Green Building Law Update

Environmental Law and Sustainability for Business

Green Building that Cleans the Air

By Stuart Kaplow on Posted in Green Building, Green Globes, LEED

Today’s green building standards, rating systems and codes are stale, largely based in decades old science and do not go far enough to be efficacious for most business to invest in.

This is no longer a genuine debate over the negative environmental impact that buildings have on the planet. But the green building industrial complex is missing that green building can be the solution to many of the environmental impacts arising from human activity and at the same time make a business case that green building can be profitable.

There is little real dispute that given humans take shelter from the climate inside buildings, humans need to design and construct those buildings to be resilient in whatever climatic zones the building is located. Moreover, when the human population of the planet that is today over 7 billion is widely expected to exceed 10 billion by 2050, those people will seek shelter in buildings, most of which have not yet been constructed, there is a huge opportunity in what is built.

Green building is a low risk geoengineering solution to many of the environmental issues of the day.

That Green buildings can significantly reduce energy use, water use, solid waste and CO2 emissions is true, but that is old and stale. And net zero efforts generally unwisely use the same tired science and sacrifice occupant comfort while not going broad enough or deep enough often at great dollar and other costs. And there is not room in this brief blog post to talk about the junk science and other unsupported science found in many green building credits (e.g., think non-roof urban heat island effect).

Today the debate about building has shifting away from a discussion of risk toward the question of “how to capitalize on exciting opportunities.” Companies and investors are quickly realizing that environmental matters are social, political and moral issues, but also economic and business opportunities as well. This is translating into a wave of investment and innovation including in real estate, much of which is ahead of and not supported by today’s green building standards, rating systems and codes, including not in the 2018 updates?!

Parents in charrettes for new K-12 schools say their number one environmental concern is germs and the integration of anti microbial building materials, .. not something current American green building addresses well. Moreover, there are federal and state laws that all but prohibit anti germicidal claims.

The “new” materials credits for EPDs and HPDs in green building programs are based on 1970s ISOs created but never actually adopted in Europe and are not being widely used irrespective of the fact that they have been denuded of matters toxicity.

The EPA reports indoor air pollution is one of the top environmental risks to public health and a study of new high end home buyers found indoor air quality be their chief ask (not energy efficiency), but green building programs do not accentuate wall and ceiling coatings that act as air scrubbers to substantially reduce VOCs and other airborne organic particulates in interior spaces.

Concomitantly, coatings available in the market reduce odors in bathroom, kitchens and everywhere by purifying the air, not simply masking odors.

Other airborne organic particulates can be reduced in interior spaces tremendously reducing inside dust not only in clean laboratory rooms, but every treated room in home and office.

And some of the most exciting materials in the market today actually have the building exterior making a positive impact on the environment. Green building programs should today focus on geoengineering solutions like façade cladding treatments where titanium dioxide nanoparticles not only self clean the building exterior, but also clean the surrounding air! These products are not the science fiction of tomorrow, but rather they exist today and are being used. In one example researchers at Louisiana State University performed lab tests and a field study with Pureti’s titanium dioxide technology and determined it was effective, so that the treated façade at a building under construction at 570 Broome in Manhattan will have an environmental impact equivalent to removing 625 cars from the road.

Policy making staff at green building programs can debate why green building has stalled in the U.S. or can aggressively follow the market to the future updating the green building standards, rating systems and codes to be the low risk geoengineering solution to the environmental issues of the day that the business community wants and demands.

This blog post is a compilation of issues discussed by Stuart Kaplow in a recent presentation about “the science of your next green building.”

Your ENERGY STAR Score is About to Fall Precipitously

By Stuart Kaplow on Posted in Codes and Regulations, Energy, Green Building, Green Globes, LEED

Building owners that utilize ENERGY STAR Portfolio Manager will see a dramatic change in the 1 to 100 ENERGY STAR scores after August 26, 2018. Every score model we reviewed saw a drop in ENERGY STAR score except hotels.

You have 75 days to act.

The change is significant for buildings pursuing LEED or Green Globes certification, for buildings with GSA or other government space leases tied to an ENERGY STAR score of 75, for buildings in cities with mandatory benchmarking, and for the more than 450,000 commercial properties that have an ENERGY STAR score.

This is a huge deal because EPA says that more than 40% of U.S. commercial building space is benchmarked in Portfolio Manager (versus less than 1% of U.S. commercial building is LEED certified).

