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

"Winter is coming."  

This is the common refrain in the popular book, Game of Thrones, in which kings vie to take over lands.  As I thought about the green building policy mess of 2012, I couldn't help but draw comparisons to Game of Thrones. 

This was supposed to be the year of the USGBC's new green building rating system, LEED 2012.  But somewhere along the way, the plan went awry and the USGBC had to retreat. 

In assessing the battlefield, I have concluded that the USGBC overextended itself, choosing to fight a two front war without the necessary resources. This is a common tactical mistake and one that has proven costly for the USGBC. Just how costly is yet to be seen. 

The Assault on Chemicals of Concern

Before being pulled, the proposed LEED 2012 rating system went through a lengthy, unexpected vetting process, culminating in a fourth draft.  One particular section of the fourth draft set the green building world on fire: 

New credit for avoidance of chemicals of concern – this credit encourages LEED project teams to specify materials that do not contain chemicals that are known to negatively impact human health (specifically in regards to cancer and reproductive toxicity).

New credit for Environmental Product Declarations - The new EPD credit encourages product manufacturers to engage in disclosure activities that provide specifiers with consistent and complete information about their products enabling specifiers to make more informed decisions.

The negative reaction to this credit was fast and furious. 

• More than 50 United States Congressman signed a letter voicing their concern "that the LEED rating system is becoming a tool to punish chemical companies and plastics makers."  
• Multiple chemical companies and the US Chamber of Congress formed the American High Performance Buildings Coalition to lobby against LEED 2012.

The timing of these lobbying efforts coincided with the GSA's release of a preliminary report  indicating that the Green Globes rating system was better suited for new federal construction.  While the report was not tied to the issue of chemicals in LEED 2012, it provided an opportunity for anti-LEED lobbying to push for a new federal green building rating system. 

With a pending final report from GSA this winter, and massive lobbying efforts against LEED at the federal level, don't be surprised if other rating systems are adopted by federal agencies going forward. 

The Wood Siege

The USGBC has also been stuck in a long standing siege with the wood industry. 

On the one side, you have two allies -- the USGBC and the Forest Stewardship Council (FSC).  The USGBC long ago selected FSC wood as the anointed certification for wood products.  On the other side is the non-FSC timber industry -- those wood providers that can't attain FSC certification.  This side prefers the Sustainable Forestry Initiative (SFI) certification.

In July 2011, it appeared the USGBC was willing to negotiate with SFI.  In a LEED Pilot Credit, the USGBC recognized SFI as one of four wood certifications.  

Then the USGBC shifted its tactics.  In the last version of LEED 2012 that was released this past year, the USGBC declared that "(n)ew wood products must be certified by the Forest Stewardship Council or better." 

The "Wood Wars" has left the USGBC bloodied.  In 2011, Congress passed a Department of Defense Reauthorization bill that effectively banned LEED Gold or Platinum certification.  One Senator indicated the LEED ban was in response to the USGBC's failure to adopt non-FSC wood certification. 

USGBC Retreats on LEED 2012

As the two battles on chemicals and wood have raged, the unthinkable happened: the USGBC had to retreat on its latest proposed version of its rating system, LEED 2012, before putting it up for a vote.  I had been tweeting for a number of weeks that things were looking grim for LEED 2012.  If you want to follow the drama, I highly recommend perusing the commentary at the LEED User forum.  

It's hard not to draw a correlation between the chemical industry's negative reaction to LEED 2012 and the USGBC's decision to pull it back.  USGBC CEO Rick Fedrizzi addressed this issue in an open letter to USGBC members:  "To be clear… this change is 100% in response to helping our stakeholders fully understand and embrace this next big step."  

Who Will Win the War?  

This winter, many decisions will be made that will determine the fate of the USGBC for years to come.

• Will the next proposed version of the LEED rating system include similar Chemicals of Concern and FSC-only credits? 
• What will be the GSA's final recommendations regarding green building rating systems? 
• How will the presidential and congressional elections impact green building policy? 

I hope everyone is ready for a long, interesting winter. 

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Someone recently asked me why I was baffled about the Department of Defense's decision to use both LEED and a green building code.  Here are two reasons: 

1.  The policy is a waste of taxpayer money.

2.  The policy unnecessarily increases risks for government contractors.

LEED + Green Building Code = Duplicative Costs

This concept is so logical to me that I have had trouble articulating it. 

The Department of Defense has proposed a green building code in order to streamline the process of applying for LEED certification. However, obtaining certification and complying with an overlapping green building code will result in duplicative costs, particularly on the administrative side. 

First, a contractor will have to review the green building code, ensure that it is complying with the code, and then submit documentation to the contracting officer to show compliance. 

Second, the contractor will have to review the LEED rating system, ensure that it is complying, and then submit separate documentation to the Green Building Certification Institute (GBCI) to apply for certification.  

Let's assume the best case scenario -- the green building code and LEED rating system requirements completely overlap (this will never happen).  The contractor will still have to compile separate documentation for a contracting officer and a GBCI reviewing authority.  And because the contracting officer and GBCI reviewing authority work independently, each individual will have separate questions, requests for clarifications and interpretations. 

Because the contractor will be working through two separate entities and submitting two sets of paperwork, the contractor will be completing twice as much work.  Twice as much work means the project will get more expensive. 

Two Interpretations Will Lead to Conflicts

It's human nature for two people to interpret the same clause two different ways.  This happens with LEED credits all the time.  When these differing interpretations occur, solutions can be worked out internally with GBCI.

But differing interpretations becomes a more risky proposition if the DoD simultaneously incorporates a green building code and LEED certification requirements in the same contract. 

On a typical DoD construction project, there is one contracting officer responsible for delivering a project on time, according to the contract and specifications.  The contracting officer has final authority to interpret and enforce the plans and specifications. 

Once the DoD institutes its green building code, a contracting officer will be responsible for interpreting and enforcing it. 

Simultaneously, a contractor working on a green building will also have to submit for LEED certification to the GBCI. 

You probably know where I am going with this.  The following scenarios will likely arise: 

• Example A - Government Contractor is hired to construct a building that complies with both LEED and the DoD green building code.  Both LEED and the code require installation of a particular bike rack.  The contractor installs a bike rack and submits for a LEED credit related during the design phase.  GBCI approves the credit.  At the end of the project, the contracting officer finds the contractor did not install the specified bike rack.  Does the Contractor lose its certification?  Can the Contractor point to the approval of the LEED credit to overrule the contracting officer?  Does the GBCI have inherent authority to interpret a government contract specification? 

Or worse: 

• Example B - Contractor completes a project that had to comply with the DoD green building code and get LEED certification.  A contracting officer finds the project was completed in accordance with all green building codes, including the installation of a bike rack.  Months later, GBCI finds that the contractor did not install the proper bike rack for LEED certification.  LEED certification is denied.  Who is right?  Did the Contractor breach its contract by not achieving LEED certification even though the contracting officer approved the bike rack?   

I don't know the answer to these questions.  Government contractors will face more risk if they have to comply with both a green building code and overlapping LEED certification.  There will be conflicting interpretations when contracting officers and GBCI reviewing authorities interpret the same requirements.

In short, this could get very messy. 

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In last week's post, I stated that the Army was abandoning LEED certification in lieu of a green building code based on ASHRAE 189.1.  But it is now clear to me that I misinterpreted the testimony of Dr. Dorothy Robyn, Deputy Under Secretary of Defense.

Instead, the Department of Defense is going to simultaneously require compliance with its green building code and with LEED certification. 

Confused?  So am I! 

First here's the statement from the DoD that suggested to me that LEED was being abandoned:

In the past, all new construction projects were required to meet the LEED Silver or an equivalent standard and/or to comply with the five principles of High Performance Sustainable Buildings. This year my office will issue a new construction code for high-performance, sustainable buildings, which will govern all new construction, major renovations and leased space acquisition. This new code, based heavily on ASHRAE 189.1, will accelerate DoD’s move toward efficient, sustainable facilities that cost less to own and operate, leave a smaller environmental footprint and improve employee productivity.

I assumed that this statement meant LEED certification was "in the past" and the new construction code would be used in the future. 

Apparently the DoD intends to use both the green building code and LEED certification simultaneously.  Paula Melton reported that according to (Dave) Foster in the Pentagon's Media Relations Division, the Army "will continue to seek LEED certification for our buildings built to that standard and expect to get LEED Silver or better at no additional cost."

I Don't Understand the Difference Between a Code and a Rating System

Before the DoD's announcement, I thought I understood the difference between a green building code and green building certification.  I understood a green building code to be a minimum standard that applied to 100 percent of buildings.  Green building certification, to me, was an aspirational standard that was beyond code and only applied to a subset of buildings. 

But the DoD's use of a green building code to achieve LEED certification is different.  The code will inform the contractor of how to get LEED certification; the certification then confirms the building was built to code.  The USGBC's Lane Burt explained the distinction like this: 

"The code tells you what to do, and LEED tells you how well you did and communicates that to the rest of the world." For building owners, LEED provides third-party validation that "you got what you paid for."

Going forward, federal contractors working with the DoD will have to ensure compliance with both a green building code and then apply for LEED certification. 

I would like to leave with you with a question.  What makes more sense?  

A.  A federal agency adopting a green building code to ensure that its projects are sustainable.

B.  A federal agency adopting a green building code to simplify the process of obtaining a third-party certification to ensure that its projects are sustainable. 

I am baffled. 

Photo Credit:  kalavinka

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Correction:  It is now clear to me that I misinterpreted the testimony of Dr. Dorothy Robyn, Deputy Under Secretary of Defense.  Instead, the Department of Defense is going to simultaneously require compliance with its green building code and with LEED certification.

Read more here:  Defense Department to Adopt Green Code and LEED

We have entered a new era of green building policy.  The Army is abandoning LEED certification.

On February 28, 2012, I reported, via a BuildingGreen article, that the Army had reiterated its commitment to LEED certification despite DoD re-authorization legislation that banned LEED Gold and Platinum certification.

Less than one month later, the Army has announced it is abandoning LEED certification. The Army is launching its own building code modeled off of ASHRAE 189.1 in lieu of pursuing LEED certification.

On March 7, 2012, Dr. Dorothy Robyn, Deputy Under Secretary of Defense (Installations and Environment) made the following statements to the House Appropriations Committee (PDF) Subcommittee on Military Construction, Veterans Affairs and Related Agencies:

In addition to retrofitting existing buildings, we are taking advantage of new construction to incorporate more energy-efficient designs, material and equipment into our inventory. In the past, all new construction projects were required to meet the LEED Silver or an equivalent standard and/or to comply with the five principles of High Performance Sustainable Buildings. This year my office will issue a new construction code for high-performance, sustainable buildings, which will govern all new construction, major renovations and leased space acquisition. This new code, based heavily on ASHRAE 189.1, will accelerate DoD’s move toward efficient, sustainable facilities that cost less to own and operate, leave a smaller environmental footprint and improve employee productivity.

The repercussions of this announcement will be widespread. 

For federal contractors, this is a game changer.  The LEED AP credential will be less valuable.  Past performance highlighting LEED certification will be less valuable, if not totally irrelevant.  Construction firms will have to learn to build to ASHRAE 189.1 instead.  

For federal agencies, this signals the beginning of the end for certifying federal buildings.  It's obvious that the Army is taking the DoD legislative LEED ban seriously. I can all but guarantee that the Navy and Air Force follow the Army's lead in some fashion.

Federal agencies have long been one of the most important supporters of LEED certification. The Navy was the first agency to adopt the certification. After the Army, Navy and Air Force stop pursuing LEED certification, how do you think other federal agencies will respond?

For the US Green Building Council, this could be a devastating blow.  Can the USGBC and LEED survive without the support of the federal government?  Because that is the new reality of green building policy.

Photo Credit:  Defence Images

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I apologize for the recent hiatus here at Green Building Law Update.  If you want to see what I have been up to, check out ClaimKit (www.claimkit.com). 

Now, on to green building legal news.

You may recall that in 2011, I published many, many articles on the Destiny USA project.  Here's a quick summary of the Destiny USA story: 

In 2007, the developer of a large-scale mall project received $228 million from a federal Green Bonds program in exchange for installing green building and renewable energy technologies.  The developer recently revealed the many of the green technologies will not be incorporated as promised. 

As reported by Rick Moriarty, the Internal Revenue Service (IRS) notified the Syracuse Industrial Development Agency on March 17 (2011) that it would be auditing the Green Bonds issued by the Agency to the Destiny USA developer. . . .

If the IRS were to determine that non-compliance occurred, then the Destiny USA project could have lost hundreds of millions of dollars in estimated tax breaks.  

One year later, the IRS has come out with a ruling on the Destiny USA's compliance with the Green Bonds program: 

The IRS notified the Syracuse Industrial Development Agency Thursday that it has closed its audit of the bonds “with no change to the position that interest received by the beneficial owners of the bonds is excludible from gross income” under federal tax code.

In other words, income received on the bonds will continue to be exempt from federal income taxes.

The ruling also permits the release of $2.3 million that the developer had been required to hold in reserve. If the IRS had found the project out of compliance with the terms of the green bond program, it could have seized the $2.3 million as a penalty.

The IRS ruling fascinates me.  By finding the Destiny USA project complied with the Green Bond requirements, the IRS essentially conceded that the Destiny USA project simply had to promise to deliver green technologies in exchange for the Green Bond financing.  In a February 2011 letter to the IRS, the Destiny USA developer argued that the legislation simply required a promise to deliver the technology:

On February 21, 2010, Syracuse Post-Dispatch reporter Rick Moriarty published a story that disclosed the contents of a draft letter addressed to the IRS by the Syracuse Industrial Development Agency.  In the letter, the Agency and developer first divulge that many of the green building and renewable energy features that were promised as part of the Green Bonds program will not be included in the completed project.  The letter blames the economy for changes to the project. 

...

The letter then moves to the crux of the compliance argument.  The Agency and developer assert that actual installation of renewable energy systems was not required.  Instead, the letter claims the developer was only required to make promises related to renewable energy and LEED certification in order to qualify for the bonds. They conclude that the financial benefits of the Green Bonds program and the forfeiture of the Reserve Account do not depend on actual achievement of the green building and renewable energy goals.

I think it's fair to say the Green Bonds legislation was fundamentally flawed.  I can't imagine that the legislators would have been satisfied with a simple "promise" to deliver green technology in exchange for hundreds of millions of dollars in tax breaks.  

And so ends the Destiny USA debacle. 

Photo Credit:  Ben Sheperd

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I had been hearing whispers that the Army planned to ignore the recently-enacted LEED ban, and now we have proof.

Back in December 2011, GBLU reported on legislation that banned the Department of Defense from pursuing LEED Gold or Platinum certification.  As reported by BuildingGreen, despite the new law, the Army is reiterating its commitment to LEED certification: 

In a call with reporters yesterday, [Katherine Hammack, assistant secretary], reiterated the Army's commitment to net-zero and LEED and gave an update about some of the progress that's already been made. "We're finding it does not cost more to design and construct to LEED" standards, Hammack said.

How can the Army continue to build to LEED Gold and Platinum? 

The BuildingGreen article does a great job explaining the loophole included in the legislation: 

The legislation in question does have a loophole for LEED Gold and Platinum projects as long as they don't cost more. As we reported at the time, "Exceptions may also be made without a special waiver if achieving Gold or Platinum 'imposes no additional cost'."

