Green Building Law Update : Green Building & Construction LEED AP, Lawyer & Attorney Chris Cheatham : Washington DC, Virginia, New York City

I had never quite understood why federal agencies were so focused on green building certification.  That was, until I read this:

"U.S. agencies are required to have 15 percent of their existing building inventory incorporate sustainable elements by 2015 under Executive Order 13423, signed by George W. Bush in 2007.  

To comply with the order, the Department of Veterans Affairs aims to have 21 facilities reviewed and rated by third-party green building systems by the close of this year.

'Reaching the goal of 21 third-party certifications in 2010 will make VA a leading example of green achievement,' said Secretary of Veterans Affairs Eric K. Shinseki in a prepared statement. 'We will proudly reach and surpass the 15 percent requirement before 2015.'"

Photo credit: cisc1970

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During green building presentations that include legal views, I usually expect that someone in the crowd will not agree with my views of the green building industry.  Usually, the unhappy audience member cannot fathom that there are potential risks associated with green building.  Last week, though, I received a much different reaction when I presented to the National Research Council.  

A number of the federal agency employees in attendance voiced dismay that I focused exclusively on federal agencies' adoption of the United States Green Building Council's (USGBC) LEED rating system.  Some audience members expressed concern that federal agencies had wholesale adopted LEED certification in order to build green. 

These concerns reminded me of a recent news article highlighting alternative green building certification adopted by a federal agency:

"Fifteen Veterans Affairs Medical Centers in 10 states have received Green Globes green building ratings under the assessment system administered by the Green Building Initiative.

The GBI's third-party review system certifies buildings at four levels with ratings ranging from a single to four Green Globes.

All but two of the 15 VA medical centers that were recently certified received ratings of three Green Globes. The Los Angeles Ambulatory Care Center and the Durham VA Medical Center in North Carolina each received a rating of two Green Globes."

In describing the U.S. Department of Veterans Affairs' Green Globes buildings, Rob Watson, the Father of LEED, argued that Green Globes was continuing to "penetrate its mid-market target." 

The use of non-LEED rating systems is a new development in federal policy, and one that may continue to gain in popularity for different building markets.  On Thursday, we will look at why green building certification is so important to federal agencies.

Is it possible that two green building rating systems can live harmoniously in federal policy? 

Related Links:

15 Veterans Affairs Medical Centers Attain Green Globes Certification (GreenerBuildings)
 
Yogi Berra Was Right (GreenerBuildings)

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If you are working on a construction project funded by the American Recovery and Reinvestment Act (or you have any hint that you are), you need to be aware of your responsibility to pay Davis-Bacon wages.

"Notwithstanding any other provision of law and in a manner consistent with other provisions in this Act, all laborers and mechanics employed by contractors and sub contractors on projects funded directly by or assisted in whole or in part by and through the Federal Government pursuant to this Act shall be paid wages at rates not less than those prevailing on projects of a character similar in the locality as determined by the Secretary of Labor in accordance with subchapter IV of chapter 31 of title 40, United States Code."

"Section 1606 of ARRA plainly indicates that the Davis-Bacon prevailing wage requirement broadly applies to ARRA-appropriated construction projects. . . . [The ARRA] also extends the prevailing wage requirements to projects 'assisted in whole or in part by and through the Federal Government pursuant to this Act' thus encompassing any assistance provided for ARRA projects through grants, loans, guarantees, and insurance."

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While preparing for my presentation "Legal Considerations When Building Green" for the National Research Council, I contemplated what proposals I wanted to make to the federal agency representatives that would be in attendance. 

The federal government is pushing federal investment in green buildings through $25 billion allocated from the American Recovery and Reinvestment Act and through the Executive Order 13514, which includes numerous building efficiency requirements. As federal agencies attempt to implement green building programs, it is important to facilitate and share green building knowledge across the numerous federal agencies.

As I contemplated making what I thought was a drastic proposal, the GSA released the following information:

"GSA has made significant changes that will strengthen its role in helping the Obama Administration make the federal government a leader in sustainability.

First, the Office of Federal High-Performance Green Buildings has been moved from PBS [Public Buildings Service] to the Office of Governmentwide Policy. . . .

As part of governmentwide policy, the Office of Federal High-Performance Green Buildings will expand its reach to provide federal agencies with measurement tools and policies to meet its sustainability mandates."

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Back in January 2010, I said this:  "Government officials and citizens are going to expect results form the significant investments in the green movement (particularly in an election year). In 2010, the nation will begin to decide if investments in the green building and renewable energy industries were worth it."

Not one month later, it appears that media critiques of American Recovery and Reinvestment Act(ARRA) green building programs have begun.  Last Thursday, the Los Angeles Times ran the following headline:  

"Obama's federal government can weatherize your home for only $57,362 each"

How did the Los Angeles Times come up with this number?  The Times did some very simple math to calculate how much money had been spent per home so far. 

"The Energy folks did tell ABC they've so far spent 522-million Recovery Act dollars on the program. So, let's see, about 9,100 homes divided into that chunk of stimulation change to believe in is -- gee! -- about $57,362 worth of very expensive weatherstripping for each home fixed up so far."

Of course there is more to the Times' blog post.  The Energy Department had to resolve Davis-Bacon wage determinations prior to starting the weatherization program.  At the end of the Los Angeles Times post, the Energy Department's response was included:  

"The GAO report cites figures from September 2009 -- almost five months out of date. Since then, we have resolved Davis-Bacon wage issues in all 50 states, clarified how states should handle historic preservation and worked with states to resolve any remaining barriers. As a result, by the end of 2009, our programs had weatherized about 124,000 homes in total, and we are on track to weatherize more than 250,000 this year. In fact, since September 2009, we have tripled the pace of Recovery Act funded home weatherization. The report also erroneously implies that our goal was to weatherize 593,000 homes in 2009. That is wrong. The goal has been to weatherize that number by March 2012, and we are on track to meet that goal."

The Los Angeles Times article suggests the media is going to comprehensively cover the progress and accounting of ARRA green building projects in 2010.  While this Los Angeles Times article may have relied on stale statistics, you can bet that the Department of Energy's weatherization program, and the contractors taking part in it, will be under additional scrutiny. 

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I often get the same question about the American Recovery and Reinvestment Act: where are the green jobs and projects?  A recent Wall Street Journal article sheds light on that question:

"The Obama administration's economic-stimulus program has delivered about a third of its total $787 billion budget during its first year, much of that to maintain social services and government jobs and to provide tax cuts for workers. Now, the pace and direction of stimulus spending are about to change.

Infrastructure spending is set to step up in the second year of the stimulus program, which should mean more money flowing to private-sector employers."

Infrastructure spending includes the green building projects that will be administered by the General Services Administration, the Department of Defense and the Department of Energy.  A large portion of the $180 billion set aside for infrastructure projects has not been spent: 

"During year one of the stimulus, only about $20 billion of money was handed out for infrastructure projects.

'I think we'll see a lot more stimulus money get into actual contracts and actual hiring in 2010 than we did in 2009,' said Kenneth Simonson, chief economist of the Associated General Contractors of America."  

If you are looking for ARRA green building projects, 2010 appears to be the year.  

Photo:  vividbreeze

Related Links:

Bulk of Stimulus Spending Still to Come (WSJ)

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What would you tell the federal government about green building law if you had the opportunity?

This past weekend, I contemplated this question as I prepared for a presentation that two colleagues - Catherine Kunz and Stephen McBrady - and I will be giving to the National Research Council and 15 federal agencies that will be in attendance.  While preparing for the presentation, I came across new information and resources that I will share with you over the coming weeks.  

While my presentations often focus on legal pitfalls facing the green building industry, I like to start each presentation on a positive note, by pointing out the benefits of the green building industry.  For the presentation to the National Research Council, I will begin with this headline:



What is the ENERGY STAR Leaders Program and why has it worked? 

"Owning a building that achieves top energy performance is a sign of good management, but owning a portfolio of buildings that achieves continuous improvement in energy performance demonstrates superior management and environmental leadership. Those ENERGY STAR partners who demonstrate continuous improvement organization-wide, not just in individual buildings, qualify for recognition as ENERGY STAR Leaders. . . .

An ENERGY STAR Leaders designation helps you leverage your management success, as organizations with strong energy management often outperform their competitors by as much as 10%. Associations, financial analysts, and other stakeholders can use the Leaders designation as an objective way to distinguish leading organizations from their peers. In addition, with more than 68% of U.S. households recognizing ENERGY STAR as the national symbol for protecting the environment through energy efficiency, ENERGY STAR Leaders can promote their energy efficiency improvements to customers and clients."

While I have concerns about other federal green building programs and regulations, the ENERGY STAR Leaders program is successfully promoting energy efficiency in the nation's building stock. 

What other governmental green building programs would you deem a success? 

Related Links:

Become an ENERGY STAR Leader (EPA)

EPA's ENERGY STAR Leaders Quadruple Energy Savings in One Year (EPA)

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When you think of green energy projects, what sort of results do you anticipate?  New energy sources?  Reduced energy costs?  Green jobs? 

What about earthquakes?

Geothermal energy, a widely-touted green energy source, involves drilling miles-deep wells into underground reservoirs in order to tap steam and hot water that can be used for energy applications.  I have previously referenced a geothermal energy project that was shut down by the Swiss government for allegedly causing earthquakes in 2006 and 2007. 

Apparently, the potential for earthquakes triggered by geothermal energy projects is also a concern for the U.S. Department of Energy, as detailed in a December 30 DOE letter: 

"The United States Energy Department, concerned about earthquake risk, will impose new safeguards on geothermal energy projects that drill deep into the Earth’s crust.  The new policy is being instituted after a project in California that used the new technology was shut down by technical problems and encountered community opposition, federal documents indicate.

The project, by Seattle-based AltaRock Energy, would have fractured bedrock and extracted heat by digging more than two miles beneath the surface at a spot called the Geysers, about 100 miles north of San Francisco. The company ran into serious problems with its drilling and faced accusations from scientists and local residents that it had not been forthcoming enough about the earthquake risk. AltaRock denied those accusations."

"In a second document dated Sept. 11, 2009, but not previously disclosed, the department concluded that earthquakes that would have been set off by the AltaRock project would 'not have a significant impact on the human environment.'”

Just another example of how new, green technologies will result in unintended consequences.  How can you extrapolate this example to the green building industry?

Photo Credit:  peripathetic

Related Links:

Green Energy Project Causes Earthquakes? (GBLU)

Geothermal Basics (DOE)

Geothermal Drilling Safeguards Imposed (NYT)

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I used to work in Tysons Corner, Virginia. It is a fascinating place for many reasons, not the least of which is the fact that the area supports 105,000 jobs but only 17,000 residents. One of the consequences of this job-to-resident ratio is a daily traffic jam as workers leave for the day.

Government officials want to remake Tysons Corner into a more sustainable community by increasing density and residential options. As you can probably imagine, there are many competing proposals put forward by varying interest groups. One of the proposals involves permitting density bonuses to developers if a building seeks LEED certification:

"As far as density bonuses, a 10 percent bonus is proposed in return for LEED platinum certification, and bonuses are to be compoundable. For example, if a developer obtained a 20 percent density bonus for offering 20 percent affordable housing, the additional bonus for LEED certification would be for 10 percent of the resulting density cap, for a total bonus of 32 percent."

The proposed density bonus program is similar to the Arlington bonus density program. Not everyone supports the Tysons Corner bonus density program though:

• “Representing the Town of Vienna, Town Council member Laurie Cole said the ‘implementation entity’ that is to oversee the fulfillment of the plan should include residents of the surrounding communities. ‘The future of Tysons Corner affects us directly and deeply,’ she told the commission. Cole advised against density bonuses for LEED (Leadership in Energy and Environmental Design) certification, as well as the compounding of density bonuses, saying that such policy was ‘testing the surface tension of what Tysons Corner can contain.’”

• “[Jonathan Cox of AvalonBay Communities] also said recommendations for LEED certification would be punitive to residential redevelopment, as LEED standards were developed for office and commercial buildings and not for residential developments.”

What do you think of these criticisms of the proposed Tysons Corner bonus density program?

Arlington County Revises Green Building Density Program (GBLU)

Photo:  Shanghai Steve

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Do you remember Property Assessed Clean Energy (PACE) bonds? If you recall, in a June 2009 post, I proclaimed my undying affection for PACE bonds, which can serve as a financing mechanism to retrofit homes and buildings:

“PACE is a bond where the proceeds are lent to commercial and residential property owners to finance energy retrofits (efficiency measures and small renewable energy systems). OWNERS then repay their loans over 20 years via an annual assessment on their property tax bill. PACE bonds can be issued by municipal financing districts or finance companies and the proceeds can be used to retrofit both commercial and residential properties.”

My hope was that jurisdictions across the country would use PACE bonds to finance retrofits of homes and buildings. Turns out, PACE bonds have been proposed in my own backyard.

In December 2009, District of Columbia Mayor Adrian Fenty announced his "administration is preparing an application for a federal grant to create a $35 million revolving fund that would make loans to District homeowners and commercial property owners for energy efficiency improvements."

There are two basic steps to establish a PACE bond program. First, a state must pass enabling legislation. Second, the state must secure seed money for the revolving fund that will finance the PACE bonds. The D.C. government is proceeding forward with both steps:

"[T]he Council of the District of Columbia is expected to take up legislation that would create not only an administrative mechanism for running the program, but would create a 'property assessed clean energy' (PACE) bond program, that will ensure sustainable funding for this initiative in coming years. The legislation would allow the District to issue a series of conduit bonds up to $250 million. The federal funds would initially seed the fund and future bond sales would be backed by future tax collections.

The average age of a building in the District is about 72 years old, or about 30 years older than the national average. Given the age of the city’s building stock, officials see a greater need for energy efficiency retrofits and program managers expect the property owners could collectively save about $10 million in utility costs during the program’s first three years."

As an owner of a hundred-year-old row house, I am looking forward to the opportunity to apply for a PACE bond.

What do you think of this program?

Related links:

A Green Building Breakup (GBLU)

District Seeks $35M Grant for Energy Efficiency Fund (DC)

PACEnow (PACEnow.org)

Photo:  edwhitaker

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In Ohio, there is LEEDigation brewing.  But it's not the LEEDigaiton that I anticipated.  

The Ohio School Facilities Commission (OSFC) requires that new OSFC-funded schools achieve LEED Silver certification.  The Washington-Nile school district is balking at the additional costs incurred as a result of the LEED certification requirement.  

When a school project is pursuing LEED certification, OSFC provides three percent more funding than the estimated project costs in order to pay for the incremental costs of certification.  According to Washington-Nile Superintedent Patricia Ciraso, 3 percent is insufficient to cover the costs of LEED certification in her school district (red dot in the picture on the left):  

"'It might cover it in Columbus, or Cleveland, where you have people that deal with LEED constantly. These contractors down here, this is new to them and they’re going to have to deal with it. They’re probably going to have to bring in some people, or at least have some people trained,' she said.

To help prove the need for greater LEED funding at smaller, isolated districts, the school has retained an attorney in Columbus, with experience in school projects, to research the equity of LEED funding for schools in Ohio. Ciraso said the outcome of this battle could have local impact on LEED funding for school projects at New Boston and Clay also.

'If you are co-funding these projects and you have said silver is the appropriate LEED certification, why would you not want to fund to that level?' she asked."

I had always assumed LEEDigation would involve post-construction disputes when a project failed to achieve its green building certification.  A pre-construction dispute involving public funding for certification is a new issue, and one that could impact other state green building programs.  

Did you see this coming? 

Related Links: 

LEED Funding for Green School Causes Construction Delay (GBLU)

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Last Thursday, during a webinar on green building legal issues, I stated the following:

"I really believe schools will be a hotbed for green defect claims, in terms of energy efficiency, and other green building components.  Schools rely on tight budgets. . . .  Be careful what you are promising on these green school projects."

On Friday, I read an article titled "Construction Delayed at West School," which led with the following paragraph:

"Construction is at a stand-still at Washington-Nile School, where issues surrounding state-mandated LEED (Leadership in Energy and Environment Design) elements have placed the new middle school building project over-budget. Now attorneys working for the school are researching the equity of LEED funding for schools in Ohio; the outcome of which could also affect building projects at New Boston and Clay."

I was close.  

In Ohio, the Ohio School Facilities Commission (OSFC), administers the state’s Kindergarten through 12th Grade public school construction program and helps school districts fund, plan, design, and build or renovate schools.  In a previous post, we highlighted the OSFC's green buiding requirement for Ohio schools:

"OSFC Resolution 07-124 . . . mandates that all newly constructed or substantially renovated school buildings that are state funded achieve a minimum of Silver certification in the US Green Building Council's LEED-Schools (Leadership in Energy and Environmental Design) rating system with emphasis in energy conservation."

As highlighted in the article, the OSFC accepted the Washington-Nile School (tiny red dot in the photo to the left) as a special-needs project.  Because of the district’s low wealth base, the OSFC agreed to provide 98 percent of the funding for a new $16 million middle school. The remaining 2 percent (about $320,000) was paid from the school’s General Fund.

By accepting the OSFC funds, the school district is required to build the new Washington-Nile School to LEED Silver certification.  But the bids for the school were over-budget despite numerous changes made to the design:  

"'We knew a little about LEED. We didn’t know much, so they (the OSFC) educated us and they did a very good job. We bought into that and we designed accordingly. We made sure we had some educational LEED credits,' Washington-Nile Superintendent Patricia Ciraso said. She explained that while striving to meet these LEED requirements, the school had to give up other features they had hoped to add. By choosing to cut-back on windows, the school had change its lighting system, which means redesigning the entire electrical system — and what they ended up with still was estimated at least $1.2 million over-budget."

On Friday, we will look at allegations by the Washington-Nile school district that the OSFC is not properly funding the necessary LEED-certification costs.  You will want to check back, as these allegations include a creative legal challenge to the state's funding of green schools, which could have broad implications for other state green building programs. 

Related Links: 

Sensible Interview:  OSFC (GBLU)

Live Webinar (GBLU)

Construction Delayed at West School (Portsmouth Daily Times)

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In December 2009, an Amendment to the D.C. Green Building Act of 2006 was introduced by the D.C. Council.  Labeled the "Green Building Technical Corrections, Clarification, and Revision Amendment Act of 2009," this Amendment includes many revisions to the original Green Building Act.  One of those revisions involves the "performance bond" requirement:

"'Sec. 6. Bond requirements.'.

(2) Section 6 is amended by striking the phrase 'performance bond' wherever it appears and inserting the word "bond" in its place."

That's it.  This feels anti-climatic.  We have been discussing this same issue since the dawn of Green Building Law Update.  Back on August 15, 2008, one of my very first posts pointed out the performance bond issue.  So what does this fix? 

1.  Replacing "performance bond" with "bond" will eliminate the confusion that was certain to ensue in the construction and surety industry.  Performance bonds guarantee a contractor will building according to the plans and specifications.  Here, a developer has to guarantee that a project will achieve green building certification. 

2.  I still have concerns about the bigger issue of whether these "bonds" will be available.  Bond instruments guaranteeing green building certification simply do not exist in the market.  Maybe a surety will develop these bonds, maybe they will not. 

In the end, I applaud the D.C. City Council for addressing the "performance bond" issue. 

What do you think about this revision?  Disaster averted? 

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Back in April 2009, I took a vow of silence.  I promised to stop writing about the "performance bond" requirement in the D.C. Green Building Act.  I had faith the D.C. Council would address the issue.  Thankfully, it appears our long nightmare may be coming to an end.

Today, I am going to reset the "performance bond" issue (I have not written about it since April 2009!).  On Monday, I will discuss the "Green Building Technical Corrections, Clarification, and Revision Amendment Act of 2009" (pdf) and the proposed revision to the "performance bond" requirement. 

As background, for every green building mandate, you need an enforcement mechanism. The D.C. Green Building Act of 2006 requires that "after January 1, 2012, all new construction of projects 50,000 square feet or greater must comply to the LEED certification level."  Here is how I described the enforcement mechanism in a previous white paper:

"One of the most controversial provisions in the Green Building Act is the performance bond requirement.  After January 1, 2012, an applicant for construction of a privately-owned building must provide a performance bond which is due and payable prior to receipt of a certificate of occupancy.  Thus, after January 1, 2012, if a construction project must meet green requirements in the Green Buildings Act, the 'applicant for construction' must also provide a performance bond guaranteeing satisfaction of the green requirements." 

There are two primary problems with the D.C. Green Building Act "performance bond" requirement. 

1.  "The Act incorrectly uses the term 'performance bond' as the bond described in the Act 'seems to function more in the manner of a license or compliance bond, which typically guarantees compliance with a law or code.' A performance bond typically assures one party that another party will perform the contract in accordance with its terms and conditions."

2.  "Let me make this clear: no bond or insurance instrument has been created that guarantees green certification.  This type of security instrument does not exist.  I have discussed the issue with sureties, surety industry groups, insurance companies and insurance brokers.  None of them know of a security instrument that guarantees green building certification."

So what did the D.C. City Council correct either of these problems?  Check back on Monday as I continue this discussion. 

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On Wednesday, I posited that codifying the LEED rating system, or any other third party green building rating system, is not a viable option for an entire state.  

Why?  Here are three primary considerations:  

1.  There are troubling antitrust issues associated with the LEED rating system.  These antitrust issues are significantly exacerbated by the incorporation of LEED into regulations or building codes.

2.  The LEED rating system was never intended to be codified.  In fact, the LEED rating system is meant to apply to only 25 percent of new construction starts. 

3.  I believe the USGBC has recognized the problems associated with codification of the LEED rating system.  In response, the USGBC, along with other groups, is quickly pushing along publication of ASHRAE 189.1P, which codifies many of the elements of the LEED rating system.  This is just a hunch, but I anticipate that the USGBC will start urging jurisdictions to adopt ASHRAE 189.1P instead of the LEED rating system.

Can you think of any other reasons?    

Photo: ilaria gallo

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These are strange times for the green building industry.  Last week, California prepared to vote on new green building codes that would improve energy efficiency, water use and waste reduction in the construction industry.  Normally you would anticipate that environmental groups and green builders would applaud these measures, right?

Not quite.  

"[P]arts of the state's new code, which would take effect in January 2011, would amount to 'a setback for California's leadership on green building,' according to a Dec. 22 letter from six groups. They included the Sierra Club, the Natural Resources Defense Council and Global Green, along with two nonprofit certification groups, the Green Building Council and Berkeley-based Build It Green. 

The groups largely applaud the code's mandatory rules as a baseline minimum standard.  But they take issue with its two-tier labeling system for stricter voluntary measures, CalGreen, saying it would be open to conflicting interpretations and be unenforceable by local building inspectors.

'The tiers cause confusion in the marketplace and the potential for builders to label their buildings green without substantiating their claims,' said Elizabeth Echols, director of the Green Building Council's Northern California chapter. Many local officials who would be responsible for verifying builder claims do not have the technical expertise that LEED and other third-party verifiers provide, she added."

I am puzzled by these groups attempts to thwart passage of the California green building code.  Pushing for the LEED rating system, or any other third party green building rating system, to be codified for an entire state is not a viable option.  Next post I will give you three reasons to consider. 

What do you think about the environmental groups' attempts to block the California green building code?  

Photo:  mars discovery district

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[Please join us on January 20 for the next Green Professionals Happy Hour.  See details in the attached flyer.]