The change is because EPA is updating performance metrics in Portfolio Manager based on more recent market data. This update is part of EPA’s standard process to keep ENERGY STAR metrics current. For most types of commercial buildings, the 1 to 100 ENERGY STAR score is based on the Commercial Buildings Energy Consumption Survey, which is conducted once every four years (.. sort of) by the U.S. Department of Energy’s Energy Information Administration. This latest CBECS data became available in 2016 and is based on the results of the 2012 survey. (Note that EIA was unable to publish the 2007 CBECS and therefore, many of today’s scores rely on much older CBECS data, hence the dramatic drop now.)

The bottom line is most, if not nearly all ENERGY STAR scores will drop. The 1 to100 ENERGY STAR score compares a building’s energy performance to that of similar buildings nationwide. The most recent market data available shows an overall improvement in the energy performance of the U.S. building stock in recent years.

So when Portfolio Manager metrics are updated on August 26, ENERGY STAR scores and other performance metrics will go down.

Exact score changes for specific buildings or portfolios will not be available prior to the August release. An individual building’s ENERGY STAR score may increase or decrease, depending on energy use, fuel mix, business activity, property type, and other variables, but see the chart above for where EPA suggests most buildings will move.

The following 1 to 100 ENERGY STAR score models will be updated: bank branches, courthouses, financial offices, hotels, houses of worship, K-12 schools, offices, retail, supermarkets, and warehouses.

The release date for all updated scores is August 26, 2018. The online tool will be temporarily unavailable beginning the afternoon of August 26 while the changes are made, and then is anticipated to come back online late in the evening the following day. Users will see the updated metrics when they login to the tool on Monday, August 27.

In addition to updates to 1 to 100 ENERGY STAR score models, there will be two other changes included in the August 2018 metric updates: Beginning after August 26, there will be a new option to use estimated energy use for data centers. This option is designed for smaller data centers, within another property type, and where it is not practical to measure IT energy use.

There will also be a change to the source energy factor helps level the playing field for different fuel types by tracing the energy requirements of the building back to the raw fuel input (coal, gas, steam, hydro, etc.). Based on the national average, the new national source electric factor will be slightly lower. However, performance metrics could increase or decrease depending on the building’s fuel-mix ratio, though changes based on this update alone with be comparatively small in magnitude.

So, apply now for ENERGY STAR certification, especially if your building score is close to 75!

Applications submitted by July 26, 2018 will be assessed using currently available (pre-update) scores. Applications received before July 26, 2018, and which require no significant follow-up or changes, will be approved and awarded certification using the existing score models. Applications received after August 26 will be evaluated using the updated score models.

EPA will not rescind prior ENERGY STAR certifications.

To aid in this transition to updated scores, EPA is making a one-time update to eligibility rules to allow everyone to apply before the score changes are implemented. EPA is updating the requirement to wait at least 11 months after the “Year Ending” date of your last approved application. Policy for 2018 only is all buildings that earned 2017 ENERGY STAR certification will be eligible to apply for 2018 certification using a “Year Ending Date” of April 30, 2018 or earlier.

EPA and the Department of Energy have signaled that in the FY 2019 federal budget, Energy Star will not be funded. I wrote about this in a blog post last year, The Opportunity for ENERGY STAR, when a last minute budget deal temporarily kept the program from being privatized.

But the takeaway for today, while awaiting implementation of the loftier policy, is, apply now for an ENERGY STAR score, especially if your building score is close to 75! You have 75 days to act.

European Data Privacy Law Applicable to Green Buildings

By Stuart Kaplow on Posted in Codes and Regulations, Green Building

With the upcoming May 25, 2018 effective date for the new European General Data Protection Regulation, the European Union law drafted to provide greater protections for the personal data of individuals, it is a good time to review and consider the large quantity of data generated by green buildings.

The EU GDPR has long arms and its reach impacts a large number of U.S. organizations that might not expect to be subject to a European data privacy law.

Because the EU GDPR, with its global reach, carries with it very large monetary penalties, being as much as the greater of €20,000,000 or 4% of the total worldwide annual turnover from the preceding financial year, every U.S. entity that has minimum contacts with European residents should determine if it is required to comply. Most large U.S. companies are already in compliance.

Many small U.S. organizations have received notices from Google Adwords or Facebook. And among our most read blog posts last years was, Green Building Data has Enormous Economic Upside. It may be shameless self promotion to suggest if you want an overview of matters of green building data, read that blog post. This post is about a subset of those data issues, that is the impact of the new European data privacy law.

An organization must comply with the EU GDPR if it is a controller or processor of “any information relating to an identified or identifiable natural person” located in the EU.

