Green Building Litigation All But Certain
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The primary theme of Green Building Law Update is green building litigation will develop. To date, one of the rare examples of green building litigation is Shaw Development v. Southern Builders, a case that involved a project's failure to achieve LEED certification in a timely matter. Other examples of green building disputes are sparse.
But I am confident the litigation will develop. A recent article, "'Green' projects create new exposures", suggests others agree:
“There is certainly going to be litigation coming out soon around (green buildings) and insurance companies are waiting to see” the loss results before developing coverage products, (David) Cohen, [senior product director for commercial insurance at Fireman's Fund Insurance Co. in Novato, Calif.], said.
Fireman's Fund Insurance Co. (FFIC) was the first company in the United States to offer green building commercial insurance in 2006. The availability of this type of policy further suggests the inevitability of green building litigation.
What factors do you think will eventually result in more green building litigation?
Related Links:
Shaw Development v. Southern Builders (GBLU)
"Green" Projects Create New Exposures (Business Insurance)
Everything in the plans and specifications are subject to debate, challenge, misunderstandings and ultimately litigation. There is no reason to expect green building issues to be any different; indeed, new design and construction elements coupled with a remote third party system that is arguably not subject to review of challenge adds complexity and risk to the equation.
The real kicker on this front to me is the governmental insistence on LEED projects coupled with a highly aggressive bidding environment. I side with you that fights are inevitable.
I don't think LEED, with its "voluntary" program foundation and potentially loose interpretation of rules, is structured to handle the demands that are inevitable in government mandated programs. As LEED grows in exposure and tries to address conflicts common in mandatory programs, this structural problem will only become more evident.
The newly defined MPRs in the LEED 2009 program are a good example. On the surface one would think that the minimum requirements are pretty clear and the consequences of failing to comply certain. Unfortunately, there is no one in the "remote third party system" that can define with any certainty what will happen when MPRs are not met. Completing that portion of the V3 guidance documents seems to be a low priority.
I am certain the enforcement branch of the EPA would want certification denied if MPR #1 was violated during construction, but who defines what a significant violation is? Can a project that suffers an eco disaster during construction still qualify for LEED platinum certification as long as they clean it up? How much credibility would LEED loose if they granted any certification to such a project.
LEED will eventually be faced with refusing certification to a project to maintain the program's credibility. Even then, they won't hold off the inevitable government program solution. Increases in litigation will only speed the process. Public entities are increasingly mandating sustainable building practices and they will not tolerate many public embarrassments from privately certified projects gone awry.
The trouble is, and I think I've made this comment before, LEED sits in that nebulous place between regulation and guideline, offering incentives but lacking punishment. Those incentives create expectations from clients with no case law (Shaw being an exception) to navigate those expectations in court.
Legal frameworks for "green expectations" need to be worked through by private attorneys and clients and then, ultimately, I suppose tested in court. I don't think LEED or any other guideline program is really the issue. I think, as always, it's managing expectations.