GRESB Purchased from GBCI in advance of ESG Breakout

Last month GRESB announced that its management had purchased the business from its parent GBCI.

GRESB was established in 2009 as the Global Real Estate Sustainability Benchmark by three pension funds who wanted to assess and benchmark the Environmental, Social and Governance (ESG) and other related performance of real assets, providing standardized data to capital markets.

GBCI, the global certification body for LEED (.. yes, it is the sister organization to the USGBC), TRUE zero waste, PEER, SITES, WELL, EDGE, ICP and RELi, acquired GRESB in 2014.

While under the umbrella of GBCI, the Amsterdam based, previously privately owned, GRESB arguably grew to become a leading ESG benchmark for real estate across the world. GRESB data covers US $5.3 trillion (.. yes, “trillion” which is 1,000 times larger than a billion) in real estate and infrastructure value. Notably, 957 private real estate companies and funds, and 272 publicly traded companies and REITs participated in the 2020 GRESB real estate survey, representing more than 96,000 assets located in 64 countries. Results were released last month.

A criticism has been that GRESB assessment is weighted in favor of portfolios that contain new buildings and that GBCI would not correct for that because its interest were in more new LEED Platinum certified buildings. And, of course there is a cottage industry of ESG consultants who will draft the GRESB questionnaire responses to skew the score.  Separating from GBCI will also allow more asset level reporting, versus portfolio level, which would directly compete with LEED building ratings.

The new GRESB Foundation will own and govern the GRESB Standards upon which the GRESB Assessments are based. The Foundation Board will be constituted from GRESB investor members and will be responsible for reviewing and approving the Standards to ensure they remain investor led.

GRESB BV, incorporated in the Netherlands, will be responsible for administering the GRESB Assessments, providing the benchmarks and promoting the GRESB Standards. GRESB BV will become a benefit corporation and seek B-Corp certification, with the aim of demonstrating the separateness of the two organizations and building accountability.

The price of the acquisition from GBCI was not announced, but was significant and financed by Summit Partners that has invested in more than 500 companies in technology, healthcare and other growth industries.

Apparently, negotiations went on for months after the GRESB founders demanded the buy from GBCI, hoping but failing to accomplish the deal for the GRESB tenth anniversary. When the deal was finally made public on November 16, 2020, asset managers in the know suggested the value of GRESB had grown exponentially with the results of the November 5 U.S. Presidential election. GRESB has been “a European thing” with its core mission of assessing ESG data having been “unAmerican” (.. GRESB does have some Canadian investor participation) including with the U.S. Department of Labor’s rule greatly limiting the use of ESG information by retirement plan fiduciaries, and the U.S. Securities and Exchange Commission very public scrutiny of ESG claims as not meeting a threshold of having a material effect, but rather as being “.. at odds with reality.” However, as I wrote in an August blog post, ESG Going the Way of the Dodo?,

“If President Trump is reelected, it appears more likely than not that ESG disclosures in the U.S. will be made extinct like the dodo bird, not unlike as the federal government banned the 100 watt Edison light bulb out of existence, but that course will all be certainly see a polar opposite reversal and ESG will be embraced in a Biden Administration.”

So, the change to a Democratic Administration in Washington DC and its green agenda for financial markets, will include a favorable view of ESG and an overwhelmingly welcoming market for GRESB not only in the EU, but if their Dutch owners can translate it, now in the new world.

ESG has to date relied most heavily on the “E” environmental, but in the U.S. given the last year of calls for social justice, governance will likely be a new emphasis, as evidenced by the new NASDAQ requirement that boards have at least one woman and one director that self identifies as an underrepresented minority or LGBTQ, and a question may be if GRESB can capitalize on that.

And lest you think there is not already a new and exploding market for ESG data in the U.S., the data that GRESB is the leader in and will no doubt move to take advantage of, in the little more than a month since the Presidential election, I have received more inquiries from public companies and their representatives about ESG than year to date before the November 5.

GRESB, separated from GBCI, will no doubt have an opportunity to thrive in the U.S. You should check out their website.

The Birds: Migratory Bird Treaty Act redux without Tippi Hedren

Three weeks ago the U.S. Fish and Wildlife Service proposed a regulation to finally resolve and codify the legal principal that an incidental bird take resulting from an otherwise lawful activity, for example a sparrows flies into a solar panel, is not prohibited under the Migratory Bird Treaty Act.

The Fish and Wildlife Service is the federal agency delegated the primary responsibility for managing migratory birds consistent with four international migratory bird treaties (between the United States and Canada, Mexico, Japan, and Russia) and the implementing the MBTA enacted in 1918. The goal of the MBTA was to stop the unregulated killing of migratory birds at the federal level. The MBTA makes it unlawful to, among other things, take individual birds of most species found in the United States, unless that taking is authorized by regulation. “Take” is defined by regulation as “to pursue, hunt, shoot, wound, kill, trap, capture, collect, or attempt to hunt, shoot, wound, kill, trap, capture, or collect.”

Federal courts have adopted different views on whether the MBTA prohibits the “incidental take” of a migratory bird. Incidental take of a migratory bird is a take that results from an activity, but is not the purpose of that activity (also sometimes referred to as accidental, unintentional, or non-purposeful taking). The saga, now covering 1,093 species of birds, has played out more than a century, literally.

Earlier this year I wrote a bog post, Migratory Bird Treaty Act Will Apply Only to Intentional Takes, in response to a February 3, 2020, FWS move to codify a 2017 Department of the Interior Opinion M–37050, which determined the MBTA only applies to the intentional take of migratory birds and not an incidental take, saying,

Interpreting the MBTA to apply to incidental or accidental actions hangs the sword of Damocles over a host of otherwise lawful and productive actions, threatening up to six months in jail and a $15,000 penalty for each and every bird injured or killed.”