The new law is based on a twenty first century application of a tenant of eighteenth century liberalism that “the protection of natural persons in relation to the processing of personal data is a fundamental right.” That is, the overarching principle is that the individual owns its personal data, not the data controllers or processors. This is the opposite of prevailing U.S. laws.

An example may be a U.S. landlord leasing to a French company or that landlord collecting building occupant data for a German resident living in the U.S., which data could be collected as a LEED building occupant survey or a stored video of building occupants entering the lobby. And while, absent an extension or some sort, as a result of Brexit, the UK will leave the EU on March 29, 2019, the law is expected to apply to British citizens.

There are opt-in consent requirements, right to erase (updated from the earlier ‘right to be forgotten’), right to access of one’ data, data security obligations including pseudo anonymization of that data, data breach notification requirements, responsibility for data transferred outside of the EU, and much more. Data processors with 250 or more employees are required to maintain records of processing activity.  A processor with fewer than 250 employees must also keep such records if the processing is likely to result in a risk to the rights and freedoms of data subjects, the processing is more than occasional, or the processing includes certain special categories of data relating to racial or ethnic origin, religious and other beliefs, sexual orientation, or criminal convictions and offenses.

The requirement of opt-in consent, as noted above, can be characterized as the core tenet of the new data protection law. But even obtaining an individual’s consent in order to process their personal data may not be as straightforward as some think, including because consents will need to be refreshed, some are suggesting every two years.

Arguably for many an easy way to comply with the EU GDPR processing requirements, for businesses only dealing with other businesses, is through standardized contract clauses preapproved by the European authorities. This is the model suggested by the Google Adwords emails to U.S. businesses that may have ads viewed in Europe.

The U.S. Green Building Council’s data practices provide the alert that “you must submit extensive information to GBCI related to the Project, including without limitation, any information related to you ..” The practices are publicly articulated in the GBCI legal section 13. Project Information and while there are other reasons not to do so, for the purposes of easily complying with the EU GDPR for purposes of data provided to GBCI, it may be both prudent to first elect for the LEED or arc project to be a “Private Project” opting out of all public data sharing and second not to pursue credits involving occupant data.

The EU law is not only mandatory of all doing business with EU residents, but its broader application may be that it is excellent guidance for any business seeking to mitigate the risk associated with data protection. Because the U.S. does not have an omnibus data protection law, the EU data protection regime has become the de facto standard.

The effective date for the EU GDPR is upon us. Organizations should first and foremost determine whether it is governed by the law.  If so, the organization should promptly undertake efforts to understand what data it collects, processes, and stores. If any of that data involves a person located in the EU, the organization should prepare a plan to bring itself into compliance. Consultation with counsel may be necessary to assure an organization is complying with the new law.

The World is being Forced to Rethink Recycling

By Stuart Kaplow on Posted in Environmental, Green Globes, LEED, recycling

Maybe not since Plato wrote about the value of reusing waste in the fourth century BC has recycling undergone the wide fluctuation, good and bad, that we are seeing right now. Today, the world has been forced to rethink its approach to waste.

China is driving the change in recycling.

Most recently, China imposed a 25% tariff on U.S. scrap aluminum. The import has resulted in a more than 15% drop in the price of mixed aluminum scrap this past month to 60 cents per pound, an amount that exceeds the profit margin for processors.

This is against a backdrop of China last July 18 banned the imports of 24 varieties of solid waste, including types of plastic and unsorted paper.

And then last month China extended the ban to dozens more types of recyclable materials, including steel waste, used auto parts and old ships.

The resultant chaos in the recycling market is because China is the largest buyer of much of the recycled material the U.S. exports. Last year, China imported 13 million metric tonnes of waste from the U.S.

And the externalities are breathtaking because shipping companies charge less to import all cargo containers into the U.S. when those containers return filled with waste in lieu of returning empty. Moreover, U.S. environmental laws greatly limit reuse of recyclables, including by way of example making all but impossible to recycle plastic drink bottles at scale in the U.S. Which is why it makes sense to export things that are almost worthless all the way to China.

China has long had an official standard that contaminants in imported waste not exceed 1.5% by weight, but it wasn’t enforced. In 2013, China announced Operation Green Fence under which enforcement would be stricter. And in March, 2017 China announced its new National Sword standard although the details were not clear to many in the West until the July 18 notice that the level of contaminants in plastic and paper recyclables China buys must be no more than 0.3%.

The recent acts by China have resulted in prices for mixed recyclable paper to be zero.

More broadly the price of other recycled products have dropped to levels below anything this law firm has ever seen in more than a decade of drafting corporate solid waste plans.

