DOE Issues Final Rule on Federal Green Building Standards

The Federal government has long been a leader in constructing green buildings, and LEED has been the Federal standard of choice. The Department of Energy issued a final rule updating its recommended certification standards and levels for all Federal buildings on October 14, 2014. 

The Final Rule does not tell Agencies which rating system to use.  Rather, if the Agency chooses to use a rating system, such system must meet the following characteristics:

  1. Allow assessors and auditors to independently verify the criteria and measurement metrics of the system;
  2. Be developed by a certification organization that (i) provides an opportunity for public comment on the system, (ii) provides an opportunity for development and revision of the system through a consensus-based process;
  3. Be nationally recognized within the building industry;
  4. Be subject to periodic evaluation and assessment of the environmental and energy benefits that result under the rating system; and 
  5. Include a verification system for post occupancy assessment of the rated buildings to demonstrate continued energy and water savings at least every four years after initial occupancy. 

Sounds a lot like LEED to me, so unless something else comes into the marketplace, Federal buildings are likely to use the LEED standard.

The DOE's rule is based, at least in part, on a General Services Administration (GSA) report on green building rating systems issued on October 25, 2013, and available here.  The GSA recommended LEED-2009 Silver or 2 Green Globes v 2010.  It also contained a variety of other recommendations, including keeping current with the rating systems as they evolve. 

The GSA's recommendation is an interesting one for two reasons:

(1) the GSA requires its buildings to be LEED Gold, and

(2) the recommendation was not supplemented to recommend LEED v4, even though the GSA did evaluate LEED v4. 

Since the Final Rule does not have a recommended rating system, and most agencies are unlikely to parse whether a particular rating system other than LEED complies with these characteristics, the GSA's recommendations are likely to become the Federal default.  

 

Do Not Pass Go: Why The USGBC Is Probably Not An Illegal Monopoly

NOTE: The opinions expressed in this post are entirely those of the author, and do not represent the position of the USGBC or the Delaware Valley Green Building Council.

As almost anyone in the green community knows, last week LEED Critic Henry Gifford sued the USGBC for, essentially, a few different flavors of fraud.  Mr. Gifford sued the USGBC as an alleged representative of a class of people who had been duped by the USGBC.  I posted last week that I did not think that the class action would survive class certification.  In that post, I provided a 30-second manager version of Advanced Civil Procedure.  Today, it is Anti-Trust 101.

 The causes of action Mr. Gifford brought against the USGBC are the following:

  1. Monopolization through Fraud--Sherman Anti-Trust Act 15 USC Sec. 2
  2. Unfair Competition--Lanham Act 15 U.S.C. Sec. 1125(a)(1)(B)
  3. Deceptive Trade Practices--New York General Business Law Sec. 349 (a) and (h)
  4. False Advertising--New York State General Business Law Sec. 350-a(1) and Sec. 350-a(3)
  5. Wire Fraud--RICO--18 USC Sec. 1962(C)
  6. Unjust Enrichment

[To avoid confusion, I will note here that the Complaint has two Fourth Causes Of Action.]

I will address the various causes of action in different posts this week, starting with Monopolization.

The Sherman Act  is intended to prevent the combination of entities that could potentially harm competition, such as monopolies or cartels.

Section 2 of the Sherman Act, 26 Stat. 209, as amended, 15 U. S. C. § 2, makes it an offense for any person to “monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States . . . .”

To prove monoplization, the plaintiff must show  “(1) the possession of monopoly power in the
relevant market and (2) the willful acquisition or maintenance of that power as distinguished
from growth or development as a consequence of a superior product, business acumen, or
historic accident.” United States v. Grinnell Corp., 384 U.S. 563, 570-71 (1966).

First, it is not entirely clear what market  the plaintiffs are alleging USGBC has a monopoly.  

A monopoly is a form of market structure where only one or very few companies dominate the total sales of a particular product or service. Monopoly power is defined as the ability to control price or to exclude competitors from the marketplace. The courts look to several criteria in determining market power but primarily focus on market share (the company's fractional share of the total relevant product and geographic market). A market share greater than 75 percent indicates monopoly power, a share less than 50 percent does not, and shares between 50 and 75 percent are inconclusive in and of themselves. In focusing on market shares, courts will include not only products that are exactly the same but also those that may be substituted for the company's product based on price, quality, and adaptability for other purposes. For example, an oat-based, round-shaped breakfast cereal may be considered a substitutable product for a rice-based, square-shaped breakfast cereal, or possibly even a granola breakfast bar.

Green Globes, Energy Star, Passive Haus, BREEM, and others exist in the realm of green building evaluation, but LEED certainly has the dominant market share.  But is this really the market? If building evaluation in general is the market, than surely the International Construction Code, which is the model code for most states and municipalities, has a broader market share and usage than LEED.  If energy performance is the market, then the ASHRAE codes which provide standards for energy performance and are used almost universally have a far more dominant market share.

 If professional certification of builders and design professionals is the market, than certifying to become a Registered Architect or a Professional Engineer must also compete with becoming a LEED accredited professional. 

Second, even assuming that LEED has a "monopoly" on some undefined market, Mr. Gifford must prove specific intent to acquire or maintain the monopoly position.  Mr. Gifford alleges a significant number of bad acts on the part of the USGBC, mostly centering around the USGBC's alleged misrepresentation of the energy performance of LEED buildings.  In the recitation of the claim, Mr. Gifford states that misrepresentation of energy performance of LEED buildings "is false and intended to mislead the consumer and monopolize the market for energy-efficient building design." 

