Green Building Law Update

Environmental Law and Sustainability for Business

New Lead (Pb) in Soil Standard Now Effective in Maryland

By Stuart Kaplow on July 12, 2020 Posted in Environmental, State

The EPA has described lead as the number one environmental public health hazard in the U.S.

And despite that the CDC has in the past identified childhood lead poisoning prevention since 1971 as 1 of 10 great U.S. public health achievements which has included success in reducing human exposures on average, the amount of lead used within the U.S. has since that date actually increased. There is little debate that no amount of lead is safe.

Although much debated, it is widely accepted that lead poisoning contributed to the decline of the Roman empire.

Understanding of the sources of lead in the environment and the pathways of human exposure is necessary to understand why what Maryland has done is revolutionary.

Lead is a naturally occurring heavy metal and exists in varying concentrations in the earth’s crust.

In modern times, the major source of lead in air was leaded gasoline exhaust, until it was banned in 1996. Use of lead in paint was widespread for more than half a century before it was prohibited in 1978. Lead was also used in some toys and a variety of furniture until the practice was stopped in 1973. In the 1960s, attempts to calculate dietary lead intake found lead solder from food cans to be a surprising large source until it was banned in 1970. And today, in the most significant source of human exposure, lead still enters drinking water primarily through lead containing pipes and fixtures as I wrote about in an earlier post, Government to Allow Less Lead in Drinking Water.

Maryland is moving beyond those sources. Effective July 1, 2020, Maryland has imposed new lead (Pb) soil screening standards. The Maryland Department of the Environment will utilize a tiered approach for soil screening:

Residential Soil Screening Concentration – 200 mg/kg

Commercial Soil Screening Concentration – 550 mg/kg

Industrial Soil Screening Concentration – 1050 mg/kg

The rationale for the updated lead screening concentrations is that the scientific and public health communities, now, generally agree that adverse effects from lead exposure on the neurological functioning can occur at levels lower than previously recognized. In 2012 the CDC published a reference level of 5 micrograms per deciliter (µg/dl) to identify children with blood lead levels that are much higher than most children’s levels.

But these levels are very low. By way of example this new residential soil screening level is 100% lower than the EPA’s standard for lead in bare soil in play areas which is 400 ppm by weight and 1200 ppm for non-play areas. And that value is for guidance only and is not enforceable. (Okay, there are a lot of science in this post, but assuming you are converting the mass of a substance, the conversion of mg/kg to ppm is 1 to 1. So, for the purposes of this post just substitute ppm for mg/kg or vice versa.)

In 2019, Maryland Governor Larry Hogan signed HB 1233, Chapter 341, which reduces, from 10 µg/dl to the 5 µg/dl CDC reference level, the blood lead level that triggers certain interventions under the State’s Reduction of Lead Risk in Housing law that is aimed at protecting children. That new law recognizes that the CDC reference level is more reflective of current scientific consensus on the health impacts of lead exposure and is therefore a more appropriate level for triggering certain interventions. While that bill only amends the Reduction of Lead Risk in Housing law, the same rationale is also now being applied to other state government programs that use an elevated blood lead level as an input, without regard to children (.. which may be a stretch without express legislative authority); this includes the soil lead screening and assessment levels used by the MDE Land Restoration Program which now is using the lower blood lead reference level.

Some have suggested these new regulatory levels are too low when CDC published studies describe that a level of 600 ppm of lead in soil would contribute no more than 5 μg/dl to total blood lead of children under 12 years of age. Moreover, with the entire subject of the impact of lead in urban soil being controversial, the new residential and commercial levels are well below typical urban lead levels in inner city soils.

In 2020 when Elderberry is “out” and Elder candidates are “in” there is no doubt that this year’s new very low lead levels will impact citizens in Maryland and greatly disadvantage owners of land in Baltimore City and other urban areas. Most if not all properties in Baltimore City will exceed these new levels. MDE remedial actions including removal actions, engineering controls like capping, consolidation and capping, in-situ stabilization, and estimating lead relative bioavailability, will all be significantly altered and made more stringent, but still available as responses to lead in soil. While modest by comparison, response action plans and remedial plans that were pending but not approved to July 1, 2020 will be subject to the lower standards.

Be aware lead is still an ongoing issue, including in many recycled materials. Playground surfaces made of recycled tire rubber and synthetic turf fields containing tire crumb rubber in Maryland are both part of an EPA lead biomonitoring study temporarily halted by COVID-19.

Lead is the number one environmental public health hazard in this country. And no amount of lead is safe. Period. Maryland regulators are boldly going where no man has gone before, becoming among the first to regulate lead in soils, certainly at these low levels, and may be blazing a trail for others across the nation to follow, but will no doubt be monetizing in real dollar terms the environmental externalities on current Maryland land owners.

A Force Majeure Decision during the COVID-19 Pandemic

By Stuart Kaplow on July 5, 2020 Posted in Environmental

There has been much speculation and supposition about the interplay of force majeure provisions in leases and other contracts in response to government orders closing businesses during the coronavirus disease 2019 (COVID-19) pandemic, but now there is an authoritative court decision that may provide persuasive authority.

In a motion in a Bankruptcy case the landlord demanded payment of post petition rent from the Hitz Restaurant Group or that the Chicago restaurant vacate the premises immediately.

There is no dispute that under section 2.1 of the parties’ lease and the exhibit labelled “Minimum Base Rent Schedule,” rent was due on the first of each month.

The restaurant argues that its obligation to pay any post-petition rent is excused by the lease’s force majeure clause, which provision is similar to ones found in many leases and other contract, and provides,

Landlord and Tenant shall each be excused from performing its obligations or undertakings provided in this Lease, in the event, but only so long as the performance of any of its obligations are prevented or delayed, retarded or hindered by. . . laws, governmental action or inaction, orders of government. . . . Lack of money shall not be grounds for Force Majeure.”

