Virginia Real Estate, Land Use & Construction Law : Virginia Construction Lawyers & Attorneys : Bean Kinney & Korman Law Firm : VA Real Estate, Land Use & Zoning

Associated Builders & Contractors Virginia Chapter (ABC-VA) has officially opened its quite impressive new headquarters location.  The building project was managed by J.J. McCarthy as owner's representative, head of its green building committee.  The project featured numerous ABC member contractors and design professionals, including BE&K Building Group as general contractor and Morgan Gick McBeath & Associates, P.C. as architects. 

The project is in the running for a LEED gold rating at this point which is truly remarkable given that it is built as the first property in an office park well outside of Dulles Airport.  Forget about going for sustainable sites credits, surrounding density, and available subway transportation lines that provide so many easy points for urban setting LEED projects.

The project incorporates a lot of interesting features (outlined complete with photos in this detailed presentation), some of them quite cutting edge, including:

1. Using pervious concrete for the parking area, eliminating storm drains and piping and reducing heat island effect;
2. Using rapidly renewable resources, including not just bamboo flooring but also bamboo cabinets;
3. Use of low VOC carpets and paint;
4. Dramatic reduction of energy usage (17%), including use of LED lighting, T-5 lighting, motion sensors, daylighting, solar hot water heating, and exterior glare and heat load reduction via sun shields;
5. Dramatic reduction of water usage (44%), including dual flush toilets and waterless urinals;
6. Extensive use of recycled materials;
7. Installation of a white roof;
8. Extensive diversion of waste from landfills by recycling (estimated at 90% of waste from the project recycled).

The project highlights how a shared vision and team philosophy amongst the owner, contractor and design professionals can really translate to dramatic success.  Handling a project as mutual members of an organization for that organization helps create that environment, but those shared values and an attitude of mutual respect and success can be fostered on other projects.  ABC-VA deserves tremendous kudos for pushing its vision of sustainable construction as well, this project really is worth visiting to check out in person.

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The blogs have been crackling for several weeks with reports and analysis of the LEED "challenge" process.  Chris Cheatham devoted a multiple part series to analyzing the challenge filed and ultimately rejected to the LEED Gold certification awarded to the Northland Pines High School in Wisconsin.  Shari Shapiro has discussed the same and included an interesting interview with the challengers discussing their reasoning for the protest.

Without getting too bogged down in the technical details of the Northland Pines case that are covered elsewhere, I would highlight a couple important takeaways from what we have learned from the Northland Pines challenge case:

1. Currently, anyone can file a challenge - there are no standing requirements whatsoever.  If anyone can file a challenge, the threat to projects, and to LEED, is that anyone will file a challenge.
2. There are very loose/limited guidelines or rules on procedure, hearings, document and information exchange and the like in the challenge process.  Look for a future revamping adding more clarity in the challenge process rules.
3. It appears that USGBC permitted Northland Pines to correct, amplify and update its submittals during the challenge process to demonstrate compliance with the prerequisites.  USGBC needs to make clear whether certification requires bright line compliance based on initial submittals and information, or whether they are more interested in allowing some wiggle room as long as the project meets the standards at the end of the finish line.  Failing to make this basic philosophical tenet clear is not fair to project participants, opens the process to future inconsistency during later challenges, and ultimately threatens the credibility (and thus potentially the viability) of the USGBC process.
4. Last point, which may be the biggest and has not really percolated as a point of focus: as currently conceived, the LEED challenge process adds another completely unpredictable line item expense to the process.  The challenge process may also add another angle of attack on projects for unhappy losers in bidding, neighborhood NIMBY uprisings, and competitors that may want at low cost and effort to financially damage their opponents.  At least courts have a theoretical sanctions approach to address complaints filed in bad faith.  USGBC should strongly consider adopting rules that require a USGBC member to certify the challenge as being in good faith, along with membership penalties or sanctions for individuals signing off on complaints that have zero merit.

The challenge process in theory may add an important element of credibility, verification and transparency to LEED certifications.  As it stands though, there are loose rules, no standing requirements, and one can easily file challenges even in bad faith without facing any impact.  If we start seeing a rash of such challenges, we may start also seeing a growing movement away from LEED certification due to increased unpredictability.  The current challenge structure presents some serious risks and issues moving forward and needs to be the subject of significant thought and retooling to avoid future problems.