The impact in the U.S. is most recycling no longer makes any economic sense under existing metrics.

All of this drives higher operating costs and in particular for LEED, Green Globes, IgCC and similar projects that include prescriptive recycling plans.

So, the U.S. has been forced to rethink its approach to recycling, including the U.S. Green Building Council’s sister organization, Green Business Certification Inc., announced in late 2017 it was entering the waste recycling certification business with TRUE (Total Resource Use and Efficiency), the new brand identity for its zero waste rating system. The TRUE Zero Waste rating system helps businesses define, pursue and achieve their zero waste goals through project certification including professional credentialing.

TRUE is a systems approach that helps organizations understand how materials flow through their facilities and identify redesign opportunities so that all products are reused. TRUE certified projects meet a minimum of 90% waste diversion for 12 months from landfills, incinerators or the environment.

The TRUE Zero Waste certification, previously administered by the U.S. Zero Waste Business Council, was acquired by GBCI in 2016. And now TRUE is administered by GBCI as a complement to LEED. View the Guide to Certification to learn more and to rethink your recycling.

And with no place far away to ship waste, recyclable or otherwise, waste to energy projects are no longer environmental pariahs and are getting a new look.

That is the good news in the realm of recycling. Such is significant when according to the EPA, the average American generates 4.4 pounds of trash each day, and that number is not falling but the amount recycled had been increasing.

Against the backdrop of China’s aggressive mercantilist policies, with no good market in which to sell many recyclables, while barring domestic reuse, it is now time to rethink the solid waste practices that are currently not supported by good science and disproportionately negatively impact on economically disadvantaged people, which have been largely unchanged since the 1960s.

The Last Straw for a Rational Environmental Policy?

By Stuart Kaplow on Posted in Environmental

In the wake of the 48th anniversary of Earth Day yesterday, among the hottest environmental issues of the day appears to be criminalizing the plastic drinking straw.

The import of the “war on drinking straws” must be true because this week there is a viral video viewed on YouTube more than 5.5 million times of a 2015 incident where a Texas A&M University research team in Costa Rica found a plastic straw stuck in the nose of a sea turtle.

Then there is the widely tossed around statistic that Americans use 500 million plastic drinking straws a day, but upon investigation it appears that number is suspect and had as its basis a 2011 environmental group’s print ad, but no science. There is apparently a single manufacturing facility in Virginia that produced nearly 4 Billion straws last year, most of them small plastic straws for juice boxes.

In response to the current hue and cry over one of the oldest eating utensils, the California cities of San Luis Obispo and Davis both have gone as far as enacting “straws on request” laws and Manhattan Beach has a law banning all disposable plastics. Also, Seattle has enacted a ban on plastic utensils, including straws, going into effect in July.

But potentially impacting more than the populations of those few cities, the state of California has pending, Assembly Bill 1884, that would prohibit sit down food facilities from providing a single use plastic straw to customers unless specifically requested by the customer.

Criminalizing the distribution of drinking straws, under the guise of environmental policy, in a state that decriminalized cannabis distribution, appears foolish to many and of concern to even more that this misguided idea might spread East.

The origin of the first drinking straw is not known, but it dates to more than 5,000 years ago. There is a gold straw in a Giza Pyramid that dates to 2589 BC. We are told Sumerians used straws to drink their beer 3,000 years ago to reach the solids at the bottle of the brew.

In America it became fashionable in the 1800s to drink from an inexpensive and easily created rye grass straw. The first modern drinking straw was likely the creation of American inventor Marvin C. Stone who began selling paper straws in 1888. And while straws have remained popular, the 1960 era of The Graduate, and “a great future in plastics” has resulted straws becoming part of our culture.

There appears to be little if any science supporting the criminalization of drinking straws? Anti-straw advocacy activists (.. yes, that is a real thing) appear focused on post consumer pollution of discarded straws after a single use, but they don’t seem concerned about the associated ‘less than ideally biodegradable’ drink boxes, usually 6 layers of paper lined with aluminum foil, nor is there a hue and cry because plastic drinking straws are typically made from polypropylene, contributing to petroleum consumption?

There are biodegradable drinking straws on the market, but corn based straws have not proven popular. There are paper straws as well as bamboo and straw straws. Glass straws have always had a place, but have issues of their own.

But maybe the real issue is that drinking straws are not actually the single greatest environmental threat to life as we know it on this planet?