The restaurant argues that this clause was triggered on March 16, 2020, the effective date of an Executive Order issued by Illinois Governor J. B. Pritzker addressing the COVID-19 pandemic in Illinois. Section 1 of that Executive Order pertains to restaurants:

“.. all businesses in the State of Illinois that offer food or beverages for on – premises consumption – including restaurants, bars, grocery stores, and food halls – must suspend service for and may not permit on-premises consumption. Such businesses are permitted and encouraged to serve food and beverages so that they may be consumed off-premises, as currently permitted by law, through means such as in-house delivery, third-party delivery, drive-through, and curbside pick-up. In addition, customers may enter the premises to purchase food or beverages for carry-out.”

The Court concluded that the force majeure clause in this lease was unambiguously triggered by the Governor’s Executive Order. First, his order unquestionably constitutes both “governmental action” and issuance of an “order” as contemplated by the language of the force majeure clause. Second, that order and its extensions unquestionably “hindered” the restaurant’s ability to perform by prohibiting the restaurant from offering “on-premises” consumption of food and beverages. Finally, the order was unquestionably the proximate cause of the restaurant’s inability to pay rent, at least in part, because it prevented the restaurant from operating normally and restricted its business to take-out, curbside pick-up, and delivery.

It is significant to the analysis of the restaurant’s force majeure argument that Governor Pritzker’s Executive Order did not prohibit all restaurant operations in Illinois.

The Court’s analysis also, gratuitously, but instructively makes clear that force majeure clauses in contracts supersede the common law doctrine of impossibility or impracticability of performance. It then dispenses with the landlord’s arguments.

Landlord first argued that the force majeure clause was not triggered because the Governor’s Executive Order did not shut down the banking system or post offices in Illinois, and the restaurant therefore would have physically been able to write and send rental checks. The Court found that a specious argument and rejected it out of hand.

Second, landlord characterizes the restaurant failure to perform as arising merely from a “lack of money,” which it argues is not grounds for force majeure according to the lease’s own terms. The Court rejects that argument.

And third the landlord averred if the state government closed the business, the federal government was making SBA loans available, but the judge found no support in the lease or in law that the tenant must apply for a loan before invoking force majeure.

Nevertheless, the restaurant is not off the hook entirely. Governor Pritzker’s Executive Order did not prohibit the restaurant from performing carry-out, curbside pick-up, and delivery services. The Court reasons that, to the extent that the restaurant could have continued to perform those services, its obligation to pay rent is not excused by the force majeure clause. The Court therefore concludes the restaurant’s obligation to pay rent is reduced in proportion to its reduced ability to generate revenue due to the Executive Order.

Neither party offered much assistance to the Court in determining the amount of the rent reduction but the restaurant offered only its estimation that 75% of the square footage of the restaurant, consisting of its dining room and bar, was rendered unusable by Governor Pritzker’s Executive Order.

The Bankruptcy judge, the Honorable Donald R. Cassling, in a move to “do justice” and that may well have far wider impact than just this case, applies the force majeure clause in part, granting equitable relief signaling that force majeure does not have to be all or nothing, ordering the restaurant to pay 25% of the base rent and 25% of its share of both the common area maintenance fees and real estate taxes.

This debtor friendly decision, among the first to decide the matter of force majeure in a COVID-19 impacted dispute, is not binding on other courts, but it may have a substantial impact on cases across the country, far broader than merely rent disputes but involving the full gambit of matters involving contracts, including because state courts often look to federal courts (including Bankruptcy courts) for precedential or, at minimum, persuasive authority in equitable theories.

The case is In re Hitz Restaurant Group, U.S. Bankruptcy Court, Northern District of Illinois, Eastern Division, June 3, 2020.

Four New LEED Pilot Credits Respond to COVID-19

By Stuart Kaplow on June 14, 2020 Posted in Green Building, LEED

This blog post is an update to my June 6th post, Two New LEED Pilot Credits Respond to COVID-19, describing that the U.S. Green Building Council has now added two additional Pilot Credits responding to the novel coronavirus. You may reasonably infer that I have posted an update (.. something I rarely do) because I believe the two new LEED pilot credits can contribute to a meaningful consideration of how to adapt to keep people safe in buildings and how to mitigate risk to owners of those buildings.

America is reopening including physically opening its buildings and the U.S. Green Building Council has announced that LEED will play a role in confronting risk in the coronavirus pandemic era.

Last week Mahesh Ramanujam, the President & CEO of USGBC announced in a published letter that the “second generation at USGBC will focus on our relevant and reimagined vision: Healthy people in healthy places equals a healthy economy.” He acknowledged that in a post pandemic world,

unlike any other moment in the history of this organization, this crisis will require us to fully reimagine the spaces where we live, learn, work and play.”

In outlining a series of actions that the organization would undertake, “on an emergency basis, we will promptly release LEED pilot credits to support social distancing, nontoxic surface cleaning, air quality and infection monitoring.”

In announcing the first two LEED pilot credits, USGBC said, “Green buildings feature opportunities for creating more equitable, healthier, and supportive environments for construction workers, and in many locations, construction workers are considered essential. Here are resources related to planning and preventing worker exposure to COVID-19.”

LEED BD+C: New Construction v4.1 INpc136 Safety First: Re-Enter Your Workspace is a special pilot credit with a possible 1 point. Its stated intent is “to promote best practice requirements in operations and human behavior to take precautions against the spread of COVID 19” and that is accomplished using the AIA Re-occupancy Assessment Tool V1.0 creating a re-occupancy assessment and requirements for an operations plan and the drafting of a management and operations plan. It is a social science study that requires keeping a daily journal of plan implementation including answering questions like, “Are you in control of your life?”