In a parallel but not directly related action, on August 11, 2020, Judge Valerie Caproni, of the U.S. District Court for the Southern District of New York, struck down that Interior legal opinion, “It is not only a sin to kill a mockingbird, it is also a crime,” paraphrasing Harper Lee. “That has been the letter of the law for the past century.” The decision has been appealed. But that case did not involve the February notice of rulemaking (that yes, also relied on the same Interior legal opinion that Her Honor struck down).

Which takes the saga to three weeks ago and the FWS proposal to develop a regulation that interprets the scope of the MBTA decriminalizing the incidental take of migratory birds.

All of this is against the backdrop of a widely discussed study in the journal Science last year that found “cumulative loss of nearly three billion birds since 1970, across most North American biomes.” But that study concluded that building collisions, driven by the increased use of glass building facades, are second to cats as the greatest threat to birds. Criminal fines of housecat owners do not make a good public policy, but owners of glass buildings should breathe a sigh of relief. Far down on the list are industrial “incidental takings” resulting in, on average 57 investigations for migratory bird deaths each year (the largest number of which were by contact with an electric power line) resulting in $178.8 Million in criminal fines and civil penalties over the past decade.

This newly proposed rule has already sparked a fiery debate, pitting members of the environmental industrial complex against one another and in opposition to business scale renewable energy, but I suggest this rule strikes a reasonable balance between the 1918 era MBTA law and unintended take, including deaths associated with modern wind turbines and solar panels.

Carbon Tax Proposed in Portland will be First in the Nation

The City of Portland is proposing a carbon tax that would be the first of its kind anywhere in the country. Given the increased emphasis on climate change by the incoming Biden Administration the proposed ordinance should be on your required reading list.

Carbon dioxide and other greenhouse gas emissions are changing the climate. Energy prices do not currently reflect these costs of greenhouse gases. A carbon tax puts a price on those greenhouse gases, encouraging business and government to produce less of them.

Today the U.S. already has a “carbon” tax on fossil fuels, that is the federal excise tax on automotive fuels, of about $5 per ton.  Economist suggest a broader carbon tax (coal, oil, natural gas, etc.) of $40 per ton would add about 36 cents to the price of a gallon of gasoline and about 2 cents to the average price of a kilowatt-hour of electricity. Policymakers could use the resulting revenue to offset the impacts on energy-intensive industries and lower-income households, lower individual and corporate taxes, and invest in clean energy and climate adaptation.

A carbon tax is a form of tax on pollution. More common in the U.S. are other forms of tax on pollution, like tradable credits, including the Regional Greenhouse Gas Initiative (RGGI), a regulatory trading program to reduce greenhouse gases. RGGI is a cooperative effort among the states of Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island, and Vermont to cap and reduce CO2 emissions. States sell nearly all emission allowances through auctions and invest proceeds in energy efficiency, renewable energy, and other consumer programs, and all users of energy in those states pay the “tax” through higher electricity and natural gas rates passed on by electric utility companies.

A study on the efficacy of RGGI, characterized laws that mandate green building, like LEED or Green Globes, as an example of a pseudo pollution tax on embodied carbon that come with a high economic cost.

But doubling down on the broader subject of pollution taxes, advocates candidly acknowledge their real aim for a carbon tax is as a core strategy for reducing and eventually eliminating the use of fossil fuels.

There are some carbon taxes outside of the U.S.  Finland was the first country to enact a carbon tax in 1990. And the United Kingdom, Ireland, Australia, Chile and Sweden all have some form of carbon tax and more than a dozen countries have a scheduled implementation.

The City of Portland’s current legislative proposal, introduced last month, follows Oregon lawmakers’ failed efforts to levy statewide carbon fees, with bills to establish a cap-and-trade policy failing to pass in 2019 and earlier in 2020. A city level carbon tax begs the question if businesses will leave the city to remain competitive, moreover whether the city levy will be deductible on federal tax returns.

The stated goal of the bill “is to reduce pollution in Portland to improve the health of our residents and reduce the risks to our economy from climate change and the high costs of pollution.”

The proposal is intended to raise approximately $11 million per year as dedicated and ongoing funding for Portland to take more aggressive steps to reduce greenhouse gas emissions and the most harmful impacts of air pollution. Portland is off track in meeting its carbon reduction target. Portland’s June 2020 Climate Emergency Declaration set a goal to reduce local carbon emissions by at least 50% below 1990 levels by 2030. Emissions are currently 19% below 1990 levels.

The new Portland Healthy Climate Fee would establish a $25 per ton fee on greenhouse gas emissions from facilities in Portland with emissions of 2,500 metric tons of CO2e (carbon dioxide equivalents) per year or greater. The base fee would be $62,500.

Based on publicly available 2019 data, 35 facilities in Portland would be subject to the tax. Covered facilities are primarily industrial plants, hospitals, food production facilities, and higher education campuses. Together, they released about 370,000 metric tons of CO2e in 2019. Here is a list of the possible payers of the new tax, some of whom may vote with their feet and relocate to a more tax free jurisdiction. Health care facilities that, however, are proposed to be exempt from paying any new fees until January 2022 due to the financial strain they face from the Covid-19 pandemic.

The City Council is expected to consider the proposal in January 2021 and it appears all but certain there are the three votes (of five council members) to enact the new law later in the month. A public comment period is now open through noon on January 4, 2021. Comment here. The mayor of Portland Ted Wheeler has said he will sign the bill.

The draft Ordinance is essential reading for anyone interested in environmental matters in our current climate. The carbon tax fee exhibit is a separate document.

It is clear that climate change will once again be a national priority in the U.S. and a carbon tax will be part of the discussion. Whether or not you live in Portland, this ordinance should be on your required reading list.

