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.”

2018 will be a Year for New Green Building Standards, Codes and Rating Systems

2018 will be a watershed year in the course of green building standards, codes and rating systems. There has been no other single calendar year that has seen the breadth of substantive change that is before us.

In 2018 there will be new versions of LEED, ASHARE 189.1, IgCC, ICC 700, Green Globes and ..

True believers seek to design to a reality that green building, at its foundation, is fundamentally human; that engineering is second rate without aesthetics in the building architecture; and, that buildings work best when the people who will occupy the space have the most contact possible with those who will erect it.

I am not naïve enough to think that the new 2018 versions of green building standards, codes and rating systems will do all of that or what “The Jungle” did to meat packing or what “Unsafe At Any Speed” did to the automotive industry, but it is clear that the real estate industry is developing out of its green building adolescence.

I am optimistic that a global conversation, although centered in the United States, has begun where people are discovering and inventing new ways to build sustainably. Earlier versions of these green building standards, codes and rating systems were largely written in silos by partisans. What appears to be on the horizon in 2018 is the democratization of green building, in the U.S. and abroad.

And while those lofty ends are of great importance if green building is to expand beyond the duality of government building and publicly owned building on the coasts, the means are huge and present real opportunities not only for better and more building but also for those who will educate themselves and be able to execute on the new standards, codes and rating systems.

Among the positive 2018 updates:

LEED v4.1 will be released in first quarter 2018 and credits will be immediately available for use through a piloting period that will run concurrently with an approval process that will include public comment and a balloting of the members in 2019.

LEED v4.1 O+M Building Operations and Maintenance will be released earlier, again through piloting available for use (hopefully) before the end of January 2018. And it has been announced that a new LEED v4.1 Homes is only days from being released.

When the U.S. Green Building Council announces a new 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, it is a big deal.

But in the long run, it may be more impactful that ASHRAE 189.1 – 2018 has been approved and is undergoing “a final accuracy review” in advance of publication. To appreciate just how important this is, one need only recall the, then, unprecedented announcement by the ICC, the AIA, IES, and USGBC in 2014 that 189.1 revisions would be collaboratively developed and be the basis of future versions of the IgCC and LEED.  Despite very real questions about the efficacy of the ASHRAE continuous improvement process being used for these purposes, the approved version of the 189.1 – 2018 has just been delivered to the ICC

The 2018 version of the IgCC has been characterized by the ICC as being powered by 189.1. Following ICC’s drafting of the administrative procedures for the technical content, the document that will be the 2018 – IgCC will be published in June.

ASHRAE 189.1 will be published in that same document as an alternative compliance path.

Development of the 2018 – ICC 700 National Green Building Standard is reportedly well underway, but with much input it is now not expected to approved and published until first quarter 2019. Be aware that this delay has apparently not impacted that NGBS – 2012 will sunset this summer and the very popular 2015 version, which has grabbed significant market share, will remain open for new certifications.

With commanding residential market share, the Home Innovation Research Labs has already certified NGBS compliance of more than 100,000 dwelling units. A growing number of local governments have incorporated the NGBS into local codes and incentive programs. Additionally, because the IgCC allows the NGBS as an alternate compliance path for all residential buildings four stories or less in height, broader adoption of the IgCC will mean more NGBS building

The Green Building Initiative’s Green Globes rating system, recently described as the rating system “with a bullet” with big expansion plans for 2018 to be released by JLL as early as this week (.. which may become a huge green building story in and of itself), has announced the third public comment period for GBI01-201X, which will become the next version of Green Globes NC, ended on December 18, 2017. GBI expects to finalize the consensus process in first quarter of 2018 and complete the rating system revision in 2nd quarter of 2018.

The third public comment version is also being piloted and GBI is currently seeking projects scheduled for completion by 2019. Projects selected for the pilot have fees waived, collaboration with Green Globes assessors and opportunities for public recognition. If you want to learn more about the pilot and to qualify as a participant using this rapidly climbing rating system, contact Jenna@TheGBI.org.

The Department of Defense, the largest owner of LEED buildings across the globe, announced an effort to update the Unified Facilities Criteria 1-200-02 High Performance and Sustainable Building Requirements and while a 2018 release date could happen, such now appears not likely.

The situation at GSA is unclear with the new Administrator having been sworn in only 3 weeks ago. Such is significant because GSA, with more than 350 million square feet of building at over 1,600 locations, GSA is second only to the DOD in number of LEED buildings. Since 2003 GSA has required green building, but many believe there will be big changes to those requirement in 2018?

While outside the scope of this blog post, it is significant that China, with the world’s largest green building market, has announced a soon to be released 2018 version of its China Three Star green building evaluation standard for public building (i.e., all non-residential building).

These updates impact contract obligations, including the design and erection of green buildings, as well as government requirements, includes incentives and mandates to build green.

With new leadership at each of the green building groups since the last versions of their standards, codes and rating systems, the 2018 revisions hold great promise for dramatic expansion of market share. This will all result in more and better green building and also immediate business opportunities for those in the green building industrial complex who can execute the 2018 changes.

