Lawyers' Opinions in Green Building Transactions

We are increasingly called upon to give legal opinions that a green building is LEED certified, ‘certifiable’ or otherwise really a green building.

The purpose of a legal opinion given in a commercial real estate transaction is, most simply put, to provide the recipient of the lawyer’s writing with comfort regarding specified aspects of the transaction. 

One might ask why they need an opinion from a lawyer that their building is green? The best response is because in many instances their lender requires it. While legal opinions are given in a variety of commercial contexts, they are increasingly being required as part of the due diligence by lenders when making loans secured by (i.e., a mortgage) a green building.

The size and nature of a transaction may well affect the scope of the opinion requested and in larger traditional mortgage financing as well as bond financing, lenders attribute increased value in the security being provided for loans when a building is LEED certified or the like.

Opinion letters are often given by the borrower’s attorney at the request of and for the benefit of the lender. Traditionally, legal opinions in the context of loan transactions provide assurances that the loan documents are valid, binding and enforceable. Often legal opinions arising from the purchase of real estate involve assurance that the improvements exist accordance with applicable zoning, subdivision and other land use laws and regulations. Opinions are also given, from time to time, that a project complies with environmental laws. And now counsel to borrowers and sellers are being called upon to provide assurances that the real property and improvements which exist or are to be constructed have been designed and exist or will exist in accordance a stated green building standard, rating system or code.

Additionally, as increasing numbers of governments make green building mandatory or offer incentives for high performance buildings, purchasers and lenders alike want assurances that a building is in compliance with those green building laws. Tenants, who with greater frequency are required by law or policy to lease only green premises (from the federal government to multi family residential builders and colleges to retail builders) are a fast growing requester of opinions.  

We also receive requests to give opinions of counsel that a project is LEED ‘certifiable’ or ASHRAE 189.1 compliant or complies with Enterprise Green Communities criteria; commonly associated with qualifying fir governmental incentives. Committing that a project will be LEED certifiable versus certified by GBCI increases certainly and lowers risk.

And while we believe a lawyer should not be asked to be an additional warrantor of facts, the distinction between questions of law and fact may at time be difficult to separate. In giving an opinion, a lawyer is not and should not be thought to be providing a guaranty or insurance against loss.

As a function of the fact that there are more green buildings being constructed and those building are being bought and financed, we will be giving increasing numbers of legal opinions that green buildings are ‘really’ green buildings.

Photo Univ of Baltimore School of Law LEED Platinum Building

E-Cigarettes will be Prohibited in Future LEED Buildings

On July 1st the U.S. Green Building Council released a change to LEED classifying electronic cigarettes as a form of tobacco smoking for the purposes of the smoking prohibitions of the LEED Environmental Quality Prerequisite 2, Environmental Tobacco Smoke (ETS) Control, which is also applicable to LEED v4. 

Project teams must follow rating system addenda posted before their project’s registration date. Addenda are often substantive changes to LEED content including corrections, interpretations and alternative compliance paths that may substantively change the way a given requirement is achieved or meant to be achieved. Addenda are accessible in the addenda database.

Addenda are often released as LEED Interpretations which “are official answers to technical inquiries about implementing LEED on a project.” They are most easily accessed in the credit library by selecting the "Interpretations” tab within each credit.

“LEED Interpretations are not an avenue for making significant changes or new requirements to the LEED rating system. LEED Interpretations are also not the intended path for fixing errors in the LEED rating systems and reference guides.”

In this instance, the inquiry was “Are electronic cigarettes (e-cigarettes) covered under the Environmental Tobacco Smoke Control prerequisite?” The LEED Interpretation,

Yes, electronic cigarettes are considered a form of smoking for the purposes of both the interior and exterior smoking provisions of the LEED Prerequisite Environmental Tobacco Smoke Control. As recommended in the December 2013 report [1] prepared for the World Health Organization, “e-cigarettes should be prohibited anywhere where the use of conventional cigarettes is prohibited”. The indoor air quality impacts from electronic cigarettes are not fully characterized, but there is sufficient evidence that electronic cigarettes produce emissions in fine aerosol form that can expose building occupants. For example, according to the report, “several chemicals that have been found in e-cigarette aerosol and e-liquid are on California’s official list of known human carcinogens or reproductive toxicants, including nicotine, acetaldehyde, formaldehyde, nickel, lead, toluene(1)”. [1] Background Paper on E-cigarettes (Electronic Nicotine Delivery Systems); Grana, R.; Benowitz, N.; Glantz, SA; December 2013; University of California.

Much is being said about the relative wisdom of this LEED Interpretation, but the most significant ‘take away’ is, given that a project team could not have reasonably anticipated such an addendum, and that addenda, issued without advance notice or prior alert, are binding when issued; it is key that all addenda be reviewed as they are released quarterly. 

Earlier this year, I wrote in this blog, Marijuana Smoking is Allowed in LEED Buildings. The conclusion in that blog post was that the LEED prerequisite was for “tobacco smoke”. But e-cigarettes also do not involve “tobacco” or “smoke”? E-cigarettes deliver a nicotine containing vapor (an aerosol, but not smoke) to users by heating a solution typically made up of propylene glycol. E-cigarettes do not burn or smolder the way conventional cigarettes do. 

