Green Building Law Blog : Green Building Lawyer & Attorney : Shari Shapiro: Calliope Communications, LLC

In an interesting move, Intel provided an institutional investor--Harrington Investments, Inc.--with an outside legal opinion stating that under Delaware Law directors have a fiduciary duty to address corporate responsibility and sustainability performance as specified in the committee charter.

 According to the HLL website

"Intel has acknowledged in their committee charter, that directors must take into consideration corporate responsibility and sustainability performance, including long and short term trends and impacts on Intel's business, as part of their fiduciary duty," said John Harrington, President and CEO of HII. "This is a major victory for advocates of corporate responsibility and environmental sustainability, and others who strongly believe that these issues are essential in recognizing directors' and officers' fiduciary duty."

If it is corporate malfeasance not to take sustainability and climate change risk into consideration, it will be a significant motivating factor in moving companies towards sustainability. 

I would love to see the legal opinion--special GBLB prize to the first reader who gets it to me!

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According to Business Green, the United Nations suspended its third carbon credit auditing company in 15 months.  Essentially, the auditors failed to follow protocols for confirming that carbon offset projects actually provide the environmental gains they promise:

The executive board in charge of the Clean Development Mechanism (CDM) last week suspended Germany's TUEV SUED and also partially suspended Korea Energy Management Corporation, after spot checks undertaken at their offices revealed procedural breaches.

Why do we care? In order for an effective carbon regulation scheme, the carbon offset program has to be measurable and verifiable.  To do so, there needs to be auditors confirming that the projects are valid. 

On the one hand, the suspensions are a positive sign because they indicate that the UN is maintaining some sort of oversight over the auditors, on the other hand, it is distressing that three of the companies which have been charged with verification have been suspended, including TUEV SUED, "the second largest CDM validator" which "had approved 1,147 renewable energy projects – almost one fifth of the total – by the end of February this year" according to Business Green. 

As the United States builds its GHG regulatory scheme, it needs to take into consideration how to ensure that the guards of environmental validity are properly guarded--that auditing procedures and confirmation of the validity of the audits is build robustly into the system.  Nothing will erode the credibility of a cap-and-trade system faster than discovering that the carbon offsets at the base of the market are fraudulent.

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Last week, the world was a-twitter about the New York Times Freakonomics blog concluding that green buildings in an unsustainable infrastructure are not really green.  Imagine my amusement when the EPA releases a list of the cities with the most Energy Star buildings, with Los Angeles at the top, declaring:

These cities see the importance of taking action on climate change," said Gina McCarthy, assistant administrator for EPA’s Office of Air and Radiation. “Communities from Los Angeles to Louisville are reducing greenhouse gases and cutting energy bills with buildings that have earned EPA's Energy Star."

Coincidentally, Los Angeles is also among the top 10 cities with the longest commutes. It would be higher than 9th due to the traffic, but the suburban-style office parks and lack of a compact central downtown allow for shorter commute times. According to Forbes:

But what serves L.A. well is that a surprisingly high percentage of drivers get to their destinations in under 20 minutes (34%), which is only the 13th worst rate in the country. The reason? All those office parks and strip malls dotting the basin make it easy for people to commute between suburbs as opposed to a central downtown location, and that makes commutes shorter in mileage terms.

Green buildings are just one component of what cities need to do to combat climate change.  A comprehensive approach which incorporates regional planning, transit, infrastructure, zoning, and the buildings themselves is what will move us truly forward in the fight against climate change, and the EPA should be stressing the need for cities to move in this direction.  

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Earth2Tech ran two stories recently on backlash by customers against utility companies for unusually high electricity bills after smart meters were installed. 

In Bakersfield, California, a homeowner actually sued Pacific Gas and Electric on behalf of himself and a class of smart meter recipients:

The original plaintiff, Bakersfield resident Pete Flores, filed the suit after his electric bill tripled fro $200 to $600 a month — right after having a new smart meter installed in his home. Objecting that PG&E described the meter as a money-saving device, he decided to sue for fraudulent advertising, negligence and unjust enrichment

The complaint is available here.