The problem is, Mr. Gifford does not demonstrate how this false representation is conspiratorial or predatory.  The USGBC's actions, even if fraudulent, are not  intentionally prohibiting other rating systems from coming into existence or preventing other systems from proving they result in more energy efficient buildings. 

 So, Mr. Gifford's Anti-Trust Claim should go directly to jail--what a court may actually do is another matter entirely.

NOTE: The opinions expressed in this post are entirely those of the author, and do not represent the position of the USGBC or the Delaware Valley Green Building Council.

EPA Declares Los Angeles Green and Other Green Building Ironies

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.  

Valuing Green--CBRE Makes The Financial Case For Building Green

CB Richard Ellis, the worldwide behemoth of real estate services, issued a report which addresses "the economics of sustainable buildings." Their conclusion? Basic level of certification adds between 2-3% to the cost, higher levels of accredidation add 5-7% of construction costs.  This is fairly in line with other cost estimates which have been issued.  However, there were some other interesting conclusions from the report:

  • Although developers will reap some rewards in terms of higher rents and enjoy higher rates of rental growth,the rates of rent additionality is about the same as the excess development costs (2-6%), so the additional rental value is essentially a wash.
  • Improvements in energy savings can be between 10-50%, a major number. 
  • Residential customers will pay some premium for green, but not necessarily the actual cost of the green improvements
  • Extra value will need to accrue from the investment markets for the lower risks and higher valuations of green buildings.

How should this study effect decisions making at the policy and business level?

  • The potential market benefits from greening buildings have not solidified--this means that incentives can still be powerful tools to motivate green projects.  The incentive may be the tipping point.
  • Energy savings, and measurement of the realization of energy savings, is an important factor in "pencilling out" green improvements.  From a policy perspective, this puts even more value on reporting and disclosure of building performance measures.
  • Policy measures need to be different for commercial and residential sectors to motivate green.  There may need to be different levels of incentives applied to motivate different segments.

Should the USGBC Force You To Eat Your [Organic] Vegetables?

According to the SF Examiner, LEED "now includes an energy reduction component called Sustainable Food."

Building owners and managers can now gain credit towards LEED certification by using sustainably harvested foods certified by pre-approved organizations including USDA Certified Organic, Food Alliance Certified, Protected Harvest Certified, The Rainforest Alliance, Fair Trade, and the Marine Stewardship Council's Blue Eco Label, and/or by acquiring food from within a 100-mile radius for food service and catering functions at the building. The threshold for achieving this credit is for 25 percent of all food and beverages to meet one or more of these sustainability criteria. Double points are awarded if the food is both certified and locally harvested.

Is this a good idea? It's true, all buildings will serve food at some point, but I am not sure that integrating an operations component like sustainable food is a good idea for a green building standard.  For example, if a municipality incorporates the LEED standard, and a building owner chooses to adopt the sustainable food credit, will the municipality have to police whether 25% of their food purchases are local and organic? 

Now using this argument, there should be no operations related credits in the LEED program.  This, of course, is not reasonable either.  The question becomes, to my mind, what operations credits are integral to the creation of a green building, and what items are merely good sustainable practices for everybody.  Once LEED enlarges its mantle to include every sustainable practice, it dilutes its legitimacy as a rigorous standard.  There is enough work to be done in managing the

  • 72% of electricity consumption,
  • 39% of energy use,
  •  38% of all carbon dioxide (CO2) emissions,
  •  40% of raw materials use,
  •  30% of waste output (136 million tons annually), and
  • 14% of potable water consumption

that come from buildings directly without frittering away efforts on peripheral matters.

Shining Light and Truth On The Harvard Green Building Law Study

CLARIFICATION:

 

I reworded my original post on this subject to clarify my intent. In my original post I noted that most of the conclusions of the Harvard study had previously been made by other commentators in the field. Similarly, the post noted that important sources appear not to have been considered by the authors of the study. I stand by those criticisms. My post also suggested, however, that the presentation of the study's conclusions seemed "to be nothing short of plagiarism." That was an unfortunate choice of words. I did not mean to impugn the academic honesty of the authors or their supervisors or the institution that published the study. To the extent that my words conveyed that impression, I apologize to each of them.


On May 29, 2009, Green, Inc., the New York Times' green blog announced a truly startling revelation--"Building green can open the door to plenty of legal pitfalls, a new study warns." 

To readers of this blog, this may seem to be...old news.  But not to the blogosphere and the Twitterverse.  News of the Harvard revelation spread fast and furious, as though Clarence Darrow himself had spoken on green building law from beyond the grave.

And what pearls of wisdom were revealed from the venerated halls of Cambridge? Frankly, nothing that had not been written about in hundreds of blog items and articles before. What was astounding, however, was that there was not a single reference to any of those articles or blog postings.  The Harvard piece was written as if the insights and conclusions were original.  This is not the case.

Here are a few examples:

AHRI v. City of Albuquerque

From the Harvard study at 5:

[AHRI v. City of Albuquerque] illustrates potential conflicts between municipal regulation of green building and green building efforts at the state and/or federal level. 

From my article on AHRI v. City of Albuquerque in July, 2008 at Greenerbuildings.com

 Local laws seeking to set higher green standards will be struck down if the federal government has exclusive authority to regulate energy efficiency.