EPA Releases Draft National Recycling Strategy

The U.S. Environmental Protection Agency has released a draft National Recycling Strategy and is seeking public comment through December 4, 2020, with the goal of finalizing it in early 2021.

Maybe not since Plato wrote about the value of reusing waste in the fourth century BC has recycling faced the challenges that we are seeing right now. The draft National Recycling Strategy is released against a backdrop where our current recycling, largely based on notions from the 1960s, no longer makes economic sense. This draft identifies strategic objectives and actions needed to create a stronger, more resilient U.S. solid waste recycling system.

“Recycling is a key driver of the U.S. economy and a way to conserve resources and protect the environment. Environmental benefits include reducing the amount of waste sent to landfills and incinerators, which can reduce the amount of air emissions released into the atmosphere.”

EPA reports the total generation of municipal solid waste (.. yes, a subset of all waste, but a good datapoint) in 2018 was 292.4 million tons or 4.9 pounds per person per day. Of that waste generated, approximately 69 million tons were recycled and 25 million tons were composted. Together, 93.9 million tons of waste were recycled and composted, equivalent to a 32.1% recycling and composting rate (.. but, it is suggested that may reflect “collected for recycling” and not necessarily recycled). However, in response to recent international policy changes related to accepting recyclables, see my blog post The World is Forced to Rethink Recycling, and major domestic changes in use patterns related to more time spent at home and other Covid-19 challenges (e.g., Baltimore City has not collected recycling since August), anecdotal evidence suggests recycling numbers have decreased sharply in 2020.

On November 16, EPA Administrator Wheeler announced the goal to increase the U.S. recycling rate to 50 percent by 2030. The strategy recognizes the historic broad underperforming of recycling programs and that stressing those programs are factors including: confusion about what materials can be recycled; recycling infrastructure that has not kept pace with today’s diverse and changing waste stream; reduced markets for recycled materials; and varying methodologies to measure recycling system performance.

What may be called for is a better approach to resource use and operation of buildings. It is important to accept that EPA’s authority to regulate recycling is fuzzy at best, beyond the agency’s implementation of the Resource Conservation and Recovery Act. Most solid waste collection in the U.S. is at the municipal level.

Benefits of recycling are obvious including conserving natural resources, such as timber, water and critical minerals; and preventing pollution by reducing the need to collect new raw materials. Economic and community benefits include increasing economic security by tapping a domestic source of materials; supporting American manufacturing; conserving valuable resources; and creating jobs in the recycling and manufacturing industries. EPA’s data shows recycling and reuse activities accounted for approximately 757,000 jobs, $36.6 billion in wages, and $6.7 billion in tax revenues

But in response to all of that, including the historic low success rates in recycling programs, EPA has begun a redoubled effort to focus on recycling challenges facing states and municipalities and private (e.g., Cradle to Cradle) programs. In recent years, there have been plastic bag bans, bars on plastic drinking straws and just last month I wrote a blog post, Maryland Becomes First State to Ban Polystyrene this Thursday.

This new federal strategy organizes high-level actions around three strategic objectives to improve the cacophony of state and municipal recycling systems by reducing contamination in the recycling stream, increasing processing efficiency, and improving markets.

To read the draft National Recycling Strategy and provide comments visit: https://www.epa.gov/americarecycles/national-recycling-strategy-and-framework-advancing-us-recycling-system

And we continue to work with businesses to pursue their waste goals, including achieving near zero waste while cutting their carbon footprint and supporting public health, and in satisfying LEED, Green Globes and IgCC waste management plan requirements. Some of the most satisfying sustainability work we have done is working with businesses to maximize resource use and facility operations.

With no good market in which to sell most recyclables and existing laws barring much domestic reuse, it is now time to rethink the solid waste practices that are currently not supported by good science, and disproportionately negatively impact on economically disadvantaged people, which recycling practices have been largely unchanged since the 1960s.

COVID-19 Liability for Building Owners

With Covid-19 spreading across the U.S. and some places reclosing in reaction to the new surge, considered against a backdrop of more than 2,000 new statutes, regulations and executive orders addressing the pandemic that have been enacted in a matter of months, many commercial real estate owners are questioning if they can be liable for damages when someone, whether an employee of a business tenant or someone else, claims to have contracted the Coronavirus Disease (Covid-19) at their building?

And these questions are not unfounded because as of November 1, 2020, legal industry databases of state and federal litigation are tracking more than 6,100 cases involving Covid-19 claims.

But U.S. courts have never addressed a pandemic like SARS-CoV-2 (the current designation for what had been the Novel Coronavirus 2019). There was not a mature plaintiff’s bar during the 1918 Spanish flu. This evolving and rapidly changing experience is and likely will continue to be governed by state, and sometimes local law that varies from jurisdiction. Over time coronavirus pandemic exposure claims may result in a new emergent subset of premises liability case law and in a number of jurisdictions new statutes are already limiting liability, but in most instances it is presumed the longstanding body of premises liability law will control.

In premises liability cases in Maryland, the state’s highest court has adopted the general rule, also applied in a majority of states with some variations, contained in Restatement (Second) of Torts § 343 (1965) that provides:

“A possessor of land is subject to liability for physical harm caused to his invitees by a condition on the land if, but only if, he

(a) knows or by the exercise of reasonable care would discover the condition, and should realize that it involves an unreasonable risk of harm to such invitees, and

(b) should expect that they will not discover or realize the danger, or will fail to protect themselves against it, and

(c) fails to exercise reasonable care to protect them against the danger.”

It is widely accepted that while a property owner owes a duty to exercise ordinary care to keep the premises in a reasonably safe condition, it is not the insurer of the invitee’s safety. Moreover, an invitee cannot maintain a negligence suit merely from a showing that an injury was sustained in the defendant’s building.

