Green Building Law Update

Environmental Law and Sustainability for Business

Maryland Reverting to Certifiable In Lieu of Certified Green Building

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

In response to an act of the Maryland legislature in 2018, the state is proposing a watershed revamp of its current mandatory green building requirements for new public school buildings.

The public is being invited to comment on the proposal.

Existing State Finance and Procurement Section 4-809(f) was amended adding new section (6), providing in relevant part,

the Maryland Green Building Council shall: .. (6) Develop guidelines for new public school buildings to achieve the equivalent of the current version of .. LEED Silver rating or a comparable rating system or building code .. without requiring an independent certification that the buildings have achieved the required standards.”

The crux of the new statute is that new public school buildings (from pre k through 12 to university dormitories and community college classrooms) need no longer be third party certified as a green building such as LEED, Green Globes or the like.

Note, there is another compliance path where building could be built to comply with the 2012 International Green Construction Code, (however, no public buildings in Maryland have ever accomplished that alternative compliance path because it is suggested as amended by the state that green code is unbuildable, but that will be remedied by what is proposed here when local government adopted versions of the IgCC may be utilized for new public school building in that local jurisdiction).

The Maryland Green Building Council, a government body not affiliated with the USGBC, sought input over the past year in implementing the law from the public and stakeholders, including input from local education agencies responsible for most school construction in the state.

The Maryland Green Building Council is proposing “guidelines” that creatively provide 3 alternative means by which an agency erecting such a new public school building may comply with State Finance and Procurement Section 4-809(f)(6):

  1. The Maryland Green Building Council finds that third party certification of high performance building is the ideal and advantageous in most, if not all, instances. New public school buildings pursuing third party certification (e.g., LEED Silver Certification by Green Business Certification Inc.) is preferable and should be given a priority and otherwise advantaged over those buildings not pursuing such a certification.
  2. Or in the alternative, the Maryland Green Building Council finds a third party opinion (i.e., by an appropriate professional such as an architect, engineer, green building consultant, attorney, etc.) that a high performance building is certifiable under an appropriate green building rating system, is desirable and in compliance with this law.
  3. Or in the alternative, that new public school building is designed and constructed to any of the following green building standards, rating systems or codes (without requiring an independent certification that the building has achieved the required standard), is suitable and in compliance with this law.

In a modernization from what once was a LEED only system, the Maryland Green Building Council is pushing green building forward with a transformation to a current version of any of:

LEED Silver

Green Globes Two Globes

National Green Building Standard – ICC 700 Silver level

International Green Construction Code

Living Building Challenge

Collaborative for High Performance Schools CHPS Criteria

FITWELL Two Stars

WELL Building Standard

However, it is not clear that all of those standards will be part of the finally approved guidelines. But by now utilizing “an appropriate and current version” of each, this proposal seeks to transform a now out of date (.. and thus not currently possible to comply with) Maryland regulatory program, making it current, including LEED version 2020 ready.

To those knowledgeable it is déjà vu all over again, where Maryland’s 2004 green building enactment only mandated that public funded building be “certifiable,” not certified while also contemplating the use of multiple green building systems.

Recognizing that no two buildings are homogenized, two different waivers processes are proposed; one for pre K thru 12 school building and the other for all other public school building.

While no agency or group will likely oppose implementation of these already widely vetted guidelines, there are no doubt individual ecco zealots who will find fault (.. with anything as not being green enough) or small minded Luddites resisting progress in high performance building, and risk killing the goose that laid the Golden eggs such that without the implementing guidelines required by the legislature, Maryland will have no enforceable public building green building law.

Despite that the law does not require action by other than the Maryland Green Building Council, (.. appreciate that with hundreds of Millions of dollars of new public school building, annually, politics weighs heavily and this legislation was vetoed by the Governor which veto was overridden by the legislature), the assistant Attorney General assigned to the Department of General Services opined that approval by the Secretaries of General Services and Budget & Management is required.

The complete draft proposal is here. Although the final version will likely be narrower in scope and breadth.

Comments are being accepted online through June 18, 2019 at https://forms.gle/T3Umpmm4gAF74FBo8. Or you can comment in person at a public meeting of the Maryland Green Building Council on June 19 at 10:00 a.m., after which the public body vote in open session on a final version of the guidelines and will seek approval, by the two Secretaries, of those mandatory guidelines that will be foundation of future high performance building in the state and a guidepost for the nation.

EPA Cancels Pesticide Registrations to Save the Bees

By Stuart Kaplow on Posted in Codes and Regulations, Environmental, Federal

In a rare move, the EPA issued product cancellation orders for certain pesticides effective May 20, 2019. The pesticides contain neonicotinoids that, despite their widespread use have become controversial when laboratory studies reported a link between neonicotinoids and declining bee populations, although a link has not been replicated in field studies.

Neonicotinoids are compounds in insecticides chemically related to nicotine. The name literally means “new nicotine-like insecticides.”

Neonicotinoids pesticides first reached the market in the 1990s and today are the most widely used class of insecticide in the world. For example, more than 80% of corn in the U.S. is reported treated with neonicotinoids seed.

In 2013 several beekeepers and public interest organizations filed suit in the U.S. District Court for the Northern District of California alleging that EPA had improperly denied a petition to suspend products containing clothianidin and that EPA’s registration of certain clothianidin and thiamethoxam products violated certain registration requirements of federal law.