Fireworks Cause Air Pollution But

In a very good example of striking the right balance between environmental protection and celebratory festivities, despite that fireworks degrade air quality with particulate matter, in the United States we have decided that the pyrotechnic show must go on.

Fireworks have a storied history in the United States best articulated in a July 3, 1776 letter from John Adams to his wife Abigail about the festivities to celebrate Independence Day,

It ought to be solemnized with Pomp and Parade, with Shews, Games, Sports, Guns, Bells, Bonfires and Illuminations from one End of this Continent to the other from this Time forward forever more.

But that historic passage does not explain the skyrocketing popularity of fireworks, on Independence Day, on New Year’s Eve and for many other celebrations. Today, Americans are exploding almost one pound of fireworks each year for every man, woman and child, up from only just one-tenth of a pound annually in 1976, the bicentennial year.

There is actually little environmental regulation for the setting off of thousands of little explosions at a modern fireworks display.

In most states those who handle fireworks are regulated for safety by a state fire marshall who issue permits including of “firework shooters, explosive blasters, explosive manufacturing, and explosive sales.” In many locales individual fireworks displays do not even require a permit.

But fireworks are an undeniable source of fine particulate matter, particles that are less than two and one half microns in diameter. And it is heavy metals, including lead, mercury salts, copper, aluminum, and barium that give fireworks their colors.

However, despite the apparent irrefutable facts, all of this is very temporary and a recent NOAA study verifies there is a surge in fine particulate matter on the evening of July 4 (albeit at only 10 of 315 air quality monitoring stations nationwide). Levels drop back down by noon on July 5, according to the research. The increases are largest from 9 – 10 p.m. on the holiday.

As result of complex chemical reactions resulting from combustion, the miniscule quantities of metals are largely aerosolized at altitude and dispersed high in the sky having no effect on people.

And not to let reality get in the way of government regulation, the Environmental Protection Agency does offer guidance on particle pollution,

Most people will have no reaction when exposed to .. .. Some individuals are more sensitive than others, including possibly infants and children, individuals with respiratory conditions or allergies and asthma, ..

As a practical matter many people who are sensitive to particle pollution heed the EPA recommendation to limit their exposure by watching fireworks from upwind or as far away as possible.

Areas that exceed EPA’s particulate matter standards are known as “nonattainment areas.” Each state is required to develop a State Implementation Plan for how they will control air pollution, including particulate matter, within their jurisdiction. “Wildfires, high winds, volcanoes and fireworks” (.. a list that could only exist in a government regulation or a cognitive ability test for the term that does not belong) each are exempted from being calculated for the purposes of a State Plan under the (Obama era) 2016 Exceptional Events Rule (41 CFR 50.14),

Fireworks displays. The Administrator shall exclude data from use in determinations of exceedances and violations where a State demonstrates to the Administrator’s satisfaction that emissions from fireworks displays caused a specific air pollution concentration in excess of one or more national ambient air quality standards at a particular air quality monitoring location and otherwise satisfies the requirements of this section. Such data will be treated in the same manner as exceptional events under this rule, provided a State demonstrates that such use of fireworks is significantly integral to traditional national, ethnic, or other cultural events including, but not limited to, July Fourth celebrations that satisfy the requirements of this section.

To see how this operates, see the Rose Park, Utah Fireworks Exception Event Report, prepared under an earlier version of the rule.

Such rational rule making is a good thing because fireworks are simply not a public health concern.

In the event there is harm, there is nothing in this regulatory scheme that precludes an actual damaged (e.g., embers igniting a roof) party from seeking judicial redress.

This is a good result. Fireworks have a longstanding and proper place in our nation’s celebrations. Fireworks do contribute to air pollution, but only very modestly over a few hours each year. Environmental regulation of this space would not serve the public good. As a New Year’s resolution for 2018, the regulatory balancing act displayed here should be repeated in other instances.

Migratory Bird Treaty Act Reform is for the Birds

A week after this blog post, the Office of the Solicitor issued a memorandum the subject line of which was, “The Migratory Bird Treaty Act Does Not Prohibit Incidental Take.” The very first page of the Memorandum ends with the sentence, “Interpreting the MBTA to apply to incidental or accidental actions hangs the sword of Damocles over a host of otherwise lawful and productive actions.”

Decriminalizing accidental bird killings “this Memorandum finds that, consistent with the text, history, and purpose of the MBTA, the statute’s prohibitions on pursuing, hunting, taking, capturing, killing, or attempting to do the same apply only to affirmative actions that have as their purpose the taking or killing of migratory birds, their nests, or their eggs.”

The Migratory Bird Treaty Act was enacted in 1918 to protect the migratory bird population from overhunting and poaching.

The Federal government has in recent years threatened that anyone involved in an otherwise legal activity may be subject to criminal liability for the unintentional death of any one of over 1,000 species of birds protected under the Act.