That loophole is big enough to blithely drive a tank through without bothering to show ID at the checkpoint. You apparently don't have to prove that it didn't cost more--or the Army is interpreting it that way, at any rate, while working closely with Secretary of Defense Leon Panetta on "educating" Congress.

After giving a green building legal presentation at the American Society of Military Engineers in Fort Leonard Wood last month, I had a chance to talk to contractors about the LEED ban.  They indicated they have been told to simply submit bids that indicate LEED Gold or Platinum costs the same as LEED Silver.  

Is this the end of the LEED ban?  The politics behind the LEED ban have nothing to do with fiscal issues, and everything to do with wood certification, at least according to one Congressman who voted for the legislation.  Do you think Congress will be receptive to the Army's use of the LEED loophole?  

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It has been a rough year for Congress.  The Republican and Democrats, the House and Senate -- no one can seem to agree. 

Unless we are talking about green buildings. 

In June, I reported on the Department of Defense Reauthorization bill that passed the House of Representatives.  In the legislation, the Department of Defense was banned from pursuing LEED Gold or Platinum certification. 

But would the Senate agree to a similar LEED ban?  

As reported by Lloyd Alter at Treehugger, the Senate passed the House bill with an Amendment that did not mention LEED.  Thus, the Senate passed the House's LEED ban for DoD projects.  You can review the messy details at Thomas.gov.   

Here is the actual text of the LEED ban: 

What is the intent behind the LEED ban?  Is Congress concerned about the financial outlay for LEED certification?  Or is Congress trying to reign in the design and construction of plush government buildings? 

In fact, the intent of the LEED ban stems from a much more contested issue -- the wood wars.   One member of Congress explained that he supported the DoD LEED ban because he believes LEED inaccurately evaluates wood products: 

Sen. Roger Wicker, R-Miss., helped lead the effort to place the language into the appropriations bill on grounds that the Pentagon needed to think more about building products' green qualities over the course of their entire life--from the moment a product's raw materials are extracted from the earth to when that product's components are tossed out or, even better, recycled. This notion, called "life-cycle analysis," has been gaining much momentum in the green building community. And on this front, some groups--including the Green Building Initiative program, a rival to USGBC's LEED--have embraced life-cycle analysis.

"As the Department of Defense works to improve energy efficiency, it is important that its building standards be based on sound science and incorporate due process in their development and implementation," Wicker said in a statement. "Standards should take into consideration the full life cycle of wood products, including the environmental benefits provided by our domestic reforestation programs. After completing this study, the Department of Defense should use credible standards that more accurately assess U.S. wood products."

After reading that quote, I couldn't help but think of the fateful vote this past year when USGBC members shot down a LEED credit that would have recognized alternative wood certifications.  Under the existing LEED rating system, points are only allocated for wood products certified by the Forest Stewardship Council (FSC).  

I don't think I can overstate how important this LEED ban is for future green building policy.  For example, the Navy was the first federal agency to adopt LEED certification when it did so in 2000.  The Navy will have to rewrite its current LEED policies (or submit waivers for every project): 

The Navy continues to aggressively pursue sustainable development; in May 2011, the Secretary of the Navy announced that all Department of the Navy Military Construction (MILCON) projects will be built to LEED Gold standards. For FY11 and FY12, applicable MILCON projects shall achieve sustainable design and construction equivalent to or above LEED Gold, with certain exceptions. For FY 13 and later, applicable MILCON projects will be required to achieve sustainable design and construction equivalent to, or above, LEED Gold.

The DoD could certainly decide to continue pursuing LEED Gold and Platinum certifications.  But will DoD officials fight for LEED certification while other military programs are facing substantial cuts?  This legislation will likely have a chilling effect not only on DoD green building projects but also on other federal agencies.  Congress has clearly expressed an intent to not support LEED Gold and Platinum projects.  Don't be surprised to see agencies adopting the International Green Construction Code (IgCC) in lieu of LEED certification. 

Do you think federal officials will be willing to ask for LEED waivers? 

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For much of 2011, my focus has been the Destiny USA project.  This should not come as a surprise to readers who waded through my thirteen posts on the topic.  I had planned to not write about the Destiny USA project again.  But then I came across a press release while I was at Greenbuild: 

Destiny USA in Syracuse Aims to be America's Largest LEED® Gold Certified Commercial Retail Project; More than 100 Tenant Retail Spaces to Also be Certified

As you may recall, the Destiny USA project received over $200 million in tax-free financing through the federal government's Green Bonds program.  In exchange for the financing, the developer of the project promised, among other things, to get LEED certification and rely on massive amounts of renewable energy. The IRS is now investigating the project because it appears the renewable energy systems were never installed.

I think it's safe to say the Green Bonds program was a failure.  But there is another policy issue that bothered me that I have not previously touched on. 

Did the US Green Building Council act appropriately in assisting the Destiny USA project? 

As I was reading the Destiny USA press release, one passage caught my eye: 

"This project is important to me and to USGBC," said Rick Fedrizzi, President, CEO & Founding Chair, U.S. Green Building Council.  "Not only is it in my backyard but it will also be a showcase in the community for what can be done with green building and LEED.  The visitors who walk through the Destiny USA doors every day will learn about the importance of green building and be able to see today's latest green building strategies in action."

For those looking for an argument that LEED should never be used in regulations or law, I present to you Exhibit A: 

• The Destiny USA project has to get LEED certification as a condition of a federal law.
• The USGBC is a non-profit entity responsible for the LEED rating system.
• The USGBC CEO states the project is important to him and his company because it is located in his hometown of Syracuse, New York.

If a federal official displayed this type of favoritism for a project, he would be removed.  Litigation would certainly ensue challenging the procurement process.

If LEED is going to be used in law, whether it be through incentives or mandates, then the USGBC and its CEO should not get to play favorites with projects.

Of course, this is not what is happening.  And this type of conflict of interest and favoritism could undermine the credibility of the LEED rating system and of the green building movement.  

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Over the past year, I've been lucky enough to get to know Jeremy Sigmon at the US Green Building Council. Jeremy works to educate the public and government officials about building codes. It has been a busy year for him with the introduction of the International Green Construction Code (IGCC). When Jeremy invited me to sit on a panel at Greenbuild in Toronto, I jumped at the opportunity.

Now you can listen to the audio of our Greenbuild panel.  The audio is available at the USGBC Knowledge Exchange and is the first option ("Greenbuild 2011 Specialty"). 

The panel created a moment of clarity for me and I went on a bit of a rant. Hope you enjoy the podcast and let me know if you any thoughts or questions.

I will also be participating in an upcoming green building legal webinar with the ABA Fidelity and Surety Law Committee. Surety bonds are often misunderstood within the green building industry. Hopefully we can provide some clarity on how surety bonds and green building projects intersect: 

The live audio webinar will take place next Thursday, December 8, 2011 from 1:00 pm - 2:30 pm Eastern. Entitled Keys to Managing Green Construction Risks, Liability and Litigation, this program will focus on the key concerns and solutions to the ever changing green construction culture. With the emergence of new green building codes, updates in green ratings systems, and new legal issues, green construction has become one of the newest areas of risk, liability and litigation for the construction industry. Our esteemed panel brings a wealth of practical experience in managing these risks in contracts, insurance and surety bond issues, including actual case studies from the field of failed green construction.

For more information on this program, click here.

I hope to hear from you on the webinar. 

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One of the very first green building legal conundrums may be resolved. 

The Washington Business Journal reported on October 31 that legislation will be introduced in Washington D.C. that will create an alternative to the much maligned LEED bond requirement in the D.C. Green Building Act of 2006. 

Under the Act, as currently written, as of January 1, 2012, all new construction greater than 50,000 square feet must obtain LEED certification.  Under the proposed legislation, developers will be permitted to make a binding "pledge" that LEED certification will be attained: 

Under the pledge route, if a new building fails to be certified LEED within two years of receiving its certificate of occupancy, the developer would be penalized $7.50 per square foot for buildings under 100,000 square feet, and $10 per square foot for buildings larger than 100,000 square feet.

Notably, the D.C. Council proposed to create an alternative enforcement mechanism instead of correcting the D.C. Green Building Act's many flaws.  Two prominent surety associations outlined these flaws in a white paper for the D.C. Government.  The associations suggested that LEED bonds would be made available if the legislation were to be corrected. 

For design professionals and contractors working in Washington D.C., the LEED Pledge will mean more onerous contract terms.  If developers can be penalized up to $3 million for not achieving LEED certification, these same developers will require guarantees of LEED certification from design professionals and contractors.  Don't be surprised to see penalty provisions in contracts that mirror the LEED pledge penalty. 

What do you think of the LEED Pledge?  

Photo credit: missrivs

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I have spent just over a year thinking about the International Green Construction Code (IgCC).  I know it has been one year because I received my first copy of the code at Greenbuild 2010.  My conclusion today about the code is no different than it was one year ago: 

The IgCC is unnecessarily confusing. 

Take, for instance, the IgCC's basic setup -- it's two codes in one.  Apparently, trying to figure out one set of building codes is not enough.  Within the IgCC, jurisdictions have the option of adopting either the IgCC code or ASHRAE 189.1.  Yes, I know that that sentence does not make sense, but it is correct. 

Other aspects of the IgCC create more confusion.  Not only does it include mandatory code provisions, but it also contains electives that can be selected by a jurisdiction and a project team.  Why would the code writers have included electives in a mandatory building code?  One theory I have heard is that the code writers wanted to mimic the elective credits in the LEED rating system.

I support the creation of a green building code.  Too many jurisdictions were mandating the LEED rating system as a de facto building code.  The IgCC was an attempt to fill that void with a system more appropriately suited to a building code.  However, the current version of the IgCC will create unnecessary confusion that will result in the following: 

• Building inspectors will struggle to learn to enforce a complicated building code that changes with each project depending on the electives selected.  This will result in inconsistent building code rulings.
• Design and construction professionals will have to comply with different building codes depending on the jurisdiction.  This means that professionals may have to learn more than one building code to do work in two adjacent communities. 
• Insurance and surety companies will struggle to ensure the risks associated with confusing green building codes.  I have already heard one large insurance company state that the adoption of green building codes will change the standard of care for design professionals going forward. 

What do you think of the International Green Construction Code?  

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Of course it could -- it already has.  But first lets recap the Solyndra saga. 

Solyndra is the solar panel manufacturer in California that qualified for a $535 million federally-backed loan.  Since receiving the loan, the price of solar panels has plummeted - good news - which has squeezed the margins of manufacturers like Solyndra.  The result:  two weeks ago, Solyndra announced bankruptcy.  And taxpayers are now responsible for repaying a half billion dollars. 

As I started thinking about the broader implications of the Solyndra collapse, I could not help but draw parallels to a similar federally-funded green project that has not panned out as expected:  Destiny USA.

Destiny USA was a proposed $20 billion mega-mall that was supposed "to be not only the biggest man-made structure on the planet but also the most environmentally friendly."  To support the project, the developer applied for a $2 billion Green Bonds program that Congress passed in 2004.  In 2007, the Destiny USA project qualified for $238 million in tax-free financing through the Green Bonds program.  In exchange, Destiny USA promised to redevelop a brownfield site, use massive amounts of renewable energy, and get LEED certification for 75 percent of the project. 

However, from the outset, there were groups questioning whether Destiny USA could satisfy the Green Bond requirements: 

[Ashok Gupta, senior energy economist at National Resources Defense Council] said he was impressed by the DestiNY team's enthusiasm for the strict guidelines, but wasn't sure the mall builders knew what they were in for. "I have a hard time believing that the DestiNY executives can deliver on their green promise," he said. "These are not developers who have ever attempted a green project, and it's not clear to me that they understand the extent of their commitment, financially and practically." Even developers who have worked on multiple green buildings would find a project of this scale to be extraordinarily challenging, he said.

It appears Gupta was right.  In February 2011, Rick Moriarty reported that the Destiny USA project would not deliver on its renewable energy promises.  Furthermore, it appears that the building itself will not be obtaining LEED certification.  Instead, the USGBC and Destiny USA developers announced that all retail units inside the mega-mall would seek LEED certification: 

“It’s never been done before,” said [USGBC CEO Rick] Fedrizzi as [Destiny USA developers] sat nearby. “When a major, major mall puts together a program creating leases requiring —requiring —tenants to be LEED-certified, it’s a major, monumental event.”

Coming back to our original question, the answer is yes, a Solyndra-type failure could happen to green building policy.  It already has.  And if the Green Bonds that funded the Destiny USA project were part of the American Recovery and Reinvestment Act, I can promise you it would be splashed on the front page of many newspapers.  

What do you think?

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Three weeks ago, Washington DC was hit by both an earthquake and a hurricane. But this was not the most shocking development during the week -- at least for me.  

Here's what shocked me the most: I learned there is a chance that LEED bonds could be available in our nation's capital.

On Wednesday, August 24, I attended a meeting of the DC Green Building Codes working group. The topic to be discussed was the DC Green Building Act's LEED bond requirement. For the uninitiated, the DC Green Building Act requires that all new construction in D.C. greater than 50,000 square feet be LEED certified starting January 1, 2012. Project developers have to post a bond guaranteeing the certification. The bonds range from 1 to 3 percent of a project's total cost, and can be as much as $3 million. 

I have been writing about the LEED bond requirement since the first week of this blog. I once compared LEED bonds to unicorns because they only existed in a fantasy world. 

LEED bonds do now exist and have been underwritten to support projects applying for the Arlington County, Virginia bonus density program. But it is unlikely that LEED bonds were going to be underwritten in Washington DC due to problems with the Green Building Act.  At the working group meeting, the SFAA and NASBP issued a white paper (PDF) summarizing the Act's many problem, including:

• "The regulations should state the developer must furnish the bond"
• "The regulations should provide for claims less than the full bond amount." 
• "Consider the relationship between the bond amount and the financial thresholds required by the surety. . . . We suggest that the regulation should set the maximum amount at a lower level that is sufficient to provide the necessary financial protection to the District." 
• "The regulations should set forth the appeals process by which a developer can appeal a USGBC determination.  Notice of appeal should be provided to surety." 

The last issue is of most interest to me.  The D.C. Department of the Environment (DDOE) has indicated that a party other than the US Green Building Council could determine compliance with LEED certification.  Whether these third-parties would be in the form of a government agency or a for-profit company remains to be seen.  But it would certainly be interesting to have another entity looking over the shoulder of the US Green Building Council. 

The DC government has less than four months to revise the Green Building Act to reflect the suggested changes in the SFAA and NASBP white paper.

Will DC make the necessary changes to the Green Building Act by January 1, 2012?

Photo credit: Cape Town Craig

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The International Green Construction Code (IGCC) is a model code for cities seeking to promote sustainable building practices through their building codes. The IGCC promotes transition from the current voluntary green construction certifications, like USGBC’s LEED, to mandatory green construction codes. As the most recent revisions of the IGCC are currently under review, Green Building Law Update hopes to promote awareness by examining some of the code sections.

Section 405.1 Where this section is indicated to be applicable in Table 302.1, uplight, light trespass, and glare shall be limited for all exterior lighting equipment as described in Sections 405.2 and 405.3.

405.3 Light trespass and glare. Where luminaires are mounted on buildings at locations that are within a distance to the lighting boundary, measured horizontally, that is equal to twice the height that the luminaire is mounted, such luminaires shall not exceed the applicable glare ratings specified in Table 406.3(1). All other exterior luminaires shall not exceed the applicable backlight and glare ratings specified in Table 406.3(2). 