Worthy of discussion is the lack of public comment for addenda, and in this instance that USGBC identifies as the rationale for this change in LEED, a single much criticized “scientific review” funded by the WHO Tobacco Free Initiative with support from the University of California Tobacco Related Disease Research Program; neither an unbiased forum. Moreover, one of the authors, Neal Benowitz is a consultant to pharmaceutical companies that market smoking cessation medications and has been an expert witness in litigation against tobacco. The other authors apparently work for that Tobacco Related Disease Research Program; making none of them neutral or detached. Read the study yourself and draw your own conclusions about the need to make this change to LEED outside of the 3 year public update process.

The larger issue is that the LEED rating systems change quarterly. While “LEED Interpretations are not an avenue for making significant changes or new requirements ..” it is clear that LEED Interpretations can be material and all involved with LEED projects should review addenda as they are released quarterly.

Baltimore City is Adopting the IgCC

This evening an ordinance will be introduced in the Baltimore City Council for the purpose of adopting the International Green Construction Code. 

The IgCC will be adopted as an overlay in conjunction with existing building, fire and related codes and will apply when a permit is required, except the new green code will not apply to: 1 or 2 family dwellings, multiple family dwellings that contain no more than 5 units, a structure that is LEED Silver certified or higher, or a structure that is ASHRAE 189.1 compliant.  

It is necessary to appreciate that Baltimore City was an early adopter when it enacted a green building law in 2007 that, prior to this legislation, remains among the most sweeping of that in any major American city. Today the building code mandates that all newly constructed, extensively modified non-residential, and specific multi-family residential buildings, that have or will have at least 10,000 square feet of gross floor area, must be LEED Silver certified or comply with the Baltimore City Green Building Standard.

So, while it was controversial in 2007 when Baltimore mandating that privately owned building must be constructed green, Bill No. 14-0413 sponsored by Councilman James B. Kraft is being warmly received as providing more and better options for developers. That is under the bill a developer may pursue LEED Silver certification, compliance with ASHRAE 189.1 or build to the IgCC. That menu of options allays the concerns of many who will now be able to determine which green building standard is most efficacious for their project.

But make no mistake, Baltimore is not greenwashing. A change in the existing code is necessitated by the USGBC’s June 1, 2015 effective for LEED v4, when projects will no longer be able to register under LEED 2009, because the Baltimore City Green Building Standard piggybacks on LEED 2009 metrics and forms. A change had to be made. Also driving the bill is an unsettled question in the existing code of the definition of what is extensively modified and subject to the green mandate. In the already built out City of Baltimore many projects have not been required to build green that will now fall within the scope of this new IgCC mandate.

The Maryland legislature enacted enabling legislation permitting local governments to adopt the IgCC in 2011 and Baltimore will be the first to do so. Although as this bill is introduced, Montgomery County, Maryland is preparing legislation to repeal its existing LEED centric mandate replacing it with the IgCC. And the State is drafting regulations to allow use of the IgCC on State capital projects, including schools, where the law had previously required LEED Silver certification.  

The first reader version of the bill repeals the current Green Building Standard replacing it with more than 25 pages of modifications to the form 2012 IgCC, and will be available later this week. Significantly for an ordinance that does not grandfather any projects, it contains an uncodified provision where the building code official may grant waivers from the new law for 180 days from its effective date in instances of good cause. Waivers may be key for projects that have been designed, but not yet permitted.

The ordinance boldly describes its purpose to “reduce the negative impacts and increase the positive impacts of the built environment on the natural environment and building occupants.” Mandatory green building has been and remains the law in Baltimore City. This bill makes the flavor of green more palatable.  

Ohio Law Rolls Back Unwise Renewable Portfolio Standards

Last Friday, Ohio Governor John Kasich signed Senate Bill 310 freezing the state’s renewable energy portfolio and energy efficiency requirements at 2014 levels. 

Environmental activists decried the new state law by evoking apocalyptic fears of ecological collapse while characterizing renewable portfolio standards as just the type of collective sacrifice needed to avoid the end of the world. Average Ohio citizens made it clear they wanted no part of the increased monthly utility bills that Toledo Edison said would rise from $54 today to $241, if no changes were made in the 2008 mandate law. And business wanted nothing to do with the 2008 enactment’s degrowth requirement to cut power usage by 22%.

While 30 states and the District of Columbia have adopted renewable portfolio standards (and 7 other states have some voluntary goal), Ohio is the first state to roll back such a clean energy mandate.

Renewable portfolio standards are state laws designed to increase generation of electricity from renewable resources. These laws require electricity producers within a given jurisdiction to supply a certain minimum share of their electricity from designated renewable resources, generally wind, solar, geothermal, biomass, and some types of hydroelectricity, but may include other resources such as landfill gas, municipal solid waste, and tidal energy.

Renewable portfolio standards are a public policy mechanism to require private sector development of renewable energy funded by increased electric bills to rate payers. But they are a regressive fee on electricity in that they take a larger percentage from low income people than from high income people.