But in a 2015 decision by the Fifth Circuit Court of Appeals reversing a misdemeanor conviction after 10 birds were found in two large open-top tanks at a Texas refiner, Federal Judge Edith H. Jones wrote,

If the MBTA prohibits all acts or omissions that “directly” kill birds, where bird deaths are “foreseeable,” then all owners of big windows, communication towers, wind turbines, solar energy farms, cars, cats, and even church steeples may be found guilty of violating the MBTA.

In an earlier blog post about Federal government enforcement, I wrote, Okay to Kill Eagles with Wind Turbines But Not with Solar Panels or ..

Federal Courts of Appeals have split on whether the Migratory Bird Treaty Act imposes criminal liability on companies and individuals for the inadvertent death of migratory birds resulting from business activities.  Three circuits – the Fifth, Eighth, and Ninth – have held that it does not, limiting taking liability to deliberate acts done directly and intentionally to migratory birds.  Two circuits – the Second and Tenth – have held that it does.  After articulating incidental take was acceptable during its term, on January 10, 2017, in the final days of the Obama Administration, the Office of the Solicitor issued an opinion, in a textualism interpretation, arguing that incidental take is prohibited, which was “suspended and temporarily withdrawn on February 6, 2017” by the current Administration.

Concomitantly, the Fish and Wildlife Service announced it intends to evaluate the general permit issued last year for incidental take under the 1940 Bald and Golden Eagle Protection Act.  When the bald eagle was delisted under the Endangered Species Act, FWS issued a rule establishing a permit program for incidental take under the Eagle Act.  On December 16, 2016, FWS adopted a final rule intended to address some of industry’s concerns regarding that incidental take permit process, but future rulemaking is ongoing; although many believe that a statutory change is appropriate to address the broad breadth of interests.

Despite its title, the World War I era Migratory Bird Treaty Act is a domestic law (not a treaty) that affirms the United States’ commitment to four international conventions (with Canada, Japan, Mexico, and Russia) for the protection of a shared migratory bird resource. Each of the conventions protect selected species of birds that are common to both countries. The Act protects migratory birds by governing the taking, killing, possession, transportation, and importation of such birds, their eggs, parts, or nests.

There is now a proposal in Congress to clarify liability under the nearly 100 year old Migratory Bird Treaty Act, reflecting the significant changes over the last century, including the electrification of homes (.. in 1918 less than 30% of American households had electricity), not to mention how energy is produced, transmitted, and distributed.

The discreet amendment to H.R. 4239 offered by Representative Liz Cheney approved by a 20 -14 vote in a markup of the Secure American Energy Act before the House Natural resources Committee, is,

At the end of Title II, add the following new section:

SEC. 207. CLARIFICATION REGARDING LIABILITY UNDER MIGRATORY BIRD TREATY ACT. Section 6 of the Migratory Bird Treaty Act (16 U.S.C. 707) is amended by adding at the end of the following:

(e) This Act shall not be construed to prohibit any activity proscribed by section 2 of this Act that is accidental or incidental to the presence or operation of an otherwise lawful activity.

In a newsletter to her constituents, Congressperson Cheney said the amendment, “clarifies the Migratory Bird Treaty Act to ensure oil and gas operators, wind operators, home-builders, and folks performing every day activities are not held criminally liable for the accidental take of a bird.”

Owners of wind turbines and of solar panel farms have had their modern ‘environmentally friendly’ and legal businesses criminalized under this century old regulatory scheme. It is those environmentalists who are pushing to amend both Acts to exempt from criminal liability a taking, killing, or other harm to a migratory bird that is accidental or incidental to the presence or operation of an otherwise lawful activity.

At first blush environmentalists might think the 32 word Congressional proposal is not a youthquake and while it may be technically correct that the amendment is not a significant cultural change arising from the actions of young people, it is dramatic modernization of a century old law advanced by one of the newest members of Congress (although an influential member). And it is a modern textualism interpretation of this old law that obstructs renewable energy gains by wind turbines and solar panels.

An amendment offered in a Congressional committee mark up of a bill, is a long way from being the law. But nearly all believe that the 100 year old law must be reformed.

This has already sparked a fiery debate, pitting members of the environmental industrial complex against each other seeking to find a balance between this dinosaur law and the incidental take, including that associated with wind turbines. Congress should act to modernize the Migratory Bird Treaty Act making the amendment the law of the land and if it does not, the Solicitor should act reversing the Obama era guidance and decriminalizing accidental bird killings.

Blockchain has come to Real Estate

Earlier this fall an apartment in Kiev became the first real estate purchased using blockchain, portending a new era in the sale of land and improvements.

It is suggested blockchain may do for the $217 trillion real estate market what the Internet did for communication. Blockchain will address high transaction costs, long time delays, and heterogeneity, accelerating both the investment good and the consumption good of real estate across sectors and the globe.

Blockchain, a digitized, distributed ledger that records and shares information, could enable the real estate industry to address its inefficiencies. Many think of blockchain as the technology, or better yet the operating system, that supports Bitcoin, the digital currency launched in 2009 that has been very much in the media in recent days as prices have run up.

