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

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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2009 was my first full year blogging at Green Building Law Update. It was a difficult year for the construction industry, but the green building movement continued to grow.

I recently went back and reviewed the Green Building Law Update stories from 2009. Below are some of my favorite quotes from my favorite posts. If you have a moment, go back and check out some of these posts, as we will continue discussing these topics well into 2010.

• "'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.'"  Prediction: It's All About the Retrofit

• "A security instrument guaranteeing LEED certification is the unicorn of the green building industry."  The Green Building Unicorn

• "The stimulus package is going to result in increased levels of green building litigation. I hope I am wrong, but I think it is inevitable."  The Stimulus: Now for the Bad Part
   
• "I have a new term for the green building and legal industries:  LEEDigation."  LEEDigation
   
• "Twitter is going to be all the rage in 2009, you should jump on board now."  All A-Twitter About Green Building Law

Thanks for taking the time to read Green Building Law Update this year. On Wednesday, we are going to look at the most important green building legal story of the year and on Friday we will look at the green building legal story that will have the most impact on the industry in 2010.

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I have previously speculated that stimulus green building projects will be at risk of underbidding.  Now we have real evidence.  Remember the $5.5 billion that the General Services Administration received from the stimulus to fund green building construction and retrofits?

"Bids came in far lower than we expected, but the upside is that because of that, we have been able to fund more projects," said Paul Prouty, acting administrator for the General Services Administration.

You may recall that the GSA requires that all new construction projects achieve LEED certification and prefers that its projects achieve LEED Silver certification.  With the fierce competition for GSA projects, you can bet that the winning bids will include LEED Silver certification promises. 

Underbidding these GSA projects with promises of LEED certification is bound to lead to problems.  Underbidding makes it more difficult to deal with changes to the design and construction.  Underbidding makes it more difficult for contractors to deal with changes in design and construction plans:

[Paul Shaughnessy, president of BSI Constructors in St. Louis] warned that some contractors are bidding so low they could find themselves unable to cover even the slightest unexpected construction costs.

"The risky side is you're seeing some very thinly capitalized companies making low bids out of desperation," he said. "Their bids are so thin that should something go wrong, they would have very little capital to fix things."

Simply put, the stage is set for LEEDigation.   

Photo:  Our Hero

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If there was a LEEDigation doomsday clock, I would move it up about 5 minutes towards midnight based on the following decision by the USGBC.* 

Real Life LEED recently reported that the USGBC has decreed that, starting June 26, 2009, Credit Interpretation Requests (CIRs) will no longer be applicable to all projects: 

"Effective June 26, 2009, credit interpretation requests (CIRs) submitted by any registered project will no longer be vetted by USGBC or its LEED Technical Advisory Groups. As a result, CIR rulings will now be applicable only to the project that submitted them. For LEED version 2 projects, rulings on CIRs submitted prior to June 26, 2009, will be honored until they are retired by USGBC or incorporated into general USGBC-issued project guidance, such as through errata or addenda."

All you non-practitioners out there may be wondering what the heck a CIR is and why this matters.  The best way for me to explain a CIR is to compare it to case law. 

When you are talking to a client that is thinking about a lawsuit, one step you may undertake is reading up on case law.  You read case law to find a factually analogous situation to determine if your client has a good chance of winning. 

CIRs function the same way as case law.  To achieve LEED certification, a project must achieve a certain number of credits.  But the requirements for each credit are often open to interpretation.  To resolve this uncertainty, a technical advisory board evaluates each CIR to determine whether or not a credit should be granted.  Historically, USGBC has published these credit  interpretations to inform other builders and designers in future projects.  The first comment after the Real Life LEED post really hits at the importance of CIRs:

Wonder why they decided to do this, public CIRs help project teams immensely. They give good information on how the USGBC look at and interpret credits so that we could submit proper documentation or know what is and isn't acceptable strategies to meet the credits. I don't think LEED is in the stage where it is clear enough to not be interpreted several different ways.

