FTC Warning about Green Certification Seals

Image Federal Trade Commission Image Federal Trade Commission

Three weeks ago the Federal Trade Commission sent warning letters to 5 providers of environmental certification seals and 32 businesses using those green seals, alerting them to the Agency’s concerns that the seals could be considered deceptive in violation of federal law.

The FTC enforces the Federal Trade Commission Act, 15 U.S.C. § 45, which prohibits deceptive advertising. In 2012, the FTC issued updated Green Guides for the Use of Environmental Marketing Claims, 16 C.F.R. Part 260. The Green Guides provide businesses with detailed information about how to make non-deceptive environmental marketing claims, including through environmental certifications and seals of approval.

The Green Guides caution that unqualified general environmental benefit claims likely convey a wide range of meanings, including that a product has specific and far-reaching environmental benefits and that an item has no negative environmental impact. Section 260.4(b). The Guides go on to say, “because it is highly unlikely that marketers can substantiate all reasonable interpretations of these claims, marketers should not make unqualified general environmental benefit claims.”

To that end, the Green Guides state that environmental certifications or seals of approval may imply a general environmental benefit claim. Specifically, the “use of an environmental certification or seal of approval likely conveys that the product offers a general environmental benefit if the certification or seal does not convey the basis for the certification or seal .. ” Section 260.6(d).

The Green Guides advise that marketers may prevent deception by accompanying the seal with “clear and prominent qualifying language that clearly conveys that the certification or seal refers only to specific and limited benefits.” Section 260.6(e).

Moreover, the Green Guides offer several examples, including,

Example 5:  A marketer’s industry sales brochure for overhead lighting features a seal with the text “EcoFriendly Building Association” to show that the marketer is a member of that organization. Although the lighting manufacturer is, in fact, a member, this association has not evaluated the environmental attributes of the marketer’s product. This advertisement would be deceptive  …  The use of the seal would not be deceptive if the manufacturer accompanies it with clear and prominent qualifying language: (1) indicating that the seal refers to the company’s membership only and that the association did not evaluate the product’s environmental attributes; and (2) limiting the general environmental benefit representations, both express and implied, to the particular product attributes for which the marketer has substantiation. For example, the marketer could state: “Although we are a member of the EcoFriendly Building Association, it has not evaluated this product. Our lighting is made from 100 percent recycled metal and uses energy efficient LED technology.”

The FTC’s new business blog post, Performing Seals, further articulates how certification seals and logos can comply with the Green Guides. It includes two sample certification seals (see above) to illustrate dos and don’ts.

I have written a series of blog posts about FTC enforcement actions in this area, including Do Not Sell the RECs and Claim the Building Uses Renewable Energy.

At this time, no law enforcement actions are being taken, and the FTC is not disclosing the names of the companies it sent the letters.

In response to a request for comment, the owner of one of the most widely recognized environmental certification seals, who was not a recipient of one of the FTC letters, said,

The U.S. Green Building Council supports the FTC’s efforts to ensure that green certification seals accurately convey information to consumers, and not make claims that could be misleading. …

Third party certification is important here because it holds businesses accountable for what they say is true, and it signals to consumers that the certified item meets certain standards so that they can make educated decisions about what to buy. Third-party seals of approval can communicate other things as well, such as the values of the company or the class of the product. At USGBC of course, we stand for accountability, and we translate that accountability through the LEED third-party certification process.

The immediate practical impact of announcing the letters have been sent has been broad and swift with many businesses evaluating seals and logos on their websites and marketing materials, many of which connote membership in an environmental organization.

This law firm regularly assists businesses with green claims that can be made with certainty. If you have questions do not hesitate to contact Stuart Kaplow.

EPA Issues Significant Revisions to Underground Storage Tank Regulation

EPA has issued significant revisions to the existing 1988 underground storage tank regulation that will impact most, if not all, businesses with USTs.

EPA regulates over 571,000 USTs, down from a high of 2.1 million USTs in 1984.

As of January 1, 2015, more than 525,000 UST releases (e.g., leaks) had been reported since 1988, many contaminating soil and drinking water.

Photo U.S. EPA

Photo U.S. EPA

An UST is one or more tanks and any underground piping connected to the tanks that have at least 10% of their combined volume underground. The federal UST regulation applies to USTs storing petroleum and certain hazardous substances (i.e., less than 10,000 tanks have hazardous contents).