Many federal agencies are applying the LEED rating system to buildings in the United States, but one agencies unique use of the system recently caught my attention.  The Army Corps of Engineers is attempting to modify the LEED rating system for international application: 

"Translating the U.S. Green Building Council’s Leadership in Energy and Environmental Design (LEED) Silver certification into a standard for all international construction—which the U.S. Army Corps of Engineers has pledged to do—may be impossible.

Creating high-performance facilities is not the issue, but holding to a LEED rating is problematic. “LEED is a very U.S.-based standard, and trying to take that and apply it overseas is difficult. But the Army mandate is ‘do it,’” says Jeanette Fiess, who represented the Corps’ LEED Sustainability Directorate of Expertise at a November 'LEED Awareness' workshop for Corps staffers in Oberammergau, Germany. The directorate, a virtual entity with experts in many Corps districts, is trying to figure out how to comply."

"Part of the problem is many countries in which the Corps builds have their own versions of LEED, and they don’t line up well enough in philosophy or detail to map from one to another. The Japanese have the Comprehensive Assessment System for Built Environment Efficiency (CASBEE), South Korea has its mandatory Green Building Certification Program, and Germany has the DGNB, or Deutsche Gesellschaft für nachhaltiges Bauen e.V, from the German Sustainable Building Council."

What do you think of the Corps of Engineers’ attempts to modify the USGBC’s LEED rating system for other countries?

Related Links:

Building To LEED-Silver May Not Survive First Encounter (ENR)

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A coalition of forest product companies ("the Coalition") has filed a complaint with the Federal Trade Commission (FTC) regarding, in part, the United States Green Building Council’s preference for Federal Stewardship Council-certified (FSC) wood products. The Coalition has asked the FTC Bureau of Competition to provide guidance to the USGBC and other rating systems regarding the endorsement of product certifications.

If the FTC decides to provide such guidance, the USGBC’s LEED rating system will obviously be affected.  I am particularly interested in the implications of FTC action for green building regulations that have incorporated the LEED rating system.

In its complaint, the Coalition takes a shot across the bow aimed at federal agencies that have adopted the LEED rating system:

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

In short, the Coalition is arguing that federal agencies are improperly requiring LEED certification for the design and construction of federal buildings. This allegation is not a new one.  Most green building regulations that require LEED certification also permit “an equivalent” certification in order to avoid antitrust issues like the ones raised by the Coalition’s complaint.

But many federal agencies exclusively require LEED certification for federal projects. The most obvious example is the General Services Administration, which builds and maintains a large percentage of federal buildings.  The GSA's website describes its LEED mandate:

“As a means of evaluating and measuring our green building achievements, all GSA new construction projects and substantial renovations must achieve Silver certification through the Leadership in Energy and Environmental Design (LEED®) Green Building Rating System of the U.S. Green Building Council.”

If the FTC were to find that the USGBC’s preference for FSC-certified wood products constitutes anti-competitive behavior, hundreds of green building regulations across the country and in Washington D.C. will have to be re-written.

The implications of the FTC action on the complaint are staggering.

What other implications do you see?

Related Links:

• USGBC Accused of Anti-competitive Practices (GBLU)
• FSC, USGBC Accused of Deception, Anti-Competitive Practices (Green Source)
• Letter:  Forest Certification and Law and Standards (Complaint)(pdf)
• GSA - Sustainable Design Program (GSA)

Photo:  Eighty734

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We may be settling into 2010, but one unresolved legal development in 2009 could have a broad impact on the future of the green building industry. On October 20, 2009, the Coalition for Fair Forest Certification ("the Coalition") filed a complaint with the Federal Trade Commission (pdf), alleging anti-competitive behavior by the Forest Stewardship Council (FSC) and the United States Green Building Council (USGBC):

"[T]he Coalition asks that the FTC investigate through the Bureau of Consumer Protection the deceptive and unfair trade practices arising out of FSC’s forest certification standards; investigate through the Bureau of Competition concerns about anticompetitive activities and monopolization arising out of USGBC’s LEED rating system and preference for FSC-certified products; and provide guidance to standard-setting organizations concerning behavioral standards for compliance with antitrust law."

My law firm represents many of the forest product companies involved in this complaint (another law firm submitted the letter), so I will not be discussing the allegations made against the FSC. Nor will I debate the merits of one wood certification versus another. But I will continue to keep you updated on the status of this complaint and I will be discussing allegations made against the USGBC and the potential impact of these allegations on green building regulations.

First, some background on the connection between USGBC, LEED and FSC:

"Under the LEED system, points can be awarded in five categories: sustainable sites, water efficiency, energy & atmosphere, materials & resources, indoor environmental quality, and innovation & design process. Credit 7 under the materials & resources category addresses the issue of certified wood, with the intent of encouraging environmentally responsible forest management. The requirements for the credit are:

'Use a minimum of 50% (based on cost) of wood-based materials and products, certified in accordance with the Forest Stewardship Council’s Principles and Criteria, for wood building components including, but not limited to, structural framing and general dimensional framing, flooring, finishes, furnishings, and non-rented temporary construction applications such as bracing, concrete form work and pedestrian barriers.'"

According to the Coalition’s complaint, forest product companies that do not supply FSC-certified wood can not contribute to LEED materials & resources Credit 7: "[T]he three standards most widely adopted by forest owners in the U.S. and Canada - SFI, the Canadian Standards Association ("CSA") Sustainable Forest Management Standard, and the American Tree Farm System - receive no points under LEED, creating a substantial disadvantage for American-sourced wood products."

Among other actions, the Coalition has asked the FTC's Bureau of Competition to investigate the USGBC’s preference for FSC-certified wood:

"The Coalition also believes that the exclusionary actions of USGBC and its exclusive endorsement of FSC-certified products . . . warrants investigation by the Bureau of Competition concerning issues of possible monopolization, attempt to monopolize and conspiracy to monopolize the fast-growing certification marketplace. In examining the issue, the Coalition invites the FTC to use USGBC as a case in point to provide specific guidance to USGBC and other standard setting organizations."

It’s this last sentence that has really caught my attention.  

How do you think the FTC should respond to the Coalition's complaint?

Related Links:

• FSC, USGBC Accused of Deception, Anti-Competitive Practices (Green Source)
• Letter:  Forest Certification and Law and Standards (SJ)(pdf)

Photo:  Travelin' Librarian

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Federal stimulus funding has provided $242 million to Illinois to weatherize more than 25,000 homes, but poor oversight of that work puts the funding at risk and in some cases puts the residents of poorly weatherized homes in danger, an audit report warns.

In an interim report released today, the Energy Department's Inspector General warned that oversight of the Illinois program is failing at many levels.

The inspector general report says the state of Illinois has failed to inspect any weatherized units completed by seven of the 35 local agencies carrying out the work. The state also lacks a system for tracking major findings of its inspections and has not inspected 5 percent of DOE-funded weatherized units, as required by DOE.

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The American Recovery and Reinvestment Act (ARRA) included $250 million for a "RAT" board (pdf) established to audit and investigate stimulus-funded programs and projects. In addition, states have established their own auditing programs.

California risks losing $226 million in federal stimulus funds for energy projects for failing to quickly spend the cash and establish a system to track its use, a state auditor said today.

Auditor Elaine Howle said a state commission created to spend money from the American Recovery and Reinvestment Act "has been slow in developing guidelines, issuing requests for proposals and implementing the internal controls needed to administer" the funds. . . . The $226 million was given to California as part of $3.1 billion made available under the stimulus law's State Energy Program."

The audit of the California State Energy Program concluded that the state has failed to create a system of internal controls adequate to ensure that those funds are used appropriately.

• State's handling of stimulus jeopardizes $226M in energy funds -- auditor (E&E News) (subscrip. req.)
• Stimulus Act Oversight (Crowell & Moring) (pdf)

Photo: Wikipedia

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The green building industry is entering an interesting period. In 2009, the green building movement was embraced as a solution to economic and environmental problems. "Green jobs" were touted as a way to improve the economy while reducing unemployment. Investment in renewable energy and energy efficiency measures was championed as a way to reduce greenhouse gas emissions and increase energy security.

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Well, that did not last long.  Two weeks ago, we wrote about Mayor Michael Bloomberg's plan to require retrofits of existing buildings.  After vehement opposition, Mayor Bloomberg has backed off of his plans to require retrofits:  

"The plan, which the owners said was too costly, called for all buildings of 50,000 square feet or more to undergo audits to determine which renovations would make them more energy efficient, and for owners to then pay for many of those changes.

The mayor wants to go forward with the proposal to require energy audits, but now is leaving it up to the building owners whether to undertake the changes called for by those audits."

“It’s another unfunded mandate, and this is just not the time for it,” said Stuart Saft, chairman of the Council of New York Cooperatives and Condominiums, an opponent of the plan. “Come back in five years when we’re past this recession. At this point it’s just a slap in the face.”

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It's always amazing to me the unexpected consequences that result from apparently benign activities.  As new green building and energy innovations and materials are incorporated into projects, there is always the possibility of an unexpected consequence.  

Take for instance a geothermal energy project in California.  

Geothermal projects involve mile-or-more-deep wells drilled into underground reservoirs to tap steam and very hot water that can be brought to the surface for use in a variety of applications.  The Department of Energy is investing millions in geothermal projects.  But one of the DOE projects was recently halted:  

The project by the company, AltaRock Energy, was the Obama administration’s first major test of geothermal energy as a significant alternative to fossil fuels and the project was being financed with federal Department of Energy money at a site about 100 miles north of San Francisco called the Geysers.

But on Friday, the Energy Department said that AltaRock had given notice this week that “it will not be continuing work at the Geysers” as part of the agency’s geothermal development program.

The timing of the announcement coincides with another project recently shutdown due to earthquake concerns:  

"The project’s apparent collapse comes a day after Swiss government officials permanently shut down a similar project in Basel, because of the damaging earthquakes it produced in 2006 and 2007. . . .  [T]he type of geothermal energy explored in Basel and at the Geysers requires fracturing the bedrock then circulating water through the cracks to produce steam. By its nature, fracturing creates earthquakes, though most of them are small."

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On December 7, the Environmental Protection Agency (EPA) issued a finding that greenhouse gas emissions pose a danger to human health and environment.  The finding sets the stage to allow the EPA to regulate these emissions.  

What impact will this endangerment finding have on the green building industry?  

In my view, the endangerment finding will not immediately impact the green building industry.  Instead, greenhouse gas standards for automobiles will likely first be promulgated based on the endangerment finding:

Along with its final endangerment finding, the EPA also sent to OMB the agency's final finding on whether cars and trucks "cause or contribute to that pollution," [EPA Administrator Lisa] Jackson said.

Such a finding would allow the federal government to regulate tailpipe emissions by increasing vehicle mileage requirement[s].

Jackson said the government is facing a "hard deadline" of next March to let automakers know of any required increases in fuel economy standards that would affect vehicles built for the 2012 model year.

"In late September, the agency announced a proposed “tailoring rule” that limits regulation of climate-altering gases to large stationary sources like coal-burning power plants and cement kilns that produce 25,000 tons or more a year of carbon emissions."

"The administration has used the finding as a prod to Congress, saying that if lawmakers do not act to control greenhouse gas pollution it will use its rule-making power to do so. At the same time, the president and his top environmental aides have said that they prefer such a major step be taken through the legislative process."

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The future of green building regulations usually starts in big cities. Cities like San Francisco, Washington, D.C. and New York City were some of the first to incorporate green building certification into regulations and building codes. The next frontier in green building regulations will be energy performance and New York City seems to be at the forefront. The New York Times recently reported this anecdote about future New York City green building policy:

The New York City Council is drafting a law that will dispatch auditors to measure large buildings’ energy use, with potential fines for landlords who fail to retrofit their systems.

There are other examples of regulations focused on energy efficiency:

• In Washington, D.C., the Energy Star Benchmarking program requires the reporting of energy data by owners of buildings.
• At the federal level, the Department of Energy has its sights set on creating an energy labeling system for buildings and homes.

The United States Green Building Council is also modifying its LEED rating system to reduce actual energy usage. With the launch of LEED 2009, the USGBC now requires the reporting of energy data. As we reported in September, Scot Horst, USGBC executive, has stated that the LEED certification will eventually require buildings to achieve a specified level of energy performance.

The eyes of the green building industry are focused on energy efficiency. You should be too.

Related Links:

In Washington, DC, Energy Star Benchmarking Law Arrives (CoStar Group)

The Future of LEED: Re-certification (GBLU)

So Who Left the Lights On? The System Knows (NYT)

Super Star Green Label Proposed (GBLU)

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On Friday, we discussed Navy contracting requirements for tracking "energy efficiency" and "energy footprints."  When I first learned of these requirements, I was reminded of Executive Order 13514.  We have already discussed Executive Order 13514 in terms of the green building industry, but the Order also contains provisions relating to greenhouse gas emissions. I don't usually include extended regulatory text, but in this case, the regulation emphasizes the Obama Administration's focus on greenhouse gas emissions: 

Sec. 13. Recommendations for Vendor and Contractor

 

Emissions. Within 180 days of the date of this order, the General Services Administration, in coordination with the Department of Defense, the Environmental Protection Agency, and other agencies as appropriate, shall review and provide recommendations to the CEQ Chair and the Administrator of OMB's Office of Federal Procurement Policy regarding the feasibility of working with the Federal vendor and contractor community to provide information that will assist Federal agencies in tracking and reducing scope 3 greenhouse gas emissions related to the supply of products and services to the Government. These recommendations should consider the potential impacts on the procurement process, and the Federal vendor and contractor community including small businesses and other socioeconomic procurement programs. Recommendations should also explore the feasibility of:

 

(a) requiring vendors and contractors to register with a voluntary registry or organization for reporting greenhouse gas

emissions;

 

(b) requiring contractors, as part of a new or revised registration under the Central Contractor Registration or other tracking system, to develop and make available its greenhouse gas inventory and description of efforts to mitigate greenhouse gas emissions;

 

(c) using Federal Government purchasing preferences or other incentives for products manufactured using processes that minimize greenhouse gas emissions; and

 

(d) other options for encouraging sustainable practices and reducing greenhouse gas emissions.

Related Links: 

President Obama signs an Executive Order (White House)

Energy Reductions in the Navy (GBLU)

Does Executive Order Signal Shift in Green Building Regulations (GBLU)

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My colleague Steve McBrady and I recently presented “Green Building in the 21st Century” at the national conference of the Construction Users Roundtable. Our slideshow is available below. Our primary message was that the federal government's investment of $25 billion in green building projects, through the American Recovery and Reinvestment Act will prop up the green building industry for the next few years.  Other presentations by government officials regarding federal construction projects further highlighted this message.

For example, during the first day, Vice Admiral Michael K. Loose, U.S. Navy, presented “How CURT and the Industry Help the U.S. Navy Deliver Fleet Readiness.” Throughout his presentation, the Vice Admiral emphasized that the Navy is focused on reducing its energy consumption through sustainability measures. The Navy intends to reduce its energy usage by using renewable energy sources, requiring LEED Silver certification for new construction and focusing on contractors’ life cycle costs and energy footprints, as required by a recent Department of Navy proclamation included in Vice Admiral Loose's presentation:

“Effective immediately, the Navy and Marine Corps will incorporate life cycle costs as an evaluation factor when awarding contracts. The Department will develop a methodology to evaluate energy efficiency and energy footprint.”

The evaluation of “life cycle costs” and “energy footprints” was a recurring theme throughout the conference and, to me, is a new development in government contracting.

How is your company going to measure its “life cycle costs” and “energy footprint"?  How will the government evaluate those factors?

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A major overhaul to the Energy Star program, which currently certifies and labels products that are energy efficient, is imminent. How this overhaul occurs remains to be seen.

On the one hand, the two current agencies responsible for the Energy Star program- the Environmental Protection Agency (EPA) and the Department of Energy (DOE) - are trying to revise the program internally. But it's not clear if the agencies' actions will be enough:

"In response to complaints, the Senate Committee on Energy and Natural Resources included provisions in its American Clean Energy Leadership Act of 2009, introduced in July, that would require improvements to the Energy Star program ... Senator Jeff Bingaman, the Democrat of New Mexico who introduced the clean energy legislation and is chairman of the Senate energy committee, says the changes are inadequate."

'There are questions about stakeholder involvement in this process and effects on D.O.E. and E.P.A. staffing and budget,' Mr. Bingaman said in a statement to Green Inc. 'I’m going to ask the agencies to go back and take into account the views of the Congress and external stakeholders.'"

A key difference between the two proposals is that the EPA and DOE proposed the EPA take over the products portion of Energy Star; Senator Bingaman has proposed that the DOE remain involved in Energy Star products and specifically oversee the solid state lighting portion of the program. Two questions immediately come to mind when reviewing the proposed overhaul plans to Energy Star.

First, why is the DOE willing to give up Energy Star products to the EPA? Turns out, the DOE has focused on a new building labeling system:

"[Cathy] Zoi, [the DOE's new assistant secretary for energy efficiency] pointed out that while D.O.E. has lost some of its Energy Star territory in the deal, it gained ownership of a new program that will develop an efficiency rating tool and labeling scheme for assessing energy in buildings — a major source of infrastructural inefficiency."

Second, how many more green labels can be created before consumers can no longer discern between them? Among the many plans put forth by the EPA and DOE, the agencies have proposed a "'Super Star' label to identify products that perform in the top five percent of any given category."

Are you confused by the myriad of green building and product labels yet?

Related Links:

Congress and Agencies Debate an Overhaul to the Federal Energy Star Program (New York Times)

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The Energy Star program, responsible for certifying energy efficient products, is about to undergo some major changes. Recently, the program, run by the Environmental Protection Agency (EPA) and the Department of Energy (DOE), has come under fire from a number of groups:

"Various stakeholder groups, such as manufacturers, utilities and even Consumer Reports , the monthly magazine published by the Consumers Union, have complained in recent years that Energy Star . . . is too inclusive. An internal audit of the program by the Department of Energy found that there is inadequate tracking of whether the appliances have actually met the required specifications for energy efficiency."

The New York Times article lists three primary complaints with the Energy Star program:

1. Too many products are achieving the Energy Star rating, casting doubt on whether evaluations have been properly performed.
2. The program has been slow to keep up with technical advancements.
3. The program has been hamstrung by jurisdictional disputes between EPA and DOE.

The complaint that the Energy Star Program has failed to keep up with technical advancements was of particular interest to me, as it may foreshadow problems with green building regulations that incorporate rating systems. Like green products and appliances, the green building industry and building rating systems are constantly evolving through technical advancements. For example, with the launch of LEED 2009 (which replaces LEED 2.2), the United States Green Building Council's LEED rating system will now be revised every two years.

Here's my concern: as I have written about numerous times, many green building regulations require LEED or other green building certification. Many jurisdictions have created green building regulations that incorporate the previous version of the USGBC's LEED rating system, LEED 2.2.

How will these jurisdictions keep up with advancements in green building rating system?

Related Links:

Congress and Agencies Debate an Overhaul to the Federal Energy Star Program (New York Times)

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[T]he head of the agency shall ... (g) implement high performance sustainable Federal building design, construction, operation and management, maintenance, and deconstruction including: (ii) ensuring that all new construction, major renovation, or repair and alteration of Federal buildings complies with the Guiding Principles for Federal Leadership in High Performance and Sustainable Buildings (Guiding Principles); (iii) ensuring that at least 15 percent of the agency's existing buildings (above 5,000 gross square feet) and building leases (above 5,000 more gross square feet) meet the Guiding Principles by fiscal year 2015 and that the agency makes annual progress toward 100-percent conformance with the Guiding Principles for its building inventory . . . .

• Integrated Design
• Commissioning
• Energy Efficiency
• Measurement and Verification
• Conservation of Indoor and Outdoor Water
• Ventilation and Thermal Comfort
• Moisture Control
• Daylighting
• Low-Emitting Materials
• Protect Indoor Air Quality During Construction
• Recylced Content
• Construction Waste
• Ozone Depleting Compounds

• President Obama Signs Executive Order (White House Briefing Room)
• Guiding Principles for Federal Leadership in High Performance and Sustainable Buildings (EnergyStar - PDF)
• Does Executive Order Signal Shift in Green Building Regulations? (GBLU)

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[T]he head of the agency shall . . . advance sustainable acquisition to ensure that 95 percent of new contract actions including task and delivery orders, for products and services with the exception of acquisition of weapon systems, are energy-efficient (Energy Star or Federal Energy Management Program (FEMP) designated), water-efficient, biobased, environmentally preferable (e.g., Electronic Product Environmental Assessment Tool (EPEAT) certified), non-ozone depleting, contain recycled content, or are non-toxic or less-toxic alternatives, where such products and services meet agency performance requirements . . . .

• A Green Certification on the Horizon for the White House? (GreenerBuildings)
• GSA Sustainable Design Program (GSA)
• President Obama Signs Executive Order (White House Briefing Room)

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President Barack Obama recently signed Executive Order 13514, which sets numerous green requirements for the federal government. The EO will certainly impact the green building industry. According to the White House's Press Release, the Executive Order requires agencies to meet a number of energy, water and waste reduction goals:

• 26% improvement in water efficiency by 2020;
• 50% of construction, recycling and waste materials will be diverted from landfills by 2015;
• 95% of all applicable contracts will meet sustainability requirements;  
• Implementation of the 2030 net-zero-energy building requirement;
• Implementation of the stormwater provisions of the Energy Independence and Security Act of 2007, section 438; and
• Development of guidance for sustainable Federal building locations in alignment with the Livability Principles put forward by the Department of Housing and Urban Development, the Department of Transportation, and the Environmental Protection Agency.

• agencies must inform the public of proposed rules before they take effect;
• the public can comment on the proposed rules and provide additional data to the agency;
• the public can access the rulemaking record and analyze the data and analysis behind a proposed rule;
• the agency analyzes and responds to the public's comments;
• the agency creates a permanent record of its analysis and the process;

• President Obama Signs Executive Order (White House Briefing Room)
• H.R. 6: Energy Independence and Security Act of 2007 (GovTrack)

Photo: Chuckumentary

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(WBJ) (subscription req.)

(GSA)

(GBLU)

(GBLU)

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The Washington Business Journal (a fantastic newspaper) recently ran an informative column by Bill Gormley titled "Government Moves to Define ‘Green’ Contracting" (subscription req.). There was so much information that I am going to spend the next two days discussing it.

In the article, Gormley ran through a list of actions that should be taken by green service or product companies wishing to contract with the government. Here are some highlights:

• "Know the lingo. . . . Know what kinds of requirements and regulations government agencies face, and do your best to help agencies meet them."

• "Be specific. Many companies struggle with explaining how they're green or how they can offer the government an advantage by buying their green-capable service or product. . . . Make your message clear, concise, and specific so your buying audience can clearly see why your service or product offers more green value than your competitor’s."

• "Get public acknowledgment. . . . Because it is so difficult for the government buyer to differentiate between products – and the green value they provide – vendors should be prepared to provide some type of third party acknowledgment that they are truly green. . . . If you are able to say you’re providing your green service or product to another government agency, that is worth your company weight in gold."

• "If you’re trying to sell green services or products to the government, get on the appropriate GSA Schedule that represents what you sell commercially."

The government is the preeminent developer right now, particularly in the design and construction industry. As more agencies start coming out with green building bidding opportunities, it is important that you are strategically prepared to address the needs of the government. Of course, once you get that green building contract, you must also ensure compliance with the government's regulatory requirements.