There is no requirement for a cryptocurrency exchange in a business transaction undertaken with a smart contract stored over the peer to peer network that is blockchain, although that is the popular image, and we can see a perfect example of this at https://veridium.io/, a token exchange. Real estate transactions have the potential to be different, to log agreements as exchanges, and the actual money exchange as it is.

Real estate is a highly regulated industry and real estate transactions must be recorded in a government ledger to be recognized and enforceable by all. There are more than 3,600 government in the United States alone where real estate deeds are filed and the vast majority are paper instruments filed with a court clerk and not easily accessible.

A California based private company, Propy, contracted with Ukraine’s e-government agency to serve as a duplicate official ledger facilitating the $60,000 Kiev apartment sale in September.

Laws will need to be changed across the U.S. and the globe to allow more than the old fashioned register of deeds because today in most of the thousands of local jurisdictions in the U.S. the transfer of ownership of real estate is effective when the deed in presented for recording among the land records.

States are making the necessary changes in law.

In 2016, Vermont enacted House Bill 868 that provides for the enforcement of transactions using “blockchain technology” by providing a presumption of admissibility in a judicial challenge,

A digital record electronically registered in a blockchain, if accompanied by a declaration that meets the requirements of subdivision (1) of this subsection [.. notarized], shall be considered a record of regularly conducted business activity pursuant to Vermont Rule of Evidence 803(6) ..

And earlier this year, Arizona went even further enacted House Bill 2417 recognizing blockchain signatures and smart contracts as an electronic record and Senate Bill 1084 requiring governmental agencies to allow the use of electronic records or electronic signatures, including for the transfer of real estate.

Delaware, Nevada and Illinois also have blockchain authorizing laws; as do Dubai and Israel.

It may well be commercial leasing will elevate blockchain real estate for the marketplace ahead of deeds because leasing transactions do not require involvement of a government registrar.

And progressive owners of green buildings and the like will all but certainly be at the forefront of this technological revolution. But all owners of commercial real estate, whether or not their aim is improve profitability, risk becoming as outmoded as the buggy whip industry, if they do not ponder and consider adopting blockchain technology.

Green Building Data Risk as an Opportunity

Green buildings generate large quantities of data. In an age when many have opinions about Edward Snowden’s disclosures, foreign state sponsored hacking, and Uber’s massive customer data hack, most people have not considered matters of data protection from their real estate, green building or otherwise.

The topic is too broad to comprehensively address in a brief blog post, so this post will consider, within the realm of green building, what a business needs to know about protecting people’s personal information, no matter where the data is processed, stored or sent, even outside the four walls of the building, as may often be the case when it is transmitted over the Internet.

There is no single comprehensive federal data privacy law in the United States. There are a panoply of federal laws within discreet silos, including significantly: The Health Insurance Portability and Accountability Act (HIPAA), The Family Educational Rights and Privacy Act (FERPA), the Fair and Accurate Credit Transaction Act (FACTA), and the like. And there is some form of privacy law in at least 48 states (but not Alabama and South Dakota), including by way of example the California’s groundbreaking 2003 Data Security Breach Reporting Law, but most of those are reactive, that is most laws in the U.S. establish requirements for a business after a data breach.

The European Union has gone in another direction with the 2016 General Data Protection Regulation, applicable as of May 2018, updating and modernizing the principles enshrined in the 1995 Data Protection Directive which guarantee individual privacy rights in one’s personal data including “the right to be forgotten.” The EU law is not only mandatory of all doing business in EU countries, but is excellent guidance for any U.S. business seeking to mitigate the risk associated with data protection.

Because the U.S. does not have an omnibus data protection law, the EU data protection regime has become the de facto standard.

But make no mistake, privacy enforcement in the U.S. is more aggressive and punitive than anywhere else in the world, including the EU. Substantial financial penalties have been recovered by the Federal Trade Commission and the 50 state attorneys general, not to mention in private civil actions.

So there are implications for owners and operators of green buildings. But the largest owner of green buildings (also the owner of the most LEED certified buildings) the Department of Defense has largely taken itself out of this discussion with a waiver that provides,

Department of Defense prohibits the sharing of metered data with private entities, such as USGBC. Therefore, DoD sustainable proponents have brokered this waiver with USGBC, allowing DoD to continue to utilize LEED without compromising data. This waiver is specific for LEED Version 4.0. The similar waiver for LEED v2009 is still in effect ..

And the power utilities protect themselves from liability related to data. A common provision in a utility Written Consent To Release Confidential Customer Usage Related Information, is

I hereby release, hold harmless, and indemnify Utility from any liability, claims, demands, causes of action, damages, or expenses, including attorneys’ fees, resulting from: 1) any release of information pursuant to this Authorization; 2) the unauthorized use of this information by the Authorized Party; and 3) any actions taken by the Authorized Party pursuant to this Authorization.

It is the unsophisticated who will encounter legal issues and be left holding the bag.

