence and Establish Facts

Like all personal injury claims, the victim must first collect all relevant evidence. Generally speaking, this may include obtaining videos and pictures of the accident scene as it existed at the time of the accident. Specifically, for example, documentation of any conditions that may have contributed to the fall, including conditions like:

  • Slippery substances on the ground or floor
  • Broken or uneven flooring
  • Dangerous terrain
  • Torn carpeting
  • Broken or uneven stairs
  • Defective handrails
  • Obstacles in walkways

It is also helpful for the victim or a family member/friend to immediately document the events exactly as they happened. This will provide necessary details, and since it was written down immediately, it is more likely to be credible than memories that may become stale. Eyewitness accounts should similarly be collected, and medical evidence, such as hospital and treatment records, is similarly critical.

The evidence collected will be critical in developing the series of critical facts, and the more believable the evidence is, the more likely the victim’s version will be found credible. A Florida injury attorney at Searcy Denney is experienced in this critical stage of your claim and will help ensure you have all the evidence needed to establish the facts of your claim.

Show Responsibility

While the owner/manager is responsible for maintaining a reasonably safe property, the victim is also accountable for reasonably avoiding hazards on the property. The property owner/manager and their insurance company may argue that the victim did not accept this responsibility by engaging in some type of careless behavior, such as staring at a phone, wearing inappropriate shoes or outer clothing, deeply engaging in conversations with their friends, or other behavior showing the victim was not reasonably responsible.

They may also require some explanation as to whether the victim had a legitimate reason to be in the area where the slip occurred and may further argue that a reasonable person would have noticed the condition and avoided it.

As is the case with many legal doctrines, “reasonableness” is the standard by which many decisions are made in the law. The easiest way to think of reasonableness is to put yourself in the owner/manager’s shoes and ask yourself, “Was I really paying attention? Could I have avoided this? Was anybody else hurt?” If the answers indicate that you were not really paying attention, a court may find that you are at least partly responsible.

Establish Fault

Liability, or fault, is a question of which party was the cause for any failure to be responsible. Try to convincingly argue that the property owners/managers should have inspected their premises regularly to identify any potentially dangerous conditions that existed. If such conditions were found, the owners/managers should have fixed these conditions within a reasonable amount of time. Again, reasonableness is the key to identifying and fixing dangerous conditions, as well as the adequacy of any warnings posted.

So, for example, if a property owner/manager has not regularly inspected his or her premises, that likely won’t be considered reasonable. Also, if an owner/manager notices a dangerous condition that is easy to fix but does not fix it within, say, a few weeks, or notices a hazardous condition that is hard or very expensive to fix but doesn’t fix it within, say, a year, that also likely won’t be considered reasonable.

Again, the easiest way to think of reasonableness is to put yourself in the owner/manager’s shoes and ask yourself, “What will it take to make repairs or replacements? What would I do if it were my business?” If a victim is found to be at least partly at fault, the court may adjust their damages accordingly. For example, victims may recover 80% of their damages rather than 100%. Again, this is a part of your claim that requires the experience of a Florida injury attorney at Searcy Denney.

Florida Personal Injury Lawyers Answer Six Common Questions Asked About Slip and Fall Lawsuits

Searcy Denney Scarola Barnhart & Shipley

Slip and fall accidents in Florida depend primarily on the facts of a claim and can become very complex very quickly. Because of this, slip and fall claims are all unique in their own ways, and there are no “templates” for successfully establishing such claims.

Read on as the Florida personal injury lawyers answer and explain the six most common questions that are asked about slip and fall lawsuits.

What is a Slip and Fall Lawsuit?

Slip and fall lawsuits stem from accidents where a victim slips and is injured by unsafe conditions on someone else’s property. Occasionally referred to as “slip, trip, and fall” accidents, they are among the most common, if not the most common, types of accidents experienced by victims on other people’s property. These lawsuits are based on what is known as “premises liability.”

