The Last Straw for a Rational Environmental Policy?

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

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

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

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

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

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.

Back to the Future with “Navigable Waters of the United States”

Last week the Environmental Protection Agency and U.S. Department of the Army finalized a rule adding an applicability date to the 2015 Rule (that never went into effect) defining “waters of the United States.”

But, the 2015 Rule will now not be applicable until two years following publication of the applicability date rule in the Federal Register (scheduled to be this week), giving the agencies the time needed to reconsider the very fluid definition of “waters of the United States.”

The 2015 Rule “clarifying” the scope of “waters of the United States” was a politicization of science that would have resulted in tens of millions of new acres of privately owned land being removed from productive use and placed under the jurisdiction of the federal government.

For those uninitiated in the moving target clarifying what are “navigable waters of the United States,” defining where those waterways begin and end has since the enactment of the 1899 Rivers and Harbors Act been the subject of disputes between the federal government and land owners (predating the modern environmental movement).

This current action follows the February 28, 2017, Presidential Executive Order on “Restoring the Rule of Law, Federalism, and Economic Growth by Reviewing the ‘Waters of the United States’ Rule.” The Order states that it is in the national interest to ensure that navigable waters are kept free from pollution, while at the same time promoting economic growth, minimizing regulatory uncertainty, and showing due regard for the roles of Congress and the states under the Constitution. It also directs the EPA and the Army to review the existing Clean Water Rule for consistency with these priorities and publish for notice and comment a proposed rule rescinding or revising the rule, as appropriate and consistent with the law. Further, the Order directs the agencies to consider interpreting the term “navigable waters,” as defined in 33 U.S.C. 1362(7), in a manner consistent with the opinion of Justice Antonin Scalia in Rapanos v. United States, 547 U.S. 715 (2006).

To meet the objective described in the Executive Order, the agencies are following a two-step process intended to finally provide certainty.

In this first step, the agencies are establishing a legal status quo in the Code of Federal Regulations, by proposing to rescind the 2015 Rule and recodify the regulation that was in place prior to issuance of the 2015 Rule; which is being implemented consistent with court orders staying that rule and with the agencies’ final rule adding an applicability date.

The agencies then plan to propose a new definition interpreting the jurisdictional bounds of the Clean Water Act that would replace the broader approach of the 2015 Rule, taking into consideration the principles that Justice Scalia outlined in the Rapanos plurality opinion. Justice Scalia’s opinion indicates Clean Water Act jurisdiction includes relatively permanent waters and wetlands with a continuous surface connection to relatively permanent waters.

You care about how “waters of the United States” is defined because what falls within the jurisdiction of the 1972 Clean Water Act is the “navigable waters,” defined as all “waters of the United States” (section 502). This is important because all Clean Water Act programs, including non-tidal wetland permits, pollution permits, and oil spill prevention and planning programs, apply only to “waters of the United States.” The Clean Water Act provides the discretion for the implementing agencies, EPA and the Army Corps of Engineers, to define this term in regulations, and this has been further interpreted by the courts.

There has been obfuscation of what “waters of the United States.” From the 1970s through the 1990s, federal courts as well as the agencies interpreted an expanded bigger scope of Clean Water Act jurisdiction as necessary to and consistent with the Act’s goals of protecting water quality. Supreme Court decisions in 2001 and 2006 held that the scope of navigable waters must be interpreted more narrowly. The justices in the 2006 Rapanos decision were split on how this was to be accomplished. The agencies have been working since the Supreme Court decisions to provide clarification and predictability in the procedures used to identify waters that are, and are not, covered by the Clean Water Act. The 2015 Rule, and this new rulemaking effort, reflect the agencies’ efforts to provide that needed certainty and predictability.

Specifically, under this rule, the 2015 Rule, which now does not go into effect until its applicability date two years from now, would be replaced. But claims that this somehow allows water to be polluted is not only not true, but the height of junk science.