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The official word is now circulating that GBCI and USGBC are dramatically altering the inspection and certification process for LEED certifications.  Last week, I posted the very surprising information that major changes were potentially in the works for GBCI certifications based on a comment at a seminar I attended.  GBCI's initial comments on the blog post appeared to reflect that the initial information was slightly off, but the thrust of problems and resulting changes to the third party inspection protocol appeared accurate.

I received a report from a good friend of ours, Jerry Therrien of Therrien Waddell Construction, that USGBC Maryland has circulated the following official announcement under the tag line, "GBCI Certification Process Evolving":

GBCI concluded its evaluation of the 'pilot' in which global certification bodies were engaged to assist with LEED project certification. The expectation was that this model would improve capacity and allow GBCI to scale the certification process while maintaining the necessary rigor and level of customer support. What GBCI discovered, however, was that it put too much distance between GBCI and its customers and hampered efforts to provide the clarity and consistency that project teams need to complete the certification process.  

Given this, GBCI will gradually assume direct management of certification reviews over the next two years. This change should be seamless to project teams. GBCI will use a combination of staff reviewers and contracted review teams to keep certifications flowing through the pipeline during the transition.

I have two editorial reactions to this.  First, after pushing the outside inspection regime so vocally only a year ago, this change represents a major shift in direction.  My initial reaction continues to be if it is not broke, why fix it?  There clearly must be widespead and significant problems with third party credit reviews to dramtically reverse course like this.  I have heard some very limited grousing in this direction about issues, but nothing too significant to force a change like this.  Perhaps our clients and friends have been lucky.

My second reaction is to say kudos and great job.  It takes a lot of organizational guts to recognize a  problem and step up and fix it even if it means completely reversing direction.  It was a bold initial move and it is a bold course correction.  The cavitation is perhaps a little disconcerting, but I for one would rather have organizations making the best decisions based on the best information boldly instead of sitting around and doing nothing when faced with problems.  That is what leadership is all about.  

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In 2008, the United States Green Building Council (USGBC) announced it was planning to shift its internally run certification of buildings to independent certifiers administered by a sister non-profit, the Greeen Building Certification Institute (GBCI).  A speaker at an USGBC - National Capital Region event declared last Wednesday that USGBC was taking steps to reverse this direction and bring the LEED certification process back in house to USGBC.

The outsourcing to GBCI and third party certifications was initially described as adding greater independence.  Commenters also discussed the potential for removal of conflicts of interest, first with the initial transfer of testing and accreditation from USGBC to GBCI a year prior to the transfer of certifications.  Last year, USGBC faced reports of significant delays in the certification process.  Most notably, our friend Vandana Sinha of the Washington Business Journal reported in May 2009 on, "a backlog of hundreds of LEED certification requests that has stretched processing periods from what should be five weeks to closer to five months."  USGBC touted the new shift to GBCI, coupled with extensive additional managed third party reviewers, would wipe out the backlog by June 26.  As detailed in our article for ABC-Metro, "Green Overgrowth", review times were still estimated by USGBC staff at twelve weeks in August 2009.

We have not heard much anecdotal grumbling over review times in the last few months.  GBCI staff indicated last week that review times generally are within the estimtaes of 25 business days for preliminary construction phase reviews and 15 business days for final construction reviews.  Assuming this is true, it appears that the backlog as been worked off.  How much is due to efficient adminstration as opposed to an evaporating construction pipeline due to the tanking construction economy is a valid question. 

It is against this historic backdrop that we must view the casual bombshell dropped by Stuart Kaplow during the USGBC - NCR event last week.  Mr. Kaplow is the Chair of USGBC Maryland.  Mr. Kaplow also described some specific struggles and frustrations with the certification process in the wake of GBCI administration where credits were misinterpreted by reviewers and historic positions were ignored during the process.

This is admittedly preliminary information I have heard and digging around on line produced nothing.  There certainly is no official announcement or position expressed by either USGBC or GBCI.  This raises some questions for our readers:

• What have your experiences been with USGBC versus GBCI administered certifications?
• Have the review times in fact come back down to the promised time frames?  If so, is this a function of more reviewers or the economy?
• Assuming the information is correct, is this a transfer of just administration of the program, or is the outside third party certification piece in question as well?

A special thinks to ABC for permission to reprint our piece from Building Washington, Volume 24, No. 3.

