The Opportunity for ENERGY STAR

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While much of the media hyperbole has focused on the Trump Administration’s 2018 Budget request of $5.7 Billion for the Environmental Protection Agency, a reduction of $2.6 billion, or 31%, from the 2017 level of funding, little attention has been paid to specific priorities including the resultant opportunities for green building.

One of the key ways the U.S. Government sets priorities is through the budget. Last Thursday the Trump Administration submitted to Congress a 53 page “skinny” budget reprioritizing federal spending. And while the Administration will propose a more comprehensive budget in May for fiscal year 2018, this blueprint will factor large into the ongoing negotiations over the continuing budget resolution for fiscal year 2017 that expires on April 28, 2017.

Skinny budgets are a common practice for a first year of a new President, but this lean 53 page blueprint may be the skinniest. The Congressional Research Service noted President Jimmy Carter’s first budget was 101 pages, President George H. W. Bush’s was 193 pages, and President George W. Bush’s was 207 pages.

Despite its brevity, the skinny budget has brought cries of an apocalyptic end of times. This brief blog post cannot comprehensively address the EPA budget, so instead it will highlight some of the opportunities that exist for green building.

The budget reflects a focus on core statutory requirements of the EPA and the important role of the States and others in protecting the environment. It seeks to curtail policy made by “sue and settle” tactics where an ideologically sympathetic group is invited by a federal agency to file a lawsuit with the aim of settling the case with a result not legislatively achievable.

The budget skinny:

Discontinues funding for the Clean Power Plan, international climate change programs, climate change research and partnership programs, and related efforts – saving over $100 million compared to 2017 levels; all campaign pledges.

Reins in Superfund administrative costs and emphasizes efficiency efforts by funding the Hazardous Substance Superfund account at $762 million, $330 million below the 2017 level; advancing State Brownfields programs and making more valuable the LEED Brownfield credit.

Eliminates funding for more appropriately state and local efforts such as the Chesapeake Bay cleanup, and other programs brought about by sue and settle tactics.

And significantly, eliminates more than 50 EPA programs including Energy Star.

From its legislative origins on March 15, 1992, Energy Star began as a series of voluntary programs, like Green Lights and the Methane Program seeking to reduce energy consumption by power plants, that morphed into a voluntary labeling program to identify and promote energy efficient products (first computer equipment and later everything from dishwashers to refrigerators), eventually ballooning into a more than $57 Million bureaucracy that also includes the online tool Portfolio Manager that is key to green building programs.

Portfolio Manager uses an automated benchmarking tool that can award Energy Star certification to buildings that have uploaded 12 months of consecutive energy usage data and received scores of 75 or above, meaning that when compared to other similar buildings of the same space type, based on a national average, a building performed better than 75% of similar buildings. More than 1.6 million homes and more than 25,000 commercial buildings carry Energy Star certification

Energy Star appliances and Portfolio Manager ratings have been incorporated into green building standards, including by way of example that a Portfolio Manager score of 75 is a prerequisite for LEED for Existing Buildings.

Several cities even have mandatory reporting requirements that certain privately owned commercial buildings report energy usage to the government using Energy Star, including Washington, DC, Seattle, and San Francisco.

And since 2010 the GSA has only entered into a lease for federal agencies in a building with an Energy Star score of 75 or above, a policy expected to soon end.

Much that Energy Star has transmogrified into can be spun positively, but it is a very long way from the power plant program authorized by Congress in 1992. As the Trump Administration moves to deconstruct the administrative state, many wonder if Energy Star is a good role or even a proper role for the federal government?

A widely circulated leaked copy of a preliminary version of the skinny contained the following language, that was not in the final version, but likely accurately portends the changing culture in Washington, DC, “EPA should begin developing legislative options and associated groundwork for transferring ownership and implementation of Energy Star to a non-governmental entity.” And also noting that the budget request would leave $5 Million “for the closeout or transfer of all the climate protection voluntary partnership programs,” the only question may be who acquires Energy Star.

Many have already concluded that the likely non-governmental entity to take over Energy Star is the U.S. Green Building Council associated, Green Business Certification Inc. that today provides independent professional credentialing and project certification programs related to green building; not to mention GBCI’s natural compulsion to protect the heavily Energy Star reliant LEED. GBCI has been in a multi year acquisition phase for other standards and it is no secret that there have been discussions about Energy Star.

Another possible suitor for Energy Star is the Columbia Law School, Sabin Center for Climate Change. And while it might seem an odd fit, in particular at a time when academia is held in lower disregard than Congress, the program’s charismatic director, Michael Gerrard, might find fighting climate change through Energy Star preferable to being relegated to the permanent opposition.