The exact same regulatory text that existed prior to 2015 Rule (that gain never went into effect), which reflects the current legal regime under which the agencies are operating, would be re-codified in the Code of Federal Regulations.

This is not a good way to make environmental policy about clean water. It has been over 40 years since the Cuyahoga River caught fire and spurred the 1972 passage of the Clean Water Act. The law was intended to target big, point source pollution like sewage leaks and oil spills, and the continuing efforts to use it to use a definition of navigable water from the 1899 Rivers and Harbors Act to describe the scope of the CWA, not only does not well serve the potable water issues of the day, and are not only junk science, but silly talk.

Despite being published as a final rule, this positive step toward what is properly “navigable waters of the United States” is back to the future, but a long way from being final.

Criminal Conviction in Trade Secret Theft of the Wind

While many people focused on the tariffs of 30% imposed by the United States on imported solar photovoltaic cells and modules last week, most missed the larger renewable energy news story that after an 11 day trial, last Wednesday a federal jury in Wisconsin convicted Chinese firm Sinovel of stealing wind technology, including the theft of trade secrets.

The Beijing based Sinovel is the largest wind turbine manufacturer in China and possibly the largest in the world, so when it is convicted of all charges in a criminal case of stealing trade secrets including copyrighted software to produce “wind turbines, and to retrofit existing wind turbines with [stolen] technology, without having to pay” for the software, products and services, such is significant.

And while the dollar amounts are staggering, .. in March 2011, Sinovel owed American Superconductor more than $100 Million USD for software, products, and services previously delivered, and had contracted to purchase more than an additional $700 Million USD of software, it is the conspiracy using the stolen proprietary information to produce Billions of dollars of new wind turbine products, including sold in the U.S., that is astounding.

The Grand Jury charges in this case read like something out of a Cold War spy novel. In furtherance of the conspiracy,

(a) On or about February 26, 2011, ZHAO HAICHUN [a Chinese national residing in China] emailed KARABASEVIC [a Serbian national  who worked for AMSC Wintec through June 30, 2011] a contract offering a salary of 11 million renminbi (approximately $1.7 million USD) for KARABASEVIC to work for SINOVEL from May 2011 through June 2017, essentially doubling KARABASEVIC’s annual pay.

(b) On or about March 7, 2011, KARABASEVIC used the internet to access an AMSC computer in Middleton, Wisconsin to secretly copy the development folder for the PM3000 [proprietary software that is the Power Module], which included the PM3000 source code.  .. ..

(k) On or about June 2, 2011, ZHAO HAICHUN, in a written Skype “chat,” reported to KARABASEVIC that he was at a wind turbine farm in Gansu, China, and had conducted a “voltage sag” test on twenty-one SINOVEL wind turbines to which the L VRT update had been copied. ZHAO HAICHUN noted that the test was successful and wrote to KARABASEVIC that it was “all because of you.” .. ..

(m) On or about October 25, 2011, SINOVEL and ZHAO HAICHUN copied and caused to be copied the software compiled from the stolen and modified AMSC PM3000 source code into a wind turbine in Charlestown, Massachusetts.

With apologies to John le Carré, you will enjoy reading the complete Grand Jury charges here.

Sentencing is set for June 4 and federal officials previously announced, that taking into consideration the grave financial damage done to the U.S. based American Superconductor and its successor, Sinovel faces fines of up to $4.8 Billion.

To appreciate the import of this much watched criminal case, in a statement released on the day of the guilty verdict, Commerce Secretary, Wilbur Ross said Chinese disrespect for “intellectual property rights, by commercial espionage” poses a direct threat to the U.S.

This trade secret theft decision is a big deal in terms of the increasing attention be paid by the U.S. government to intellectual property theft by Chinese interests and in responding the Chinese aggressive mercantilist policies, both of which portend dramatic shifts in the business of renewable energy and sustainability more broadly in the U.S. and across the globe that have become so intertwined with China.