In today's society, star gazing is unfortunately more likely to refer to looking at pictures in tabloids than to nights spent staring at a starlit sky. If one were to try star gazing near a city tonight, one would find significantly fewer visible stars than were visible a century ago. The visibility of the stars has significantly decreased in recent years due to excess artificial light commonly referred to as light pollution.

As a recent public art installation on the Hudson River seeks to illustrate, fewer constellations are visible in New York City due to the increasing amounts of excess light forming an orange haze above The City That Never Sleeps. The installation uses solar powered LED lights to "reflect" the constellations in the river that are no longer visible because of increased light pollution.

New York City is not alone in its problem of disappearing constellations. Those who go camping can attest to the vastly greater number of visible stars away from the city lights that have become a fixture of 21st century life. 

Light pollution is not only concerned with the obvious aesthetics and wasted energy. Multiple studies have been conducted to analyze the human health effects of light pollution. However, humans are not the only ones impacted. Animals, especially nocturnal ones, can be easily confused by the excess light and alter their behaviors. Have you ever had a bird chirping at an obnoxious hour of the night? You can blame the excess artificial light for your lost sleep.

Reducing light pollution is an often overlooked aspect of green building. Preventing light pollution does not equate to promoting a return to the Stone Age. Rather, green building professionals concerned with light pollution hope to encourage builders and lighting designers to focus lighting on areas where it is needed (the ground) and prevent wasted light from illuminating the sky. The IGCC advocates this approach through its light pollution control provisions which are provided as an elective code requirement.

The IGCC provides measurements limiting the amount of light fixtures can direct upward as well as the amount of light fixtures can emit horizontally that may "trespass" over property lines. These provisions also provide numerous exceptions for lighting monuments, roads, and athletic fields, among others. Despite the many exceptions and the elective nature of the light pollution control provisions, the IGCC provides a valuable framework for cities wanting to curtail the rapidly increasing rate of light pollution.

The next time you are star gazing, consider this quote by Ralph Waldo Emerson: "If the stars should appear but one night every thousand years, how man would marvel and stare."  The IGCC light pollution provisions aim to ensure this never becomes a reality.

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I can’t believe it has come to this.

We are just over four months away from January 1, 2012. On that date, the D.C. Green Building Act of 2006 requires that all new construction of non-residential buildings greater than 50,000 square feet be LEED certified. While there are many technical problems with the Green Buildling Act, the very premise of the law is fundamentally flawed. Thankfully, there is a very obvious solution to the Act’s flaws and technical deficiencies.

Why is the D.C. Green Building Act Fundamentally Flawed?

How can I make this claim? Because the D.C. Government does not understand what a LEED mandate actually entails.

I was recently reviewing materials published by the D.C. Department of the Environment (DDOE) regarding the Green Building Act (GBA). One slide caught my attention:

Do you see the problem with this slide? The DDOE views the Green Building Act LEED mandate as a “ceiling.” If the D.C. Government believes it has passed a ceiling then it truly does not understand how the Green Building Act and its LEED mandate will function.

A LEED mandate is not a ceiling. Rather, a LEED mandate is a floor. Because the GBA requires all buildings to obtain LEED certification, it functions as a quasi building code. In other words, LEED certification is a minimum requirement, the very definition of a so-called "floor."

Furthermore, the very premise of putting a "ceiling" on the green building industry is a terrible and nonsensical idea. A ceiling would actually prohibit buildings from being built to be greener or more efficient than LEED. The GBA requires buildings to meet LEED certification and yet there are numerous LEED Platinum buildings in Washington, D.C.. Does DDOE imagine that the GBA will serve as a cap and prevent future buildings from seeking LEED Gold or Platinum certification?

The Solution

The intent of the Green Building Act is to “raise the performance of the District's buildings so that they are environmentally sustainable, healthy, and more efficient to operate” and to “make the District of Columbia a national leader for green building.” The solution to the problems with the Green Building Act seems obvious to me and ensures the intent of the Act is satisfied.

First, the District needs more time to correct the many problems with the Green Building Act. The deadline for implementation of the LEED mandate should be extended to 2013 or later. It is very unlikely that all of the Green Building Act’s deficiencies, which will be discussed in a later post, can be corrected in the remaining four months.

Second, all of the D.C. government’s green building resources need to be applied to green building codes. The International Green Construction Code will be released sometime in 2012. D.C. can be one of the first cities to adopt a mandatory green building code if it starts reviewing IgCC public version 2.0 now. Adopting and implementing this code will raise the performance of District buildings and shine a spotlight on the city as the first to adopt the code.

For those of you interested in learning more about the D.C. Green Building Act, I would recommend that you attend a D.C. Green Codes Working Group meeting next Wednesday, August 24 at 9:30 am. The meeting is at 1350 Pennsylvania Avenue in Room 412. Email if you need more details -- chris@greenbuildinglawupdate.com.

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One of the great parts about Green Building Law Update is interacting with astute readers. One recent comment has forced me to rethink the proposed Department of Defense Reauthorization Bill ban on LEED certification.

In the comments to last week’s post, reader R. David Chambers asked an important question:

Chris -
your quoted section says '... LEED Gold or Platinum certification ...', which appears to NOT preclude LEED certification at a Certified or Silver Level - I have not read the bill, but it appears from your snippet that if the funds required to achieve Certified or Silver 'backed into' Gold or Platinum there would be '... no additional cost to DOD.'
am i missing something?

No, David, you are not missing anything. And your comment raises an important issue about the policy underlying this bill.

There are two primary reasons why I can see a politician opposing government spending on LEED certification:

1. LEED certification is primarily a marketing tool for green buildings. The federal government does not need to advertise its green buildings. I have always considered this a legitimate policy argument.

2. The government should not be investing in green buildings, period. To me, this argument has less merit. Many studies now find that a green building can be built for the same costs as a non-green building. And green buildings should result in cost-savings in energy and water useage.

If the drafters of the DoD reauthorization bill were concerned with the first policy issue -- the costs of certification -- then presumably they would have banned spending on all LEED certifications.

However, the DoD reauthorization bill only prohibits funding for LEED Gold or Platinum. Buildings that obtain LEED Gold or Platinum certification generally cost more than buildings that obtain Silver or Certified certification. It appears that the DoD reauthorization bill ban on LEED Gold or Platinum certification is based on the policy that the federal government should not be investing in advanced green buildings.

How do you interpret the DOD reauthorization bill ban on LEED Gold or Platinum certification?  Do you think the ban has merit? 

Photo credit: David Reeves

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The International Green Construction Code (IGCC) is a model code for cities seeking to promote sustainable building practices through their building codes. The IGCC promotes a transition from the current voluntary green construction certifications, like USGBC’s LEED, to mandatory green construction codes. As the most recent revisions of the IGCC are currently under review, Green Building Law Update hopes to promote awareness by examining some of the proposed code sections.

Section 601.1 - This chapter shall regulate the design, construction, commissioning and operation of buildings and building sites for the effective use of energy.

Section 601.2 - The intent of this code is to ensure the effective use of energy by building and building sites. This chapter is intended to provide flexibility to permit the use of innovative approaches and techniques to achieve the effective use of energy.

With the heat wave currently sweeping the country, the U.S. power grid is being put to the test. As electricity consumption continues to rise, the increased stress on the existing energy infrastructure has the potential to cause major energy challenges. This increased stress on our grid and sources of electricity makes designing energy efficient buildings increasingly important.  

In the IGCC, the International Code Council (ICC) addresses building energy efficiency by relying on its widely adopted International Energy Conservation Code (IECC). Various versions of the IECC have been adopted by the majority of U.S. states and localities. Most states have adopted the 2009 IECC as a federal requirement to be eligible for $3.1 billion set aside in the 2009 stimulus for state energy program grants. 

All IGCC buildings must meet (or sometimes exceed) the IECC building envelope air leakage, mechanical systems, service water heating equipment, and electrical systems codes. In addition to these IECC codes, the IGCC merely adds a requirement that buildings demonstrate energy efficiency through a self-selected compliance path. To incorporate a wide range of energy efficiency techniques, the IGCC provides various compliance path choices including performance-based, outcome-based, and energy use intensity-based options.

Developers are often more inclined to implement green building measures that have a measurable payback. Since energy is a continuous operating cost that is quantifiable and billed on a monthly basis, it is relatively easy to identify direct paybacks from an investments in energy efficiency. 

For the many jurisdictions that have already adopted IECC, the IGCC would largely replicate the IECC requirements. Unfortunately for the IGCC, energy efficiency and the related cost savings is often the best selling point for green construction for both private development and code adoption. By adding little on the topic of energy savings, the IGCC is left with an even tougher hill to climb toward widespread adoption or adoption at all as an actual code and not a voluntary program.

Photo Credit: digitizedchaos

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It is not looking pretty for federal green building policy.

Earlier in the year, I speculated that Congress might target green building certification as an unnecessary cost.  Well, it happened.  From the ASHRAE Government Affairs Update: 

House Passes National Defense Authorization Act for FY 2012 – Would Require Cost-Benefit Analysis & Long-Term Payback for DoD Adopting ASHRAE Standard 189.1

The U.S. House of Representatives passed the National Defense Authorization Act for Fiscal Year 2012 (H.R. 1540) by a vote of 322-96. . . .

The bill would also require a cost-benefit analysis and return on investment for energy efficiency attributes and sustainable design achieved through DoD funds used to receive a Leadership in Energy and Environmental Design (LEED) Gold or Platinum certification.

But here's the real kicker in the legislation: 

The bill would prohibit FY 2012 DoD funds from being used to achieve a LEED Gold or Platinum certification, however these certifications could be obtained if they impose no additional cost to DoD.

As I understand it, LEED certification will always impose an additional cost on the DoD simply because administration fees have to be paid to the US Green Building Council in order to get the certification.  It appears that this legislation, if passed in this form, would bar the DoD from pursuing LEED certification. 

According the ASHRAE update, the Senate will propose its own bill.  It will be interesting to see how the LEED certification funding issue is dealt with in the Senate and in conference committee.

I have often wondered why federal buildings should pursue LEED certification.  I always viewed certification as a marketing tool to demonstrate that a building was green.  But a green building policy wonk recently made an interesting point to me:  by pursuing LEED certification, the federal government receives third-party confirmation that it is getting the green building it contracted for.  

Is this the beginning of the end for federal policy that supports LEED? Should federal buildings pursue LEED certification in the first place? 

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The International Green Construction Code (IGCC) is a model code for cities seeking to promote sustainable building practices through their building codes. The IGCC promotes transition from the current voluntary green construction certifications, like USGBC’s LEED, to mandatory green construction codes. As the most recent revisions of the IGCC are currently under review, Green Building Law Update hopes to promote awareness by examining some of the code sections.

505.1 A building service life plan (BSLP) in accordance with this section shall be included in the construction documents. The design service life shall not be less than 60 years and the BSLP shall indicate the design service life selected for the building.

505.1.2 A plan to accommodate future re-configuration, dismounting, and disassembly of interior non-loadbearing walls, partitions, lighting and electric systems, suspended ceilings, raised floors, and interior air distribution systems for a minimum of 25 years shall be included in the BSLP. The plan shall verify that the interior materials, components, and assemblies have a minimum service life of 25 years, and are adaptable to future reconfigurations with in the interior spaces.

Among the numerous aspects of green development, building service life is rarely mentioned. Building longevity and adaptability are critical to any analysis of long term sustainability.  Among the various elements that factor into a building's service life are the design, materials, utility, location, and ownership. Due to these competing interests, a universal standard for building service life is difficult to define.

The building service life plan (BSLP) required by the IGCC mandates all buildings have a 60 year life span unless a shorter span of 25 years is approved and justified by community development plans. In response to new technology or unforeseen future needs, the IGCC also requires buildings to include plans for accommodating interior renovations for a minimum of 25 years.

Despite sustainable construction and management practices, if a green building does not serve its intended purpose after a mere ten or fifteen years, its sustainability should rightly be questioned. To illustrate some of the sustainability issues related to building service life it is easiest to contrast two very different projects: a university building and a shopping center. 

Universities typically build on a campus where they plan to own and occupy buildings for the foreseeable future. This anticipated long-term ownership can affect the employment of better building materials and incorporation of sustainability features with a long-term payback. It is no surprise, then, that universities were some of the first to find value in and adopt green building programs.

Retail developers often build shopping centers near new or trendy residential areas. Unlike university buildings, shopping centers are typically built with low cost materials like cinder block, stone, and stucco. Some retail developers do not plan to own a new shopping center for any extended period after it is leased. This short turnaround can disincentivize investment in sustainable features and high quality materials. Many of the savings from sustainable features are realized through lower energy consumption but the tenants typically pay shopping center utilities.

The IGCC’s building service life plan takes a step toward finding a middle ground between these development strategies to increase overall sustainability. Balancing long term development plans with the ability to adapt to the needs of a rapidly evolving society is vital to the ultimate success of a building life plan.

The Schermerhorn Symphony Center in Nashville, TN demonstrates the notable difference when building service life is a top consideration. From the outset, Nashville's new venue was designed to last 300 years. To achieve this goal, the design team incorporated elements of many European performance halls combining classic architecture with modern technology and high quality materials. Nashville's result is a timeless building that is also adaptable to future technology.

Unfortunately, the IGCC fails to account for these differing motivations and incentives for sustainable building across various industries. Symphony halls do not need to adapt to new innovations at the same pace as hospitals. Should a gas station be built to last for 60 years? Or even 25 years? Is that the best use of monetary or natural resources?

Though the current provision needs further conversation and refinement, the IGCC's efforts to account for this often overlooked sustainability issue should be applauded. In addition to sustainable materials, clean energy, and diverted waste, our green buildings must be lasting and adaptable to be sustainable.

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The International Green Construction Code (IGCC) is a model code for cities seeking to promote sustainable building practices through their building codes. The IGCC promotes transition from the current voluntary green construction certifications, like USGBC’s LEED, to mandatory green construction codes. As the most recent revisions of the IGCC are currently under review, Green Building Law Update hopes to promote awareness by examining some of the code sections.

Section 611.1: Renewable energy systems requirements. Buildings that consume energy shall comply with this section. Each building or surrounding lot or building site where there are multiple buildings on the building site shall be equipped with one or more renewable energy systems in accordance with this section.

Photo Credit: agahran

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The International Green Construction Code (IGCC) is a model code for cities seeking to promote sustainable building practices through their building codes. The IGCC promotes transition from the current voluntary green construction certifications, like USGBC’s LEED, to mandatory green construction codes. As the most recent revisions   of the IGCC are currently under review, Green Building Law Update hopes to promote awareness by examining some of the code sections.

Section 502.1: Not less than 50 percent of non-hazardous construction waste shall be diverted from landfills, except where other percentages are indicated in Table 302.1. A Construction Material and Waste Management Plan shall be developed and implemented to recycle or salvage construction materials and waste.

There is a silver lining for the Great Recession: less trash.  National waste has dropped causing the annual intake of the nation's largest landfill to fall by 34%.  Reflecting in part the effects of a slowed economy, this precipitous drop also demonstrates the growing trend favoring green waste management. 

As a major producer of waste, construction has been no exception to this green trend. In green building, the ultimate destination of waste leaving a construction site is becoming just as important as the materials coming into the site. In D.C., Jones Lang Lasalle (JLL) diverted 72% of its construction waste last year, adding up to over 1,200 tons.  

Among the cranes and bulldozers, construction sites often contain oversized and overflowing dumpsters. It should be no surprise that the average new construction project yields 3.9 lbs. of waste per square foot while the average building demolition project yields 155 lbs. of waste per square foot.