But you can worry about that another day.   

Related Links:

Government Moves to Define "Green" Contracting (WBJ) (subscription req.)

A Recipe for Green Building Litigation (GBLU)

Photo:  DeltaMike

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When I have previously speculated as to green building lawsuits, I never imagined that an industrial hygienist would play a significant role.

Industrial hygienists are scientists and engineers who study health and safety of people in the workplace and the community. Linda Kincaid is an industrial hygienist in California. She is also a citizen-reporter for the San Jose Environmental Health Examiner. Turns out, Kincaid has recently been testing Los Altos homes for formaldehyde. Kincaid alleges that Los Altos homes are emitting more formaldehyde and that a green building rating requirement may be the culprit:

[According to Kincaid], of homes with more than 100 ppb formaldehyde, nine out of eleven were in Los Altos. Of homes with more than 120 ppb formaldehyde, three out of four were in Los Altos. Over half of the homes tested in Los Altos had more formaldehyde than the 77 ppb average in the Katrina FEMA trailers.

Initially, we could not understand why homes in Los Altos were different from homes in nearby communities. Construction practices and construction materials should be similar throughout the county. The difference, [according to Kincaid,] was a green building ordinance passed by the City of Los Altos in late 2007. Beginning in January 2008, all new homes in Los Altos were required meet the criteria for GreenPoint Rated.

Kincaid's accusation is a big one. She is alleging that homes that are certified under the GreenPoint Rated system, which is mandated by the City of Los Altos, have higher levels of formaldehyde.

Kincaid's first article of September 8 drew a swift response. The Formaldehyde Council, Inc. published a scathing critique of Kincaid's analysis, as did Build it Green, publishers of the GreenPoint Rated certification system. From the Build it Green website:

Build It Green found the information in the articles quite inflammatory and simplistic, with an elementary perspective on the realities of any green building rating system and the US construction marketplace. Ms. Kincaid also severely misrepresents the standards and intent of California’s regulatory safeguards in place to help protect homeowners from actual risks of formaldehyde offgassing. Ms. Kincaid’s testing methodology is highly questionable, her conclusions overly simplistic and spurious. Her articles do the opposite of supporting the need for good comprehensive information regarding the realistic dynamics occurring in today’s homes.

There is, of course, more to the story, which we will discuss on Friday. If residents were hypothetically getting sick from formaldehyde in green certified homes, could a green building rating system be responsible? Could a city or county, which mandated the green building certification, be responsible? Architects and contractors who built the homes also have to be concerned about liability implications.

What is your take?

Related Links: 

What is an Industrial Hygienist?  (AIHA)

Elevated formaldehyde in new Los Altos Homes (Examiner)

FCI Reponds to Linda Kincaid Articles (FCI Blog)

Build It Green Responds to Recent Articles by Linda Kincaid (Build It Green)

Photo:  timlovesbrian

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[Ed. Note:  On Monday, I promised breaking news on the green building risk front.  The news is still breaking so I am holding off on posting the story for now.  Sorry for the delay.  We are going live with the story on Friday.]

Here's a green building law pop quiz for you.  What is missing from this policy?

“4.4. ... [N]ew development is encouraged to at a minimum, achieve Leadership in Environmental and Energy Design  certification.  A floor area ratio (FAR) of up to 7 may be allowed if the proposed structure achieves a level of “Silver” LEED certification.” 

If you were preparing to develop a project, what else would you want to know?  First correct answer will be featured on this blog post. 

UPDATE:  You may have noticed that there were a lot of right answers to the quiz.  In fact, all of the responses in the comments section are correct.  But there is one answer that I was looking for specifically:  what's the enforcement mechanism?  Attorney William E. Kelley saw the issue 

The presumption is that if your project achieves LEED Silver certification, then your structure may have a FAR of up to 7.  What is not said is what happens if the project does not achieve LEED Silver (e.g., it only achieves LEED Certified level or it does not achieve LEED certification at all).  The allowable FAR would be integral to the development of the design plans, and the building would be constructed before LEED certification occurs.  So, if the project does not achieve LEED Silver, and if the project was further constructed with a FAR of 7, then what is the consequence to the developer for the failure to achieve LEED Silver?  The policy, as written, ties allowable FAR levels to "achieving" LEED Silver certification.  Perhaps better for the developer would be a policy where FAR is tied to a project with a "goal" of achieving LEED Silver.

That's the first issue that comes to my mind, but I'm confident there are probably other questions about the policy.       

Photo:  LShave

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Something very important popped out at me when I re-read the New York Times article about the green buildings not performing as anticipated.  The green building highlighted for poor energy performance is a General Services Administration building: 

"The building’s cooling system, a major gas guzzler, was one culprit. Another was its design: to get its LEED label, it racked up points for things like native landscaping rather than structural energy-saving features, according to a study by the General Services Administration, which owns the building."

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Reminder:  Don't forget to register for Green Building Law Update's Birthday Happy Hour

Sometimes, my fair city of Washington, D.C. can drive me crazy. There is no doubt we have our issues.

But one thing Washington, D.C. has going for it is its push to become more green. D.C. is at the forefront of the green building movement and it is taking full advantage of American Recovery and Reinvestment Act funding:

The District of Columbia will receive $8.1 million in federal funds to support its weatherization programs for low-income residents. The funding is part of a United States Department of Energy grant to the District under the American Reinvestment and Recovery Act. It will allow the District to weatherize an additional 785 homes over the usual workload of about 400 in the same period.

I have received a number of inquiries about the requirements for eligibility under the weatherization program. Here are the income requirements in D.C.:

If you have questions about eligibility for the weatherization program in your region, I would recommend reviewing the website dsireusa.org.

Finally, here is a great video put together by the White House about the D.C. weatherization program. This has me feeling (gulp) hopeful. Watch this and tell me Van Jones is not the coolest environmentalist on the planet.

Links:

District To Weatherize Hundreds of Additional Homes (DDOE)

Database of State Incentives for Renewables & Efficiency (DSIRE)

Green Jobs for a Green Future: Weatherization (YouTube)

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Reminder:  Don't forget to register for Green Building Law Update's Birthday Happy Hour

If you are looking for green building projects resulting directly from the American Recovery and Reinvestment Act, then the General Services Administration is the agency for you. The GSA received $5.5 billion to support its High Performance and Sustainable Buildings program. Previously, I had reported that the GSA was requiring LEED certification and preferred LEED silver certification. Turns out, those requirements have changed:

As a means of evaluating and measuring our green building achievements, all GSA new construction projects and substantial renovations must achieve Silver certification through the Leadership in Energy and Environmental Design (LEED®) Green Building Rating System of the U.S. Green Building Council. Projects are encouraged to exceed LEED® Silver and achieve LEED® Gold.

Back in April, we reported on an initial list of ARRA projects published by the GSA. Since then, very little information was available regarding these projects. Bisnow recently reported on the first GSA ARRA project award that I have seen:

[C]ongrats again to sponsor Grunley Construction for landing a renovation contract for the Mary E. Switzer Building at 330 C St., SW. Having completed Phase I in 2008, GSA put Grunley back to work using Recovery Act funding. The project includes: interior construction removal (including Hazmat); a "green roof system"; renovated elevators; and, three 2-story atriums, like the one above. Work is underway, due in July 2011. Designed by HNTB, it's aiming LEED Silver.

The Grunley-GSA contract is just the tip of the iceberg. ENR recently reviewed tremendous progress made by the GSA in awarding ARRA projects:

After taking about six weeks just to produce its list of stimulus projects, GSA has shifted into overdrive. It has awarded contracts totaling nearly $1.1 billion for projects involving about 120 buildings. Twenty of those projects account for more than $940 million of that total.

Most of those funding commitments came in a burst of awards announced since early July, according to Anthony Costa, acting commissioner of GSA’s Public Buildings Service. “At least 20 of the 120 projects are already under construction,” he told the House Transportation and Infrastructure Committee at a July 31 hearing. “The rest will begin soon.”

Even more GSA recovery-act work is on the way. Costa says the agency plans to award another $1 billion in ARRA contracts by Dec. 31, with the goal of having 91% of the $5.5 billion under contract by Sept. 30, 2010.

Of course, it's nearly impossible to report on stimulus projects without highlighting the fact that bids are much lower than anticipated. In the case of GSA ARRA projects, bids are coming in 10 to 15 percent below government estimates. I have serious concerns about bids coming in below government estimates, which I will discuss in more detail next week.

Links:

GSA Sustainable Design Program (GSA)

Grunley! (Bisnow)

New GSA Contracts Starting to Surge (ENR)

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Note:  Don't forget to register for Green Building Law Update's Birthday Happy Hour

This week we will be taking a look at green building and renewable energy funding available through the American Recovery and Reinvestment Act. While the opening of the stimulus spigots has been slow, there has been a noticeable uptick in news the last few weeks.

Today we will look at the Department of Energy; Wednesday we will check in on the General Services Administration; and Friday, we are going local to see how Washington D.C. is using weatherization funding.

If you are in the renewable energy sector, you may want to take advantage of a recently announced loan guarantee program made available by the Department of Energy:

The Energy Department is making available $36 billion in loan guarantees for renewable energy projects and for modernizing the electricity grid.The department said Wednesday it will accept applications for the financing support over the next 45 days.

The government-supported loans are expected to help companies involved in solar, wind, biofuels and other renewable energy projects get private financing. It also aims to spur investments in power grid improvements. 

To learn more about the Department of Energy's loan guarantee program, check out their loan guarantee website.

In addition, other opportunities remain available at the Department of Energy.

DOE's Energy Efficiency and Renewable Energy Program Office is reporting that of the $16,796,000,000 it was allocated, only $3,534,031,000 has been obligated and $63,362,000 has been spent. Many of the deadlines have already passed for the DOE projects so check in now to see where you can benefit.

Anyone had any luck with DOE stimulus projects?

Links:

Department of Energy Loan Guarantee Program

DOE Makes Available Energy Loan Subsidies

Recovery and Reinvestment at the Department of Energy: Welcome

Recovery and Reinvestment at the Department of Energy: Funding Opportunities

Green Building Law Update: Stimulus

Photo:  rebuildingdemocracy

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If you are a contractor lucky enough to have won a stimulus project, one of the pesky requirements attached to the project is reporting the number of new jobs created by the project.  Many builders and contractors have been wondering how exactly to do that.  Finally, at long last, the White House has provided clarity: 

Wait, that didn't answer all the questions out there.  If someone was already working for you, do they count?  What about subcontractors?  If you receive multiple stimulus contracts and employ the same person for both jobs, is that one job or two?  Maybe there is further clarification:  

Oh, now I get it!

The reporting of ARRA jobs is going to be an extremely confusing and important issue for all parties. Back on June 22, I wrote:  "As we draw closer to the 2010 election cycle, you can bet that politicians who supported the ARRA will be looking to tout green jobs that were created." 

Turns out, the federal government isn't the only one hoping to tout good job creation numbers:

As funds for green building projects start flowing from the General Services Administration and the Department of Energy, everyone will be paying attention to the number of green jobs created by these agency projects.  If you have to report green jobs, be extra careful that you follow the reporting requirements, whatever those requirements may be.

Photo:  talkradionews

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You may be relieved to learn that I am temporarily done discussing LEED de-certification.  The USGBC will be releasing an addenda to the Minimum Project Requirements, at which time we will discuss this issue anew.  Until then, lets move on...to another LEED legal discussion. 

One green building legal development that I, and others, have been concerned about is the inclusion of LEED into government regulations, particularly when applied to private projects.  Is it constitutional to require private parties to comply with a third party rating system, namely the USGBC's LEED rating system?  What other legal issues arise from LEED mandates? 

Brad N. Mondschein's green energy blog raised an interesting case study regarding Connecticut's recently passed LEED mandate.  Under the regulation, the State Building Inspector is required to revise the State Building Code to incorporate LEED standards. 

Turns out, the State Building Inspector is very concerned about revising the State Building Code to incorporate LEED:

The state Department of Public Safety is still trying to write building-code language that reflects the new requirements for commercial projects.

“We don’t have the framework in place to implement it properly,” said Lisa R. Humble, the state building inspector.

After the law was passed, the State Building Inspector asked for an opinion from the Attorney General regarding the legality of the mandate.   

Andrew Falk did a great job finding a copy of the Attorney General's informal opinion letter (PDF) to the State Building Inspector.  From Janet Ainsworth from the Connecticut Department of Public Safety: 

The attached is the informal advice (PDF) received from the Office of the Attorney General. The AG opinion does not address the constitutionality of the legislation.  Rather, it discusses whether the statutory provisions may be enforced in the absence of applicable language in the State Building Code.  The Department of Public Safety is engaged in the development of the applicable language to be added to the State Building Code.  At this time, I am unable to estimate when the amendment to the State Building Code to address the green building requirements of the Connecticut General Statutes will be enacted.

Check out the letter (PDF) as we will be discussing it in future posts.  What's your take on the letter?

*Turns out, the Attorney General letter does not address constitutionality of LEED mandates, as originally thought.  We will save this issue for another day. 

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A few weeks ago, Toronto announced a mandatory green roof requirement, which my fellow bloggers dutifully covered.  When I read about the green roof mandate, I thought of another Canadian city with a similar program. 

You remember the Vancouver Catch-22, right? 

Many British Columbia jurisdictions, including Vancouver, began mandating green roofs.  Simultaneously, the Homeowner Protection Office required homeowner's insurance covering roofs for new developments.  A resourceful government official with the Homeowner Protection Office did some digging and sent out a letter emphasizing that insurers would not issue policies covering green roofs.

In the end, the Homeowner Protection Office had to call a meeting with the insurers, the building industry and government officials to find a solution.  Quite embarrassing. 

When I read about the Toronto green roof mandate, I thought to myself "good for Toronto, they ironed out all of the insurance and liability issues associated with green roofs."

Not so fast. 

Marks says, however, that green roofs built to the Toronto construction standard won’t be able to pass Underwriters Laboratories of Canada’s CAN/ULC S107-03, Methods of Fire Tests of Roof Coverings. “Under the flame-spread test, they shoot a flame across the top of a traditional roofing membrane,” says Marks. “There isn’t one green roof that will pass that test — the vegetation will burn, and the City of Toronto has been aware of this.”

Marks notes that the insurance sector is generally reactive to emerging issues, not proactive.

“The insurance industry hasn’t caught up with this yet,” he says. “They may need to experience some losses and claims before clueing in.”

I am no engineer but I am pretty sure grass catches on fire if you shoot a flame at it. 

The green building industry is a brave new world.  How long will it be before the insurance industry can assess the risks associated with green roofs and projects?  

Photo:  Earth Hour Global

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You have to have a short memory to write for a blog.  There is no point getting attached to a blog post because it will soon be relegated to the archives.  With that said, sometimes I am reminded of a blog post that deserves revisiting. 

After reflecting on the Waxman-Markey bill over the weekend, I am reminded of a prediction I made at the beginning of the year:

"Green" was the buzz word in 2008.  In 2009, Green Building Law Update predicts that green buzz words will become more nuanced and the focus will be on "energy efficiency," "retrofits," and "existing buildings."

One of the three factors cited for the retrofit prediction was cap-and-trade: 

Finally, climate legislation in the form of cap-and-trade is coming.  Early investments now to reduce energy use through retrofits will pay off for big businesses. 

Not bad!  But you know what I missed?  I never anticipated that the cap-and-trade legislation would be full of financial support for retrofits. 

The post last Friday highlighted three different financing mechanisms for energy efficiency upgrades:  (1) SEED funds; (2) the REEP program and (3) the GREEN ACT, which establishes a green bank. 

Over the next five years, energy efficiency upgrades and retrofits will be big business.  How is your company responding? 

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[Today's post is a collaborative effort with Shari Shapiro highlighting green building provisions in the Waxman-Markey bill. You didn't think I was going to read through a thousand page bill all by myself, did you? I have also made the article available as a white paper for download since it is a bit long.]

Green Building Guide to Waxman-Markey
By: Shari Shapiro and Chris Cheatham

Today, the Waxman-Markey bill, otherwise known as the American Clean Energy and Security Act (H.R. 2454), is set to be voted on in the House of Representatives. The very fact that the vote is occurring means this bill will pass in the House. This monumental bill would establish a cap-and-trade program to cut global warming pollution. Of course, a cap-and-trade program faces an even more difficult path in the Senate.

So what is a cap-and-trade program exactly (PDF)?

The cap: Each large-scale emitter, or company, will have a limit on the amount of greenhouse gas that it can emit. The firm must have an “emissions permit” for every ton of carbon dioxide it releases into the atmosphere. These permits set an enforceable limit, or cap, on the amount of greenhouse gas pollution that the company is allowed to emit. Over time, the limits become stricter, allowing less and less pollution, until the ultimate reduction goal is met.

The trade: It will be relatively cheaper or easier for some companies to reduce their emissions below their required limit than others. These more efficient companies, who emit less than their allowance, can sell their extra permits to companies that are not able to make reductions as easily.
Companies will be required to purchase the emissions permits from the federal government, which in turn results in a sizeable revenue stream to the federal government. Much of the back room politicking that has occurred over the last few weeks regarding the Waxman-Markey bill has involved how this revenue stream will be allocated to government programs.

In addition to establishing an overall Cap-and-Trade program for carbon emissions, the Waxman-Markey bill contains several provisions which involve green building, and many green building and energy efficiency programs will be funded by the cap-and-trade revenue. Below is a summary of some of the major provisions regarding green building contained in the Waxman-Markey bill.

Details after jump.

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Here's an update on "green job" requirements created by the American Recovery and Reinvestment Act. Previously, I wrote

To my knowledge, there is no requirement or guarantee in the American Recovery and Reinvestment Act to create a certain number of "green jobs."

While this is still the case, there are job creation reporting requirements that will likely be used to categorize the number of green jobs created by the ARRA.

Federal agencies must report more than 40 separate pieces of data regarding their stimulus spending to a central repository — and contractors are required to submit similarly detailed reports for all work funded in whole or in part by the stimulus legislation.

The deadlines are clear. What’s less clear is how to submit reports and arrive at certain calculations, such as the number of jobs created or saved by the stimulus-funded work.

The Office of Management and Budget should be coming out with reporting requirement guidelines for contractors soon.

If you are a contractor lucky enough to have successfully bid a stimulus project, pay close attention to future guidelines released by OMB. As we draw closer to the 2010 election cycle, you can bet that politicians who supported the ARRA will be looking to tout green jobs that were created.

Of course, the big question remains, will the ARRA result in a surge in green jobs? I'm not an economist but I can report I have noticed a surge in green startups the last two months. As we slowly emerge from the recession, and as green stimulus funds finally start to flow, look for huge opportunities and resulting success stories from startup green companies.

My money is on a lot of new green jobs being created.

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Dear Feebate,

I'm sorry to be writing this.  First, I have to say, it's not you, it's me. You have done nothing wrong.

I remember when we met back at Greenbuild '08. The Portland officials were very eager to show you off and I fell for you hard. You were everything I dreamed of in a green building regulation. You weren't quite a mandate, but you strongly encouraged green building certification. Projects that did not achieve LEED certification were penalized; projects that achieved LEED Gold or Platinum certification received a reward.

It has been a long distance relationship and my eye has wandered. I have become increasingly focused on retrofits to existing buildings. How are we going to improve the energy efficiency of existing building stock?  You always refused to answer this question when I asked.

Then, she appeared.  PACE.

PACE bonds - Property Assessed Clean Energy bonds. PACE bonds are just so beautiful to me. What is a PACE bond you ask?

PACE is a bond where the proceeds are lent to commercial and residential property owners to finance energy retrofits (efficiency measures and small renewable energy systems).  OWNERS then repay their loans over 20 years via an annual assessment on their property tax bill. PACE bonds can be issued by municipal financing districts or finance companies and the proceeds can be used to retrofit both commercial and residential properties.

My dear Feebate, PACE bonds are everything you are not.  PACE bonds focus strictly on creating a market for energy efficiency retrofits or renewable energy. PACE bonds are not mandates; instead, individuals must willingly agree to opt in. PACE bonds can be set up by private companies or government entities. The best part, though, is that a PACE bond can turn into a revolving fund that creates even more retrofits.

So Feebate, thanks for everything. It's been a nice ride and I wish you luck.

Best Wishes,

Green Building Law Update

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On Monday we highlighted "headaches" that may arise from climate-related stimulus funding.  Cities and towns are struggling to come up with worthy programs for the funds.  Furthermore, the Department of Energy has warned officials that funding should go towards the long-term establishment of programs: 

"Don't use the entire amount of this money to set up a single capital fund that when that fund is done, your program is done," Bailey told local officials. "Because you will have potentially, I think, wasted an opportunity to set in motion a program that could last five, 10, 15, 20 years."

Virginia should heed this advice.  The state recently announced plans to use stimulus funding from the DOE to create a long-awaited financial incentive program for renewable energy development:

After years of zero financial incentives for alternative-energy enthusiasts, Virginia is bursting out of the starting gate with tens of millions of stimulus dollars just for renewable-energy aid.

The state plans to set aside $39 million from its $70 million share of the federal stimulus package to help residents, businesses, nonprofits, schools and government agencies summon electricity and heat from the sun and wind.

Funding is expected to start flowing for the program, if approved, in July.  The incentive program will be a great short-term solution for renewable energy development in Virginia.  Turns out, though, the long term prospects for a state funding to continue the incentive program are unclear:

That money runs out in September 2010, and Jurman, a self-described eternal optimist, acknowledges that he could still have trouble getting legislative backing then. . . .

Energy advocates worry about the consequences if the incentives disappear after merely a year.

“It looks like we’re going to grow very easily, but it’s not going to shrink easily,” said Peter Lowenthal, executive director of the Maryland-District of Columbia-Virginia Solar Energy Industries Association, which is advising the Virginia agency on the renewable-energy rebate program. “It will be a shot in the arm. People will get some training, so that’s a good thing. But it won’t really meet the goals of the stimulus in order to create permanent job growth.”

Are there better ways to setup renewable energy development incentive programs for Virginia?

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Back on February 20, 2009, I said the following about the American Recovery and Reinvestment Act:

While Republicans, Democrats and the President argued over the stimulus package for weeks, the real battle may arise when state agencies and officials attempt to divide up the stimulus funding and choose the projects that receive funding.

The real battle is now upon us.

The New York Times has written a fascinating article highlighting the benefits, and potential troubles, associated with clean-energy stimulus funds that will soon begin flowing to cities and towns. The article really paints a picture of potential waste and "headache" that may result from these funds. I was particularly struck by this section:

But the sudden flow of federal funding is raising questions about whether many of these communities are really ready for it.

Some 1,000 cities and counties have direct access to the new entitlement account, the Energy Efficiency and Conservation Block Grant Program. They have until June 25 to submit plans, but that's a challenge, because most haven't received federal grants for energy projects before.

Many communities are having trouble retaining enough police officers, let alone hiring sustainability professionals who understand how to establish energy efficiency programs that will evolve into long-term savings in power and money, experts say.

"Some cities are ready for this, others aren't," said Mark Wolfe, executive director of the Energy Programs Consortium, which helps state energy programs establish efficiency policies.

Many cities are using the stimulus funding for energy efficiency retrofits or even LEED certification:

• "Las Cruces expects to receive $888,000. Henry said it will help pay for a solar array and "all the green stuff" on an old adobe bank the city is converting into a natural history museum that will be certified under the U.S. Green Building Council's Leadership in Energy and Environmental Design (LEED) guidelines. The project will cost about $6 million."