The parties settled the case. As part of the dismissal, the defendant intervenors Syngenta, Bayer and Valent (whose insecticides contain clothianidin and thiamethoxam) agreed to request that EPA voluntarily cancel 12 specific products that contain either clothianidin or thiamethoxam.

Section 6(f)(1) of the Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C. 136d(f)(1)) provides that a registrant of a pesticide product may at any time request that any of its pesticide registrations be canceled or amended to terminate one or more uses. Such requests were made.

Bayer did note that its two products targeted by this EPA action are not sold in the U.S. This is a global issue and the EU and Canada have moved to protect pollinator populations.

Of note, the companies may continue to sell and distribute existing stocks of products (.. which are reported to be significant) until May 20, 2020, which is 1 year after the publication of the Cancellation Order.

The settlement of the case also requires EPA in coming years to analyze the impacts of neonicotinoids pesticides on endangered species, but it is suggested in a cart and horse problem that is looking for the science to justify this ban after the fact?

Unaffected by the settlement is a similar problem that arguably exists for monarch butterflies which population has dropped precipitously.

It is not in dispute that there has been a significant collapse of honeybee hives in recent years, but there is no scientific consensus as to the cause. President Obama was criticized when a central element of that Administration’s initiative to promote honeybee and other pollinator health was installing a beehive of the South lawn of the White House. President Trump has been criticized that this is regulation through litigation despite, EPA Ends Perverse Practice of “Sue and Settle” even though this action was published in the Federal Register.

But it is not clear that banning these 12 insecticides will have any efficacy for honeybees It will no doubt lead to disruption at U.S. farms and increase the costs of food production.

This regulation through settling litigation, banning legal products without a finding of even a scintilla of scientific evidence by a court or government agency, is no better than Montgomery County, Maryland’s local government pesticide ban, and is bad environmental public policy.

GSA Reviews more than 100 Green Building Systems and Selects 5

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

Section 436(h) of the Energy Independence and Security Act of 2007 requires the General Services Administration’s Office of Federal High-Performance Buildings to complete a review of high performance building certification systems every 5 years. After the review, GSA recommends to the Secretary of Energy the building certification systems most likely to encourage a comprehensive approach to certification of high-performance buildings.

The last review, in 2012, shook the green building industrial complex to its foundations, when it not only recommended LEED (that had previously been the sole option), but also recommended Green Globes.

GSA is now undertaking the next 5 year review and last week released a draft report of its recommendations. This is not simply a “laurel versus yanny” debate because there a hundreds of millions of construction dollars at stake.

GSA researched the U.S. market and identified more than 100 whole building certification systems. The screening next identified 6 systems that likely met the government’s requirements for its own building (one system, Earth Advantage, declined to participate):

BOMA BEST Sustainable Buildings, version 3.0

BREEAM In-Use USA, version 2016

Green Globes, version 2013

LEED, version 4.0

Living Building Challenge, version 3.1

GSA invited those system owners to complete a survey, which asked for information on the technical components of the certification system that address federal high performance building requirements and industry best practice, as well as the processes by which the system was created. GSA evaluated the effectiveness and conformance based on specific building requirements found in:

The Green Building Certification Systems Requirement for New Federal Buildings and Major Renovations of Federal Buildings Final DOE Rule,

EISA, and

The 2016 Guiding Principles for Sustainable Federal Buildings.

GSA, actually a third party consultant engaged by an unrelated government agency whose work was vetted by yet another consultant, evaluated 39 criteria for new construction and building interior systems and 36 criteria for existing buildings systems. The GSA report concludes,

While each system reviewed for this report addresses the primary criteria that define high-performance buildings, no single system fully ensures conformance with all the federal requirements. Each system offers a unique framework and approach to achieving building certification, but all the systems generally agree on the aspects of building design, construction, operation, and maintenance that lead to high-performing commercial office buildings.

Specifically, the GSA report finds that for “new construction and major renovation” LEED BD+C and Green Globes NC score identically, both slightly ahead of the score for LBC.

For “existing building” certification systems the GSA report scores all well ranking in descending order LEED O&M, Green Globes EB, LBC EB, BREEAM, and BOMA.

And for “building interior” the report ranks LBC Interiors best followed by LEED ID+C and then Green Globes Interiors.

Of course there is no requirement that federal agencies use green building certification systems, although agencies may choose to do so to support conformance with federal high performance building requirements in statutes and executive orders, as well as the Guiding Principles for Sustainable Federal Buildings. However, the use of building certification systems has advantages for federal agencies and it can be anticipated that the list of recommended building certification systems in 2019 will include all those reviewed. The trend nationally is for government to branch out from the days of old LEED only, allowing any of a variety of green building programs, as Maryland is expected to do next month.

All of that observed, the efficacy of this report may be short lived. There is serious discussion in several Executive Branch departments to next year eliminate most if not all of the high performance building requirements from the best practices and guidance issued by GSA for application federal government wide.

Recycled Restaurant Waste Cooking Oil Can Trigger Insurance Pollution Exclusion

By Stuart Kaplow on Posted in Environmental, recycling

In a case having broad implications given the wide mandatory recycling of restaurant waste cooking oil across the country, in a decision filed on April 29, 2019, a federal appeals court held that contaminated recycled fat could trigger the “pollution exclusion” in an insurance policy.

In Restaurant Recycling, LLC v. Employer Mutual Casualty Company,

Restaurant Recycling purchased used fat, like waste cooking oil from restaurants in mandatory commercial organics recycling programs and the like, and then processed and resold the substances to pork and poultry producers for blending with other ingredients in their animal feed.