Update (2:00 pm est, 3/22/2010):  In our comments, the GBCI has provided an official response to our blog post.  For the benefit of our readers who follow the blog post by RSS feed, here is the first paragraph of that reply (please click through to the post to see the complete comment):

There has been some misunderstanding about recent process changes at GBCI, the third party that provides certification for LEED projects. GBCI is bringing the technical review of project documentation in house over the next two years rather than continuing to manage the process exclusively through other certification bodies. This move will allow us to have closer technical oversight of reviews and more direct communication with our customers to ensure consistency and clarity throughout the process. This doesn't change anything project teams are doing now.

We appreciate the comment and clarification, as well as the delicious nuance this adds to the discussion.  It appears that:

1. The plan is not to transfer control back to USGBC from GBCI for the LEED certifications as initially indicated during the presentation discussed above; however,
2. It appears there are in fact substantive and substantial changes anticipated to the current certification regime;
3. GBCI in fact is taking at least some level of technical review back "in house";
4. I am struck in particular by the "ensure consistency and clarity throughout the process" language ... that suggests that process changes were needed to reign in and create consistency amongst the various third party outside bodies.  While the detail is shifted a bit, that clearly fits with Mr. Kaplow's description of process and credit review issues.

Thanks to USGBC and GBCI for responding so promptly and providing an update on this important topic!!

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Wading through the various layers of requirements, enticements, incentives and regulations that apply to green building can be overwhelming to anyone, let alone the uninitiated.  This process is made far more complicated by adding the layering of federal, state, and local government efforts in this field.

The United States Green Building Council has this effort very easy with regards to LEED related public policy searches.  USGBC has a search engine with multiple selectable criteria to sift through the oceans of regulations to find what you are looking for.  I cannot say the entire database is perfect, but I can say that it appeared that the Virginia state and local discussion was basically accurate, including the status of the green building ordinances in Arlington County, Fairfax County, and the City of Alexandria.

USGBC naturally has an interest in promoting the USGBC's interests with its efforts and these tools are no exception.  The only pet peeve I have is that some of the commentary seems to slant the discussion entirely towards LEED standards without a recognition of the role other standards may play in these regulations.  For example, the USGBC description of the City of Alexandria policy states,

On April 18, 2009, the Alexandria City Council adopted their Green Building Policy requiring all new municipal buildings to achieve LEED Silver certification and all new commercial buildings to achieve LEED Silver certification. The policy also requires all new residential buildings to be LEED Certified with the intention of increasing the standard over time.

In reality, the City of Alexandria policy expressly recognizes the ANSI approved ICC-700 2008 National Green Building Standard for residential construction.  The ICC-700 standard was developed by the National Association of Home Builders in partnership with the International Code Council.  The City's overall adopted standard further provides that while LEED is typical, to the extent equivalent rating systems are available and can be demonstrated as equivalent to the Director of Planning and zoning, they are also acceptable.

That limited comment notwithstanding, the USGBC search engine is a great free tool to dig out federal, state and local requirements.  Careful and prudent use will require clicking through to the underlying source links and maybe digging a bit for confirmation, but used carefully the search tool can save a ton of time and effort.

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I am pleased to invite everyone to attend the upcoming Trends in Building Green Seminar on January 21, 2010. 

Date:       January 21, 2010

Time:       9:00 am - 12:00 pm (breakfast 8:30 am)

Location: National Rural Electric Cooperative Ass'n

                  4301 Wilson Blvd., Arlington VA 22203

A full listing of speakers and information is available, but the main topic is on green buildings and energy.  I will be speaking on some of the historical energy related issues with LEED structures, the attention they have received, and what this may translate to in the future both for LEED and liability exposure;  these topics have received a lot of interest and commentary generally, and we have also commented on them frequently here.

Anyone interested in attending should RSVP to Nancy Shipley of Rutherfoord by Tuesday, January, 19 at 703-813-6575, or nancy.shipley@rutherfoord.com.

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As we kick off 2010, it is a good time to make some predictions on the future of green building. While these predictions anticipate a longer time horizon than just the coming year, my bet is we will see some of these trends manifest during 2010. We can also expect that some of these topics will be the subject of a lot of discussion here and elsewhere over the coming year.