Curiously environmental activists lobbied hard against the provision in the new law that requires disclosure of the costs to customers of the renewable energy resource on every monthly bill.

The new law is not perfect. It is only a 2 year moratorium mandating a study and stating the General Assembly intendeds to enact legislation in the future “that will reduce the renewable energy resource.”

The just passed law should be considered in context given the federal EPA’s recent release of its carbon curbs that states will now have to meet largely through this very type of electric utility mandates. Also significant is that most of the meaningful federal tax incentives for renewable energy projects expired last year and have not been renewed by Congress.

Renewable portfolio standards are not good public policy. The hodgepodge of standards exist today for the failure of Congress to act on energy policy. Possibly EPA’s new carbon curb proposals will initiate discussions about solutions to the real world environmental issues of the day, cognizant that electricity use will increase (i.e., EPA’s new carbon curbs assume that electricity consumption will drop sharply) including considering an answer in market based solutions driven by innovation and technology.

It is likely best to not be an alarmist about Ohio’s new law or to deny that it was passed overwhelmingly by the legislature after a hue and cry from the public, who recognized an unwise (expensive and degrowth)  existing law (green or otherwise) when they saw it.

The real concern may be whether Ohio is the beginning of a trend?

Demand Response Needs a Mulligan

The D.C. Circuit Court of Appeals has nullified the retail electric market Demand Response programs governed by the Federal Energy Regulatory Commission, putting a chink in the armor of the new EPA carbon curbs. 

Demand Response is defined in FERC’s Order 745 as “a reduction in the consumption of electric energy by customers from their expected consumption in response to an increase in the price of electric energy or to incentive payments designed to induce lower consumption of electric energy.” When the electric grid is near its capacity (for example, when weather temperatures rise dramatically and air conditioning use is increased), building operators can participate in Demand Response programs that provide incentives for reducing the building’s energy demand during peak hours.

Specifically, on May 23, 2014, in Electric Power Supply Association v. FERC, the court said in a challenge to the FERC’s “Order 745’s direct regulation of the retail market, we vacate the rule in its entirety as ultra vires agency action.”

Key to EPA’s new carbon curbs assumption that electricity consumption will drop sharply are energy efficiency programs like Demand response.

Vacating the entire rule as ultra vires, holding it unlawful and “in excess of statutory jurisdiction, authority, or limitations” is dramatic and has the effect that the FERC cannot correct its mistake by simply revising its rulemaking.  

Demand Response regulation is complex and lies at the confluence of state and federal jurisdiction. The court noted, Congress in 2005 declared “the policy of the United States that time-based pricing and other forms of demand response . . . shall be encouraged.” But the FERC gamed the marketplace by encouraging aggregators of retail customers that acted like ‘buying clubs’ reselling cheaper electricity.

This case makes clear the “FERC’s jurisdiction over the sale of electricity has been specifically confined to the wholesale market.” Demand Response is the purview of state public service commissions.

An example of the complexity is that many public service commission approved Demand Response programs do not qualify for the LEED NC-2009 EApc8: Demand Response pilot credit. After several iterations as a pilot credit, including changes to automated programs based on external utility initiation, a Demand Response credit is incorporated into LEED v4. 

The effect of the court ruling will be to embolden state public service commissions and give electric customers more clout in the shaping of revised Demand Response programs.

The real economic winners should be electric rate payers across the country who have paid public benefit funds, system benefits charges and overall higher electric rates to subsidize unlawful FERC required Demand Response programs that have benefitted a relatively small number of participants in the name of a national energy policy.  

It is unclear how this court decision announced only days before the new EPA rule will reshape Demand Response. What we do know is that Demand Response programs will continue across the country. And we know they won’t be run from Washington DC.

Photo credit: © TebNad/iStockphoto 

Revocation of LEED Certification

Revocation of LEED Certification is the title of the largest section within the U.S. Green Building Council’s Guide to LEED Certification: Commercial. The more than 2,800 word section consumes over 3 pages of the 7 page guide; far more words are dedicated to revocation than any other topic.

And one of the most common questions by owners considering LEED certification is, does USGBC revoke certification? 

However, with all of that attention paid to the topic, Susan Dorn, the USGBC and GBCI General Counsel makes clear,

While GBCI reserves the right to revoke and there have been a few occasions to review project certification, GBCI has never found a reason to proceed against certification after a review.

That said, the Certification Challenge Policy may be initiated by GBCI or any third party within 18 months of a project’s certification (an owner is advised to maintain all associated records through that period).

The Certification Challenge Policy is in place to protect the integrity of the LEED certification program. In an incident of intentional misrepresentation which results in an inappropriate award of LEED certification, it is clear that GBCI will reduce the level of certification (e.g., from Gold to Silver) or revoke certification. But such would only happen after the multi level challenge process where an owner is afforded the right to actively participate in the process, including if an owner desires two hearings where witnesses may be called and cross examined, the first before a panel appointed by the GBCI President and the latter before the GBCI Board.   