From July to September 2014, Restaurant Recycling delivered several loads of its blended fats to New Fashion Pork. These fat products were contaminated with two substances, lasalocid and lascadoil. Lasalocid, a chemical agent, “is not generally recognized as safe and is known to cause deaths in horses, turkeys, and swine.” Lascadoil, a byproduct in the manufacture of lasalocid, “is not approved for consumption in humans or in animals and is not generally recognized as safe.” Lascadoil is an industrial waste product whose only approved use is as biofuel.

New Fashion Pork sued Restaurant Recycling for delivering defective shipments of recycled fat, which New Fashion Pork uses as an ingredient in its swine feed. Restaurant Recycling, in turn, sued Employer Mutual Casualty Company, seeking a declaratory judgment that the insurer had a duty to defend and indemnify Restaurant Recycling. Employer Mutual moved for judgment on the pleadings, citing a total pollution exclusion in its general commercial insurance policy that limited coverage in the case of property damage arising from dispersal of pollutants. Fatal to its case, Restaurant Recycling conceded that lascadoil is a “pollutant” such that these actions were within the scope of their insurance policy’s pollution exclusion.

The district court granted the motion, and Restaurant Recycling appealed. The Eighth Circuit concluded that the total pollution exclusion applies and affirmed the judgment.

This case highlights one of the real world implications of the use recycled products, mandatory and otherwise, which are widely blended with other ingredients before being reintroduced into the stream of commerce.

Maryland Appellate Court Upholds Local Government Pesticide Ban

By Stuart Kaplow on Posted in LEED, Local Government

Last week the Maryland Court of Special Appeals, the state’s intermediate appellate court, overturned an earlier circuit court decision, reinstating a Montgomery County ordinance significantly restricting pesticide use throughout the County.

In October 2015, the Montgomery County Council enacted Bill No. 52-14 becoming the first major jurisdiction in the country to enact such a ban. Among its other provisions, the bill amended the Montgomery County Code to ban certain pesticide use on private and County owned property. Most pertinent to the challenge of the ordinance is that is specifies only “Listed pesticide[s]” may be applied to (1) lawns, (2) playgrounds, (3) mulched recreation areas, (4) children’s facilities, or (5) the grounds of a children’s facility when those areas are located on “County-owned property and private property.”

Pesticides are not simply bug spray or better yet not limited to household insect repellants, but is also not only substances used to destroy insects, but include insecticides, herbicides, rodenticides, bactericides, fungicides and larvicides.

“Listed” permitted pesticides are defined to mean only pesticides that are recommended by the National Organic Standards Board or designated as “minimum risk pesticides” under FIFRA.

It is widely accepted that a local government attempting to ban a legal substance is wrong. This anti-pesticide law has been analogized to anti-vaxxers as based on junk science. And lest one be confused, this ban has nothing to do with pollinator habitat or the like.

And it does purportedly allow very limited exceptions to the restrictions, for example if a pesticide is applied pursuant to an exception concerning “imminent threats to human health or preventing significant economic damage” the person applying the pesticide must inform the County of each application.

In an August 2017 written opinion, the circuit court had concluded that the County ordinance was preempted by State law, both by implication and by conflict: “[t]he County’s Ordinance flouts decades of State primacy in ensuring safe and proper pesticide use, undermines the State’s system of comprehensive and uniform product approval and regulation, and prohibits products and conduct that have been affirmatively approved and licensed by the State.” The circuit court issued a declaratory judgment that Bill No. 52-14 was unlawful and preempted by Maryland law, and ordered that the bill “as it regards the use of pesticides on private property, shall not take effect, and [Appellees] are entitled to permanent injunctive relief from the enforcement of these sections.” The County’s appeal followed.

Pesticides have been used by man for more than 4500 years beginning in Samaria, but not now in Montgomery County. A May 2, 2019 opinion that begins “From 1958-1962, Rachel Carson wrote Silent Spring .. Carson’s examination of the health impacts of DDT and other pesticides galvanized the public ..” and footnotes Upton Sinclair’s The Jungle, reinstates the County legislated ban, explaining the Court of Special Appeal’s reasoning, including ..

The opinion lists factors supporting the appellate court’s conclusion against preemption including: “repeated failures to preempt, a lack of comprehensiveness along the lines of FIFRA, no pervasive scheme of administrative regulation, no conflict through frustration of purpose, and General Assembly recognition of local regulation of pesticides. Together, these factors point in one direction: the State has not prohibited local governments from regulating pesticides in the manner addressed by the County. Accordingly, we conclude that the citizens of Montgomery County are not powerless to restrict the use of certain toxins that have long been recognized as ‘economic poisons’ and which pose risks to the public health and environment.”

The issues before the court were about how state law did not preempt local law, but critics of this decision that cites as authority Silent Spring and The Jungle, see a highly charged political issue putting people at risk when pesticides are banned that control pests and diseases including mosquitoes and ticks. Montgomery County, Maryland v. Complete Lawn Care, Inc., et al, may or may not be good law, ( .. however the court’s analysis of preemption is not consistent with this same appellate court’s decision last November in Board of County Commissioners of Washington County, et al. v. Perennial Solar, LLC, a case currently before Maryland highest court the Court of Appeals, where the intermediate appellate Court found counties are impliedly preempted in the solar arena), but allowing one county to ban pesticides puts people at risk, from Zika fever, Lyme’s disease and much more, beyond that jurisdiction’s borders and is bad environmental public policy. Moreover, the judiciary should not advance junk science, even if it is popularized by the local legislative branch.