• "Take El Paso, Texas. The sprawling city is due to receive $5.8 million in energy efficiency grants. It will use $3 million of that to help finance a $15 million "performance contract" program aimed at cutting energy use 30 percent in 52 public buildings."

According to the article, in a recent meeting, the DOE also suggested that cities and towns could use the funds to create "carbon trading markets." I don't know about you, but municipal officials new to environmental policy might be better served retrofitting existing buildings instead of creating a complicated, regional carbon trading market.

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It’s no surprise that there is intense competition for stimulus projects.  Competition can be good and result in more efficient construction.  But competition can also lead to complaints, disputes and even litigation.  

Connecticut is experiencing intense competition for stimulus funding.  

"There's nowhere near the amount of money for individual projects that people thought there was," one senior lobbyist lamented.

Still, advocates and their clients ask whether putting solar panels or a geothermal roof on a planned new building would qualify them for some energy funds (it might); they ask about the permit process (a bill to expedite project approvals has yet to be passed by the legislature); and they want to know how the feds define a stimulus 'job' (still not clear). 

When I read this article, I couldn’t help but notice the complaints about the "green" stimulus projects:  

In her meeting with Fritz, Cheri Quickmire, director of Common Cause of Connecticut, noted that a portion of the stimulus money must go to create "green jobs."

"How does a road-paving project create a green job?" Quickmire said last week, recounting her conversation with Fritz.

Stimulus funding for green building projects will help the industry grow.  Complaints about the administration of green building stimulus funds, though, should be of concern to the industry.  Complaints mean bad press.  Complaints mean bid protests.  Complaints mean litigation. 

Have you heard any rumblings about green stimulus projects?

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Back in March, I highlighted that $5 billion in funding had been dedicated to weatherization assistance as part of the American Recovery and Reinvestment Act.  Six short months later, the weatherization funding is scheduled to begin flowing:  

Final applications for the federal weatherization funds were due this month, with the first $2.5 billion expected to reach the states by September. Ohio has announced tens of millions in federal spending and plans to begin spending money for weatherization projects June 1, providing former workers such as Posey hope that they can regain their $18-an-hour assembly-line jobs.

When I ask people about stimulus projects, I keep hearing the same thing:  competition is fierce.  Here’s anecdotal evidence of the intense competition for stimulus projects in Ohio:  

More than 25,000 proposals have been filed on Ohio's stimulus Web site alone. "There's got to be $50 or $100 in requests for every $1 we've got," the state budget director, J. Pari Sabety, said several weeks and several thousand requests ago.

Are you seeing intense competition for green building stimulus projects?

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In previous posts I have talked about Dillon’s Rule and the impact this rule has on green building regulations in Virginia.  Dillon’s Rule provides that the state retains all powers except those specifically carved out for municipalities and counties.  You can think of this as the reverse of the federal system, where all powers not enumerated in the Constitution to federal authorities are then devolved to the states.  So if a Dillon’s Rule state has a statewide building code, like Virginia, cities are limited in the green building regulations they can enact. 

Arlington County has found a way to implement a green building policy despite Dillon's Rule.  What other options are out there for municipalities located in Dillon's Rule states? 

You may recall that I have highlighted the Portland Feebate system as a common sense green building regulation that others should mimic.   After reading more about the Feebate structure, I recently learned that the Feebate system works particularly well for Dillon’s Rule states:

According to Vinh Mason at the Portland Bureau of Planning and Sustainability, the new policy came about in part because Portland cannot institute a building code that is more stringent than the statewide code.

Lets not stop there, though.  I also came across another option for Dillon’s Rule states looking to implement green building regulations when reading Green Building Law Blog's post regarding a new Massachusetts building code.  According to the Board that passed the new code, implementation would be optional at the city level:

[T]he stretch code would be incorporated into the Massachusetts building code as an optional appendix.  Towns and cities in Massachusetts would then be able to choose between remaining on the base energy code or adopting the stretch energy code as their mandatory energy code requirement.

Which option do you prefer, the Feebate or the stretch code?  Got any better ideas? 

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I took away a very important, very big thought from my conversation with Rob Watson.  This big, important thought was based first on a comment from Watson himself:

"We are in a 'you bet your species' proposition with unmanageable climate change, so more rapid penetration of LEED is not a problem, rather a prerequisite with regards to solving this global problem."

"Initiating is really and truly difficult, and that's what leaders do.  They see something others are ignoring and they jump on it." 

As an attorney and an independent analyst,  I see it as my role to make that standard work better, with less risk to all parties.  We can't wait for the USGBC to undertake that task - that is OUR task.

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In addition to clarifying the LEED 25% guideline, Rob Watson also had some interesting points regarding regulations that required LEED certification.* 

First, Watson made a great point about governments requiring municipal projects to achieve LEED certification:  "As far as municipalities requiring their own buildings to go LEED, that's an owner decision and no problem.  Municipally-funded projects are in a similar vein."  I wholly agree with Watson. 

I still remain concerned about private development LEED mandates.  Watson indicated he also has similar concerns:  "It gets a bit dicey when talking about broader mandates because we designed LEED as a market-leading standard and there is concern about the market's ability to respond on a very broad level.  As penetration of green accelerates, I believe this will become less of a problem."

What do you think?  Can LEED mandates for private projects work?

*To be clear, Watson was speaking to me as the CEO of The EcoTech International Group.  He was not speaking on behalf of the USGBC. 

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I have been spending a lot of time recently thinking about two posts I made regarding the LEED 25 percent premise and why this will be problematic for green building mandates.  Why did I reconsider these posts?  Rob Watson told me I was wrong. 

Watson knows LEED better than you and I.  He was one of the original members of the USGBC.*  When he tells you your post about green building "does not add up", you listen.  Watson made some great points that I would like to share with you. 

The general premise of my post was that the USGBC intends for only 25 percent of the building stock to attain LEED certification.  As more cities mandate LEED certification, which requires 100 percent compliance, some projects will fail to achieve LEED certification.

Watson was kind enough to explain the 25 percent premise to me in more detail.  In short, it is not as simple as adding up all the building stock, determining how much new stock achieves LEED New Construction certification and coming up with a percentage. 

This was the incorrect equation floating around in my head:

Based on this description, it is now clear to me that the 25% guideline would only apply to new construction starts, not the entire building stock.  Here's the simplified equation:

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As readers may know, I am a die hard Kansas Jayhawk basketball fan.  Our main rival is the Missouri Tigers.  So if I discuss something that originates from Missouri, you better believe that the Missourians have come up with something extraordinary. 

U.S. Representative Emanuel Cleaver has established a plan for an innovative "Green Impact Zone" in Kansas City, Missouri that will be funded through the American Recovery and Reinvestment Plan funds: 

So far, the Green Impact Zone involves three primary plans:

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The first step toward implementation of a nationwide cap and trade program has occurred.  On Thursday, May 21, 2009, the House Energy and Commerce Committee passed a comprehensive clean energy bill that includes a strict limit on global warming pollution: 

This vote is a big deal.*  Unless something drastic happens, the bill will easily pass through in the full House of Representatives.  The next battle will occur in the Senate.  While the press may not have significantly covered the Committee debates and vote, the Congressmen understood the importance of their vote:

Have no doubt, this bill will greatly influence the green building industry.  It includes specific provisions about greening new and existing buildings and the overall pollution limit will drive cost-effective energy efficiency in buildings, which are responsible for nearly 40 percent of the country's emissions.  I am not going to go through the Committee bill and pick out green building provisions (unless someone wants to pay me to do it!) because the final regulation will look much different. 

I would love to hear your thoughts on cap-and-trade.  Will it pass the Senate?  What will the impact be on green building?  Will it work? 

*The vote is also a big deal because I get my lady back!  Congratulations Melissa!

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Thanks to the fine folks at the Green Research Council, I was able to review their publication, "Green Guide to the 2009 Stimulus Package."  This guide is packed with information about the American Recovery and Reinvestment Act.  The Guide starts with a review of the stimulus and where to get information about particular projects being funded.  I have been telling people that due to transparency demands of the Obama Administration, there is a ton of information available about the stimulus projects.  The Guide does a great job bringing all of the information together in one place. 

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On Wednesday, we discussed the LEED 25 percent rule: the LEED rating system was only intended to apply to the top 25 percent of buildings.

It is important to remember this premise when considering what is happening in the green building industry today. Many cities are mandating LEED certification for public and private buildings. For example, in Washington D.C., all new construction of private buildings greater than 50,000 square feet will have to be LEED certified after January 1, 2012.

As cities, states and federal agencies are mandating LEED certification, you simultaneously have the USGBC "raising the bar" for green buildings by bi-annually updating the LEED rating system to include even more stringent requirements for certification. The USGBC's goal is not for every building in the country to be LEED certified. Instead, the USGBC wants "to bring in even greener and greener buildings."

You see the problem there. I know you do. But I will say it anyways.

Mandates require 100 percent compliance.

The USGBC is designing a system that only the leading 25 percent of buildings can comply with, at least in terms of certification.

Those two numbers do not add up.

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I have had another green building epiphany.  Actually, a series of epiphanies. 

But before we get to the epiphany, we have to review a simple premise.  I have to thank Will Clark over at Multi-Family Guide for pointing out this premise to me.  So here it is: 

The LEED rating system was created to only apply to the top 25 percent of the market. 

It's true.  After doing a little digging, I found an interview from February 2008 with Rob Watson, the "Father of LEED," where he states the premise.   

VL: Here in the US, LEED is becoming mainstream and expanding to cover homes, schools, banks, businesses, neighborhood development, etc. Ultimately, how far do you think LEED can go?

RW: LEED is designed to fully reach the top 25 percent of the market in terms of the number of square feet—so a quarter of new buildings will be built to LEED specifications. The rest of the market will catch up eventually as green practices become more mainstream. So as we reach our target 25 percent (currently about 10 percent of new building square footage is LEED certified), LEED will get more stringent so it will be a moving bar. Unless the engine is moving, the train following it won’t move, either. So we want to keep raising the bar as the knowledge gets greater and the technology availability gets greater. We want to bring in ever greener and greener buildings.

I would venture to guess that most people don't realize LEED is only supposed to apply to "the top 25 percent of the market."  There are all sorts of ramifications, or epiphanies, we will get to in later posts that are the result of this premise. 

But for now, does anyone know the percentage of square footage that is LEED certified currently? 

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According to a recent Washington Post article, “Construction firms are so eager for work in the sagging economy that project bids are coming in much lower than expected.”

Great news, right?  Not necessarily.  Lower bids can be a good thing if they are the result of increased efficiency in the construction process.  But lower bids can also be the result of increased competition.  These lower bids can be just that - too low - and result in delays and litigation. 

What factors are causing the lower bids on stimulus projects?  According to Kenneth Simonson, chief economist for the Associated General Contractors of America: 

"Wherever I go, I hear of projects that used to attract two to three bids just a couple of years ago, now it's 20 or 30," Simonson said. "Many [contractors] are coming down on the minimum size of projects they will bid on, and ones who didn't do schools now are bidding on schools. Others are coming from out of state to a new region just to keep busy. And they are essentially giving away their services just to keep their key employees busy."

Why should this be a concern to the green building industry?  As I have detailed, the stimulus is providing nearly $25 billion for green building projects.  The green building industry is newer, the parties more inexperienced, and the technology relatively untested.  The opportunity for underbidding these green building projects is tremendous.  Projects that can't be completed at the promised cost could lead to LEEDigation. 

Be careful with your bids. 

Photo:  Jim Frazier

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The Washington D.C. government has recently began incorporating Social Media 2.0 into its public outreach.  Agencies have Facebook pages, some are on Twitter and officials have even taken to participating in online chats with the public. 

I was very excited to learn that Councilmember Mary Cheh was conducting one of these online chats last Friday.  Cheh is the chairperson of the Committee on Government Operations and the Environment and very interested in the operation of the D.C. Green Building Act of 2006.  You may recall that I spoke at a D.C. Public Hearing on Green Building that was convened by Councilmember Cheh.  During the hearing, Cheh demanded accountability from those responsible for implementing the Act. 

After reading the chat, I am optimistic about the future of green building regulations in the District: 

1:37    [Comment From SG]
How can the DC government incentivize "green roofs" for private citizens to make it extremely cost-effective for average citizens and businesses to install?

1:41    Mary Cheh:  We are moving to do just that. The RiverSmart program, by DDOE, provides grants for mitigation of storm water outflow at residential properties. It could be used for green roofs. Anyone interested should check out the DDOE website at ddoe.dc.gov. Unfortunately, at the moment, for our businesses, we don't have much by way of incentives and we are relying more on a stick approach, which will make it more expensive for businesses if they fail to deal with water runoff. DDOE has a Business Outreach specialist who can offer advice on strategies for green roofs and other environmental initiatives.

Cheh's comment that it is "unfortunate" that there are not more incentives for green roofs has me optimistic that Cheh also supports further incentives for green building development.  The problem Cheh faces, of course, is that Washington, D.C. has very limited funds for incentive programs. 

So here's my proposed plan:  the D.C. Feebate.  Modeled after the Portland Feebate, D.C. could set up a separate green building fund.  If a project fails to achieve LEED certification or equivalent, the project pays a fee into the city fund.  If a project achieves LEED Certified or Silver certification, nothing happens.  Here's the kicker:  if a project achieves LEED Gold or Platinum, the project will get a rebate back from the fund. 

What do you think?
 

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When you heard that the Department of Energy would be providing $3.2 billion for Energy-Efficiency and Conservation Block Grants to states, what kind of programs did you have in mind?

"In D.C., environmental leaders have split the District's pot between $4.8 million for solar panels on 20 schools and curriculum additions to help those students be watchdogs for energy waste in their schools, as well as a $3.5 million advertising campaign that includes distributing canvas bags and compact fluorescent lighting to residents in exchange for plastic bags and incandescent bulbs." 

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This week, I want to tell you about new green building developments in the D.C. metropolitan area. 

I like incentive programs related to green building.  D.C. recently came out with a solar rebate program that will most definitely increase the installation of renewable energy systems:

Beginning February 23, 2009, the program will provide rebates to eligible applicants to assist in the installation of a solar photovoltaic or wind turbine renewable energy system. Additional technology rebates are forthcoming in the second quarter of 2009 as regulations are adopted. Projects may include but are not limited to the installation of systems on single- and multi-family dwellings, as well as commercial and institutional buildings. 

Of course, I have to discuss some legal implications from this program.  D.C. is relying on a tried and true enforcement mechanism, the lien:  

Rebates will remain active for a period of six months (6 months) from the date of the award. The incentive contract requires installations to be completed in 6 months. If the system is not completed within 6 months, the system owner may request in writing a six-month extension. If an extension is not requested and/or the project timeline exceeds 12 months from the award date, the applicant is to return the rebate to DDOE. Failure to return the rebate will constitute a lien on the owner's real and personal property to secure repayment.

Filing liens on property in Washington, D.C. is not easy.  Releasing liens is even more difficult.  Are property owners and the District prepared for lien battles if problems do arise? 

Photo:  Jared Zimmerman

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On Wednesday, we looked at the best case scenario that can result from the D.C. Green Building Act "performance bond" requirement.  We assumed that the green building "performance bond" was created.  The scenario was not pretty and involved extensive LEEDigation™ . 

Green roofs not covered by B.C. insurers

 

No coverage means no new residential developments.  This has left developers caught between the possibility of being mandated by city governments on one hand and shut out by insurers on the other. 

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Today I am speaking once again on the D.C. Green Building Act "performance bond" issues (see slides in this post).  I have a new message for this presentation because, frankly, I am not certain we are getting anywhere.  If you need some background, here are all of the Green Building Law Update posts regarding this hot topic. 

What will this LEEDigation look like?  The Surety will file a lawsuit against the Architect or Contractor, blaming them for the project's failure to achieve LEED certification.  The Architect will file an additional lawsuit blaming the Contractor, or vice versa.  Oh, and the Architect will also file lawsuits against all of the Engineers.  The Contractor will go a similar route and sue all the Subcontractors. 

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[Sometimes, it's better not to reinvent the wheel.  As I was preparing this week's posts, I came across Lane Burt's analysis of the Department of Energy's (DOE) stimulus funding.  Lane, an NRDC Policy Analyst, agreed to let me use his post today.  Check out Lane's blog - it's a great resource for energy policy analysis.]   

DOE released the funding distribution for the Energy Efficiency and Conservation Block Grants (EECBG) from the recovery act (ARRA) late last week. With this action, we now know as much as we are going to about the destination of the clean energy dollars.

The big ticket items for clean energy were,

• $5 billion for low income weatherization (WAP)
• $3.1 billion for state energy programs (SEP)
• $3.2 billion for the local block grants (EECBG)
• $4.5 billion for greening GSA facilities

I blogged on the funding breakouts here and here,

We aren't going to get more clarity on the destination of the GSA funding. GSA has a list of projects across the country, but details have yet to be released and GSA is not required to do so.  [Ed. The GSA released its project list after this post.]

The money for state energy programs and low income weatherization is distributed according to an existing formula that sends a baseline allocation out and divides the remainder, 1/3 weighted according population, 1/3 by consumption, and 1/3 equally. The text of the law is here,

Now, DOE has released the funding amounts for EECBG and a nifty little interactive map so you can see where all the funding (SEP and WAP included) is headed.  More detailed state by state info here, including city by city breakouts for the local block grants.  A few clicks show me that my home state of North Carolina is getting $266 million dollars and my hometown of Charlotte is getting close to $7 million of that.  New York recieves $693 million, California gets $764 million and Texas gets $755 million.

Decision time

DOE is doing everything they can to get this money out now. How it gets spent (in the case of SEP and EECBG) is now a state or local matter and there is a lot of discretion given to states and localities on how to spend it. The potential impact of this money is incredible if used properly to save energy and create jobs, but the potential for waste is also very high.

Because of the potential for waste, there are two words that should guide every state, county, and local official in spending this money - Prioritize Efficiency. I cannot say this enough. It is faster, cheaper, and cleaner than any alternative and it is the only way we can spend now to save us money in the future. It supports local jobs and keeps dollars in the local economy. No one can find a stimulus proposal better than the one that will leave you with more money than you started with in just a few years.

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While the General Services Administration announced stimulus projects last week, they have no time to rest.  In fact, choosing the stimulus projects may have been the easiest part of the process.

The next step is contract procurement and administration.  Due to staffing vacancies at the GSA, the administration process may prove difficult : 

"Meanwhile, the ranks of contracting officers who make the day-to-day contracting decisions at the GSA have been shrinking since 2005, through attrition, outsourcing and a convoluted federal hiring process that many say discourages talented people from applying."

The GSA is not the only federal agency that is currently understaffed and tasked with administering billions in stimulus funds.  The Department of Energy must figure out how to administer over $38 billion in stimulus funds and the DOE Office of the Inspector is being upfront about the difficulties the agency is facing:

"The infusion of these funds and the corresponding increase in effort required to ensure that they are properly controlled and disbursed in a timely manner will, without doubt, strain existing resources."

In reading the DOE Inspector General's Report, it seems almost inevitable that some fraud will occur:  "As the Recovery Act implementation proceeds, all parties should recognize that the potential risk of fraud increases dramatically when large blocks of funds are quickly disbursed."

How can these understaffed agencies avoid fraud?

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General Services Administration, I am impressed. 

The American Recovery and Reinvestment Act mandated that the GSA determine projects that would receive $5.5 billion by April 3, 2009.  The GSA beat this mandate, making its list of projects available on April 2, 2009 (hat tip to the Washington Business Journal for breaking the story ).

If you were hoping to benefit from the GSA projects in the D.C. metro area, you have a much better opportunity of working on these projects in the District than in other surrounding localities.  D.C. is set to receive $1.2  billion for GSA projects.  According to the Washington Business Journal, "the amount of work slated for D.C. appears to be more than any other jurisdiction. By contrast, GSA plans to modernize only five buildings for $66 million in Virginia and two buildings for $25 million in Maryland."

A full list of GSA projects receiving funding is available here.  Here's a list of GSA projects in D.C., Virginia and Maryland slated to receive funding:

Washington D.C.

• Department of Homeland Security headquarters, St. Elizabeths Hospital west campus, Southeast, $450,000,000
• Department of Commerce Herber Hoover Building (phase II and III), 14th Street and Constitution Avenue NW, $225,638,000
• GSA headquarters (phase I), 1800 F St. NW, $161,293,000
• Lafayette Building (phase I), 811 Vermont Ave. NW, $128,827,000
• Mary Switzer Building (phase II), 330 C St. SW, $68,241,000
• Department of Interior Building (phase IV), 19th & C streets NW, $63,450,000
• Department of State Truman Building, 2201 C St. NW, $14,735,000
• Veterans Administration, $1,499,000
• Lyndon B. Johnson Federal Building, $4,162,000
• Elijah Barrett Prettyman Courthouse, $3,662,000
• IRS Building, $1,506,000
• Ariel Rios Fed Building, $1,337,000
• GSA-Regional Office Building, $592,000
• Wilbur J Cohen Building, $16,701,000
• Winder Building, $1,865,000
• Theodore Roosevelt Building, $23,551,000
• Robert C. Weaver Building, $3,663,000
• Howard T. Market National Courts, $2,070,000
• Tax Court, $8,083,000
• 601 - 4th St, NW, $2,150,000
• US Secret Service Headquarters, $1,601,000
• EPA East and West and Connecting Wing, $4,564,000
• Reagan ITC and Garage, $16,161,000

Virginia

• Franconia Warehouse, Franconia, $9,512,000
• Martin V.B. Bostetter Courthouse, Alexandria, $1,699,000
• Advanced Systems Center, Reston, $690,000. 
• Poff Federal Building, Roanoke, $50,968,000
• Robert Merhige Courthouse, Richmond, $3,500,000

Maryland

• New Carrolton Federal Building, Lanham, $1,647,000 
• CMS HQ Complex, Woodlawn, $23,723,000

The federal website, www.fedbizopps.gov, should have more information about these projects very soon.  Any luck finding information? 

Wondering how to successfully bid these projects?  My "Getting Green from the Stimulus" slideshow is a good start.

Photo Credit:  JPhilipson

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If you have been paying attention to Green Building Law Update, you know D.C. has a bit of an issue regarding a green building "performance bond" currently required by law.  In short, green building "performance bonds" do not exist.  A few weeks ago, George Hawkins, Director of the District Department of the Environment, testified in support of the use of “performance bonds” as a method of enforcing the District’s Green Building Act (PDF link).  Among the comments that caught my attention, Mr. Hawkins stated that green building performance bonds will be created just as car insurance was created: 

"For example, before there were automobiles, there was no such thing as car insurance.  When the law recognized a growing need to insure against harms that may be perpetrated by automobile drivers to others, the market rose to the demand." 

Automobiles were invented in the mid-1890s. Although various vehicle insurance schemes existed in the late 1890s through the first decades of the 1900s, Massachusetts was the first state to make vehicle insurance compulsory in 1927. New York was the second state to make vehicle insurance mandatory, in 1956. The 'invention' of automobile insurance clearly preceded the state's mandating of such coverage. The DC GBA reverses this precedent by mandating something for which no appropriate instrument exists.