Despite that the policy expressly says it “is not meant to serve as a vehicle for the adjudication of disputes between outside parties” to make certain sub contractors, materialmen and the like do not file challenges, contract documents now commonly have confidentiality provisions, including expressly precluding any such communication.

Certification is a one time grant based upon a one time review, not dissimilar from issuance of a building permit. Only LEED for Existing Buildings: Operations & Maintenance has an expiration date requiring recertification every 5 years. USGBC just recently announced specifics for how projects are to do that.

However, GBCI does also retain the right to revoke certification from any project where it is “not provided with energy and water use data on an ongoing basis after LEED certification is conferred, as required.” To date, GBCI has not been pursuing that data.

Interesting, beyond the guide, the new GBCI Certification Agreement has new provisions expanding termination, including “this Agreement will automatically terminate in full .. upon the complete  or substantial demolition of a Project.” And in an effort to protect the LEED trademarks, “You agree if you use the Marks in any manner that could or does disparage, tarnish, or dilute the distinctive quality of the Marks, .. GBCI will have the right, at its sole option, to terminate this Agreement.”

We know with certainty that GBCI has never revoked a certification, but GBCI does not make public complaints that initiate the Challenge Policy. It is apparent challenges are infrequent. So, among the many issues associated with green building, to quote the Bob Marley lyric, “don’t worry” about revocation of LEED certification. 

Green Building Bonds as a Game Changing New Source of Capital

Regency Centers Corporation, a publicly traded REIT, completed the sale of $250 million of “green building bonds” on May 14, 2014.

Proceeds from these corporate bonds will be used to fund “eligible green building projects” including the acquisition, construction, development or redevelopment of projects that will pursue LEED certification. 

Regency is an owner, operator, and developer of grocery anchored neighborhood and community shopping centers. With 332 retail properties, the REIT's portfolio encompasses over 43.9 million square feet located throughout the United States. The REIT has 17 LEED registered projects since 2009 (7 of which are under construction) and 7 of which have been certified.

Regency described this source of capital as an opportunity to support an important market as investors seek more socially responsible investment options. This bond issuance also confirms Regency's commitment and long term view on sustainability, as evidenced by its greengenuity© program, which is the REIT's “commitment to do all that is practical to reduce its environmental impact in developing and operating shopping centers.”

Only days before the green building bond sale, on May 12, 2014, Regency was honored by the U.S. Department of Energy's Better Buildings Alliance as an inaugural Green Lease Leader, leading the market by incorporating lease clauses that help overcome market barriers and align tenant and property owner interests to save energy in commercial buildings.

These green building bonds are more specifically 3.75% ten year senior unsecured notes due on June 15, 2024. The interest rate for these green building bonds was lower than other similar, but non-green building bonds offerings by REITs. While bond financing can have higher transaction costs than oft used mortgage backed loans, even in large dollar amounts as in this instance, it is significant that there was strong market demand for these unsecured bonds that drove the lower interest rates.

Green building bonds are a new investment vehicle in the U.S.  Until recently green bonds had been issued by the World Bank raising funds from investors to support World Bank lending for projects “that seek to mitigate climate change or help affected people adapt to it,” but while ‘green’ the bonds were not limited to ‘green building’. Since 2008, the World Bank has issued over $6 Billion in green bonds through 65 transactions and 17 currencies. And while several European business entities have issued similar green bonds, this transaction is the first in the U.S. exclusively for green building.

In November 2013, Bank of America issued the first ever U.S. bank green bond, but again its purpose was not limited to green building. The funds of the debenture are being used to finance renewable energy projects such as wind, solar and geothermal. Funds are also being used to finance energy efficiency projects such as lighting retrofits, district heating, co-generation, and building insulation in residential, commercial and public properties. The bank acted as underwriter on Regency’s deal.

As investors seek socially responsible investment options, green building bonds present a game changing opportunity for financing green building. Green building, which arguably offers higher value collateral and reduced risk, will be advantaged by bonds as a cheaper cost of capital all while saving the planet.      

Chinese Military Hackers Charged with Disrupting U.S. Solar Market

A grand jury in the Western District of Pennsylvania has indicted Chinese military hackers for computer hacking, economic espionage and other offenses directed at a solar products manufacturer in America.

The indictments, the first time criminal charges have been filed against known state actors for hacking received wide spread attention earlier this week. And while the mainstream media described the U.S. corporate victims as in the nuclear power and metals industries and a labor organization, scant attention has been paid to the fact that one of the businesses is a solar panel manufacturer. 

The indictment made public this past Monday, alleges that Wen Xinyu, one of five named defendants, who is officer in Unit 61398 of the Third Department of the Chinese People’s Liberation Army, hacked the computers of U.S. subsidiaries of SolarWorld AG several times to glean its strategy in a trade dispute with China.

In 2012, at about the same time the Commerce Department found that Chinese solar product manufacturers had “dumped” products into U.S. markets at prices below fair value, Wen and at least one other, unidentified co-conspirator, stole thousands of files including information about SolarWorld’s cash flow, manufacturing metrics, production line information, costs, and privileged attorney-client communications relating to ongoing trade litigation, among other things. The information enabled Chinese competitors to target SolarWorld’s business operations aggressively from a variety of angles.