The accidents that lead to slip and fall injuries are caused by unsafe conditions on the property in question. So, for example, if you are at a gas station market and trip over an empty box, or slip on a wet area that has no warning sign posted, you may be able to sue for your resulting injuries.

Who is Responsible for My Slip and Fall Injuries?

Slip and fall accidents are often due to the negligence of the property owner. If this is the case, the property owner or the property manager can be held responsible for your injuries and any damages that you sustain due to the fall. Aside from your legal claim, you may also be able to seek compensation through their insurance policy.

How Long Do I Have To Sue the Property Owner or Manager?

Like most lawsuits, there is a time limit by which you must file your claim. This deadline is known as the statute of limitations. In Florida, for any type of personal injury claim, including premises liability claims, the statute of limitations is four years from the date of the accident, although there may be relevant exceptions.

For example, not all injuries are immediately symptomatic, and injuries may not be noticed until weeks or even months after the accident. In this case, a victim may be able to extend the start of the limitation until the victim notices or should have noticed the existence of the injury. Nonetheless, after the time limit is reached, any claims by the victim may be time-barred by the court.

Are Property Owners Liable for Slip and Fall Accidents on Personal Property or Commercial Property?

Both. In Florida, private property can be either personal and commercial. No matter how the private property is being used, property owners are legally required to maintain safe conditions for visitors who enter the premises, and the duties of property owners change according to what type of visitor has been injured; i.e., what the purpose of the visit was.

How Serious Are Slip and Fall Accidents?

Slip and fall accidents are not as insignificant as the name may suggest. In fact, they can be quite common, and quite serious. According to the Nation Floor Safety Institute (NFSI):

  • Fall fatalities are nearly equally divided between men and women. However, more women will experience a slip-and-fall accident. According to the Bureau of Labor Statistics, falls accounted for 5% of the job-related fatalities for women compared to 11% for men.
  • Falls account for over eight million hospital emergency room visits, representing the leading cause of visits (21.3%). Slips and falls account for over 1 million visits or 12% of total falls.
  • Fractures are the most serious consequences of falls and occur in 5% of all people who fall.
  • Slips and falls do not constitute a primary cause of fatal occupational injuries but represent the primary cause of lost days from work.
  • Slips and falls are the leading cause of workers’ compensation claims and are the leading cause of occupational injury for people aged 55 years and older.
  • According to the Consumer Product Safety Commission (CPSC), floors and flooring materials contribute directly to more than 2 million fall injuries each year.
  • Half of all accidental deaths in the home are caused by a fall. Most fall injuries in the home happen at ground level, not from an elevation.
  • Of all fractures from falls, hip fractures are the most serious and lead to the greatest health problems and number of deaths.

Because of the high percentage of the elderly in Florida, slip and fall accidents are particularly concerning. If you’re caring for an elderly relative or friend, it’s incumbent upon you to take extra precautionary steps for prevention.

Where Do Slip and Fall Accidents Occur?

Slip and fall accidents can happen anywhere, at any time, and always catch the victim off-guard. The two primary areas for slip and fall accidents are the workplace and the home. They may also occur in the homes and apartments of friends or family members, in business establishments, in parking lots, at sporting or concert events, on sidewalks, in parks or other recreational establishments or areas, at swimming pools, on boats, or literally wherever people are walking or running.

Dealing with Wrongful Death Issues in Slip and Fall Claims

Seary Denney Scarola Barnhart & Shipley

Slip and fall accidents in Florida are frequently underestimated because the term “slip and fall” sounds relatively minor. Our minds tend to create images of slipping, falling onto our floor, and standing back up, albeit a bit more slowly, with a few curse words and maybe a bruise for our clumsiness.

And, quite frequently, this, or something similar to this, is what actually happens. Occasionally, however, a slip and fall accident is anything but minor. These types of accidents can be severe, costly, and expensive, with injuries that are complicated and painful, often requiring extended medical care.