Risks

From the Harvard study at 6:

Project Owners

Failure of project to achieve certification or an anticipated level of certification

Failure to qualify for tax credits

Failure to meet loan or incentive program requirements

Increased soft costs due to delays

Failure to meet anticipated or state claims in marketing or promotional materials

From Greenbuildinglawblog July 1, 2007

Finally, although the green building movement is in its halcyon days, new expectations will inevitably lead to conflict. A multimillion-dollar development project will fail to gain the LEED credits required to secure a government grant, and litigation will doubtless ensue.

From Custom Home Online February 15, 2008

Some mistakes to beware of committing in your marketing of green homes include overstatement of benefits or performance; misrepresentation, non-disclosure, or outright fraud (intentional or unintentional); and making vague, misleading claims or subjective, unverified statements.

From Construction Monthly, 2007

Suppose, for example, that an architect’s LEED Silver building, designed to such a level for the purpose of securing some type of state or local tax incentive, only received LEED Certified because of a credit rejection from USGBC due to insufficient documentation? It is not difficult to imagine the owner looking to the architect or engineer responsible for that particular part of the design for some sort of redress, particularly if documentation responsibilities were not clearly identified by contract.

From the Harvard study at 6:

Design Professionals

Higher standard of care resulting from participation in the building process as LEED Accredited Professionals

Design defects that result in failure to achieve certification or a specific level of LEED certification

Liability due to the failure of systems or components to perform adequately over the structure's lifecycle

Exclusion of warranties and services in the green building context from insurance policies or added insurance costs

From Greenbuildinglawblog, March 9, 2009:

However, the answer is not as clear for professionals who hold themselves out as a LEED Accredited Professional, or who provide additional green services, like commissioning and energy modeling. There is a credible argument to be made that a LEED AP should be compared with what a reasonable LEED AP would have done with respect to building a green building, not just what a reasonable architect or other design professional would have done under the circumstances. Further, it is not clear that a professional liability policy which covers specific design or contracting services covers negligence in providing additional green services like commissioning and energy modeling.

From Sustainable Land Development Today, December, 2008:

Accordingly, the contractual language in the design contract could provide the insurance company with ample opportunity to determine that the architect gave the owner a guarantee or warranty that the building would achieve a particular rating and to possibly deny coverage for claims arising out of the building’s failure to obtain such rating.

I could literally go through the entire publication demonstrating that each and every component has been said elsewhere before.  The Harvard team could have alleviated this situation with the liberal application of footnotes.  Instead, a compendium of a total of 15 articles are listed at the back of the publication, giving the impression that the article contains new insights into green law from Harvard. Shining a little light discovers the truth--the Harvard report is regurgitation from leading scholars in this field almost three years after we started discussing these issues in earnest.

Tax Freedom Day Post--Green Building Vice Tax

Most people are thinking about taxes this week.  Today is tax freedom day, the day on which most Americans have earned enough money to pay their taxes for the year, and Wednesday is tax day. In the spirit of this week, a post about taxation. 

How do you influence people to use reusable grocery bags instead of plastic ones? 

There are a few options:

1) Ban customers from using plastic bags

2) Ban stores from providing plastic bags

3) Give away or subsidize reusable bags to customers

4) Give away or subsidize reusable bags to stores

5) Educate stores and/or customers on the benefits of reusable bags

6) Charge customers a tax for the privilege of using plastic bags

7) Charge stores a tax for the privilege of using distributing plastic bages

The first two are traditional, command-and-control regulations.  "Thou shalt not....".  Historically, this had been the model of environmental regulation.  3 and 4 are incentives.  During the Bush Administration, market based incentives and voluntary programs were very much in vogue for environmental protection. 

I believe that all four have their place.  For big, intractable problems with clear environmental consequences, command-and-control is the only way to go.  Incentives are best utilized to correct for market failures, like making solar or wind power more affordable because carbon is not priced in the cost of petroleum.

But I think five through seven--education and taxation are underutilized tools of environmental policymaking.  Miley Cyrus sporting a reusable shopping bag in the new blockbuster film is a way of educating and influencing public action.  Make the reusable tote the new "it" bag.  The green building equivalent is providing education on green building practices, and for government agencies to build green and widely promote their efforts.

Taxation is another great way to influence public choices. By taxing a plastic bag, even a small amount, people are penalized for their anti-social behavior.  We do it with cigarettes, why not plastic bags? Or stick construction? By making alternatives available at the same price as the tax--a 50 cent tax for each plastic bag, and a reusable tote at the same price, people will be more likely to choose the reusable bag. Combined with education on better choices, a penal tax is a very strong policy lever. Portland has sort of done this with the feebate structure, charging builders who want to build traditionally, and remitting that fee for green construction.  But I have yet to see a green building program which taxes builders for traditional construction.  The tax could be tied to the increased public resources needed to service traditional buildings--stormwater management, electricity, etc.

 

Real World Road Rules--The Realpolitik of Green Building Policymaking

I am involved in getting green building legislation passed in Philadelphia.  Basically, the bill would tie a 10 year tax abatement to LEED certification.  The greater the level of certification, the higher the tax abatement.  The bill is modelled on many other cities' incentive systems, and certainly does not go as far as Boston, Washington DC or several other cities in requiring green building practices.

What has been interesting about the process of shaping this bill and lobbying for its passage is the Realpolitik which comes into play when trying to get legislation done.  This is one of my favorite topics--where the real world intersects with theory.

In theory, everyone should be on board with green building practices.  Save the environment, save money in utilities, get federal, state and local incentives and have a great marketing tool.  In addition, most studies now report that the cost of green is down, in some cases not costing any additional resources beyond standard construction costs. 