Some tanks are excluded from federal regulation including tanks storing heating oil used on the premises where it is stored, tanks on or above the floor of underground areas, such as basements or tunnels, etc.

Note, many states have a state program approval from EPA. In these states, the state’s UST regulation is followed in lieu of the federal regulation and states have 3 years to come into compliance with this new federal edict. Click for a list of states with state program approval.

This 2015 regulation changes certain portions of the 1988 UST technical regulation published in 40 CFR part 280. Nearly all businesses with USTs will be impacted by these new regulations and will in many instances have 3 years to come into compliance with the changes that include:

  • Adding secondary containment requirements for new and replaced tanks and piping
  • Adding operator training requirements
  • Adding periodic operation and maintenance requirements for UST systems
  • Adding requirements to ensure UST system compatibility before storing certain biofuel blends, and
  • Removing past deferrals for emergency generator tanks, airport hydrant systems, and field-constructed tanks.

Although not a change, comments to the draft regulation noted that many UST owners apparently do not maintain the $500,000 per occurrence insurance coverage required of UST owners that handle less than 10,000 gallons per month.

Click here for an EPA issued comparison of the 1988 UST versus new 2015 UST regulations.

While the number of releases has gone down significantly since 1988, releases of petroleum from USTs into the environment are still a significant concern today. USTs are a crucial part of our country’s energy infrastructure. A properly installed and managed UST should not threaten the environment. These updated regulations are a move in that direction that will require capital investment and changes in operations, but should not overburden business; and, we would expect the same of the 38 states that will overhaul state delegated programs in the coming years.

Utility Incentives Tied to LEED are Growing Geometrically

Last week Louisville Gas and Electric Company and Kentucky Utilities Company announced rebates from $2,000 to $10,000 tied to achieving certain LEED credits.

Electric utility based incentives that support energy efficiency, including LEED certification, are increasing in number across the U.S. at all but geometric rates, while at the same time new government incentives have stalled. electricmeter

Since September 1, new utility based incentives were announced, not only in Kentucky, but also in Ohio, South Carolina, New Hampshire, Missouri, Colorado, and Georgia.

Utilities offer incentives for energy efficiency, which might at first glance seem counterintuitive given that the utilities make money selling electricity, despite that most are funded by rate payers, .. for several reasons, including that some are required by state regulators (in at least 29 states), others have capacity constraints that encourage conservation (it is very costly to build a new power plant), and in a small number of utility markets there has been a regulatory decoupling of revenue and profits.

Many credit Pacific Gas and Electric as the first utility to offer a modern energy rebate program. Today, while incentives vary, most are crafted by a small group of consultants that serve the utility industry and enable very similar programs across the country.

It is worthy of note that there are at least 55 existing energy incentives across Kentucky.

The new electric utility incentive is available for construction of a new commercial facility that is LEED certified from between $2,000 and $10,000. The new construction may be under any of several LEED ratings systems: Commercial Interiors, Core and Shell Development, Healthcare, Retail: New Construction, Schools: New Construction, or Retail: Commercial Interiors; for work completed after the November 14, 2014 retroactive start date.

Rebates are based on points awarded on a sliding scale under LEED Energy & Atmosphere, Credit 1 – Optimize Energy Performance credit. A less than 25,000 square foot building that earns up to 5 points under that Optimize Energy Performance credit earns a rebate of $2,000, while a building that is larger than 25,000 and earns 16 points under that credit is eligible for a rebate of $10,000.

Some have criticized this and other utility based incentives as simply being too modest to be worth expending time, effort and dollars to apply for. And such may be a fair criticism of these programs that can be worth pennies on the dollar when compared to a local government multi year property tax credit that can easily have a value of hundreds of thousands of dollars.

Some utility incentives arguably have greater efficacy and offer more dollars. A regulatory required program in Maryland, available through BGE and other utilities, encourages energy savings pursued through the LEED credit for implementing Enhanced Commission Services. Funding is available for up to 50% of the cost of achieving the Enhanced Commissioning LEED credit, up to $20,000 per project.

This law firm maintains a national database of green building associated incentives, to be able to advise our clients about first costs of projects. It is clear from our new data that electric utility based incentives tied to LEED certification and earning specific LEED credits are increasing at all but geometric rates.

