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

Happy Monday!  

As I posted earlier, in Murray, et al v. EPA , plaintiff Murray Energy Corporation seeks to enjoin EPA's Clean Power Plan rule even before it has been issued as a Final Rule.  The Clean Power Plan proposes to regulate the carbon emissions of existing power plants under the Clean Air Act. 

 Last week, the states of New York, State of Connecticut, State of Delaware, State of Maine, State of New Mexico, State of Oregon, State of Rhode Island, State of Vermont, State of Washington, Commonwealth of Massachusetts, District of Columbia filed notice of their intention to participate as amicus curiae 

In June, Alabama, Kentucky, Oklahoma, South Carolina, West Virginia, Alaska, Nebraska, Ohio and Wyoming also filed an amicus brief in this case.

Assuming that the northeastern states support the Clean Power Plan, it sets up a sort of "Blue v. Grey over Green" battle, with the western states thrown in as well.   

There was also an interesting decision in the D.C. Circuit last week, lifting a stay on the EPA's Cross-Border Pollution Rule.  But, additional issues remain to be resolved in the DC Circuit case, so there will likely be more action on this critical rule.    

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Contributions to this post were made by Nadia Washlick, a Cozen O'Connor intern.

One of the most under-discussed and under-valued aspects of green building law is regulatory enforcement.  Most of the discussion among experts, myself included, tends to analyze new laws and new incentives as they develop.  Frequently, these new legislative and regulatory initiatives pay little attention to the implementation and enforcement requirements that are required for realizing the energy efficiency and environmental benefits the regulations were intended to foster. 

New York's Greener, Greater Buildings Plan compliments its sweeping new regulatory initiatives with recognition of and attention to code compliance and enforcement.

Released in 2007 and designed by Mayor Bloomberg, PlaNYC has brought together over twenty-five city agencies to collectively equip the city for one million more residents, bolster the economy, fight climate change, and enhance the quality of life for all city residents.  Most importantly, these agencies are working hard to enforce the regulatory changes necessary to achieve these goals. 

The City Counsel believes that focusing on buildings will help achieve most of these broad citywide goals as buildings account for almost 80% of greenhouse gas emissions, 94% of electricity use, and 85% of potable water consumption. In December of 2009, the City Council passed four laws known as The Greener, Greater Buildings Plan (GGBP). Collectively, these laws require energy efficiency upgrades and energy transparency in large existing buildings, including annual benchmarking, energy audits, retro-commissioning, lighting upgrades, and sub-metering of commercial tenant space.  The City Council believes that these laws will reduce GHG emissions by at least five percent citywide by 2030. In addition, GGBP will save New Yorkers more than $750 million per year in energy costs and create around 18,000 construction-related jobs, thus helping to bolster the economy. 

Needless to say, PlaNYC is attempting to transform the construction industry in New York City. This daunting task requires developing new regulatory procedures, defining new terms, and codifying these procedures. The New York City Green Codes Task Force, led by Urban Green Council, was established to develop new regulations, amend current laws, and provide new rules for enforcement. The task force consists of more than 200 experts in design and construction and has the duty of developing rules to enforce these new laws.  It has already developed over a hundred proposals to modify City codes and regulations that impact buildings or hinder green building practices, twenty-two of which have since been adopted.   Furthermore, the task force now requires progress inspections during the construction period, as well as energy analyses and drawings from engineers and architects before construction begins to prove the designs meet current energy code requirements. The task force aims to achieve 90% energy code compliance by 2017 through both stringent enforcement and energy code training for designers.

New York City was recently ranked number seven on a list of the nation’s top ten most “climate ready” cities. In coming years, the city’s ranking is likely to rise as PlaNYC comes into effect. With such rigorous enforcement, it is no wonder why PlaNYC has been deemed “the most comprehensive set of efficiency laws in the nation.” If successful, the plan will surely be a blueprint for other cities hoping to achieve climate readiness. 

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Steven Johnson, in his book Where Good Ideas Come From (read an excerpt here) explained that great ideas, the ones that transform the marketplace, are based on the “adjacent possible:”

The phrase captures both the limits and the creative potential of change and innovation. In the case of prebiotic chemistry, the adjacent possible defines all those molecular reactions that were directly achievable in the primordial soup. Sunflowers and mosquitoes and brains exist outside that circle of possibility. The adjacent possible is a kind of shadow future, hovering on the edges of the present state of things, a map of all the ways in which the present can reinvent itself.