But the reality of policymaking is a whole different ballgame.  Turf battles exist even where all the participants are supportive of green building.  Who created the legislation and who will get credit for its passage will effect whether a piece of legislation passes or dies in committee.  Special interest groups, like the affordable housing community, residential developers, mixed-use advocates and others come out  either because of cost considerations or inapplicability to their building typology.  Finally, the best bill may not be the ultimate bill that is passed--compromises made for political reasons will effect the content of the ultimate legislation. 

What is the solution? 

1. Understand the Realpolitik aspects of the process going in.  We do not live in an ivory tower, we live in a democracy with co-equal branches of government.  Engaging the power players in your jurisdiction will matter.

2. Reach out to interest groups early.  These groups should include the affordable housing community, residential developers, large development companies, contractors, the Building Industry Association if your area has one, etc. 

3. Build a coalition of supporters. Political supporters, industry supporters, academic supporters, etc.

4. Recognize that you will not please everybody.  Put in the strongest bill you can, with the best support you can.

5.  Finally, don't let the great be the enemy of the good.  Do not let the holy grail of a perfect bill supported by all constituencies stand in the way of getting something actually passed which  advances the agenda of benefitting the environment through green building practices. 

Credibility in an Age of Skepticism

There has been quite a dust-up over last week's energy efficiency feasibility study by NAIOP, the Commercial Real Estate Development Association.  The study challenged the economic feasibility of developing office buildings with 30% and 50% energy efficiency targets.  Essentially, the study concluded: 

Using energy models, the report found that 30 percent and 50 percent improvements in energy efficiency over code were not financially feasible for most new, Class A office construction. Developers striving for the 30 percent target would not recoup the cost of their initial energy efficiency investments within a 10-year period, while the 50 percent target was far beyond their reach, the study said.
 

The study set off a storm of controversy, resulting in the USGBC and others to decry the methodology and conclusions of the NAIOP study. 

However, the NAIOP study highlights some very important flaws in the current analysis of green buildings. 

1. We need to stop measuring certification, and start measuring performance.  If we had good, apples-to-apples measurements of energy efficiency, water savings, indoor air quality, vehicle miles travelled by occupants and occupant satisfaction which we could compare across building types, it would be easier to deflect the misinformation being espoused by green building skeptics.

2. We need to start incorporating carbon costs. NAIOP's main argument is that achieving 30-50% energy efficiency is not cost effective.  If building carbon costs and other environmental externalities were measured as a component of the cost-benefit analysis, even a flawed study like the NAIOP would have a hard time showing that the costs outweighed the benefits.

3. We need policies which mandate measurement and verification.  In order to collect solid information about building performance over time.  To do so, public policies should incorporate energy efficiency, water savings, indoor air quality, vehicle miles travelled by occupants and occupant satisfaction reporting as components of their green building regulation. 

By effectively incorporating costs and developing solid performance measurements, we can acheive credible green building arguments (as well as improving the performance of the buildings themselves) which will give the green building movement credibility in an age of skepticism. 

Part 1 of Regulating Green Series--Anatomy of Green Building Regulations

In the past five years, green building regulation has been on a meteoric rise. Green practices are being incorporated into state an local building and zoning codes and ordinances. According to the AIA, 14% of US cities with populations in excess of 50,000 people now have green building programs in place, and the number of counties with green building programs has grown nearly 400% since 2003. In addition, federal statutes were passed requiring federal agencies to build green, procure recycled materials, reduce energy consumption and prevent pollution.  The regulatory schemes fall into one of three basic types: command-and-control regulations, financial incentives and non-financial incentives.  

Command and Control Regulations

These laws mandate that buildings comply with a green building standard of some type. Command and control regulations often reference a private green building standard, like LEED, but may also include local green building requirements on top of the referenced standard.

Command and control regulations come in two basic types, zoning ordinances and building code changes. One model for instituting a command-and-control regulation is to pass a zoning ordinance which requires that a proposed project meet the referenced green building standard, in order to obtain zoning.

 In 2007, Boston made several amendments to the Boston Zoning Code to require all projects over 50,000 SF to be designed and planned to meet the “certified” level using the USGBC’s LEED systems modified with Boston-specific credits.

The advantage of a zoning code based regulation is that the project team can determine how to achieve the green building standard. In addition, local governments have almost exclusive control over their zoning.

Another approach is to revise the building code to require green building practices. On July 17, 2008, California adopted a green building code applying to all new construction statewide, with targets for energy efficiency, water consumption, plumbing systems, diversion of construction waste and use of environmentally sensitive materials in construction and design. 

 Some advantages to amending the building code to include green building requirements is that more buildings are generally impacted by changes to the building code, and the system of inspection for compliance with building codes is already in place.

Financial Incentives

Municipalities can also provide financial incentives to promote green building practices. These financial incentives can take almost any form: tax rebates, fee waivers, cash payments, etc. 

Portland, OR recently instituted a unique “feebate” structure whereby buildings built in a conventional manner pay a specified fee for their permits, building s built to LEED Silver standard get the fees waived and get access to green building resources, and buildings built to LEED Gold or higher actually get a rebate from the government. 

 

The advantage to financial incentives is that they use the market to encourage green building, as opposed to mandating green building practices.  However, there has been little data collected regarding whether financial incentives cause developers to go green where they would not have otherwise.  In other words, the value of the financial incentives in stimulating new green building projects has not been adequately studied.  