On February 5, 2014, Frank H. Asbeck, founder and CEO of SolarWorld, issued an open letter to President Barack Obama requesting his “support for both the U.S. manufacturing and installation wings of the domestic solar industry as they confront trade aggression from China.”

I had written in a blog post last October, Bankruptcy Trustee Sues Chinese Over Solar Panel Dumping, about a case filed in the U.S. District Court Eastern District of Michigan, claiming the object of the Chinese state owned companies’ illegal dumping actions was to drive established solar industry leader, Energy Conversion Devices, out of business.

“For too long, the Chinese government has blatantly sought to use cyber espionage to obtain economic advantage for its state-owned industries,” said FBI Director James B. Comey.  “There are many more victims, and there is much more to be done.  With our unique criminal and national security authorities, we will continue to use all legal tools at our disposal to counter cyber espionage from all sources.” 

This criminal case charging five Chinese military officers should be a wakeup call to all; not only have Alcoa, Westinghouse, and U.S Steel been damaged, but every U.S. business and homeowner with solar panels on a roof has been a victim of Chinese economic espionage.

LEED v4 has a New and Improved Registration Contract

USGBC proudly boasts that LEED v4 has 80% fewer forms when compared to LEED 2009. Not only are there fewer fields to document with the removal of low value content, but the user experience is further improved including by removing multiple required signatures.

The earlier “LEED Project Registration Agreement” and “LEED Project Certification Agreement” have both been replaced in v4 with a new single Certification Agreement, accessed at the time of project registration through LEED Online after inputting the project details.   

Simply stated, the Certification Agreement is “the” contract that governs certification of a project under the LEED program. The contract is with the Green Building Certification Institute, which “administers the Program and confers precertifcation and LEED Certification under license from the U.S. Green Building Council.” There is now one Agreement applicable across all rating systems, including new construction, the Volume Program, Campus Projects and soon to be v4 Homes.  

This is not an attempt to summarize that 14 page almost 8,000 word Agreement (readers of this blog can read the contract at the link above); all participating with LEED should read the online contract carefully and have it reviewed by counsel. This article simply highlights some of the important improvements from the earlier forms (which forms will continue to be used in LEED 2009 and earlier version projects as they are registered and certified).

The new Agreement expends much verbiage on who is the “Owner” beginning in the first paragraph and introduces the new Confirmation of Primary Owner’s Authority form. It also highlights the need for projects, where the owner is not completing the LEED registration process itself to continue to utilize the existing Confirmation of Agent’s Authority form.

The most significant change is that under prior agreements disputes were resolved through litigation in federal court where this Agreement contains a provision requiring the parties seek to resolve all disputes “through open and good faith discussions in the first instance” and if not resolved, “by mediation, administered by the American Arbitration Association (“AAA”) under its Mediation Rules” and if settlement is not then reached, by binding arbitration administered by the AAA.

Another material change, also within the context of dispute resolution, is that for the first time, the prevailing party is entitled to “all costs and expenses of any Arbitration, including reasonable attorneys’ fees and expenses.” These changes in dispute resolution serve to level the playing field in favor of project owners.

While not likely of great import to most, some may be troubled that, “GBCI reserves the right to increase the Fees by no more than twenty seven percent (27%) per calendar year.” An owner may elect to pay all fees in advance and not risk a future increase.    

An owner may at its sole election opt out of pursuing LEED certification and “may terminate this Agreement in whole or in part at anytime.”

The final contract provision eliminates the need to upload hard copy signatures when it provides that selecting the button marked “I AGREE” is your signature.

There is no doubt this Agreement is new and improved from the perspective of a project owner, but be aware, it continues to reflect the unequal bargaining power of the parties and is heavily weighted to protect USGBC and GBCI (including requiring owners to broadly indemnify USGBC).

That observed, as a sustainability and green building attorney my personal favorite new provision is the very first sentence that includes the warning, “YOU REPRESENT THAT YOU HAVE CONSULTED WITH AN ATTORNEY ABOUT YOUR RIGHTS AND OBLIGATIONS HEREUNDER”. You may give me a call at any time. 

Maryland Sidesteps LEED in Favor of the IgCC

House Bill 207, approved unanimously in both the Maryland House and Senate and expected to be signed by Governor Martin O’Malley this Thursday, May 15, 2014 broadens the definition of a “high performance building” to include any building that complies with a nationally recognized and accepted green building code, guideline, or standard that is reviewed and recommended by the Maryland Green Building Council and approved by the Secretaries of Budget and Management and General Services. 

At first blush that language sounds innocuous, however the bill portends fewer, if any, Maryland state and local government projects will be LEED certified in the future, in favor of projects built to the International Green Construction Code. 

By way of background, existing law has required since 2008 that most new or renovated government buildings and new school buildings be constructed as high performance buildings. High performance building is defined as one that “meets or exceeds the U.S. Green Building Council’s (USGBC) Leadership in Energy and Environmental Design (LEED) criteria for a silver rating,” a definition that has existed in state law since 2001.