1. The marketplace will demand green buildings as the baseline building product. This is particularly true in markets that show signs of economic vitality where construction, redevelopment, or renovation are most likely to occur. (See for example the recent AGC article  highlighted by our friend Chris Hill).
2. Newly built buildings which are not designed and built using sustainable practices will struggle in the marketplace.
3. The marketplace will continue to struggle independently evaluating green building information and concepts. As such, rating systems such as LEED will continue to hold significant focus in the sustainability conversation for some time.
4. Energy efficiency will receive increased attention as the most important yardstick in measuring the sustainability of specific structures. (Here is an example of the discussion regarding the LEED energy debate).
5. The anticipated ASHRAE green code and other code based alternatives will gain traction in comparison to LEED ratings with respect to energy efficiency (see also Chris Cheatham’s recent post on local energy regulation and energy labeling).  LEED will continue to have a significant place for overall evaluation of projects; however, LEED will need to respond to energy performance concerns or risk losing attention to evaluations methods which are more focused on actual energy performance.
6. Longer term investment strategies in commercial property are more in vogue leading to owners who are more interested in operational expenses. Look for increases in renovations of existing buildings focusing on improvements to energy efficiency of older buildings.
7. Governmental bodies will continue to drive sustainable building as a prerequisite both through their own acquisitions and regulations. This trend will further fuel the feedback loop of the marketplace demanding green buildings.
8. Look for continued tension with regards to bonding requirements of green buildings, particularly where specific green performance bonds are required (such as DC’s bond requirement which takes effect in 2012, discussed by Kevin Kaiser at Best Practices Construction Law).

Do you think these are likely to happen?  Did I miss any other big ones?  We are interested in your thoughts, please comment!

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There are three kinds of lies: lies, damned lies, and statistics.

Mark Twain, paraphrasing Benjamin Disraeli

We have a new and very interesting recent report on green building to examine, the Regional Green Building Case Study Project: A post-occupancy study of LEED projects in Illinois. The Illinois report studied a mix of projects of various certifications levels, certified under various versions of LEED, with various applications, that used various baselines, and that used various reporting methods for utilities. The small sample and disparate projects involved lends itself towards a scattershot of data.

The study found a range of cost premiums for green construction (after grants and incentives) at 0.6% to 6.9% of project cost with 3.8% increase as the mean. The Illinois report found that projects focusing on energy efficiency tended to have better energy efficiency (quite a V-8 moment I am sure). Interestingly, the Illinois report found no meaningful correlation between the level of LEED certification and the energy performance of the buildings involved … this may be an off-shoot of the limited sample size.

The most interesting point from the Illinois study was in the details regarding energy modeling. Sixteen projects used energy design models. Of these sixteen projects, twelve projects performed worse than design models … six of them using 100% to a whopping 250% more energy than anticipated in the model. Seventeen projects used at least baseline models and remarkably seven of the projects showed actual energy use above the baseline!

To me, to have energy use of these structures exceed the original baseline is flat out staggering. Looking into the project details, one big factor was more intensive use and occupancy figures than modeled. This continues to point out the flaw of expecting too much from energy modeling that we have previously discussed. In addition, we continue to see the problem of trying to draw averages from lumping apples and oranges together. As someone recently said in a meeting on green building, drawing statistically across these projects appears far less educational and valid than more in-depth case study analysis of the specific individual projects.

(Hat tip to our friend Heidi Schwartz for commenting on this and sending us the report)
 

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A post this weekend by our friend Andrea Goldman raises the interesting question of “why bother with LEED certification”? The post highlights a recent profile on the highly sustainable Hutton Hotel project in Nashville which elected to forego seeking LEED registration and certification. In particular, Hutton Hotel representatives are quoted as saying:

Doing the government documents alone cost $50,000. Also, the paperwork is so complicated you have to hire an expert to do it. They make the certification a little onerous so everyone won’t pile on. You also need engineers that do testing. It’s a whole process.

If the goal truly is to develop more sustainable, energy efficient and better performing buildings, perhaps that is where a project’s generally limited resources should be directed. The question is how less technically savvy owners, developers, and even perhaps government officials are able to evaluate how “green” are these buildings. USGBC has been able to carve out a niche and indeed expand that niche into widespread identification of LEED being synonymous with green building and presenting LEED as the most credible source of third party validation of green design and construction.

The questions raised by Hutton Hotel are not unique. Indeed, last week I had a long conversation with a longtime client who builds very upscale homes. He remarked that their design and building practice had “been what people are calling green now” for years. He added that LEED did not make sense for them because of its lack of teeth regarding energy performance.  These comments echo the themes of our earlier discussions regarding critiques of LEED and energy performance, its efforts to incorporate post-occupancy energy reporting, and the changes in credit emphasis in LEED 3.0.