Through its requirement of a Construction Material and Waste Management Plan, the IGCC strives to reduce construction waste in landfills. Section 502.1 requires at least 50% of construction waste to be diverted to other uses. Under Table 302.1 jurisdictions may opt for more strict requirements of up to 75% waste diversion.

Construction waste includes both demolished materials as well as excess new building materials. Demolition waste can be diverted from landfills using a recycling company, reusing old materials in the new construction, or by donating or selling materials to others. 

In the current economy reuse and recycling is an increasingly popular money saving strategy. Construction projects have used similar strategies and found financial incentives in coordinating waste diversion efforts. 

One builder's trash may be another builder’s treasure. Selling some of their diverted waste can help builders offset some of their costs.  JLL noted that steel waste was especially valuable. Builders can also save money with a comprehensive plan to prevent overbuying and increase the efficient use of materials.

As building codes increasingly encourage the use of recycled goods, builders are encouraged to find the most environmental and economic use for their disposed materials. The IGCC Construction Material and Waste Management Plan promotes and codifies the green waste trend which will hopefully maintain these practices in a better economy.

Photo Credit: ell brown

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The International Green Construction Code (IGCC) is a model code for   cities seeking to promote sustainable building practices through their building codes. The IGCC promotes transition from the current voluntary green construction certifications, like USGBC’s LEED, to mandatory green construction codes. As the most recent revisions of the IGCC are currently under review, Green Building Law Update hopes to promote awareness by examining some of the code sections.

404.1 The heat island effect of building and building site development shall be mitigated in accordance with Sections 404.2 and 404.3.

404.2.3 Where shading is provided by trees, such trees shall be selected and placed in accordance with all of the following:

1. Trees selected shall be those that are native to, or non-invasive and adaptive to, the region and climate zone in which the project site is located. Plantings shall be selected and sited to produce a hardy and drought resistant vegetated area;

2. Construction documents shall be submitted that show the planting location and anticipated ten year canopy growth of all trees and that show the contributions of existing tree canopies; and;

3. Shading calculations shall be shown on the construction documents demonstrating compliance with this section and shall include only those hardscape areas directly beneath the trees based on a ten year growth canopy. Duplicate shading credit shall not be granted for those areas where multiple trees shade the same hardscape.

How do trees decrease the urban heat island effects and increase building energy efficiency?

Buildings should not be the only element of our urban cores that are going green. Many U.S. cities are looking to reject their concrete jungle moniker by greening community spaces including public streets. Increased use of tree plantings in streetscaping has gained favor in cities including Houston and Nashville. Houston alone planted over 40,000 trees this past year.

These urban planting projects may seem merely cosmetic to the average citizen. But, in fact, vegetation reduces the urban heat island effect.

The urban heat island effect is the variance of an urban core temperature from its surrounding areas. The increased temperature can vary from an additional 2-5ºF during the day and up to 22ºF at night. The heat island effect is caused in part by the high concentration of heat absorbing hardscape materials (concrete, bricks, etc.) in urban areas.  As hardscape materials are shaded, divert heat, and reflect sunlight the heat island effect can be reduced. 


The IGCC seeks to mitigate the heat island effect by requiring at least 50% of hardscape materials to meet reflective, permeability, or shading standards. Section 404.2.3 allows shade from the tree canopies to factor into a building's heat island mitigation.

These IGCC codes will reward existing streetscape vegetation programs and may encourage increased tree planting efforts. Construction costs may be lowered since trees can serve as both landscaping and shade.

Unlike the other IGCC options for hardscape shading, trees also divert storm water runoff, naturally reduce air pollution, and actively cool the air around them.  

Overall, the shade and cooling provided by trees allow buildings to reduce their energy consumption. One of the most effective ways to green our buildings may be to look at the amount of green (or lack thereof) surrounding them. 

Photo Credit: torontocitylife

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I was recently forwarded an interesting article written by Helen Mason regarding the International Green Construction Code.  She did such a good job reviewing the state of green codes that I wanted to make it available for download (PDF) to my readers and ask her a few follow up questions.  Enjoy! 

Chris: I was fascinated to read in your article that many Florida groups and cities already have indicated support for the IGCC.  Do you anticipate jurisdictions in Florida will start adopting IGCC soon?  

Helen: Yes, I do think the IGCC will be adopted by jurisdictions in Florida. The state has a long history of being a leader in promoting all areas of sustainability. In fact, the Florida legislature has mandated incremental increases in energy efficiency up to 50% by the 2019 Edition of the Florida Building Code and has required the use of the most current version of the International Energy Conservation Code (IECC) as the foundation code. The IECC is also a fundamental component of the IGCC. 

Further evidence that Florida residents are committed to sustainability is shown by the adoption of “ Miami 21 Code” in May of 2010 which requires new buildings greater than 50,000 sq. ft. to be certified “at a minimum” LEED Silver. In addition, the developer must post a performance bond of 2% to 4% of the cost of construction which “shall” be forfeited if the building does not meet LEED Silver within a year of the Certificate of Occupancy. How “soon” the IGCC would be adopted will likely be controlled by the statutory provision that Florida building codes are revised on a three year cycle, generally six months after publication of International Code Council revisions. This would mean that adoption of the IGCC would likely not occur until the 2013 Edition of Florida Building Code.

Chris: Some jurisdictions are adopting IGCC as a "voluntary" code.  What do you think of this development? 

Helen: For many individuals, understanding and implementing the IGCC as a minimum standard will require a dramatic change in approach to their work. Therefore, I think it is reasonable for a jurisdiction to initially adopt the IGCC as a voluntary code to allow adequate time for parties to become educated and to discover any unique issues to a specific jurisdiction. However, the only way to achieve significant, predictable environmental benefits on a large scale is for jurisdictions to adopt the IGCC on a mandatory basis.

Chris: You raise a number of legal issues that may arise from the IGCC.  Which do you think is the most significant and why?  

Helen: When one is asked what “legal” issues may arise, typically you would think who is going to sue whomever; but I think the most significant legal issue arising from the IGCC is that it imposes obligations on owners to improve the energy efficiency of existing buildings. As part of our national security, particularly with the wide unrest in the Middle East, the U.S. must reduce the energy consumption of existing buildings which accounts for 72% of total electricity consumption.

These IGCC mandates for existing buildings can be a first, but important, step in achieving this goal. In addition, these obligations can produce significant public and economic benefits. Requiring periodic improvements will reduce the deterioration of existing building stock; maintain overall quality and value of all construction and thus help to preserve neighborhoods. The public will benefit by maintaining its tax base and having less strain on utility infrastructure. Finally, these provisions can help to create a stable construction job market to meet the retrofitting and compliance obligations of building owners.  

Photo credit: davesag

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The International Green Construction Code (IGCC) is a model code for cities seeking to promote sustainable building practices through their building codes. The IGCC promotes transition from the current voluntary green construction certifications, like USGBC’s LEED, to mandatory green construction codes. As the most recent revisions   of the IGCC are currently under review, Green Building Law Update hopes to promote awareness by examining some of the code sections.

403.3 Long term and short term bicycle parking shall be designated on the site plan by a registered design professional and as specified in Table 403.3. The required minimum number of spaces shall be determined based upon the occupied floor area of each primary use or occupancy of building. Accessory occupancy areas shall be included in the calculation of primary occupancy area. 

403.4.2 Where parking is provided for a building that has a total building floor area greater than 10,000 square feet (929 m2) and that has an building occupant load greater than 100, at least 5 percent, but not less than 2, of the parking spaces provided shall be designated as preferred parking for low emission, hybrid, and electric vehicle

How will these codes affect transportation options and the locations of IGCC building projects?

"Location, location, location."  Everyone involved in real estate hears this adage on a regular basis. But for green building developments, selecting a project site plays a different role.  Location will impact many environmental attributes of a building, including the types of transportation occupants use to get to the building.  

The IGCC requires many buildings to include accommodations for various forms of green transportation. Buildings complying with IGCC must include reserved parking for low emission, hybrid, and electric vehicles under section 403.4.2.  Under section 403.3 the IGCC also mandates bicycle parking.

A building's location can have a significant impact on the transportation choices occupants of a building make. A location far from residential areas may force an occupant to drive and buildings without mass transit access will have a similar effect.

The Environmental Protection Agency (EPA) has recently been in hot water for failing to consider the transportation impact for locating its own offices.  In the Kansas City area the General Services Administration (GSA) has proposed to move the Region 7 EPA Office from downtown Kansas City, Kansas to an office building in the suburbs.  However, the new building has less access to mass transit and other alternative forms of transportation for EPA employees.  

The Region 7 EPA headquarters were built in 1999 to help revitalize a failing Kansas City, Kansas urban core. To compensate for the new suburban location, the GSA has promised that the new building will be upgraded to meet the LEED Gold standard.  GSA’s LEED promise raises an important question: To what extent can a suburban green building compensate for its location in a low-density area with less access to alternate forms of transportation?

Green building is important in all cities whether suburban or urban. However, Kansans are right to question the wisdom behind moving the Region 7 EPA office.

The IGCC requires a building owner to encourage occupants to utilize green forms of transportation. However, the impact of these measures may be reduced if buildings are located outside of a reasonable bicycling distance. 

While the IGCC tries to create incentives for building occupants to choose green transportation, the IGCC, like any building code, does not address sprawl issues.  The IGCC does little for slowing sprawl and encouraging overall green development like the issues raised by the relocation of the Region 7 EPA headquarters.

Obviously, some forms of green transportation are not available or practical for various building locations. Recognizing these transportation limitations points to important green building certification considerations. Should buildings be rewarded for choosing locations with access to certain forms of green transportation (walking, bicycling, carpooling, mass transit, etc.) or, alternatively, should buildings be penalized for failing to do so?

Photo Credit: epSos.de

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Many of you have been asking about the availability of the webinar on the International Green Construction Code (IGCC) that I completed with Bob Kobet, and Basic Gov.  The webinar is now available online, although you will have to sync the powerpoints and audio.  If you listen closely, you can hear the panic in my voice as we tried to resolve technical difficulties that were blocking Bob from joining.  

• Powerpoint slides
• Audio

I have been thinking about the complexities of the IGCC since public version two was released at Greenbuild.  To me, the most interesting and unusual aspect of the IGCC is that it is two codes in one.  The IGCC includes both a model code and ASHRAE 189.1:  

The IGCC was developed with the intent to be consistent and coordinated with the ICC family of Codes & Standards: the I-Codes. . . .

The IGCC also allows jurisdictions to choose ASHRAE Standard 189.1 as an alternative compliance path. ASHRAE Standard 189.1, Standard for High-Performance Green Buildings Except Low-Rise Residential Buildings, is an American National Standards Institute (ANSI) standard developed by the American Society of Heating, Refrigeration and Air-Conditioning Engineers (ASHRAE) in association with the Illuminating Engineering Society (IES) and the U.S. Green Building Council (USGBC). 

It will be interesting to see whether the majority of jurisdictions adopt the model code or ASHRAE 189.1.  If I was a betting man, I would put my money on the model code.  The nature of human beings is to seek the most simply solution.  Many jurisdictions will simply rely on the model code because ASHRAE 189.1 is an entirely different document. 

What do you think will be the result? 

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The International Green Construction Code (IGCC) is a model code for cities seeking to promote sustainable building practices through their building codes. The IGCC promotes transition from the current voluntary green construction certifications, like USGBC’s LEED, to mandatory green construction codes. As the most recent revisions of the IGCC are currently under review, Green Building Law Update hopes to promote awareness by examining some of the code sections.

Section 402.3.3: Water used for outdoor landscape irrigation shall be non-potable and shall comply with Section 406.2.2.

Section 402.3.4: Outdoor ornamental fountains and other water features constructed or installed on a building site shall be supplied with either municipally reclaimed or collected rainwater complying with Section 406.2. Signage in accordance with Section 706.2 shall be posted at each outdoor fountain and water feature where non-potable water is used.

How will builders comply with non-potable water irrigation requirements?

IGCC Section 402 contains various codes promoting the efficient use of natural resources including the use of non-potable water for outdoor irrigation and water features. Utilizing non-potable water can mitigate or prevent some effects of water shortages, like those experienced during recent droughts in Texas. As climates change and populations grow, water conservation will be increasingly important in areas like the western United States where natural water resources are predicted to decline during upcoming decades.

Rainwater is an abundant source of non-potable water yet most of it is routed into gutters and storm sewers. Once the rains have subsided, sprinkler systems filled with treated drinking water are used for landscaping. In Section 402, the IGCC recognizes that our golf courses do not need to be watered using the same filtered and fluoride-infused water we consume and use to cook.

Unfortunately, the high costs of providing a source of non-potable water may become a hindrance for IGCC builders trying to comply with IGCC's non-potable water requirements. In cities where non-potable water can be provided as a municipal service, builders would simply have to install non-potable plumbing systems. Unfortunately most cities in the U.S. do not have non-potable water services.

For most buildings a water collection, storage, and distribution system would be required to provide non-potable water. In addition to increased costs to install this system, IGCC regulation of non-potable water systems is extensive due to the health risks associated with accidental human consumption. These extensive regulations will result in increased costs for both builders and municipal regulators to ensure compliance.

The IGCC requirement for non-potable water use in irrigation is well-meaning but its mandate and relative high cost may prove to be a significant obstacle for IGCC cities and their developers.

Photo Credit: teofilo

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This guest post is by Joe Stampone of A Student of the Real Estate Game. Joe is in his final semester at the NYU Schack Institute of Real Estate with a concentration in sustainable development.


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The International Green Construction Code (IGCC) is a model code for cities seeking to promote sustainable building practices through their building codes.  The IGCC promotes transition from the current voluntary green construction certifications, like USGBC’s LEED, to mandatory green construction codes.  As the most recent revisions of the IGCC are currently under review, Green Building Law Update hopes to promote awareness by examining some of the code sections.

IGCC Section 402.2.1: “Building and building site improvements shall not be located within a floodplain.”

What is the potential green impact on the community?

Working to remove and discourage new structures within the floodplains of rivers, streams, and lakes is not a new concept. FEMA has required flood insurance for high-risk properties in floodplains since 1968.  However, IGCC Section 402 does not simply discourage building in a floodplain but rather prohibits it completely.  This prohibition takes into account both the high risk of flooding to structures built in the floodplain as well as an increased flood risk to structures outside the floodplain due to the removal of soil surface area that naturally soaks up floodwater.

Floodplain maps (even those used by FEMA and the insurance companies) often fail to fully account for the floodplain extension caused by development, as most maps have not been updated in many years.  In fact, FEMA is currently working to update flood maps as Congress looks into renewing the National Flood Insurance Program (NFIP).

During the 500-year flood that hit Nashville, Tennessee last spring, the consequences of developing in floodplains became apparent to Tennesseans.  Many Nashville area properties were not considered to be in a floodplain and, consequently, property owners did not have flood insurance.  These uninsured landowners learned the hard way that years of development within the floodplains had helped extend the floodwaters to their front doors.   

As a result, Nashville has acknowledged the importance of protecting the integrity of the city’s floodplains.  Nashville has offered to purchase 305 properties in the floodplain through a Hazard Mitigation Home Buyout Program.  The voluntary buyout program seeks to prevent the costs of property loss and the costs to provide emergency services to these high-risk areas in the event of flooding.  Also, by removing structures in the floodplain, the city will create more open space to soak up floodwater and increase green park space.  