A properly drafted green building lease may contain a provision substantially like,

Landlord shall provide to Tenant reports for the amount of electricity, natural gas and fuel oil (where applicable) consumed at the building broken down by utility type, energy unit usage (e.g., kWh, therms or ccf, gallons), cost per month for each energy source for the duration of the Lease, including a limited license to use the Landlord’s data for nonpecuniary purposes. Unless disclosure is prohibited by state or local law or if data is not available or is confidential, ..

.. Irrespective of any other provision contained herein, the above described exchange of data shall be as an accommodation only, to the maximum extent permitted by law AS – IS without representation or warranty of any kind or type, and use of the data is at the risk of the party using it.

Some data transmission is involuntary. There are a number of mandatory energy benchmarking reporting laws requiring large buildings in a dozen or so U.S. cities to report data to the local government. Many of those local laws are poorly drafted and do not insulate the reporting parties from liability for errors, harmless or otherwise.

Others collect building data. ARC Skoru collects lots of data stored in servers throughout the world and its services agreement contains language found in similar green building rating system agreements, often including data not actually owned by the party submitting it,

You hereby grant GBCI and the GBCI Affiliates and subcontractors a perpetual, non-exclusive, royalty-free, fully paid-up and irrevocable license to access, view, reproduce and otherwise use all Project Information submitted to GBCI, including all copyrighted materials, tradenames and other proprietary information, for the purposes of assessing the Project.

And building automation systems not only create and collect data but use it to control mechanical and electrical systems, and today the standard is contracts that license the use of data over separated computer systems from the building available Internet provider. It may seem unlikely that a hacker would attack an environmental control handled lighting/ shading system, but proprietary and building occupant personal data may be accessible from that network.

Additionally, with the advent of the Internet Of Things, smart device manufacturers and providers often control data, and even claim to own it, including a large number of power utilities that claim smart meter data as theirs; not only in commercial buildings but also homes.

Much of this post has been about energy data, but water data is notoriously unreliable and simply bad across the country. A claim pending against a major U.S. city with more than 400,000 water customers alleges that more than 38% of billings (which are based on water usage) in that city are wrong. There is little if any accountability for junk data from government water systems.

And this subject involves more than simply the USGBC Minimum Program Requirement for 5 years of energy and water use data reporting. LEED projects gather a broad breadth of data from individuals occupying buildings including Occupant Comfort Surveys and Occupant Commuting Surveys; all which personal data has to be protected.

When claims are made, including for negligent misrepresentation, by a buyer against a seller that data is not accurate, who is responsible largely depends upon the writings. In one widely discussed claim, a tenant reported ‘bad’ utility data to its landlord when the public utility mixed up accounts being uploaded to an ENERGYSTAR account, and the landlord provided the whole building ENERGYSTAR report to the prospective purchaser, who only after buying the building discovered the very large underreporting of electricity costs.

Contract documents involving real estate must now prescribe who owns the building data. This is an issue in the GBCI Change Of Ownership Agreement which terminates all rights to data provided by the seller and transfers all rights to the buyer, and also the obligation to continue to report energy and water usage data to GBCI. That Agreement and more should be part of every contract of sale for a LEED project.

Private sector commercial leases now, in most instances, have provisions describing who owns the data or has a license to use it or in some instances to require it be held confidential and not released. For example, when the DoD is a tenant within a building the building owner must also not report data for the remainder of the building and several other federal government civilian instrumentalities impose similar restrictions.

There is additionally data deemed “classified information” by the government. Such information may be associated with a green building, although GBCI expressly disclaims data controlled for export under the International Traffic in Arms Regulations or the Export Administration Regulations.

However, it is key that data protection strategies encourage innovation and use of data, not the opposite. Strategies for data protection in contract documents must become an essential term incentivizing businesses to innovate and develop new ideas, methods, and technologies for security and protection of personal data. With well drafted protection provisions in contracts, businesses will mitigate risk and have effective tools to create technological and organizational solutions, including to monetize that data.

The fix is very easy. All LEED surveys and other data collection vehicles should promote techniques such as anonymization (removing personally identifiable information where it is not needed), pseudonymisation (replacing personally identifiable material with artificial identifiers), and encryption (encoding messages so only those authorized can read it) to protect personal data, while allowing the aggregation of data that can be valuable.

There is a robust cyber security insurance market designed to mitigate losses from a variety of cyber incidents, including data breaches, but such carries with it a dollar cost and does not necessarily encourage the implementation of best practices for self-protection.

Data is often described as the currency of today’s digital economy. Collected, analyzed and moved across the globe, personal data has acquired enormous economic significance. By strengthening green building standards of data protection, owners of real estate will mitigate risk while creating business opportunities and increasing dollar values, all while saving the planet.

Arc is Electrifying Green Building

Scot Horst at Greenbuild

Next week will be a year since the launch of Arc. Already approaching a Billion square of projects not only in the United States but also from India to Sweden and Israel to Bhutan, if you are not familiar with the Arc platform, that helps a building owner measure performance and benchmark against others, you are missing out on what is transmogrifying the built environment.