Saint Paul Green With Envy

When the Saint Paul City Council votes this Wednesday on Ordinance 17-60 it should amend the legislation to not delete, from the existing law, Green Globes as one of the approved green building standards.

The work product of an advisory committee of experts, Ord 17-60 Sustainable Building Regulation Ordinance, alters and amends the 2009 Resolution to Implement Saint Paul Sustainable Building Policy. The existing law was well received and was the subject of several prior blog posts that applauded the effort to make Saint Paul “the most livable city in the United States.”

The existing law has had some efficacy. There have been about 5 projects a year since 2009 falling under the law and while there are less than 50 projects in total they range from single family homes to a ball park.

The modest usage is not surprising because by design, the law only applies to: new construction of facilities owned or operated by the City of Saint Paul; new construction of facilities that the City will become the sole tenant; and, new construction of any facilities within the City of Saint Paul receiving more than $200,000 of City funding.

Commercial projects falling within the law must achieve a “Sustainable Building Standard means any of the following: ..  .. LEED New Construction (NC) 2.2 Silver or Green Globes 2 globes or State Guidelines Building Benchmarking and Beyond (B3) or Saint Paul Port Authority Green Design Review.”

But in what might be described as some Rube Goldberg tinkering with the existing law, the advisory committee of experts, recommended this legislation delete Green Globes as an option.

The rationale expressed at the January 17, 2018 public hearing was that no one in Saint Paul has used Green Globes to comply with the law, so “there was a lack of interest” such that it should be eliminated.

And while such may be technically accurate, it is not correct where there are nearly 40 buildings in the Twin City metro area that are certified by Green Globes and more pursuing certification, including the Xcel Energy Center and a new Whole Foods supermarket. If the City Council tries to pick winners and losers removing Green Globes as one of the options, such may or may not present real antitrust issues, but it is downright anticompetitive and only hurts green building, including in a year when a new version of Green Globes is being released.

After a review of green building rating systems by the Pacific Northwest National Laboratories in 2012, Green Globes has been accepted for federal government building use. Over 100 localities and 23 states currently accept Green Globes for green building projects. This is not about if Green Globes green enough.

This ordinance will make Saint Paul more and darker green. The biggest change is that not only new construction, but now also major renovations, being 10,000 square feet renovated space with replacement of mechanical systems are subject to this law.

Additionally, this ordinance is that it updates and makes very green the Saint Paul Overlay, the compilation of mandatory requirements on top of complying with a Sustainable Building Standard. The overlay will now require: 2% of energy needs to be met on site through renewable energy; that projects be electric vehicle ready (including prewiring); it will include a resilience component, that is a tool for developers to identify “shocks and stressors” a building may encounter and potentially alleviate; and it will require tracking actual water use.

And then, without public explanation the committee recommends adding the USGBC’s Parksmart as a new Sustainable Building Standard. Of course, this would become necessary if Green Globes were eliminated where Green Globes certifies parking structures, but LEED stopped certifying parking structures some years ago. There is nothing wrong with Parksmart, the problem is when a local government removes competition from the marketplace.

Shakespeare described envy as the green sickness. There is nothing wrong with Saint Paul desiring to be the most livable city in the United States, including through green building, but this ordinance now on third reader has garnered national attention because eliminating from use a green building rating system widely utilized in the Twin City metro area sends a covetous and wrong message.

Moreover, given that in 2018 there will be new versions of LEED, ASHARE 189.1, IgCC, ICC 700, and Green Globes, it may be desirable that City Council consider the Sustainable Building Regulation again, including expanding the number of Sustainable Building Standards, sooner rather than later.

Admittedly, with history of controlling 5 projects a year, this ordinance will not save the planet, even with a corrective amendment adding back in Green Globes, but the power of the mindset should not be underestimated and the City should be seen to be strengthening sustainable building requirements, not the opposite.