There are alternatives to this ban. Montgomery County has long had a mandatory green building law and the local government could incentivize LEED Integrated Pest Management Plans that minimize pest problems and exposure to pesticide.

Ideally, the Maryland Court of Appeals will grant certiorari and correct this wrong, protecting the residents of Montgomery County and beyond from a local legislative body by not allowing pesticide to be banned.

Maryland Bans Polystyrene and Enacts 31 other New Environmental Laws

By Stuart Kaplow on Posted in Environmental, State

The Maryland General Assembly, the state’s legislative body meets in regular session for 90 days each year beginning the second Wednesday in January to act on more than 2,500 pieces of legislation.

On sine die, when the legislature adjourned at midnight on the 90th day, on April 8, 2019, a total of 864 bills and 2 resolutions passed both chambers. The Governor has until May 28, the 30th day after presentment to sign or veto bills.

This post is a review of key environmental bills passed this session. Maryland has been described as having more pages of environmental statutes and regulations on a per capita basis than any other state. The 32 new laws compiled below add to that regulatory scheme. Savvy players in the environmental industrial complex will find business opportunities to lead and profit in environmental matters, including opportunities advantaged by these newly enacted laws.

Expanded Polystyrene Ban

The Maryland General Assembly enacted the first statewide ban of expanded polystyrene foam. Beginning July 1, 2020, Senate Bill 285/House Bill 109 (both passed) prohibit a person from selling or offering for sale in the state an “expanded polystyrene food service product” and a “food service business,” which includes specified businesses, institutional cafeterias, or schools from selling or providing food or beverages in an expanded polystyrene food service product.

Although foam coffee cups and plates are often referred to as “Styrofoam®,” that terminology is incorrect. Styrofoam is actually a registered trademark of Dow Chemical Company and is a brand generally used in industrial settings for building materials and pipe insulation. Styrofoam is not used in the food service industry for coffee cups, coolers, or packaging materials, which are generally made of expanded polystyrene.

The Maryland Department of the Environment (MDE) may adopt regulations to implement the bills. MDE may grant to a food service business or school a waiver from the bills’ prohibition for up to one year if MDE determines that compliance would present an undue hardship or a practical difficulty that is not generally applicable to other food service businesses or schools in similar circumstances. A unit of county government must enforce the bill’s prohibitions and may impose a penalty of up to $250 on a person or food service business that violates the bill’s prohibitions. However, the monetary penalty may only be imposed if the unit of county government first issues a written notice of violation and the violation is not corrected within three months of the written notice.

Solid Waste Management

In an effort to promote solid waste diversion through a combination of recycling, composting, landfilling, energy recovery, and exporting for disposal or recycling, House Bill 510 (passed) prohibits an owner or operator of a refuse disposal system from accepting loads of separately collected yard waste or food waste for final disposal unless the owner or operator provides for the “organics recycling” of the yard or food waste. “Organics recycling” means any process in which organic materials are collected, separated, or processed and returned to the marketplace in the form of raw materials or products, and includes anaerobic digestion and composting.

In Maryland, state law does not address carryout bags provided by retail establishments. However, local jurisdictions with general taxing powers (e.g., Baltimore City, Baltimore County, and Montgomery County) have the authority to levy a bag fee on disposable plastic carryout bags that are clogging waterways, harming wildlife, and consuming valuable landfill space to discourage the use of disposable bags or to promote bag recycling. House Bill 1166 (passed) authorizes Howard County to impose, by law, such a fee. The fee may not exceed five cents for each disposable bag used.

Recycling

Maryland law sets mandatory recycling rates for state government and local jurisdictions, as well as a voluntary statewide recycling goal of 60% by 2020. Each county (including Baltimore City) must prepare a recycling plan that addresses how the jurisdiction will achieve its mandatory recycling rate. Senate Bill 370 (passed) requires that each county recycling plan address the collection and recycling of recyclable materials from specified large office buildings by October 1, 2020. Additionally, by October 1, 2021, the owner of a building that has at least 150,000 square feet of office space must provide recycling receptacles for the collection of recyclable materials and for the removal of specified materials deposited into the recycling receptacles so that the materials can be further recycled.

Climate Change and Renewable Energy

The Transportation and Climate Initiative of the Northeast and Mid-Atlantic States is a regional collaboration that seeks to improve transportation, develop the clean energy economy, and reduce carbon emissions from the transportation sector. There are 13 participating jurisdictions, and Maryland has been an active participant in TCI since its inception in 2010. Senate Bill 249/House Bill 277 (both passed) authorize the Governor to include the State as a full participant in any regional governmental initiative, agreement, or compact that limits or reduces GHG emissions from the transportation sector. However, the State may only withdraw from such an initiative, agreement, or compact with statutory approval from the General Assembly.

Zero-emission Vehicles

In Maryland, over 640,000 public school students receive transportation services. In total, local school systems use over 7,200 school vehicles for student transportation services. In an effort to reduce GHG in the State, House Bill 1255 (passed) establishes the Zero-Emission Vehicle School Bus Transition Grant Program within MDE, and the Zero-Emission Vehicle School Bus Transition Fund to provide funding for the program. A “zero-emission” vehicle is any vehicle that is determined by the Secretary of Transportation to be of a type that does not produce any tailpipe or evaporative emissions and has not been altered from the manufacturer’s original specifications. The purpose of the program is to provide grants to local boards of education (and entities that contract with local boards to provide transportation services) to purchase school buses that are zero-emission vehicles; install electric vehicle infrastructure for charging school buses that are zero-emission vehicles; and, fund pilot programs to experiment with a transition to school buses that are zero-emission vehicles.