About Slip and Fall Accidents and Premises Liability

When slip and fall accidents occur on someone else’s property and are caused by some type of unsafe condition, you may be able to hold the property owner liable for your injuries under a premises liability claim. Particularly tragic are slip and fall accidents that result in the death of a loved one. If you’re experiencing this type of heartbreaking devastation, you’re usually buried in the necessary legwork of putting your loved one to rest and grieving. Financial compensation may be the last thing on your mind.

However, the financial compensation you’re entitled to will become very important as you begin to deal with the loss of income, medical bills, and other types of expenses. A Florida wrongful death attorney at Searcy Denney understands the suffering you’re experiencing and can handle your insurance and legal claims for you, allowing you to deal with your other tragic responsibilities.

About Wrongful Death Claims

A wrongful death claim is a claim resulting from another person’s negligence or direct act, in this case, by unsafe conditions on another’s property, which causes the death of a family member. In Florida, wrongful death claims are governed by the “Florida Wrongful Death Act,” Florida Statutes Sections 768.16-768.26. The Act, in Section 768.19, states that surviving members of the family may file a lawsuit if the loss is due to:

  • A wrongful act
  • Negligence
  • Default
  • Breach or of contract or warranty

There’s also a statute of limitations regarding wrongful death claims, which is two years from the time of death. Under certain circumstances, the attorney or personal representative for the family may be granted an extension for the claim.

Who Can Recover for Wrongful Death?

Under Florida law, a personal representative for the deceased person can bring a wrongful death claim on behalf of the deceased person’s survivors. “Survivors” include “the [deceased person’s] spouse, children, parents, and, when partly or wholly dependent on the decedent for support or services, any blood relatives and adoptive brothers and sisters. It includes the child born out of wedlock of a mother, but not the child born out of wedlock of the father unless the father has recognized a responsibility for the child’s support.”

In addition, certain specific survivors can recover other specified damages. A Florida wrongful death attorney can help with these.

A General Introduction to Projects and Construction in USA

Henry Scott, Karen B. Wong and Miguel Duran | Milbank

An extract from The Projects and Construction Review, 11th Edition


The project finance market in the United States benefits from a well-developed legal framework and sophisticated financial markets. The US legal system is generally viewed as clearly codified, stable and efficient, as well as one that is enforced in a regular and open manner.2 Contractual agreements between parties are recognised by law with few exceptions related to public policy concerns. The project finance sector has strong access to both the public and the private financial markets and is in some limited areas even supported – directly or indirectly – by government policies.

This combination of a strong legal framework and financial markets has facilitated the development of a robust project finance sector in the United States. Project finance is premised on the ability of the parties to contractually allocate risks among themselves and to enforce those contractual obligations in a reliable manner. A successful project finance regime is also dependent on commercial laws that allow developers to protect themselves through special purpose entities that benefit from non-recourse financing and that, similarly, allow lenders and investors to obtain security in the project assets and to enforce their claims against the project. Likewise, a sophisticated private financial market has the flexibility to allow the developer and the financing providers to create complex financing structures and to tailor those structures to the specific needs of a particular project.

This chapter discusses various transactional structures available to projects and the legal documentation frequently used to implement them. It reviews the various risks associated with project finance transactions and how parties allocate these risks. It also examines how the US legal framework supports the ability of lenders and investors to protect their interests, including obtaining, perfecting and enforcing security interests in a manner that permits lenders to enforce their rights in the event that a project encounters financial problems. This chapter also considers how the legal framework is influenced and affected by social and environmental considerations. The role of a complex legal framework and sophisticated private financing providers and the public sector is also addressed, followed by a summary of the impact of taxes on investment, which may be of particular interest to foreign lenders and investors. The framework for how dispute resolution is processed in the United States is discussed in the final section.