No tort case has yet provided an answer to a building owner’s liability for failure to enforce social distancing or to wear a mask, or for that matter to take the temperature of all invitees.

As early as March lawsuits had already been filed in courts in San Francisco and Miami against Princess Cruise Lines Ltd. alleging negligence that passengers on cruise ships became ill with Covid-19 because the ships did not employ proper screening protocols and more.

Historically, state courts have awarded damages for negligent transmission of diseases imposing liability on individuals who have harmed others (from occupational diseases like silicosis inhaled while grinding steel, to cotenants in a two apartment house infected with tuberculosis, and having unprotected sex and transmitting AIDS).

There are likely intervening issues, including significantly that legal action by employees is almost all barred and claims limited to the workers’ compensation system where the employer has insurance (and despite defying the facts, at least 15 states now have an interpretation that assumes an individual who contracts Covid-19 was infected in the workplace triggering workers’ compensation). And while OSHA is providing guidance through a May 19, 2020 Updated Interim Response Plan the agency has issued no new mandates and in fact has announced enforcement discretion as to existing standards, which will further bar employee claims; although many expect that a Biden Administration OSHA will issue an emergency temporary standard which will establish mandatory workplace rules.

Customers, as well as business invitees and even trespassers might be able to articulate some claim, but proof during a pandemic that exposure was in a particular building will likely face insurmountable causation problems not to mention an inability to prove some breach was the proximate cause of the harm?

All of this begs the question if a business owner’s premises liability insurance covers such claims? And while reviewing insurance policies, it is also likely prudent to review liability provisions in tenant leases.

While there are more than 2,000 new federal, state and local statutes, regulations and executive orders enacted in a matter of months to respond to the pandemic, likely more than have ever been enacted in the U.S. on a single topic in such a short period, few have directly impacted matters of liability. Georgia, Idaho, Iowa, Kansas, Louisiana, Michigan, Mississippi, Nevada, North Carolina, Ohio, Oklahoma, South Carolina, Tennessee, Utah and Wyoming have each enacted liability shields for civil claims related to SARS-CoV-2 by a newly enacted statute, and of course there are differences between the enactments and what is shielded; and not all would protect a building owner. Alabama and Arkansas’ liability shields were enacted by executive order. Other states have legislation pending. There, of course, has been discussion in Congress about limiting liability for everything from grocery stores and pharmacies to others that have provided essential services, and some lawmakers have discussed eventually making similar protections universal.

I am not aware of any cases interpreting those new laws. I did write an earlier blog post about a concomitant matter, A Force Majeure Decision during the Covid-19 Pandemic.

These are uncharted waters, but exercising reasonable care may be adopting conduct by following available government guidance, including from the CDC and states about buildings. California offers widely quoted guidance on reopening.

And while there is some very good information about reopening in the real estate marketplace including from the U.S. Green Building Council that rolled out a series of pilot credits, including the well regarded Safety First: Managing Indoor Air Quality During COVID-19 credit. But caution must be observed when following third party advice; for example some of the green building industrial complex required cleaning products and disinfectants necessary to achieve a rating system credit are not on the EPA List N of disinfectant products that have qualified for use against SARS-CoV-2 and could expose a building owner to legal jeopardy.

There is a great deal of uncertainty, at this time when we are still learning about this coronavirus. I wrote in an earlier blog post, COVID-19 in Buildings is all about Ventilation, making clear that “until effective vaccines exist and are in wide-spread use, enhanced ventilation in buildings will be key, and even more significant than the important social distancing including community masking, and hand washing, in limiting the spread of SARS-CoV-2.”

There are some things a building owner should likely do. Most state premises liability law provides a duty of a property owner to warn a business invitee of an unsafe condition and while it might sound silly in this instance, posting warning signs is prudent. The CDC has provided some printable signs at the link above that serve to warn and also may allay the concerns of those entering a premises, another key issue. Additionally, some of the newly enacted Covid-19 liability shield laws require specific warnings be posted.

But a building owner should likely not adopt policies that it seeks to impose on others. Arguably there could be liability for failing to reasonably or consistently enforce a self created policy. However, should an owner determine to articulate some Covid-19 policy, it should include a disclaimer, like this one created for a business owner that occupied its own building:

Disclaimer: While the strategies embodied in these policies are intended to help promote health and safety in the built environment, an individual’s health and safety are determined by a number of factors particular to that individual and implementing the strategies in these policies do not in any way guarantee that the individuals in a space will be safe, healthy or healthier, nor that the space will be free from bacteria, viruses, allergens, volatile organic compounds or other pathogens; and the content of these policies does not constitute the provision of medical advice nor is does it represent all possible strategies that may be implemented or recommended to promote health and safety.

Some have asked those coming on their land to sign liability waivers, including notably President Trump’s reelection campaign had supporters sign liability waivers at a Tulsa, Oklahoma rally.

The coronavirus pandemic is obviously unprecedented, and as such it is not possible to predict with any degree of certainty how a court might rule on premises liability or other exposure claims, however, the legal reasoning above may provide guidance on the role of law in this pandemic and possibly mitigating the legal risk to commercial building owners.

While much is still being discovered about this novel coronavirus I have been asked about our business’ adaptations. We believe the best approach to keeping people safe and mitigating risk to owners of buildings is to employ a variety of interventions. In our personal law offices we trust in technology and innovation and we have never closed our offices, but rather after posting warning signs, we adapted our operations, by way of example having stopped recirculating indoor air, increased airflow, upgraded to MERV 13 air filters, and disinfecting air with UV-C light, in addition to social distancing including community masking and hand washing, in our war with SARS-CoV-2.

With more than 6,100 cases involving Covid-19 claims pending, building owners should track liability shield laws in their jurisdiction (.. including because some require warning signs). And it is important that all mitigate the risk in the coronavirus pandemic operation of their building or face the legal risk being another victim of this disease.