Clean Energy Jobs

Maryland’s Renewable Portfolio Standard was enacted in 2004 to facilitate a transition to renewable sources of energy. Electric companies (utilities) and other electricity suppliers must submit renewable energy credits equal to a percentage specified in statute each year or else pay an alternative compliance payment equivalent to their shortfall. Senate Bill 516 (passed) increases the RPS from 25% by 2020 to 50% by 2030 and makes other related changes. The bill requires at least 1,200 megawatts of additional offshore wind generating capacity to begin operating not later than 2030 and increases the carve-out for solar energy to 5.5% in 2019, with further annual increases until it reaches 14.5% in 2030. The expired Tier 2 source of RPS, large hydropower, is reestablished for two years through 2020. And a total of up to $15 million is transferred from the Strategic Energy Investment Fund for specified purposes, including workforce development and investment in clean energy industries.

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Nurdles are the Environmental Calamity of 2019

By Stuart Kaplow on Posted in Codes and Regulations, Environmental

A year ago, I thought a nurdle was a cricket term for a score by deflecting the ball rather than striking it. But in the last twelve months I learned that a nurdle is also a term for a small, lentil size, pellet of plastic that serves as raw material in the manufacture of plastic products.

Nurdle, an idiom for pre production plastic pellets, are the malleable polymers that are molded into everything from plastic drink bottles to plastic piping and an untold number of other consumer products. But when released into nature, environmentalists now claim nurdles are the second largest direct source of microplastic pollution in the oceans by weight.

Last month in Nairobi United Nations Undersecretary General Amina Mohammed called nurdles “an ocean Armageddon.”

This is not to be confused with post consumer production microbeads used in cosmetic products.

While many are aware of the harm from plastics in the oceans, including that communities have responded by outlawing plastic drink straws; the issue of nurdles is new to nearly everyone.

Activists tell us that due to spills and poor handling, annually billions of nurdles pellets are swept into waterways during production and transport and increasingly washing up on beaches. The mermaid tears that can be found on increasingly on the world’s beaches are often mistaken by marine animals for fish eggs and consumed for food.

Nurdles are not new so how did this just come to our attention. The environmental issue was apparently first popularized in Green Britain including as a result of the 2016 surveys conducted by the Marine Conservation Society. Then a charity in Scotland conducted the Great Nurdle Hunt, which in part concluded that “up to 53 billion pellets may be spilled annually in the United Kingdom alone.” With those origins environmentalists brought the issue to U.S. shores.

We have been working with some of this country’s largest businesses on how to respond to shareholder environmental proposals including matters of nurdles.

Environmentalists engaged public traded companies in a concerted effort beginning last year. In a media release, As You Sow, a foundation charted to promote corporate social responsibility through shareholder advocacy, described how last year it filed shareholder proposals with public traded companies. At least two of those companies, Chevron Corp. and Phillips 66 petitioned the U.S. Securities and Exchange Commission to allow them to omit the nurdle reporting proposal from their annual meeting agendas, but the SEC ruled that the companies could not omit the proposals. As You Sow announced that following its engagement that it had reached agreements with Chevron Corp. and Phillips 66 as well as ExxonMobil, to start reporting on spills of nurdles.

“The company agreed to report data it submits to state regulatory agencies regarding the amount of pellets lost in the environment due to accidental releases from its plants, the amount of material recovered within its resin-handling facilities that is recycled, substantive information on its best management practices, plastic pellet production capacity, and information on how it engages its supply chain to share best practices and help reduce and eliminate pellet losses elsewhere. It also said it will employ third-party auditing to verify its reporting.”

The companies have agreed to provide regular third party verified reports to environmentalist despite that, as the language above makes clear, in the U.S. nurdle spills have long required notice to state environmental agencies, under delegations of the Clean Water Act.

Each of the companies avoiding annual meeting stockholder proposals did so despite being listed as partners in the Operation Clean Sweep enhanced Blue a private sector initiative “to help every plastic resin handling operation implement good housekeeping and pellet, flake, and powder containment practices to work towards achieving zero pellet, flake, and powder loss, protecting the environment and saving valuable resources.”

There is reportedly still an As You Sow inspired shareholder nurdle proposal pending before DowDupont and there are similar stockholder measures pending before other companies.

But the issue is far bigger than nurdles. The larger matter is environmentally conscious stockholders, often owning only a handful of shares, driving corporate action, often action not concerned about the financial interest of stockholders.

Stockholders, including even large public employee pension funds have inappropriately demanded shareholder proposals on climate change and other environmental matters, not only from oil companies, but also aerospace manufactures and sports apparel businesses. Many have suggested that the SEC staff needs to be more conservative, as it historically had (.. before the recent SLB 14J) in granting “no action relief” when companies seek to solicit proxies without including stockholder proposals either looking to micromanage the company in violation of the “ordinary business” and “economic relevance” exceptions or unlikely to garner the necessary votes at an annual meeting.

Environmental and social concerns dominated shareholder submissions in 2018 and such can be expected to be the instance again this year. But is this a good way to run a company? And maybe the greater calamity is this not a good way make environmental public policy.