In 1970 when Earth Day was created U.S. rivers were on fire and smog choked our cities. 38 years later most do not think that the environmental apocalypse will begin with a drinking straw, even one disposed of with a juice drink box in California. In 2018, possibly elected officials can find another boogeyman as a last straw for rational environmental policy?

Local Laws Stop the Setting Sun on Solar Installations

By Stuart Kaplow on Posted in Energy, IgCC, Local Government, Solar Panel

Two bills pending in the Montgomery County Council aim to increase the use of renewable energy in the suburban Maryland County.

At a time when the number of households installing solar panels on their roofs declined last year, the first annual decline since 2000, and a decline by more than 15% when compared with the year before, following 5 years of growth that averaged nearly 50% a year, many believe that the growth of onsite renewable energy is not sustainable in the current environment.

These two bills are models, replicable across the country, for promoting more solar installations.

Bill 12-18, Real Property – New Home Sales Contracts – Solar Panel Systems, sponsored by Councilmembers Marc Elrich and Tom Hucker, was introduced on March 20, 2018 and a public hearing is scheduled for this week on April 10.

Bill 12-18 would require the seller of a newly constructed single-family home to give the buyer an option to install a solar panel system. It would also require the seller to disclose the benefits of a solar panel system and an estimate of the cost to install the system.

The stated purpose of the bill is to increase the use of renewable energy in the County. The bill would encourage this by ensuring that the purchaser of a new single-family home or townhouse (i.e., a house not previously sold or occupied) is aware of the option of installing solar panels on the roof of the home including receiving an estimate of the cost to install the panels before signing a contract of sale. The buyer would have the option of either adding the installation of solar panels to the new home sale contract or declining to add the panels.

Forms required to implement the new law and to be included with contracts of sale for newly constructed homes, included the required costs estimates, are to be provided on the County website. Numbers made available by the federal government depict that the cost of a typical rooftop solar installation fell more than 60% between 2010 and 2017 to $2.80 per watt or roughly $16,000 for the average home.

And the second proposed enactment, Bill 11-18, Buildings – Environmental Roof Design – Non – Residential and Multi-family buildings, also sponsored by Councilmember Elrich, was also introduced on March 20 with a public hearing scheduled for April 10.

Bill 11-18 would require an environmentally sustainable roof on certain new and extensively modified non-residential or multi-family buildings.

This bill would require new non-residential and multi-family buildings that will have at least 10,000 square feet of floor area to have a solar roof with at least 15% of the roof surface covered by solar thermal collectors or a solar photovoltaic system, as prescribed by section 408.3 of the International Green Construction Code. If that is not practical (because the roof is in the shade of a neighboring building for example), then if not solar, a vegetative green roof is required, if practical. If neither solar nor vegetative, then a heat reducing reflective roof must be installed.

It would also authorize the Director of the Department of Permitting Services to approve a full or partial waiver.

The solar industry has retreated both because of market forces, including overly aggressive sales tactics and saturation among early innovator home owners, both that could not be propped up by federal government tax incentives that principally benefitted institutional investors. New U.S. tariffs will only result in that market being more constrained in 2018.

These two bills are models, replicable across the country, for promoting onsite renewable energy.

LEED v4.1 Building Operations and Maintenance is Live

By Stuart Kaplow on Posted in Green Building, LEED

LEED version 4.1 is now a reality with the release for use today, March 26, of LEED v4.1 O+M – Building Operations and Maintenance.

“We are excited to introduce LEED v4.1 in beta, the latest update to the LEED rating system,” said Melissa Baker, senior vice president for Technical Core with USGBC, when we spoke last week. “The changes made to the rating system simplify and streamline the certification process for projects of all kinds. We are fully committed to bringing all buildings in as users of LEED, and the launch of LEED v4.1 is a critical step toward realizing our vision of green buildings for all within a generation.”

Mahesh Ramanujam, USGBC’s President and CEO, put it in context last Thursday in LEED’s new move, “The fact is that we now live in a very different world than we did in 2009, when LEED v4 was first written, but we are encouraged that with LEED v4.1, a system updated for today’s market, so much more will be possible.”

The first to be released, LEED v4.1 O+M is the rating system for existing buildings that are undergoing improvement work or little to no construction. It applies to Existing Buildings, Schools, Retail, Hospitality, Data Centers, and Warehouses & Distribution Centers.

And in what is undisputedly the most dramatic positive revision in LEED v4.1 O+M, it is now available for Existing Interior spaces where in the past is was whole building only.