The only evidence of the alleged fraudulent, negligent and unjust failure to accurtately measure Mr. Flores' electricity was an increase in his bills, with "no change in usage pattern on the part of Plantiff."  Complaint at 5.  Evidence of complaints of fellow class members comes from:

countless complaints on the internet, over 100 complaints to activist group TURN (The Utility Reform Network) and a special meeting led by State Assemblyman Dean Florez...

Complaint at 5.

After reading the Complaint, I have a few questions:

1.  What evidence is there that Mr. Flores did not change his usage patterns other than his electricity meter reading?

2. Is it possible, that, as compared to the meter maid stopping by and checking your traditional meter, a smart meter is actually accurately measuring electricity usage, and Mr. Flores was actually being poorly measured, BEFORE, not after the installation of smart meters? 

3. What is the misreading rate of meter maids? More than 100 complaints across the state of California for the same time period? 

Smart grid technology, and smart meters are grassroots level green building technologies which are likely to effect millions of homeowners nationwide.  It is likely that we will see more lawsuits like Mr. Flores'. 

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I have posted on many occasions about the importance of place in green building--green buildings on unsustainable sites are simply not green.  But it is never really true until the Grey Lady--The New York Times--says it is.  Today, on the Times' Freakonomics blog, James McWilliams had a nice little piece on the fundamental issue of building LEED buildings in an unsustainable, car-based infrastructure. 

Take the long view. From the moment of European settlement onward, American faith in Manifest Destiny has inspired aggressive development driven by land acquisition and individual choice. Sprawl started to become ingrained in the American character over two centuries ago and, as a result, middle America has inherited cities that value expansion over intensification.  To an extent, this vexed inheritance turns our cork floors and compost bins into empty expressions akin to the sun-starved solar panels adorning the Merritt Center.

What McWilliams does not acknowledge is the role that regulation and tax policy has had in developing the infrastructure the way it is. Two give just three examples--the mortgage interest tax credit encourages homeownership outside of the urban core. For many years, urban neighborhoods, the most sustainable, were red-lined--you simply couldn't get a mortgage.  Funding highways over mass transit means that more highways are built, making it possible to move further from the urban nodes.  Finally, funding schools through property tax assessments mean that inner cities with multi-family housing and greater rental concentrations will have less money to provide excellent education, driving families with children to the suburbs.

McWilliams uses the passive voice--" Sprawl started to become ingrained in the American character over two centuries ago "--as if sprawl simply appeared, like a cancer on the landscape.  Not so.  Regulatory and monetary policy implemented by elected representatives caused the unsustainable circumstance Americans now find ourselves in.  

 We have seen the sprawl, and it is us.

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Today the International Code Council released its Green Construction Code for public comment today.  You can download a copy here. The objective of the IGCC is

to develop a Green Building Code for traditional and high-performance buildings that is consistent and coordinated with the ICC family of Codes and Standards.

I have previously posted on the importance of such an effort here.  Public comments can be made on the IGCC until May 14, 2010.

Once finalized, the IGCC can be adopted by local governments, and comport with the already existing building codes. 

One interesting diversion from prior building codes is the integration of post-occupancy reporting.  According to the AIA:

When the building is complete and the C of O is issued, building owners will be required to submit a commissioning report to the local code official within 18 to 24 months. This report will detail how the building has performed in terms of energy efficiency, building envelope performance, water use, lighting controls, etc. The report can be completed by the primary designing architect, or by a third party designated by the client or building owner. In either case, the local code official must approve the commissioning agent that completes the report. If a building does not meet its performance goals, the commissioning report will document why and prompt the parties involved in its design and construction to improve it.

Such post-occupancy requirements, and performance reporting, will elicit the usual hand-wringing from green building law practitioners like me about what will become of buildings which do not perform to their expected levels, and what enforcement mechanisms will be implemented by local governments to require building owners to fix underperforming green buildings.  Nonetheless, if buildings are going to be required by law to meet green standards, it is important that some mechanism is in place to confirm compliance.

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I am speaking at the Green Legal Matters conference in New Orleans, April 26-28, 2010 with many friends of GBLB, like Chris Hill of Construction Law Musings, Timothy Hughes of Virginia Real Estate, Land Use & Construction Law blog and Scott Wolfe of the Wolfe Law Group. Come and join us, and eat some crawfish!