The IGCC seeks to mitigate damage in areas similar to the flooded parts of Tennessee through its prohibition on development in established floodplains.  Unfortunately, as the Army Corps of Engineers continues to struggle with the ever-rising Mississippi River, there may be more landowners over the coming weeks who learn the hard lessons that Nashville residents learned just a year ago.  The IGCC floodplain regulation is a prime example of how green building choices often do not only affect the owners and occupants of a particular building but also help to minimize the building’s impact on the land and people around it.

Photo Credit: southerntabitha

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If the International Green Construction Code (IGCC) is successful, green buildings will soon become the rule instead of the exception.  By codifying green building standards, the IGCC has the potential to make major strides to advance green building practices on a scale that has been unattainable through LEED and other similar voluntary green building standards.

We are currently in the period for public commentary on the proposed International Green Construction Code (IGCC), we at Green Building Law Update have decided to do a series highlighting some of the proposed IGCC provisions.  Most of you do not have time to read the entire 243 page proposed code but that is what interns are for.  

If your city decides to adopt the IGCC, Green Building Law Update wants you to be prepared and know what it means for you and your business.  Each Wednesday we will post a proposed code section and a short analysis.  Please feel free to discuss the pros and cons of the proposed code in the comments.  Please also note that if you are especially passionate about a certain provision of the IGCC that the public commentary period runs until August 12, 2011.  The IGCC is expected to be finalized by January 2012.

Photo Credit: International Code Council

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The following post is written by Kirk Dryer, a law student at the University of Missouri.  Kirk is also the first Green Building Law Update intern.  His assistance researching the Destiny USA matter was priceless.  Below, Kirk explains the tax implications of an adverse ruling in the Destiny USA dispute.  If you want to read more on the Destiny USA dispute, please read my short e-book on the subject.  

While Destiny USA stands to lose $122 million in financing costs if the IRS strips the project of it’s green bond tax exemption, an adverse ruling will also result in a significant investment income loss for individual bondholders.  In total, these bondholders purchased $228,085,000 in green bonds for Destiny USA and would owe taxes they were not expecting to pay which would significantly cut into their investment gains.  The tax exemption itself and not green building promises is the means through which the developer was able to offer an interest rate lower than the market rate and remain a competitive investment. Most (if not all) of the individual investors would have chosen an investment with a higher return if the gain had been taxable.  

It is easy to assume that most individual investors with enough income to hold a significant sized investment in the Destiny USA bonds would be in one of the two highest federal income tax brackets which means that any additional income for 2010 would be taxed at either 33% or 35% depending on the investor’s taxable income.  This means that if the IRS takes away Destiny USA’s green bond tax exemption, any gain collected on a bondholder’s investment would be taxed and would cut his/her investment gain by at least a third.

For example: We’ll say an investor, Bob, had an adjusted gross income of $250,000 for 2010 and he held a $50,000 bond in Destiny USA.  The Destiny USA Green Bond interest rate is 4.420% meaning that Bob would have a gain on his bond investment of $2,210.  With the tax exemption, he would not have to pay any income tax on that bond income.  However, if the tax exemption is stripped from the Destiny USA project, Bob would owe 33% of that gain or $729.30 in federal income tax.   If Bob bought his bond at issuance in 2006 he would owe a total of $3,646 in back taxes for his investment gain for the five years (2006-2010) he took the tax exemption.  He would then no longer have the exemption for the next 25 years until the bond matures on January 1, 2036.  Over the life of the bond Bob would pay $21,879 in income taxes he would not have owed if Destiny USA fulfilled its obligations for the Green Bond program.

Ultimately, bondholders like Bob would have legal recourse, but the filing of a lawsuit to recover the money lost on a bond investment is sure to create a domino effect of filings resulting in lengthy legal battles.  If the tax exemption is revoked due to Destiny USA’s noncompliance with IRS Green Bond requirements, the bondholders can sue the Syracuse Industrial Development Agency and Citigroup as the bond issuers.  The bond issuers may then recover their losses from their bond insurer who may then recover its losses from the Destiny USA.  

Overall, Bob is simply an example of a bondholder who purchased one $50,000 bond out of the $228 million.  For simplicity’s sake, if all bondholders were in the same tax bracket as Bob, the bondholders would pay $99,805,434.30 in income taxes over the 30 years of the bond. While the bondholders may ultimately recover their losses, the IRS ruling nonetheless has a large impact on the financial gains of their investment.

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I have been amazed at the immediate interest generated by the International Green Construction Code (IGCC).  

Despite the fact that the IGCC is still in its infancy, there are a number of states and municipalities closely studying it for adoption.  We have already discussed Rhode Island’s adoption of IGCC for public buildings.  More significantly, legislation was introduced in Maryland just a few days ago to allow statewide adoption of the IGCC.  

Based on the interest in IGCC, I have teamed up with BasicGov and Bob Kobet to present a free webinar related to green building code adoption:

“The Reality of Implementing Green Building Programs in Your City”

The webinar is FREE and will take place on February 23 at 2 pm eastern.  During the webinar we will cover the following topics:

• The basics of IGCC
• Best practices for implementation of green building codes
• Problems that have arisen in jurisdictions that have adopted green building codes

I hope you can join us.  And please pass on the webinar information to your favorite city official or planner.  

Disclaimer:  I am being paid to speak at this webinar. 

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Every year, as the calendar turns over, a host of new regulations take effect.  In California, January 1, 2011 marked the introduction of CALGreen, the California green building code.  The California government has produced a guide to CalGreen, which I found informative:

“The 2010 California Green Building Standards Code is a code with mandatory requirements for new residential and nonresidential buildings (including buildings for retail, office, public schools and hospitals) throughout California beginning on January 1, 2011. The code is Part 11 of the California Building Standards Code in Title 24 of the California Code of Regulations and is also known as the CALGreen Code.”

If you are interested in a more thorough review of CALGreen, I would recommend Imad Naffa’s post on the subject.  Here are some quick thoughts I have on CALGreen:

• Whenever I read about new building codes, I always wonder whether code officials will be prepared to enforce them.  This question is specifically addressed in the guide: “Chapter 7 of the CALGreen Code provides a guideline for minimum inspector qualification criteria.”

• I noted that CALGreen requires commissioning of new buildings.  Commissioning involves calibrating the building’s systems to make sure they are running as designed.  Commissioning is often cited as one of the more expensive aspects of a green building; but it can also ensure a green building works properly.  It will be interesting to see how the California real estate industry responds to mandatory commissioning. 

• California is often a bell-weather state for new green building trends.  Will statewide building codes become more common? 

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I continue to ponder the importance of the release of the International Green Construction Code public version 2.0 (IGCC).  I recently asked Bob Kobet, LEED Faculty member, to provide his thoughts on IGCC.  It's good to see that I am not the only one who thinks the new code is a big step for green building.  

For the last 31 years my professional life as an architect and educator has been linked to codes. Through it all my core beliefs about codes, why we have them and how they get developed and enforced have been reinforced. They include:

1) Architecture is complex, no matter now simple the project may seem. It is very difficult to write codes that apply with equal rationale to a variety of building types in different geographic locals and climate zones.

2) Codes do not lead the technology parade. They follow it.

3) Code officials are generally not known for taking risks or being overly creative in their role as authorities who essentially interpret and enforce the law. Most “go by the book” for a reason, so what is in the book is critically important to the advancement of building performance and environmental stewardship.

From this perspective the International Green Construction Code (IGCC) provides a much needed alternative for advancing environmentally responsible architecture combined with the ability for municipalities to adopt what they believe is most appropriate and important to them.

The IGCC was developed to be consistent and coordinated with the ICC family of Codes & Standards. These are the I-Codes, which include ASHARE 189.1. ASHRAE Standard 189.1, Standard for High-Performance Green Buildings Except Low-Rise Residential Buildings, is an American National Standards Institute (ANSI) standard developed by the American Society of Heating, Refrigeration and Air-Conditioning Engineers (ASHRAE) in association with the Illuminating Engineering Society (IES) and the U.S. Green Building Council (USGBC). The IGCC allows jurisdictions to choose ASHRAE Standard 189.1 as an alternative compliance path. The IGCC is applicable to commercial buildings, including existing buildings undergoing alterations and additions. Traditional and innovative construction practices are addressed.

The IGCC does not replace existing codes or force municipalities to make wholesale administrative changes. Instead it allows jurisdictions to use their administrative powers to exercise the flexibility inherent in the IGCC. This is possible because the IGCC contains a new regulatory framework that allows choice and adaptation to local or regional conditions. Through the use of Baseline requirements, Projective Electives and Jurisdictional Requirements, the IGCC has achieved a balance between traditional safety issues and sustainability. The balance is a result of collaboration between the International Code Council, ASHRAE, ASTM, The AIA, and the US Green Building Council.

Overall I favor the approach the IGC and its partners have taken with the IGCC. I am hopeful it will meet the expectations of those who have worked so hard to make it available. Finally, there is a code emerging that supports renewable energy systems, rainwater harvesting, grey water reclamation, nontoxic design and straw bale construction. There will be those who view the IGCC as just another code to confront. I embrace it is a significant step in the right direction.

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Back in October 2010, Doug Reiser and I co-presented on the topic of substituting LEED for traditional building codes.  As we were finishing our presentation, I reiterated our primary theme that LEED standards should not be used as a building code.  One of the audience members raised her hand and asked why weren’t we discussing the International Green Construction Code (IGCC).  

That audience member was right--states are beginning to consider the adoption of IGCC as a state-wide green buiding code in lieu of LEED certification requirements.  

The IGCC is available for a free download.  I suggest you take a look at it.  At the front of the code is a “Roadmap to the International Green Constructon Code” that I found to be helpful:

“Chapter 3 is the core of the (IGCC).  It is formatted to: facilitate the customization of this code to address local issues; provide options for construction which exceed the minimum requirements of this code; and provide for the implementation of best practice. . . .

All of the provisions of this code, other than those selected by the jurisdiction in Table 302.1 and those designated as project electives, are mandatory as applicable.”  

Rhode Island was one of the first states to adopt the IGCC.  Interestingly, Rhode Island adopted the code as an “‘equivalent standard’ to meet requirements that all new major facility projects by state agencies be constructed as green buildings.”  

Do you see other states adopting IGCC as an “equivalent standard” to other green building rating systems? 

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Last week, we looked at Air Conditioning, Heating, and Refrigeration Institute (ACHRI) v. City of Albuquerque, a case in which a federal court struck down portions of the Albuquerque Energy Conservation Code based on the doctrine of federal preemption.  In a construction code context, federal preemption often means that products and appliances are regulated at the federal level but states regulate building codes.  The decision in the Albuquerque case was not all that surprising as the code clearly went beyond federal efficiency standards for heating, ventilation, and air conditioning (HVAC) products. 

But a more recent case involving similar claims of federal preemption is not so clear. 

On May 25, 2010, the Building Industry Association of Washington (BIAW) and nine HVAC manufacturers and installers, filed a lawsuit in federal court against the Washington State Building Code Council.  The lawsuit alleges that one portion of a new Washington State Energy Code related to single-family residential energy efficiency is preempted by federal law.  The plaintiffs have asked for an injunction against the code. 

Changes to the State Code were passed on November 20, 2009 and the new code went into effect July 1, 2010.  Plaintiffs are particularly concerned with residential energy efficiency requirements under Chapter 9. I would suggest you download a copy of the complaint (PDF) and take a look at the chapter, which is attached as an exhibit starting on page 16.  Here is sample of the table from Chapter 9: 



In order to comply with Chapter 9, a home must achieve one credit from the entirety of Table 9-1.  On its face, the table appears to provide a variety of options for compliance, which would not infringe on federal efficiency requirements.  For example, option 3b in the table requires an efficient building envelope, and does not require specific efficiency for any product. 

According to the plaintiffs, though, the effect of Table 9-1 is that in order to comply, a number of options must be combined with the result that the code mandates product energy efficiency: 

"[T]he menu of 'options' in Table 9.1 is not extensive enough and in effect forces homebuilders to install high efficiency HVAC, water heating and plumbing equipment with performance standards in excess of those set by federal law."

Essentially, the plaintiffs are arguing that all compliance paths under table 9 require the installation of HVAC equipment that is more energy efficient than federal law. 

What do you of the builders associations' challenges of various state energy codes? 

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This is as confusing and sordid as any green building dispute I have seen.  Consider yourself warned. 

Over the holidays, Michael Anschel informed me that the the Builders Association of the Twin Cities (BATC) had sued Minnesota GreenStar and filed a restraining order against using a green building standard. 

Despite that simple statement, there is a lot more to this story.  Here is the best summary I can come up with after reviewing the lawsuit filed by the BATC and a blog post by Anschel on the subject. 

The BATC worked with other associations to create a green building standard, called the Green Homebuilding Guidelines.  BATC and the other entities then created a new entity, Minnesota GreenStar, to run the green building standard (much like the Green Building Certification Institute runs LEED).  At some point, BATC became disenchanted with either Minnesota GreenStar and/or the Green Homebuilding Guidelines, and decided to file a lawsuit to essentially take over administration of the Guidelines.  If you believe the complaint, the reason for BATC's disenchantment was Minnesota GreenStar's failure to repay a loan and GreenStar's intent to license the green building standard to other states.  If you believe Anschel's post, BATC's reasons are more sinister and have to do with weakening the Green Homebuilding Guidelines.

Lets start with the lawsuit itself. 

On December 9, 2010, the BATC filed a restraining order and lawsuit against Minnesota GreenStar.  BATC claims that in 2006, it developed the Green Homebuilding Guidelines and further asserts it owns the intellectual property rights to the Guidelines.  BATC also points out it that it contributed $50,000 to develop the Guidelines. 

In 2007, BATC, along with two other entities, formed Minnesota GreenStar, which began using the Green Homebuilding Guidelines.  At some point in 2008, GreenStar filed registered copyrights for the Green Homebuilding Guidelines, which would give GreenStar intellectual property rights to the Guidelines. 

This is where events get a bit confusing.  BATC alleges that in 2010, it provided an additional loan to GreenStar.  Despite this additional loan, BATC claims that GreenStar ran into financial trouble:

"On September 15, 2010, GreenStar conducted a meeting of its Board of Directors and disseminated its Business Plan . . . in which GreenStar relied on continued sponsorships, a one-year deferment on its Promissory Note obligations to BATC, and significant additional funding from BATC. . . . GreenStar also indicated its intent to license the Green Homebuilding Guidelines developed and owned by BATC to other states to raise revenue for GreenStar."

BATC goes on to ask the Court for four things: 

1.  Judgment of $50,000 for an alleged breach of the loan;
2.  Judgment declaring that BATC owns the intellectual property rights to GreenStar and GreenStar is restricted from using or licensing the Guidelines;
3.  Temporary and permanent injunction against GreenStar from using the Guidelines; and
4.  Attorneys fees. 

Taken at its face, the complaint suggests that BATC is concerned about the prospect of licensing the Green Homebuilding Guidelines to other states.  But why would a builders association be concerned about this? 

According to Anschel, BATC's motives are more complicated.  In a blog post at Construction Law Musings, Anschel explains that BATC actually intends to develop a new green building certification program that allows for self certification.  Anschel believes BATC's move is a step backwards for green building in Minnesota.  If BATC intends to create a new green building standard in Minnesota, then it certainly makes sense why it would want to take over and limit Minnesota GreenStar and the existing Green Homebuilding Guidelines. 

What do you think?

