Legal Considerations When Building Green J. Catherine Kunz, Esq. Stephen McBrady, Esq. Christopher...

Legal Considerations When Building Green

J. Catherine Kunz, Esq. Stephen McBrady, Esq.

Christopher Cheatham, Esq., LEED AP

Green Building Investments Are Working . . .

But Green Building Liability Issues Are Emerging . . .

Legal Considerations: Building Green

What Will You Learn?

• Significant green investments, regulations

• Some regulations problematic

• Failure to achieve certification a risk

• Building performance is difficult to control

Legal Considerations: Building Green

Agenda

• Green Building Basics

• Green Government

• Legal Considerations

• Green Building Regulations

• LEEDigation

• Green Defects

What is Green Building?

How do you measure “green”?

Construction Completed

How has the government

supported green building?

The American Recovery and Reinvestment Act (ARRA)

Green Government

$4.5 billion for high-performance, green buildings

$3.6 billion for energy efficiency and modernization

$6.3 billion for the State Energy Program and EECBG

$5 billion for weatherization of homes

Most ARRA Green Building Funds Not Spent. . .

Green Government

February 17, 2010

Green Government

But Early Problems are Emerging . . .

Green Government

• 26% improvement in water efficiency by 2020;

• 50% recycling and waste diversion by 2015;

• 95% of all applicable contracts will meet sustainability requirements;

• Implementation of the 2030 net-zero-energy building requirement;

• Implementation of the stormwater provisions of the Energy Independence and Security Act of 2007, section 438

Executive Order 13514 – October 5, 2009

Green Government

“Recommendations should also explore the feasibility of . . . (c) using Federal Government purchasing preferences or other incentives for products manufactured using processes that minimize greenhouse gas emissions . . . .”

Executive Order 13514 – October 5, 2009

Green Government

GSA Makes Changes to Bolster Sustainability Efforts

“The Office of Federal High-Performance Green Buildings will expand its reach to provide federal agencies with measurement tools and policies to meet its sustainability mandates.”

February 22, 2010

Green Government

• One of first LEED certified projects in 2002 – Nathaniel R. Jones Federal Building

• Building portfolio includes 40 LEED certified buildings

GSA Office of Federal High-Performance Green Buildings

“[A]ll GSA new construction projects and substantial renovations must achieve Silver certification through the Leadership in Energy and Environmental Design (LEED®) Green Building Rating System of the U.S. Green Building Council. Projects are encouraged to exceed LEED® Silver and achieve LEED® Gold.”

Green Building Regulations

Green Building regulations are prevalent:

•45 states •132 cities •35 counties •28 towns •34 state governments •13 federal agencies

- U.S. Mayors Conference, Mainstreet Economic Recovery Report

Are green building regulations properly drafted?

• DC Green Building Act: what’s the enforcement mechanism?

• Vancouver Catch 22: is there a conflict?

• FTC Complaint: are LEED regulations anti-competitive?

What’s the enforcement mechanism?

DC Green Building Act of 2006

• January 1, 2012

• Private construction > 50K SF

• LEED certified

“(b) On or before January 1, 2012, all applicants for construction governed by section 4 shall provide a performance bond”

“(g) All or part of the performance bond shall be forfeited to the District and deposited in the Green Building Fund if the building fails to meet the verification requirements described in sections 3 and 4.”

DC Green Building Act of 2006

D.C. Green Building Act of 2006

Surety and Fidelity Association of America and Surety Bond Producers:

“The new law incorrectly uses the term ‘performance bond.’ In short, the performance bond assures that the construction contract, and therefore, the project will be completed.”

• D.C. Green Building Act of 2006

Regulatory Compliance

Is there a conflict?

Are LEED regulations anti-

competitive?

Federal Trade Commission Complaint October 20, 2009

“The favoritism shown FSC-certified products by USGBC is inconsistent with the American National Standards Institutes's (“ANSI”) due process requirements and OMB Circular No. A-119, which establishes the principles that voluntary, private sector standards must meet if federal agencies wish to use them, including openness, balance, due process, an appeals process, and consensus.”

• D.C. Green Building Act of 2006

Regulatory Compliance

LEEDigation = LEED + litigation

Legal Considerations: LEEDigation

Shaw Development v. Southern Builders

• Shaw retained Southern Builders to construct $7 million condo project

• Shaw sought LEED Silver certification

• The Contract

• Allegation: Breach of Contract

• Allegation: Negligence

• The Damages

Project is designed to comply with a Silver Certification Level according to the U.S. Green Building Council’s Leadership in Energy and Environmental Design (LEED) Rating System, as specified in Division I Section “LEED Requirements.”

Hypothetical

Project will be constructed to comply with a Silver Certification Level according to the U.S. Green Building Council’s Leadership in Energy and Environmental Design (LEED) Rating System, as specified in Division I Section “LEED Requirements.”

Hypothetical

Project will comply with a Silver Certification Level according to the U.S. Green Building Council’s Leadership in Energy and Environmental Design (LEED) Rating System, as specified in Division I Section “LEED Requirements.”

Hypothetical

Bid Protest – DePonte Investments, Inc.

“DePonte also asserts that the [Board] unreasonably assigned its proposal a weakness with regard to experience on the basis that its proposed architect lacked LEED experience.”

Bid Protest – DePonte Investments, Inc.

“The evaluation in this area was reasonable. LEED experience was significant because the [solicitation] required the building here to meet specific LEED requirements.”

How are green building

defects different?

Legal Considerations: Green Defects

Energy Efficiency

Some Buildings Not Living Up to Green Label

“The Federal Building in downtown Youngstown, Ohio . . . has LEED certification, the country’s most recognized seal of approval for green buildings. But the building is hardly a model of energy efficiency.

According to an environmental assessment last year, it did not score high enough to qualify for the energy star label. . . . The building’s cooling system, a major gas guzzler, was one culprit. Another was its design . . . .”

One of first GSA LEED certified projects from 2002 – Nathaniel R. Jones Federal Building

“NOTE: CERTIFICATION MAY BE REVOKED FROM ANY LEED PROJECT UPON GAINING KNOWLEDGE OF NON-COMPLIANCE WITH ANY APPLICABLE MPR.”

Mr. Horst, the LEED executive, said that LEED may eventually move toward the E.P.A.’s Energy Star model, which attests to energy efficiency only for the year the label was given, similar to restaurant ratings.

“Ultimately, where we want to be is, once you’re performing at a certain level, you continue to be recertified,” Mr. Horst said.

LEED De-certification is on the Horizon…

Legal Considerations: Solutions

What do we recommend?

• GSA as a green building clearinghouse

• Move away from LEED codification

• Avoid LEED certification guarantees

Cathy Kunz –

ckunz@crowell.com

Steve McBrady -

smcbrady@crowell.com

Chris Cheatham -

ccheatham@crowell.com

How can we help?

www.greenbuildinglawupdate.com

Legal Considerations When Building Green J. Catherine Kunz, Esq. Stephen McBrady, Esq. Christopher...

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