LEED BD+C: New Construction v4.1 INpc137 Safety First: Cleaning and Disinfecting Your Space is a special pilot credit with a possible 1 point. Its stated intent is “to provide effective cleaning and disinfecting relative to the Coronavirus Disease 2019 (COVID-19), during re-occupancy and during operations while minimizing adverse health impacts on cleaning personnel, building occupants and visitors; and the environment.” The credit requires creating a policy and practices that focuses on green cleaning that now must meet the guidelines of Centers for Disease Control and Prevention and U.S. Environmental Protection Agency relative to COVID-19. This includes the procurement of cleaning and disinfecting products, procedures and training for cleaning personnel, occupant education, and services that are within the project and site management’s control.

LEED BD+C: New Construction v4.1 INpc139 The Safety First: Building Water System Recommissioning is a special pilot credit with a possible 1 point. Its stated intent is to reduce occupant exposure risks associated with degraded water quality in community and building water systems due to stagnant or low water use. Building and business closures reduce water usage that can potentially lead to stagnant water and water that is unsafe to drink or use. The credit integrates recommendations from industry organizations and others, including the EPA and CDC. It requires buildings to develop and implement a water management plan, coordinate with local water and public health authorities, communicate water system activities and associated risks to building occupants and take steps to address water quality from the community supply, as well as the building. This credit is important beyond only matters of the coronavirus, responding to a long term issue in LEED buildings, including having particular application in school buildings that are little used over weekends, and should cause a discussion of the unintended consequences of water use reduction.

LEED BD+C: New Construction v4.1 INpc138 The Safety First: Managing Indoor Air Quality During COVID-19 is a special pilot credit with a possible 1 point. Its stated intent is to promote precautionary best practices for managing air quality in buildings during the pandemic to minimize spread of COVID-19 through the air. Building owners should ensure indoor air quality systems are operating as designed and determine temporary adjustments to ventilation that may minimize the spread of COVID-19 through the air. Additional considerations include increasing ventilation and air filtration, physical distancing of occupants and following measures outlined in public health and industry resources, as well as guidance found in the Re-Enter Your Workspace Pilot Credit. The guidance also encourages monitoring and evaluating indoor air quality on an ongoing basis.

Each of these pilot credits require submittals that are a plan with follow up survey results so they are low first dollar cost credits.

USGBC has said, “these special pilot credits are awarded based on project teams attempting to meet the requirements to the best of their ability and providing feedback on the requirements. The credits may change as feedback is received.”

Additionally, on June 10th Arc, an affiliate of the USGBC announced it has launched Arc Re-Entry in response to COVID-19. Arc Re-Entry is a set of tools that can be used to document and benchmark infection-control policies and procedures, collect and analyze related occupant experiences and measure and track indoor air quality around factors such as carbon dioxide, relative humidity and particulate matter.

In most places in America building did not stop as construction was an essential business and now nearly everywhere construction sites are operating. Green building is a subset of that essential real estate sector.

While much is still being discovered about this novel coronavirus 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 never closed our offices, but rather adapted our operations, by way of example having stopped recirculating indoor air, increased airflow, and introduced UV light as key strategies in our coronavirus warfare. Last month I posted COVID 19 Commercial Building Liability responding to the many questions we have received from commercial real estate owners are questioning if they can be liable for damages when someone, whether an employee of the business tenant or someone else, claims to have contracted COVID-19 at their building?

If we can assist you in mitigating the risk in the coronavirus pandemic operation of your real estate business including adapting your operations in a reopening plan, that may include the two newest Pilot Credits, or otherwise with an environmental matter, we are ready to help you.

New Maryland Real Estate Laws from the 2020 Legislative Session

By Stuart Kaplow on June 7, 2020 Posted in Codes and Regulations, State

The 71 day session of the Maryland General Assembly was for the first time since the Civil War cut short from the prescribed 90 days (.. of note, the legislature has met for 90 days since the predecessor, appointed not elected, General Assembly of Maryland was first called together in 1635 in St. Mary’s).

Despite the Coronavirus pandemic concern shortened session, the legislature acted on 1,664 House bills and 12 resolutions and 1,081 Senate bills and 6 resolutions with 667 bills passing both chambers before they adjourned sine die on March 18, 2020.

I have previously posted on this blog, Maryland Enacts New Environmental Laws in 2020 and posted on our sister blog, Maryland Enacts New Alcoholic Beverage Laws in 2020 and each of those describe more robust (.. and possibly more fun) legislative activity than is found below.

This is a compilation of the real estate legislation enacted this session and signed into law by the Governor.

Much can be gleaned about consumer weighted priorities from the ranks of Democrat lawmakers that control both houses of the legislature by those bills acted on. And real estate professionals might point to those things the legislature chose not to do, many necessary to modernize the real estate sector of the economy keeping Maryland competitive.

Given that real estate accounted for more than 25% of the gross state product (the state Gross Domestic Product) in Maryland last year and that more than 650,000 rent cases were filed in the Maryland courts in 2019, more than anything else the courts adjudicated, some have suggested the legislature might focus more of its efforts on real estate.

And arguably the new laws that were enacted were dwarfed, at least in the short and mid term by the impact on real estate of the federal Coronavirus Aid, Relief, and Economic Security Act, the Maryland Governor’s Executive Orders related to COVID-19, and the COVID-19 Administrative Orders of the Maryland Court of Appeals.

Historic Discrimination

While unenforceable, covenants that restrict the ownership of real property based on race, religious belief, or national origin persist in the land records. House Bill 1077 (Ch. 421) permanently exempts from specified fees and surcharges the recordation of a covenant modification or an amendment to the common area deeds or other declarations of an HOA if the recordation is to modify or delete, in accordance with statutory provisions, a covenant or restriction that limits ownership based on these identifying characteristics. The Act also repeals a reference to an expired statutory deadline by which the governing body of an HOA was required to delete related recorded covenants or restrictions.