COVID–19 in Buildings is all about Ventilation

This post is about what we know today about how to occupy commercial and public buildings, from offices to schools, in order to prevent the spread of the SARS-Cov-2 (the now designation for what had been the novel coronavirus 2019).

If in 1992, “it’s the economy, stupid” was the phrase coined as the message of the day, today as we face another surge in SARS-Cov-2 cases,  it should be “it’s the ventilation, stupid.”

This is taken from a Zoom webinar I gave last week and is actually an update to my (.. admittedly very widely read) blog post on April 29, COVID-19 and the Risk from Recirculated Air in Buildings, but I must acknowledge, while this may refresh your recollection, there is little if any new guidance. And you might ask, ‘why advice from an attorney?’ to which I say, as an environmental attorney who reviews a lot of standards and codes, including about indoor air quality, I offer a perspective where others have not, including that my now much quoted April 29 blog post that was among the earliest writings on the topic.

In addition to more widely recognized transmission via direct contact with respiratory droplets generated by infected people or from contaminated surfaces, inhaling fine droplets and particles (often described as aerosols) being smaller than 10 microns is a principle pathway for infection of SARS-Cov-2. While uncertainties exist with respect to transmission pathways, it is beyond dispute that we cannot wait for 100% scientific certainty and owners of commercial buildings must now target airborne transmission within those buildings as part of any larger strategy.

Much of this can be easily implemented without much first dollar cost.

First and foremost, open the windows! If the building has operable windows, by all means provide ventilation by introducing outdoor air through those openings in the wall.

Increasing numbers of experts who study indoor air quality suggest the Centers for Disease Control and Prevention has placed insufficient emphasis on protection from small, virus laden, airborne droplets within the built environment. While others that deal specifically with buildings, like REHVA (the Federation of European Heating, Ventilation and Air Conditioning Associations) and ASHRAE (previously, the American Society of Heating, Refrigerating, and Air-Conditioning Engineers), have both acknowledged the indoors airborne hazard and in response described ventilation control measures.

Of course, the measures described here must be implemented by building owners in combination with increased disinfection of high touched surfaces, closing water fountains, and encouraging occupant behaviors like community wide use of face masks and hand washing.

Reasonable, but not certain inferences, including REHVA guidance, tell us:

Ventilation is key to reducing airborne transmission of SARS-Cov-2. Ventilation is the process of providing outdoor air to a space or building by natural or mechanical means to maintain the quality of indoor air. Appropriate building engineering controls are necessary and proper including avoiding air recirculation, enhanced by particle filtration and air disinfection, and avoiding overcrowding.

The most significant REHVA recommendation is “no use of recirculation” in any building with a mechanical ventilation system. However, the recirculation of indoor air is actually required by law, through application of standards incorporated into building codes, to save energy in the operation of buildings. But recirculated air can transport airborne contaminants including SARS-Cov-2 from one indoor place within a building to other areas in the building.

Particulate filters (MERV 13 filters and above) and disinfection equipment in recirculated air streams (such as ultraviolet germicidal irradiation and germicidal ultraviolet) can significantly reduce this risk, where  feasible, but they need to be professionally installed and then regularly serviced.

Additionally, portable air cleaning machines may be beneficial in modest sized spaces.

Significantly, in a mechanically ventilated building, ventilation rates should be increased by HVAC system modifications. Increase air supply can be accomplished by extending operating times to start ventilation at least 2 hours before building usage, if not 24/7. Multiple matters need to be considered in addition to only the ventilation rate, including temperature control, relative humidity, air flow distribution and direction.

Again, if ventilation is provided by opening windows, by all means, open them. Theoretically at least, natural ventilation could introduce pollutants from the outside air, but ..?

Lest it be lost on anyone, ventilation plays a critical role in removing exhaled virus laden air, thus lowering the overall concentration and therefore any subsequent dose inhaled by the occupants.

Concomitantly, and while it might seem obvious, minimizing the number of people within an indoor space (from classrooms to restaurants and ..) accomplishes the same in limiting the spread of SARS-Cov-2.

Of import the science does not support plexiglass room dividers (.. becoming common in courtrooms and restaurants) for reducing risk of airborne transmission. Maybe they do NOTHING, but anecdotal evidence articulated by environmental engineers suggests they change the airflow patterns in the room and can cause pooling of air and hotspots, dangerously reducing ventilation effectiveness. Plexiglass barriers are only effective in preventing spray-borne drops from hitting you in the face if you are very close to a person (e.g., a sneeze guard for a cashier in a supermarket). It is like a shield to protect you from someone who is trying to spray you with a water gun.

World Health Organization curated studies describe that humidification and air-conditioning have no practical effect as coronaviruses are quite resistant to environmental changes and are susceptible only for a very high relative humidity above 80% and a temperature above 30 ˚C.

Note, duct cleaning has no practical effect and changing of outdoor air filters is not efficacious.

Arguably retro commissioning or otherwise tuning up HVAC systems could be advantageous or not.

But this is Not what is being done in the U.S. today. In fact, many local codes make increased ventilation illegal. ASHRAE 62.1, the standard specifying ventilation rates “to provide indoor air quality that is acceptable to human occupants and that minimizes adverse health effects” is widely suggested to not be enough in a SARS-Cov-2 period building, despite being mandated by many jurisdiction that have adopted the ICC codes that incorporate the standard by reference. And the use of no recirculated air, at all, is considered extreme by some, but likely necessary for a period of time (i.e., maybe until the population has been vaccinated?) in order to prevent the spread of coronavirus. ASHRAE’s leadership issued two statements last Spring in response to SARS-Cov-2, including, “changes to building operations, including the operation of heating, ventilating, and air-conditioning systems, can reduce airborne exposures.” But many building owners believe the ASHRAE epidemic task force, heavily weighted with academics, has been too slow to do anything (the European based REHVA acted months ago) and should do more, promptly providing direction on suspension of use of its standards, in particular those related to recirculated air and/ or provide greater guidance on filtering viruses.