More directly, auto insurance is an extension of tort law, and vehicle insurance exists to compensate a party for its loss, whether personal or property. These loses are either known (cost of repair or treatment) or negotiated. In the case of the DC GBA, the compensated party (District's Green Building Fund) is not the party of loss.  Regarding forfeiture, the legislation states "All or part of the performance bond shall be forfeited to the District and deposited in the Green Building Fund if the building fails to meet the verification requirements." There is no method in the legislation to negotiate (or dispute) the severity of loss or even identify the loss. Certification of LEED projects is made by the US Green Building Council (USGBC), a non-governmental entity, and includes a mix of objective and subjective requirements. Because a failure to achieve the desired certification could be the result of subjective failures, a surety bond is an inappropriate method to ensure compliance.

Photo:  Larry Miller

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Today, we run Part II of the Eric Corey Freed interview.  I divided up the interview into two posts because the interview was long and Eric does a great job illuminating green building legal issues in Part II:   "Architects would not be able to guarantee LEED certification because the architect is not the one providing the LEED certification. . . .  I also don't think given the science of building technology that we can guarantee anything about energy usage."    

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It may surprise you to learn that I have a real job.  Seriously, I do and I love it!  I am a construction litigator and I am currently involved in a major construction delay claim.  I have been preparing a motion the last few days, hence the late filing of today’s post. 

There is a lot going on in the green building world.  The Stimulus.  D.C.’s unique green building bond (i.e. the green building unicorn).  LEED AP exam deadlines.  And also a little basketball.  I often don’t have time to touch on all the issues I would like, so today, I provide you my thoughts on these many issues. 

The stimulus.  In my “Green in the Stimulus” slideshow, I indicated that the General Services Administration has until April 3, 2009 to prepare a list of federal projects to receive stimulus-funding.  While that is true, apparently the GSA does not intend to release this list on April 3:  “Morris said a list of stimulus-funded projects is being vetted by the administration, but he could not give a date for the list’s release.”  Stay tuned for further details.

The D.C. Bond.  You may have noticed that I have been writing a lot about the D.C. Green Building Act's performance bond requirement.  It seems the issue takes a new turn everyday.  The most recent rumor is that the D.C. may incorporate the green building bond into zoning requirements.  How are we going the wrong way on this?  Look for a guest post next week on the issue. 

The LEED AP Exam.  I get a lot of google hits from people trying to decide if they should take the LEED AP exam.  My general thought is that if you are interested in a career in green building and you have some free time and money, you should take the exam.  You do know the deadline to sign up for the LEED AP exam is March 31, right?  Also, the Green Building Certification Institute recently announced that you actually have to take the LEED AP exam by June 30, 2009.   

The Defending Champions.  Finally, it is my favorite time of year.  It is the time of year when the University of Kansas Jayhawks take flight.  In addition to my job and this blog, I also am just a little bit COMPLETELY AND UTTERLY (ed: my fiancee made this change) obsessed with Kansas Jayhawks basketball.  Always have been, always will be.  I hope Sherron Collins, Cole Aldrich, Bill Self and company continue rolling and dispatch of the Spartans in quick fashion tonight.  Rock Chalk Jayhawk! 

Photo:  ruralocity

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While we have all (or at least I have) been focusing on the federal stimulus and its effect on the green building industry, an interesting development occurred in Virginia that may impact the future of a statewide green building regulation.

In past posts, I highlighted Governor Tim Kaine's attempts to pass a statewide green building regulation.  As you may recall, in 2007, Governor Kaine indicated his preference for the LEED rating system and Energy Star in Executive Order 48.  In 2008, the Governor and the General Assembly crossed paths on the proper green building rating system for Virginia:  

The Governor’s original proposed budget in 2008 did not include green building provisions.  As part of the budget process, the Governor’s budget was sent to the General Assembly to undergo legislative amendments and the following provision, which includes Green Globes, was added:  “All new and renovated state owned-facilities . . . that are over 5,000 gross square feet shall be designed and constructed consistent with the . . . U.S. Green Building Council's LEED rating system or the Green Globes rating system.”  Governor Kaine vetoed the inclusion of Green Globes but the General Assembly overrode the veto.  

Based on the Governor Kaine's past work to exclude the Green Globes rating system, I was surprised by a portion of the Governor's State of the Commonwealth Address on January 14, 2009: 

"A few years ago, I issued an executive order requiring that all new state buildings be constructed to high energy-efficiency standards. Later, members of the General Assembly included similar language in the budget bill. That was a smart step in ensuring that the Commonwealth makes good energy decisions, and one that saves us money in the long run.

This year, I will ask you to ratify that approach again, by requiring in the Code of Virginia that all state and local government buildings meet either LEED or Green Globes standards for efficiency."

Did you see that shift in policy?  What do you think of Governor Kaine's new found support for the Green Globes standard? 

Photo:  Ouij

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Last week, I had the pleasure of testifying before the D.C. Council regarding green building policies in the district.  As mentioned in my post last week, the focus of my testimony was the Green Building Act's "performance bond" requirement.  Before my testimony, I had the opportunity to hear George Hawkins, Director of the District Department of the Environment.  During his speech, Mr. Hawkins directly addressed the "performance bond" issue and many of the points I raised in my White Paper last Wednesday.  After you review Mr. Hawkins testimony, I would be very interested in hearing your thoughts. 

---

“Performance Bond” Requirement for Private Projects

I would now like to turn to the issue of performance bonds and criticism of this enforcement tool. Pursuant to the Act, commercial applicants will be required to submit a “performance bond.” If the building fails to meet the LEED certification requirements, “all or part of the performance bond shall be forfeited to the District.” Experts in the area of environmental finance analysis and DDOE’s research on the subject support this approach as an appropriate and sufficient enforcement mechanism to ensure compliance with the Act.

One of the concerns that has been raised is that “performance bonds” do not currently exist in the financial assurance world. There are, however, a number of laws and regulations that have required forms of financial assurance that at the time of the inception did not exist in the market. In each regulatory context, private financial markets have developed to provide the insurance, bonds, and other financial instruments necessary to demonstrate assurance. For example, before there were automobiles, there was no such thing as car insurance. When the law recognized a growing need to insure against harms that may be perpetrated by automobile drivers to others, the market rose to the demand.

The breadth of operations and environmental risks covered by current rules is an additional testament to the market’s ability to conform to and rise to the demand of a new form of financial assurance. For example, the Resource Conservation and Recovery Act (RCRA) requires that financial assurance be provided by the responsible party as proof that adequate funds will be available when needed to undertake the necessary corrective action at a RCRA treatment, storage, and disposal facility. Many states have their own laws requiring financial assurance, including our own DDOE requirement that developers post a bond equal to the cost of stormwater management infrastructure until DDOE verifies proper installation.

A second concern that has been raised is that it may prove difficult and financially burdensome for developers to provide letters of credit, collateral to obtain a bond, or escrow in amounts up to $3,000,000 (the maximum requirement under the Green Building Act). While opposition to new financial assurance rules is common regardless of industry, DDOE believes fears of business disruption from this new assurance requirement are unwarranted. When the District began to require condominium developers to place 10 percent of the cost of construction in an escrow account or provide a letter of credit under the Condominium Act, the same concerns were cited, and yet, this is now common practice.

An additional criticism of the current “performance bond” requirement is that the enforcement mechanism creates an inherent conflict of interest because those that would require forfeiture of the bonds would also directly benefit from the forfeiture. If forfeited, performance bond funds are to be “deposited in the Green Building Fund.” Under the Act, the Green Building Fund is to be used, in part, for “staffing and operating costs to provide technical assistance, plan review, and inspections and monitoring of green buildings.” On the contrary, it is important to note that many legally-required fees, fines, and penalties are used by governments to fund the operation of the program under which they are collected. For example, D.C. Official Code § 7-632 authorizes the establishment of a Regulatory Enforcement Fund to be used by DDOE to finance its regulatory practice. The Council has routinely authorized use of enforcement proceeds to finance future enforcement actions.

In summary, we believe the bond requirement under the Green Building Act is viable and can be implemented. We have already, and will continue to, participate in discussions with our sister agencies and stakeholders as to how this enforcement mechanism should best be implemented.

---

Do you think Mr. Hawkins is right?  Will the financial sector come up with a green building performance bond?

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[Today we are interviewing Joan Kelsch, an environmental planner for the Arlington County Government.  I first met Joan when she agreed to sit down with me and discuss the Arlington County green building bonus density program.  I really appreciate the green building incentive program put in place by Arlington County.  To learn about changes to the program, read on!]

Chris:  I know you have been working hard on revisions to Arlington County's green building policies.  What changes were made?

Joan:  Arlington has had a green building density incentive policy for nearly 10 years.  It was originally adopted in 1999 and we updated it in 2003.  There have been many changes in the green building arena over these past 5 years and we updated our policy to reflect the increase in knowledge and market demand for green buildings.  We wanted to provide a stronger incentive to achieve the higher levels of LEED (gold and platinum).  We reduced the bonus for LEED Certified and Silver since these levels are more frequently achieved in the DC region, even without an incentive.  The basic bonus density incentives apply to office construction, and we added a slightly higher bonus at all LEED levels for residential projects.

Arlington’s program offers additional density based on Floor Area Ratio (FAR).  The new densities offered are as follows:  

Chris: Why did Arlington County's revise its green building policies to increase the incentives for meeting higher LEED certification levels, like Platinum, while decreasing incentives for the lower levels of LEED certification? 

Joan:  We wanted to provide an extra incentive to achieve more sustainable buildings (as measured by higher LEED levels).  We also wanted to provide extra incentive for residential projects to achieve LEED certification.  Over the past 5 years, our data indicate that about 55% of office space agreed to achieve LEED certification in exchange for the density bonus.  During the same time period, only 25% of multifamily residential units agreed to achieve LEED certification in exchange for bonus density.  We’d like “greener” residential projects overall and we’d like to encourage office developers to really stretch to reduce environmental impact even further.

Chris:  Do you think green building certification (e.g. LEED) is the proper regulatory vehicle for encouraging green building developments?  Why?

Joan:  LEED is the most widely accepted and understood green building rating system.  Until building codes call for more energy efficient and water efficient buildings, I think LEED is a good tool to guide more environmentally responsible development.  LEED addresses issues broader than just building code – indoor air quality, materials choices, embedded energy issues, waste management, etc.  I think LEED has played a critical role in helping the market transformation toward greener materials and process and will continue to do so. 

The Washington Metropolitan Council of Governments (MWCOG) released a report in December 2007 recommending that local governments strive to achieve at least Silver LEED certification for all public buildings and that private development be encouraged to meet at least the LEED Certified standard.  Using LEED across the region levels the playing field, making it easier for developers and the construction industry to understand and meet the LEED standards whether they build in DC, suburban Maryland, or Northern Virginia.

Photo:  EPA

Related links: 

• Arlington County, Virginia - National Award for Smart Growth Achievement (EPA)
• Transit-oriented Development in Arlington (NRDC)
• How To Regulate Green in Virginia (GBLU)

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I am very excited for an event taking place today:  the Public Oversight Roundtable on Green Building Practices hosted by the Council of D.C. Committee on Government Operations and the Environment. 

As you may recall, Green Building Law Update has repeatedly discussed the "performance bond" requirement of the D.C. Green Building Act .  As currently written, the D.C. Green Building Act, starting in 2012, will require a performance bond as a guarantee the private development projects will achieve LEED certification. 

Last week, I wrote that no bond, security or insurance instruments exist to guarantee LEED certification.  I have never liked pointing out problems without also providing a solution.  Today, at the Roundtable, I will be speaking about problems with the performance bond and highlighting two potential solutions:

(1) "Financial security" in the form of a fee if a project fails to achieve LEED certification; or
(2) a "D.C. Feebate" similar to Portland's feebate system . 

In order to crystallize these solutions, I wrote a white paper discussing this complex issue and potential solutions.  You can download "White Paper:  Revisions to Performance Bond Requirement of the D.C. Green Building Act" or read the white paper in its entirety after the jump. 

If you have any critiques or suggestions, please do not hesitate to share. 

Photo:  Echo9er

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Well, that wasn't much time to get prepared. 

The Department of Energy has released the first installment of funding for the Weatherization Assistance Program and the State Energy Program. 

"To jump-start job creation and weatherization work, the Department of Energy is releasing the first installment of the funding - about $780 million -- in the next few days.  The Department will release additional funding over time as states demonstrate that they are using the funding effectively and responsibly to create jobs and cut energy use."

The Weatherization Assistance Program seems fairly straightforward.  Through the program, "an average investment of up to $6,500 per home in energy efficiency upgrades and will be available for families making up to 200% of the federal poverty level - or about $44,000 a year for a family of four."  

The administration of the State Energy Program funding is a bit more murky.  According to the DOE, State Energy Program funding "will be available for rebates to consumers for home energy audits or other energy saving improvements; development of renewable energy projects for clean electricity generation and alternative fuels; promotion of Energy Star products; efficiency upgrades for state and local government buildings; and other innovative state efforts to help save families money on their energy bills."

In the coming weeks, Green Building Law Update will monitor stimulus funding at the state level.  How do individuals apply for weatherization funding?  What programs will be funded through the State Energy Program?  I hope to answer these and many more questions. 

Related Links

• DOE to Release First Wave of $8B in Weatherization, Energy Efficiency Funds from Stimulus (GreenerBuildings)
• Obama-Biden Administration Announces More Than $164.1 Million in Weatherization Funding and Energy Efficiency Grants for Virginia (DOE)
• Getting Green From the Stimulus (GBLU)

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One of the first real conversations I had through Green Building Law Update was with Erica Bannerman.  Erica was kind enough to ask me a loaded question about Virginia municipalities mandating green building while complying with Dillon's Rule (turns out, municipalities can't mandate green building).  I soon found out that Erica is a Senior Environmental Specialist with the City of Alexandria.  Alexandria is in the process of revising its green building policies so I thought Erica would make for a great interview.  Enjoy! 

---

Chris:  What can you tell me about Alexandria's plans to revise the city's green building policies?   

Erica:  Green Buildings are a major component of the City’s commitment to sustainable development. The City has required that its own buildings meet high environmental standards for several years and asks private developers to look to green solutions for their buildings. Furthermore, the City’s initiatives through its Strategic Plan and Eco-City/Action PlanCharter established the broad policy foundation for a wider and stronger green building practice for the future.

For several years, all major development applications have been reviewed for compliance with an established checklist of environmental factors, applicants have been given information on recycling building materials, and approvals have included conditions requiring such green elements as green roofs, cisterns, and energy efficient appliances. While the checklist and guidelines are voluntary, Staff and applicants negotiate to achieve the highest number of LEED or equivalent points as possible, and the City’s efforts have resulted in a long list of recent green projects.

In 2008, the City’s Planning and Zoning staff with the assistance of the City’s Green Building Workgroup began developing a Green Building Policy. The proposed Green Building Policy identifies specific rating systems for nonresidential and residential development as well as the specific level of certification expected. The policy statement applies equally to public and private development and identifies projects that require a Development Site Plan (DSP) or Development Special Use Permit (DSUP) as those to which the policy applies. Smaller projects, such as a simple house addition, which do not require Planning Commission or City Council approval, will not be subject to the policy.

Additional highlights of the proposed policy include:

• The policy is a strong statement of expectations by the City. It is not a mandatory regulation.
• LEED-Silver will be the expected level of achievement for all nonresidential buildings;
• The policy includes the possibility of phasing and room for flexibility for nonstandard buildings and uses;
• The policy anticipates significant outreach and education and requires a partnership with the building and development community.

Chris:  How will Alexandria apportion responsibility for attaining green building certification of public projects or demonstrating energy efficiency improvements. 

Erica:  Based upon the proposed policy, certification of compliance with green building standards will be provided by independent and accredited third party professionals retained by the applicant and approved in advance by the Director of Planning and Zoning. The City will require the applicant to achieve the green standard approved in its development application within two years of issuance of a certificate of occupancy.

Chris:  What factors do you think will most contribute to the growth of the green building industry in the D.C. metro area? 

Erica: The factors that will most contribute to the growth of the industry are: (1) the pro-green Administration; (2) businesses transitioning to a carbon-constrained economy; and (3) the demand from consumers for more ecologically responsible buildings and development. The carbon-constrained economy will have the greatest impact because companies will no longer be able to externalize the negative impacts buildings have on the climate and environment.

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I have been working with the D.C. City Council recently on revisions to the D.C. Green Building Act of 2007.  In particular, I have been looking for an enforcement mechanism that can be used to ensure compliance with LEED certification requirements for commercial buildings.  The problem is that the current Green Building Act requires a "performance bond" to guarantee certification.  Green Building Law Update has covered the issued extensively and you can read more about it here. 

Photo:  Martyn and Debz

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As promised, below is the slideshow from last week's "Green in the Stimulus" presentation as part of Rutherfoord's Trends in Green Building seminar.  Unfortunately, I have not figured out how to synchronize audio files with a slideshow - maybe next time.

I had two goals when I created this presentation:

(1) Explain the green building provisions in the stimulus package.
(2) Convey how parties can prepare themselves now to take advanage of resulting green buiding opportunities. 

You can be the judge whether I succeeded.  The slides, by themselves, do not do the presentation justice.  If you are interested in hosting the "Green in the Stimulus" presentation for your company, please contact me at chris@greenbuildinglawupdate.com.  The presentation can be tailored to your specific state or region and industry. 

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[GBLU Note:  Awhile back, I had the pleasure of hearing Darren Prum speak at the William & Mary symposium, "It's Not Easy Building Green."  Darren's presentation regarding Nevada's problematic green building legislation was fascinating.  I asked Darren to write something up for Green Building Law Update on the topic.

Darren's post is very timely.  State and local governments throughout the country are currently drafting new green building regulations to take advantage of incoming stimulus funding.  The "Nevada Green Building Incentive Experience" provides a warning of what can happen when green building regulations are not drafted and implemented carefully.]

By Darren A. Prum, MBA, JD

In 2005, the Nevada Legislature passed a poorly considered green building incentive package in an effort to spur private developers in the state. The hastily written legislation in conjunction with little direction to state agencies and minimal financial analysis forced the next session of the Nevada Legislature in 2007 to rethink and modify the program because it created a financial crisis of epic proportions (developers figured out quickly that they could receive up to $3 for every $1 spent meeting the LEED requirements). 

In brief, the 2005 legislation required the state to construct 2 LEED Silver or higher structures during each 2 year budget cycle while it provided a sales tax reduction down to 2% for all materials and fitting used in construction and a 50% reduction on all property taxes for 10 years to the owners of private constructed buildings. 

While the concept had the best of intentions, the agencies charged with administrating the program drastically altered the legislative intent.  The Nevada Tax Commission was supposed to only authorize projects that broke ground before December 31, 2005; but instead, it allowed those “in existence” prior to the date to qualify.  Then, Nevada Governor Gibbons’ newly appointed Director of the Office of Energy changed the application of the LEED building standard for eligibility to evaluate a project based on an entire development rather than by each individual building.  This modification allowed casinos to permit smoking and still gain the tax break.

As a result of the legislation, LEED projects in Nevada jumped from 14 in 2005 to 97 in 2007.  As the 2007 legislative session approached, budget forecasters projected a minimum loss of $940M to state revenue over the next biennium.  Clark County (Las Vegas area) would lose 10% of its tax base and the Clark County School District would lose $700-900M over the next 10 years (which the state must still fund through other sources).  The biggest winners of the breaks included:  MGM-Mirage’s Project City Center ($80M already and  $900M over its life), Venetian’s Palazzo Tower, and Boyd Gaming’s Echelon Place (currently stalled).

In 2007, a very wild legislative session resolved the financial impact but grandfathered 6 projects under the old system.  The current incentives repealed the sales tax abatement revised the property tax incentives.  The property tax reductions no longer applied to education levies and strictly enforced compliance to the adopted LEED standard.  These changes limited the state’s exposure now to approximately $493M.

In evaluating already existing incentive programs, New York, Oregon, and Maryland preceded Nevada but utilized their state income tax code as the primary tool to further green buildings.  In an effort to avoid similar results to that of Nevada, many other jurisdictions created their own unique programs.  Virginia followed the Nevada model by allowing property tax abatements at a local level, New Mexico used the income tax credit approach, and Hawaii tried a new method by requiring a green building to receive priority processing during governmental reviews for project approvals, which should not impact the state’s revenue stream at all. 

Because Nevada does not impose an income tax, a well-developed incentive program should try to offer nonfinancial incentives first, followed by abatements in taxes that do not create lasting effects to the state’s fragile revenue stream.  Accordingly, the Nevada experience provides an example to other jurisdictions considering a green building program on how incentives may offer too generous a benefit to developers and others and may place a state in financial crisis despite the noble intentions.

Darren A. Prum is a Visiting Lecturer in Business Law and Finance at the University of Nevada, Las Vegas.  A more detailed version of Nevada’s Green Building Incentive Experience is expected to appear in an upcoming issue of William & Mary’s Environmental Law & Policy Review.  Mr. Prum has other green building related articles previously published and forthcoming in the Real Estate Law Journal.

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Update:  For a rundown of green building provisions in the stimulus pacakge, see this post.

Thank you to everyone who attended Rutherfoord's "Trends in Green Building" seminar yesterday and listened to my "Green in the Stimulus" presentation.  It was great to recognize so many faces in the crowd.  If you came up and spoke to me about speaking engagements or green building legal programs offered by my law firm, please follow up with me so we can make it happen.  For those of you who missed the event, I will post the powerpoint I presented to Green Building Law Update (hopefully with a voiceover) on Monday. 

Now for the bad part. 

The stimulus package is going to result in increased levels of green building litigation. I hope I am wrong, but I think it is inevitable. 

In my "Green in the Stimulus" presentation, I highlighted three factors that will contribute to an increase in green building litigation.  The first factor is an influx of inexperienced parties attempting to build green.  There are many state and local governments that, to date, have not been substantially involved in the green building industry.  These entities, with the help of the stimulus funding, are now going to require green building projects through regulation.  Here is an example.  These state and local governments will be required by the timelines of the law to fast track these green building developments.  Do you see the problems that can arise from this scenario?

The second factor will be the requirement that projects attain LEED certification.  The website of the General Services Administration states:

As of 2003, all new GSA building projects must be certified through the Leadership in Energy and Environmental Design (LEED) Green Building Rating System of the U.S. Green Building Council, and Silver LEED rating is encouraged. 

The GSA will not be the only entity requiring LEED certification for projects.  Who will be responsible for achieving the LEED certification?  What happens if the project fails to achieve the LEED certification?

Finally, the third factor that will result in more green building litigaiton is the emphasis on energy efficiency.  The drive to build green primarily centers around the desire to reduce building energy use.  However, it is very difficult to anticipate how a building will actually perform.  Under the LEED rating system, energy efficiency is modeled through ASHRAE.  Buried deep in a ASHRAE appendix (ASHRAE 90.1, Appendix G, Section G1.2, Note 2) is the following disclaimer:

"Neither the proposed building performance, nor the baseline building performance are predictions of actual energy consumption or costs for the proposed design after construction. Actual experience will differ from these calculations due to variations such as occupancy, weather, energy use not covered by this procedure, changes in energy rates between design of the building and occupancy, and the precision of the calculation tool."

Not every government or municipality will see or understand this caveat.  Heck, many of the entities requiring certification don't even understand the acronym for the LEED rating system.  What happens when the new green buildings don't actually reduce energy usage? 

I am not the only one concerned about these issues.  Real Life LEED initially raised factor three.  Are we wrong?  Tell me. 