Ground Leases

The General Assembly passed several bills relating to ground leases during the 2020 legislative session. Senate Bill 170/House Bill 241 (Chs. 124 and 125) prohibit a ground lease holder from bringing any suit, action, or proceeding against a current or former leasehold tenant to recover past due ground rent owed before the date that the current leasehold tenant acquired the interest in the residential property if the ground lease was not registered with SDAT prior to the current leasehold tenant acquiring title to the leasehold interest.

The redemption or extinguishment of the ground rent is effective to conclusively vest a fee simple title in the ground lease tenant when the ground lease tenant records the certificate in the county land records. The title is free and clear of any and all right, title, or interest of the ground lease holder, any lien of a creditor of the ground lease holder, and any person making claims in relation to the ground lease holder. Senate Bill 806/House Bill 1182 (Chs. 441 and 442) alter these provisions by establishing that the redemption or extinguishment of the ground rent is effective to conclusively divest the ground lease holder of the reversion, vest the reversion in the leasehold tenant, and eliminate all rights, titles, or interests to the property, as specified, when the leasehold tenant records the certificate of redemption or extinguishment in the land records of the county in which the property is located.

House Bill 149 (Ch. 82) repeals a requirement for a ground lease holder to promptly notify SDAT of a change in the name or address of a leasehold tenant and authorizes a leasehold tenant or an interested party to submit documentation of the redemption of a ground lease to SDAT if the ground lease was redeemed in a private transaction between the ground lease holder and the leasehold tenant and the ground lease holder failed to notify SDAT of the redemption, as required under current law. The documentation submitted to SDAT must include a certified copy of the ground lease redemption deed that has been filed in the land records of the appropriate county.

The current registration fee per ground lease holder is $10 for the first ground lease and $5 for each additional ground lease. House Bill 172 (Ch. 94) repeals the fee for the registration of a ground lease with SDAT, effective October 1, 2020.

Recordation of Instruments

A deed other than a mortgage, deed of trust, or an assignment or release of a mortgage or deed of trust may not be recorded unless it bears the certification of an attorney admitted to the Maryland Bar or a party named in the instrument, which states that the instrument was prepared by the attorney, under the supervision of the attorney, or by the party. Senate Bill 154/House Bill 1084 (Chs. 423 and 424) authorize the recordation of an assignment of rents or an assignment of leases for security purposes without this certification.

Senate Bill 291/House Bill 676 (Chs. 299 and 300) add all units of State government to the list of governmental entities that are exempt from paying a fee to record land records under § 3-603 of the Real Property Article unless the entity first gives its consent. Under current law, any entity that is exempt from paying recordation fees under § 3-603 is also exempt from paying to the clerk of a circuit court a surcharge on each recordable instrument that is recorded in the jurisdiction’s land records. Thus, the Acts also exempt any unit of State government from being required to pay these surcharges, which are deposited into the Circuit Court Real Property Records Improvement Fund.

Senate Bill 570 (Ch. 566) authorizes, but does not require, the recordation of a notice of a recorded easement, covenant, restriction, or condition that affects an interest in real property in the land records of the county in which the property interest is located. The recorded notice must contain specified information and must be indexed in a specified manner. Failure to record a notice in accordance with the Act does not impair the rights or interests of the holder of the easement, covenant, restriction, or condition or waive, release, or otherwise affect the obligations of any person holding a real property interest burdened by the easement, covenant, restriction, or condition. The bill might appear unnecessary on its face, but a similar provision already exists in law for environmental easements, but given that many easements exist in perpetuity, this allows an updating of the current contact information for beneficial and burdened interests.

Condominiums and HOAs

Senate Bill 175/House Bill 108 (Chs. 56 and 57) specify that the council of unit owners’ property insurance deductible is a common expense if the cause of damage to or destruction of the condominium originates from an event outside of the condominium units and common elements and increase, from $5,000 to $10,000, the maximum amount of the council of unit owners’ property insurance deductible for which a unit owner is responsible when the cause of any damage to or destruction of the common elements or units of a condominium originates from an event inside the owner’s unit. The Acts apply prospectively to all policies of property and casualty insurance issued, delivered, or renewed in the State to a condominium council of unit owners on or after October 1, 2020.

Senate Bill 472 (Ch. 559) requires a condominium association or an HOA to submit its annual adopted budget to the unit or lot owners within 30 days after the meeting at which the budget was adopted. The adopted annual budget may be submitted to the unit or lot owners by electronic transmission, posting on the entity’s homepage, or inclusion in the entity’s newsletter.

The bylaws of a condominium may be amended without the explicit agreement of the holder of a mortgage or deed of trust under certain circumstances. Senate Bill 293/House Bill 25 (Chs. 32 and 33) establish similar authority for amendments to the declaration of a condominium and the governing documents of an HOA. Under the Acts, if a declaration or a governing document contains a provision requiring any action on the part of a holder of a mortgage or deed of trust for a unit in a condominium or a lot in an HOA in order to amend the declaration or governing document, the council of unit owners of a condominium or the HOA must deliver a copy of the proposed amendment to each holder of a mortgage or deed of trust entitled to notice. If the holder of the mortgage or deed of trust fails to object, in writing, within 60 days after the date of actual receipt of the proposed amendment, the holder is deemed to have consented to the adoption of the amendment.