The year in review

The nature and complexion of project finance in the United States has been shifting, mostly as a result of the expiry of certain government incentives, regulatory changes relating to power plant emissions, declining prices of distributed generation technologies, including battery storage, and lower natural gas prices as a result of increased domestic production. More recently, the sector has been shaped by the enactment of a package of amendments to the tax code at the end of 2017, 3 by the imposition of tariffs on imported solar cells and modules in January 2018 and the covid-19 pandemic. The issuance on 1 May 2020 of an executive order addressing national security threats facing the US bulk-power system, in particular by restricting the acquisition, installation and use of certain imported equipment essential to the power grid,4 could potentially be significant for the sector as the result of the regulatory uncertainty created by the new ban given that clarification on the scope and impact of that executive order on the development and operations of energy projects using equipment from countries deemed to be ‘foreign adversaries’ will depend on the US Department of Energy’s rulemaking process. Furthermore, while the long-term impact of the covid-19 pandemic remains to be seen, the pandemic has already impacted a number of projects with force majeure claims and construction delays, and introduced uncertainty given the turbulence in financial markets and economic recession.

Despite fears that the approval of the US tax reform (particularly the reduction in the corporate tax rate from 35 per cent to 21 per cent and the implications of the base erosion anti-abuse tax to certain international financial institutions active in the market) would curtail the availability of tax equity financing in the market in 2018 and beyond, tax equity investors have maintained a substantial presence as financing sources and renewable energy projects continue to remain a significant component of the market. In 2019, approximately 30 per cent of the total value of project finance transactions in the country was invested in the renewable energy sector.5 For example, 9,143MW of wind energy (a 20 per cent increase from the 2018 level)6 and 13.3GW of solar energy (a 23 per cent increase from the 2018 level, and including approximately 8.4GW of utility-scale installations, which represents a 37 per cent increase from the 2018 level) were installed in 2019.7 Approximately 24,690MW of wind capacity (the highest amount on record) was still under construction at the end of March 20208 and nearly 20GW of solar capacity is expected to be completed in 2020.9 Additionally, hydroelectric capacity could increase from 101GW to approximately 150GW by 2050, not only through the construction of new power plants but also through the upgrade and optimisation of existing plants and by the increase of the pumped storage hydropower capacity.10

Throughout 2019, much of the project financing activity in the United States involved energy projects that were able to qualify for a production tax credit (PTC)11 or the 30 per cent investment tax credit (ITC)12 by meeting certain requirements. Additionally, developers of clean energy projects employing new or innovative technology that was not in general use were able in 2019 to request loan guarantees pursuant to Section 1703 of the Department of Energy’s loan guarantee programme,13 including for advanced fossil energy projects that avoid, reduce or sequester greenhouse gases14 and for renewable or efficient energy technologies.15 In December 2016, the Department of Energy announced a conditional commitment to guarantee up to US$2 billion of loans to construct a methanol production facility employing carbon capture technology in Lake Charles, Louisiana, which would represent the first loan guarantee made under those solicitation programmes.16 In February 2018, Congress enacted the Bipartisan Budget Act of 2018,17 which substantially increased the value of the Section 45Q tax credit available for carbon capture, utilisation and storage projects, and significantly expanded the universe of companies that would be eligible for this federal subsidy (which was originally made available in 2008) by increasing the eligible uses, decreasing the carbon capture threshold and eliminating the prior programme’s limitation to the first 75 million tons of carbon captures. The Section 45Q tax credit will be available for eligible projects placed in service after 9 February 2018 and for which construction begun prior to 1 January 2024 and can be claimed over a 12-year period.18 In February 2020, the Internal Revenue Service (IRS) issued guidance with respect to the determination of the beginning of construction for purposes of the Section 45Q tax credit19 and the allocation of the Section 45Q tax credit by partnerships,20 which is expected to increase the development of carbon capture and sequestration projects.