 

Non-Financial Incentives

 

The third common type of green building regulation is the non-financial incentive. Some local governments allow for increases in floor to area ratio, building height or density for building green. Others expedite the permitting process. 

 

Using non-financial incentives has the advantage of being inexpensive for cash-strapped local governments, and harnessing some of the same market based value of financial incentives.  It is also a good gateway for entry into regulating green buildings for local governments who want to proceed in a step-by-step fashion.

 

TOMORROW: To LEED or Not To LEED: Pros and Cons Of Integrating Third Party Certification Into Green Building Regulations

New Series--Regulating Green

Today I will introduce the first of a new series on Green Building Law Blog focusing on mechanisms for regulating green building successfully.  This series incorporates many themes I have been covering here on Green Building Law, but is intended to be a more in depth look at the topic.  

Please feel free to contact me with any comments or suggestions for the series at shari.shapiro@obermayer.com.

 

When it comes to regulating green, don't let the great be the enemy of the good

There has been a lot of discussion about whether the stimulus package includes too much pork, unnecessary spending, etc.  Obama has countered that the bill may not be perfect, but we have to do something.  In short, the country has come up against an age old problem--are we letting the great be the enemy of the good? Do we need to do something, however flawed? 

I engaged in a similar conversation with respect to green building regulation at the William and Mary Environmental Law and Policy Review symposium this past weekend. One of the speakers, Carl Circo, a professor at the University of Arkansas and self-proclaimed "Green Building Pessimist" argued that the green building regulations were insufficient to address the environmental and social problems plaguing us today.

We are indeed using blunt regulatory instruments, like impact fees which may not show the requisite connection between development and environmental damage, LEED-referencing legislation which may not effectively limit energy and water usage, etc.  Unlike the stimulus package, where spending is a one shot deal, with green building regulation, acting is preferable to not acting.  We will achieve three significant goals by passing green regulations,  though they be subject to critical challenges, even litigation: 

1. Obtain whatever environmental benefits come as a result of the regulation--requiring LEED compliance or fees for building conventionally will not set us back environmentally, and we may make incremental progress

2. Provide a basis for measurement, evaluation and tweaking  

3. Provide a working draft for uniform federal legislation (which I believe is coming)

So to municipalities who are considering legislating green, I recommend taking the plunge.  There is no such thing as perfect legislation, and the carbon crisis does not give us the luxury of time.

 

Tiny Rays Of Light--Good News For Green Building

Over my first few cups of coffee this morning, I had an odd sensation.  What could it be? That slightly warm feeling eminating from my heart--oh, now I remember, hope! That's what it is.  Not a lot of hope (although as I write this the dow is up 133 points), but certainly a few rays...

1. Industry organizations and utilities are embracing energy efficiency measures, including enhancing building code requirements.  According to Greenerbuildings.com

Environmental and energy groups, including the association that represents almost 70 percent of the country's utilities, are urging swift passage of a stimulus package that includes provisions for energy efficiency programs that they say would help jumpstart an economic recovery through the creation of green jobs.

Most significant from a green building law perspective, is that these groups are advocating for block grants to state and local governments to "be contingent on adoption of regulatory changes that make building codes tougher — and "major investments" in energy efficiency projects by utilities easier. "

2. As I predicted in my post Pink is the New Green, energy efficiency is at the top of the legislative agenda. It is being incorporated into the stimulus package, and local municipalities are embracing it as well.  Washington DC updated its building codes to ASHRAE 90.1 2007 and included some new green provisions. 

3.  The Bicycle Commuter Act passed--A benefit originally proposed seven years ago by .S. Rep. Earl Blumenauer, D-Ore. provides $20/month to those who commute primarily by bicycle.

Of course, we are still waiting to see what the green provisions of the economic stimulus package will be, but these actions are very positive signs of change in our national zeitgeist.  

Will the surety industry kill Washington's green building law?

Washington DC has one of the most progressive green building laws in the country.  Passed in December 2006, Washington mandates, among other things, that private buildings above 50,000 square feet submit a checklist of green features by 2009, and meet LEED NC 2.2 standards by 2012. To enforce the law, there is a bonding requirement for each project. 

Today's Washington Business Journal [subscription required, but you can get a synopsis of article here] reported that the surety industry is complaining that the enforcement mechanism is flawed: 

Under the new law, if a project does not meet the strict green requirements, the city would receive money from a performance bond that has to be posted for the project in an amount of up to 4 percent of the building costs, or $3 million. Those dollars would be paid into a new city green building fund aimed at helping implement the legislation.

But the bonding mandate has surety companies wondering which party in the project — whether the building owners, the contractors or the designers — must shell out for the performance bond, therefore bearing the risk of noncompliance.

Without support from the sureties, which finance bonds, it will be difficult for Washington to enforce its law because construction projects won't be able to acquire the required bonds.  If there is bond default, litigation will surely follow, funded either by the parties involved, or the surety guaranteeing the bond.  Alternatively, the surety industry may choose to sue Washington, as the HVAC industry associations did to Albuquerque in AHRI v. City of Albuquerque, to enjoin the legislation from taking effect due to the poor drafting of the legislation. 

Green Building Law--Quoted!

I was quoted in an article at buildinggreen.com on the AHRI v. Albuquerque suit.

Happy Thanksgiving everyone!

Listening To Greenbuild

Things have been a bit quiet here at GBL because I went to Greenbuild this week. Greenbuild is a conference of 30,000+ green building professionals.