I had an opportunity just days ago to talk with Scot Horst. Scot serves as the CEO of Arc Skoru Inc., the technology company established to build Arc, the digital platform created by the U.S. Green Building Council and its sister organization, the Green Business Certification, Inc.

Previously, Scot was the chief product officer at the USGBC where he oversaw LEED, so he is uniquely qualified to explain Arc’s place in the cacophony of green building standards, codes and ratings systems including its space in the orbit of LEED. While LEED was designed to recognize leadership which has historically been described as the top 25% of the real estate market, “now we can help everyone else make improvements from where they are.”

The Arc platform is not Noah’s ark, the vessel in the Old Testament that saves Noah’s family and the world’s animals from the planetary engulfing flood, but it may only be a modest overstatement to analogize Arc scored existing green buildings saving life as we know it. New construction of green buildings cannot save the planet when less than 170,000 new commercial buildings were constructed in the U.S. last year and that number is all but insignificant given 5.6 million existing U.S. buildings, so eucatastrophic benefit can only be achieved by impacting those millions of existing buildings.

The Arc platform is already casting a huge and growing green shadow over that existing building market.

Those existing buildings participating in the inaugural year of Arc, while in largest number are in the U.S., are across all 7 continents except Antarctica. As we heard from the speakers at Scot Horst’s Master Series session at Greenbuild 2017, they range from schools to airports, from offices to train stations and baseball stadiums to hospitals.

The reason this “system” is having a disruptive impact on hundreds of millions of square feet of existing buildings in less than 12 months, is that while LEED is designed to be about the effort of designing and constructing green building, Arc was created “to focus on the results not the effort.”  Put another way, it is “an outcome based standard, not a rules based standard.”

Projects using Arc input data across five categories: Energy, Water, Waste, Transportation and Human Experience. Over time this data will generate a performance score. The data required for Arc includes 12 consecutive months of energy and water use, and a minimum of 1 waste data point, occupant/ transportation survey, and interior carbon dioxide and interior total volatile organic compound levels.

Arc is not a raven-messenger when allows the project to measure improvements and benchmark against itself and other similar projects. A “project” can represent a single standalone building, a group of buildings in a large development or portfolio, or an entire city.

Arc can even be used to send data to GRESB.

There is no Arc “certification.” Arc is a technology platform that offers online tools for buildings to score themselves. There is no plaque, but there is an optional display unit ideal for a building lobby and there is an App so building occupants can track building data real time and be involved.

Arc is available at no charge to LEED registered projects. There is a $1,200 registration fee if a project is not registered with GBCI.

Participation in Arc does satisfy the LEED MPR6 owner’s commitment to share whole building energy and water usage data.

And it is really much more than that. A very large number of LEED Existing Building certified projects did not recertify (.. some could not meet the increasing LEED minimums). And only a very few LEED New Construction certified projects later pursued LEED EB (.. including only a handful that took Rick Fedrizzi up on his Greenbuild offer of some years ago for free certification).  Those tranches of building owners are ideal candidates for Arc. And that does not include all of those who are not interested in pursuing third party certification, but will share data so that they can benchmark themselves against other similar buildings. And just maybe, when their score gets close to 40, a building owner might determine it could do a few more things and qualify for LEED certification?

A new and improved LEED v4.1 O+M Building Operations and Maintenance aimed at a larger existing building market share, will be released before the end of 2017 and through piloting available for immediately for use. As I described in my recent blog post, LEED v4.1 Announced by USGBC at Greenbuild, there are still some final decisions to be announced on the much discussed concept of removing prerequisites for O+M projects and the possibility of O+M interior spaces as opposed to the current whole building only. So, it is not Arc in lieu of LEED, but rather Arc complementing LEED.

And Arc building data is already accelerating global market transformation. For example, with 129 registered projects in India, Arc has among the best building performance databases in one of the fastest expanding and high growth real estate markets in the world (.. the construction market in India is expected to grow almost twice as fast as in China).

All of this building data, collected in Arc and other green building rating systems, screams issues of personal data protection and privacy laws not to mention who ‘owns’ the building data and it enormous economic significance. Such will be the subject of my blog post next week.

Industry insiders have predicted that with Arc approaching one billion square of projects in year one, there will be more than 5 billion square feet participating in Arc by this time next year.

Regular readers of this blog may think this post sounds like an endorsement of or testimonial for Arc, and I would respond we are cheerleaders for this system and have been since I first wrote about it a year ago. Just last month in a blog post focusing on the opportunities to green existing buildings, I coauthored with Katie Stanford, we wrote, “Greening the millions of existing buildings, one commercial build out at a time, with .. Arc scored space, can actually save the planet.

What more can I say, except that you should learn about how Arc will transform your business.

LEED v4.1 Announced by USGBC at Greenbuild

LEED v4.1 Presentation at Greenbuild

The announcement of the upcoming release of the new LEED version 4.1 by the U.S. Green Building Council was no doubt the biggest story at Greenbuild 2017 in Boston last week.