That law has both resulted in significant government LEED building and been a driver for private sector LEED construction. In point of fact, only weeks ago USGBC announced that Maryland ranked #2 in the Top 10 States in the Nation for LEED Green Building.

But as I wrote in a blog post in November in anticipation of this legislation, IgCC About To Get A Boost In Maryland, the USGBC is falling out of favor in this very green state, including with school construction interests and others seeking state capital budget funding that are concerned LEED v4 strayed too far from high performance building. Those ‘post LEED’ forces combined to drive HB 207. And such is instructive, because those favoring this sidestepping of LEED were not lumber interests or “plastics” industry interests that have been involved in anti-LEED legislation in other states. In Maryland with a mature environmental industrial complex, buttressed by some 114 green building laws and codes, this Department of General Services bill was supported by local pro green building players.

The state will adopt a version of the 2012 IgCC for its specific use for government building before the new law goes into effect on October 1, 2014.

While not expressly authorized by the bill, the Collaborative for High Performance Schools (“CHIPS”) rating system which is gaining momentum around the country, will all but certainly be tested in Maryland in future school construction. 

It is also expected that this year Baltimore City and Montgomery County, Maryland will each adopt a local IgCC enactment as a voluntary alternative to existing mandatory LEED centric green building laws that impact all private construction. 

Maryland was one of the first states to incentivize green building in 2001 with a tax credit tied to LEED. Today, Maryland is joining Washington DC and Virginia leading a nationwide trend sidestepping exclusively LEED centric green building laws. All of this should be good for green building, good for Maryland, and very good for the planet. 

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The 2015 IgCC Takes a Major Step Forward

We alerted readers of this blog in a post some days ago, All the Cool Green Building People will be in Memphis Next Week. And some thought we oversold the story. But when Britain's Prince William and Prince Harry arrived in Memphis last week for the wedding of Elizabeth “Lizzy” Wilson and Guy Pelly, we felt vindicated.

And while the paparazzi did not take our picture after we ate at Rendezvou, last Thursday night the restaurant was full of code folks having completed a day of Committee Action Hearings on the 2015 International Green Construction Code. 

More than 900 changes to the 2012 IgCC were proposed grouped and ordered in a big code effort into just over 500 “proposed changes” publicly discussed and voted on over 7 days of hearings. Changes ranged from clarifying confusing text to updating provisions to reflect the new and best science.

Much of the chatter among the hundreds of participants in the hearings was about “super habitable” buildings and questioning the efficacy of the proposed emphasis on materials, including EPDs, as being not supported by science and as straying too far from green building and any articulable benefit to building occupants.   

With hundreds in the room, many representing industry interests, the ICC update of the Green Code is a voluntary consensus based process with openness, balance of interests, due process, an appeal process, and consensus. It is not perfect and at this hearing the concrete industries united to oppose the asphalt pavement industry’s attempt to allow asphalt pavement to be used under the IgCC. The existing code all but bans asphalt pavement in favor of concrete products (i.e., the 2012 IgCC mandates heat island mitigation for not less than 50% of site hardscape with material as having a solar reflectance value of not less than 0.30, including not even allowing the use of permeable asphalt); making the IgCC an outlier as the only green standard, rating system or code to effectively ban the use of asphalt pavement.

With the hearings now concluded the Report of the Committee Action Hearings (to accept, reject or accept with modifications each IgCC change proposal) will be posted online on June 6, 2014. A public comment period will be conducted until July 16, 2014, where any member of the public may provide written comments. And this is where the new IgCC gets real.

Public Comment Hearings will be held in Ft. Lauderdale between October 1 and 7, 2014.  Voting on the final action on the public comments will be done by governmental ICC members both at the hearing and for a two week period afterward with the online cdpACCESS.

The resultant document, the 2015 IgCC will be released for use in the calendar year 2015 offering a more robust and greener Green Construction Code that will be a real alternative to LEED and Green Globes, with broader and wider adoption across the country.

The IgCC is moving forward. On June 6, with the posting online of the then current version, the public will have more than a month to comment. Don’t be left behind. Review the proposal and comment. 

Photo credit Reuters

FTC is Pursuing Green Marketing Claims

The Federal Trade Commission announced last Friday that it approved a final order settling charges that American Plastic Manufacturing, Inc. made misleading and unsubstantiated biodegradability claims for its plastic products.  The final order is the fourth resulting from a set of “green” marketing cases the FTC first announced in October, 2013.

The FTC alleged that APM advertised its plastic shopping bags on its website as biodegradable. 

Under the FTC’s final order, APM is prohibited from making biodegradability claims unless they are true and supported by competent and reliable scientific evidence.  The company must have evidence that the entire plastic product will completely decompose into elements found in nature within one year after customary disposal (defined as disposal in a landfill, incinerator, or recycling facility) before making any unqualified biodegradable claim. 