Tenants Order Phase l to Avoid Hazardous Substance Liability

By Stuart Kaplow on Posted in Environmental, Federal

It has been a year since the omnibus spending bill signed on March 23, 2018 amended the Superfund law, for first time making clear that tenants can qualify as bona fide prospective purchasers, protected from cleanup costs from the presence of hazardous substances on a property; but tenants are only now beginning to order Phase l Environmental Site Assessments taking advantage of the liability protections in the new law.

Buried in the Consolidated Appropriations Act last year was Division N, the ‘‘Brownfields Utilization, Investment, and Local Development Act of 2018’’ (the BUILD Act).

The Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA, commonly referred to as Superfund), 42 U.S.C. § 9601 et seq., provides an important liability protection, including from cleanup costs, for parties who qualify as bona fide prospective purchasers (BFPPs).

The potential applicability of the BFPP protection to a tenant who leases contaminated or formerly contaminated real estate and improvements has been the subject of debate for the decades since the CERCLA’s enactment. The cases interpreting CERCLA make clear that the mere execution of a lease does not necessarily make a tenant liable as an owner or operator under the law. But courts have acknowledged uncertainty regarding the potential liability of tenants under CERCLA including because a tenant may be an operator of the property as well as a responsible person, but tenants had previously lacked any express protection in the federal law. Understandably, a prospective tenant may wish to seek BFPP treatment in the event of a future federal CERCLA cleanup action at the leased property or simply to ensure appropriate environmental stewardship of the property.

Such is a real issue when in any given year the vast majority of commercial and industrial real estate transactions are leases and not contracts of sale.

In 2002, as part of the Small Business Liability Relief and Brownfields Revitalization Act, the BFPP definition was amended to include the parenthetical phrase “(or a tenant of a person)” in the description of who can claim the BFPP defense, but there was no other direction on the treatment of tenants.

EPA issued guidance in 2012 on the treatment of tenants as BFPPs, but provided that the tenant could only derive it BFPP status through the property owner, and that status was limited to “so long as the owner maintains its BFPP status.” So while instructive, it provided little comfort to tenants.

This 2018 BUILD Act addresses the uncertainty dating to 1980, by amending CERCLA § 101(40) including by in subclause (II), by inserting ‘‘, by a tenancy, by the instruments by which a leasehold interest in the facility is created,’’ ..

And in that subsection, the term “bona fide prospective purchaser” has been amended to mean,

(ii) a person who (I) who acquires a leasehold interest in the facility after January 11, 2002; (II) who establishes by a preponderance of the evidence that the leasehold interest is not designed to avoid liability under this Act by any person; and ..”

Which has the macro effect of increasing the value of many properties making reuse viable, obviating one of the longstanding criticisms of CERCLA, that the law limits urban redevelopment across America, allowing a tenant to avoid CERCLA liability by any of the following three means:

One, establishing the landlord is a BFPP because that landlord completed the “all appropriate inquiries” as required by federal law; or two, establishing that the landlord completed all appropriate inquiries, but later failed either with compliance or to complete additional requirements; or three, establish the tenant itself, as the BFPP, by completing all appropriate inquiries prior to acquiring the leasehold interest and maintaining compliance with the additional requirements, if any.

All appropriate inquiries has been determined by EPA regulation to be a Phase I Environmental Site Assessment conducted in accordance with ASTM E1527-00. Phase l ESAs are now becoming much more common in commercial and industrial leasing.

A tenant can now assert, without having to rely on the landlord’s status, the innocent landowner defense being protected from CERCLA liability including cleanup costs from the presence of a hazardous substances on the property.

Prospective tenants of commercial and industrial properties must now consider ordering a Phase I Environmental Site Assessment.

LEED Credit is Designed to Eliminate Illegal Wood in Buildings

By Stuart Kaplow on Posted in Green Building, LEED

The U.S. Green Building Council is being applauded for the release last week of the new pilot credit intended “to reduce the risk that illegally sourced, harvested or traded wood products are used in building.”

The LEED BD+C: New Construction v4 MRpc127 – Timber Traceability pilot credit “is designed to up efforts to eliminate the use of illegal wood in buildings.”

There may be no single subject matter more discussed with over the more than 20 year history of LEED than forest product certification. That this new pilot credit continues the discussion of trees is positive.

But make no mistake, this new alternative compliance path credit does not alter the existing LEED credit, NC-v4 MRc3: Building product disclosure and optimization – sourcing of raw material, that requires,

Wood products must be certified by the Forest Stewardship Council or USGBC-approved equivalent.

This new pilot credit also leaves in place the 2016 pilot credit MRpc102 Legal Wood, that despite all the discussion has not been a market mover. The vast majority of LEED buildings have not pursued wood related credits.

The requirements for the new pilot credit are complex and include,

Project teams shall identify the country of harvest and wood species (scientific name) for all wood products that are not reclaimed, salvaged or reused.

..  wood products must constitute at least 5%, by cost, of the total value of permanently installed building products in the project or be valued at a minimum of $100,000.

At least 50%, by cost, of the permanently installed wood products must meet one of the following traceability/transparency requirements.

Low threshold: Samples of the product shall be tested using wood identification technology .. Samples shall be accompanied by a map, or maps, of the “supply area(s)” of origin. Products that meet the low threshold are worth 100% of their base contributing cost.

Medium threshold: Samples of the product shall be tested .. Samples shall be accompanied by a map of the Forest Management Unit of origin. Products that meet the medium threshold are worth 150% of their base contributing cost.

High threshold: In addition to meeting the requirements of one of the preceding thresholds, the product shall be tested and the test results shall corroborate both the declared species as well as the origin of the product. Products that meet the high threshold are worth 200% of their base contributing cost.