Furthermore, the Protecting Americans from Tax Hikes Act of 201521 and the Further Consolidated Appropriations Act of 202022 extended the PTC programme for certain eligible facilities for which construction began before 1 January 2017 and for otherwise qualifying wind facilities for which construction began before 1 January 2021 (with a progressive phase-out reduction if construction begins after 31 December 2016) and the ITC programme for qualified solar facilities for which construction began before 1 January 2022. Current IRS guidance provides for certain safe harbour provisions with respect to the beginning of construction requirement, requiring the performance of certain specified actions (based on either physical work or the incurrence of costs) prior to the applicable qualification deadline and placement in service of the facility within four years of the qualification deadline. On 27 May 2020, the IRS modified its prior guidance and extended the four-year safe harbour requirement by one additional year to address the unforeseen interruptions experienced by developers because of the covid-19 pandemic.23

Propelled by extended federal incentives, advances in green technology that decrease investment costs, state incentives and regulatory policies implementing renewable energy portfolio standards (RPS) on utilities, and the positioning of renewable energy as a key component for strategic energy independence for the nation, the development of renewable projects is expected to continue moving forward. As at June 2019, 29 states, the District of Columbia and three US territories have enacted RPS programmes, and eight additional states and one US territory now have voluntary goals for generation of renewable energy.24 For example, California’s RPS programme, one of the most ambitious in the United States, requires that utilities derive 33 per cent of their energy from renewable sources by the end of 2020, 44 per cent by the end of 2024, 52 per cent by the end of 2027 and 60 per cent by the end of 2030 (with the ultimate goal of obtaining 100 per cent of the retail sales of electricity to end-use customers and the electricity to serve all state agencies from renewable energy resources and zero-carbon resources by the end of 2045).25 While all three of the largest California utilities have enough renewable energy capacity under contract to meet the 2020 threshold, the generation forecasts that those utilities prepared in 2019 (risk adjusted to account for a certain degree of project failure) show that, in the aggregate, there will be a deficit beginning in 2026.26 Other states, such as New Mexico and Washington, have similar 100 per cent carbon-free goals in the next few decades and Hawaii has gone further by requiring 100 per cent renewable energy generation by 2045.27 As a result, there is a need for additional renewable energy generation in California and the rest of the United States. As the existing fleets of wind generation projects developed before 2000 approach the end of their useful lives, it is also expected that repowering investment will significantly increase during the next decade.

While still in its early stages, the US offshore wind energy sector recently experienced noteworthy developments. In 2018, Vineyard Wind LLC’s 800MW offshore wind project was awarded six long-term power purchase agreements with Massachusetts utilities through a competitive process,28 which represents the largest single procurement of offshore wind in the United States.29 Besides the mere size of the award, the most significant feature of those power purchase agreements is perhaps the energy purchase price, which is substantially lower than the price in prior reported transactions and confirms the increased competitiveness of offshore wind energy. The first offshore project to be constructed and achieve commercial operations is the 30MW Block Island Wind Farm, which has a power purchase agreement with a starting price of US$244/MWh and the reported price in other subsequent offshore power purchase agreements ranged between US$132/MWh and US$160/MWh.30 In contrast, the starting price under the Vineyard Wind power purchase agreements is US$74/MWh for the first 400MW phase and US$65/MWh for the second phase.31 While the Vineyard Wind project experienced an unexpected permitting delay in the summer of 2019, the US Bureau of Ocean Energy Management anticipates its final decision by 18 December 2020.32

Fuelled in part by improvements in technology (lowering costs and reducing risk) and government support, particularly on the north-east coast of the United States,33 offshore wind is becoming widely seen as a notable opportunity;34 it was brought to the industry’s attention with Ørsted’s acquisition of Deepwater Wind (the owner of the Block Island Wind Farm) in November 2018.35