Treehugger reports today that a cutting-edge green community, breaking ground both in its design and its site (it was gentrifying an historically lower income, African-American community) is facing foreclosure. The explanation, in part, is because the development skipped ahead of the adjacent possible:

This was a cutting edge design, by the greenest of cutting-edge architects. Most developers build the same thing over and over again so that they get to know their costs really accurately; when you are the first, you don't. You build in contingencies, and may even benefit from the fact that in a downturn, construction costs drop significantly, but green roofs, solar thermal hot water and other green features cost money. Purchasers are not often willing to pay their full value because they are thinking about investment and resale, and banks don't make it easy to get mortgages on the green goodies, so your margins on a green, innovative or different building are often smaller.

Move one square to the left, and you are a genius. Skip over a square, and you are a failure, ahead of your time. This seems to be one of the classic problems with the green movement. We try to skip over steps, assuming that the rest of society will make the leap with us. Not so. 

With respect to cap-and-trade, there has been significant argument that its advocacy skipped a vital step—linking cap-and-trade to where the American public is now. In the Daily Kos, Frank Luntz, the pollster and wordsmith, had this to say about bringing climate change into the adjacent possible:

Luntz's report, "The Language of a Clean Energy Economy," finds that the majority of the public across the political spectrum is convinced that global warming is happening and caused at least in part by humans. But, Luntz says, talking about the problem won't win support for the legislation that would solve it. Among both Democrats and Republicans polled by his firm, addressing climate change was the least important reason to support a cap-and-trade policy.

So what should environmentalists say instead? Luntz suggests less talk of dying polar bears and more emphasis on how legislation will create jobs, make the planet healthier and decrease US dependence on foreign oil.

In innovation, there are no skipped steps. Moving from the present to the adjacent possible is the only route to transformation, one step at a time. Many have argued that there is no time for incremental change, but moving along the continuum of the adjacent possible does not necessarily mean a lengthy timeframe. Rather, it means linking the next vision to the one we are already connected to. For example, the internet went from text based pages to picture to video to facebook in just over a decade.

Now let me bring this back to law. Laws, regulations and programs promoting green and energy efficient construction must build on the adjacent possible. When they do not, as in the IRS Bond Requirements for the Destiny USA Project (which mandated completely unattainable green features and job creation obligations), they are destined for failure. When they do, like the 1603 grant for solar power (great article on 1603 grant results here), they can spur a whole industry forward and radically reduce the price of solar panels. 

As of February 25, 2011, a total of 7,180 alternative energy projects were funded through the §1603 program, totally $6.4 Billion in Treasury funding...Whereas solar P.V. installations in 2010 grew by 114% over 2009, netting $757 Million in 1603 grants, industry analysts forecast that solar installation will grow by an even larger factor through 2011. Solar has been receiving more attention in recent months from consumers, industry analysts and property owners alike. This attention has raised awareness of the benefits to installing solar, resulting in a spike in ground mounted and rooftop P.V. installation. In 2011 and beyond, the authors are confident improved technology and increased economic incentives will meet with this awareness to result in a marked increase in the amount of cash grants dedicated to solar technology.

The most audacious ideas are those that build on what already works, and makes it better, faster and more impactful. The same is true for regulation. Move forward to the adjacent possible, one step at a time.

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I covered the messy breakdown of the Carousel/Destiny USA project in Syracuse on Monday.  In short, the Destiny USA project was selected as a green "demonstration" project under the 2004 Green Bonds program.  $255 million in tax exempt bonds were issued on behalf of the project, the revenue of which was supposed to be used to implement the green features of the project.  As of now, none of the green features have been implemented, and the developer has intimated that even if the project is fully built out, the green features will not be included.  The IRS will have to decide whether to rescind the tax exempt status of the bonds for failing to meet the green requirements.

I have written at length about creating effective green incentives and regulations (see my Regulating Green Series here).  For me, the most interesting part of this debacle is what it reveals about a major green incentive program.  The Green Bonds program was developed as a part of the America Jobs Creation Act of 2004.  In theory, the program was intended to: 

 finance environmentally friendly development. The objective is to reclaim contaminated industrial and commercial land (brown fields), and encourage energy conservation and the use of renewable energy sources.

Although the goals of the Green Bonds program were clearly noble, as I see it the program was doomed from the start. No market rate project in 2005 could have met all of these requirements.  Thus, the proponents of the projects had reason to overstate the green components of their projects to access $2 billion in tax free capital for the projects. 