Also proposed to be eliminated is the EPA WaterSence program. WaterSense products and services that have earned the label must be at least 20 percent more efficient than base codes and the close ties to green building programs including LEED also makes GBCI a likely candidate for that acquisition.

Once the dust settles from the ideological Armageddon over the budget request, it will become clear there are opportunities for Energy Star, for WaterSense, and for the voluntary stewardship of the environment.

The First BREEAM USA Certification


The Oaks, a 1.3 million square foot shopping mall located in Thousand Oaks, California, owned by Macerich is the first project achieve certification under the new BREEAM In-Use program for existing buildings.

Macerich, a leading owner, operator and developer of major retail real estate with a portfolio of over 50 shopping malls, also earned the #1 GRESB ranking in the North America Retail Sector in 2016 for the second consecutive year.

The Oaks was built in 1978, renovated in 1993 and again in 2007. The shopping mall has 100% LED lighting. 20% of the building’s energy consumption comes from photovoltaic panels on the roof. The Oaks is connected to the public transport network, providing customers with a range of sustainable transport alternatives. And the Oaks has particularly water efficient features, including waterless urinals, low flow taps and fixtures.

The Oak’s management describes that other U.S. based green building “assessment tools do not offer in place shopping center ratings, but that the BREEAM In-Use program was robust and flexible enough to fit The Oaks’ parameters while also providing Macerich with immediate operational efficiencies that fully support its corporate goals.”

BREEAM USA is the new joint venture between BRE and BuildingWise, the well respected U.S. based LEED certification consultancy headed by Barry Giles. Barry is now the CEO of BREEAM USA. For those who do not know, Barry is one of the icons of the green building industrial complex. I reported on a conversation we had in a blog post last year, BREEAM for Existing Buildings: The British are Coming.

BRE Global Ltd. is the 97 year old Great Britain based world’s leading authority on all aspects of the built environment (.. it all started with fire testing for homes), with over 2,261,237 BREEAM registered buildings across 78 countries in its sustainability assessment method.

While not in direct competition, it is useful to note that the 1st version of LEED in 1998 was a knockoff of the 1990 edition of BREEAM.

As Jerry Yudelson described in a blog post last week, “In 2016, LEED O+M/EBOM certified less than 700 projects, representing only a little more than 0.01% (that’s not a typo!) of the 5.8 million existing buildings in the US. That’s one in 10,000 buildings certified.”

Barry regularly points out that “LEED has done a stunning job with new construction, .. but existing buildings have been a difficult thing.” He explains that the prerequisites and tough requirements for an EBOM certification, including the LEED v4 prerequisite of an Energy Star score of 75, keep the vast majority of 5.8 million existing buildings in the U.S. out of the USGBC program.

Significantly, BREEAM In-Use does not have prerequisites and does not require anyone run a separate energy model. This is huge today and will become even more significant as the Federal government “closes out” the government program Energy Star (i.e., while components of Energy Star may be transferred to the private sector), such will be a blow to LEED projects that rely on the government program.

Born in part out of the belief that the “we are not putting our effort in the huge sector of the market that is not already efficient,” Barry’s new effort is also to focus on all those other buildings that “cannot get into the program,” like existing shopping malls.

The BREEAM USA Technical Manual was just published last August and is available free of charge. The BREEAM In-Use program only launched in the U.S. on October 1st and while the first project is now certified there are others in the cue. Barry notes, “but we are not making a race of it. Our biggest goal is not to get buildings certified.” Barry wants owners to see the benefits of greening existing buildings.

The Technical Manual and underlying algorithm are academic, based on a peer reviewed paper process controlled by the trust that owns BRE, not simply the consensus of some coterie.

There are 200 questions in the online tool within nine categories including Energy, Water, Transport, Management, Waste, Pollution, Health and Well Being, Land Use and Ecology, and Materials to create a score. Once completed, the BREEAM In-Use assessment is automatically scored and the building is given an unverified rating based on the final score: Acceptable, Pass, Good, Very Good, Excellent and Outstanding.

BREEAM In-Use is open to all existing commercial buildings of any size, age and in any condition. But currently, the system does not apply to multi family residential buildings.

A January 2017 study, On the Value of Environmental Certification in the Commercial Real Estate Market, documents that existing certified green buildings, on average, have higher rental, occupancy and pricing levels.

The overarching aim is that “BREEAM In-Use democratizes the entry point” for existing commercial buildings to engage in a program for improved performance, financial and otherwise. “There are a lot of Class B and C buildings out there and we could help them make changes and save money. The byproduct is we will reduce carbon footprint.” And that is the goal.