Real Estate Commission

Generally, an individual must be licensed by the State Real Estate Commission as a real estate broker, associate broker, or salesperson before the individual may provide real estate brokerage services in the State, subject to specified requirements for licensure and ongoing licensee behavior. The commission also administers a guaranty fund for the purpose of reimbursing persons for actual losses due to acts or omissions that occur in the provision of real estate brokerage services by licensees or unlicensed employees of licensed real estate brokers. Senate Bill 6 (Ch. 493) extends the termination date of the commission by 10 years – from July 1, 2022, until July 1, 2032.

Elevators

Senate Bill 618 (Ch. 569) delays the requirement that certain annual tests on an elevator in a privately owned building be performed in the physical presence of a licensed third-party qualified elevator inspector. The Act delays the requirement from October 1, 2020, to October 1, 2021, for all elevators in privately owned buildings, except for direct-acting hydraulic elevators, which must comply beginning October 1, 2022. The Secretary of Labor must report to the Senate Finance Committee and the House Economic Matters Committee by January 1, 2021, and January 1, 2022, on the status of how elevator inspections are being conducted in accordance with the Act.

Home Builders

The Home Builder Guaranty Fund, administered by the Consumer Protection Division (CPD) of the Office of the Attorney General, allows consumers to seek compensation for actual losses resulting from an act or omission by a registered home builder who constructs a new home for a consumer. The fund is supported by fees collected by local governments from home builders upon application for a construction permit. Senate Bill 164/House Bill 116 (Chs. 58 and 59) increase, from $300,000 to $500,000, the maximum amount CPD may award from the Home Builder Guaranty Fund to all claimants for acts or omissions of one registered home builder before the registered home builder reimburses the fund.

The Maryland General Assembly will convene in regular session on Wednesday, January 13, 2021 at 12:00 p.m.

Thank you to the Maryland Department of Legislative Services for the information provided above.

And be assured I would like to be your lawyer in real estate matters. We are ready to help you.

Two New LEED Pilot Credits Respond to COVID-19

By Stuart Kaplow on May 31, 2020 Posted in Environmental, Green Building, LEED

America is reopening including physically opening its buildings and the U.S. Green Building Council has announced that LEED will play a role in confronting risk in the post coronavirus pandemic era.

unlike any other moment in the history of this organization, this crisis will require us to fully reimagine the spaces where we live, learn, work and play.”

Both of these pilot credits require submittals that are a plan with follow up survey results so they are low first dollar cost credits.

In most places in America building did not stop as construction was an essential business and now nearly everywhere construction sites are operating fully staffed. Green building is a subset of that essential real estate sector.

If we can assist you in mitigating the risk in the coronavirus pandemic operation of your real estate business including working on your reopening plan or otherwise with an environmental matter, we are ready to help you.

COVID 19 Commercial Building Liability

By Stuart Kaplow on May 24, 2020 Posted in Environmental, Green Building

With all 50 states now in some stage of reopening and some reclosing in part from the novel coronavirus pandemic closures and more than 1,500 new statutes, regulations and executive orders addressing the pandemic having been enacted in a matter of weeks, many commercial real estate owners are questioning if they can be liable for damages when someone, whether an employee of the business tenant or someone else, claims to have contracted the coronavirus disease 2019 (COVID-19) at their building.

Obviously courts have never addressed a situation like this novel coronavirus, officially the SARS CoV-2 (.. there was not a mature plaintiff’s bar during the 1918 Spanish flu), and this evolving and rapidly growing 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 law, but in most instances it is presumed that longstanding body of 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

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.

A tort case has not yet provided an answer to the obligation to enforce social distancing or to bar a person from the premises who has a fever until they have a negative test result, or the like.

By early 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 while OSHA is providing guidance through an 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. And customers, 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 1,500 new federal, state and local statutes, regulations and executive orders enacted in a matter of weeks 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, very few have directly impacted issues of liability. However, while an aberration, anticipating coronavirus claims, on March 24, New York Governor Andrew Cuomo signed an executive order limiting the malpractice exposure for health care workers treating COVID-19 patients directing that an action against a health care professional providing medical services in response to the outbreak can only be maintained if gross negligence is established, a higher standard than negligence. 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.

These are uncharted waters, but exercising reasonable care may be adapting 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 CBRE and the green building industrial complex has belatedly begun to roll out “special pilot credits” (.. some of which are good) and the like, none of that will likely mitigate a building owner’s risk in litigation. Caution should also be observed, when following third party advice; for example some of the green building trade group 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 COVID-19 and may 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 and the Risk from Recirculated Air in Building that California recommends building owners consider stop recirculating air and now that the CDC is saying “touching a surface” is not the main way the coronavirus spreads, all building owners should consider stop recycling air, increasing airflow and filtering or otherwise disinfecting indoor air, so long as the outbreak lasts (i.e., until there is a COVID-19 vaccine).

There are some things a building should likely do. Most state 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 also may serve to allay the concerns of those entering a premises, another key issue.

The coronavirus pandemic is obviously unprecedented, and as such it is not possible to predict with any degree of certainty how courts might rule on premises liability or other exposure claims, however, businesses are reopening now, and the principles described above may provide guidance on understanding and possibly even mitigating the 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 never closed our offices, but rather adapted our operations, by way of example having stopped recirculating indoor air, increased airflow, and introduced UV light as key strategies in our coronavirus warfare.

If we can assist you in mitigating the risk in the coronavirus pandemic operation of your buildings including working on your reopening plan or a reclosing or otherwise with an environmental matter, we are ready to help you.

New BREEAM In Use Version in a Changing World

By Stuart Kaplow on May 17, 2020 Posted in Green Building, LEED

Last week BRE Global announced that the “BREEAM USA In-Use Version 6 for Commercial and Residential” green building rating system has launched. In addition to improvements to the prior commercial building rating system BREEAM In-Use now includes residential for the first time (accepting that existing multi-family building is a very much underserved sector).