Related Links:

• LEED Risk Management:  Crossing the Model/Reality Chasm (Real Life LEED)
• "The Stimulus:  Now for the Hard Part" (GBLU)
• The Stimulus:  Green Building Provisions (GBLU)
• The Stimulus:  "LEEDS"ing the Way (GBLU)
• The Stimulus:  FedBizOpps Has Green (GBLU)
• The Stimulus:  States Have Green Too (GBLU)
• The Stimulus:  Build Relationships Now (GBLU)

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Update:  For a rundown of green building provisions in the stimulus pacakge, see this post.

I am wrapping up my "Green in the Stimulus" presentation for tomorrow and wanted to provide more information that may benefit your company as you seek out green stimulus projects. 

As you prepare to bid federal and state projects, relationships will be key.  You will need relationships with general contractors or subcontractors to facilitate your bid.  Relationships with the government officials that are creating or letting the government projects can also be helpful.  I am convinced that in the stimulus bidding process, information is power.  Government officials can provide information about requirements and preferences for green stimulus projects. 

How do you develop relationships with these government officials?  Here is an idea. 

Like Virginia, Maryland has developed a stimulus website .  Unlike the Virginia stimulus website, Maryland does not provide information about proposed stimulus projects.  But other information on the website may prove valuable. 



The Governor's office will be providing "Workshops for Local Leaders" related to the stimulus package.  The event is free.  You do not have to register. 

If you are in Maryland and you want to learn about stimulus projects and talk to the officials in charge of these projects, why would you not go to one of these events? 

Related Links: 

• "The Stimulus:  Now for the Hard Part" (GBLU)
• The Stimulus:  Green Building Provisions (GBLU)
• The Stimulus:  "LEEDS"ing the Way (GBLU)
• The Stimulus:  FedBizOpps Has Green (GBLU)
• The Stimulus:  States Have Green Too (GBLU)

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Update:  For a rundown of green building provisions in the stimulus pacakge, see this post.

This week, in preparation for my "Green in the Stimulus" presentation, I have been providing what I hope is interesting and useful information about the stimulus.  Today we are briefly going to review a new website in Virginia, Stimulus.Virginia.gov, which is vitally important to anyone expecting to take part in Virginia projects resulting from the stimulus. 

According to Stimulus.Virignia.gov, the "website is a forum for citizens, localities, and others to submit project proposals to be considered when federal stimulus funds become available."  In its current iteration, the most interesting aspect of the website is the "Reports" section .  This section lists projects that have been submitted to the website by municipalities and individuals.

I have skimmed this list and was amazed to see that the very first project was a school seeking LEED certification. 

Do you realize the opportunity that Stimulus.Virginia.Gov, along with FedBizOpps.gov, provide?  Through these two websites, you can inventory all of the potential projects you would want to bid on and begin preparing for these projects now.   Plenty of other states have similar stimulus websites (Ohio and Michigan, for example) so these actions aren't limited to Virginia. 

How do you prepare for these projects now?  What are the risks that have to be accounted for and what should your contracts look like?  You will have to come to my presentation on Tuesday to find out!  (Or check back on my website when I make my slideshow, and possibly the video of the presentation, available).

Related articles:

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"The General Services Administration (GSA), Region 7, is seeking a contractor to perform as the CMc (Construction Manager as Contractor) for the construction of the New United States Land Port of Entry (LPOE) in Tornillo, Texas. The site is located in El Paso County, Texas. It is situated approximately 30 miles east of El Paso and is adjacent to the current Fabens Port of Entry facility, which will be demolished as part of the construction option in this contract.  An estimated 115 acres will compose the new LPOE.

This project must be certified through the U.S. Green Building Council (USGBC) Leadership in Energy and Environmental Design (LEED®) green building rating system. The target USGBC LEED® rating for this project is Silver level."

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Update:  For a rundown of green building provisions in the stimulus pacakge, see this post.

Yesterday, while preparing for my "Green in the Stimulus" talk, I came across something both hilarious and frightening. 

StimulusWatch.org has provided an inventory of proposed projects that could benefit from the stimulus.  The list was prepared from a list of shovel-ready projects prepared by the U.S. Conference of Mayors .  While reviewing the list for "LEED" projects, to my great horror, I made the following discovery:



If an entity is seeking "LEEDS" certification, is the project really "shovel-ready"?  And no, that is not a rhetorical question. 

Related Links: 

• "The Stimulus:  Now for the Hard Part" (GBLU)
• The Stimulus:  Green Building Provisions (GBLU)

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• Stimulus: now for the hard part (CNN)
• Earmark-Free Stimulus Bill Lacks Spending Direction (NPR)
• Democrats Among Stimulus Skeptics (Wash. Post)

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Update:  For a rundown of green building provisions in the stimulus pacakge, see this post.

Thomas C. Mawson - U.S. Green Building Council
Executive Director, National Capital Region Chapter
2009 LEED Rating System Changes and their Impact on Property Owners and Developers

Richard M. Silberman - Healthy Buildings International, Inc.
Chief Executive Officer
Earning the Ventilation-Related Credits Within LEED-NC

Eric M. Oliver - EMO Energy Solutions
President
Looking for Energy Savings In All The Right Places

Bobby C. Christian - Tangible Software Solutions, Inc.
President  
Simplifying Energy – Buy. Use. Manage.

Did I forget anything? 

Related Links:

• Highlights of $787 billion stimulus plan (AP)
• Stimulus: Now For the Hard Part (CNN)

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• D.C. Green Building Act
• SFAA and SBP Letter Regarding "Performance Bond" Requirement 
• Related GBLU "Bond" Posts

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Last week, we talked about the William & Mary Environmental Law Review Symposium "It Ain't Easy Building Green."  Today, I am going to try yet another new blog trick and make my slideshow available from the Symposium. 

If you have any questions or would like to discuss any of the slides in detail, just post a comment and I will be sure to respond.  If your company or organization would be interested in hosting this or a similar presentation, please contact me (chris@greenbuildinglawupdate.com). 

So what do you think? 

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[Green Building Law Update is achieving another first:  our first guest post!  Christopher G. Hill is a Virginia construction attorney and recently started a legal blog, Construction Law Musings.  I first met Chris through Twitter and I appreciate his willingness to discuss green building legal issues.]

Aside from the governmental impetus to learn green building techniques, two factors require that Virginia contractors learn to build green.  These two factors are simply 1.  project owners want green buildings and 2.  those contractors that do not keep up with the “greening” of construction are likely to fall behind and struggle to stay afloat in today’s economy.

Project owners want green buildings for many reasons.  Owners want to be seen as environmentally friendly and civic minded.  Additionally, and possibly more importantly, owners save money (both initially and over time) by building green.  As an example, use of integrated green building methods requires less up front costs for irrigation piping and the like and leads to use of less than one quarter of the water that a non-green building uses according to a recent study.  Lower water usage means lower operating costs.  Couple these factors with tax incentives and the like provided by the government and the benefits of green building to owners are obvious.

Because of the environmental benefits and cost savings inherent in a green building approach, contractors versed in green building can sell their services more readily than those that do not.  First of all, a “green” contractor will be among a limited set of contractors to whom an owner seeking green certification for its building will look.  Second of all, if an owner asks you for input, you can sell him or her on the benefits of your services over a comparable non-“green” contractor.  In both of these instances, being knowledgeable in green construction and its benefits will serve your business well.

As always, be sure to consult with a legal professional regarding the contract requirements on such a project before bidding on the job to avoid headaches at the end of the project.  As with any new area of business, you are better off anticipating issues rather than responding to them.   

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I met Elaine Lipman Barnes through Twitter (elbarneshouse).  Soon I learned that she manages a billion dollar green schools program in Ohio.  Since green schools are an emerging industry, I thought Elaine would be perfect for a Sensible Interview.  She didn't disappoint.  Enjoy! 

---

Chris:  Can you tell me about the green building program you manage?

Elaine: I manage Ohio's Green Schools Initiative at the Ohio School Facilities Commission (OSFC).  In 2007, Governor Ted Strickland issued Executive Order 2007-02S (Coordinating Ohio Energy Policy and State Energy Utilization) that mandated that, among other things, all state agencies improve energy efficiency in both the buildings they use and the programs they run.  Our response eventually became known as OSFC Resolution 07-124 which mandates that all newly constructed or substantially renovated school buildings that are state funded achieve a minimum of Silver certification in the US Green Building Council's LEED-Schools (Leadership in Energy and Environmental Design) rating system with emphasis in energy conservation.

We estimate that we will provide $4.1 billion in school funding over a 3 year period to begin the construction process of at least 250 schools in Ohio.  My responsibility is to guide our design teams in their process of achieving this standard of excellence.  As of February 1st, we had 97 school projects registered with the US Green Building Council  and expect to have around 180 registered by the close of this state fiscal year.

Chris:  One area where I see potential green building disputes is green schools.  School districts are building green schools, in part, because of the energy efficiency and related cost savings.  How important a factor is energy efficiency for the Ohio green school program?  How do school districts incorporate projected energy efficiency savings into school budgets?

Elaine: Our mandate stems from a desire to make schools energy efficient and to reduce long term operating costs.  Because we have set a high standard for integrating technology into the classroom, and because our average school that will be replaced is over 70 years old, we are buildings schools that have significantly higher energy costs than what the districts are used to. The associated increases in consumption are often 200-1000% greater than the old buildings and many districts have difficulties affording these costs. Further, there are cases where the increase in consumption means an increase in energy rates per kWh (or Btu) and so the costs skyrocket.

We have increased our master plan budgets for all schools that fall under Resolution 07-124 by 3% to account for the new design process and emphasis on potentially greater first cost to reduce long term operating expenses.  Additionally, OSFC has developed provisions for districts to use our Energy Conservation Program (aka 1986 Am. Sub. HB264), which allows the district to incur bonded indebtedness with unanimous approval of the school board without public vote provided the energy conservation measures have a payback period of less than 15 years, to cover incremental costs increases of more expensive systems, renewable energy installation, and co-generation.

The question of how schools incorporate the energy savings into their budgets is interesting.  Traditionally, there is no direct process for that because a school's capital budget and operating budget are both restricted.  HB264 allows for operational savings to pay off capital expenditures over the approved project period.  Governor Strickland and his Energy Advisor, Mark Shanahan are working with the Ohio Department of Education to develop a process of better managing the connection between these budgets and ensuring that districts are able to reinvest their savings into staff, capital expenses, and, of course, the classroom.

Chris:  A portion of the economic stimulus funding is supposed to go to modernizing schools.  Does this mean making schools green?  Do you anticipate seeing some of the stimulus package money designated to your green schools program?

Elaine:  It appears as though both the House and Senate versions of the economic stimulus package have language requiring the school modernizations to be green.  It isn't clear how they will define "green."  It also appears that the stimulus funds will be either offered directly to the districts or to the districts via the Department of Education (ODE).  We will work with ODE and the districts to provide technical support and are currently working with our partners across the state to begin to determine what that might look like.

***
Elaine Lipman Barnes is the Energy & Environment Administrator for the Ohio School Facilities Commission.  For more information about OSFC or Ohio's Green Schools Initiative, visit http://osfc.ohio.gov  or call 614.466.6290

Related Links: 

• Sensible Interview:  AIA President Marvin Malecha (GBLU)

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Last week, we discussed a law in Virginia that prohibits municipalities from creating green building codes or mandates.  In short, Dillon's Rule only grants to municipalities those powers that are explicitly granted by the state.  The Virginia Code has specifically granted the power to create a building code to the state; municipalities, on the other hand, can create zoning ordinances. 
 
Recently, I had the pleasure of sitting down to speak with Joan Kelsch, Environmental Planner for Arlington County, about the Arlington County green building programs.  Arlington County has taken advantage of the opportunity to create zoning ordinances by promulgating two programs that stimulate the development of green building projects:  (1) a Site Plan Program; and (2) a Bonus Density Program. 

Lets start with the Site Plan Program.  According to Kelsch, in Arlington County "green building policies are technically voluntary but site plan projects do allow Arlington County to ask for specific proffers from developers."

What is a site plan project?  A site plan is a large project that requires a special exception to the zoning ordinance in order to be built.  Because site plans require an exception to the zoning ordinance, Arlington County is able to require specific green building requirements, including:

(a) LEED™ Accredited Professional
(b) LEED™ Scorecard.
(c) LEED™ Tracking.
(d) Construction Waste Management.
(e) Energy Star Appliances.

In addition, Arlington County is also incentivizing green building development through its Bonus Density Program.  Under the Bonus Density Program, projects larger than zoning would normally permit are allowed if the developer promises to achieve a specific LEED certification level. 

We will be looking at Arlington County's Bonus Density Program in more detail, in part, because the enforcement mechanism involves a four-letter word that has created problems in Washington, D.C. (hint: bond).

Related Links: 

• Virginia Green Building Regulations:  Avoid the Building Code (GLBU)
• Green Building Regulations in Virginia:  Zoning In (GBLU)
• Environmental Services (Arlington)
• Green Building Incentive Program (Arlington)

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Last week, I had the pleasure of speaking at the William and Mary Environmental Law & Policy Review symposium "It's Not Easy Building Green."  The students did a fantastic job and the audience was large and engaged. 

In particular, Mark Pike organized an interactive web 2.0 experience for the symposium that was quite impressive.  Many of the symposium participants used Twitter to discuss the event.  Additionally, Mark set up a blog (in less than 12 hours!) and live blogged each of the presentations.  From what I have heard, the event was even taped and should be made publicly available. 

In addition to the technology, there was plenty of substantive discussion about green building law.  Here are five things I learned at the symposium:

1.  Stephen Del Percio correctly pointed out that state legislation may run afoul of antitrust law if it only incorporates one green building rating system, like LEED.

2.  North Carolina's green building regulations focus on two specific green building strategies -- energy efficiency and water usage -- instead of requiring certification through a rating system.  This seems like a good idea to me. 

3.  If I am going to describe techniques to reduce water usage, I should be able to list more than just "low flow urinals."  Furthermore, I should not emphasize the awkwardness by repeating the word "urinal" and then pausing.  Thanks to everyone for pointing this out to me.

4.  Darren Prum described a ridiculous scenario in Nevada surrounding a property tax abatement that went awry.  Essentially, the property tax abatement that was provided to projects achieving LEED certification almost bankrupted the state. 

5.  There is a Property Tax Reduction regulation in Virginia for projects that achieve LEED certification or certification under another energy preferred standard.  You will definitely be hearing more about this at Green Building Law Update. 

Green Building Law Update will be looking at these issues in more depth in future posts.  Thanks to all of the symposium participants for their hard work and important ideas.

Related Links: 

• "It's Not Easy Building Green" homepage (W&M)
• "It's Not Easy Building Green" live blog (W&M)
• "It's Not Easy Building Green" twitter discussion (hashtags.org)

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I hope you survived the dramatic cliffhanger from Monday.  Now, time to answer the question, how do Virginia cities and counties regulate green building if they cannot adopt a building code? 

Such a dramatic pause for such a mundane answer:  zoning ordinances. 

The Virginia code specifically delegates to the municipalities the right to create zoning ordinances:

“The planning commission of each locality may, and at the direction of the governing body shall, prepare a proposed zoning ordinance including . . . a text setting forth the regulations applying in each district.”

Under the Dillon Rule, the state creates the building code at the state level but cities and counties can create zoning ordinances at the local level. 
Local governments have recognized the opportunity to regulate green building through zoning ordinances.  You may remember this great quote from a previous post:

“Arlington County is deliberately pushing the limits of state law to insist on green standards for development. . . . Arlington pioneered green building standards through its planning and zoning . . . process.”

Next week, we will examine Arlington County's green building regulations.  In the meantime, I have something very special for Friday.

Related links: 

• Virginia Code 15.2-2285
• Going Green (Va. Lawyers Weekly) 

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This past weekend, I spent a lot of time preparing a slideshow for the William & Mary Environmental Law & Policy Review Symposium, "It's Not Easy Being Green."  As you may recall, I will be presenting on green building regulations in Virginia.  Guess what we are going to discuss on Green Building Law Update this week?  That's right, green building regulations in Virginia. 

Hold on, stay with me. Virginia is actually a very interesting state for developing green building regulations. 

As you may recall, in the past, a reader asked how a Virginia city or county can regulate green building with the Dillon Rule in place.  The Dillon Rule essentially says this: 

"Municipal corporations have only those powers that are expressly granted . . . ." 

“The Board is hereby directed and empowered to adopt and promulgate a Uniform Statewide Building Code. Such building code shall supersede the building codes and regulations of the counties [and] municipalities . . . .”

• Have a Beer With Green Building Law Update (GBLU)
• Dillon Rule Hampers Green Building Efforts (GBLU)
• The Rules of Statutory Construction (Virginia1774)
• Virginia Code 36-98
• Arlington Green Building

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Today, we bring you a first on Green Building Law Update:  my first radio interview. 

Vik Duggal, over at Konstructr, was kind enough to invite me to be a guest on his KCast interview series.  Konstructr is basically Facebook for the construction industry. 

Some of the topics we discuss include green building attorneys, President Obama's proposed economic recovery package, Twitter and Washington D.C.'s Green Building Act. 

There is one correction I need to make from the interview.  Despite what Vik says, I do not have a "LEED AP" tattoo (or any tattoo for that matter).  Enjoy and please send me your suggestions for future radio interviews! 
 

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Back in October of 2008, in the midst of the economic turmoil, Green Building Law Update wrote that governments should reconsider requiring green building certification for projects.  With the deepening economic recession, some governments are now supporting green building projects while specifically not requiring certification. 

A recent New York Times article highlighted green building developments in Westchester County.  Interestingly, one city is not requiring LEED certification due to the additional costs while another is pushing forward a code requiring LEED certification: 

Building green in the county does not always mean building to LEED certification standards. Some local governments, like New Rochelle’s and the county Department of Public Works, have committed to green building in principle but are not going for LEED sign-off because of extra costs of hiring consultants and paying certification fees.

“We are requiring all of our staff and consultants to provide us with a listing of options for the different levels of certification, and then we are analyzing the costs,” said Ralph L. Butler, commissioner of public works for the county . . . .

Reese Berman, the supervisor of the Town of North Castle . . . is working on green guidance for local governments.

“It’s hard when development is slow for towns to make this kind of legislation,” said Ms. Berman, whose town has had to shelve plans for a new highway garage with solar panels. “Unless there are really big incentives from the state or federal government, we are not going to see the kind of green initiatives we were hoping to see.”

The article also highlights Yonkers, New York, which has "drafted the most aggressive green building standards in Westchester."  In the coming months, the Yonkers City Council is expected to pass a green building code that will require most new construction comply with LEED standards.  

On January 30 and 31, I will be sitting on a green building law panel to discuss government green building regulations.  Which city do you think is crafting more appropriate green building regulation: New Rochelle, which is pushing green building projects without the certification or Yonkers, which is pushing a green building code requiring certification? 

Related Links:

• Green Building Trend Picks Up Pace in County (NY Times)
• A Week of Epiphanies: I Don't Mean to Diminish This But. . . (GBLU)

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I like categories.  I like to categorize ideas, issues and thoughts in order to develop my understanding.  The same is true for green building law; I like to think of this emerging practice in terms of categories.

The other day I was asked "what is green building law?" by an environmental attorney.  I had never really been asked that question before so I reverted to my categories.  This is what I told the environmental attorney, almost word for word:

Green building law has both front-end and back-end components.  At the front end, you have the contract.  Additionally, you have to deal with financing, land use and real estate legal issues.

At the back end, green building law deals with potential disputes.  These potential disputes fall into one of three categories:  

(1) Certification - Disputes arise from green building certification when a project fails to achieve certification.  Which party will be responsible for the failed certification?

(2) Regulations - Regulations refer to those green building regulations that require or incentivize green building development.  Failure to comply with these regulations can result in green building litigation.

(3) Green building strategies -  Specific components of a green building  that can result in litigation.  The example I give is a green roof that leaks.  Who will be responsible for the leaking green roof?

Do these categories properly define green building law?  What am I forgetting?  Most importantly, do you have a better understanding of what a green building attorney can do for your business?  

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"Green" was the buzz word in 2008.  In 2009, Green Building Law Update predicts that green buzz words will become more nuanced and the focus will be on "energy efficiency," "retrofits," and "existing buildings." 

I don't mind making this prediction because it is not much of a stretch.  There are three factors that will contribute to the popularity of retrofitting existing buildings to improve energy efficiency. 

First, as we have been discussing all week, President-Elect Obama is pushing a large stimulus package aimed at, in part, improving the energy efficiency of existing buildings and homes.  Yesterday, President-Elect Obama again stated his plan "to modernize 75 percent of federal buildings and improve energy efficiency in 2 million homes to save consumers billions of dollars on energy bills."

The second factor that will contribute to increased popularity for retrofitting current building stock is a slowdown in new building project developments.  At this point, we have all heard the dire warnings of a construction slowdown.  This construction slowdown is due, in part, to tightened lending options.  We also know that tenants are now demanding green buildings.  The result will be that building owners will look to "retrofit" their existing buildings so as to offer more green building options. 

Finally, climate legislation in the form of cap-and-trade is coming.  Early investments now to reduce energy use through retrofits will pay off for big businesses. 

What do you think?  Are my predictions off?  What is your one prediction for the green building industry in 2009?   

Related Links:

• Obama's Green Energy Plans Build Hopes, Skepticism (Reuters UK)
• Construction Slowdown Hits Architects (BizJournal)
• Construction Slowdown Still to Come (Wall Street Journal)
• Congress to Delay Action on Cap-and-Trade (Wall Street Journal)
• A Very Detailed Green Stimulus Proposal (GBLU)

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Update:  For a rundown of green building provisions in the stimulus pacakge, see this post.

On Monday, we highlighted some green building strategies that might be incorporated in the Obama Administration's proposed stimulus program.  The Alliance to Save Energy, Edison Electric Institute, Energy Future Coalition and the Natural Resources Defense Council (NRDC) recently published a comprehensive Energy Efficiency Initiative to be included in the proposed stimulus plan.  You should read the letter yourself but here is a good summary from NRDC's Peter Lehner:

The proposal we put together would invest approximately $33 billion for greater energy efficiency. . . . One of our primary recommendations is to make grants available to states and local governments giving them a huge incentive to increase efficiency. Under this program, states would provide funding under the grants program to entities such as utilities, cooperatives, energy service companies and school districts.

The grants would fall into the following broad categories: home energy efficiency retrofits, retrofits of public buildings, commercial building efficiency retrofits and efficiency programs matching fund. 

The Initiative's plan to allocate the state grants is particularly intriguing.  The first half of the funding would be allocated without conditions.  The second half of the funding would be tied to, in part, a state adopting and implementing more stringent energy building codes: 2009 IECC (for residential buildings) and the ASHRAE Standard 90.1-2007 (for commercial buildings).

If the stimulus package includes any or all of these proposals, the impacts on the green building and construction industry would be enormous.  In a few short years, we would simultaneously see huge government investments in green building strategies to improve energy efficiency while states simultaneously adopt building codes that will force private projects to include new green building techniques and technologies. 

If you are in the construction or green building industry, you better pay attention to the details of the final stimulus package. 