In order to make biodegradability claims, the FTC takes the position that companies must state the time required for complete biodegradation in a landfill or the time to degrade in a disposal environment near where consumers who buy the product live. Alternatively, companies may state the rate and extent of degradation in a landfill or other disposal facility accompanied by an additional disclosure that the stated rate and extent do not mean that the product will continue to decompose or decompose completely. This is a high bar.

In another FTC green marketing case, N.E.W. Plastics Corp., of Wisconsin, has agreed to stop making allegedly unsubstantiated claims about the recycled content and recyclability of two of its brands of ‘plastic lumber’. The company claimed that its “Evolve products are made from 90 percent or more recycled content”, and that its “Trimax products are made from mostly post-consumer recycled content”.

The fake plastic lumber products were used as trim and decorative moldings, including in green buildings, as well as for outdoor decking.

The proposed consent order prohibits N.E.W. from making any statements about the recycled content, post-consumer recycled content, or environmental benefits of any product or package unless they are true, not misleading, and are substantiated by competent and reliable evidence, which for some claims must be scientific evidence.

In an earlier blog post I wrote that the FTC announced in October, 2013 it would begin to ramp up enforcement of environmental claims. It is clearly doing so. The FTC does provide guidance to businesses on environmental claims, including its interpretations of federal law that at times fly in the face of the free flow of commercial information, in its Green Guides. This law firm regularly assists businesses with green claims that can be made with certainty.

The Green Guides and much more will be the subject of the educational session I am presenting tomorrow morning, Tuesday, May 6 at 8:00 a.m., with Ida Cheinman for USGBC Maryland in Baltimore. There is still time to register today for Marketing Green Building: A Competitive Advantage Without Greenwash.   

Marijuana Smoking is Allowed in LEED Buildings

Today 20 states allow medical marijuana use and Colorado and Washington state have laws allowing recreational marijuana use. Colorado started allowing recreational marijuana use in January and Washington is expected to allow sales this summer.

While there are a patchwork of current laws for legal marijuana that vary from state to state, and legislation is pending in at least 6 states, it is clear that there has been a major shift in attitudes across the country to now allow marijuana smoking for medical and even recreational purposes. 

Those laws trump and supersede most, if not nearly all, “no smoking” laws. However, LEED certified buildings generally prohibit smoking, irrespective of law, and that has led to inquiries about whether marijuana smoking is allowed in a LEED building?

The answer is simply, yes, you can smoke marijuana in a LEED certified building assuming it is otherwise legally permissible in the jurisdiction to do so (but, see the disclaimer below about federal criminal laws).

Many are aware LEED includes the Indoor Environmental Quality Prerequisite 2, “Environmental Tobacco Smoke (ETS) Control”. The rating system language explains, “Intent. To prevent or minimize exposure of building occupants, indoor surfaces and ventilation air distribution systems to environmental tobacco smoke (ETS).” ETS is arguably what is commonly described as secondhand smoke from the burning end of tobacco cigarettes, pipes, and cigars, including as exhaled by smokers.

And LEED offers options to comply with that prerequisite. Option 1 is,

Prohibit smoking in the building. Prohibit on-property smoking within 25 feet (8 meters) of entries, outdoor air intakes and operable windows. Provide signage to allow smoking in designated areas, prohibit smoking in designated areas or prohibit smoking on the entire property.

LEED offers a second option with two alternatives: the first for non-residential buildings prohibiting smoking in the building except in designated smoking areas; and the second alternative for residential and hospitality projects prohibiting smoking in all common areas of the building.

But none of that applies to marijuana. By its express language, beginning with the title, “Environmental Tobacco Smoke (ETS) Control” this prerequisite is about tobacco smoke. The language is clear and precise, and unambiguous that it does not apply to marijuana smoke.

It important that when creating a LEED required smoking policy and signage that both make clear it is tobacco smoking that is being prohibited. More than one Colorado landlord is seeking advantage in the marketplace by advertising a “marijuana friendly” building. Many LEED smoking policies, certainly in the 20 states allow medical marijuana use, should now be revised to articulate that marijuana smoking for medical and even recreational purposes is permitted.

And while, of course, the author has no personal knowledge, today increasing quantities of marijuana is ingested through vaporizers versus rolled joints, not to mention in edibles from brownies to granola bars and butter to chocolate, such that concern over secondhand smoke from marijuana is lessening.  

On a related matter there is at least one medical marijuana cultivation and dispensary under construction in Massachusetts pursuing LEED certification.

While for many buildings it is likely necessary and proper that existing LEED smoking policies now be revised to articulate that marijuana smoking for medical and even recreational purposes is permitted; it is certainly important from this point forward that when creating a LEED smoking policy and signage that both make clear it is tobacco smoking that is being prohibited. 

“Federal and state laws [should] be changed to no longer make it a crime to possess marijuana for private use.” – Richard M. Nixon, 1972. Despite that statement, be aware that possessing, using, distributing and selling marijuana are all federal crimes and may be state crimes. Beyond the general disclaimer below about the purposes of the blog, this blog post is not intended to give you criminal law advice or for that matter, any legal advice. 

Photo Credit United Kingdom Cannabis Social Clubs    

All the Cool Green Building People will be in Memphis Next Week

The process of updating the 2012 International Green Construction Code moves to Memphis next week.