The updated law is proposed to take effect on July 1, 2018, so there will be no disruption in Saint Paul’s desire to be more green by amending the Ordinance 17-60 to not delete, from the existing law, Green Globes as one of the approved green building standards.

Green Globes Acquired by GBI Expanding Sustainability

Last week Green Building Initiative announced that it had completed the bold and innovative acquisition of Green Globes from JLL and I had an opportunity to speak with Vicki Worden, President and CEO of GBI and Bob Best, Executive Vice President of JLL.

In 2008, JLL, a Fortune 500 company with more than $50 billion of real estate under asset management, purchased ECD, a Canadian sustainability consulting organization that had developed Green Globes. JLL continued ECD’s strategy of promoting Green Globes in Canada as a building sustainability assessment and certification system.

GBI, a nonprofit organization, had first licensed the U.S. rights to Green Globes in 2004 from ECD and continued to operate the Green Globes program in the U.S.

In early 2017, GBI approached JLL with a strategy to purchase Green Globes and make significant investments in improving the technical platform, re-branding Green Globes and expanding its market reach. JLL accepted that Green Globes, which was a small independent operating unit, should be better owned and operated by a dedicated and neutral, not for profit organization that could serve the entire commercial real estate industry, including those JLL competitors who were uneasy about the relationship.

The terms of the sale were not disclosed, but all have been assured that this is a true sale and JLL’s involvement in the future will only be as a customer of GBI.

“As a nonprofit, GBI is in a better position to grow the sustainability movement as the sole owner and promoter of Green Globes, and we have every confidence in GBI’s ability to do so,” according to Bob Best.

Some suggest this acquisition should be seen as further consolidation of the green building industrial complex, but others see this as much larger than the single corporate act that it is an effort to square the circle in a huge expansion of market share in 2018 by Green Globes.

GBI has experienced significant growth over the past 2 years. As of January 2, 2018, 1,594 buildings in the U.S. have been certified by GBI. 1,328 under Green Globes; 266 under its Guiding Principles Compliance program; and 193 dual certified. In total, GBI has certified 299,152,031 square feet, 280,920,871 square feet of which was certified under Green Globes. A map of GBI certified buildings in the U.S. can be found here. Green Globes has garnered significant attention recently, and counts major national brands such as Whole Foods, Fidelity, and MGM Resorts as part of its expanding customer portfolio. Government is widely expanding statutory definitions of green building to include Green Globes from the GSA to the State of Maryland.

An increase in promotion, including a “brand refresh” and a new software platform expected to be completed in 2018 and launched in 2019 will fuel the expanded operations. And Vicki Worden offers assurances to customers who today demand real communication with real people that the “high touch customer service” that has been a hallmark of Green Globes, including keeping the program easy to use, will remain unchanged after this acquisition and after the release of GB101-201X which will become the next version of Green Globes NC when released in second quarter 2018.

GBI has established a Canadian non-profit subsidiary, GB Initiative Canada, to support the growth and previously established use of Green Globes in the Canadian marketplace and will begin a listening tour in Canada to judge customer demand.

No immediate push outside of North America is planned, but GBI is aware of clients with projects on other continents and they have made clear they will support the use of Green Globes as a certification option for those international owners.

Before the acquisition there are already 49 states with GBI certified buildings and this acquisition will no doubt result in more Green Globes building and more green building everywhere as more in the commercial real estate industry drink the green Kool-Aid.

This is more than just the first big green building story of the year. Green Globes is number two with a bullet. In 2018 forward thinking real estate professionals will consider Green Globes favorably as they consider the cacophony of high performance building.

Vicki Worden is clearly excited when she says this acquisition “was a logical and natural next step to further our mission to accelerate the adoption of green building best practices in the built environment.” And she could not sound more confident about the future of green building when she makes the point that growth in Green Globes will be driven by the fact that “third party certification does not have to be bureaucratic or costly.”

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