An update to the BREEAM In-Use online platform, which is used to facilitate the benchmarking and certification process, has also been rolled out with an improved user interface.

During a global pandemic might seem an odd time to announce a new green building rating system, but appreciate that this was at the end of a global 18 month long pilot process. Moreover, BREEAM USA In-Use supports existing buildings in the United States to measure their sustainability performance and gather information to drive improvements in a cost effective manner and receive market recognition for the achievement, so those buildings exist today (i.e., this is not a new construction rating system).

BREEAM was not only the first third party certified green building rating system, but today many real estate industry insiders consider it the most technically proficient if not also the most efficacious of the green building rating systems. Created in Great Britain in 1990, based upon the work of British engineer and architect John Doggart, an early version of BREEAM was the genesis of LEED. But despite several attempts at a North American invasion, including a 2008 joint venture with ICSC, BREEAM has never been widely accepted nor utilized in the U.S., which has surprised some because it appears aimed at a sweet spot, class B and C existing buildings? See my 2017 post on the First BREEAM USA In-Use Certification.

This new update appears to be philosophically based on the changing climate on real estate where there has been a shift from “green” as a marketing tool to ESG performance reporting to stakeholders and risk management. It is not clear how that will play in the U.S. in this post pandemic era. The shift toward ESG may be too much of a European bent where ESG is not an investment tool widely appreciated in the U.S. and the COVID-19 influenced shift from green may be toward building occupant health.

All of that observed, at a time when “What Is Cinema?” is out and “what is television?” is in, the new BREEAM USA In-Use will be an ideal green building rating system for many existing buildings.

v2016 will remain open for registrations for one final year, giving building owners and assessors time to plan before they have to upgrade. Buildings that are due to expire after this one year window will need to recertify in Version 6.

BRE will be hosting a series of four free webinars to introduce the new version. Click on the topic to register:

Commercial buildings are able to register now and benchmark through the updated online platform. Online registration and benchmarking for Residential assets will come online by late summer, with offline Scoring and Reporting Tools are available for the interim.

It can be expected that BREEAM credits will be amended and adjusted, just as new LEED pilot credits are anticipated in coming days, as the green building industrial complex, in an effort to remain relevant, urgently responds to concerns about reoccupying commercial buildings and preventing the spread of coronavirus.

If we can assist you in navigating the realm of green building standards, rating systems and codes or otherwise with an environmental matter, we are ready to help you.

The New and Improved 2020 ICC 700 National Green Building Standard

By Stuart Kaplow on May 10, 2020 Posted in Green Building, Green Globes, IgCC, LEED

The 2020 version of the ICC 700 National Green Building Standard (NGBS) is now available for free download and public use.

You care about this because the NGBS is the most used green building standard in the United States. As of April 1, 2020, more than 216,000 residential dwellings have been certified to the NGBS through NGBS Green, the third-party certification program administered by Home Innovation Research Labs. And yes, that is more domestic certifications than LEED and Green Globes combined.

Moreover, the NGBS is a uniquely drafted “standard” in that it can be used by any builder for their individual project as a rating system (including obtaining third party certification), or may be adopted by a local government as a residential green building code. And appreciate that the International Green Construction Code incorporates the NGBS as an option for each jurisdiction that single family dwellings or multifamily family dwellings of 4 stories or less comply with the NGBS.

The NGBS applies to the design, construction, alteration, enlargement, and renovation of all residential buildings, residential portions of mixed-use buildings, and mixed-use buildings where the residential portion is greater than 50% of the gross floor area. This NGBS also applies to subdivisions, building sites, building lots, and accessory structures.

The NGBS includes high performance building practices in six areas: Lot Design and Development, Resource Efficiency, Water Efficiency, Energy Efficiency, Indoor Environmental Quality, and Building Operation & Maintenance. There are 4 certification levels, Bronze, Silver, Gold and Emerald, providing options to integrate sustainability and high performance into a project at a level most appropriate for the regulatory environment as well as the customer base in the local housing market.

Replacing the 2015 edition (.. yes, the development process dragged on), this latest NGBS version keeps abreast of new technologies and advances the standard’s role as the industry benchmark for residential green building.

This fourth edition of NGBS continues the collaboration of the International Code Council and the National Association of Home Builders, who took on a leadership role to commission an independent consensus committee of stakeholders charged with the development of this next generation of the NGBS. Home Innovation Research Labs served as secretariat, or administrator, of an ANSI approved standard development process, as it has done in previous iterations. The 2020 NGBS was ANSI approved earlier this year.

First published in 2009, the NGBS provides a pathway by which builders and developers may seek third-party certification of new homes. In addition, builders and consumers whose projects are NGBS compliant satisfy a large number of green building mandates across the country and may be eligible for federal, state or local incentives.

The 2020 edition builds upon years of experience of building and certifying to the NGBS. Significant changes include:

An expanded scope that now includes compliance for the non-residential portion of mixed-use buildings as long as the residential portion of the building is greater than 50% of gross floor area (previous editions defined criteria only for the residential portion of the project);
An expanded scope that also includes assisted living facilities, residential board and care facilities, and group homes;
A new Chapter 12: Certified Compliance Path for Single-Family Homes, Townhomes and Duplexes, that provides a new compliance path customized for single-family dwellings;
A new water efficiency performance path that demonstrates compliance using an index that generates a score relative to a standard baseline home;
An option to utilize a phased approach for multifamily remodeling projects;
A range of updated performance baselines and references;
And, a substantially revised remodeling chapter that offers a choice of prescriptive or performance compliance paths for energy and water efficiency.

“NGBS continues in its tradition of providing builders with the flexibility and choices in meeting market preferences for green building and staying relevant to our customers,” said NAHB Chairman Dean Mon, a home builder and developer from Shrewsbury, N.J.