You probably already see why LEEDigation is more likely without public CIRs.  Without public CIRs, architects, engineers and contractors are going to have more trouble interpreting credits and determining strategies that will successfully achieve a LEED credit.  As a result, the likelihood that projects will fail to achieve LEED certification increases dramatically.  As we've discussed, failure to achieve promised LEED certification leads toLEEDigation.

On Monday, we will look at why the USGBC had to do away with public CIRs.

But what do you think about this change? 

*To be clear, the USGBC had to make this business decision.  My post on Monday will go into more detail as to why this decision was necessary.

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One of my blogging buddies, Shari Shapiro, wrote a piece last week about the lack of green building lawsuits.  Her post reminded me of a conversation I had with an attorney when I was in New Orleans for the ABA Forum on Construction event. 

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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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Last week, I attended the ABA Forum on Construction “Talking Green Blues” conference in New Orleans.  The one presentation I was looking forward to the most was “When ‘Green’ Turns to ‘Red’ and ‘LEEDs’ to a Summons and Complaint,” which was moderated by Frank Musica.  Musica is one of the foremost experts on green building claims.  I wrote about Musica's presentation "Don't Let Green Design Cause Red Ink" in September, 2008 and refer to it often when discussing potential problems with green building. 

One of Musica's opening remarks really caught my attention:

"We are about to see a second and much larger wave of green building claims." 

Go back and read that quote again.  This is serious.  This is a big deal for the green building industry. 

Why do Musica and I expect a surge in green building claims in the coming months and years?  I highlighted many of the reasons in my "Green in the Stimulus" slideshow.  The presentation highlights the opportunities, but also the risks, inherhent in green building stimulus projects: inexperienced government entities will have unrealistic expectations of green building projects.  These same entities will also require guarantees of LEED certification or energy performance, or both.  The contracts for these projects will be extremely important. 

The wave of LEEDigation is coming.  Can you swim?  Can your attorney? 

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Recently, I was asked about my involvement with green building.  Why do I keep pointing out potential legal issues that the green building industry may have to confront?  Am I just an impediment to the green building industry? 

Here is my answer.  I am going to use this in the About section up above. 

I am a construction litigator.  I am also a LEED Accredited Professional (AP).  If you want a standard biography describing the articles I have written, the organizations I am a part of, or the schools I went to, go ahead and view my law firm profile, or better yet, my LinkedIn profile.  This section is going to be about why I started Green Building Law Update.

When I studied for the LEED AP exam, I got hooked on green building and became convinced this was the future for the construction industry.  Just after I passed the exam, I began reviewing the D.C. Green Building Act of 2006.  As I stated in one of my first Green Building Law Update posts, when I read the “Performance Bond” section of the Act, I gasped.  In that moment, I realized lawyers have an important role to play in the green building industry.

With any new industry, there will be issues and conflicts that must be resolved.  The green building industry is no different.  Through Green Building Law Update, I aim to point out the problematic regulations and industry trends that are ripe for litigation (i.e. LEEDigation) in order to hopefully prevent some of these issues and conflicts from arising.  If the issues and conflicts do arise, hopefully Green Building Law Update will lead you to contact me.  

These are my goals.  How am I doing? 

What do you think?  Are you convinced? 

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This post is simple.  I have a new term for the green building and legal industries:

LEEDigation. 

What is LEEDigation?  LEEDigation is green building litigation.  LEEDigation could involve disputes arising from green building certification.  LEEDigation could arise if a project fails to obtain government incentives or satisfy mandates for green building construction.  LEEDigation could simply result from improperly designed or constructed green building strategies. 

There you have it:  LEEDigation.  Feel free to start using it.  But don't forget about its origin!

Photo:  Outstanding Photos

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RSVP for the DCENVIRO Happy Hour on Earth Day, April 22.  Hope to see you there.

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