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Yesterday, I wrote about Senator Merkley's new set of incentives to encourage green commercial building retrofits, and left you with the question of whether these new incentives will actually change behavior. An interesting article came out today on CNN.com which highlights a barrier to incorporating green building technologies into building projects:

Appraisals for newly built green homes do not fully reflect the cost of green technology, and the lower appraisal values mean buyers often cannot get the full financing they need from banks.

In essence, according to this articel, the cost of incorporating the green features is not covered by a commensurate increase in the purchase price, causing homeowners to avoid incorporating costly green technologies, even if they represent savings in the long run. 

This is the perfect opportunity for designing a targeted grant or financing incentive.  The government agency could look at the difference in the appraisal of homes without green technologies, homes with green technologies, the cost of those technologies and the ultimate payback, and design an incentive to make up the difference.  A great example would be providing financing for green renovations at a lower rate than standard renovations.  Unfortunately, most incentives are not designed around barriers to entry and cost data, but are essentially throwing some non-targeted amount of money at the problem without analyzing would be the best amount and struture to really change behavior.

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Last week, Senator Jeff Merkley of Oregon introduced S.B. 3079, the Building Star Bill, to:

To assist in the creation of new jobs by providing financial incentives for owners of commercial buildings and multifamily residential buildings to retrofit their buildings with energy efficient building equipment and materials and for other purposes.

In essence, Building Star provides rebates for retrofitting commercial and multifamily buildings in existence as of December 31, 2009 with energy efficient components, like insulation, window, doors, HVAC equipment, etc.  the rebates are structured as follows:

• For energy audits and commussioning studies--$.05 per square foot of audited or commissioned space or 50% of the cost of the audit or commissioning study.
• For energy efficient building operations and maintenance training--$2000 per individual trained and certified
• For service on space heating equipment--$100 per unit serviced
• For service on cooling systems--$2 per ton of namepate cpacity of the serviced cooling system and 50% of the total service cost
• For installation of qualified energy monitoring and management systems--the lesser of $.45 per square foot of building space covered by the system or 50% of total installation and commissioning costs
• For upgrades of qualified energy monitoring and management systems--the lesser of $.15 per square foot of building space covered by the system or 50% of total installation and commissioning costs
• For HVAC testing, balancing and duct sealing--$.75 per square foot of duct surface tested, balanced and if necessary, sealed

The Building Star incentives can be combined with other incentives, like the existing deductions for energy efficient buildings. 

The Building Star program also provides for a loan program administered by the states to provide loans for energy efficiency upgrades.

So the question becomes, will this incentive program be significant enough to cause building owners to invest in these energy efficiency measures. 

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Last week, the USGBC announced its list of the Top 10 Pieces of Green Building Legislation in the 111th Congress.  Top of the list were the American Recovery and Reinvestment Act, better known as the Stimulus Bill, and the American Clean Energy and Security Act, better known as Waxman Markey.  I have posted about these pieces of legislation extensively--here for Waxman-Markey posts and here for ARRA posts.  So I was interested to see what the rest of the list had to offer in terms of overall perspective on Federal regulation of green buildings:

1. It's all about incentives.

Heaven forbid that Congress should force anyone to do anything.  With the exception of Waxman-Markey, the bills selected by the USGBC are all incentive based, providing funds for energy efficiency, water savings, etc. 

2. It's not very innovative.

There are only two bills on the list which I consider to be innovative or interesting.  The Federal Personnel Training Act of 2010 (yet to be introduced) which focuses on training federal personnel to operate and maintain high performance buildings, and S. 1619, the Livable Communities Act of 2009 which seeks to establish an Interagency Council on Sustainable Communities and provides $4 billion in grants to incentivize integrated community planning and implementation of sustainable projects. I like the first bill because it recognizes the need to raise the skills of implementing federal employees to realize the benefits of high performance buildings, and I like the second because it recognizes the linkage between planning and sustainability.   

3. Building Codes are not addressed.

Waxman-Markey, and its Senate counterpart The American Clean Energy And Leadership Act, both have some provision for creating a national energy efficient building code.  The other bills, however, do not attempt to address the key policy lever of building codes to enhance sustainable construction and save resources. This is probably because of the enormous political fight involved, both in wresting control of building codes away from states and local governments, and with the private interests involved in the building industry.   

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