According to the IRS Guidance (available here) $2 billion in AAA tax exempt bonds were authorized by the Federal government to be awarded to four demonstration projects.  To qualify for the bonds, the four projects in aggregate had to:

1. Reduce energy consumption by more that 150 megawatts annually compared to conventional generation;
2. Reduce daily sulfur dioxide emissions by at least 10 tons compared to coal generated power;
3. Expand by 75% the domestic solar PV market in the United States as compared to the expansion of that market from 2001-2002, which was 14.424 megawatts (which means an aggregate increase of approximately 11 megawatts, or an average of almost 4 megawatts of PV power per projects);
4. Use at least 25 megawatts of fuel cell energy generation.

In addition, each project had to be at least 1,000,000 square feet or 20 acres and: 

1. At least 75% of the square footage had to be LEED certified;
2. The wood had to be certified under the Sustainable Forestry Initiative or the American Farm Tree System;
3. Reclaim a brownfield site

Beyond the green features, the projects also had to create at least 1000 construction jobs and 1,500 full time equivalent jobs. 

In addition to the requirements of the Green Bonds, the Destiny USA project entered into a Memorandum of Understanding with the EPA (available here and summary below from Syracuse.com) committing to: 

1. Using green building design, construction and operation principles to obtain the highest levels of certification from the U.S. Green Building Council's Leadership in Energy and Environmental Design
   program;
2. Retrofitting more than 100 construction vehicles with diesel particulate filters and using clean fuel, which will reduce emissions by nearly 85 percent;
3. Implementing techniques to reduce idling of vehicles during construction
4. Becoming partners in EPA's Energy Star and WaterSense programs,
   which require the use of energy- and water-efficient appliances;
5. Using over 3,000 tons of coal ash in place of using newly-manufactured Portland Cement, which will reduce greenhouse gases by over 3,000 tons.
    

As a policy measure, the green bonds were destined to be ineffective.  For a green incentive to be truly beneficial, it needs to set out goals that stretch its recipients to higher levels of sustainability, but not so pie-in-the-sky that they create an incentive to greenwash their projects.  This is a tough balance to strike.  Doing so requires that the regulatory bodies have a good understanding of the state of the green market that they are looking to incentivize. It is not enough to throw public money at any project claiming to be green.  The result is projects like Destiny USA, which give a bad name to green building and public financing of green projects. 

By contrast, good investment in green projects can bring real benefits.  I analyzed the investment of ARRA funds in green projects.  Per public dollar, these investments were among the most efficient ways of creating jobs of all of the ARRA money spent. (See my analysis here).  As Congress debates the value of continuing public investment in green projects and renewable energy, the debate must not only be about whether, but how, the support will be crafted and implemented.  The road to green is paved with good intentions. 

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Although most of you are probably in St. Martin enjoying fruity cocktails on the beach, we here at GBLB are hard at work.  So take a break from your mai-tai to read about a very interesting appellate decision out of California on weighing the relative priorities of green development.  The case, brought to our attention by a loyal reader, is Sven Toorvald v. City of West Hollywood, and the decision is available here.

A quick summary of the case is as follows:

Mr. Toorvald installed a small solar panel to power his halogen security lights, presumably like the one available here from Amazon.com.  Importantly, the Court notes:

The opening brief describes plaintiff's system, "an industry standard collector (one foot by one-foot comparable in size to a solar panel on a freeway call box), separate inverter and storage battery, [which] collects, stores and distributes solar energy for electrical generation."

Next door, a developer sought to build a four-story, nine-unit courtyard condo building with subterranean parking.  The development was a "green" development in that it complied with the West Hollywood green building regulations, was a "high achieving" green building project that qualified for an additional unit density bonus and had solar panels.  In addition, the project was an urban in-fill project.  

The controversy emerged because the green development was going to "cause an obstruction to his solar absorption for eight months of the year."  Mr. Toorvald alleged that this violated Municipal Code Section 19.20.170(A) which  mandates:

A structure, fence, or wall shall not be constructed or modified in a residential zoning district, and vegetation may not be placed or allowed to grow, so as to obstruct more than 10 percent of the absorption area of a solar energy system on a neighboring parcel at any time.
 

The trial court determined that Mr. Toorvald's solar lighting installation was not a "solar energy system," and therefore its obstruction did not violate Section 19.20.170(A). 

To justify this conclusion, the trial court and the appellate court go through a convoluted set of contortions to conclude that a solar panel that produces electricity for a lighting system is not "Any solar collector or other solar energy device whose primary purpose is to provide for the collection, storage and distribution of solar energy for...electricity generation..."