Apply to be a Member of the ASHRAE Committee for Standard 189.1

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ASHRAE is looking for new members to serve on the ASHRAE Project Committee for SSPC 189.1 Standard for the Design of High Performance Green Buildings Except Low Rise Residential Buildings. The deadline to make application for Project Committee membership is March 15, 2017.

Standards produced by ASHRAE are consensus documents developed and published to define minimum values of acceptable performance. Originally, the American Society of Heating, Refrigerating and Air-Conditioning Engineers when founded in 1894, today simply known as ASHRAE, its voluntary standards are often guides for state and municipal codes and the basis of specifications and rating systems.

It is Project Committee members that are responsible for standards preparation. Project Committee members need not be ASHRAE members, but are ideally technically qualified people in the area of interest. Details about the application process and the application itself are available on the ASHRAE webpage for Standards Forms and Procedures.

And this is a particularly important Project Committee impacting nearly all corners of green building.

ASHRAE Standard 90.1 is important because it provides the minimum requirements for the “energy” design of buildings, but ASHRAE Standard 189.1 provides a “total building sustainability package” to design, build and operate green buildings. From site location to energy use to recycling, this standard sets the foundation for green buildings by addressing site sustainability, water use efficiency, energy efficiency, indoor environmental quality, and the building’s impact on the atmosphere, materials and resources. This standard establishes ‘how to build a Green building.’ A read only version of 189.1 is available at this link.

But that does not begin to explain this standard’s importance and huge influence on green building.

Significantly, the U.S. Department of Defense, the largest owner of buildings in North America, that is also the owner or more green building and more LEED certified building than anyone else, uses a variant of ASHRAE 189.1-2009. The Defense Department’s Unified Facilities Criteria system provides planning, design, construction, sustainment, restoration, and modernization criteria for military facilities. Since 2013, the Department of Defense has used UFC 1-200-02 High Performance And Sustainable Building Requirement. That UFC provides minimum standards to achieve high performance and sustainable facilities that comply with federal laws, including EISA 2007 and Executive Order 13423 together with its Guiding Principles For Federal Leadership In High Performance And Sustainable Buildings. And yes, sometimes it pursues LEED certification for these buildings.

Also of import, the most recent ASHRAE 189.1-2014 is published together with the International Green Construction Code such that local jurisdictions adopting the IgCC can make adherence to 189.1 an alternative compliance path when the local enacts the IgCC.

Arguably, both the Department of Defense and local government adoption of a standard to prescribe green building is not what is intended for a standard, which is often the basis of codes and ratings systems, because in and of itself it does not have inspection metrics nor an enforcement mechanism.

ASHRAE 189.1 will be republished in 2017 for adoption in the IgCC 2018. In an environment of green building standards, rating systems, and codes, it is the republishing of ASHRAE 189.1 that may be the single most significant act toward improving the built environment.

This may not be civilization warping, but for those who think the importance of a republished ASHRAE 189.1 is overstated, appreciate that as a result of the unprecedented announcement by the ICC, the AIA, IES, and USGBC in 2014 that 189.1 revisions would be collaboratively developed and be the basis of the IgCC and LEED.  The 2018 version of the IgCC has been characterized by the ICC as being powered by 189.1.

And while most do not expect a new version of LEED anytime soon (if ever), as the USGBC dramatically losses domestic market share, the quarterly updates to this still dominant rating system will in the future be driven by the technical underpinnings of this ASHRAE Project Committee.

So, serving as an ASHRAE Project Committee member on this efforts has far more import than influencing a single industry standard. This is an opportunity to truly “support the goal of development that meets the needs of the present without compromising the ability of future generations to meet their own needs.” Consider applying to be considered as members on the ASHRAE Project Committee for 189.1.

Deadline to Propose Changes to National Green Building Standard

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Development of the 2018 version of the National Green Building Standard (NGBS) is now underway.

The NGBS is a collaborative effort between the National Association of Home Builders and International Code Council, the NGBS also known as the ICC 700 provides “green” practices that can be incorporated into new homes, including high rise multifamily buildings, home remodeling and additions, hotels and motels, and the lots upon which the green homes are to be located.

The 2018 version of the NGBS will be the fourth iteration of this national residential standard.

As part of that development process, individuals and groups have been invited to propose changes to the 2015 edition of the NGBS submit proposed changes to the NGBS online by March 1, 2017.

Participating in this development process is hugely significant because as of this date there are 98,120 NGBS Green Certified Homes! The NGBS is the fastest growing residential green building standard and is the preferred green standard by many in the residential real estate sector.