I decided not to blog or tweet the conference, but rather to try to really listen to what my green industry fellow travellers were saying. So here is what I heard, in reverse order of importance:

10. Green is becoming mainstream. There were lots of green products providers, but the exhibit hall was primarily filled with the usual suspects in the building industry--Turner, Kohler, skanska, etc.

9. Data is becoming available. A lot of the exhibitors brought nice compilations of data on green building stock. The General Services Agency was giving away flash drives with new data on its large stock of LEED building, for example. The quntification of performance on green buildings should benefit the business case.

8. Fireman's Fund is leading the pack of insurers with green products for building green or insuring green replacement in the event of loss. They are also considering creating a risk product for designers of green buildings.

7. NAHB is going after LEED-H in a big way. A new, more robust NAHB green standard for residential should be out shortly which will give LEED-H a run for its money.

6. Green building policy was well covered, but carbon policy got short shrift. The one session dealing with carbon policy at the state and federal level was cancelled, with no explanation.

5. Enacting green building policies in major municipalities requires LEED APs in relevant municipal agencies to act as agents of change.

4. There was remarkably little concern over the economy's effect on getting buildings built, which seemed strange at a conference for the building industry.

3. The economy tanking may be the push needed to implement basic green changes like energy efficiency and conservation. The next big green thing is likely to be blown insulation, not photovoltaics. [Green Decoder has a nice article on green winterization for a head start]

2. Legal issues, especially risk and liability associated with building green, were little discussed. Where legal issues were highlighted, like a seminar on green leasing, the practioners did not appear to have deep understanding of the green legal issues [Caveat--there was a paid additional seminar on green leasing today that I could not attend--did anyone go and want to comment?].

1. There are no bars open after 2 am in Boston.

I will post more on each of these issues over the coming weeks, and I would welcome other greenbuild attendees to submit their thoughts on greenbuild.

China v. US--Top Down v. Bottom Up Green Building Standards

Via @allroads on Twitter, I found an interesting presentation on the difference between green building standards in China and the United States. As I discussed here China takes a top down approach to mandating environmental change. In the United States, it is a more bottom up, market based approach. We will see how/if this changes with a more environmentally interested president in the White House. Do you think top-down or bottom-up is more effective?

Green Building Law Featured on EcoBuild

The nice folks over at Ecobuild featured Green Building Law today. http://www.ecobuildmedia.com/

They are hosting the EcoBuild Fall Convention in Washington, DC, the most comprehensive event and exhibition with a focus on the ecological aspects of cutting edge IT at the Washington, DC Convention Center, December 8-11, 2008.

Moreover, they run a great blog with lots of green products and resources.

Tackle Risk Early

If the government had stepped in a bailed out foreclosing homeowners, would we be in the credit crisis we are in now? Nicholas Stern, a former British Treasury economist, notes that "inaction on emissions blamed for global warming could cause economic pain equal to the Great Depression."
http://www.enn.com/business/article/38498

We are still in a moment when regulation could curb global warming, but not for long. If we think this credit crisis is bad, global warming could be far more economically, as well as environmentally, devastating. Therefore, regulation of carbon, green building laws, etc. cannot get subsumed in short term "cost saving" measures.

An example of this short sighted behavior is being shown in King County, Washington, where $20/month incentives to county officials who bike or walk to work are being threatened. http://sustainable.bizjournals.com/green/King_County_bike-to-work_subsidy_under_fire.html The total cost for the subsidy--$37,000.

Interesting Green Leasing Post

http://sustainable.bizjournals.com/green/Possibilities_to_think_over_when_negotiating_a_green_lease.html

Green Building Law Potpourri

There are three notable articles on various sites around the blogosphere addressing green building legal issues--

1. Greening of the Bailout Bill--There was a great article over at Earth2Tech (I love those guys) on the greening of the financial bailout--http://earth2tech.com/2008/10/01/senate-passes-greener-financial-bailout/

2. Will Cap-and-trade work--Interesting perspective that cap-and-trade won't work to curb greenhouse gases soon enough over the at Green Skeptic http://greenskeptic.blogspot.com/2008/10/steve-rayner-dear-mr-president-deal.html

3. Southern Builders v. Shaw Development series on Green Building Law Update--Chris Cheathem has a nice series on the Southern Builders v. Shaw Development case in which Shaw Development, L.L.C. (Shaw Development) filed a counter-complaint against Southern Builders, Inc. (Southern Builders) in the Circuit Court of Somerset County, Maryland arising from, in part, the projects failure to achieve LEED Silver certification. http://www.greenbuildinglawupdate.com/2008/10/articles/legal-developments/southern-builders-v-shaw-development-the-most-important-part/

What does all of this mean? A lot of legal action--litigation, corporate and regulatory work--ahead.

Event Alert--RGGI Greenhouse Gas Auction TOMORROW

Just wanted to alert my readers that the Regional Greenhouse Gas Initiative, RGGI ("Reggie") will begin auctioning greenhouse gas allowances tomorrow. http://www.rggi.org/about

New Tool To Tackle Green Sprawl

ICLEI-Local Governments for Sustainability (ICLEI) (a membership association of local governments committed to advancing climate protection and sustainable development) is developing a new tool to rate the sustainability of communities, called the Star Community Index. http://www.iclei-usa.org/programs/sustainability/star-community-index

This, along with LEED for Neighborhoods, and the changes to LEED 2009 which will incorporate more sustainable site mandates are good steps towards tackling "green sprawl"--building green buildings on unsustainable sites, which has, to date, been a problem with the LEED system.