In recent years, the US Environmental Protection Agency (EPA) has attempted to implement regulations aimed at limiting greenhouse gas emissions from existing fossil fuel-fired electric generating units in part by setting state-specific goals for reducing emissions from the power sector. The final rules were released in August 2015 (the clean power plan) but were confronted by immediate legal challenges from a large number of affected states and state agencies, utility companies and energy industry trade groups. After a protracted legal process (including actions before the US Supreme Court), the EPA’s final repeal rule became effective on 6 September 2019.36 Numerous affected parties (including 22 states, multiple cities, power companies and non-profit organisations) immediately filed petitions for review before the US Court of Appeals for the DC Circuit. The petitioners’ opening briefs were filed on 17 April 2020 and the briefing is expected to continue until 13 August 2020.37

Going forward, most renewable energy projects will increasingly rely upon commercial banks and capital markets to satisfy capital demands. For larger projects, mixed bank–private placement transactions with two or more tranches of funds may provide a preferred financing structure. In the past couple of years, the market has seen an increase in the amount of available capital for project financings combined with a reduction in the number of projects seeking funding, as a result of which financiers have been driven to offer almost unprecedented conditions (including a significant downward trend in pricing for capital) to remain competitive. This environment has allowed sponsors to refinance existing facilities with inexpensive long-term capital sources and has fostered an increased interest in the acquisition of operating assets.

New financing tools have also become increasingly important for renewable energy projects, particularly in the field of structured finance. For instance, approximately US$1,600 million was raised in 2019 as part of the securitisation of thousands of residential and commercial solar energy contracts.38 As other solar developers increase their portfolios, they may choose to follow this lead to secure financing.

After several years of uncertainty and doubt about its staying power, the ‘yieldco’ model has started to gain stability and remains a prominent feature of the US market. A yieldco is a publicly traded corporation similar to a publicly traded master limited partnership (MLP) vehicle except that its assets do not qualify for MLP status. In the renewable energy sector, a yieldco is expected to obtain stable cash flows from ownership of operating projects that have entered into long-term power purchase agreements and minimise corporate-level income tax by combining recently built projects that are still producing tax benefits with older projects. Yieldcos started achieving prominence in 2013 for energy companies and increased their presence exponentially until the downfall of prominent sponsors of yieldcos, such as SunEdison (TerraForm Power Inc and TerraForm Global Inc) and Abengoa (Atlantica Yield, formerly known as Abengoa Yield), turned investors’ attention to, and increased investors’ concerns about, yieldcos. After years of sharp declines in the value of shares of yieldcos and a flurry of dispositions by sponsors that led to the conversion of some yieldcos to private entities,39 some of the remaining yieldcos have shown improved health.40

Outside the renewable energy space, the retirement of coal and nuclear facilities generated renewed interest by sponsors in the development of new gas-fired power plants. Since 2016, natural gas-fired generation in the United States has surpassed coal generation every year and the gap keeps increasing.41 Natural gas-fired electric generation is expected to grow to a forecast level equal to over 36 per cent of the total generation by 2050 while coal-fired electric generation is expected to decrease to less than 14 per cent of total generation by 2050.42 The introduction of new capacity markets may further spur investment in gas-fired projects, which have been challenged by lower wholesale electricity prices in some markets, such as Texas. Additionally, project developers have devoted more attention on gasification facilities, which convert feedstock into a synthetic gas that is used as fuel or further converted into a variety of products, including hydrogen, methanol, carbon monoxide and carbon dioxide. These projects have commonly used fossil materials such as coal and petroleum coke as feedstock, although there are several gas-to-liquid projects in development and there is an intensified interest in the use of biodegradable materials, including municipal solid waste and forestry, lumber mill and crop wastes. The bankruptcy filings of Westinghouse Electric Company in March 2017 43 and FirstEnergy Solutions Corp in April 201844 may be a harbinger of further headwinds in the nuclear sector.45

Although still in its infancy from a technological and economic perspective, the nascent sector of electro-chemical energy storage (batteries that store electrical energy in the form of chemical energy) is beginning to attract the attention of a broad range of project finance participants.46 Reliable and cost-efficient battery energy storage systems have the potential to shake up the energy sector. Significantly, this type of storage system could become an ideal complement for intermittent resources such as wind and solar energy power plants and facilitate power grid balancing efforts. As a consequence, natural gas ‘peaker’ plants (those that are used when there is high demand for electricity) may become less significant and the electricity generation mix could be reshaped further.