The IgCC provides model code language, to be adopted by local governments as an overlay to existing codes to establish “baseline regulations for new and existing buildings related to energy conservation, water efficiency, building owner responsibilities, site impacts, building waste, and materials” and other matters. 

It is surprising to some that adoption of the IgCC across the country has not been faster and broader. It may be that mandatory green building codes are controversial and fly in the face on the tenets of green building as voluntary stewardship of the Earth; which would explain the large market share that LEED has, as a voluntary third party green building rating system. But a better explanation may be that the IgCC needs to find its place among standards, rating systems and codes; which is a balancing act between the hard left environmental extremists and the conservative engineering based code officials? And that is what is going to happen in Memphis.

The ICC’s new cloud based code development system “cdpACCESS” will be used for the first time for offsite comments to the 2015 IgCC, but the action will be on the ground in Memphis.

Proposed IgCC changes submitted have been posted online since March 10th for public review. The changes will be heard at two Committee Action Hearings conducted April 27th through May 4th in Memphis. The hearings will also be webcast live.

There are more than 900 changes proposed ranging from clarifying confusing text to updating requirements to reflect the best science evolved since 2012. By way of example, one positive change is GC 159-14, being advanced by the National Asphalt Pavement Association, to revise IgCC section 408.2.4. Pervious and Permeable Pavement, to now refer only to permeable pavements defined as having an air void of at least 15% versus the current measure of a percolation rate of 2 gallons per minute per square foot. Recent research describes how permeable pavements can not only manage stormwater but also mitigate urban heat island effect due to the high air void nature.

NAPA is also proposing GC 156-14 to delete IgCC section 408.2.1 describing site hardscape material as having a solar reflectance value of not less than 0.30. This is significant because the IgCC mandates heat island mitigation for not less than 50% of site hardscape, including that the hardscape materials meet that requirement. Given the growing body of evidence of unintended consequences associated with reflective pavements and the potential negative impact they may have on energy usage, it is time ICC members accept the code may have gotten ahead of the science and be prepared to eliminate provision.

The results of the hearing (to accept, reject or accept with modifications) each IgCC change proposal, will be posted online. A public comment period will then be conducted until July 16, 2014, where any member of the public may provide written comments.

Public Comment Hearings will be held in Ft. Lauderdale between October 1 and 7, 2014.  Voting on the final action on the public comments will be done by governmental ICC members both at the hearing and for a two week period afterward with cdpACCESS.

The resulting document, the 2015 IgCC will be released for use in the calendar year 2015 and will offer a more robust and greener Green Construction Code.

Zoning Laws Stop Wind

The application of zoning laws, many of which date to the 1920s are bringing alternative energy projects to a halt in 2014.

In a recent New York case, the Town of Allegany issued a special use permit to a landowner on July 11, 2011, allowing it to construct a wind farm. The Town notified the landowner that its permit would “expire if construction has not commenced within a year of approval.” On June 11, 2012, the Town extended the deadline “until the earlier of” one year or 90 days after the “conclusion of the” lawsuit commenced against the Town by a citizens’ group, Concerned Citizens of Cattaraugus County, which opposed the project.  

By letter dated August 3, 2012, petitioner advised the Town that it was “considering use of alternate turbine models” for the project. Petitioner thereafter requested a second extension of the special use permit, but the Planning Board denied that request at its October 15, 2012 meeting.

The Supreme Court of the State of New York, in Allegany Wind LLC v Planning Board of Allegany, 2014 WL 1099718 (NYAD 4 Dep. 3/21/2014), concluded that, contrary to the landowner’s contention, there was a material change in circumstances since the special use permit had been issued, and that the Planning Board’s refusal to extend the special use permit for a second time was not arbitrary or capricious. When the special use permit was granted, the landowner was going to use Nordex N1000 turbines. It was undisputed that, by the time landowner requested its second extension of the permit, it proposed using alternate turbine models because that model was no longer being produced and less expensive more energy producing turbines had become available during the pendency of the lawsuit. The Town determined that a change in turbine models would constitute a change in circumstances sufficient to warrant reconsideration of the project.

The landowner also argued the time period should be tolled because, until the litigation was resolved, it could not obtain necessary financing and could not commence construction of the wind farm. The high court rejected that further contention that the expiration date of its special use permit was tolled during the pendency of the lawsuit.

Most zoning laws, including those in New York, do not provide for or otherwise recognize an equitable doctrine that would allow for the tolling of the time period of zoning approvals. Such is a bar to large and expensive projects that require special zoning approvals, as many alternative energy projects do. Interestingly, most Dinasaur electric utilities’ projects ‘are permitted as of right’ in all zoning districts, while zoning laws require special exceptions or special use permits or the like for many alternative energy projects. 

Historic zoning laws need to be brought into the contemporary era. Electricity in the 1920s, when many of today’s zoning laws were written, powered the Edison light bulb. Today, that light bulb is illegal and electrons drive our socio-technological trends powering the information age. Modern alternative energy projects must not be allowed to be halted by old fashioned zoning laws.