And that is saying a lot because Greenbuild is the world’s largest conference and expo dedicated to green building and there was much to be excited about in the aisles of the expo floor.

But when USGBC announces a new 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, it is big deal.

That LEED v4, originally released as LEED 2012, is growing and changing in response to the marketplace is widely heralded as a very good and necessary thing.

Beginning in November 1, 2013 projects had the option of registering under LEED v2009 or LEED v4. And beginning November 1, 2016, new LEED projects had to register under v4. Despite that passage of time there are not a large number of certified v4 projects and a very modest number of new construction v4 building in the U.S.

The “existing credit requirements” in LEED v4 are the foundation of the changes. This is not a full version change of the rating system, but rather it 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 2018 IgCC).

There is much that is not known because many decisions about LEED v4.1 are yet to be made and nothing has yet been released in writing, but this blog post is based upon the best information that could be gleaned from USGBC staffers as of last Friday. It is quite likely that some of this will change and there will no doubt be much more to come. Here are the key facts as we now know them:

The technical development work has been under way on a new version of the rating systems that will be known as LEED v4.1.

Version 4.1 will be released in first quarter 2018 and credits will be immediately available for use through a piloting period that will run concurrently with an approval process that will include public comment and a balloting of the members in 2019.

Initially, v4 and v4.1 will both exist on parallel tracts at least until the vote by the members.

LEED v4.1 O+M Building Operations and Maintenance will be released earlier, again through piloting available for use (hopefully) before the end of January 2018. But there are still some final decisions to be made to this rating system “that will see the most change” and be expanded to a larger share of the market. No final determination has been yet made on the much discussed concept of removing prerequisites for O+M projects and the possibility of O+M interior spaces as opposed to the current whole building only.

Among the four goals of this next evolution of the rating system, as described by USGBC staff, is to “address market barriers and lessons learned from v4 projects teams.” As part of the technical development process staff quantified the percent of all LEED BD+C v4 projects that earned each credit. That work, including highlighting those credits that were little achieved, which is the basis of the changes that will be LEED v4.1, can be accomplished on this short timeline because it is being tasked to the same leadership and team that drafted v4.

The largest number of changes will be in the Materials And Resources category. MR Credit: Building Life-Cycle Impact Reduction is very paperwork intensive and little achieved, only in 27% of projects, in part because with only option 4 of the credit available to new construction and the iterative modeling required arguably having limited true environmental efficacy, the credit will be revamped. MR Credit: Building Product Disclosure and Optimization – EPDs is perceived as having resulted in “tremendous movement” in green building, but has not been widely accepted in the marketplace and should see dramatic change away from USGBC promulgated EPDs to globally accepted standard EPDs. MR Credit: Building Product Disclosure and Optimization – Sourcing of Raw Materials option one under the credit requiring using at least 20 different products with an extraction report has never been achieved and option two is little achieved; and will see change. MR Credit: Building Product Disclosure and Optimization – Materials Ingredients, was only achieved in 17% of projects (the lowest rate of achievement of any credit), which will result in a serious reconsideration of the whole topic of material ingredients.

There are also changes proposed in the Sustainable Sites category. Only 24% of projects achieved the SS Credit: Site Development – Protect or Restore Habitat and that credit is being revamped. SS Credit: Rainwater Management is also little achieved and despite the concept of storm water management being widely accepted it is clear that the current credit does not capture current best practices often ensconced in law.

The Indoor Environmental Quality category will also see improvements. Despite that EQ Credit: Low-Emitting Materials has been achieved on 75% of projects, it will be streamlined. EQ Credit: Indoor Air Quality Assessment, despite being the second most often achieved credit, on 89% of projects, is achieved under the credits option one that is a building flush-out while not a single project has achieved option two which requires actual testing of 32 parameters that is too expensive if even available; and will be updated. EQ Credit: Daylight is only achieved ion 31% of projects and is being changed. The EQ Credit: Acoustic Performance ties as the least achieved credit, at only 17% of projects, and simply does not reflect where the market is, and will be changed.

The second goal is to “update the performance requirements” in the Energy And Atmosphere category, but there is a real debate to be had if this is actually accomplished by simply ratchetting up the prerequisites (including the almost certain move from the reference ASHRAE Standard 90.1 – 2010 to 90.1 – 2103) or if that move simply eliminates projects from qualifying for LEED and possibly the better change is to move away from energy cost savings to some other metric? EA Credit: Renewable Energy Production has only been achieved on 41% of projects and will be updated. EA Credit: Green Power And Carbon Offsets is also being changed.

Which is closely related to the third stated goal of this next evolution of the rating system, “expand the marketplace for LEED.” For example EA Credit: Demand Response has only been achieved on 20% of projects and  is being looked at again and will be changed because there are simply so many places that the electric power utility does not offer Demand Response. And similarly EA Credit: Green Power And Carbon Offsets, which is largely tied to Green-e, is not available in many markets. And despite that Location And Transportation category LT Credit: Sensitive Land Protection was achieved on 79% of projects, it simply cannot be achieved at all locations, and it will be changed. Six new international advisory councils are being convened to harmonize credits across the globe (similar to Regional Priority Credits aimed to be in the U.S.) with national codes and local best practices.