Another development in the energy sector involves an ongoing transformation in the identity of the power purchasers in the market. As electricity prices have been declining, it has become more difficult for developers to secure long-term offtake agreements with investment grade utilities, and businesses, universities and other non-traditional offtakers gradually have been taking their place. Additionally, in some states, communities have started forming Community Choice Aggregations (CCAs) to source electricity.47 CCAs purchase electricity from a utility and sell it to their residents and businesses. While only eight states have legislation governing CCAs,48 these entities may become more significant in the near future. Utilities, especially those in western states, face increasing difficulty in maintaining their credit standing, as they confront a declining customer base due to the emergence of CCAs and distributed generation technologies, legacy pension liabilities, and the implications of climate change, including liability for utility-caused wildfires.

In addition, constrained state and local fiscal budgets, limited federal transportation funding, decreased tax revenue and the considerable need for new infrastructure assets and the refurbishment, repair and replacement of existing assets may hasten the further use of the public-private partnership (PPP) project finance structure (further described in Section IX). While most large infrastructure projects in the United States, at least since the introduction of the interstate system in the 1950s, have been completed using public funds rather than through the participation of private entities, a confluence of factors may be creating a fertile ground for the development of increased government and public acceptance of PPPs. According to the latest report card by the American Society of Civil Engineers, the infrastructure of the United States has a D+ grade point average49 and an estimated investment of approximately US$5.1 trillion (in addition to the approximately US$5.6 trillion currently contemplated to be funded) will be required by 2040 to maintain a state of good repair.50 The Trump administration’s infrastructure plan, published in February 2018, is intended to stimulate at least US$1.5 trillion in new infrastructure investment over the next 10 years 51 and 12 federal agencies agreed on a framework to expedite the environmental review and approval of infrastructure projects.52 Given that existing legislation has been insufficient to satisfy the country’s needs for infrastructure funding, state and local governments started to turn to the private sector to fill the gap. Recent significant PPP projects include the up to US$4.9 billion Automated People Mover project and US$2 billion Consolidated Rent-A-Car facility at the Los Angeles International Airport,53 the approximately US$3.7 billion I-66 Outside the Beltway project in Virginia,54 and the approximately US$5.7 billion Gordie Howe International Bridge connecting Detroit (United States) and Windsor (Canada).55 While in some jurisdictions developers will need to navigate uncharted legislative and regulatory waters, and may also have to overcome negative public perception regarding the private management of public infrastructure, the opportunities for growth may be unprecedented.

Outlook and conclusions

In the long term, project finance is expected to continue to be a popular vehicle to finance the necessary energy and infrastructure assets in the United States, particularly to replace the ageing fleet of coal-fired plants, nuclear plants and other public infrastructure, given the support of the strong legal framework and a strong, sophisticated private financing market (in addition to political support and other factors).

The US Energy Information Administration (EIA) estimates that energy consumption, across all sectors, will increase by 0.3 per cent per year between 2019 and 2050.95 While additions to power plant capacity are expected to slow from the construction boom years in the early 2000s, it is expected that there will be more long-term growth in certain sectors, such as projects from renewable sources and natural gas. For example, the EIA projects that electricity generation from renewable sources will grow so that its share of total US energy generation will increase from approximately 19 per cent in 2019 to approximately 38 per cent in 2050 in the reference case, or as high as 40 per cent based on a high oil price case.96 Additionally, projections from industry sources foresee that the United States may need close to US$5.1 trillion in additional funding to support its standard infrastructure needs in the coming years.97 With the enduring need for energy and infrastructure, the United States will look to project finance structures as one of the tools for satisfying this need.