You Should Comment on the Revised Green Globes Standard

Last Friday was the beginning of the public comment period on the Green Building Initiative’s revision to its ANSI/GBI 01-2010: Green Building Assessment Protocol for Commercial Buildings that forms the basis for the current version of Green Globes for New Construction.

Nearly 1000 buildings are Green Globes certified in the U.S. today.

The revised Standard is now available on GBI’s website along with a public comment form at www.thegbi.org/ansi.  The public comment period will run through Monday, October 26, 2015. gg2

It is important for the continued success of the broader green building industry that you comment on the revised Green Globes Standard whether or not you have worked on a Green Globes project. Many are concerned that the current collaboration on the development of future versions of ASHRAE Standard 189.1, the IgCC and LEED, relying on ASHRAE’s technical expertise, risks further stifling innovation and creativity in green building. A strong GBI and innovative new Green Globes Standard may be the best weapon against the further slowing of the already stalling larger domestic green building market.

I had an opportunity to speak with Vicki Worden the new Executive Director of GBI last week and she described how work on the revision began in 2014 and has included input from nearly 100 subject matter experts in the green building community through more than 70 public meetings and calls conducted as part of GBI’s American National Standard Institute (ANSI) procedures.

A good example of the Green Globes tradition of flexibility is the use of “non-applicables.” Users can indicate criteria that are not applicable to a building or project. For instance, if optional features (e.g., cooling towers) are not included in the project scope, then those criteria could be marked non-applicable. This is key because a building is only in compliance with the Standard and can only achieve Green Globes certification if it achieves at least 35% of “applicable” points out of 1000 possible points.

The revised Standard sets an additional requirement that a building must achieve at least 20% of applicable points within each of the six environmental assessment areas.

In this revision, several changes were made to 1000 point distributions to reflect the relative perceived importance or “weight” of the criteria within areas. For example, the Energy assessment area continues to hold the highest number of possible points, indicating its critical importance. The Water assessment area’s point allocation has also been raised significantly to highlight the vital importance of water efficiency. The new point distribution as proposed “weights” the assessment areas as follows: Project Management (100 points), Site (150 points), Energy (260 points), Water (190 points), Materials (150 points), and Indoor Environment (150 points).

The revised Standard, consistent with the 2010 version, does not make specific criteria mandatory (i.e., there are no mandatory points).

Additional weighting occurs within each assessment area to encourage pursuit of criteria considered to be most important. For example, Section 9.1 on Indoor Domestic Plumbing has 32 possible points out of the Water assessment area’s total 190 points and points are allocated to encourage use of indoor plumbing fixtures more efficient than the base efficiency requirements. This ensures that Green Globes buildings prioritize indoor water efficiency. Other sections in the Water assessment area also have high weightings, including Cooling Towers (31 points), Alternate Sources of Water (28 points), Metering (28 points), and Irrigation (27 points).

With respect to the future, GBI is moving to a continuous maintenance process (i.e., not every 5 years or the like), where proposals for change can be continually considered by the Consensus Body to insure continued innovation in the Green Globes Standard that responds to the market.

The proposed more robust Green Globes New Construction Standard may be a small step for GBI, but the continuous innovation that it brings to green building, as a geoengineering solution to man’s impact on the planet, is a giant leap for mankind.

The Single Best Thing You Can Do To Grow Your Green Building Business

I was speaking at a breakfast of real estate professionals some days ago and the question I received most frequently from those in attendance was “how can I expand my green building business?” I retell that because it is a variation of the question I get most often these days about green building.

My answer is simple and I offer the same response I have for years, attend the Greenbuild International Conference and Expo. greenbuildsmall

This year Greenbuild is in Washington, DC from November 18 – 20.

I do not claim to have any business marketing expertise, but Greenbuild has been the number one source of new clients for my sustainability and green building law practice!

I have been attending Greenbuild on and off over 12 years. Last year, Greenbuild 2014 was in New Orleans and a far cry from the first U.S. Green Building Council “Green Building Conference” (yes, pre Greenbuild) held in conjunction with the National Institute of Standards in Gaithersburg, Maryland in 1994 which had 450 people in attendance. While attendance is off a bit from the huge Greenbuild in Boston in 2008 with 27,995 attendees, last year dwarfed the first Greenbuild in 2002 when 4,189 people gathered in Austin.