NGBS is fast approaching 100,000 certified units because of while 86,256 units are NGBS certified within multifamily buildings, there are 74,648 registered units in the multifamily pipeline.

Within that number there are also 2,473 certified multifamily buildings and another 1,475 registered and in process.

The standard is, of course, not limited to multifamily and there are 11,864 certified NGBS single family homes with another 1,509 currently in process.

The NGBS is a uniquely drafted “standard” in that it can be used by any builder for their individual project as a rating system (including obtaining third party certification), or be adopted by a local government as a residential green building code. Appreciate that the International Green Construction Code incorporates the NGBS as an alternative compliance path. That is, the IgCC includes, at the option of each jurisdiction that single family dwellings or multifamily family dwellings of 4 stories or less shall comply with the NGBS (in lieu of the IgCC base green code).

And the NGBS is getting a big boost because since last year the National Defense Authorization Act authorizes use of the NGBS for Department of Defense projects. To appreciate the very large impact that the military has on the real estate industry, it is budgeted to spend more than $20 Billion on housing in 2017.

Home Innovation Research Labs will again act as the secretariat, or administrator, of the NGBS development process. Similar to the makeup of the committees convened to develop previous versions of the standard, the committee for the 2018 updated version will include government officials, advocacy groups, home builders, product manufacturers, and other affected industry stakeholders in residential construction. The committee members and other interested parties are being assigned to task groups, each specializing in a different area of the NGBS such as energy efficiency, indoor environmental quality, or lot development.

The entire Consensus Committee will hold two hearings in Washington, D.C., in 2017. At the first hearing on April 18 and 19, committee members will initiate the review of all proposed changes to the NGBS. At a second hearing in the Fall 2017 (on dates yet to be determined), Consensus Committee members will consider, discuss, and take formal action on all proposed changes.

Once the committee has completed its work, the newly updated National Green Building Standard, ICC 700 – 2018, will be submitted to ANSI for approval and release in 2018.

Again, this development process is hugely significant because the NGBS is the fastest growing residential green building standard and is the preferred green standard by many in the residential real estate sector. Go to the website and propose changes.

Is there Lead in the Water of your Green Building?

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The subject of lead leaching from pipes and faucets into drinking water within buildings is not new. But the broad growth of green buildings, including green schools, that include water conservation strategies has the potential to negatively impact the quality of drinking water in those green building plumbing systems.

To reduce indoor water consumption, LEED v4 New Construction offers points for further reducing by 25% and up to 50% “fixture and fitting water use from the calculated baseline in WE Prerequisite Indoor Water Use Reduction.”

But the consequences of that reduced water have lead to concerns across the country including in green schools from the West coast to the East coast.

Some of the difficulty in characterizing this water quality and public health issue is there are not any quantity of good studies of existing building, including schools. As required by the 1974 Safe Drinking Water Act, the U.S. Environmental Protection Agency developed a guidance program that instructs 20 parts per billion (or 0.020 mg/l) is the recommended “action level” for the amount of lead in drinking water that specifically applies in evaluating sampling results from schools and day care facilities. EPA recommends that schools and facilities take additional actions to evaluate and address specific problem areas (e.g., faucets and fountains) for which the sampling results show an exceedance of this level. But the federal law and no state law that this writer is aware of requires a school to take a sample or test the water.

Note, that level is significantly higher than the 15 ppb (or 0.015 mg/l) for lead allowed in a “public water system.” EPA requires annual testing for lead under the SDWA for water provided by public water systems. A public water system is defined in part as a system for the provision to the public of water for human consumption through pipes or other constructed conveyances that serves at least 15 service connections or regularly serves at least 25 individuals. So unless a school has its own water supply (and few do), schools are not a regulated public water system.

So, there is little data. But, concerns from Oregon to Maryland have resulted in testing of both the quality of water coming into the green school building and at water fountains and other outlets used for consumption. And water fountains and other outlets are being taken out of service where the lead level exceeds 20 ppb.

Despite no good baseline for comparison, there are clear trends that go beyond lead alone. Among the most significant culprit is apparently “water age” (i.e., the water retention time). The green school buildings sampled had exceptionally high water age, and it appears that elevated water age is inherent in achieving sustainability goals of green building plumbing systems.

The magnitude is daunting. The first green building for which this firm reviewed data has water use which is more than 50 times lower a typical similar building. Very low use at each fixture in bathrooms, coupled with large diameter pipes stipulated by plumbing code, resulted in an average overall premise plumbing water age of 8 days.