If that sounds like a silly argument, it is. What the courts were really trying to resolve is whether a high-value green development project was "worth" more than a tiny solar light.  The problem was not in the decision--I believe that the court and the city council rightly decided that an appropriate, in-fill green development should be approved.  The problem was in the justification, and the clumsy regulatory drafting which it uncovered.  "Solar energy system" was not defined in the Municipal Code.  The definitions that the Court refers to in state legislation were equally broad. 

Now that green buildings and renewable energy installations are becoming more commonplace,  city councils and planning commissions will be forced to weigh the environmental impact of competing development.  Is an in-fill development more environmentally worthwhile than a tiny solar installation? Just like health and safety regulations, these regulatory bodies will need to have discretion and guidelines to weigh the relative factors on environmental impact.

Because if it looks like a solar energy system and it quacks like a solar energy system, it probably is a solar energy system.

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I have curly hair. More heat and humidity = bad hair days.  Thus, from a purely personal perspective, climate change-caused increases in temperature and intensity of storms will be, for me, a nuisance. 

Apparently, my perspective on this does not count as much as that of the Supreme Court.  Fortunately, the nine justices (well, actually, eight because Sonya Sotomayor recused herself) will be deciding whether climate change actually is a nuisance.  Today the high court announced that it will hear American Electric Power v. Connecticut. 

In the original suit, a coalition of eight states, local governments and non-profit land trusts sued major power producers alleging that the power producers had created a common-law nuisance by adding 650 million tons of carbon into the atmosphere. 

The main issue is one of my perennial favorites in the green regulation arena--federalism.  The district court determined that the case could not go forward because the suit raised political questions which were not justiciable by the courts.  The Second Circuit reversed, arguing that, while complex, the issues boiled down to basic environmental torts which had been handled by the courts in the past. The Second Circuit decision is available here.

Many Republicans have been trying to restrict the EPA's ability to regulate greenhouse gas emissions pursuant to the Clean Air Act, and Harry Reid has already announced that comprehensive energy legislation, including cap-and-trade is off the table indefinitely.

Thus, If the Supreme Court rules that regulating greenhouse gas emissions is a political question, that question has already been answered.  But if the Court decides that carbon emission is a nuisance, and capping of carbon emissions is an available remedy, the politicians will be left with little choice other than to create a compromise on how to cap carbon emissions comprehensively.  If they do not, it leaves open the opportunity for copy-cat litigation in every state and municipality across the country, with potentially differing mechanisms for capping greenhouse gas emissions.

The showdown is likely to happen in the spring, and be on the lookout for an 4-4 split, since Justice Sotomayor recused herself.   

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Several stories recently have highlighted the other side of the regulatory coin--regulations are onlyeffective if they are enforced. 

On Monday, the Department of Energy issued 27 penalty notices to companies for failure to meet energy efficiency and water conservation standards.

According to Green Wombat:

For the first time in 35 years, the United States Department of Energy is moving to enforce decades-old energy efficiency and water conservation standards for products like refrigerators, light bulbs and shower heads.

Baltidome challenged Baltimore's enforcement of the city's green building code with respect to a new development being considered for the city center. 

Whether these enforcement actions are legitimate (Baltimore lawyer Stuart Kaplow did a little digging and reported to me that the senior policy making public official reviewing the project  assured him that the project, as designed, complies with the law), it is worth discussing what impact enforcement of energy efficiency codes, building codes, tree planting regulations and open space requirements THAT ARE ALREADY ON THE BOOKS could have on greening the United States. 

Part of the problem is that putting laws on the books is cheap, and enforcement is expensive.  It requires expertise, personnel, lawyers, inspectors and so forth to make it work.  In this era of contrained resources, it is nice to see that the DOE is enforcing some of its regulations.  Let us hope that other regulatory bodies follow suit, like the Federal Trade Commission, which is in charge of false green advertising claims, but has only filed a handful of enforcement actions over the years.   

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A few weeks ago, the EPA released its Sustainable Design and Green Building Toolkit for Local Governments. The Toolkit:

is designed to assist local governments in identifying and removing permitting barriers to sustainable design and green building practices. It provides a resource for communities interested in conducting their own internal evaluation of how local codes/ordinances either facilitate or impede a sustainable built environment, including the design, construction, renovation, and operation and maintenance of a building and its immediate site.
 