There were 17,507 attendees last year and while 90% were from the U.S., 76 countries were represented. 26% of those attending were from architecture or engineering firms, 13% were contractors and builders, 10% were manufacturers and 7% were utilities, not to mention the very large numbers of professionals offering services and consulting, including, yes, a large assemblage of real estate attorneys.

And Greenbuild is sustainable. USGBC reported all alcohol served in the venues in New Orleans was 100% domestic with emphasis on regionally sourced beverages.

The 2014 demographics are the most recent proof that Greenbuild is the largest green building gathering each year and the best opportunity for networking among “green people.”

In 2013, event company Hanley Wood acquired Greenbuild from USGBC and at the end of 2014 Hanley Wood sold its exhibition businesses, including World of Concrete and Greenbuild, to Informa, a U.K. based publishing and events company, for $375 million.

Last year there were 552 exhibitors on the Expo Floor. It is all but impossible not to encounter new vendors and innovative suppliers. Educational activities abound and there is a lot to learn, I am already looking forward to attending the session, EPDs: State of the Art and Advancement by Industry, where one of the presenters will be Heather Dylla, Director of Sustainable Engineering for the National Asphalt Pavement Association.

Greenbuild 2015 in Washington, DC will be “the” target rich environment for green people this year. So register today.

It is only 71 days until this once a year opportunity to expand your green building business.

And for those who will complain that this blog post is shameless promotion of USGBC, that may be true, but it is also correct that Greenbuild has been the number one source of new clients for my sustainability and green building law practice!

Having fun is also part of the Greenbuild experience. As a reader of this blog, if you email me before Greenbuild, I will buy you a drink or a cup of coffee at a DC watering hole. (I made a similar offer last year and had a great time meeting a lot of very fun people for coffee and beignet at Café Du Monde.) I hope to see you in DC on November 18.

What one change would you make to LEED to encourage green building?

In recent days, I asked the question, “what one change would you make to LEED to encourage green building?” to four score and seven people familiar with green building.

This was a highly unscientific poll that is not representative. The small sample was not randomly selected, but rather each was a professional working on green building projects, so the results have some statistical reliability. And when coupled with the result that more than 50% offered the same solution and the next offered solution polled at only 8%, the responses to this question, posed by someone not associated with the U.S. Green Building Council, are a useful tool of analysis. LEED Plaque(1)

Against a backdrop of the increasing belief, as recently articulated by Bill Gates that current green technologies can reduce carbon dioxide emissions and the human contribution to climate change only at costs that are “beyond astronomical” many have begun to focus on another frontier of innovation, on using energy more efficiently, and thus using less of it. Given that green buildings regularly consume 25% less energy or more, green building may be the single greatest current opportunity to address climate change.

There are nearly 4. 9 million commercial buildings in the U.S. which makes existing buildings the target rich environment (i.e., each year only about 170,000 new commercial buildings are constructed). And those existing buildings are tremendous consumers of electricity, accounting for 74% of the total electricity consumption in the U.S.

There are a variety of green building standards, codes and rating systems, but LEED commands a more than 95% market share in the U.S., so the answer may be expressed in terms of LEED.

And the LEED for Existing Buildings: Operations & Maintenance rating systems are highly regarded when they identify and reward current best practices and provides an outline for buildings to use less energy and uncover operating inefficiencies.

In 2014, LEED for Existing Building Operations and Maintenance was once again the most popular rating system, with existing buildings representing 48% of the total square footage LEED certified.

But the problem is that since LEED EB was launched in 2004, today there are only a total of 3,778 certified LEED EB buildings. That is less than one tenth of one percent of the 4.9 million existing commercial buildings.

However, an existing building that cannot achieve an Energy Star Portfolio Manager rating of 75 is excluded from participating in LEED v4. (An Energy Star score of 75 means the building is performing better than 75% of similar buildings nationwide.) The prerequisite of a minimum score of 75 arguably excludes 75% of all existing buildings from participating in LEED. This is more significantly stringent than LEED 2009 requiring an Energy Star score of 69.

There is a pilot credit known as “EAp2 Energy Jumpstart” such that an existing building that reduces energy consumption by 20% is now LEED v4 eligible. But, after much internal debate, it is only a LEED pilot credit and available to only the first 500 applicants.

Which gets us back to the question, “what one change would you make to LEED to encourage green building?” The number one answer, by far, allow every existing building that improves its Energy Star score by at least 20% to be LEED EB eligible!