“The updated NGBS ICC-700 provides designers, contractors, developers and policy makers with the tools and blueprint for green construction strategies and practices. These tools also aid occupant comfort and health, save money and preserve resources during the design, construction and operation of buildings,” said Code Council Chief Executive Officer Dominic Sims, CBO.

At a time when sequels every few years are “out” and sequels every 30 years are “in” the few year development process of the 2020 NGBS predated the coronavirus pandemic and there is already pressure for an update as consumer priorities are shifting away from tradition energy and resource efficient green matters toward health concerns.

All of that observed, there is no way of getting around that the NGBS has been and remains the most used green building standard in the United States. You should read the new document.

A free download of the ICC 700-2020 National Green Building Standard is available here.

COVID-19 and the Risk from Recirculated Air in Buildings

By Stuart Kaplow on April 29, 2020 Posted in Environmental, Green Building, State

The Federation of European Heating, Ventilation and Air Conditioning Associations (REHVA) has in recent days issued guidance on how to occupy commercial and public buildings, from offices to schools, “in order to prevent the spread of the coronavirus.”

As Americans begin to end coronavirus disease 2019 (COVID-19) lockdowns, which were of course intended to keep hospitals from being overwhelmed but not reducing the number of people who will ultimately get infected, with no vaccine yet available, much of the instruction is now for people to wear a face mask and six feet of social distance, but there is apparently no U.S. government guidance on how to operate and use a commercial building. Most would expect more frequent cleaning of buildings, but not anticipate much more. Antimicrobial materials, filters and ultraviolet lights for cleaning will likely be the future, but will all not yet be in place as most people go back to school and work. And as people return to their commercial buildings, codes and standards for heating, ventilation and air conditioning in the U.S., and even the green building movement, are driven principally by energy efficiency not preventing the spread of viruses.

The REHVA guidance is based on WHO documents and the best evidence and knowledge from 27 countries in Europe focusing on HVAC systems in buildings to articulate a set of measures that help to control the airborne transmission of COVID-19 in buildings (apart from frequent surface cleaning).

Important for every pandemic are the transmission routes of the infectious agent. In relation to COVID-19 the standard assumption widely discussed in the U.S. is that there are two dominant transmission routes, droplets emitted when sneezing or coughing or talking and via fomite surface and hand-hand, hand-surface contact.

But Europeans and some Asian countries have also identified another key transmission route of concern, airborne transmission through small particles (< 5 microns), which may stay airborne for hours and can be transported long distances. REHVA describes,

The size of a coronavirus particle is 80-160 nanometers, and it remains active for many hours or couple of days (unless there is specific cleaning). COVID-19 remains active up to 3 hours in indoor air and 2-3 days on room surfaces at common indoor conditions. Such small virus particles stay airborne and can travel long distances carried by airflows in the rooms or in the extract air ducts of ventilation systems. Airborne transmission has caused infections of SARS (an earlier coronavirus outbreak).”

While it has received little if any public discussion in the U.S., the NIH reached the same conclusion about airborne transmission on March 17, 2020, “scientists found that severe acute respiratory syndrome coronavirus 2 was detectable in aerosols for up to three hours.”

The latest studies cited in the REHVA guidance concluded that aerosol transmission is plausible, as the virus can remain viable in aerosols for multiple hours. Another recent study that analyzed superspreading events showed that closed environments with minimal ventilation strongly contributed to a characteristically high number of secondary infections. The manuscript draft discussing airborne transmission concludes that evidence is emerging indicating that COVID-19 is transmitted via airborne particles.

In response to that clear and convincing evidence, albeit preliminary, REHVA provides practical recommendations for building operations:

– The most significant REHVA recommendations is “no use of recirculation” in any building with a mechanical ventilation system. “Virus particles in return ducts can also re-enter a building when centralized air handling units are equipped with recirculation sectors.” It is recommended to avoid recirculation of air during COVID-19 episodes by closing the recirculation dampers (via the Building Management System or manually). Sometimes air handling units and recirculation sections are equipped with return air filters, but most of these filters, even HEPA filters may not filter out virus size particles effectively. Ultraviolet light can be used to disinfect indoor spaces and could be installed to destroy viruses, but has not yet been proven effective against COVD-19.

– Increase air supply and exhaust ventilation by extending operation times, changing the clock times of system timers to start ventilation at nominal speed at least 2 hours before the building usage.

– There is a general recommendation to stay away from crowded and poorly ventilated spaces, so in buildings without mechanical ventilation systems it is recommended to actively use operable windows (much more than normally, even when this causes some thermal discomfort).

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. And if the system is beyond its useful life this may be an ideal time for replacing it with a modern system with a MERV-13 filter, ultraviolet light treatment or the like.

Certainly a lower population in a building can affect the spread of the coronavirus.

Owners of existing buildings in Europe are doing this today and American building owners should implement these practices now and for as long as the COVID-19 outbreak lasts (i.e., until there is a vaccine).

Green building programs, that have at their core energy efficiency (e.g., LEED is an acronym for Leadership in Energy ..) will have to promptly change and evolve if they are to remain relevant as ‘stay at home’ orders are lifted and people return to their places of school and work, concerned about the spread of COVID-19 within the buildings. The environmental community elevated reduced energy use to an environmental issue while relegating indoor air quality, including recirculated air necessary to achieve those energy goals, to an unimportant externality. Such may have been well and good when the associated cost savings of reduced energy use could drive green building for many owners. But on April 20 when oil in America went for negative $37 a barrel, reduced building energy costs were no longer a current priority for owners and certainly not a matter that will trump concern for building occupant exposure to coronavirus.