And the last articulated of the four goals of this updated rating system is to “improve performance through the life of buildings.” This will largely involve aligning the credits, including underlying metric, across all rating systems, including LEED Neighborhood Development and the Cities program, as well as describing alignments with PEER (version 2.0 to be released in first quarter 2018), WELL and SITES. As part of this work all of the residential rating systems will become one program and, possibly burying the lead, this will include an “updating of the single family home” rating system.

Moreover, “Arc is now fully available as a platform to support projects as they track energy, water, waste transportation and human experience.”

We suggest this is what innovation looks like.

Follow this blog for more and additional information on LEED v4.1 as the most widely used green building rating system in the world adopts a new version. And if we can assist you with your v4.1 project or other green building work do not hesitate to email Stuart Kaplow.

Arbitration is Why There is So Little Litigation in Green Building

It is surprising to many in the environmental industrial complex that there has been relatively little litigation arising out of green building. There have been only a very modest number of cases commenced in courts across the country involving construction of green buildings.

The reason for the dearth of court cases is not that there are no disputes and differences arising from green building design and construction, but rather that many, if not most of the contracts in sustainable construction require mandatory arbitration, in lieu of a judicial contest.

Appreciate that this limited number of disputes pursuing courtroom redress exists against a backdrop of a rising number of actual claims in green building construction projects.

The purpose of the blog post is not to argue whether or not arbitration works as well or better than litigation. Legal scholars can have at it.

And there is no question that a properly drafted provision in a contract requiring arbitration is enforceable. The Supreme Court, in American Express v. Italian Colors Restaurant decided in 2013, “the overarching principle that arbitration is a matter of contract. .. Courts must “rigorously enforce” arbitration agree­ments according to their terms.”

While there has been much discourse in the media recently about consumer contracts containing alternative dispute resolution provisions, including those requiring arbitration, that situation is easily distinguished from (non-consumer) construction industry contracts. With over a million contract documents licensed on an annual basis, the AIA’s form construction documents are the most widely used contract documents in the industry. And while the AIA documents mandated arbitration as the exclusive form of binding dispute resolution for well over 100 years, the current form of documents contain a ‘check the box’ where the parties choose between arbitration, litigation or other agreed process.

Arbitration is particularly widespread in green building and has resulted in so few green building disputes ever seeing the inside of a courtroom. Even the Green Business Certification Inc. LEED Certification Agreement has a mandatory arbitration provision.

Significantly, many green building subcontractors and materials suppliers have provisions in their purchase contract requiring arbitration or their contracts are governed by provisions in prime contracts (many of which are from larger and more sophisticated construction industry players) that mandate arbitration.

A review of 25 suppliers that were exhibitors at Greenbuild 2015 (unscientifically selected from a single aisle on the expo show floor) found 16 had sales contracts requiring arbitration. And two years later, an online review of 25 suppliers registered to appear exhibitors at Greenbuild 2017 this coming week (also unscientifically selected) found 18 had sales contracts requiring arbitration.

Maybe more surprising are contracts requiring religious arbitration, like that required by bamboo floor supplier Higuera Hardwoods, a past Greenbuild exhibiter, providing,

Arbitration shall be by a single arbitrator experienced in the matters at issue and selected by principal and agent in accordance with the Rules of Procedure for Christian Conciliation of the Institute for Christian Conciliation, a division of Peacemaker Ministries.

While it was a court enforcing an arbitration provision involving a Church of Scientology agreement that made headlines last year and concern over a court enforcing an alternative dispute resolution applying Sharia law is publicly debated, courts have been enforcing these provisions both under the edict of the Supreme Court in the American Express decision and out deference to the First Amendment rights of the religious groups. Anecdotally, it appears most of these cases are Christion conciliation.

However, the Department of Defense Appropriation Act precludes expenditure of funds on contracts in excess of $1 Million that require subcontractors and employees to consent to arbitration. And such is a big deal in this consideration when the Department of Defense is the largest owner of green buildings.

Arbitration can be useful in some matters of green building for a variety of reasons including that experienced green building construction arbitrators may be better suited to rule on complex construction disputes rather than layperson judges and juries, and that arbitration is a faster and more cost effective dispute resolution process.

In absolute numbers there are more green building construction claims this year than last and more last year than the year before. And the dollar amount of those claims is increasing. The vast majority of those claims that this law firm is involved in are resolved through mediation or arbitration and it is the rare case that ends up in judicial redress. But make no mistake claims are being paid including profits being disgorged by designers, construction companies and materialmen.

The take away from all of this should be in an effort to manage your risk, pay particular attention to and negotiate the dispute resolution provisions in your contracts. And always consult your attorney before signing.

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