In the end, the ability of LEED to succeed relies upon its stance as an accepted source for third party validation is critically dependent on its ability to maintain credibility. It is for this reason that the recent critiques of energy performance of LEED certified buildings and the USGBC’s efforts to address energy performance issues are so important to USGBC’s long term success.  It seems to us that in addition, third party validation relies in part on the market necessity to "prove" a project is green rather than having a knowledgeable marketplace already in position to make that evaluation on its own.  As marketplace knowledge and information improves, perhaps the need for third party validation begins to erode over time.
 

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The New York times reported this week that the "Coalition for Fair Forest Certification" has filed a complaint with the Federal Trade Commission claiming that the Forest Stewardship Council has engaged in unfair and deceptive trade practices. According to the report, the main thrust of the complaint centered on FSC's higher levels of preserved land in the United States compared to other areas of the world placing the US at a disadvantage. The complaint further alleges that the USGBC LEED system is anticompetitive because it currently only accepts FSC certified wood products as approved for the LEED program applicable credit. While the Coalition does not have a website, it is widely believe that the Sustainable Forest Initiative (SFI) and other timber industry players are part of the coation.

This complaint is the latest salvo in what is an increasingly ugly struggle over certified wood. As reported at Dead Tree Edition in September, ForestEthics previously filed complaints against SFI. The first complaint with the Internal Revenue Service  requested that SFI's tax exempt status be revoked. The second complaint with the FTC  alleged unfair and deceptive trade practices. ForestEthics claimed that SFI was in essence deceptively postured as an independent non-profit, but instead was an industry shill funded almost entirely by timber industry interests. ForestEthics further alleged that SFI's representations on the quality and chain of custody of SFI certified lumber were false.

These complaints are set against the backdrop of the USGBC's currently pending proposed changes to its certified wood credit. USGBC has conducted its first public comment period regarding opening the wood certification process to other standards.  Some individuals and organizations have raised concerns, including our own Jon Kinney, that the FSC certification may discourage smaller landowners from participating in the FSC certification program due to its extensive reporting and expense. SFI in turn has raised the point that the limited number of FSC certified producers in the United States translates to creating a market for overseas wood products that are shipped long distances. This naturally runs contrary to the LEED system preference for local products and materials to reduce carbon footprint and use of energy where appropriate.

Even before this latest round, SFI has been accused of being an exercise in "greenwashing". In response to the FTC complaint, the President for FSC's United States operations stated, "They're attempting to put a green label on status quo practices ... FSC will fight that. Otherwise, the value won't be there and we will all lose."  Architecture Week takes the analysis a big step forward this month and details a series of 2007 mudslides in Washington that "destroyed significant swaths of mountain habitat, caused hundreds of millions of dollars in property damage, and downed an estimated 140,000 truckloads of timber."  The kicker: the forests were managed by Weyerhauser who conducted extensive clear-cutting which is alleged to be the a main or contributing cause of the mudslides. Weyerhauser in turn claims that extreme weather was the culprit. The credibility of SFI rating and approval is implicated in the mudslide cases because SFI stamped approval on many of the same lands prior to the mudslides. Despite these concerns, SFI has sought and obtained approval for the SFI standards from the American Standards Institute (ANSI) for inclusion in the National Green Building Standard.

Picking one standard over another, or even more particularly excluding all standards except the FSC approval, exposes USGBC to some legitimate scrutiny and criticism. This is particularly true where the program participation costs may exclude many players in the timber industry and who may conduct their operations in an extremely sustainable way. Nevertheless, this appears to be another example where USGBC has started the reaction process and is considering alternatives in response to criticism. Regarding the merits of the FTC complaint by the "Coalition", it is hard to see how a valid complaint can be stated that participation in a completely voluntary rating program operates as a restraint on trade.  What do you think?

(Thanks for our friends Imad Naffa and Shari Shapiro for passing the NYT link on Twitter yesterday!)

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We have previously discussed the New York Times article criticizing the Leadership in Energy and Environmental Design (LEED) rating systems developed by the U.S. Green Building Council (USGBC) for its arguable lack of translation to improved energy efficiency.  We also discussed energy codes and their interplay with LEED and ongoing reporting.  More recently, similar concerns were raised with respect to performance of LEED certified buildings at Dartmouth College (hat tip to Rich Cartlidge who wrote a nice piece on this topic with an ensuing series of good comments). Stephen Del Percio of Green Real Estate Law Journal has similarly analyzed the 2007 reports from the University of Massachusetts that found various LEED certified buildings used significantly more energy than anticipated under applicable modeling used for the LEED certification process.