The toolkit can be downloaded here.

The Toolkit was developed by EPA Region 4, and we are very excited to have Karen Bandhauer, an Environmental Scientist at EPA Region 4 for an interview about the Toolkit.
 

GBLB:  Why did you develop the Toolkit?

KB: The Toolkit was the result of a relationship between the EPA and Roswell, GA. The city approached EPA wanting to develop green, protect natural resources and provide resources for its residents. The Roswell representatives told us that there had been some innovative projects that came into their permitting pipeline, and had run into permitting problems because of green features. They realized they were creating barriers to projects that they wanted to have in their community. The asked us whether we could help them create some resources to help communities identify the barriers in their codes to developing green. Some funding became available through the internal EPA innovation work group, about $50,000 in seed money for innovative projects. This project was put forward as an innovation project in 2008 by Region 4. That got it started. The project ended up being a partnership with Smart Growth and Green Building at [EPA]  headquarters.

GBLB: What does the Toolkit contain?

KB:  The Toolkit has three parts:  an assessment guide that allows users to tak a look at their codes and ordinances under the categories of the LEED process [sustainable sites , water efficiency, energy and atmosphere, indoor air quality, materials & resources]. The assessment tool identifies objective and rationale for each category, and then questions for communities to identify gaps in the current regulatory system, then a list of potential tools and techniques [for addressing those gaps].

There is also an assessment tool—green, yellow and red—to determine how well the community is promoting each practice. Green is where the tactic is either mandatory or incentivized, yellow is where the practice is typically allowed, and red is where the practice is hampered or prohibited [by the current regulations].

There is aslo a resource guide attached to each section which has tools, information and case studies. The resource guide has a compendium of policy tools, best practices and other materials. In some cases it might be an example of a community that has put in a model ordinance, it might be an example of a best management practice guide or a green roof technical specifications. It allows the user to get a good sensse of the existing information in the field without having to spend a lot of time searching around for it.

The last section is a guide for developing an action plan. We had not originally envisioned this section for the project, but the City of Roswell gave us feedback that they wanted advice on next steps. This is a step by step guide for changing the regulatory environment. It helps communities identify things they need to look for and address if they want to implement the changes to their regulations.

GBLB: What are some of the barriers that play out in communities?

KB: A lot are the ones you hear about, and some are community specific. One of the things that we heard about was barriers in the code to installing waterless urinals, reuse of greywater. Others were “unintended consequences”—some communities prohibit groundwater wells which prohibit geothermal. Or specific ordinances which require tree planting, but if there is a drought, there might be issues better addressed by native planting. Or street widths, which [were put in place for fire safety] but might matter in terms of building sustainable communities.

Other barriers are institutional or process oriented—specific to historical legacies like union involvement. We wanted to walk [communities] through from their environmental objective to how they could implement codes and ordinances to achieve those objectives. We tried to flip it—here’s the outcome you are trying to achieve, here are things that you can do through your permitting process to try and achieve them.

In no way is EPA trying to tell localities how to do their permitting process, but to give them resources to help them look at their codes and ordinances, and save some time and money in the process.

GBLB: Who is the intended audience?

KB:  Local government officials, and it could also be useful for developers and other private entities who are looking to develop green projects. We hope it will provide a resource for communities to bring their codes and ordinances in line with sustainable policy efforts.

GBLB: What is the status of the Roswell project?

We have completed the pilot project, and they have provided excellent feedback.
In addition, we held a Lean Kaizan event in Roswell [to identify potential efficiencies] in their land disturbance permitting process. If they wanted to incentivize a specific thing, communities can identify process improvements, allowing them to provide incentives without taxing additional resources. Roswell is continuing to work on that. We are going to work with them over time to promote the project as well as improve it.

GBLB: Have they made any changes to their code yet?

KB: Not yet. Now that the Toolkit is done and the Lean project is done, we will see where they want to take it.

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Yesterday, the EPA released its Sustainable Design and Green Building Toolkit for Local Governments.  The Toolkit: 

The Toolkit is designed to assist local governments in identifying and removing permitting barriers to sustainable design and green building practices. It provides a resource for communities interested in conducting their own internal evaluation of how local codes/ordinances either facilitate or impede a sustainable built environment, including the design, construction, renovation, and operation and maintenance of a building and its immediate site.
 

The toolkit can be downloaded here.

The Toolkit was developed by EPA Region 4, and we are very excited to have Karen Bandhauer, an Environmental Scientist at EPA Region 4 for an interview about the Toolkit on August 4.