An elephantiasic effort has been made to simplify and streamline LEED v4.1 O+M. While there had been discussion about eliminating Prerequisites, the determination was that the system would be better updated for today’s market by providing templates for policies and otherwise streamlining Credit requirements. That has resulted in what may be the most wide reaching substantive update such that now the majority of points available are performance based.

By focusing on building performance and using data as documentation, LEED v4.1 encourages leadership, transparency and inclusivity,

Ms. Baker said in our conversation. “LEED v4.1 is more accessible and agile, and the beta release will allow project teams to engage with the rating system as we continue to make improvements.”

Using the Arc platform to generate the data, existing building owners can create a performance score across five data categories – Energy, Water, Waste, Transportation, and Human Experience – and a LEED v4.1 O+M certified project must achieve a performance score of at least 40.  The data during the beta period will drive the ultimate form of this v4/1 rating system, but already the environmental industrial complex is excited about the goal to let more existing buildings certify when Arc powers the LEED rating system.

There is of course no Arc “certification” and Arc will thrive and grow as it is integrated within LEED v4.1. Arc is a technology platform that offers online tools for buildings to score themselves. And Arc is available at no charge to LEED registered projects.

LEED v4.1 is not a full version change of the rating system, but rather is what is being described as “the next evolution” of the rating system, hence the nomenclature of moving from v4 to v4.1 and not v5 (.. development is ‘underway’ on the next full version of LEED in collaboration with the creators of the already approved ASHARE 189.1 – 2018 and the soon to be released 2018 IgCC). This update to O+M includes dramatic and hugely positive ‘updates’ to a rating system that had in the past failed to move the existing building market. The updates to other rating systems may not be so dramatic.

LEED v4.1 O+M is available for use, now, in beta (technically a piloting period) that will run concurrently with an approval process that will include public comment and a balloting of the members in 2019. It is unique for USGBC that initially, v4 and v4.1 will both exist on parallel tracts at least until the vote by the members.

You can review the summary of changes, scorecards and other documents from this link.

It will be advantageous to pursue a LEED 4.1 project during this period as GBCI will have designated technical teams for support that will buttress a robust educational and training rollout by USGBC.

LEED v4.1 versions of the other LEED rating systems, including significantly BD+C, will be forthcoming later this year. LEED v4.1 Homes will be the next released.

As I wrote in a blog post last year, LEED v4.1 Announced by USGBC at Greenbuild, an updated version of the most widely used green building rating system in the world, that certifies 2.2 million square feet daily and has more than 92,000 participating projects in more than 165 countries and territories, is a big deal.

Selling a House with Solar Panels is Not for the Faint of Heart

By Stuart Kaplow on Posted in Energy, Solar Panel

There are more than a Million houses in the U.S. with solar panels installed on the roof and that number is increasing. It can be difficult if not dangerous to fail to properly address rooftop solar panels at the time of sale of a house.

Among the most often made inquiries to this law firm arise from the failure to properly transfer installed solar panels.

We assist real estate owners and those acquiring property in positively leveraging the constraints and finding advantages in matters involving solar panels, often including new approaches and possibilities in this emergent arena.

But contract forms for the sale and purchase of a house are often provided by a local board of realtors and today those forms do not adequately address the new and only now evolving issues arising from a sale with rooftop solar panels.

There is no one homogenized solar panel ‘deal’ and the business terms including ‘who owns the panels’ varies from one transaction type to another, and in most instances these installations are governed by varying state laws. But commonly, residential solar panel leases provide language similar to, ..

You agree that the solar panel system is the Company’s personal property under the Uniform Commercial Code.  You understand and agree that this is a lease and not a sale agreement. The Company owns the solar panel system for all purposes.

Obviously this creates issues when selling a house with solar panels on the roof that belong to someone else. It is common that residential solar panel leases provide language similar to,

If you sell your home you can transfer this lease and the monthly payments.

The person buying your home can sign a transfer agreement assuming all of your rights and obligations under this lease by qualifying in one of three ways: (1) the home buyer has a FICO score of 650 or greater; (2) the home buyer is paying cash for your home; or (3) if the home buyer does not qualify under (1) or (2), if the home buyer qualifies for a mortgage to purchase your home and the home buyer pays us a $250 credit exception fee.

Or, if you are moving to a new home in the same utility district, then where permitted by the local utility, the system can be moved to your new home. You will need to pay all costs associated with relocating the system, ..

Timing also needs to be considered when entering into a contract to sell a house,

You agree to give the Company at least 15 days but not more than 90 days prior written notice if you want someone to assume your lease obligations.