Liberty Finds Benefits in Building Green

According to Craig Cope, a local vice president for developer Liberty Property Trust,
"The additional cost [of building green] is certainly more than paid back in terms of quicker renting, keeping tenants longer, charging higher rents," he said. "Every building we do from here on out will be certified." For the full article, see http://hamptonroads.com/2008/07/green-buildings-are-going-so-are-prices.

PA Alert

Green Building Alliance (GBA) announced a total of $140,000 in Product Innovation Grants for three projects that seek to develop and introduce new and enhanced green building products. http://www.tristateobserver.com/modules.php?op=modload&name=News&file=article&sid=10238

Great Resource--AIA List of Green Incentives

I have discussed the DSIRE website here before, but the AIA has compiled a report on all sorts of incentives for green building which is available here http://www.aia.org/SiteObjects/files/LLgreenincentives(5-19).pdf.

Maternity Leave

Green Building Law Will Be On Maternity Leave Through September 2008.

Making 80% of your progress on 20% of your problems

As I look towards 2008, I have been reflecting on the importance of the green building movement--where are we, where are we going. There is no question that buildings contribute to environmental damage--the U.S. Environmental Protection Agency reports that up to 48 percent of the greenhouse gas emissions contributing to global climate change are a result of building construction and maintenance projects. In addition, there has obviously been a lot of growth in the Green Building sector--for example, the GreenBuild conference in Chicago had 18,000 attendees, up from 4,200 just five years ago, and some estimates put the growth of LEED-registered and LEED-certified green building projects at rates approaching 70-80% year-over-year. A new study from the American Institute of Architects (AIA) found that since 2003, the number of American cities with green building programs has increased more than 400%.

However, public transit cuts in cities like Chicago, Philadelphia and others threaten to break down essential components of sustainable development. As recently as November, the Bush administration reiterated its opposition to the 1997 Kyoto Protocol, saying that it would damage the U.S. economy. Energy bills at the state and federal levels failed to implement real changes to our energy consumption infrastructure.

Based on the theory, therefore, that you make 80% of your progress on 20% of your problems, I recommend the following areas of focus for the coming year:

1. Integration of green building standards into municipal codes--As I have stated on the blog before, I believe that green building practices need to be like requirements for fire safety--an integral part of the regulaiton that municpalities provide. The completion of the ASHRAE/USGBC/IESNA Standard 189 code project will hopefully provide a set of materials which can be easily integrated into municipal codes.

2. National leadership on public transportation--Without steady and reliable sources of funding and commitment to public transportation, building and growing sustainable development will be very difficult. National figures, including the presidential candidates, need to provide clear, coherent and strong leadership on this issue in the coming year.

3. Acceptance of international climate change protocols--The environment is a global issue which requires a global agenda. The United States needs not just to join, but to lead the world in pursuing an environmental agenda.

Here's to a Happy and Green New Year!

Apologies

Please excuse the one month absence from the blog. My husband had surgery and I am pregnant (not to mention a full-time lawyer), so the blog had to take a backseat. I hope to be posting with more regularity over the next few months, but the blog will go on hiatus from May (ish) through August next summer for maternity leave.

All my best for a happy and green holiday season and new year.

More green sprawl

After Best Buy announced they were doing green stores, I wrote an extensive column on green sprawl for the good folks over at Greener Buildings--http://www.greenerbuildings.com/news_detail.cfm?Page=1&NewsID=35868. Here is more green sprawl development--Staples and Office Depot have decided to build green stores as well-- http://jetsongreen.typepad.com/jetson_green/2007/09/office-depot-st.html.

Similarly, Jetson Green has a piece on a 9,500 square foot "green" home--http://www.jetsongreen.com/2007/09/9800-sf-luxury-.html. Seriously--there is nothing sustainable about a single family home this size.

More on Mortgages

Yesterday I posted a conclusion that the subprime lending debacle was going to make securing funds for green building projects more difficult. There was one more observation that needs to be made as a result--the tightening capital market puts the onus on the government to keep the green building momentum growing. It is really up to states, municipalities and even the Federal government to mandate green building practices which might otherwise get "value engineered" out in a tight money situation.

Unfortunately, Even Green Buildings Still Have To Have Mortgages

I am always fascinated by the fact that the financial services industry loves ponzi schemes, like the Savings & Loan debacle and the sub-prime mortgage mess. GreenbuildingsNYC has an interesting bit on the effect of the sub-prime mortgage situation on green building here http://www.greenbuildingsnyc.com/?p=287.

I spend quite some time thinking about mortgages, because the governmental framework which supports them has such a significant impact on what--and where--buildings are built. For example, the fact that home mortage interest is tax deductible allows people to build bigger houses. Because that interest deduction is applicable wherever your house is located, there is no disincentive to building ever further out from the urban centers.

Here, I think the subprime mortgage debacle will have a two-fold result: 1) banks will be less likely to lend to projects in general, and 2) to avoid risk, perceived "experimental" green building projects with a less reliable set of financial pro formas may be even more difficult to fund than traditional projects.

What's new is risky, and what's risky in the real estate world is rapidly going out of fashion.
This could put a dent in the nacent green building boomlet, but it will force projects to be sound financially, as well as ecologically.