Water age of 8 days raises concerns with respect to the chemical and microbiological stability of the drinking water.

There are externalities associated with water age, including that a disinfectant residual (e.g., a residual level of chlorine) was generally not maintained in the plumbing of the green buildings. At that first green school, 40 minutes of flushing was necessary to establish a chloramine residual similar to that present in the public water system.

Most immediately, regular flushing of water is a practical approach to addressing water quality in green buildings including green schools.

It is anecdotally reported that a LEED Gold certified school with very high water age solved problems with elevated lead and microbial growth by regularly flushing a small volume of water (3 minutes of flushing every 6 hours, less than 1% of the total daily flow into the building) to regularly introduce fresh water into the system.

While wasting water may be viewed to conflict with the conservation goals of green building, it may serve as a temporary solution to the apparent public health issue.

This is a tough subject. Have the green building programs gotten ahead of reliable science in the area of water quality?

More and additional research is needed now from the environmental industrial complex to assist in justifying potable water conservation goals without compromising water quality and the public health. All schools and day care centers should test for lead in drinking water.

And you might want to test the water in your green building for lead.

Legislature Overrides Veto of Renewable Energy Portfolio Standard Increase

Wind Turbines

On February 2, 2017, the Maryland Senate and House of Delegates voted to override the veto of an increase the State’s Renewable Energy Portfolio Standard, as enacted in the 2016 Maryland General Assembly session.

Last May, Maryland Governor Lawrence J. Hogan, Jr., vetoed House Bill 1106, that was characterized as a “sunshine tax” to be levied upon every electricity ratepayer in Maryland.

That is, on its face the bill mandates that 25% of all electricity consumption in the state come from renewable energy sources by the year 2020, an increase from the then existing renewable energy mandate of 20% renewable energy by 2022.

Except that nowhere does HB 1106 actually require that 25% of “Maryland’s energy” come from renewable sources.  The Renewable Energy Portfolio Standard is a mandate on electricity suppliers (.. think monopoly electric utilities) and the cost of compliance is passed through to ratepayers.  In 2015, Maryland ratepayers paid $127 million to comply. Under the increased standard in the bill, electricity suppliers would comply by purchasing a percentage of renewable energy credits proportional to its share of Maryland’s total electricity sales.

The implementation of this law is accomplished through the creation, transfer, and retirement of renewable energy credits (RECs). RECs are a commodity that represents the renewable attributes associated with the production of one megawatt-hour of electricity generated using eligible renewable energy sources.

Maryland electricity suppliers have relied heavily, and will continue to rely more heavily, on out of state generators to acquire the RECs needed for Renewable Energy Portfolio Standard compliance. In fact, in every year since 2011, The Public Service Commission admits that between 70% and 75% of RECs retired for compliance with this law were generated out of state. Maryland has been and now, more than ever, will be far ahead of what the electricity generating marketplace can do.

While the primary objective of the Maryland Renewable Energy Portfolio Standard when enacted into law in 2004 was to foster the development of renewable energy resources in Maryland, this has not happened.

The Governor’s veto had been widely applauded as a pushback against ever increasing legislatively flawed subsidized local renewable energy marketplace portends a national trend.

While on the surface, the aim of HB 1106, increasing the amount of renewable energy in Maryland was laudable, the dramatic increase in dollar costs to Maryland ratepayers for electricity, not to mention the regressive nature of the additional dollars, including burdening the poor that rely on electricity to heat and light their homes, while benefitting out of state investors (many of which institutional investors leverage those dollars invested in facilities in other states that they ‘double dip’ by getting credit in Maryland, and then obtain federal tax incentives), was widely seen as the wrong approach.

And calculatedly, the Maryland Renewable Energy Portfolio Standard does not take into account that more than one third of electricity in the State is generated from nuclear power, the ultimate (but controversial) renewable energy source that produces virtually no greenhouse gas emissions.

Additionally, the Standard is made more expensive when it expressly includes offshore wind (.. so, yes, Maryland ratepayers are subsidizing offshore wind development and later operation).

Twenty years ago Maryland had among the least expensive price of electricity to the ultimate consumer across the residential, commercial and industrial sectors, but before the implementation of HB 1106, at 14.3 cents per Kilowatt hour the average price is now among the highest in the continental U.S. and the very highest among all south Atlantic states.

The veto was Maryland’s effort to strike a balance in energy policy.

The veto override last week, was of a bill passed last year in advance of the Presidential election and resultant national policy shifts including anticipated elimination of President Obama’s Clean Power Plan. The vote was largely along party lines with the Democrat controlled legislature rebuffing the Republican governor. In the Senate, all 32 Democrats voted to override, more than the 29 needed. In the House of Delegates on Tuesday, 88 Democrats voted for the override, more than the 85 needed.