ASHRAE 62.1, the standard specifying minimum ventilation rates “to provide indoor air quality that is acceptable to human occupants and that minimizes adverse health effects” is perceived to not be enough in a post coronavirus building. And the use of no recirculated air, at all, is considered extreme by some, but possibly is necessary for a period of time (i.e., until there is a vaccine?) in order to prevent the spread of coronavirus. ASHRAE’s Executive Committee has issued two statements in response to COVID-19, including, “changes to building operations, including the operation of heating, ventilating, and air-conditioning systems, can reduce airborne exposures.” But many believe ASHRAE should consider and promptly provide direction on suspension of its standards, in particular those related to recirculated air and/ or provide greater guidance on filtering viruses.

The just released California COVID-19 Industry Guidance: Office Spaces, is significant when it raises the issue but makes it a consideration and not mandatory when it provides,

“Consider installing portable high-efficiency air cleaners, upgrading the building’s air filters to the highest efficiency possible, and making other modifications to increase the quantity of outside air and ventilation in offices and other spaces.”

There is a growing call for local code officials to immediately evaluate the efficacy of new executive orders or otherwise suspend code (BOCA, IECC, IgCC, etc.) requirements mandating use of recirculated air. Related to code requirements, demand controlled ventilation should be disabled.

If you think this is not a real issue, a front page story today in The Washington Post describes, several of the studies linked above, and a new one published this week in the journal Nature, that found evidence that the coronavirus can remain suspended in inside building air in aerosol particles. But the health advice from governments has not kept pace with the admittedly emergent science surrounding COVID-19.

While much is still being discovered about this novel coronavirus I am regularly 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 never closed our offices, but rather adapted our operations, by way of example having greatly reduced recirculating indoor air, increased airflow, and introduced UV light as key strategies in addition to asking all to wear face masks when in common spaces, in our warfare on coronavirus.

The current pandemic should be a wake up call to operate and use commercial buildings, from schools to offices and more, to truly provide shelter, on a philosophical and existential basis, including not letting the tail of energy efficiency wag the dog of better and healthier buildings. Maybe the Europeans, who are already beginning to end lockdowns, know something about not using recirculated air and increasing airflow at this time in commercial buildings in order to prevent the spread of coronavirus. And across America we should open minimum outdoor air dampers, as high as 100%, greatly reducing the use of recirculated air.

I plan to publish a blog post in the coming days responding to the question of many commercial building owners if they can be liable for damages when someone claims to have contracted COVID-19 in their building.

And if we can assist you in mitigating the risk in the coronavirus pandemic operation of your buildings including working on your reopening plan or otherwise with an environmental matter, we are ready to help you.

Supreme Court Permits State Law Claims Against Superfund Property

By Stuart Kaplow on April 26, 2020 Posted in Codes and Regulations, Environmental

In an instructive environmental law decision last week, the U.S. Supreme Court held that the federal Superfund statute (the Comprehensive Environmental Response, Compensation and Liability Act) does not preclude owners of adjacent contaminated land from pursuing state laws claims for money damages for nuisance, trespass and strict liability, but any cleanup of that land cannot be taken in the absence of EPA approval.

Among the reasons this is a significant decision is the impact on widely utilized state Brownfields programs.

For nearly a century, the Anaconda Copper Smelter in Butte, Montana contaminated an area of over 300 square miles with arsenic and lead. Over the past 35 years, EPA has worked with the current owner of the now-closed smelter, Atlantic Richfield Company, to implement a cleanup plan for a remediation expected to continue through 2025. EPA has managed an extensive cleanup at the site, working with Atlantic Richfield to remediate more than 800 residential and commercial properties; remove 10 million cubic yards of tailings, mine waste, and contaminated soil; cap in place 500 million cubic yards of waste over 5,000 acres; and reclaim 12,500 acres of land. More work remains.

A group of 98 landowners sued Atlantic Richfield in Montana state court for common law nuisance, trespass, and strict liability, seeking restoration damages, which Montana law requires to be spent on property rehabilitation. The landowners estimate that their cleanup would cost Atlantic Richfield $50 to $58 million.

Of note, the landowners’ proposed cleanup exceeds that found necessary to protect human health and the environment by EPA in the CERCLA cleanup agreed to in the settlement with Atlantic Richfield.

The Supreme Court, in a split decision with two opinions concurring in part and dissenting in part, held that CERCLA does not strip the Montana courts of jurisdiction over this lawsuit.

But the Montana Supreme Court erred in holding that the landowners were not potentially responsible parties under CERCLA §122(e)(6) and therefore did not need to seek EPA approval. The high court reasoned, because arsenic and lead are hazardous substances that have “come to be located” on the landowners’ properties, the landowners are PRPs, under the Section 107 definition of a “covered person” as an “owner” of a “facility” despite that the landowners argued they are no longer PRPs including because CERCLA’s six year limitations period for recovery of remedial costs has run, and they were not parties to the EPA action.

Montana law requires that “an award of restoration damages actually . . . be used to repair the damaged property.” But such action cannot be taken in the absence of EPA approval. That approval process, if pursued, could ameliorate the conflict, if any, between the landowners’ restoration plan and EPA’s Superfund cleanup. So, the judgment of the Montana Supreme Court was affirmed in part and vacated in part.

This decision impacts on landowners in widely utilized state Brownfields programs, including those who enter the program in advance to purchasing a contaminated property as a defense to being a PRP. That is, the Small Business Liability Relief and Brownfields Revitalization Act of 2001, amended CERCLA, restricting liability under federal law for the cleanup and redevelopment of a Brownfields property by a person complying with a state voluntary cleanup program. A key lesson to be learned here is that even a landowner determined to be an “inculpable person” under a state voluntary cleanup program is still subject to a state law claim by some other impacted third party property owner.

You can read the Supreme Court decision at Atlantic Richfield Co. v. Christian et al.