Many of the companies engaged in this business (.. but not all) file a UCC-1 financing statement in the real estate records that puts third parties on notice to their rights in the system. That fixture filing is in most states a lien or encumbrance against the system. But because in many residential transactions, title companies do not search the UCC-1 indexes (.. that are primarily used for business purposes), solar leases are regularly missed.

However, the express language of solar system leases cannot be missed,

EXCEPT AS SET FORTH IN THIS LEASE, YOU WILL NOT SUBLEASE, ASSIGN, SELL, PLEDGE OR IN ANY OTHER WAY TRANSFER YOUR INTEREST IN THE SYSTEM OR THIS LEASE WITHOUT OUR PRIOR WRITTEN CONSENT.

That accepted, as suggested by the solar lease language above, there are options and fertile, enabling and desirable business terms that can add significant value to the real estate. The solar lease, as well as any power purchase agreement need to be considered in light of federal and state law (including tax laws) that stimulate new possibilities including create profit.

Shockingly, this is not only a residential problem. This firm regularly receives inquiries arising from commercial real estate transactions that have not adequately addressed matters of solar panels, PPAs, PACE financing, tax credits and the like.

Selling a house with solar panels is not for the faint of heart. There can be real legal jeopardy and significant dollar liability for those failing to address the issues associated with solar panels. If we can assist you in positively leveraging the constraints and finding advantages in matters of transactions involving solar panels do not hesitate to contact Stuart Kaplow.

Renewable Energy Claim is Deceptive

By Stuart Kaplow on Posted in Energy, Solar Panel, wind turbine

This past week and there have been many other times this law firm was consulted about a marketing claim by a building owner with rooftop solar panels that advertises they “use” renewable energy, but the owner sells Renewable Energy Certificates (RECs) for the renewable energy it generates, so the Federal Trade Commission says it shouldn’t make the claim.

But it is suggested that the Federal Trade Commission’s Green Guides, designed to help marketers avoid making environmental marketing claims that are unfair or deceptive under Section 5 of the FTC Act, 15 U.S.C. § 45, need to be updated with respect to renewable energy, despite that the Green Guides first issued in 1992 were revised in 2012.

With respect to renewable energy claims, the Green Guides advise, “if a marketer generates renewable electricity but sells renewable energy certificates for all of that electricity, it would be deceptive for the marketer to represent, directly or by implication, that it uses renewable energy.”

Key to the Green Guides are the examples. So, with apologies to the FTC, but there is no better way to communicate the thinking of the federal government than to quote extensively from the Green Guides, including examples published in the Guides with respect to renewable energy:

Example 1:  A marketer advertises its clothing line as “made with wind power.”  The marketer buys wind energy for 50% of the energy it uses to make the clothing in its line. The marketer’s claim is deceptive because reasonable consumers likely interpret the claim to mean that the power was composed entirely of renewable energy.  If the marketer stated, “We purchase wind energy for half of our manufacturing facilities,” the claim would not be deceptive.

Example 2:  A company purchases renewable energy from a portfolio of sources that includes a mix of solar, wind, and other renewable energy sources in combinations and proportions that vary over time.  The company uses renewable energy from that portfolio to power all of the significant manufacturing processes involved in making its product.  The company advertises its product as “made with renewable energy.”  The claim would not be deceptive if the marketer clearly and prominently disclosed all renewable energy sources.  Alternatively, the claim would not be deceptive if the marketer clearly and prominently stated, “made from a mix of renewable energy sources,” and specified the renewable source that makes up the greatest percentage of the portfolio.  The company may calculate which renewable energy source makes up the greatest percentage of the portfolio on an annual basis.

Example 3:  An automobile company uses 100% non-renewable energy to produce its cars.  The company purchases renewable energy certificates to match the non-renewable energy that powers all of the significant manufacturing processes for the seats, but no other parts, of its cars.  If the company states, “The seats of our cars are made with renewable energy,” the claim would not be deceptive, as long as the company clearly and prominently qualifies the claim such as by specifying the renewable energy source.

Example 4:  A company uses 100% non-renewable energy to manufacturer all parts of its product, but powers the assembly process entirely with renewable energy.  If the marketer advertised its product as “assembled using renewable energy,” the claim would not be deceptive.

Example 5:  A toy manufacturer places solar panels on the roof of its plant to generate power, and advertises that its plant is “100% solar-powered.”  The manufacturer, however, sells renewable energy certificates based on the renewable attributes of all the power it generates.  Even if the manufacturer uses the electricity generated by the solar panels, it has, by selling renewable energy certificates, transferred the right to characterize that electricity as renewable.  The manufacturer’s claim is therefore deceptive.  It also would be deceptive for this manufacturer to advertise that it “hosts” a renewable power facility because reasonable consumers likely interpret this claim to mean that the manufacturer uses renewable energy.  It would not be deceptive, however, for the manufacturer to advertise, “We generate renewable energy, but sell all of it to others.”