Despite politics, it is clear HB 1106 will do little if anything to foster the development of renewable energy resources within Maryland. What this veto override does signal in this changing environment is the need for a national rebalancing of government energy priorities, and not subsidized on the backs of the poor.

Defamation Case over Global Warming Claim set for Trial

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Michael E. Mann is a well-known climate scientist whose research in studying the “paleoclimate,” or ancient climate, has featured prominently in the politically charged debate about climate change. Dr. Mann filed an action for defamation and intentional infliction of emotional distress on October 22, 2012 against Competitive Enterprise Institute (CEI), Rand Simberg, National Review, Inc. (National Review), and Mark Steyn based on articles written by Mr. Simberg, Mr. Steyn, and National Review’s editor Rich Lowry that appeared on the websites of CEI and National Review. Dr. Mann’s complaint claimed that the articles which criticized Dr. Mann’s conclusions about global warming and accused him of deception and academic and scientific misconduct contained false statements that injured his reputation and standing in the scientific and academic communities of which he is a part.

The court order says, on July 15, 2012, Mr. Steyn authored an article titled “Football and Hockey,” which appeared on National Review’s online blog “The Corner.” In his article, Mr. Steyn quoted from Mr. Simberg’s July 13 article:

I’m referring to another cover up and whitewash that occurred [at Penn State] two years ago, before we learned how rotten and corrupt the culture at the university was. But now that we know how bad it was, perhaps it’s time that we revisit the Michael Mann affair, particularly given how much we’ve also learned about his and others’ hockey-stick deceptions since. Mann could be said to be the Jerry Sandusky of climate science, except that instead of molesting children, he has molested and tortured data in service of politicized science that could have dire consequences for the nation and planet.

And the order further says, Mr. Steyn then added:

Not sure I’d have extended that metaphor all the way into the locker-room showers with quite the zeal Mr. Simberg does, but he has a point. Michael Mann was the man behind the fraudulent climate-change “hockey-stick” graph, the very ringmaster of the tree-ring circus.

The defendants argue that Dr. Mann’s lawsuit infringes on their First Amendment right of free speech and moved for dismissal under the District of Columbia’s Anti-Strategic Lawsuits Against Public Participation (Anti-SLAPP) Act, D.C. Code §§ 16-5501 et seq, and, alternatively, under Court Rule 12 (b)(6). The trial court ruled that Dr. Mann’s claims were “likely to succeed on the merits,” the standard established in the Anti-SLAPP Act to defeat a motion to dismiss, and denied the defendants’ motions to dismiss and their subsequent motions to reconsider. CEI, National Review and Mr. Simberg sought interlocutory review of the trial court’s denial of their motions to dismiss.

In a December 22, 2016 order, the District of Columbia Court of Appeals held that it has jurisdiction under the collateral order doctrine to hear appellants’ interlocutory appeals of the trial court’s denial of their special motions to dismiss filed under the Anti-SLAPP Act:

“We further hold that the Anti-SLAPP Act’s “likely to succeed” standard for overcoming a properly filed special motion to dismiss requires that the plaintiff present evidence — not simply allegations — and that the evidence must be legally sufficient to permit a jury properly instructed on the applicable constitutional standards to reasonably find in the plaintiff’s favor. Having conducted an independent review of the evidence to ensure that it surmounts the constitutionally required threshold, we conclude that Dr. Mann has presented evidence sufficient to defeat the special motions to dismiss as to some of his claims.”

The appeals court remanded the case to the trial court for further proceedings.

The defendants have filed a petition for rehearing. Many expect the petition to be granted and that the full Court of Appeals will put an end to this attack on the First Amendment now, before a trial that will no doubt result in many more years of appeal.

I first blogged about this case in 2013, Michael Mann’s Defamation Case Continues, Just Not Now and the saga continues.

Of course a jury verdict in this case will do nothing to resolve the debate over climate change. And given new President Donald Trump has said he will “open up our libel laws” to make it easier to sue for defamation law, this case will not impact the law of libel and slander.

Given that a jury will have to find that Steyn and Simberg acted with “actual malice” or a “reckless disregard” of the truth or falsity of the claims at issue, most believe Dr. Mann, who is among that coterie who refer to people as “climate change deniers” (analogizing those who disagree with him to Nazi Holocaust deniers), .. such that this lawsuit strikes many as the pot calling the kettle Black, is very unlikely to prevail on the merits. We will continue to monitor the debate.