That single change to the rating system would make millions of buildings eligible to participate in LEED and may be the single greatest current opportunity to address climate change.

Court Blows Away Permits for Wind Turbine Eagle Kills

On August 11, a federal court set aside the U.S. Fish and Wildlife Service rule allowing 30 year permits to “take” bald and golden eagles. In an industry born from tax credits and government energy policies an interruption of one of those key policies can bring wind turbine construction to a halt.

The Bald and Golden Eagle Protection Act, which was enacted in 1940, imposes criminal and civil penalties against “whoever” shall “take, possess, sell, purchase, barter, offer to sell, purchase or barter, transport, export or import” bald and golden eagles, except as permitted by the Department of Interior Secretary. Wind Turbine(4)

On September 11, 2009, FWS issued regulations for the first time that “authorize limited take of bald eagles .. and golden eagles .., for 5 years or less, where the take is not the purpose of the activity but is a foreseeable consequence of that activity.” The 2009 regulations themselves included but a few references to wind turbines. For instance, FWS cited “a company interested in siting a wind-power facility” as an example of an entity that “may qualify for a programmatic take permit.” 74 Fed. Reg. at 46,842.

Soon after the 5 year rule was issued in 2009, there was a substantial increase in the development of wind power for renewable energy purposes. Because “eagles can be killed by colliding with structures such as wind turbines,” FWS developed the Eagle Conservation Plan Guidance for the wind industry to “help project operators in complying with regulatory requirements and avoiding the unintentional ‘take’ of eagles at wind energy facilities.”

One issue not addressed by the Guidance “was the wind industry’s extensive comments that the five-year maximum tenure of permits under the Eagle Take Rule is fundamentally unworkable for the industry considering the life of most wind projects is 20 to 30 years.” The industry’s chief complaint was that the uncertainty surrounding the renewal of 5 year programmatic eagle take permits was preventing operators from obtaining the necessary 30 year financing for wind energy projects.

On December 9, 2013 the FWS adopted a “strictly administrative” rule increasing the maximum duration of programmatic permits to take bald and golden eagles from 5 years to 30 years, which I wrote about in the blog post Okay to Kill Eagles with Wind Turbines But Not with Solar Panels or .

However the Court in Shearwater et al v. U.S. Fish and Wildlife Service et al, concluded that FWS failed to show an adequate basis in the record for deciding not to prepare an EIS [environmental impact statement], much less an EA [environmental assessment] – prior to increasing the maximum duration for programmatic eagle take permits by six-fold.

While promoting renewable energy projects may well be a “worthy goal, it is no substitute for the [agency’s] obligations to comply with NEPA and to conduct a studied review and response to concerns about the environmental implications of major agency action.” Accordingly, the Court held that FWS violated its procedural requirements and that the 30 year rule must therefore be set aside.

The practical effect of this court ruling is less than clear because despite creating uncertainty in the wind turbine business and hardening beliefs that the Obama Administration is attempting to pick winners and losers in energy, FWS is today considering new regulations in this area. At the same time the proposed 30 year rule was published, FWS issued an Advance Notice of Proposed Rulemaking, considering comprehensive changes to the 2009 regulations and on June 23, 2014, FWS stated its intent to prepare an EIS or EA on these changes allowing wind turbines to kill eagles (but not solar panels or even electric transmission lines?).

Climate Change Disclosures by Public Companies

In recent weeks this law firm has received more inquiries than at any time in recent years about the Securities and Exchange Commission’s disclosure requirements for public companies as they apply to climate change matters.

Possibly the Environmental Protection Agency’s proposed rule for emission reductions for existing power plants triggered this heightened level of interest or it could be President Obama’s newly announced series of executive actions on climate change or maybe it is simply increased concern over shareholder activism. The SEC required disclosures are not limited to automobile manufactures and electricity generating utilities, but also may apply to a broad breadth of industries, including by way of example, real estate (i.e., if only as an indirect consequence of buildings accounting for 72% of the electricity consumption in the U.S.).

A view of the Securities and Exchange Commission headquarters May 3, 2013 in Washington, DC. AFP PHOTO/Brendan SMIALOWSKI        (Photo credit should read BRENDAN SMIALOWSKI/AFP/Getty Images)


When a company is required to file a disclosure with the Commission, those disclosures (e.g., notes in an annual report) will largely track the disclosure requirements of Regulation S-K and Regulation S-X. Securities Act Rule 408 and Exchange Act Rule 12b-20 require a registrant to disclose, in addition to the information expressly required by Commission regulation, “such further material information, if any, as may be necessary to make the required statements, in light of the circumstances under which they are made, not misleading.”