Photo credit: Jvstin

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Last night I had dinner with a long-time reader of Green Building Law Update.  I was frank with him, and I will be frank with you.  I will be doing two things this year with the blog: 

1.  I am going to stop talking about LEEDigation as much.
2.  I am going to talk more about the green building codes, and the challenges to those codes that are occurring throughout the country.

A trend seems to be developing across the country in the green building world.  Traditional builders and manufacturers are fighting against green building codes and programs.  You can expect an increase in these types of challenges in 2011. 

One of the first reported legal challenges to a green building code occurred in New Mexico with the case Air Conditioning, Heating, and Refrigeration Institute (ACHRI) v. City of Albuquerque.  The case focused on the Albuquerque Energy Conservation Code passed by the city on September 17, 2007.  The goal of the code essentially was to create greater energy efficiency in buildings and products.  As often happens with new regulations, numerous parties were unhappy with the Code.  Three trade associations representing HVAC product manufacturers, distributors and installers challenged the Code, and the case was ultimately decided on September 30, 2010 by Judge Martha Vazquez of the U.S. District Court for the District of New Mexico. 

While the legal challenge focused on many portions of the Code, I am focusing on Volume I, which included requirements for commercial buildings and multi-family buildings. 

In order to comply with Volume I of the code, a building had to satisfy one of three paths:

1. The building must achieve LEED certification;
2. The proposed building must be 30 percent more energy efficient than a baseline building; or
3. The Heating, Ventilation, and Air Conditioning (HVAC) system and equipment must comply with minimum energy efficiency standards.

There is a key difference between the first two compliance paths and the last.  The first two paths can be described as performance-based because the building must perform in a particular manner.  The last path is a prescriptive compliance path, which means it focuses on the products that go into a building. 

Judge Vazquez relied on the legal theory of federal preemption to strike down the code's prescriptive compliance path:

"The Court concludes that the prescriptive provisions of Volume I requiring the use of heating, ventilation, or air conditioning products or water heaters with energy efficiency standards more stringent than federal standards are regulations that concern the energy efficiency of covered products and, therefore, are preempted as a matter of law."

Judge Vazquez pointed to the National Appliance Energy Conservation Act, which expressly preempted product energy efficiency standards: 

"A standard prescribed or established under section 6313(a) of this title shall, beginning on the effective date of such standard, supersede any State or local regulation concerning the energy efficiency or energy use of a product for which a standard is prescribed or established pursuant to such section."

Judge Vazquez went on to uphold performance path one and two because the plaintiffs presented a "cursory argument" and "very few material facts" in support. 

The question remains whether a court could find federal preemption of a LEED-based code if properly argued by a plaintiff. 

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Many months ago, I promised a two-part series on public-private partnerships.  Part one was previously published and today I wrap up the series with post two.  As we head in to 2011, public-private partnerships will play a vital role in replacing the non-existent state funds for necessary public works projects.  Here is part two on public-private partnerships: 

We have already revealed Secret No. 1 about public-private partnerships: there is bi-partisan support for PPPs.  I promised to reveal Secret No. 2 about PPPs.  In hindsight, I should have probably not labeled this a secret as it is more an observation verging on opinion.  Some of you that do not support public-private partnerships will not agree with this observation. 

Secret No. 2:  There appears to be no viable alternative to public-private partnerships. 

If you work in the construction industry, you probably know that the U.S. infrastructure is in dire need of renovation and repair.  According the American Society of Civil Engineers (ASCE), the U.S. infrastructure is in absolute disrepair based on its 2009 U.S. infrastructure grade card:

2009 Grades
Aviation D
Bridges C
Dams D
Drinking Water D-
Energy D+
Hazardous Waste D
Inland Waterways D-
Levees D-
Public Parks and Recreation C-
Rail C-
Roads D-
Schools D
Solid Waste C+
Transit D
Wastewater D-

America's Infrastructure GPA: D

Further, the ASCE has concluded that an investment of $2.2 trillion would be required over the next five years to improve our infrastructure.  Assuming the ASCE is correct, repairs to our infrastructure will require substantial investments by the states charged with infrastructure upkeep. 

But states have no money. 

Check out the grim outlook for state budget shortfalls from the Center on Budget and Policy Priorities:

The worst recession since the 1930s has caused the steepest decline in state tax receipts on record. State tax revenues were 8.4 percent lower in the 2009 fiscal year than in 2008, and an additional 3.1 percent lower in 2010, while the need for state-funded services did not decline. As a result, even after making very deep spending cuts over the last two years, states continue to face large budget gaps. At least 46 states struggled to close shortfalls when adopting budgets for the current fiscal year (FY 2011, which began July 1 in most states). These came on top of the large shortfalls that 48 states faced in fiscal years 2009 and 2010. States will continue to struggle to find the revenue needed to support critical public services for a number of years, threatening hundreds of thousands of jobs.

From my vantage point, I see an extreme need for infrastructure upgrades and I see public bodies that do not have the financial ability to fund the upgrades. 

If the public sector cannot fund infrastructure improvement, isn't the only other solution private sector investment through public-private partnerships? 

Photo credit:  Barbour

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Today I am interviewing Karen Bates Kress, President of the Yellowstone Park Foundation.  Yellowstone National Park just completed construction of a LEED Gold Old Faithful Visitors Center. The Foundation played an important role in raising funds for the green and educational aspects of the project

.  While this is not a traditional public-private partnership, it is an interesting example of the private sector paying for certification on a public project.

Chris:  Thank you for your time today.  The Old Faithful Visitor Center was recently built in Yellowstone National Park and is both LEED Gold and touted as a public-private partnership. Is the Visitor Center a public-private partnership in the traditional sense? 

Karen: The Yellowstone Park Foundation is the official fundraising partner of Yellowstone National Park. As with other “friends groups,” like friends of your local library, we fund projects and programs that go above and beyond what is possible through the base budget of our government partner.  After covering our own operating expenses, all of the funds we raise are granted to Yellowstone. Since we are a non-profit, we don’t directly profit from the arrangement, other than to re-invest revenue back into protecting, preserving and enhancing Yellowstone.

Chris:  As a National Park Service project, what were your concerns in pursuing a public-private partnership?  Was there resistance to the idea of using the public-private partnership model?  How did you overcome any resistance?

Karen: Concerns from some people always occur in the sense that they believe that a facility like a visitor center should be paid for totally by the government. However, to achieve the margin of excellence with a LEED standard and high quality educational exhibits that exist with the Old Faithful Visitor Education Center, private funding would have to be part of the equation.

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I just finished up a presentation to the Construction User's Roundtable (i.e. users of construction services) regarding public private partnerships (P3s). P3s are defined by the National Council of Public Private Partnerships as:

"a contractual agreement between a public agency (federal, state or local) and a private sector entity. Through this agreement, the skills and assets of each sector (public and private) are shared in delivering a service or facility for the use of the general public. In addition to the sharing of resources, each party shares in the risks and rewards potential in the delivery of the service and/or facility."

In the course of preparing for my speech, I learned two very important secrets about public private partnerships that I want to share with you.

Secret No. 1. P3s have bipartisan support.

One of the first areas I researched for my presentation was the effect the recently-completed election would have on P3s. You may have noticed that the House of Representatives will now be controlled by Republicans, many of which ran on a platform of fiscal austerity. As a result, the new Congress is likely to be less supportive of expensive public works projects. At the same time, our infrastructure - including old buildings - needs significant upgrades. For example, take a look at the abysmal grades given to the U.S. infrastructure in 2009 by the American Society of Civil Engineers (ASCE).

My research uncovered secret number one: support for public private partnerships is bi-partisan. Many politicians on both sides of the aisle have indicated their support for P3s as a means to fix our infrastructure problem. Here are some quotes I used during my presentation:

“That means maintaining strong support for public-private partnerships like NREL. . . . ”

- Rep. John Boehner, presumptive House Majority Leader

“Innovative public-private partnerships are appearing around the country, bringing much-needed capital to the table. It is important to ensure that the public interest is well-served in public-private partnerships, since they are here to stay and likely grow in importance.”

- Rep. Nancy Pelosi, Speaker of the House

And probably most important, Rep. John Mica, the presumptive Chairman of the House Transportation & Infrastructure Committee recently indicated he supports P3s, at least in one instance. In response to questions about the future of an American Recovery and Reinvestment Act high-speed rail project in Florida, Rep. Mica suggested that a public-private partnership should be used to get the project done:

"I want private dollars involved in this," Mica said. "If someone in the private sector puts up $500 million and that's $100 million short – I'm in an excellent position to assist. But I don't want the private sector to see this as a gravy train.”

Along with the Congress, President Barack Obama is strongly supportive of P3s and is pushing a National Infrastructure Bank to support P3 development.

While bi-partisan issues are few and far between these days, public private partnerships appear to have support of both Republicans and Democrats. With growing infrastructure needs and bi-partisan support, P3s may gain in popularity over the next few years.

I will reveal secret number two on Monday.

Photo credit:  Photo Phiend

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Across the country, government officials are scrambling to award and spend American Recovery and Reinvestment Act (ARRA) funding before upcoming deadlines.  If you are a contractor or subcontractor lucky enough to work on one of these projects, congratulations! 

Now comes the tough part. 

Working on a federal or state-funded project brings a myriad of regulatory issues that must be resolved.  One of those issues is Davis-Bacon compliance.  As you sort out compliance issues, here are some questions to think about: 

• Is the project a federal project subject to federal labor laws? 
• Is the project a state project subject to state labor laws?
• Is the project both a federal and state project subject to both federal and state labor laws?

Is your head spinning yet?  In some circumstances, depending on the government agencies involved and the source of funding, you may actually be subject to both federal and state labor laws.  I have assisted clients with these confusing issues, so please contact me if you have questions (chris@cheathamconsulting.com). 

Photo Credit:  NIOSH

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For this Halloween edition of Green Building Law Update, I thought I would try to scare your socks off by describing circumstances that may lead to the green building legal apocalypse.  Be warned, this blog post is going to give you nightmares! 

Last week, Doug Reiser and I presented at the Green Legal Matters conference on the following topic:

"The Green Building Legal Apocalypse: Why Cities Should Stop Mandating LEED" 

I have received a number of inquiries about the presentation so I published the slideshow.  I am big on not using a lot of words or bullet points on slides so I am not sure how helpful the slideshow will be, but I am happy to answer any questions you may have about it in the comments section. 

There is one central theme of our presentation:  municipal governments should stop mandating LEED certification for private construction.  I could run through all of the reasons - there is no proper enforcement mechanism, there will be increased LEEDigation - but in my mind, the creator of the LEED rating system, the US Green Building Council, makes the most powerful argument for not mandating private-construction LEED certification: 



This picture is taken from the USGBC white paper, "Greening the Codes" (pdf).  The hyphenated vertical line represents the current market.  The updwards sloping, blue area at the bottom represents building codes.  The dashed line above the blue area represents green building codes.  Above the green building codes are LEED Platinum, Gold, Silver and Certified certification levels. 

What does it mean? 

If you need evidence that LEED certification was never meant to be a building code, and should not be a building code, use this picture.  Building codes are the minimum.  By mandating LEED certification for all private construction, a government essentially makes LEED certification a building code, a minimum.  LEED certification is supposed to represent buildings that have gone beyond the building code.  With this picture, the US Green Building Council is telling us not to use LEED certification for private-construction mandates. 

LEED certification is a high bar, and if certification is mandated, not everyone will comply.  Non-compliance means penalties, disputes and litigation.  This is why I say governments that are requiring LEED certification for  private construction are setting the stage for the green building legal apocalypse. 

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The likelihood that some American Recovery and Reinvestment Act (ARRA) green building projects would fail should not come as a surprise to Green Building Law Update readers.  Back in February 2009, I wrote about the the difficulties of administering the stimulus funds at state, county and municipal levels.  In January 2010, I highlighted initial problems with the Illinois weatherization program, which was being funded by Department of Energy ARRA funds. 

But the rampant problems with the Illinois weatherization program have not improved. 

The Department of Energy Office of Inspector General recently published a follow up report on the Illinois weatherization program.  The report focuses on 15 homes that were audited.  The conclusions of the report speak for themselves:

Poor Workmanship: At 12 of the homes, CEDA inspectors found substandard work that could have, in some cases, resulted in significant property damage or injury to the homeowners. In one home, 11 of the 14 items that the contractor should have installed or repaired to improve energy efficiency failed inspection. In another instance, while accompanying inspectors, we found that a contractor had not corrected, as required by the home's work order, improperly installed kitchen exhaust ductwork, a potential fire hazard. Although CEDA and certain State officials disagreed that the ductwork problem posed a fire hazard, State building code officials we consulted confirmed the concern. Further, we observed a furnace intake vent pipe that had been improperly installed and found that five of the six tune-ups to heating systems had not been properly performed, allowing the heating systems to either improperly fire or emit carbon monoxide at higher than acceptable levels. Further, CEDA's own inspectors cited contractors for improper insulation of attics, band joists, and walls. In all, 8 of the 10 contractors that had weatherized homes included in our evaluation were cited for poor workmanship.
...

Inadequate Initial Assessments: At eight of the homes, CEDA inspectors found that assessors from within its organization had either called for inappropriate measures or had overlooked key weatherization measures needed to make the homes more energy efficient. In one home, for example, an inspection report noted that an assessor had inappropriately called for attic insulation when sizeable leaks in the roof would have reduced the effectiveness of the insulation. In addition, we found homes where inspectors cited assessors for failing to identify an open sump pump, leaking water lines, and a skylight that had not been properly insulated. CEDA acknowledged that, due to hiring nearly 60 new field personnel who were needed for the increased level of weatherization work funded by the Recovery Act, it had experienced "an inevitable level of inadequate assessments that were not corrected or were incompletely reviewed before the jobs were assigned to contractors."
...

Erroneous Billing: At 10 of the 15 homes we visited, CEDA inspectors found that contractors had billed a total of about $3,300 for labor and materials that had not been installed. For example, a contractor had installed a 125,000 BTU boiler, but had billed CEDA for a 200,000 BTU boiler costing an estimated $1,000 more. Additionally, a contractor had installed one carbon monoxide detector, but had billed CEDA for 3; another contractor had installed 12 light bulbs, but had billed CEDA for 20; and, yet another had failed to install a gas shut-off valve, but had billed for the work. In addition, a contractor had billed for almost four times the amount of drywall actually installed. Billing issues appeared to be pervasive, since 7 of the 10 contractors in our sample were cited by CEDA for erroneous invoicing.

Keep in mind that the DOE and Illinois were already on notice that the program was suffering from severe deficiencies back in January 2010. 

I have absolutely no doubt that this report will be picked up in the press and by politicians in order to cite a failure of the stimulus program.  I have no doubt that Illinois is not the only state that is failing to properly administer the DOE weatherization program.  I have no doubt that other green building stimulus programs are also facing similar issues. 

But as I look at this from a legal standpoint, I see an enormous wave of green building litigation.  I see homeowners filing lawsuits against contractors, engineers, and architects.  And I am advising my clients to be very careful as they proceed with ARRA projects. 

This could get very messy. 

Photo:  BostonBill

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As part of the evolution of Green Building Law Update, I have started an interview series with leaders in the green building industry. My first interview is with John Kennedy, Autodesk's Senior Manager of Sustainable Analysis Products. My interest in interviewing John was piqued when Autodesk's Vice President called for reform to the federal government's procurement process in order to further support green building developments. I never quite understood the concept of a "net zero energy building" until this interview.

Thanks to John for explaining the concept and being my first guinea pig for an interview.