Related Links: 

• The Stimulus:  "LEEDS"ing the Way (GBLU)
• The Stimulus:  Now for the Hard Part (GBLU)
• The Stimulus:  Green Building Provisions (GBLU)
• NRDC and Utilities Agree:  Efficiency Works (NRDC Switchboard)
• Big Business Support Green Stimulus Package (GBLU)

Photo:  Kimberlyfaye

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Update:  For a rundown of green building provisions in the stimulus pacakge, see this post.

Over the weekend, news broke that the massive economic stimulus package will not be ready for President-Elect Barack Obama to sign on day one. As you may recall, President-Elect Obama had previously indicated that the stimulus package would include support for green building strategies.

While it was not previously clear what green building strategies were to be included, a December 24, 2008 letter from the United States Climate Action Partnership (USCAP), a business-environmental coalition arguing for mandatory global warming legislation, detailed what it believed should be included as part of the package:

It is possible to move fast and make investments in energy efficiency that can immediately put people to work on transit projects and existing building retrofits. These include weatherization, insulation, HVAC upgrades, and use of waste heat in industrial processes and facilities.

Rural and urban homes and businesses alike can take advantage of renewable technologies such as solar photovoltaic systems, hot water heaters or small wind turbines, and communities can benefit from development of local renewable energy resources.

This letter was signed by CEOs of some of the biggest corporations in the energy industry:

Alcoa
The Dow Chemical Company
Duke Energy
DuPont
General Electric
NRG Energy, Inc.
PG&E Corporation
PNM Resources
Siemens Corporation

With much of the energy industry and the President-Elect supporting a stimulus package that invests in energy efficiency strategies, we are likely to see an influx of capital for green building projects.

How is your business preparing for these new construction opportunities? 

Related Links: 

• The Stimulus:  "LEEDS"ing the Way (GBLU)
• The Stimulus:  Now for the Hard Part (GBLU)
• The Stimulus:  Green Building Provisions (GBLU)
• Stimulus Bill Faces Delay to Win Support (USA Today)
• The Political Winds are Changing: Part II (GBLU)

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On Wednesday, we highlighted the Bush Administration's recent decision to order the Office of Management and Budget (OMB) to not adopt regulations that would have improved energy efficiency in all federal buildings.  This decision is in stark contrast to the political platform and green building policies being pushed by President-Elect Obama. 

If you may recall, back in 2008, Green Building Law Update highlighted the green building political platforms of both President-Elect Obama and Senator John McCain.  Among the green building proposals, both Obama and McCain supported "greening" the federal government by applying a higher efficiency standard to government buildings.  While we can not be certain what an Obama Administration would have done, the Bush Administration's decision to kill the federal building energy efficiency regulation contrasts sharply with Obama's platform. 

Even more telling, Obama has emphasized green building policies as part of a massive federal stimulus package that is likely to be voted on as soon as Congress returns in January: 

Roughly $350 billion would be invested to rebuild roads and bridges, modernize schools and help hospitals and doctors switch to computerized patient records. That category also would include projects aimed at improving energy efficiency, such as weatherizing buildings, as well as aid to the poor through expanded unemployment and food-stamp benefits.

As one of his first acts, President-Elect Obama plans to use $350 billion to, in part, improve energy efficiency in buildings and modernize schools.  Improved energy efficiency in buildings and modernizing schools will likely require green building strategies.  The political winds have most definitely shifted in favor of green building policies. 

If you are looking for green building projects, make sure you pay attention to the upcoming federal stimulus package.  We will continue to keep you appraised here at Green Building Law Update. 

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As we head towards the finish line of 2008, we turn our eyes towards 2009 and what lies ahead for green building.  The next two posts at Green Building Law Update will highlight the shift in political support for green building policies that will soon occur. 

In order to understand the shift, we must start with the current political support, or lack thereof, for green building policies.  Heading into the New Year, the Bush Administration has quietly been passing and killing regulations through the Office of Management and Budget (OMB).  One such regulation that the Bush Administration refused to adopt would have improved energy efficiency in federal buildings:

On Nov. 19, the OMB ordered the Energy Department to kill new regulations that would have forced the federal government to buy more-energy-efficient lights, appliances, and heating and cooling systems. Daniel J. Weiss, climate strategy director at the Center for American Progress Action Fund, called that retreat from a 2005 requirement "unbelievable."

Notably, 2005 energy efficiency requirements were passed by a Republican Congress.  According to Department spokeswoman Jennifer Scoggins, the energy efficiency regulations may be issued before or during the next administration.

As the economic downturn continues into 2009, construction players must seize all opportunities for new projects.  On Friday, we will discuss the shift in support for green building policies that will occur with the incoming Obama Administration and new business opportunities that result.

Related Links: 

• At the Last Minute, A Raft of Rules (Wash. Post)

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Here at Green Building Law Update, sometimes we wonder if we are just talking to our parents and significant other.  Then we get a comment or a great email from one of our readers and we realize someone is actually paying attention.  With that said, what happened this past week in the green building industry astounded and amazed Green Building Law Update.  

Earlier in the week, your humble author presented a seminar “Green Building Law from a Surety’s Perspective” to a client.  Just prior to the seminar, an article was published in the Washington Business Journal that highlighted the D.C. Green Building Act of 2006 performance bond requirement.  The first few paragraphs were sent to me but I didn’t have time to review the full article before the presentation. 

You may recall that this performance bond requirement drew the ire of the Surety and Fidelity Association of America (SFAA) and the National Association of Surety Bond Producers (NASBP) and Green Building Law Update.  When I first read the performance bond requirement, I literally gasped out loud and realized the green building industry may have some serious legal problems in the very near future.  Basically, the D.C. Council was demanding an insurance instrument that didn’t exist.

During the presentation to the surety client this past week, I highlighted the D.C. Green Building Act performance bond requirement as an enforcement regulation that was going to cause the surety industry problems.  After the presentation, I returned to my office and attempted to unbury myself from hundreds of emails.  With time on my hands, I opened the full version of the Washington Business Journal article and, once again, gasped out loud when I read the following paragraph:

Both trade groups, as well as the Surety and Fidelity Association of America, have met with D.C. officials to air their concerns, one of the first challenges to legislation that is among the first of its kind nationwide.

Alan Heymann, a spokesman for the D.C. Department of the Environment, said his agency has formed a working group with the Department of Consumer and Regulatory Affairs to address the surety industry’s concerns. Both agencies are tasked with implementing parts of the act.

Green Building Law Update is not taking credit for the D.C. Council’s reconsideration of the green building performance bond requirement.  But after writing numerous articles, posts and having discussions with the D.C. Council, I would like to think I played some small part in effecting change. 

Congratulations to the D.C. Council for taking steps to remedy what could have been a problematic regulation.  Congratulations to the SFAA and NASBP for pointing out this problematic provision.  Congratulations to the green building attorneys writing about these issues and helping the green building industry avoid legal problems. 

Of course, there are going to be more green building legal problems.  Green Building Law Update is excited about discussing these issues in 2009 and, hopefully, effecting more change.  

Related Links: 

• Green Bond Coming to a City Near You (GBLU)
• Surety groups fear risks in D.C. green building act (Wash. Bus. Journal)
• What's Your Green Construction Strategy? (GBLU Article)
• Surety Industry Continues to Critique (GRELJ)
• Will the surety industry kill Washington's green building law? (GBLB)

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Green Building Law Update came across an interesting lawsuit in Texas challenging a green cement regulation.  First, here's a little background on green cement regulations: 

Green cement resolutions put pressure on wet kiln operators to either update their smog-causing pollution controls to the level of dry kilns, or replace their wet kilns with new dry ones. They do this by incorporating state emissions standards as specs in bids for cement purchasing. These specs favor more aggressive pollution controls.
 

Late in the afternoon on the day before Thanksgiving, lawyers for Kansas City-based Ash Grove Cement filed suit in federal court against the cities of Dallas, Ft. Worth, Arlington, Plano, The Dallas County School District and Tarrant County for adopting “green cement” resolutions that favor modern, less polluting dry kilns over older, dirtier wet kilns - like the three the company operates at its 43-year-old Midlothian plant, south of Dallas.

 

“This is not a case about air quality; rather, it is about whether the defendants, however well intentioned but misguided their goals might be, may ignore laws they do not wish to follow, may pass resolutions which are unfair, unwise and unlawful, and may take property away from Ash Grove in an arbitrary and capricious manner,” Ash Grove’s complaint states.

• Group Condemns Ash Grove Lawsuit Against Texas Green Cement Cities, Predicts Backlash (Dallas Green Zine)
• Ash Grove sues over Texas green cement resolutions (KC Star)

 Credit:  Thanks to Rich Cartlidge for originally sending me this story. 

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Last week, Green Building Law Update highlighted Portland's innovative green building regulation that includes a "Feebate" system to encourage green building development.  According to this OregonLive article, City Commissioner Dan Saltzman unveiled a previous version of the green building program nearly one year ago at the USGBC's Greenbuild event in Chicago.  The reception in Portland to the previously proposed policy was not good: 

Upon returning home, however, a firestorm of resistance singed the commissioner and nearly torched the entire policy. Saltzman retreated, forming committees -- adding the Realtors and homebuilders who were left out of initial discussions -- to rework the policy.  

The final Portland green building program removed regulations for owners of existing homes.  Despite the removal of residential requirements, opposition still remains: 

The policy has already laid bare a rift among the larger Portland real estate players, mirroring a division apparent nationwide. The nation's biggest commercial developers have caught onto the green-building trend and often brag about their energy efficiency strides and certification plaques. . . .  

But Earth-friendly standards for homebuilders have been slower to develop. Certification programs are more varied, and the residential industry remains hostile to government requirements -- even if the rules promise rebates for compliance.

Dave Nielsen, chief executive officer of the Home Builders Association of Metropolitan Portland, said Saltzman is rushing to impose new rules without assessing their potential impact. Buyers of new homes might or might not recoup the higher price they pay for energy efficiency measures, Nielsen said.

"They have no clue in terms of what the costs are to do this and what the value will be, to the consumer or the value of the home," Nielsen said. "They're just trying to be first to something, and it's crazy."

Based on Mr. Saltzman's quotes, residential developers are concerned about the additional costs associated with "green" homes.  As suggested by the CoStar Group Study published in early 2008, commercial green building projects result in increased profits and sales.  The residential "green" market has not developed to the extent of the commercial "green" market.  As a result, governments wishing to create a market for "green" residential projects should create incentives for green home developers.  Whether Portland's "Feebate" is the proper incentive structure for such a program remains to be seen. 

Related Links: 

• Saltzman offers scaled-back green building policy (OregonLive.com)
• Portland's Battle To Legislate Green Building (Green Building Law Blog)
• A Tale of Two Cities: Portland's Feebate (GBLU)

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Continuing our discussion of topics from Greenbuild, we now move to Los Angeles’ green building regulation.  We have already highlighted Portland’s innovative Feebate enforcement mechanism.  Los Angeles has created a very different enforcement mechanism that, frankly, may cause problems. 

Under Los Angeles’ Green Building Program Standard of Sustainability, projects meeting certain size requirements must:  (1) include a LEED AP on the project and (2) demonstrate that the project has met the intent of the USGBC’s LEED certified level.  Importantly, Los Angeles’ Standard of Sustainability states that “formal certification by the USGBC is not required.” 

Los Angeles’ plan to enforce the Standard differs significantly from other regulatory schemes and includes the following steps:

1. Developers must submit plans and a preliminary LEED checklist to the Department of Building and Safety (DBS);
2. DBS will then refer an applicant that meets the sustainability requirements to the Department of City Planning for clearance; and
3. Every seventh project is then audited to ensure compliance with LEED certification.

The Standard never states the punishment if a project fails an audit.  Absent a sufficiently punitive fine for failed audits, owners may be willing to gamble that they will not be audited.  Furthermore, the Standard does not include any provision to ensure that green building strategies are incorporated into actual construction.  Owners can simply eliminate green building strategies after the design phase and avoid punishment. 

Which system do you prefer, Portland’s Feebate or Los Angeles’ Audits? 

Related Links: 

• Building A Green Los Angeles (PDF)
• A Tale of Two Cities: Portland's Feebate (GBLU)

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 Continuing our posts from GreenBuild, our next two posts will discuss two very different green building regulatory enforcement mechanisms from two very different cities.  The first city, Portland, has created a very innovative enforcement mechanism to enforce its stringent green building regulations. 

Portland is very similar to other cities in that they will require specific project to achieve varying LEED certification levels.  Portland's enforcement mechanism, however, is much different.  Called a "Feebate," Portland will require that some projects pay into a green building fund while other projects obtain rebates from the city.

Under the Feebate system, all new buildings built to code are assessed a fee.  If a project is built to LEED Silver, then the fee is waived and the owner obtains access to financing options.  Even better, if a project attains LEED Gold, the city writes the project owner a check! 

All money that is paid into the green building fund is used either for the incentives or to educate about green building.

Pretty neat, don't you think?  After the Holidays, Portland is coming out with its economic analysis of the plan, and I am looking forward to reviewing it with you. 

Photo Credit:  Scott_rtw

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Here at Green Building Law Update, we remain troubled by the disbanding of the proposed ASHRAE 189.1 green building code committee, but we have to point out one bright spot. 

As you may recall, last week we  discussed the merits of the “Proposed Standard 189: Standard for the Design of High-Performance Green Buildings Except Low-Rise Residential Buildings" and the disbanding of a committee that was to create the code, apparently due to pressures from industry groups.   After the committe was dissolved,  the USGBC voiced strong support for the green buiding code: 

Brendan Owens, vice president for LEED Technical Development at USGBC, told EBN that it was “very surprised at this action taken by ASHRAE,” adding that USGBC is trying to learn more about ASHRAE’s reasons.

 

“We want to make sure that this is the best path forward,” Owens said. Acknowledging the uncertainty about Standard 189, Owens noted that a minimum green building standard that can be incorporated into codes is “so fundamental to everything USGBC is about, we are very committed to making sure it happens.”

• Uncertain Future for ASHRAE Standard 189 (BuildingGreen)
• Industries Halt Proposed Green Code (GBLU)

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Last week, Green Building Law Update questioned whether governments should be requiring LEED certification through regulations and mandates.  Assuming governments should get out of the green building certification business, what then should governments do to support green construction strategies?  There are generally two options, one of which we will discuss today:  green building codes. 

Green building codes essentially incorporate green building strategies into construction codes.  By incorporating green building strategies into code, governments can not only mandate the strategies they deem most important but also avoid the costly and time-consuming certification process. 

Apparently, not everyone agrees with me.  Shari Shapiro first brought my attention to the fact that the committee constituting the “Proposed Standard 189: Standard for the Design of High-Performance Green Buildings Except Low-Rise Residential Buildings” recently disbanded.  Proposed Standard 189-P was supposed to serve as a minimum green building code. 

A committee composed of members from ASHRAE, the USGBC and the Illuminating Engineering Society of North America (IES) had been put together in 2006 to work on the standard.  But on October 14, 2008, the committee was suddenly disbanded and the reasons remain unclear:   

Several committee members discussed the move with EBN, all of them speaking off the record, either because they were unauthorized to speak by the organizations they work for, or did not want to jeopardize their chances to rejoin the committee.

Discussing resistance from various industry groups, including steel, gas and utilities, wood, and building owner interests, one committee member said, “We must have been doing a good job.” While those trade associations had specific complaints in some cases, in others they were unsupportive of ASHRAE’s involvement, as a mechanical engineering association, in a broad green building standard.

There are many nuances to creating a green building code, which we will discuss in future posts.  Managing all of the associated parties' interests is one clear impediment to proposed green building codes. 

Related Links: 

• A Week of Epiphanies:  I Don't Mean to Diminish This But . . . (GBLU)
• The Death of ASHRAE 189? (Green Building Law)
• Uncertain Future for ASHRAE Standard 189 (BuildingGreen)

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On Tuesday, hopefully you are planning on exercising your civic duty to vote.  Here at Green Building Law Update, we try to remain non-partisan but we could not ignore this monumental election.  Thankfully, though, the candidates have made it easy for us.  Did you know that a vote for either Barack Obama or John McCain will be a vote for green building? 

It's true.  While the two candidates may hold substantially different opinions on other issues, both hold similar positions on green building energy efficiency standards:

"There really is a lot more alignment between the two platforms than folks may at first expect," says Jason Hartke, director of advocacy and public policy for the U.S. Green Building Council (USGBC). "They both do a very good job of emphasizing energy efficiency in their platforms."

• Obama and McCain both support increased energy efficiency standards. 

• Obama and McCain both want to "green" the federal government by applying a higher efficiency standard to government buildings. 

• Obama and McCain both believe that global warming is real and that a cap-and-trade program should be instituted. 

• Obama, McCain on Energy and the Environment (ecohome)
• Obama v. McCain -- No Real Contest on The Environment (Green Building Law)

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In continuing our week of epiphanies, here’s another one that struck us here at Green Building Law Update:  should governments consider getting out of the green building certification process? 

Yes, I realize this epiphany is out there and that practically every state has implemented some sort of green building regulation.  Over the past few months, we have profiled green building regulations in D.C., Virginia, Indiana and Maryland, to name a few.  But the more I think about these regulations, the more I become concerned that governments should not mandate certification, particularly of public projects.

Apparently, I am not the only one with these concerns.  For example, this article cites an Evanston, Illinois official that is concerned with certification cost:

At the meeting, Evanston residents spoke about the Green Building Ordinance, which was drafted by the Evanston Environment Board. . . .  Ald. Lionel Jean-Baptiste (2nd) cited the need to look closer at the cost of the ordinance.

"It's difficult in this current economic climate for anyone to build," he said. "We need to look more into the cost, and have greater discussion at the committee level." 

And here is another example, this time a LaCrosse, Wisconsin official voicing concern over the costs for green building certification:

“When I think about all this discussion about certification and not certification, I think we’re going to do all this good stuff so let’s just declare it a green building and go home,” Supervisor John Medinger said during the Law Enforcement Center Construction Committee meeting this week. “We say it’s a green building. Who says it isn’t? I don’t mean to diminish this, but I’m trying to see what we’re going to get with this $161,000.”

With the state facing a $3 billion shortfall, Medinger said the county will take a hit and can’t afford to spend money that brings no return.

These officials represent a minority view that government’s should not mandate green building certification due to the associated costs.  But Mr. Medinger drives home the point:  what are governments getting out of certification? 

Green building certification is primarily a marketing tool used to sell a building.  Green building strategies can most definitely be incorporated without obtaining certification and the results can still be confirmed through commissioning.  What benefits are cities and states getting when their public buildings are deemed certified?

Related links: 

• Cost concerns may clash with green ordinance draft (Daily Northwestern)
• Several commissioners object to price tag for LEED certification (LaCrosse Tribune)
  
• Can state budgets support green building? (GBLU)

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Over the weekend, we here at Green Building Law Update had some green building epiphanies.  So let’s start with epiphany number one.  As I was driving into my law firm’s office in Tyson’s Corner on Saturday, I looked out at the construction and thought to myself, why am I not writing about that? 

This isn’t any regular construction I am referring to either.  The construction I see everyday is the beginning stages of the Tyson’s Land Use Task Force Recommendations.  While I have been perusing the Internet for green building stories, there is a green building story happening in my backyard! 

The first time I read about the Tyson’s Corner redevelopment project was in this post  from Kaid Benfield’s NRDC blog.  Kaid describes the current design of Tyson’s Corner:

an absolute mess of a place that would be hard-pressed to function worse environmentally or even as a place to navigate in a car.  You'd have to be suicidal to try it on foot. 

Kaid is right – I have worked in Tyson’s for three years and walked to lunch once.  Thankfully, the Tyson’s Land Use Task Force Recommendations are aiming to fix these problems by focusing on “smart growth.”  Smart growth generally is an urban planning and transportation theory that concentrates growth in the center of a city to avoid urban sprawl.  

Maybe you are wondering, what does this have to do with green building?  Next time we discuss the Tyson’s Corner redevelopment, we will look at the Task Force Recommendations, which include green building regulations.  

Related Links

• Retrofitting suburbia for the 21st century (Kaid Benfield)
• Smart Growth (Wikipedia)

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As part of our review of the economic downturn's effect on green building, on Monday we looked at private projects that have cut LEED certification due to associated costs.  Today, we move from private projects to public projects.  Despite this shift, the theme is the same:  the economic downturn will result in less public projects pursuing LEED certification.  Want proof?  In the same Gazette.Net article cited to on Monday, one Maryland public project has already abandoned LEED certification:

A Frederick County Public School project, the Earth and Space Science Lab at Lincoln Elementary in Frederick, also had registered for LEED certification. Directors withdrew from the process in the spring, realizing it could not meet the standards without incurring additional costs.

Gov. Martin O'Malley directed state agencies yesterday to look for budget cuts of up to 5 percent that could include layoffs or unpaid furloughs for state employees, as he seeks savings in this year's budget and prepares a spending plan for next year.  An economic downturn has cut tax collections, so O'Malley must make cuts for the fiscal year that began in July to keep the $14 billion operating budget in balance, as required by law.

One area where state agencies may seek budget cuts is through green building programs.  For example, the Maryland Green Buildings Tax Credit (you may remember this from the Shaw Development case) has yet to be renewed in 2008 and it seems unlikely to be renewed in the face of the state's huge deficit.  Additionally, Governor Martin O'Malley signed Maryland's High Performance Buidings Act on April 24, 2008, which requires construction or major renovation of public projects to achieve green building certification through LEED, Green Globes or an equivalent green building system unless a waiver is obtained.  If agencies are asked to cut 5 percent from their budgets, it's not a stretch to imagine agencies using  waivers to eliminate green building certification and the associated costs. 

Obviously, Maryland is not the only state with a major deficit that has now been hit by the economic downturn.  It will be interesting to see Maryland and other states manage the green building certification process in face of state deficits. 

Related Links: 

• Developers Cede LEED Label for Savings (Gazette.Net)
  
• State Budget Troubles Worsen (Center on Budget)
• O'Malley Calls for 5% Cuts in State Agencies' Budgets (Baltimore Sun)
• Maryland Green Buildings Tax Credit (Maryland Govt.)
• Maryland's High Performance Buildings Act (Maryland Govt.)

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Last week, Green Building Law Update wrote about the Dillon Rule and how it is thwarting Virginia cities’ green building regulations. Under the Dillon Rule, the Virginia legislature is empowered with passing building codes, thus preempting city building codes or building regulations.

As we detailed, Indiana also follows the Dillon Rule but was successful in passing a green building regulation. The regulation was actually an executive order passed by Governor Mitch Daniels requiring new state buildings to achieve green building certification. You may remember that Governor Tim Kaine passed a similar executive order in 2007 requiring the incorporation of green building strategies in public construction. So how are Virginia cities including green building regulations?

• Alexandria, Virginia has set a goal “to achieve LEED-Silver rating for all new City-owned facilities over 5,000 square feet.”

• Arlington County “encourages private developers to evaluate the environmental impacts of all site plan projects.”

Importantly, notice the language in these green building provisions. Virginia cities have recognized that green building regulations affecting private projects must be passed in the Virginia State Legislature and so they either set “goals” or “encourage” green building. But this doesn’t mean the Virginia cities aren’t testing the limits of the Dillon Rule:
 

Arlington County is deliberately pushing the limits of state law to insist on green standards for development. A decade ago, Arlington pioneered green building standards through its planning and zoning approval process.
 

Arlington County has created one of Green Building Law Update’s favorite green building incentive structures. Stay tuned to read more about it.