State and local codes officials have, almost without exception failed, despite their more than 2,100 new SARS-Cov-2 related statutes, regulations and executive orders, to suspend code (BOCA, IECC, IgCC, etc.) requirements mandating use of recirculated air and the like. Code requirements for demand controlled ventilation should also be disabled during this pandemic.

Moreover, executive orders that close a restaurant or bar or other business after the building has been retrofitting to exchange indoor air 20 times per hour, avoid air recirculation, enhanced by particle filtration with MERVE 13 filters and air disinfection with UV-C technology, and additionally avoids overcrowding; are at best the wrong headed decisions of lazy policy making public officials and at worst unconstitutional takings without rational basis.

Make no mistake, “it’s the ventilation, stupid.”

Until effective vaccines exist and are in wide-spread use, enhanced ventilation in buildings will be key, and even more significant than the important social distancing including community masking, and hand washing, in limiting the spread of SARS-CoV-2.

To Make Dishwashers Great Again?

Last Friday the U.S. Department of Energy issued a final rule effective November 30, 2020, that will once again permit American households to purchase dishwashers that actually clean dishes, as they had done for most of the machine’s 130 year history.

The October 30 final rule does not force anyone to change their currently installed dishwasher. And new machines will not be available for this year’s Thanksgiving meal, as future rulemaking is contemplated and manufacturers must produce the new class of machine. But the Department of Energy is giving consumers the choice to buy dishwashers that clean again while using less energy and less water.

Some might think it crazy that the federal government regulates dishwashers?

Congress enacted the first energy efficiency standard for dishwashers in 1987. The Energy Policy and Conservation Act (.. yes, the same law under which the Edison lightbulb was make illegal) has been updated three times, most recently by the Department of Energy in 2012. Arguably, dishwasher water and energy use have each declined by more than 50% over the past three decades.

The resultant effect is that modern dishwashers don’t clean dishes or cutlery well. Such is not surprising when hand dishwashing relies largely on physical scrubbing to remove food particles, the machine version relies on spraying hot water and heat, such that less water and less heat produce less cleaning over a longer period of time. Dishwashers that once took an hour from wash to dry today average two hours and 20 minutes, and even then they don’t accomplish the task. A 2016 GE Appliance survey of 11,000 dishwasher owners found that having to wait for hours for dishes to be done is a major consumer complaint.

Enter the Competitive Enterprise Institute. In 2018, the Department of Energy received a petition from the CEI to define a new product class under the Energy Policy and Conservation Act, for standard residential dishwashers with a cycle time for the normal cycle of less than one hour from washing through drying. Following evaluation of the petition and receipt of more than 2,700 public comment, the Department granted CEI’s petition and proposed a dishwasher product class with a cycle time for the normal cycle of less than one hour. This final rule establishes a new product class for standard residential dishwashers with a cycle time for the normal cycle of one hour or less from washing through drying.

Some environmental zealots are not happy.

But getting the facts and science right, besides reducing the time consumers expend scrubbing and drying (.. think of improved quality of life), according to the EPA dishwashers use 3.5 to 5 times less water than it takes to do the job by hand (.. and yes, that is water that requires energy to be heated). They also sanitize dishes and even rinse away food allergens, that most hand washing cannot accomplish, making the average 1.5 kWh at a cost of 17 cents for electricity (to run a heavily soiled load) a bargain.

And curiously, the Association of Home Appliance Manufacturers has argued that dishwasher manufacturers have made significant investments to meet the current standards, and that relaxing (or any unexpected change in) the standards would make these stranded investments. But with more than 8 million new machines sold each year, manufacturers will get over it.

And lest you think this is not a big deal, more than 75% of households in the U.S. have a dishwasher, many of which take more than 2 hours to not actually clean the dishes.

We are already working with home and condominium builders on the renewed sense of possibility marketing the installation of the new dishwashers.

And yes, it is crazy, if not also bad environmental public policy that the federal government regulates the robot in my kitchen that cleans and dries the dishes; and keeps changing the rules to the point that the machine first invented in 1886 no longer accomplishes its purpose. This less bad new environmental regulation will allow Americans a renewed sense of purpose making dishwashers great again.

HREC in a Phase l is Not a Recognized Environmental Condition

Among the most misunderstood term in a Phase I environmental site assessment is the Historical Recognized Environmental Condition.

The environmental professionals who perform these assessments by and large do not take heed of Eduardo Galeano’s quote, “History never really says goodbye. History says, ‘see you later.’”

By way of background, a Phase I environmental site assessment is the process of evaluating a property’s environmental conditions and assessing potential liability for contamination.

More precisely, ASTM International Standard E1527-13 Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process describes good commercial and customary practice for conducting an environmental site assessment of a parcel of commercial real estate with respect to the range of contaminants within the scope of the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) and petroleum products.

The purpose of a Phase I is almost universally to permit a user to satisfy one of the requirements to qualify for the innocent landowner, contiguous property owner, or bona fide prospective purchaser limitations on CERCLA liability. That is, a Phase l constitutes all appropriate inquiries into the previous ownership and uses of the property as defined in the EPA issued rule.

It has been estimated there were more than 800,000 Phase Is completed last year in the U.S. I wrote a blog post in January about the huge expansion in the space, Phase I Assessments for Tenants are the Hottest Environmental Issue in 2020.

And in another blog post last month, I wrote, I Just Read my 1000th Phase I Environmental Site Assessment this Year. A properly drafted Phase I can create huge dollar advantages serving as a marketing piece in an associated real estate transaction, be it a sale, a lease or a loan secured by real estate or .., while a poorly worded report can imperil the deal.