Today, the Center for Climate Change Law at Columbia Law School issued for comment a draft model municipal green building ordinance.  The Model Ordinance is available for download here.  According to the Center for Climate Change Law:

Unlike other model ordinances that detail technical specifications, this ordinance presents a framework for the implementation of existing technical standards and a streamlined procedure for their compliance and enforcement. The model ordinance accommodates the rapidly developing field of substantive green building standards by allowing for the adoption of new standards within the ordinance’s framework.
 

Notably the Model Ordinance attempts to deal with the issues related to preemption, non-delegation, and antitrust, and a separate analysis document is available on the site as well.

I look forward to working through these documents and commenting on them further, and looking forward to hearing your thoughts on these resources. 

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On Friday, June 4, 2010 from 8:00 - 10:00 am, the Delaware Valley Green Building Council is hosting a green building forum with Pennsylvania state Senator John Rafferty to discuss proposed legislation aimed at promoting more efficient use of energy, water and natural resources through the use of green building standards for state owned and state funded green buildings.

The meeting will provide an opportunity to learn more about House Bill 444 and
Senate Bill 728, which will require that high performance green building standards be
implemented in most new or remodeled building projects owned or funded by the
Commonwealth of Pennsylvania.

I have attached the flyer here, I would love it if GBLB readers in the Philadelphia area would join me at this great event!

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The New York Times had an interesting Op-Ed today on how municipalities can supplement LEED by requiring follow-up energy tracking. 

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I have discussed many issues related to regulating green here at GBLB (for the Regulating Green best practices series, go here).  Some communities seeking to regulate green building, clearly with the best of intentions, have gone astray.  The most vivid examples of this were the Las Vegas green tax credit which threatened to bankrupt Nevada and the Albuquerque regulation which the City Solicitor failed to analyze for federal preemption issues.  But small communities are not immune from regulatory snafus: 

Recently, I came across a density bonus regulation for Madison, New Jersey.  The regulation reads as follows (emphasis mine): 

Maximum dwelling units per acre: 12 units per acre base density, with bonuses as follows:

(a) Incorporation of green building/design techniques to achieve at least a Silver level LEED-certified project: bonus of 10% over base density. (NOTE: The applicant shall demonstrate the ability to achieve this standard prior to receiving preliminary approval and shall commit to providing those systems, site improvements and design features consistent with Silver LEED certification.)
 

This regulation would be acceptable if the word "qualify" were substituted for "achieve."  There is simply no way for an applicant to demonstrate their ability to achieve a certification which is in the hands of a third party agency at the outset of the project.  Moreover, what design professional would be able to provide this type of guarantee? 

The Madison, NJ example demonstrates the importance of a good understanding of the LEED system (or other certification system) before utilizing it in regulatory drafting.  Design professionals need to be aware of the obligations they are assuming when a project seeks to comply with local regulations.  Finally, project owners need to ensure that they can comply with the local regulations, or seek legally binding representations by the government entity ensuring that their efforts to comply are sufficient. 

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On October 5, 2009, President Barack Obama issued an executive order entitled "Federal Leadership In Environmental, Energy and Economic Performance." According to the preamble to the EO, the purpose is to:

In order to create a clean energy economy that will increase our Nation's prosperity, promote energy security, protect the interests of taxpayers, and safeguard the health of our environment, the Federal Government must lead by example. It is therefore the policy of the United States that Federal agencies shall increase energy efficiency; measure, report, and reduce their greenhouse gasemissions from direct and indirect activities; conserve andprotect water resources through efficiency, reuse, and stormwater management; eliminate waste, recycle, and prevent pollution; leverage agency acquisitions to foster markets for sustainable technologies and environmentally preferable materials, products, and services; design, construct, maintain, and operate highperformance sustainable buildings in sustainable locations; strengthen the vitality and livability of the communities in which Federal facilities are located; and inform Federal employees about and involve them in the achievement of these goals.
 

It is further the policy of the United States that toachieve these goals and support their respective missions,agencies shall prioritize actions based on a full accountingof both economic and social benefits and costs and shall drive continuous improvement by annually evaluating performance,extending or expanding projects that have net benefits, and reassessing or discontinuing under-performing projects.

Finally, it is also the policy of the United States thatagencies' efforts and outcomes in implementing this order shallbe transparent and that agencies shall therefore disclose results associated with the actions taken pursuant to this order onpublicly available Federal websites.
 