California is a Model for PACE Loan Reform

Residential PACE

California’s statutory changes to its existing residential Property Assessed Clean Energy (PACE) financing program, that became effective January 1, 2017, may be a model for residential PACE programs across the nation.

The first residential PACE program started in Berkeley, California in 2007. Today there are laws in at least 34 states that allow some form of PACE financing, however, there are very few residential PACE programs up and running. Residential PACE loans got a late jumpstart when the U.S. Department of Housing and Urban Development and the Department of Veterans Affairs released new guidance on July 19, 2016, changing their 2011 positions, now widely allowing residential PACE.

Last year I suggested with that new guidance, PACE financing, where payments for energy efficiency, water conservation and renewable energy improvements to real estate are made through a building owner’s property tax bill without upfront cash from the owner could be bigger than anything in U.S. real estate since the invention of the glass window.

To date, more than $3 Billion has been lent for residential PACE projects and it is predicted that total will double within the year. A recent front page Wall Street Journal article went on to forecast that growth “would likely rank PACE loans as the fastest growing type of financing in the U.S.”

But this explosive growth has not been without externalities. There is growing concern that PACE loans are being made to homeowners who cannot afford to make the payments.

The State of California determined that government enabled PACE “is sometimes misunderstood and may affect the consumer’s ability to refinance their loan or sell their property” but that many of the regulatory safeguards that buttress traditional second mortgages do not exist in the realm of PACE. To address those and other issues, California announced it “is essential to promote standardized disclosures and protections for consumers to ensure that the PACE program can continue to be widely used to offset the adverse impacts of years of climate change.” To that end, the State enacted Assembly Bill No. 2693 and Assembly Bill No. 2618, both effective January 1, 2017.

Among the key features of the new laws, for residential properties with four or fewer units, that may be model language as more residential PACE programs are enabled across the country are:

Not permitting a property owner to participate if the owner’s participation would result in the total amount of any annual property taxes including PACE assessments exceeding 5% of the property’s market value, as determined at the time of approval of the owner’s contract.

The PACE financing must be for less than 15% of the value of the property, up to the first $700,000 of the value of the property, and must be for less than 10% of the remaining value of the property above $700,000.

Requiring a disclosure in substantially the same form as provided in the law shall be completed and delivered to a property owner before the property owner consummates a voluntary contractual assessment.

Mandates that the property owner shall receive the right to cancel document in substantially the same form as provided in the law, providing a 3 business day right to cancel.

In addition, the amendments to California’s existing law generally prohibit the making of any representations to property owners regarding the monetary or percentage effect that the PACE financed improvements will have on the value of the property unless the estimate of value is derived through the use of a specified automated valuation model or a licensed real estate appraiser.

PACE programs exist only as a creation of government, made possible by the fact that local governments collect payments incident to property tax bills, ignoring existing indebtedness secured by the real property. With those loans now the fastest growing type of financing in the U.S., many of these state and local enactments are less than ideal, including it has become clear that certain consumer protections must be built in if this segment is going to achieve its true market potential, advance green building, and yes, save the planet.

Is the New USDA Organic Rule Dead on Arrival?

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On January 19, 2017, the U.S. Department of Agriculture published a new list of rules governing the treatment of animals that are ultimately sold to consumers as organic food.

It is suggested that these amendments to the existing organic livestock and poultry production requirements are an exercise in futility both in that they were published on the final day of the Obama administration (.. last Thursday) and at a time when Republicans control both houses of Congress.

The rules were scheduled to become effective on March 20, 2017, but on January 20, 2017 (.. last Friday), the new White House Chief of Staff Reince Priebus issued a memorandum to all Executive departments and agencies to freeze all new or pending regulations. Because this is a regulation that has been published in the Federal Register but has not reached its effective date, the memo instructs that this regulation be delayed for 60 days for review.

President Donald J. Trump only announced his pick of former Georgia Governor Sonny Perdue to be his Secretary of Agriculture on January 19, 2017, on the same day these rules were published, so it is premature to conclude that these rules are dead on arrival and it might be more accurate to conclude that a new notice reopening the regulation will likely occur.

Make no mistake these rules have been very controversial. Nothing here is new with much of this ‘non food quality related’ mandate coming from recommendations of the National Organic Standards Board, a USDA advisory group, dating back to 1994. And that they were among the final act of an outgoing Administration (that chose not to promulgate these rules during the last 7 years and 364 days) is what some find offensive about the federal government regulatory processes.

The Final Rule is here.