Samples of wood products or components that originate in countries with elevated risk of illegal logging and/or trade .. shall be tested and the results shall not contradict the declared species and origin. In addition, each product and/or component must be backed by one of the following requirements:

Certified to FSC, SFI or PEFC standards.

Certified by a third-party legality verification program (see Annex 3).

Documentary proof that the products are backed by a FLEGT license accepted under the European Union Timber Regulation.

A Convention on Trade in Endangered Species permit shall be provided for all wood products containing or composed of species listed ..

The entire credit can be accessed from this link. And there is a USGBC issued guidance. Among the knocks on LEED v4 is that credits are too complex and require time, effort and cost to comply with that exceed the efficacy of the credit; and many will conclude this is such a credit.

In the announcement of this pilot credit, Mahesh Ramanujam, president & CEO of USGBC, said, “The Timber Traceability pilot credit continues USGBC’s work to leverage LEED’s market transformation potential in areas critically important to the quality of life of all people on earth.” Admittedly, this pilot credit cannot yet [reasonably] be achieved, the underlying science has not yet been deployed. USGBC is out in front and creating the market.

And despite what you think you read in this pilot credit language USGBC has not approved an “equivalent” to FSC certified wood [.. although USGBC has apparently given tacit approval to PEFC, as equivalent]. What USGBC apparently did was include a new temporary alternative compliance path for the purpose of this credit.

The failure to act boldly in the face of the vestiges of the FSC only wood practices of USGBC, is significant in that this new pilot credit will not end the “wood wars” nor result in repeal of Maryland’s longstanding statute, Maryland Tax Property Article, Section 9-242, not permitting any LEED wood credit to be pursued in government projects or other projects seeking LEED based tax incentives; and this will not repeal similar statues and executive orders in Maine, Georgia and elsewhere. So, as written, this pilot credit is a huge missed opportunity in increasing LEED market share.

However, the real concern over this new illegal wood pilot credit is that it is not actually about “illegal wood” but rather is about a small subset of wood from trees managed under some forest certification system.

Wood that is not certified as managed is not illegal. It is simply not from a managed tree.

That distinction is huge because the relevant ASTM D7612 – 2015 standard makes clear that “forest certification is still a small fraction of total forest acreage” going on to describe that only 10% of forests are certified. Again, that does not mean that wood from the other 90% of forests is illegal or somehow not legal nor good wood, but rather only that it is not from a certified forest.

The same will be true in the future. Trees not in a tree DNA database (that is owned by wealthy North American interests) will not be illegal, they will simply not be in some proprietary database.

It is suggested this new pilot credit is really today about competing business interests and their forest management practices and tomorrow about USGBC choosing winners and losers in who will own and monetize futuristic tree DNA databases. Forests can be managed across a broad spectrum of philosophies from high-yield “crop style” plantations at one extreme to parks and preserves at the other. The Weyerhaeuser Company has planted far more than one billion trees in the past 10 years and that it is forests like those where most U.S. certified wood comes from (100% of their North American timberland is SFI certified).

Again, this is really today about certified versus not certified outside of the U.S. and in the future about trees tracked DNA databases that today do not even exist and may never exist. There are existing U.S. laws including the Lacey Act to prohibit illegal forest products. Section 8204 of that Act as amended in 2008 is titled “Prevention of Illegal Logging Practices.” That Act provides the legal authority to take action when products stemming from the practice of illegal logging enter the U.S. Declaration forms are required for all forest products imported into the U.S. including that specify the country of origin. The European Union has similar timber regulation.

But the same may not be true elsewhere and this is problematic as USGBC tries to craft one LEED rating system for the entire planet. This pilot credit may be efficacious elsewhere, for example in India. Russia has the second largest quantity of FSC certified wood in the world (after Canada), but 25% of Russia’s timber exports have been characterized as originating from illegal logging, including that the Russiapedia of Russian origin Taiga (an area of more than 20% of the planet’s forested land) and the FSC logo are being misused; although this pilot credit will have no measurable impact on that.

Across the globe, an estimated more than 2.8 billion residents, mostly from poor and developing countries gather and burn wood “illegally” (.. really?) for fuel to keep warm and cook food. Subsistence wood simply does not find its way into LEED buildings in the U.S.

Which makes the statement released in conjunction with this pilot credit, “If you want good wood, you need to start with honest wood,” by Alexander von Bismarck, executive director of the Environmental Investigation Agency, sound elitist at best and silly at worst.

So, is an illegal wood credit a misnomer? USGBC should be acknowledged for this pilot credit that will promote the growth of responsible forest management. But there is a real concern if any marketing claims related to this credit are accurate, verifiable, relevant and not misleading, including that marketing this credit has been achieved is in compliance with the Federal Trade Commission’s Guides for the Use of Environmental Marketing Claims and other state consumer protection laws.

Additionally, recall that the U.S. Green Building Council was originally named the U.S. Green Manufacturers Council reflecting that the target members were building product manufacturers. Given the increased emphasis, some more than 20 years later, on building materials, that name change provides very real insight into why this credit, now, and the future of the organization. But it portends transparency that does not exist. Who paid for this pilot credit to be developed? What agreements exist with the many other trade groups and standards associations related to this pilot credit? How much money has and will pass hands between this coterie?

All of that observed, the Timber Traceability pilot credit is a positive step forward in 2019, much like this year’s boot-cut jeans versus last year’s edited baby genes.