In the future, I plan to keep these interviews much shorter so please contact me (chris@greenbuildinglawupdate.com) if you are interested in being my guest. And note, John did not mention his company's name once (it's Autodesk) but provided invaluable insight into his specific interest, net zero energy buildings. Well done, John.

---

Chris: What type of regulations do you think could best move the green building industry forward? I tend to think of building codes, incentives, even cap and trade legislation. What would be the best for the green building industry?

John: Well, if you look at a state like California as a model, since the late '70s, they've been ratcheting up their energy code in terms of the efficiency and how efficient a building has to be, and they're targeting by the end of this decade 2020 that all new residential buildings have to be net zero energy and that by 2030 all new commercial buildings have to be net zero energy. And so that's pretty much the end game for targeting green building energy focused regulation is the net zero energy -- are you familiar with that term, Chris?

Chris: If you want to explain it, that would be great.

John: So generally the typical definition is from a site perspective that a building has some means of generating energy typically electricity from renewable sources either photovoltaic electric panels or a wind turbine, and that electricity powers the energy use in the building and if there's excess it goes onto the grid and when those sources aren’t available when the sun is down or the wind isn’t blowing, that building will pull electricity off the grid and over the course of time, typically a year, that meter on the building rotates backwards and forward depending on which way the electricity is going nets out to zero.

And so that really changes the game in a lot of different aspects. Number one, it's very easy for someone to determine whether their building is meeting that performance and then it's very easy for people to understand that concept whereas today if you look at energy codes they typically have reference buildings that you have to build theoretical models of and compare your design to. It's very abstract, very complex, and then it's very difficult for the industry to confirm that that building is really meeting the performance that the law is saying it's supposed to meet.

So, with these net zero energy regulations coming up, the Industry is rushing to try and figure out how to meet them, owners are becoming very cognizant of the risk to their portfolios these building regulations will have. As we see more successful stories of net zero energy building put in place and performing well, these regulations are going to accelerate and we're going to see net zero energy building regulations pretty much mandated everywhere.

Chris: One of the issues that I've seen with green buildings is they're not performing like they were modeled to perform. How does that differ with net zero energy buildings? I think you indicated there is a difference in net zero buildings so that the performance gap is less likely. Can you expand on that a little bit?
 

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Construction defects often take a long time to develop.  Take, for example, the Courthouse Square building in Salem, Oregon, which is used for county offices and retail stores.  It was constructed in 2000 and received its LEED certification in 2002. 

As early as 2002, problems were identified at the project, including cracked grouting and loose tiles.  But it was not until July 2010 that the Courthouse Square buiding had to be vacated due to structural problems: 

"Henderson said the county started monitoring the floor in 2008 after an evaluation by David Evans and Associatesfound floor deflection, stating that 'portions of the original structural floor slab design were inadequate with regard to code requirements'. . . .

The county’s original plan was to stay in the building as the firm did tests on the building’s integrity, but that plan changed when the floors got worse.

'It’s only been in the last short time that the seriousness of these issues have come to light,' said Henderson. 'We had an incident on Friday where we believe one of the post tension cables ruptured.'

The cables are located in the building’s concrete floor slabs to provide rigidity. Several cables are in the slabs for redundancy and backup support, so the county at first did not believe one ruptured cable posed an immediate threat.

But after the rupture, further inspection found that 33 to 35 of the building’s 220 columns where bearing a weight that is more than code allows. The county then decided to vacate the building."

Since the evacuation was the result of construction defects, my initial thought was that LEEDigation was unlikely.  But a blog post at Green Building Elements further piqued my interest regarding potential LEEDigation:

"No one knows, or is saying at least, what is causing all the structural issues.  Cracked walls and ceilings are the hallmark of what appears to be a buckling post-tensioned concrete slab.  The concrete was recently tested and found to not meet the specified strength.  Garbage was found in the slab when samples were taken." 

Would any of the following scenarios be grounds for LEED decertification if the original certification was challenged?

• Installing concrete slabs that include garbage?
• Failing to meet code requirements?
• Having a LEED-certified building deemed structurally unsound? 

What do you think? 

Photo Credit: Oregon.gov

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I first met Daniel Moring as an aide to D.C. Council Member Mary Cheh when we discussed the D.C. Green Building Act.  We recently met up to discuss the General Services Administration's proposal to require greenhouse gas emissions reporting and I asked him to write a post on the topic.  Enjoy and have a great weekend.  

By: Daniel Moring

Although a climate bill lies in shambles at the foot of Capitol Hill as the summer recess approaches, a new approach to evaluating federal contracts by the General Services Administration could go a long way to realizing at least some of the goals of the failed legislation.  GSA won’t stop judging based on what vendors are offering and for how much, but they will give extra consideration for the greenhouse gas footprint of offerings.

Or, to put it more simply: The feds are going Wal-Mart. 

Wal-Mart, recognized across the retail industry for its masterful supply chain management and razor-thin margins, decided in 2007 to use its sheer buying power to move the market.  Wal-Mart committed to reduce 20 million metric tons of CO2 from its business operations, targeting the product lines with the highest ‘embedded emissions,’ a measure of environmental impacts across its lifecycle of manufacture, distribution, and disposal. 

To tackle this wide-ranging objective, Wal-Mart enlisted its over 60,000 suppliers to help investigating and implementing improvement of firms’ environmental footprint, starting with energy and climate impact—or risk being dropped as a vendor. 

The Wal-Mart approach does not go as far as federal actions contemplated, but simply creating an awareness of the greenhouse gas footprint implicit in the supply chain can have a transformative impact on the market, particularly as government remains an attractive [if not the best] client due to persistent sluggishness.  The GSA rules only encompass direct emissions from operations and, while not yet mandatory, could garner additional preference in procurement decisions. 

Although environmental footprinting for your firm may seem like just another government mandate, taking into account your business’ environmental impact and associated costs also presents opportunities to identify inefficiencies, prioritize investments, manage risk, and improve performance while gaining a strategic advantage with a very significant market actor.  As the oft-cited saying goes, “you cannot manage what you do not measure,” so it begins with taking stock, taking aim, and taking action on your company’s environmental impact, starting with vehicle and building energy use. 

The standards and requirements are still developing, but the handwriting is on the wall, and smart companies are beginning to understand the language of environmental management so they can read it and take advantage. 

Daniel Moring is Program Manager for the Washington, DC office of IBC Engineering Services, a sustainable engineering firm that specializes in identifying and reducing energy-related environmental impacts for business and government clients.

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The green building industry has been besieged the last few years with stories about buildings not performing as anticipated.  It appears the federal government has taken notice, and is pushing reforms to green building certification, based on comments by one high-ranking General Services Administration official:  

“'One of the things that I tease the USGBC about is that they really need to re-brand from ‘Leadership in Energy and Environmental Design’ to ‘Leadership in Energy and Environmental Performance,’ and they are picking up on that,' Kampschroer said. 'The GSA is as well, with the idea of continually improving the maintenance of existing buildings.'”

I was surprised to read this comment from a high-profile GSA official.  The GSA relies on the Leadership in Energy and Environmental Design (LEED) rating system to demonstrate that its new construction is green.  Now the GSA is apparently pushing the USGBC to reform its LEED rating system to account for building performance.  

In the article, the Vice President of Autodesk took it a step further and suggested that the federal government needs to completely overhaul the procurement system to ensure improved building energy performance:

"In order to demand more energy-efficient government buildings, he said, federal officials must change their procurement model from the typical system of outlining what they want built, setting an estimated price and awarding a contract to the lowest bidder.

'You have to blow that to smithereens,' said Bernstein, who believes federal officials must start setting broader energy-efficiency guidelines and rethink their incentive structure. 'The government should say, ‘I want this schedule, this LEED rating, this operational efficiency and these design-quality standards,’ and all the profit is a measure of achieving those things.'"

I have no doubt that the USGBC will be revising the LEED rating system in the next few years to include re-certification for new buildings based on energy performance.  The government has been dabbling with performance contracting - contractors that get paid based on reducing energy bills - for some time.   But would the federal government blow up the existing procurement process and require actual energy performance as part of new construction contracts? 

I wouldn't put it past the GSA.  

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It's an understatement to say environmentalists were disheartened by Senator Reid's announcement last week that a comprehensive cap-and-trade bill would be tabled for the year.  But, fear not, environmentalists - and, be fearful, unprepared federal contractors - because the federal government will be regulating greenhouse gas emissions in other ways.  

Back in October 2009, we talked about the groundbreaking Executive Order 13514, which set advanced sustainability requirements for the federal government.  One of the most important parts of the Order is Section 13, which asks the General Services Administration to look into the feasibility of requiring  vendors and contractors to report greenhouse gas emissions. 

The GSA recently released its report, which concludes that it is feasible to implement a "phased approach, for the Federal Government to track and reduce its scope 3 supply chain emissions through coordination with suppliers and other stakeholders."  In short, a greenhouse gas emissions reporting requirement will be phased in, and eventually mandated for federal contracts.

For federal contractors - and eventually state and local contractors - tracking, reporting, and reducing emissions will become an important strategy for winning government contracts. 

While much of the focus of Green Building Law Update has been on green building certification, I plan to shift gears in the coming months and focus more on greenhouse gas emissions reporting requirements for federal contractors.  Why?  

My concern is that construction contractors are not prepared to report greenhouse gas emissions.  

Are you prepared to report your greenhouse gas emissions?    

Photo credit: melancholic optimist

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"A Public-Private Partnership (PPP) is a contractual agreement between a public agency (federal, state or local) and a private sector entity. Through this agreement, the skills and assets of each sector (public and private) are shared in delivering a service or facility for the use of the general public. In addition to the sharing of resources, each party shares in the risks and rewards potential in the delivery of the service and/or facility."

But P3 practices are also being used for green building projects.  For example, the General Services Administration recently entered into a P3 lease agreement for a new campus to house the National Nuclear Security Administration's Kansas City manufacturing operations, which are seeking LEED Gold certification:

"The Heartland Region of the General Services Administration on Monday signed the final lease agreement with CenterPoint Zimmer LLC for a new campus to house the National Nuclear Security Administration’s Kansas City manufacturing operations. . . .

CenterPoint Zimmer, a subsidiary of CenterPoint Property Trust of Oak Brook, Ill., will receive annual rent of $61.5 million through the 20-year lease for a total contract amount of $1.23 billion.  Stephen Stanberry, the GSA contracting officer who worked on the lease, said it is a “net of utilities” leasing, meaning the NNSA will pay its own utility costs.

In return for the NNSA lease payments, CenterPoint Zimmer will develop the new campus. . . ."

My friends at J.E. Dunn will be constructing the project.

If you have questions about P3s, please let me know and I will do my best to address them in future posts.

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Despite my previous suggestion that the USGBC's Greening the Codes could have done without the history of building codes, I do think it offers an interesting history lesson.  This paragraph caught my attention:   

The energy crisis of the 1970s brought yet another topic to the national stage. The soaring costs of energy and a growing concern about pollution and natural resource conservation caused Congress to pass the Energy Policy and Conservation Act that in 1978 would require states receiving federal funds to initiate energy conservation standards for new buildings. That same year, the State of California led the nation by adopting the California Energy Code, recognizing that energy consumption gone unchecked yields societal costs to consumers, to the economy, to the environment and ultimately to public health. It would take a number of compounding factors in the 1990s to revive this interest in building energy efficiency that ended up otherwise largely lost to other priorities in the 1980s.

The more recent surge in support for green building looks eerily similar to the 1970s.  
I have always thought that the most recent green building trend really took hold in 2008, just as gas prices skyrocketed.

Congress then included billions of dollars for the green building and renewable energy industries in the American Recovery and Reinvestment Act that passed in February 2009.  In order to receive some of the stimulus funds, Governors had to make promises to improve state building codes.  At the state level, California became the first state to adopt a mandatory, state-wide green building code in January 2010.

History teaches us that this combination - the federal government and then California push green building codes forward - tends to repeat itself. 

If history repeats itself, what lessons can we learn from the last cycle of green building support?  The 1970s saw a wave of sick building syndrome cases.  After building envelopes were tightened -- but ventilation remained the same -- the occupants grew ill from the indoor environment.  Concerns are already starting to emerge about indoor air quality in this cycle's green buildings.  

Any other lessons I missed?

Photo Credit: Stuck In Customs

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The United States Green Building Council (USGBC) recently published a white paper entitled "Greening the Codes" that is simultaneously very helpful and somewhat frustrating.  The most important information is buried on page seven after an unnecessary review of the history of building codes.  But if you can get through the first six pages, you will find that the USGBC has made an important statement, although one that could have been made more boldly:  

"Raising the Floor: While green building rating systems such as LEED have been designed to benchmark above-code leadership for buildings that intend to go beyond the minimum, it is equally important to complement this leadership with stronger, more comprehensive building codes. Safer, healthier, and more environmentally responsible codes are at the heart of sustainability planning for raising the floor for the entire community. These codes are a viable new baseline off which incentives for exemplary leadership and commitments for public buildings to pave the way can naturally be built.

For commercial buildings: Consider adopting the International Green Construction Code and its technically rigorous 189.1 compliance path.

For residential buildings: In addition to adopting and implementing the 2009 International Energy Conservation Code, consider a well-established local green homebuilding program in your area. In the absence of such a program, the ICC-700 compliance path of the International Green Construction Code should be considered as a means for jurisdictional oversight for residential buildings."

I wish the white paper had stated in big bold letters on page one "STOP USING THE LEED RATING SYSTEM FOR BUILDING CODES."  But the statement in the white paper is a good start. 

Based on this white paper, I would suggest that it is time to revisit the D.C. Green Building Act before it's too late.  As you may recall, starting in 2012, all private construction greater than 50,000 square feet will be required to achieve LEED certification in Washington, D.C.  The USGBC's white paper all but states that the LEED rating system should not be used as a de facto building code for commercial buildings.  

And there still remains the issue of the unavailable "bonds" required to enforce the Act, but I won't get started on that.  At least for now.  

What are your thoughts on "Greening the Codes"? 

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What Is a "Zero Environmental Footprint"? 

This is an important question for government contractors because the General Services Administration (GSA) recently proposed that the federal government move to a zero environmental footprint.

Unfortunately, I'm not sure anyone has defined this apparently new term.  The GSA's announcement doesn't define "zero environmental footprint."  None of the articles highlighting GSA's proposal defined the term.  The numerous websites that provide greenhouse gas and carbon footprint accounting services do not define zero environmental footprint.  I also couldn't locate a definition through my Twitter, Facebook and LinkedIn friends.  

In the end, I had to rely on a Canadian children's website for a definition.  

The Canadian website Zerofootprint Kids Calculator defines an environmental footprint based on five categories:

(1) Transporation
(2) What you eat
(3) Home & School
(4) What You Use; and
(5) What You Throw Away

If you change "Home & School" to "Home & Work," you actually have a fairly comprehensive list of categories to calculate an adult's environmental footprint.*  

However, contractors will need a better definition of "zero environmental footprint."  The federal government might want to consider defining this important phrase.

*I actually took the YourFootprint quiz and was surprised at my carbon results.  Keep in mind, I live in Washington, DC, I do not own a car, and I live with a environmentally-conscious wife.  Here are my stats:

Carbon Footprint:  Me - 10.4; U.S. average - 9.8
Land:  Me - 1.8; U.S. average - 2.2
Trees:  Me - .3; U.S. average - 4.2
Water:  Me - 1743.2; U.S. average - 1877.9

Photo Credit: isolano

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Executive Order (EO) 13514 continues to have enormous implications for the green building industry.  As you'll recall, EO 13514 requires that federal agencies comply with a number of green building stipulations, including 95% of all applicable contracts meet sustainability requirements.  While the American Recovery and Reinvestment Act (ARRA) invested over $25 billion in green building projects, the Order will have a more long-lasting impact on the industry. 