ASTM E1527 – 13 describes an Historical Recognized Environmental Condition as ..

“a past release of any hazardous substances or petroleum products that has occurred in connection with the property and has been addressed to the satisfaction of the applicable regulatory authority or meeting unrestricted use criteria established by a regulatory authority, without subjecting the property to any required controls ..”

Some context is useful. A Recognized Environmental Condition (a REC) is “the presence or likely presence of any hazardous substances or petroleum products in, on, or at a property: (1) due to any release to the environment; (2) under conditions indicative of a release to the environment; or (3) under conditions that pose a material threat of a future release to the environment.” The presence of a REC can thwart a contemplated real estate transaction.

And an Historical Recognized Environmental Condition is distinct from the Controlled Recognized Environmental Condition (a CREC) which applies to an environmental condition on a site that has received regulatory closure but are still subject to controls. A CREC is a subset of a REC.

Significantly, an Historical Recognized Environmental Condition is not a REC. To be clear an Historical Recognized Environmental Condition is not a recognized environmental condition for the purposes of a Phase I.

It is almost that simple. For a past REC to be determined an Historical Recognized Environmental Condition, the release or other condition must have been previously cleaned up or now meet current regulatory standards without clean up.

Additionally, in the event of prior regulatory intervention related to the condition, that the final action did not require use restrictions or engineering controls (restrictions on using water for drinking or a cap or the like).

A good example of an Historical Recognized Environmental Condition that is very common is when a regulatory agency issues a “no further requirements” determination as an UST is properly abandoned in place.

And to be an Historical Recognized Environmental Condition, the condition must meet current regulatory standards.

Note, some conditions identified as an Historical Recognized Environmental Condition under the prior version ASTM E1527-05 will no longer meet this determination under the revised express language of current, 2013, version ASTM E1527-13.

Arguably, for the vast number of properties, a Phase I identifying an HREC is a very good thing because it means the property has been managed in that the historic environmental issue “has been addressed to the satisfaction of the applicable regulatory authority.”

Again, an Historical Recognized Environmental Condition (an HREC) is not a Recognized Environmental Condition for the purposes of a prospective purchaser seeking protection from potential liability under CERCLA.

2018 IgCC to be Adopted in Baltimore City

Last Monday evening an ordinance was introduced in the Baltimore City Council to adopt the 2018 International Green Construction Code.

In the realm of green building this is a big deal. In the more than 4,400 code adopting jurisdictions across the country only the town of Gaithersburg, Maryland has adopted the 2018 IgCC. It is worthy of note that a second jurisdiction, Montgomery County, Maryland (that includes the municipality of Gaithersburg) has promulgated regulations adopting the 2018 IgCC, but the code is not yet in effect.

I have regularly and consistently been critical of enactments of mandatory green building codes, as violative of the core principal modern green building is built upon that sustainable construction is a voluntary non regulatory response such that the built environment that can repair the planet.

But in this instance it is necessary to understand the context that Baltimore City was among the first in the nation when it enacted a mandatory green building law in 2007 that remains among the most sweeping of that in any major American city. The existing green building code mandates that nearly all newly constructed or extensively modified building must be certified green.

Accepting that this new green code replaces an existing green building mandate, Bill 20-0630 should be applauded as an excellent enactment of the 2018 IgCC, far superior to what Gaithersburg or Montgomery County have done.

Make no mistake, Baltimore is not greenwashing. The 38 pages of amendments to the form 2018 IgCC both cause the code of conform to the existing regulatory scheme in the City and tweak many of the difficult provisions of the form document that have likely caused other jurisdictions to take a pass on this code (.. click here for a free copy of the IgCC).

As proposed, the 2018 IgCC will apply to all building except not 1 or 2 family dwellings and not muli-family dwellings with no more than 3 stories and no more than 5 dwelling units.

Most significant, drawing on the current law, the Baltimore version of the 2018 IgCC is a voluntary code. That is, there are options; there are alternative compliance paths, including a structure that achieves:

  1. LEED Silver certified or better,
  2. Certain multi family residential and mixed use structures, NGBS Silver or better,
  3. Enterprise Green Communities certification, or
  4. GBI Two Green Globes rating.

Also of paramount import “the code official may, in unusual circumstances and only on good cause shown, grant an exemption from any requirement of this code ..”

Wisely, this enactment ameliorates the harsh effects of some of the form 2018 IgCC provisions that are unsupported by good science and appear to be the vestiges old trade group infighting at ASHRAE, including by way of example when in an effort to address urban heat island effect (within a major Northeastern city), Baltimore has reduced the area that must be mitigated to “40% of the site hardscape.”

To add flexibility while preserving sustainability, the enactments creates a new section eleven for electives, of which at least 10 points must be achieved. Those electives are provisions extracted from the form code that projects in Baltimore may not be able to reasonably achieve.

All 10 elective points are satisfied if the project pursues a net zero certification, including the International Living Futures Institute Zero Energy or Energy Pedal or LEED Zero Energy (and the project need only provide documentation demonstrating acceptance into the monitoring period).

Baltimore Department of Housing officials have done a good job at striking a balance with the larger environmental industrial complex and the real estate community when the City is surrounded by jurisdictions that do not have mandatory green building laws.

It should not be lost on the reader that the State of Maryland has to date declined to adopt the 2018 IgCC as a means of satisfying the State high performance building mandate for State capital projects, including new public school building, instead leaving in place a heavily amended version of the now out of date 2012 IgCC that no project has ever utilized. So, the 2018 IgCC does not apply to new public school building or other new State funded building in Baltimore City, Gaithersburg or Montgomery County.