Among what is most controversial is that nothing in the rule goes to the quality of the organic meat and poultry that people will consume (i.e., there is nothing about pesticide fee, genetically modified free, fungicide free or anything along those lines). According to the USDA, this regulation “ensures organic animals will live in pasture-based systems and are produced in environments supporting their well- being and natural behavior.”

The USDA says it received 6,675 written comments in response to the proposed rule. Nearly 80% of those (5,180 comments) were form letters and the majority of these were from individuals associated with animal welfare groups.

One of the few noncontroversial, if not actually popular, provisions adds the term “ritual slaughter” to the existing definition of Humane Methods of Slaughter authorizing “slaughtering in accordance with the ritual requirements of the Jewish faith or any other religious faith that prescribes a method of slaughter” (e.g., halal) without loss of organic status.

Specifically, the Final Rule:

Requires that producers provide animals with daily access to the outdoors and that outdoor areas include vegetation and/or soil. Additionally, exit doors must be distributed to ensure animals have ready access to the outdoors. It does not allow enclosed porches or “winter gardens” to be considered outdoors.

Specifies the amount of space required indoors for chicken broilers and layers, prohibits forced molting, restricts the use of artificial light, limits the amount of ammonia in the air indoors, and requires perching space for laying chickens indoors.

And adds humane handling requirements for transporting livestock and poultry to sale or slaughter.

Congress has steadfastly refused to enact these perversions of increasingly popular organic programs that conflate issues of free range and cage free with organic. To undertake this expansion of organics without express legislative authority is wrong.

Given that this Final Rule would be at significant additional costs to consumers, but without additional benefit for those consumers of organic meat and poultry, many anticipate a new notice reopening the regulation will occur.

Green Building Transactional Due Diligence

Due Diligence

As ever larger numbers of green buildings are bought and sold, due diligence related to the green features of commercial buildings takes on an increasing importance.

But apparently most real estate due diligence checklists are stuck in the 1980s and while they address matters ranging from title and zoning to tenants and leases, as well as review of litigation and physical property inspections, many green buildings are being transferred with little if any appreciation of the opportunities or for that matter the risks associated with the “greenness.”

We have seen a surprisingly large number of contemplated transfers of LEED certified buildings where the deliverables at closing do not anticipate including the GBCI Change Of Ownership Agreement. That Agreement is not only required by GBCI such that a new owner is entitled to claim the building is LEED certified, but also so that the new owner can access the project on Arc.

If there is a single issue that arises most often as a surprise, although admittedly it is of only modest dollar impact, if at all, new owners have not been pleased to be learn after the fact that a multi year commitment to purchase green power was a credit achieved for LEED certification. Those new owners that object to any USGBC requirements for continuing reporting of energy data to USGBC, simply choose not to report.

There is no widely accepted standard for green building due diligence, as there is for hazardous materials where the Phase I Environmental Site Assessment ASTM Standard is all but universally utilized. It is curious that Mike Italiano, one of the three founders of the U.S. Green Building Council, was also a co-originator of Phase I ASTM standard.

There are, of course, other environmental matters that are beyond a Phase I, including non-tidal wetlands, but it is clear that green building issues may be material in valuing a property correctly.

As such it is important to use a skilled practitioner to assist with green building due diligence. We regularly assist with these efforts work as well as the associated work of providing opinions of counsel in green building transactions.

A threshold matter is always determining if the property complies will state and local government building codes and other regulatory requirements. An increasing number of jurisdictions have adopted the International Green Construction Code, or some other green code (e.g., CalGreen) or made LEED certification mandatory for private building, and an even larger number of jurisdictions have adopted the International Energy Conservation Code that has the import of imposing high performance building requirements on most building.

Much of the profit associated with green building is often derived from green leases (e.g., a GSA lease mandates an Energy Star score of 75) and reviewing those writings with an eye to greenness is key.

Of course matters of photovoltaic panels on the roof or otherwise are contract matters that need to be appreciated and the economics incorporated into operating budgets as well as tax allocations.

Tax allocations are also a matter to be considered because there are often expedited and special tax treatments of energy efficient and other green features (e.g., the 179D federal tax deduction is an expedited depreciation that a new owner should be aware of). Similarly, there may be local property tax abatements, but most are of limited duration and start date is of import.

There may be other government incentives and such should not only be addressed as a contract term, but also verifiable through due diligence.

Most of our green building due diligence efforts are associated with the sale and purchase of commercial real estate, but we also do work for prospective tenants, for lenders, including those providing green bonds, and others who are concerned about the verifiable greenness of a building.

If we may be able to assist you with green building due diligence do not hesitate to contact Stuart at