USGBC should be applauded. Voluntary forest certification systems have become important in promoting sustainable forestry. The forest management standards in use are highly variable, however. Even within a family of standards with a common label there is the potential for wide variations in practices, especially from country to country which prevents erectors of buildings and other consumers from specifying a certification label to characterize products according to a specific set of qualities or values. This pilot credit creates a framework to differentiate products based on a set of qualities and values identified as important in the market for wood products.

Resilience is the Future of Real Estate and USGBC Spells it RELi

By Stuart Kaplow on Posted in Green Building, resilience

Last Friday, Hudson Yards, the largest private real estate development in the country opened, but what the $25 Billion project may become best known for is that is designed for resilience from its giant “submarine doors” underground that can be closed to keep out storm surges to its own power plant that can keep the lights on even if New York City’s power grid goes down.

The day before, the City of New York released the Lower Manhattan Climate Resilience Study, identifying more than $10 Billion of capital projects for the resilience of Lower Manhattan, including floodproofing by extending the shoreline into the East River.

So what is resilience?  There are a lot of definitions of the word resilience. Susan Dorn, the General Counsel of USGBC and GBCI has proposed a definition that is at once spiritual while yet very grounded, when she offers a quote from Krista Tippett, the National Humanities Medal winning journalist who authored, Becoming Wise: An Inquiry into the Mystery and Art of Living,

Resilience is a successor to mere progress, a companion to sustainability. It acknowledges from the outset that things will go wrong .. This is the drama of being alive. To nurture a resilient human being, or a resilient city, is to build in an expectation of adversity, a capacity for inevitable vulnerability .. It’s a shift from wish-based optimism to reality-based hope.

In a conspicuous example of resilience becoming mainstream, the Defense Authorization Act for Fiscal Year 2019 for the first time requires the Department of Defense, the largest owner of buildings in North America take resilience into account, responding to sea level rise and flooding by constructing new mission critical buildings 3 feet above the base flood 100 year elevation.

Accepting that we construct buildings to provide shelter, how do you build resilience features into your next project?

GBCI’s newest rating system, RELi 2.0 will help identify and reduce the risk of damage in the event of a natural disaster, economic disruption, resource depletion or other crisis for buildings, homes, neighborhoods and infrastructure.

Much more than only anticipating rising water, RELi 2.0 criteria include acute hazard preparation and adaptation strategies along with chronic risk mitigation at the building and neighborhood scale.

Susan Dorn, could not be more emphatic,

RELi 2.0 offers the most comprehensive certification available anywhere for environmentally and socially resilient design. By selectively bundling existing sustainable and regenerative guidelines with RELi’s groundbreaking credits for emergency preparedness, adaptation, and community vitality, RELi 2.0 is designed to protect occupants, offer shelter to those in the nearby community, allow business continuity, and reduce the cost of disaster-related repair and rebuilding.

RELi was first developed over 5 years ago by the Institute for Market Transformation to Sustainability and adopted by MTS in 2014, following the ANSI accredited American National Standards procedure. Since 2017, RELi has been managed by the USGBC which, in conjunction with MTS and others led the evolution of RELi 2.0 in large measure.  In 2018, the LEED Steering Committee also synthesized the LEED Resilient Design pilot credits with RELi’s Hazard Mitigation and Adaptation credits.

RELi 2.0 is similar to LEED in format with certification by GBCI based on a point system. The 15 requirements within the rating system are mandatory and do not carry a point value. Optional credits have point values, allowing projects to seek credits and certification levels that fit their needs. Point values are: 300 to 349 points earned for RELi Certified, 350 to 440 points earned for RELi Silver, 450 to 599 points earned for RELi Gold, and 600 to 800 points earned for RELi Platinum.

Those in the know have described RELi 2.0 as by far the best GBCI associated rating system since LEED v2.2.

The gravitas of this update from version 1.2.1 is made clear by its own words, “[t]he RELi 2.0 Rating System assumes that there will be an initial emergency response from state and/or federal emergency authorities within four days after the occurrence of a major event.”

By way of example, as one might expect the rating system contains a requirement, Hazard Mitigation + Adaptation requirement 2.0 Fundamental Emergency Operations: Back – Up Power, that makes a prerequisite of “permanent back – power, switching gear and/ or power hook – ups, and infrastructure for temporary generators ..”

While some are surprised there is a requirement that “residential facilities with overnight occupancy, provide 96 hours (4 days) of emergency supplies including water + food ..” to accommodate all occupants, food can consist of compressed food bars.

Just about the only criticism of RELi 2.0 is that the 91 pages of rating guidelines reads like an architect’s dystopian rule book for society. However, for those readers old enough to have participated in ‘duck and cover’ (under our desks) elementary school nuclear attack drills or had a Cold War era bomb shelter in your back yard, these guidelines, including stocking 4 days of food and water, seem tame.

In an age where deaths from natural disasters have fallen precipitously, when many believe that the biggest global risk in the future is a pandemic disease outbreak, RELi 2.0 even advances pandemic preparedness.

RELi 2.0 is significant because it is widely suggested, just as a Phase I Environmental Site Assessment is now standard practice in nearly every commercial real estate transaction in this country, that in the future the same will be true of a resilience assessment.

RELi (.. by the way, pronounced ri’lai like rely), is open for registration. To be eligible, a project must also register for LEED (note, at least 25% of RELi are based on LEED credits) and at this point ought to be new construction. For more information, and to pursue RELi certification, email reli@usgbc.org

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