The 2018 IgCC is not for the faint of heart, even with these 38 pages of amendments. There are no 2018 IgCC buildings, yet, anywhere in the country. Recall maybe only 17 or so (.. out of 4,400 code enacting jurisdictions) ever adopted the 2012 version of the IgCC, and Boulder County may be the only place to adopt the 2015 IgCC, so guesstimating difficulty in construction and estimating increased first construction cost is speculative at best. The only jurisdiction I am aware has used the 2018 IgCC, for any purpose, is Denver that included it within its voluntary 2018 Denver Green Code housing pilot program as a compliance option with LEED Platinum, Net Zero Energy or Passive House +Non-Energy DGC. That is, Denver determined the 2018 IgCC to be an alternative to LEED v4 Platinum!

Projects in Baltimore will certainly select one of the alternative compliance paths (.. most major projects will pursue NGBS certification) and avoid the 2018 IgCC until there is some experience with this green code.

Of course, mandatory green building in Baltimore has its critics, from those who believe the City with the highest murder rate and among the highest violent crime rates in America should focus on making the City safe, to those who believe during a COVID-19 pandemic City government should not be enacting new building regulation that will not permit increasing outdoor air ventilation; disabling demand-controlled ventilation; further open minimum outdoor air dampers, as high as 100%, thus eliminating recirculation; improving central air filtration to MERV-13; or keeping systems running longer hours, if possible 24/7; etc.

This ordinance boldly describes its purpose to “reduce the negative impacts and increase the positive impacts of the built environment on the natural environment and building occupants.” Mandatory green building has been and remains the law in Baltimore City. Bill 20-0630 will  make the flavor of green building bigger and better while more palatable for all of the City’s occupants, and it may just help repair the planet.

Supreme Court to decide Climate Change Case

While this week the confirmation of Judge Amy Coney Barrett begins in earnest before the Senate Judiciary Committee, last week the U.S. Supreme Court granted BP’s petition for a writ of certiorari in BP P.L.C. v. Mayor and City Council of Baltimore, a much watched climate change case.

In 2017, a number of state and local governments began filing lawsuits in state courts against various energy companies, alleging that the companies’ worldwide extraction, production, sale, and promotion of fossil fuels had caused injury by contributing to global climate change, even though most of the fossil fuel companies were nonresidents of the states where the cases were filed.

Those lawsuits primarily assert that the extraction, production, sale, and promotion of fossil fuels constitute a public nuisance and give rise to product liability under state common law and state consumer protection statutes; the plaintiffs are seeking relief largely in the form of compensatory and punitive damages. The defendant energy companies removed nearly all of those lawsuits to federal court.

In this case, the defendants are 21 domestic and foreign energy companies. The plaintiff is the municipal government of Baltimore, Maryland. Like a number of other state and local governments, Baltimore City filed this action against energy companies in Maryland state court, seeking to recover damages under state law for harms that it claims it has sustained and will sustain due to global climate change. As in other similar cases, the energy companies removed this case to federal court, asserting multiple grounds for removal. The district court remanded the case to state court, and on appeal the federal appellate court agreed (although such was inconsistent with other federal appeals courts), and energy companies filed this petition with the Supreme Court.

On the face of the pleadings, this case is narrowly about procedure in appellate court jurisdiction,

Whether 28 U.S.C. 1447(d) permits a court of appeals to review any issue encompassed in a district court’s order remanding a removed case to state court when the removing defendant premised removal in part on the federal-officer removal statute, 28 U.S.C. 1442, or the civil-rights removal statute, 28 U.S.C. 1443.

And while a federal court of appeals ordinarily lacks jurisdiction to review a district court’s order remanding a removed case to state court, other federal courts of appeal have found there is authority for this appellate review, but moreover this is a case about climate change of national, if not global import, that many believe should not be decided in a Baltimore City Circuit Court courtroom.

Appreciate there are real differences in Maryland and federal law, both procedural and substantive, that may impact the outcome of these disputes. The consensus of environmental attorneys is if this case is heard in federal court such is not only all but certainly a victory for the energy companies, but also a victory for science.

The Supreme Court in a unanimous opinion written by Justice Ruth Bader Ginsburg in 2011 in American Electric Power Co., Inc. v, Connecticut, held

The Clean Air Act and EPA action the Act authorizes displace any federal common-law right to seek abatement of carbon-dioxide emissions from fossil-fuel fired power plants.”

Baltimore and the other state and local governments are ignoring this settled law about claims for climate change and attempting to end run this precedent by suing in state courts.

Additionally, I wrote about a key procedural matter in a recent blog post,

If courts exclude scientific evidence from a jury only because people generally agree some other way, .. think for example excluding evidence in the pending lawsuit for damages from climate change brought by Baltimore City pending in the Maryland courts because one side’s scientific experts are called “climate change deniers,” offering junk science counterposed to “sound science,” .. courts risk being the next vehicle in the car wreck of confidence the public has in scientists.

The possible importance of this case in articulating the nature of applying science in the making of public policy should not be underestimated. A state court bench is simply not a good substitute for a laboratory bench in application of the scientific method.

It is widely suggested officials in Baltimore, a city notorious for its significantly high crime rate, including a murder rate that regularly tops the nation, are wrong and out of their element when they describe their prosecution of this case in apocalyptic terms. Rather the real dispute is not about whether the world is warming or the relative impact of man on the planet, but the costs to society of particular remedies and the efficacy of those remedies versus that money being spent improving the quality of life for earth’s inhabitants; not matters a Baltimore City Circuit Court judge is particularly well suited to resolve. As the Supreme Court has already determined matters of climate change are the purview of EPA and not a trial court judge.

It should be fun to watch BP P.L.C. v. Mayor and City Council of Baltimore, docket no. 19-1189, which is set for argument on January 19, 2021 (.. yes the day before Inauguration Day), with a decision expected by June.

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