The guides do not operate to bind the FTC, other governments or the public, and are not legal advice, but they are characterized as the current thinking of the FTC.

Despite that the guides are instructive, this law firm is regularly asked to counsel and advise solar industry participants, owners of green building and others about environmental claims. In an era when consumer class actions are de rigueur it is particularly important that environmental marketing claims are not unfair or deceptive.

All of this exists against a backdrop of the greatly expanding use of solar panels generated by available LEED credits and Green Globes points, federal tax incentives, increasing numbers of local government mandates, not to mention that rooftop photovoltaic panels are chic.

Given this is a fast emergent industry and that consumers have become much more sophisticated about environmental claims in recent years, it is suggested that the current Green Guides need to be updated, especially with respect to renewable energy.

Maryland Expanding Green Building Thru Government Leases

By Stuart Kaplow on Posted in Green Building, LEED, State

The Maryland Green Building Council recommended a broad and deep expansion of green building leasing by state government and the Maryland Department of General Services is expected to enlarge what is a “high performance building” for the purposes of state government leasing.

The anticipated regulatory change is being widely heralded as a dramatic step forward in expanding green building in the State and across the country, not only because of its efficacy (i.e., it will result in significantly more green building), but because it is a voluntary incentive to private landlords who want to lease to the state that is leading by example (and not creating another mandate from on high).

Maryland has for more than a decade had a statutory requirement that new construction projects 100% funded by the State’s capital budget must meet or exceed the current version of LEED. And in recent years the state has expanded that requirement to allow IgCC and Green Globes constructed building to satisfy the mandate.

But Maryland 100% funds the construction of very few new buildings each year (e.g., public private partnerships are the de rigueur). What the state continues to do is lease buildings and space within existing buildings, however despite a vibrant leasing program little of that space is actually green. This action by the Maryland Green Building Council seeks to buttress leasing of green buildings including significantly encouraging the greening of existing buildings.

The specifics of this are not sexy. This is a proposed change to the “Office of Real Estate, Department of General Services, General Performance Standards and Specifications for the State of Maryland Lease Facilities” last revised July 2013. In those specifications, the Maryland DGS “has established a set of selection criteria for the evaluation of RFP submissions: for those who propose to lease to the state. “Proposal criteria will be evaluated and awarded a value from 0 to 15.”

These changes improve the 2013 specifications including to make them applicable to leases for a tenant space within and existing building, not just a whole building lease (as had been the goal in the past),

e.  In the event the proposed Leased Space is less than a whole building, the appropriate green building system may certify the existing building (e.g., LEED Operations and Maintenance Silver) the Leased Space (e.g. LEED Commercial Interiors Gold) – 35 Value Points.

The revised specifications now apply to lease renewals (a major change when the majority of Maryland DGS leasing activity is a renewal and not a lease of new space),

g.  In the event of a proposed renewal of a lease (i.e., beyond the last stated renewal term), as an alternative to item c and d above, and ENERGY STAR Portfolio Manager score of 75 – 25 Value Points.

And there are other positive changes in that the specification is no longer LEED only, when it provides,

3.a.  High Performance Building Plus (i.e., LEED Gold Certified, Three Green Globes, NGBS Gold, or the equivalent, in a current and appropriate green building system) – 30 Value Points.

And there are other forward thinking edits to the specifications, like, “the State of Maryland will own and control all information and data associated with the building including but not limited to energy and water data and other data associated with High Performance Building, and such information and data shall be considered proprietary may not be disclosed in any manner to a third party without the prior written consent of the State.”

Maryland is already among the greenest places on the planet and was recognized at #5 on the USGBC’s Top 10 States For LEED In 2017.  When this recommendation becomes final, as is expected during upcoming changes to the RFP process, Maryland will become even more green.

This is an exciting expansion of green building. This is voluntary. No one in Maryland is required to do anything by this regulatory change, but if a project developer wants to lease to the state there are real incentives for building green.

And maybe most important, this type of government action leading through example and encouraging positive is an ideal model to be replicated elsewhere, resulting in more green building everywhere.

I would be remiss if I did not make the reader aware that Maryland Governor Larry Hogan appointed me to the Maryland Green Building Council in 2017 and I was pleased to participate in this recommendation.

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