Related Articles: 

• Going Green (Virginia Lawyers Weekly) 

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To finish off the week at Green Building Law Update, we are going to attempt to answer another reader question with the help of all the readers out there. In a previous post, Anna MacLeod posted the following question: 

I need to find some DC-based architect, commercial building development companies, etc… Anyone who would be affected by the requirement described in the article below.

"Washington, D.C., was among the early cities to require privately owned buildings to meet LEED standards. Now, it is requiring the city government as well as private building owners to benchmark their buildings using the Energy Star Portfolio Manager tool and to submit performance data to the City, which will then publish it for the public.'

If anyone can help me by sending me any contacts or websites it would mean a lot to me.

I am glad Anna asked about this issue because I have been meaning to post on this topic. Back on July 15, 2008, the D.C. City Council unanimously passed The Clean and Affordable Energy Act of 2008.  Among the provisions in the Act is a requirement for Energy Star benchmarking:

Beginning in 2010, it would require commercial property owners to generate an Energy Star efficiency "score" for their buildings using free online tools provided by the Energy Star program. That score would be made available to the public by the District Department of the Environment (DDOE).

You may be asking yourself, what is the point of this benchmarking program? According to Cliff Majersik, the program director for the Institute for Market Transformation, the benchmarking program will create “a market-based demand for energy disclosure.” If the D.C. Government’s plan works, there will be increased demand for green buildings. In short, you might want to think twice about developing a non-green building in the District of Columbia. 

So can anyone out there help out Anna? If you are currently using the Energy Star benchmarking tool or The Clean and Affordable Energy Act of 2008 will affect you, please drop a note in the comment section below with more details and contact info for Anna. Thanks!  

Related Links:

• The Clean and Affordable Energy Act of 2008 (DC Council)
• In Washington, DC, Energy Star Benchmarking Law Arrives (CoStar Group)

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Now that our discussion of Southern Builders v. Shaw Development is over (whew!), Green Building Law Update is going to take the rest of the week to answer some reader questions.  The first question comes from Erica: 

How should a locality located in a "Dillon Rule" state, such as Virginia, go about establishing a mandatory green building program?

Good question Erica.  Lets get everyone on the same page first.  What exactly is the Dillon Rule?  The Dillon Rule is a peculiar rule that basically limits a city’s rulemaking ability so that the city can only make rules when expressly granted by the state: 

“This rule provides that municipal corporations have only those powers that are expressly granted, those necessarily or fairly implied from expressly granted powers, and those that are essential and indispensable. When a local ordinance exceeds the scope of this authority, the ordinance is invalid."

The Dillon Rule is upheld in Virginia, which means that cities are not allowed to create their own building codes.  Virginia Code section 36-98 states “the Board is hereby directed and empowered to adopt and promulgate a Uniform Statewide Building Code. Such building code shall supersede the building codes and regulations of the counties, municipalities and other political subdivisions and state agencies.”

What does this have to do with green building?  We have previously highlighted the Virginia legislature’s disagreement over green building regulation.  While the Virginia legislature continues to disagree as to the proper green building rating system, Virginia cities are watching cities all around them pass green building regulations.  

So how does a Virginia city get around the Dillon Rule so it can enact green building regulations?  My first instinct was building codes, but clearly that is not an option.  What other states use the Dillon Rule.  Indiana?  Indiana!  And Indiana recently imposed green building regulations!  How did that happen?  Stay tuned…

Related Links

• Virginia Debates Green Building (GBLU)
• Governor's Mansion Goes Green (GBLU)
• Going Green (Virginia Lawyers Weekly)

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Today we are wrapping up our discussion of Shaw Development v. Southern Builders, one of the first examples of major green building litigation.   On Monday we discussed the basic facts of the case; on Wednesday we looked at the contractual green building requirements between the two parties; and on Friday we looked at Shaw Development’s stated causes of action. We conclude our discussion today by looking at the damages alleged by Shaw Development. 

Parties that bring claims or lawsuits based on a green building project’s failure to achieve certification must also prove damages. Often, owners seek green building certification to obtain government incentives or comply with regulatory mandates. In Shaw Development’s counter-complaint, damages were based on the owner’s failure to obtain green building tax credits: 

Shaw Development demands judgment in its favor and against Southern Builders for . . . Six Hundred Thirty-Five Thousand Dollars ($635,000.00) in tax credits for failing to construct the Project in conformance with a (LEED) “Silver Certification . . . .”

The tax credits for which Shaw sought damages were part of a State of Maryland green building tax incentive program. Many cities throughout the country have enacted similar tax incentives to entice developers to build green. Failure to achieve anticipated incentives can result in litigation similar to this case. Additionally, many cities, including Washington, D.C., New York, Los Angeles and San Francisco, have adopted mandatory green building laws and codes that will require the incorporation of green building strategies into all construction projects. Failure to comply with green building laws and codes creates additional liability risks for contractors. 

As inexperienced parties undertake green building projects, unmet expectations will result in disputes and lawsuits. Parties must protect themselves from the start by clearly stating all parties’ understanding of the green building certification process and what is to be achieved. Furthermore, parties must fully understand the specific requirements of the green building incentives and mandates that apply in their locality. While Shaw Development v. Southern Builders was apparently settled without a trial, further green building litigation is just around the corner and is unlikely to be as easily settled.   Check back with Green Building Law Update as we continue to discuss how to mitigate your green building risks.   

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Way back on August 13, GBLU’s inaugural post focused on the impending green building litigation and factors that would cause the litigation.  One of the factors that was described focused on parties’ financial expectations:  “Parties undertaking green building projects for purely financial reasons will expect to make a profit.”  In order to make a profit from a green building, the project typically has to be certified.  Thus, it was anticipated that green building litigation would most likely occur when a project failed to achieve certification.  

Not surprisingly, we now have an example of green building litigation arising from this very scenario.  On February 16, 2007, Shaw Development, L.L.C. (Shaw Development) filed a counter-complaint against Southern Builders, Inc. (Southern Builders) in the Circuit Court of Somerset County, Maryland arising from, in part, the projects failure to achieve LEED Silver certification.  While the case never proceeded to trial, Shaw Development’s counter-complaint is instructive as to the future of green building litigation.  Our next three GBLU posts will look at the Shaw Development v. Southern Builders case in detail:  

•    Monday we will review the facts
•    Wednesday we will review the contract
•    Friday we will review the causes of action
•    Next Monday we will review the damages and provide some tips to avoid this type of litigation

The facts are similar to most construction projects.  Prior to the lawsuit, Shaw Development purchased property in Somerset County, Maryland and retained Southern Builders to construct a condominium project on the property.  In the counter-complaint, Shaw Development alleged, among other things, that Southern Builders failed to construct the condominium project in a good and workmanlike fashion and, as a result, the project did not achieve USGBC LEED Silver certification.

The contract between two parties is key to determining liability between two parties undertaking a green building project.  Check back Wednesday when we review the contract between Shaw Development and Southern Builders.  

Related LInks

• The Anatomy of America's First Green Building Litigation (gbNYC)
• The First LEED Lawsuit...Great.... (Real Life LEED)
• Open the Floodgates:  The Era of Green Building Litigation (Greener Buildings)

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Last week, we discussed the Virginia General Assembly’s attempts to pass green building legislation in 2008. Virginia Governor Tim Kaine was also forced to weigh in on his preferred green building rating system in 2008.  Previously, in 2007, Governor Kaine indicated his preference for the LEED rating system in Executive Order 48: 

“All agencies and institutions constructing state-owned facilities over 5,000 gross square feet shall be designed and constructed consistent with the U.S. Green Building Council’s LEED rating system (including the use of Virginia forest products with alternate certifications) or the United States Environmental Protection Agency/Department of Energy’s ‘Energy Star’ rating.”

The Governor’s original proposed budget in 2008 did not include green building provisions.  As part of the budget process, the Governor’s budget was sent to the General Assembly to undergo legislative amendments and the following provision, which includes Green Globes, was added:  “All new and renovated state owned-facilities . . . that are over 5,000 gross square feet shall be designed and constructed consistent with the . . . U.S. Green Building Councils LEED rating system or the Green Globes rating system.”  Governor Kaine vetoed the inclusion of Green Globes but the General Assembly overrode the veto. 

The debate over green building rating systems continues to play out in Virginia and other states across the country.  GBLU looks forward to monitoring the 2009 Virginia legislative session and further green building legislation.  Virginia’s choice of a green building rating system will have a significant impact on the Virginia cities due to a peculiar statewide rule, which we will discuss next week.

Related Articles: 

More Green Building Legislation May Be Imminent for Garden State (gbNYC)

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One of the more interesting debates in the green building industry relates to the LEED and Green Globes rating systems.  When parties or governments decide to regulate green building, they must choose between green building rating systems.  GBLU has discussed Washington, D.C.’s incorporation of the USGBC’s LEED rating system into its Green Building Act.  What rating system does D.C.’s neighbor, Virginia, prefer? 

During the 2008 legislative year, the Virginia General Assembly tried to decide which green building rating system is most appropriate for Virginia.  In the House of Delegates, Senators J. Chapman Peterson and Toddy Puller introduced bill, S.B. 447, the Green Building Act, on January 9, 2008.  As introduced, S.B. 447 required that departments, agencies and institutions “ensure” that construction of “state-owned buildings” 10,000 square feet or less “comply” with the LEED Silver standard.

After being introduced, S.B. 447 was then referred to the Committee on General Laws and Technology, where it emerged in a different form.  The Committee’s amendment to S.B. 447 eliminated the Division’s involvement and instead included an alternative green building rating system: “Green Building Design means . . . the USGBC’s LEED building rating system or the GBI’s Green Globes building rating system.”  The amended S.B. 447 passed in the Senate, 39-0, but died in the House of Delegates’ Committee on General Laws.

But this wasn’t the end of green building regulation in Virginia in 2008.  In a future post, we will discuss how Governor Tim Kaine was ensnared in this green building debate.  A similar debate is occurring in cities and states throughout the country and even at the federal level.  The winner of this important debate will shape the future of green building. 

Photo credit:  Ian Britton
 

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You may remember that in previous posts, GBLU warned that September was going to be a big month for green building regulations in Washington D.C. It was anticipated that the D.C. City Council would vote on new green building codes on September 16 but the codes were tabled to allow for more feedback from affected parties. But there was still significant green building regulations voted on yesterday in D.C.

Late Monday night, H.R. 6899, the Comprehensive American Energy Security and Consumer Protection Act, was passed by the House of Representatives by a vote of 236-189. The big story will be that an energy bill was passed that permits more oil drilling off U.S. Coasts. But as expected, the legislation also included green building mandates. 

Among these mandates is Title IV – Greater Energy Efficiency in Building Codes. This section requires the Secretary to update the national model building energy codes and standards at least every three years to achieve specific overall energy savings, compared to the 2006 IECC for residential building and ASHRAE Standard 90.1-2004. From prior discussions, you may remember ASHRAE 90.1-2004 is the energy standard used by the USGBC’s LEED rating system. 

But GBI’s Green Globes rating system also found its way into the legislation. Under Title VI – Green Resources for Energy Efficient Neighborhoods, the legislation described requirements for both residential and non-residential projects seeking HUD assistance. Among these requirements, to qualify for HUD assistance projects can comply with one of numerous green building standards:

1)      The national Green Communities criteria checklist

2)      The gold certification level for the LEED for New Construction rating system, the LEED for Homes rating system, or the LEED for Core and Shell rating system

3)      GBI’s Green Globes assessment and rating system; or

4)      The National Green Building Standard

It seems peculiar that this legislation would require LEED gold certification but not include a similar requirement for Green Globes. Like the LEED rating system, Green Globes awards “globes” for each level of certification. The equivalent of LEED gold certification would be achieving three globes through Green Globes. 

Word on Capitol Hill is that the Senate is likely to adopt a different version of energy legislation so it is unclear whether green building mandates will be included in the Senate’s version.   

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On Monday, we discussed the possibility of a federal green building mandate being voted on this week on Capitol Hill and what that green building mandate might look like. Yesterday, GBLU received a great tip regarding previous federal green building legislation that passed in the House of Representatives but not in the Senate. In 2007, H.R. 3221 was passed in the House of Representatives and included green building mandates covering residential, commercial and federal building efficiency.

This federal legislation would have set energy efficiency standards for buildings throughout the country. Notably, H.R. 3221 incorporated ASHRAE 90.1-2004 as the energy efficiency benchmark. As we discussed on Monday, ASHRAE 90.1-2004 is the benchmark standard incorporated in the USGBC’s LEED rating system, though this legislation did not refer to the LEED standards explicitly. Furthermore, H.R. 3221 included a rulemaking process that allows for regional adjustments to the green building mandates. As a commenter pointed out on Monday, regional adjustments to federal green building mandates would be necessary to account for the differing climate zones found in the United States.

Legislation could be could be offered up today or tomorrow by House Democrats that is likely to include green building mandates similar to those included in H.R. 3221. GBLU will provide further analysis of this federal legislation that will affect owners, contractors, designers, sureties and insurers across the country.

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One factor that has significantly increased demand for green building is government regulation that requires green building strategies. So far, GBLU has focused green building initiatives at the city level. While there has been some federal green building legislation, GBLU anticipated major federal green building legislation would emerge from Congress in 2009.  It now looks like federal green building mandates could be voted on before the 2008 presidential election ever occurs. 

As Congress returns to Capitol Hill today from the two parties’ conventions, one of the primary issues on the table is energy policy and offshore drilling.  A recent Greenwire article detailed how Democrats intend to offer a piece of legislation that includes energy-efficiency standards for buildings in order to counter the congressional Republicans demand for offshore drilling:

Top House Democrats say that shortly after Congress reconvenes, they will put on the floor a piece of legislation that will include an expansion of offshore drilling but also a renewable electricity mandate, energy-efficiency standards for buildings and oil industry tax provisions.

Under the USGBC’s LEED rating system, projects must satisfy a minimum energy performance by complying with provisions in ASHRAE 90.1-2004. The Democrats’ legislation could require compliance with ASHRAE 90.1-2004, or a similar standard, like the EPA’s Target Finder.  

GBLU was on Capitol Hill on Friday to discuss what additional Federal green building legislation might look like. The consensus was that Federal green building legislation would most likely come in the form of mandates for specific green building components. For example, Federal legislation could mandate the use of Energy Star compliant appliances. The list of possible green building mandates is long: insulation, certified wood and pervious paving are just a few. 

If you think of other potential green building mandates, please submit a comment below. GBLU would like to put together a list and discuss what each mandate could look like. 

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GBLU has previously mentioned that September is going to be a big month for green building regulations and the green building performance bond in Washington, D.C.  So far, we have highlighted D.C.’s Green Building Act performance bond requirement and the surety industry’s response. It now appears the Government of D.C. is forging ahead with the green building performance bond requirement. 

On April 25, 2008, D.C.’s Department of Consumer and Regulatory Affairs (DCRA) included new building codes in a proposed rule.  DCRA has since completed the rule making process and on June 26 submitted the Construction Code Supplement of 2008 to the full D.C. Council.  The Construction Code Supplement includes the following rules to enforce the Green Building Act’s green building performance bond requirement. 

1301.2.3 Prior to Preliminary Review, the applicant shall file any

documentation required . . . and post a performance bond (or letter of credit or escrow

account) pursuant to Section 6 of the Green Building Act, D.C. Official Code

§6-1451.05.

1301.2.4. Upon or before construction completion, the permit holder (whose

permit has been obtained pursuant to the Expedited Green Building Permit

Process) must apply to the Certifying Entity for “certification” of its 

compliance with the Green Building Act.

1301.2.5 If green building verification is not obtained in accordance with

the requirements of D.C. Official Code § 6-1451.05, all or part of the

performance bond shall be forfeited as provided in D.C. Official Code § 6-1451.05(g) and (h).

The Government of D.C. remains very serious about incorporating a green building performance bond requirement that guarantees compliance with the Green Building Act.  The City Council is set to vote on the green building codes in September 2008. The final vote will have a significant impact on the surety industry’s bonding of D.C. projects. 

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In a previous post, GBLU referenced problems with a green building performance bond requirement in Washington D.C.’s Green Building Act.  So what are the apparent problems with this green performance bond? 

On August 13, 2007,  the Surety and Fidelity Association of America and the National Association of Surety Bond Producers detailed the problems with the bond requirement, pointing out that the Act “includes bond requirements that, if not clarified significantly, may make sureties reticent to issue such bonds.”  The SFAA and NASBP outlined several perceived problems with the Green Building Act’s performance bond requirement, including:

•    The Act incorrectly uses the term “performance bond” as the bond described in the Act “seems to function more in the manner of a license or compliance bond, which typically guarantees compliance with a law or code.” A performance bond typically assures one party that another party will perform the contract in accordance with its terms and conditions.

•    The Act does not designate which party is to furnish the performance bond.  The letter argues that “the building owner or developer, as the originator of the building project that retains the design professional and contractor, hold the ultimate responsibility for whether the building achieves compliance with the Act’s requirements.” 

The SFAA and NASBP’s primary concern with the Act is that contractors and performance bonds are improperly suited for guaranteeing green building compliance.  The Government of D.C. so far has continued to incorporate the green performance bond in building codes and rules used to enforce the Green Building Act.  September 2008 is going to be a big month in D.C. for green building codes and the green performance bond.  GBLU will continue to keep you apprised.

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As part of GBLU’s monitoring of green building regulations and codes, GBLU will provide timely information regarding government green building programs that may be of interest to you.  Below is information about a Green Roof subsidy being offered by the Government of the District of Columbia, District Department of the Environment.  Please note, applications are due September 9th. 
   
D.C. plans to make major changes to the stormwater regulations in the near future that will encourage incorporation of green roof technology.  Subsidies such as this one are a good step to promote green roofs in advance of these stormwater regulation changes, which we will discuss in a later post.  Thanks to Scott Kowalski and Brian Cashmere for providing information regarding this subsidy. 
…

Green Roof Subsidy Grant Program 2008
Contact Info: Office 202-518-6195
email: nora@dcgreenworks.org

DDOE District Department of the Environment

The Green Roof Grant Program applies to:
• Extensive or intensive green roofs
• New roofs and roof retrofit
• Innovated green roof design
• Educational value of demonstration
• All Properties within the Combined
  Sewer Overflow Zone (CSO) are eligible
• Geographic and building use diversity
• Size of Projects with priority given to
  spaces larger then 3500 square feet
• Retrofits

The Green Roof Subsidy Program (the Program) is funded wholly, or in part by the Government of the District of Columbia, District Department of the Environment, Watershed Protection Division with the purpose of subsidizing and encouraging green roof projects in the District of Columbia within the Combined Sewer Overflow Zone.

The purpose of the project is to demonstrate greenroof technology, encourage its use and illustrate the feasibility of greenroofs to help manage storm water – to reduce excessive runoff and to improve water quality. The grants are intended to partially defray the additional costs of a greenroof. The subsidy will be in amounts that approximate up to $3.00 a square foot of the greenroof cost for each qualified building with a cap of $12,000 per property.

Applications are due September 9th.

For more information and to download an application go to www.DCGREENWORKS.org or http://web.mac.com/trees14/Site/About__Green_Roofs.html

MAIL APPLICATIONS TO DC GREENWORKS 3030 12TH STREET N.E. WASHINGTON, DC 20017
 

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As most individuals involved with green building probably know, green building is just one strategy to combat the overall global warming and carbon emissions issue.  Green building strategies, it is believed, reduce CO2 emissions, thus helping combat global warming.

Numerous cities, states, entities and individuals have pledged to become carbon neutral.  A pledge of carbon neutrality means that the entity pledges to “balance the amount of greenhouse gases it emits through industry and other human activities with the amount of greenhouse gases it eliminates.”  A recent article highlights a Chinese city, Rizhao, which has declared its intentions to become carbon neutral.  

So how exactly does a city become carbon neutral?  Not surprisingly, the push for carbon neutrality in Rizhao required changes to existing building codes and construction practices: 

“The first important measure was to popularize solar hot water," says Wang Shugang, chief of Rizhao's EPB. Nearly every building in Rizhao now supports dark arrays of tubing to heat the water, or grill-like units beneath the ubiquitous enclosed terraces of most apartments.

Obviously, not every building will voluntarily agree to install new “tubing and grill-like units” to deliver solar hot water.  Mandatory changes in construction practices to incorporate green building strategies require changes to existing building codes.  Cities throughout the United States are currently making similar, but less stringent green building changes to building codes.  

While changes to green building codes may be feasible in the United States, the second step undertaken by Rizhao seems less plausible:

The second important step, according to Wang, was to "shut down many small-size enterprises [that] are really high consumers of coal as well as use central heating. New enterprises don't need their own boilers."  Industries that shut down or moved as a result of the go-green effort include cement, papermaking and steel.

Could you imagine the constitutional challenges that would occur if a United States city attempted to re-locate high-polluting industries?  Based on these potential legal challenges, it may be some time before we see a United States city pledge carbon neutrality.

It appears that Rizhao has recognized some legal constraints on its push for carbon neutrality: 

Rizhao is the ninth biggest port in all of China, according to Fan, exporting seafood and other goods to Japan and South Korea. It's difficult to make such shipping carbon-neutral, he notes. "We can't do anything for those ships because they do not belong to us."

At some point, a United States city may pledge to become carbon neutral.  The relevant legal issues and challenges will set an important precedent for the construction industry.  

 

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As green building becomes more popular, new green building regulations continue to pop up in U.S. cities.  The Aspen Daily News recently highlighted proposed changes to the Aspen Commercial Building Codes that will incorporate very progressive green building strategies.  Among the green building strategies, the proposed codes will “require either a photovoltaic solar panel system [solar panels] or payment into a renewable energy fund to offset exterior features such as snowmelt systems and heated pools.”  The City Council’s proposed enforcement mechanism for the green building codes is particularly of interest.

In the article, Aspen’s chief building official describes the proposed building codes as “all carrot and no stick,” meaning that the codes will rely on incentives instead of penalties for enforcement.  For example, commercial projects will receive from the city “triple the credit for energy generated by the solar panels rather than through payments into the [renewable energy fund].”  Essentially, commercial projects can either invest in solar energy or pay three times as much into the solar energy fund.  Quite the incentive to invest in solar energy. 

The Aspen City Council made a major change to the proposed code by eliminating “a requirement that buildings larger than 25,000 square feet submit to an energy audit every five years, and that the results of that audit be used to apply credit or debit to a particular building’s energy target.”  Good decision, Aspen City Council.  Could you imagine trying to enforce this provision? 

Aspen’s chief building official stated that the city “can find no examples of other municipalities that have implemented a program that requires owners to pay if they do not meet efficiency targets.” I can think of one…

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    When people ask me about green building lawsuits and legal issues, I usually start with Washington D.C.'s Green Building Act of 2006. 
  
    The Green Building Act is a very progressive Act that requires both that private and public projects comply with specific green measures.  I have written more extensively about the Act in the article "What's Your Green Construction Strategy" available here. 

    The biggest problem with the Green Building Act is the green performance bond requirement.  When I read this performance bond requirement I literally gasped so I am going to post portions of it word-for-word.  Please note that "section 4" details green building requirements for privately-owned construction projects: 

    (b)  On or before January 1, 2012, all applicants for construction governed by section 4
shall provide a performance bond, which shall be due and payable prior to receipt of a certificate
of occupancy.

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

Did you gasp?  If not, make sure you catch my later posts detailing the potential problems with this green performance bond.