Rival Green Building Standards, Part II

A month or so ago I posted on the various emerging green building standards. http://greenlaw.blogspot.com/2007/07/proliferation-of-standards.html

There was a nice analysis of the NAHB (National Association of Home Builders) and LEED for Home rivalry in the Sarasota Herald Tribune: http://www.heraldtribune.com/article/20070819/REALESTATE/708190677

Effective Green Incentives

Sunnyvale, California, home to Yahoo! Headquarters, among other big tech compannies, has enacted regulations which allow builders who decide to build green to increase the allowable height of their buildings. http://www.mercurynews.com/realestatenews/ci_6501546

The Sunnyvale incentive, like fast-tracking permitting for green buildings, is an effective way to encourage developers to build green.

Leonardo DiCaprio Needs Me

I read in today's Inhabitat that LEONARDO DI CAPRIO to Build "Eco-Town" in Kansas. It appears that the actor is filming a 13-part reality series about creating an environmentally sustainable community in Greenburg, Kansas which was devastated recently by a tornado. I wonder whether Leo and friends have sufficiently taken into consideration the legal issues facing the development of an ecologically sustainable community.

1) Has Leo considered the zoning code of the town? As many of you are aware, zoning may make it impossible to have a town which does not depend largely on automobile transportation due to prohibitions on the mixing of uses. The zoning code may also prohibit the use of green technologies, like photovoltaics or waterless urinals. The zoning code also must ensure that future building endeavors are done sustainably, by at least providing for mixed-use development and facilitating green buildings, and preferably by requiring environmentally friendly building techniques and typologies.

2) Has Leo analyzed whether the building code prohibits the use of green technologies or mandates the use of environmentally unfriendly products, like certain fireproofing and insulation materials?

3) Has Leo interfaced with the Kansas Department of Health and the Environment? Has he analyzed the state and local environmental laws he may encounter when doing large scale rebuilding?

4) Has Leo considered the risks associated with sustainable development and adequately provided for insurance of the new projects in the event of loss?

5) Has Leo developed effective short and long term public transportation plans, interfacing with the Kansas Department of Transportation?

I am waiting for Leonardo DiCaprio's call.

Green Life Tip

Discovery Television is launching a 24-hour green channel. See http://planetgreen.discovery.com/ for details.

Event Alert For Washington DC--Celebrate

Event Alert For Washington DC--Celebrate the first green building on Capitol Hill!

What: Bi-partisan Congressional Delegation Celebrates FCNL "Green" Building When: Thursday, July 12 from 5-7 p.m. Where: FCNL Headquarters (across the street from Hart Senate Office Building) 245 Second Street NE, Washington, DC, 20002

The Role For Attorneys In Building Green

Green building has hit the real estate scene remarkably quickly, but little attention has been paid to the legal implications of this new area. As green building and ecological sustainability considerations are becoming more prevalent, new regulations are being enacted by local governments around the country and old regulations are being adapted to embrace green building practices. State, local and federal dollars are being made available for green building projects through tax incentives and grants. Insurance companies and financiers are making products and instruments for green building projects available. As a result, there are new legal issues to consider when embarking on a green building project, including: drafting construction and design contracts that incorporate green building standards; navigating the local building and zoning approvals processes and securing public financing; negotiating with insurance and financial institutions and resolving disputes over green building projects that fail to achieve their sustainability goals.

Green building projects large and small must obtain permits from local governments, but the regulatory environment is in flux. In many places the zoning and building codes were developed in response to the health and safety issues of a century ago, and certainly not developed with green building in mind. In others, due to lack of action on the federal level, local governments are creating new regulations to encourage sustainable development. As old regulations are being adapted to new technologies and new regulations are developed, attorneys can provide critical guidance on the local regulatory landscape as part of the planning for a green project.

Furthermore, private and government entities are providing significant financial incentives to encourage green building. For example, Gov. Edward G. Rendell's newly released energy independence strategy earmarks $150 million ($50 million for grants; $100 million for loans) for green building projects. Fireman's Fund offers discounted pricing for building owners who commit to greens standards, and provides specialized insurance to allow for repair or replacement of green building projects in the event of a loss. Lawyers have a unique role in identifying and securing access to financial incentives and risk management tools.

Participants in the development process will require new contracts to ensure compliance with green building goals. Most of the entities establishing criteria for the performance of green building are private, nonprofit organizations like the United States Green Building Council (USGBC). Many local regulations and incentives for green building are directly linked to these certifying criteria, particularly USGBC's Leadership in Energy and Environmental Design (LEED) standard. If a project must achieve a certain LEED or similar rating to qualify for funding or approval, the construction and design contracts should reflect that ambition.

Finally, although the green building movement is in its halcyon days, new expectations will inevitably lead to conflict. A multimillion-dollar development project will fail to gain the LEED credits required to secure a government grant, and litigation will doubtless ensue.

These are some of the legal considerations in building green. Considering the legal issues should not be seen as an impediment to green building, but rather as a way to manage risk and to proceed with a smooth development process.

Parts of this post were previously published in the Legal Intelligencer.

Welcome!

My name is Shari Shapiro, and I am an associate with the law firm of Obermayer Rebmann Maxwell & Hippel LLP in Philadelphia. I am a member of the Environmental and Litigation Departments, and I am spear-heading Obermayer's Green Building Initiative.

Obermayer has hosted several educational events, and I have published a number of articles on the legal issues concerning green building, but the information changes daily. The goal of this blog is to provide timely, in-depth information and to serve as a forum for discussions on this emerging area.

I hope you will find this blog both informative and entertaining.

Best,
Shari