The SEC first addressed disclosure of material environmental issues in the early 1970s. The Commission issued guidance that public companies should consider disclosing in their SEC filings the financial impact of compliance with environmental laws.

In 2010, by a 3 – 2 split by the vote of five SEC commissioners, the SEC issued guidance on SEC disclosure requirements for companies on the impact that “climate change may have on its business.” Based upon that SEC guidance, the following areas are examples of where climate change may trigger disclosure requirements:

Legislation and Regulation: When assessing potential disclosure obligations, a company should consider whether the impact of existing or pending laws and regulations regarding climate change is material.

International Accords: A company should consider, and disclose when material, the risks or effects on its business of international accords and treaties relating to climate change (e.g., COP 21 is only weeks away).

Indirect Consequences of Regulation or Business Trends: Legal, technological, political and scientific developments regarding climate change may create new opportunities or risks for companies. For instance, a company may face decreased demand for goods that produce significant greenhouse gas emissions or increased demand for goods that result in lower emissions than competing products. As such, a company should consider, for disclosure purposes, the actual or potential indirect consequences it may face due to climate change related regulatory or business trends.

Physical Impacts of Climate Change: Companies should also evaluate significant physical effects of climate change, such as effects on the severity of weather (for example, floods or hurricanes), sea level, the arability of farmland, and water availability and quality, etc.

Among the existing disclosure rules that may now advisedly trigger climate change disclosures, the SEC casts a broader, more subjective interpretation of its requirements for ‘management discussion and analysis’ disclosures, which practically require the company to disclose “currently known trends, events, and uncertainties that are reasonably expected to have material effects.”

In 2010, immediately after the SEC guidance, this law firm worked with a large number of publicly traded companies and their counsel and outside consultants to advise them about these requirements. That year more than 25% of public companies used the term “climate change” in their annual report, most for the first time.

Data culled from filings of public companies listed on U.S. stock exchanges reveals that last year less than 30% of companies made a climate change disclosure. The heightened interest we have experienced suggests that number will be increasing.

We assist public companies in matters of climate change and sustainability, including voluntary environmental reports, as well as SEC disclosures and financial statement compliance. If we can assist your company, please contact Stuart Kaplow.

Litigation over First LEED Platinum Building Comes to an End

On July 23, 2015, the parties in the lawsuit The Chesapeake Bay Foundation, Inc., et al v. Weyerhaeuser Company, et al, pending in the U.S. District Court for Maryland, filed a Stipulation of Dismissal with Prejudice following a confidential Settlement Agreement and Mutual Release.

Because the settlement is confidential we do not know precisely how this case ended.  

But we do know the facts as recited by the trial judge in a May 4, 2015 opinion ruling on motions, ..

More than 15 years ago, CBF contracted with SmithGroup, Inc. to design the Philip Merrill Environmental Center, CBF’s headquarters, on the Chesapeake Bay in Annapolis, Maryland. CBF also contracted with Clark Construction Group, LLC as general contractor to oversee the construction, which spanned from 1999 into 2000. SmithGroup’s ‘green’ design called for exposed structural wood members outside the envelope of the Merrill Center, including some that penetrated the building’s façade.

Weyerhaeuser, a manufacturer of columns and beams, agreed in a purchase order to provide Parallams to Clark for use as the exposed wood members. Parallams, which have a rough-hewn appearance, are manufactured by bonding together strips of wood (i.e., a then new, LEED rapidly renewable material). The wood strips’ lack of uniformity creates channels, or avenues, that run longitudinally through the Parallams. Thus, water is expected to infiltrate Parallams used outdoors. To protect against rotting, Parallams are pressure treated with a wood preservative.

The Clark Weyerhaeuser purchase order required Weyerhaeuser to treat the Merrill Center’s Parallams with the preservative PolyClear 2000 (i.e., a then new, LEED low emitting material). Weyerhaeuser engaged third party defendant Permapost Products Co. to apply the PolyClear 2000 treatment, and Permapost provided certificates to Weyerhaeuser verifying that the treatment had occurred. Nonetheless, 5 years later, CBF discovered that the Parallams indeed had rotted and deteriorated and subsequently learned that the Parallams had not been treated with PolyClear 2000 as certified, that PolyClear 2000 was not in any event well suited to the job of preserving the Parallams, and that Weyerhaeuser had knowingly given false assurances to the contrary.