Why do I say this?  General Services Administration (GSA) Adminstrator Martha N. Johnson's recent statement regarding the GSA's zero environmental footprint goal suggest how far agencies may go to implement the Order:

"Citing the president’s Executive Order 13514, Johnson highlighted the agency’s mission to assist other federal agencies to make greater strides in sustainability, excel at greening initiatives, and increase federal building performance. Johnson proposed that the federal government move to a zero environmental footprint, and she stressed that GSA is setting its sights on 'eliminating the impact of the federal government on our natural environment. . . .'

Johnson outlined a number of areas in which GSA could take the lead toward greening the government. These include cultivating green-centered public/private partnerships, aiming for only green products on the federal supply schedules, and using the federal building portfolio as a green proving-ground for new sustainable building and design technologies. . . ."

Administrator Johnson's statements are a signal of what is to come from GSA and other federal agencies.  Under the Executive Order (pdf), the GSA has broad authority to make recommendations to "green" federal contracting:

"Within 180 days of the date of this order, the General Services Administration . . . shall review and provide recommendations ... 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." 

Additionally, under Section 13 of the Order, the GSA has been asked to provide recommendations regarding "using Federal Government purchasing preferences or other incentives for products manufactured using processes that minimize greenhouse gas emissions. . . ."

The GSA is preparing to overhaul the way the federal government purchases services and supplies.  But what exactly is a zero environmental footprint? 

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I recently co-authored a chapter with Shari Shapiro of a soon-to-be-published book about green building law.  I am a regular reader Shari's Green Building Law Blog and she is one of the authors who helped me launch my own blog.

However, I am going to respectfully disagree with one of her recent posts regarding green building legislation. Shari juxtaposed two "green" regulatory measures - one that passed in Europe and one that was vetoed by the Governor of Wisconsin.  Shari concluded the Wisconsin Governor was in the wrong: 

"On the one hand, Europe has determined that it is not only feasible, but necessary to build its entire building stock to a near carbon neutral level, and Wisconsin has determined that it cannot even make 15% of its public buildings green.  What will the competitiveness of Wisconsin--indeed, the entire United States--be if it is saddled with a portfolio of underperforming building stock contributing to greenhouse gas emissions."

The Wisconsin Governor did not actually veto legislation making public buildings green.  The Governor properly vetoed spending state funds to certify public buildings as green:

"The measure had directed all state building funds to be used for certifying at least 15% of total gross square footage of working space in state-owned and leased buildings to meet green building requirements.  Doyle said he remained committed to green building efforts but that he could not support the bill."

For long-time Green Building Law Update readers, this veto should not be a surprise.  Back in October 2008, I pointed out that states may balk at green building regulations if revenues drop:

"[W]hat will happen to all of those states that passed regulations requiring public projects achieve LEED certification?  As you probably know, during economic downturns, less taxes are collected, which affects state budgets. . . . One area where state agencies may seek budget cuts is through green building programs."

"The latest biannual NGA-NASBO 'Fiscal Survey of the States,' released on June 3, says that, for fiscal 2010, which ends for 46 states on June 30, state general-fund expenditures will fall an estimated 6.8%, to $612.9 billion."

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From time to time, I like to step outside the green building industry and look at construction of renewable energy projects.  While windmill construction is nothing new, countries are looking for new opportunities to develop wind energy.  One new type of development has certainly caught my attention from a risk management standpoint. 

"By offering generous incentives, the U.K. already has built more offshore wind power than any other nation.  Now it is planning a wave of vast new wind farms, in some of Europe's stormiest waters." 

"Some dismiss the windmills as quixotic. . . . And many more challenges await, judging from those the project at Kent faced, ranging from the need to protect marine worms to a design flaw that causes turbines to sink into their foundations."

"Owners of a Dutch wind farm found their turbines had shifted a few inches, the result of a design flaw in equipment connecting the towers to their foundations.  RenewableUK, a trade association, said most of the 336 turbines operating in the U.K. waters could have the same fault, and would cost about $250,000 each to fix."  

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My first legal case involved "fly ash."  I had no idea what fly ash was so I looked it up in the dictionary.  Fly ash is a "coal-combustion by-product" (CCB) that is often used in concrete as a replacement for portland cement.  When used in massive concrete structures, like dam construction, fly ash can result in a significant cost savings.  

Despite all of my work with fly ash, I had never read or heard anyone mention that fly ash could be the "new asbestos."  That was, until I read an ENR article titled "Fly Ash Looms as the 'New Asbestos":

"Concrete groups are on tenterhooks, waiting for the U.S. Environmental Protection Agency to publish a proposed rule that aims to designate fly ash and other coal-combustion by-products as hazardous waste. The concrete sector is concerned even about the ramifications of a 'hybrid' rule that would allow beneficial uses of CCBs to continue."

"[T]he USGBC has issued a credit interpretation that allows for an innovation credit if 40% less cement is used than in typical construction, or if 40% of the cement in concrete is replaced with slag cement, fly ash, or both."

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On Thursday, I had the honor of presenting on green building legal issues to the Texas Young Lawyers Association.  I graduated from the University of Texas School of Law, so it was surreal to be invited back for the opportunity to speak on the law. 

Whenever I speak, I leave time for questions and this time I received a new question, something no one had ever asked me.  During my presentations, I often review the government trend in support of green building regulations.  Thanks to the United States Green Building Council for providing these helpful statistics:

"Various LEED initiatives including legislation, executive orders, resolutions, ordinances, policies, and initiatives are found in 45 states, including 202 localities (138 cities, 36 counties, and 28 towns), 34 state governments (including the Commonwealth of Puerto Rico), 14 federal agencies or departments, 17 public school jurisdictions, and 41 institutions of higher education across the United States."

"While the government seems to be driving energy efficiency initiatives in public buildings, local developers and companies are lagging behind. However, multinational companies have taken the lead to promote green buildings in China by pursuing more stringent LEED certification. . . . In fact, multinational companies, driven by their global corporate responsibility policies, have built eight of the total 15 LEED certified buildings in China so far. . . .

'At this point, the Chinese companies don’t feel the same sort of pressure to demonstrate corporate social responsibility that the multinational companies feel,' says Geoffrey Lewis, a Fulbright Fellow at Tsinghua University’s Department of Building Sciences who closely monitors China’s green building progress." 

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For many in the green building industry, federal projects have provided an opportunity for much needed work as private development has stalled.  However, contractors should be aware of a significant change to federal construction contracts coming down the pike.

On April 13, President Barack Obama issued an Executive Order that will result in new requirements for project labor agreements:

"The Obama administration is set to issue a rule Tuesday that will allow federal agencies to require that contractors on large-scale public construction projects agree to union representation for workers. . . . The rule doesn't mandate that federal agencies require contractors to bargain with unions on all jobs, but it clears the path for government agencies to make such agreements a requirement for contractors on jobs costing $25 million or more."

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On Saturday, I was having a leisurely breakfast with my wife when I foolishly flipped on my blackberry, opened my email and stared at the following headline:

Comox Rec Centre not LEED anymore. 

Breakfast was essentially over.  Never before had I seen the potential for LEEDigation stated so clearly in a headline.  

The Comox Recreation Centre is located in Comox, Canada.  According to the story at Canada.com, the project was originally pitched to receive LEED Platinum certification: 

"The expansion of the main entrance area and the older multi-purpose was expected to be built to the highest level of LEED certification, or LEED Platinum when it was awarded $950,000 in federal grants last fall.

But Comox Mayor Paul Ives says that certification was never realistic given the project's smaller budget and that the retrofit had to be built on the existing footprint.

'If we'd gone through LEED, we were going to be hard pressed to get LEED Silver, probably not Gold and definitely not Platinum because of the rating scale,' said Ives."

"Town council held in camera meetings March 23 and resolved to build 'an environmentally responsible and as energy efficient building as the budget allows', a downgrade of an earlier resolution that called for LEED platinum 'or a similar standard with financial limits.'"

Los Angeles Times Assails Weatherization Program (GBLU)

Photo credit:  Antony Pranata

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"If your company owns or leases commercial buildings and you have constructed or retrofitted the property to be more energy efficient, you may be eligible for an accelerated deduction for part or all of the costs associated with the property. Incentives are available for:

• Interior lighting systems

• Heating, ventilating and air conditioning (HVAC) and hot water systems

• Building envelope

• Interior lighting systems

• Heating, ventilating and air conditioning (HVAC) and hot water systems

• Building envelope"

"In the case of energy efficient commercial building property installed on or in a property owned by a Federal, State or local government entity, an allocation of the deduction can be made to the person primarily responsible for designing the property in lieu of the owner of such property. This designer could be an architect, engineer, contractor, environmental consultant or an energy services provider who created the technical specifications for making the building energy efficient."

You should consult with an attorney or tax consultant to ensure that you comply with all requirements. But the tax incentive provides a tremendous opportunity to capitalize on green building components that are incorporated into federal green building projects.

Related Links: 

Improving Cash Flow With the Energy Efficiency Deduction (RSM McGladrey)(.pdf)

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I recently had the pleasure of sitting down with Chris Birk of Surety Bonds Insider to discuss surety issues and the green building industry, particularly related to the D.C. Green Building Act.  

As a quick reset, the D.C. Green Building Act of 2006 requires owners put up "performance bonds" that guarantee LEED certification for certain projects.  The surety industry has raised concerns that these types of bonds do not exist.  My favorite question was when Chris asked me about the implications of the D.C. Green Building Act "performance bond" issue for the broader green building industry:

Chris Birk:  "What sort of long term, beyond the District implications are there in this?"

Chris Cheatham:  "This same issue will pop up wherever there is a green building regulation being proposed or pushed forward.  Whenever you are mandating some type of certification, some type of green building certification, you have to have an enforcement mechanism.  Because if you don't then people won't comply and its pointless to have the regulation.  You have to have some type of penalty." 

Related Links: 

Surety Bonds Sit-Down: The Future of Green Building with Chris Cheatham (Surety Bonds Insider)

A Green Building Performance Bond (GBLU)

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A nation-wide Property-Assessed Clean-Energy (PACE) bond program has been proposed, but not without its critics.  

As you may recall, PACE bonds are a new financing mechanism that can be used to retrofit homes and commercial buildings, or install renewable energy:

"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."

The White House is now pushing its own PACE bond program:

"Under the program, homeowners would borrow money from their local government to pay for energy improvements—from high-efficiency furnaces that cost a few thousand dollars, to solar-panel systems that can cost more than $30,000. They would then repay the loan over 15 to 20 years through a special assessment added to their property-tax bills. Local governments would get the funding by selling municipal bonds to investors

This debt would be senior to existing mortgage debt, so if the homeowner defaults or goes into foreclosure, it would be repaid before the mortgage lender gets any money. While property-tax assessments are usually senior to existing property debt, cities have traditionally used their assessment authority for community-wide improvements like sewers and roads—not for upgrades that homeowners elect to make on their own homes."  

As with any new governmental program, there are critics of the PACE program.  The critics of the White House's PACE program are opposed to the first-lien rights:  

"Alfred Pollard, general counsel for the mortgage companies' regulator, the Federal Housing Finance Agency, said he was worried about the problems that a first-lien, or first-in-line, loan could create. 'The goal of enhancing energy efficiency, which we share, should not overcome the need for prudent underwriting,' he said."

There appears to be no easy solution to appease the PACE bond critics.  Government agencies are comfortable pushing PACE bond programs for the same reason that banks and mortgage companies are uncomfortable with the programs:  the agencies take first-lien rights.  

Do you see a resolution?

PACE NOW (PACEnow.org)

Fannie and Freddie Resist Loans for Energy Efficiency (WSJ)

Photo: afagen

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I have previously written about informal complaints regarding the Environmental Protection Agency (EPA) and Department of Energy's (DOE) Energy Star Program for appliances.  Based on recent findings of a Government Accountability Office report, it seems much larger systemic problems exist within the Program:

"In a nine-month study, four fictitious companies invented by the accountability office also sought EnergyStar status for some conventional devices like dehumidifiers and heat pump models that existed only on paper. The fake companies submitted data indicating that the models consumed 20 percent less energy than even the most efficient ones on the market. Yet those applications were mostly approved without a challenge or even questions, the report said."

"Did you know that a building or manufacturing plant can earn the ENERGY STAR label just like your refrigerator?" 

"Commercial buildings achieving a score of 75 or higher using Portfolio Manager and verified by a professional engineer are eligible to apply for the ENERGY STAR. To get started, enter the required data into Portfolio Manager. The tool will tell you if your building may qualify for the ENERGY STAR. If it does, your next step is to complete the verification process and submit your application." 

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On Monday, I discussed conflicts between military construction and green building certification.  Green building certification was originally created for commercial office buildings, which can create some odd applications in military construction.  While we have have already discussed energy efficiency, bicycle racks and HVAC systems, there is one component of military construction that conflicts directly with many green building components:  anti-terrorism.  

I never imagined someone had completed a study of these conflicts:

The LEED®-DoD Antiterrorism Standards Tool addresses the security implications of strategies used to achieve each LEED credit with regard to their inter-relationship (i.e., potential conflicts and synergies), from the Department of Defense (DoD) perspective. Information is presented within a color-coded matrix based on the U.S. Green Building Council's Leadership in Energy and Environmental Design Green Building Rating System (LEED-NC Version 2.1) cross-referenced with the applicable standards in Unified Facilities Criteria (UFC) 4-010-01, DoD Minimum Antiterrorism Standards for Buildings. As such, critical areas are easily identified, prompting the project team to work collaboratively, using a 'whole building' approach, to develop successful, efficient solutions for a high performance, secure building.

For a government contracts attorney focused on green building legal and regulatory developments, the Standards Tool is a remarkable discovery.  My eye was immediately drawn to the "conflicting requirements" in the Standards Tool.  According to the Standards Tool, the following LEED credits are in direct conflict with Anti-terrorism Standards: 

•    SS-2 Development Density
•    SS-5.2 Reduced Site Disturbance, Development Footprint
•    SS-6.1 Stormwater Management, Rate and Quantity

In future posts, I will be exploring the conflicts between these LEED credits and the Anti-terrorism Standards Tool.  Have any of you worked with a building trying to comply with both LEED certification and the Department of Defense Anti-Terrorism Standards? 

Related Links:

LEED DoD Antiterrorism Standards Tool (WBDG)

Conflicts Arise Between Military Construction and Green Building (GBLU)

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Douglas Reiser, who publishes at the Builders Counsel Blog, recently posted an interesting question regarding Davis-Bacon wage determinations for green building projects:

"What do you think about Davis-Bacon worker/payment classifications for 'green building' specialists or professionals? Should there be a classification for your project's LEED AP? How about for any independent raters?  I am thinking that there might be a debate about HVAC, electrical, and plumbing workers who are trained in sustainable practices - do they require higher wages than your normal subcontractors?"

• Weatherization worker
• Doors & windows replacement worker
• HVAC, furnace, heating & cooling repair, installation and replacement worker
• Carpenter
• Electrician
• Plumber

Virginia Residential Weatherization Wage Determination

(DOL)(PDF)

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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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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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Photo:  serdir

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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."

Photo: wilkins lee

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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