 Whoa.  I will analyze in later posts the various programs included in the EO, but first it must be recognized that this is an enormous step.  The EO sets out ambitious goals for every federal agency to pursue sustainable priorities, including developing net-zero buildings, and to report on their environmental performance. 

Can the president do this with the stroke of a pen? The answer is a definite maybe. 

Let's start with the basics.  What is an Executive Order exactly? 

U.S. Presidents have issued executive orders since 1789. Although there is no Constitutional provision or statute that explicitly permits executive orders, there is a vague grant of "executive power" given in Article II, Section 1 of the Constitution, and the statement "take Care that the Laws be faithfully executed" in Article II, Section 3. Most executive orders are orders issued by the President to US executive officers to help direct their operation, the consequence of failing to comply being removal from office.

The scope of a president's authority to make law via executive order was analyzed in YOUNGSTOWN CO. v. SAWYER, 343 U.S. 579 (1952)

To avert a nation-wide strike of steel workers in April 1952, which he believed would jeopardize national defense, the President issued an Executive Order directing the Secretary of Commerce to seize and operate most of the steel mills.  

The major distinction drawn in Younsgtown was between law and policy:

The President's power, if any, to issue the order must stem either from an act of Congress or from the Constitution itself. There is no statute that expressly authorizes the President to take possession of property as he did here. Nor is there any act of Congress to which our attention has been directed from which such a power can fairly be implied. Indeed, we do not understand the Government to rely on statutory authorization for this seizure.

So what is the authority under which President Obama issued the Federal Leadership In Environmental, Energy and Economic Performance EO? Um...Um...Um...No specific law or statute is cited, indeed the only legal justification is:

By the authority vested in me as President by the Constitution.

This is not as thin on the ground as it may seem.  When the government acts as a "market participant"--i.e. like a private actor--it has broad flexibility.  For example, government entities acting as market participants are not subject to the same Constitutional restrictions as where the state is governing private entities.  See, e.g. SOUTH-CENTRAL TIMBER V. WUNNICKE, 467 U. S. 82, 93 (1984) (“Our cases make clear that, if a State is acting as a market participant, rather than as a market regulator, the dormant Commerce Clause places no limitation on its activities.”)  The federal government is largely free to make its own requirements for its purchases and projects, which may include setting a standard for its practices, like net-zero.

However, the requirements set forth in the Federal Leadership In Environmental, Energy and Economic Performance EO are likely to be costly, time-consuming and restricting on Federal agencies.  For example, beginning in 2020, all new Federal buildings that enter the planning process are designed to acheive net-zero energy by 2030.  95% of new contract actions must be energy efficient. 

This is not a bad thing--it is very strong and ambitious.  If implemented, it will be a significant step forward in environmental stewardship.  The General Services Administration alone owns and leases over 354 million square feet of space in 8,600 buildings in more than 2,200 communities nationwide.  However, those who seek to challenge this action may argue that it exceeds the authority of the president by putting unacheivable requirements on the Federal agencies, thus preventing them from carrying out their missions. 

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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. 

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Throughout the Regulating Green series, I have tried to identify strategies which will lead to great green regulations.  I gave a presentation to municipalities in Southeastern PA who are considering green regulations.  In preparing for the presentation, I identified a few additional considerations for green regulations.  Here are some of the thoughts I shared: 

1. Avoid improper delegation of authority

Delegation of a power normally exercised by government authorities to a private agency is considered an improper delegation of authority.  Requiring green certification by a third party entity (like the USGBC) in order to get a Certificate of Occupancy would be subject to this challenge.  This challenge probably would not apply for incentive based programs or for municipalities' own buildings.
 

2. Develop a sound rational relationship between the regulatory means and the ends

In enacting land use regulations, the means a municipality uses to regulate must bear a a real and substantial relation to the ends sought.  Thus, green regulations should include a clear intent, be supported by external authority, and implement  rational regulatory mechanisms that tie to the original intent of the regulation.
 

3.  Ensure that your regulations are not void for vagueness

Regulations violate due process if a regulation fails to give a person of ordinary intelligence fair notice that contemplated conduct is forbidden or encourages arbitrary enforcement, or both.  Green regulations which include language like "LEED or equivalent standard" might not withstand a vagueness challenge.