Less than 50 days after the trial judge recited those facts in an opinion granting in part and denying in part cross motions for summary judgment, the parties entered into the Settlement Agreement. Weyerhaeuser’s third party action against Permapost is unaffected by the dismissal and remains scheduled for trial beginning November 9, 2015.

Despite the confidential settlement we know a lot about this case. CBF initially settled with SmithGroup and Clark who undertook remediation measures which involved replacing the Parallams and then they all commenced this action against Weyerhaeuser to recover more than $6 Million related to the deteriorating columns.  Those interested in the procedural history of this case may look to my earlier blog post Litigation Over First Ever LEED Platinum Building.

Substantively the case suggests there is no more liability arising from green building versus other construction, but that the liability is different.

The crux of this case is one of those differences, claims arising from materials. It should give architects pause, now more than ever, that specifying new or untried materials and products (that are often the keystone of sustainable building) comes with unique risks; and in this case PolyClear 2000 was specified even before the emerging era of expanded liability arising from environmental product declarations and health product declarations.

Finally, the most significant take away from this case, that involved sophisticated parties engaged in a multi-Million Dollar green building project that was the first LEED Platinum building, is that properly drafted contract documents are both the best sword and shield for mitigating risk.

IgCC will now be Powered by ASHRAE 189.1

Last Friday, the International Code Council and ASHRAE announced they signed an “agreement that the new version of the International Green Construction Code (IgCC), .. scheduled to be released in 2018, .. will be powered by” ASHRAE Standard 189.1 for the Design of High-Performance Green Buildings.

Much of the early reaction has been nonplussed given that, today, there are only a handful of IgCC green buildings.  

The ICC will still be responsible for IgCC Chapter 1, Scope and Administration, so that the green code will continue to be integrated into the ICC construction codes. And now that ASHRAE will be developing all the technical provisions of the IgCC, ICC announced the “2017 Group C cycle to develop the 2018 IgCC has been cancelled.”

By way of background, in 2005, U.S. Green Building Council and Illuminating Engineering Society of North America, worked in concert with and provided technical support to ASHRAE in developing the first ASHRAE Standard 189.1. Shortly thereafter, independently, ICC began development of the IgCC, which was first published in 2009. Standard 189.1 was published with the IgCC as an optional alternative compliance path for governments adopting a green code.

Against that blurring of the lines between green building standards, codes and rating systems, in 2014 the ICC, ASHRAE, the American Institute of Architects, the IES, and the USGBC announced the signing of a memorandum “to collaborate on the development of future versions of Standard 189.1 and the LEED green building program.” From that agreement has come an Executive Steering Committee to align the green programs.

The 2018 green code also will align with LEED to provide “a streamlined, effective set of regulatory and above-code options.” To achieve LEED certification, buildings will continue to have to satisfy prerequisites and earn credits above levels necessary to meet the IgCC.

Some are concerned that relying on ASHRAE’s technical expertise alone risks further stifling innovation in green building. Accepting that green building is a geoengineering solution to the negative impacts that man has on the natural environment, anything that might further slow and already stalling domestic green building market is problematic.

Others are concerned that the nonpublic written agreements between these stakeholder groups despoil any purported voluntary consensus process, favoring one industry player over another in the multi Billion dollar domestic construction industry.

But many commentators suggest the real problem can be traced to March 18, 2002, when the City of Normal, Illinois enacted the first law mandating that all new buildings within a business development district be required to achieve LEED certification. LEED was designed as a voluntary rating system and to gerrymander it into a code is not efficacious.  Many believe that voluntary, non mandatory green building is the best hope for environmental protection and stewardship of our planet; hence the broad brand and wide market share acceptance of LEED.

The broad failure of the IgCC to be implemented by only 19 of the 89,055 governments with permitting authority in the country portends a mandatory code that goes far beyond life safety may be going too far.

But the announcement last Friday means there will be a 2018 version of the IgCC (.. something that was less than certain given the very low market acceptance of the IgCC). Whether created by the ICC or by ASHRAE, a mandatory IgCC will remain controversial. This change also means there will continue to be green standards, codes and rating systems. Such is good for green building and good for the stewardship of our planet.