4. Be careful of imposing arbitrary and excessive fees

If the cost of compliance with the regulation is too high, it may amount to a virtual taking of the property of the persons being regulated. This standard is high--the value of the property must be reduced to almost nothing for a taking to occur.  But, regulatory license fees must be reasonably related to the costs associated with the services being provided.  If a municipality imposes a fee for standard projects (i.e. projects which are not green), there could be a challenge that the license fees are not related to the services being provided.
 

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Guest post contributed by Holly McCarthy, who blogs at Organic Coupons. She invites your feedback at hollymccarthy12 at gmail dot com
 

Although the economy has taken a turn for the worse in recent months, one thing is for sure: the world will continue to see construction and development in all corners for many years to come. As the population continues to grow, new areas will need to be developed and old ones will need to be renovated or razed to make room to build up. At any rate, stricter laws must be enacted in the United States if we hope for the world to follow suit.

The US has gone through many building booms and continues to grow and develop in areas of highly concentrated populations. As we continue to build bigger and better we must keep in mind that uses sustainable resources and materials is the right way to go.

Plenty of products are now being developed and produced that will not leave a heavy carbon footprint or fail to decompose once put in a landfill. Recycled materials are being used and considered for use in a variety of building applications and energy efficiency is a key factor in the design of new buildings.

Cities and states have long made sure that builders and contractors are doing their part to maximize space without making a significant impact on the surrounding areas. It only makes sense that we look at the world through the same lens. Why would we want to build something—even if it’s beautiful—if it’s going to make a huge mess for someone else to clean up?

It is time to call for action regarding the production of building materials and enact laws that will make sustainability something that is finally considered when the blueprints are being drawn, not when the building is being scrapped.

Rejuvenation of cities is also possible through green roof initiatives, where owners of buildings are offered incentives for helping to reduce temperature and carbon dioxide levels in major cities by encouraging the growth and cultivation of ecosystems atop the large and small buildings. A simple solution can definitely yield some positive results.

Green building standards will one day be the norm; they are quickly becoming something that tenants and investors are looking for as well. Now all we need are the laws that will make what we know is that right to do mandatory.
 

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1.  Have a clear intent

In Going by the Book, authors Eugene Bardach and Robert Kagan state, “A regulation requirement is unreasonable if compliance would not yield the intended benefits…” In other words, a regulation should have a clear intent--like increasing the number of high performance buildings or reducing greenhouse gas emissions or improving indoor air quality--and compliance with the regulation should acheive the intent. 

2. Evaluate extreme outcomes

Las Vegas instituted a tax cut for green buildings so sweeping and easy to qualify for that it threatened to cut a giant hole in the state's budget.  In planning regulatory mechanisms, regulators must look at a likely scenario of compliance and an extreme case to ensure that all outcomes are considered, and the extreme case is prevented. 

3. Carefully analyze utilizing third party green building criteria and certification systems

Many local governments incorporate third party green building criteria (and in some cases, certification) like LEED, NAHB-Green, Green Globes, etc. as the core of their green building regulations.  I will do a full post on this topic as part of this series, but regulators need to examine the pros and cons of choosing a third party system as a component of their regulations.  

4. Create measurement and verfication mechanisms

In conjunction with point number 1 above, compliance with the regulations should be measurable and verifiable.  Looking to decrease greenhouse gas production? Require reporting on energy usage.  Looking to increase green buildings in your municipality? Require receipients of tax credits to indicate what green components the credit enables them to add that they would not have done in the absence of the credit. 

5. Develop valid enforcement mechanisms

Washington DC has come under major criticism for requiring a performance bond which is forfeited in the event that a building fails to comply with the green requirements of the DC green building act.  Essentially, this is not what a performance bond has traditionally been used for, and the surety industry has expressed significant concerns over providing bonds for this purpose.  Another mechanism DC could have used was to levy fines, or withdraw (or refuse to issue) occupancy permits, if the project did not meet its green requirements.  

6. Check for state and federal preemption 

Last year, the HVAC industry associations sued the City of Albuquerque to prevent the city's green building code from taking effect.  They argued that the energy efficiency requirements in the green building code was preempted by federal standards for HVAC equipment.  In the course of the litigation, it came out that the city attorney had not checked for federal preemption. 

In addition to federal standards, many states have state-wide building codes which may preempt local municipalities' ability to require construction to conform to more stringent standards.

7. Anticipate litigation

The first envrionmental legislation was passed in the early 1970s. There is still litigation on the interpretation of sections of the Clean Water Act and the Clean Air Act.  The purpose of the judiciary is to interpret and clarify regulations, and this process is a normal part of new regulatory schemes.

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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

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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.

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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.

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