In the midst of all this discussion of failed energy performance of LEED buildings, it makes sense to take statistical note of the changes from LEED 2.2 for New Construction to LEED 3.0 for New Construction. These changes appear to reflect an awareness and understanding that energy efficiency is critical to not only measuring the true sustainability of a LEED certified project, but also is key to USGBC and LEED maintaining credibility. A simple numerical comparison of LEED 2.2 and LEED 3.0 reveals a change in focus:

The relative redistribution of credits has resulted in a greater number of points allocated towards carbon footprint, efficient water and energy usage and the provision of alternative transportation options for workforces. A greater importance is placed on sustainable sites, water efficiency and energy and atmosphere. A greater number of points are now focused on sustainable sites credit two, development density and community connectivity and credit four, alternative transportation. While the methodology for compliance with these credits remains largely the same, the increased number of points available for them is evidence of growing relative importance.

For water efficiency, a new prerequisite requires each LEED project to reduce water use by at least 20 percent. Under LEED NC 2.2, a 20 percent reduction would have earned a credit point.  The threshold for attaining credit three, water use reduction, has increased by 10 percent compared to the previous version.

In energy and atmosphere, the points allocated to credit one, optimize energy performance, expanded from a maximum of 10 points to a maximum of 19 points. Similarly, the available points available for the remaining credits have been increased. The relative percentage weighted similarly demonstrates a shift in focus to increase the emphasis on energy efficiency:

It is clear from the above, plus the previously reported requirements for energy reporting as part of minimum project requirements, that the USGBC was already moving towards an increased focus on the need for energy efficiency improvements as part of LEED. It remains to be seen whether these efforts will succeed or whether LEED has suffered on-going credibility damage as its certification plan comes under the spotlight of scientific and journalistic scrutiny.

As a LEED AP and human being, I am all in favor of a relevant and successful program that makes a difference. As a construction litigator and business attorney, I am concerned that the LEED structure will start (or has started) to suffer from the natural human temptation towards self-perpetuation and amalgamation of resources, influence and power. In both capacities and finally as a blogger, I am not sure it is entirely fair to pile on LEED on the energy question in particular given the statistical demonstration that USGBC is trying to shift increased focus towards energy efficiency and energy reporting. It seems to me the discussion should be about how to improve energy efficiency and energy modeling accuracy rather than trying to discredit LEED.

Editorial Note: This article is adapted in part from a recent article titled "Shades of Green".  This article was co-authored by me and Ela Kapusta, LEED AP. This article is made available as a reprinting from Commonwealth Contractor, September 2009, a publication of the Associated Builders and Contractors - Virginia Chapter (all rights reserved). 

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I had a great time last Thursday at another one of Rutherfoord’s Trends in Building Green seminars. We got to hear from Tommy Russo from Akridge, Eric Oliver from EMO Energy Solutions, Bobby Christian from Tangible, and Tom Mawson, the Executive Director for the U.S. Green Building Council’s National Capital Region Chapter. 

I made a presentation outlining our region’s local jurisdictional green building trends, policies and incentives for private commercial development from a zoning, planning and land-use perspective. Here’s the slide show from the presentation. There was quite a bit more explanation beyond what is outlined in the slides, including bonding and other security requirements for incentives and a number of new initiatives a number of localities are currently pursuing. If anyone has any questions about what any of these localities (Arlington County, City of Alexandria, Fairfax County, Loudoun County, Prince William County, Montgomery County, Prince George's County and Washington, D.C.) are doing, please feel free to post a question and I can respond in more detail.

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As discussed previously, USGBC has imposed extended reporting requirements as part of its minimum program requirements for LEED. It appears the extended reporting already adopted may only be an initial step. We may see extended reporting requirements backed up by decertification; we may see on-going recertification as a basic part of LEED program structure.  I admit this is speculative, but we may be seeing a shift from LEED using energy modeling towards an actual performance model.

Given the overall goal of improved building performance implicit in LEED, these changes and speculated upon shifts may make sense technically. These changes, however, raise some significant questions regarding risk and responsibility. The ultimate impact on risk, and thus embedded costs, of these changes may vary dramatically from state to state because of each state's underlying legal framework.  Placing these changes into the complex network of construction contracts, contractual allocations of risk, and shared responsibilities raises some interesting observations and questions:

• States whose limitations period runs based on "injury", such as Virginia, may experience extended limitations triggers where building performance is alleged to be the failure; such results could be different for the various players depending on their roles
• In damage trigger states, courts may find that "injuries" were suffered far earlier than owners even suffered performance problems, so results in these states are difficult to predict and there could be big winners and losers
• States with discovery based limitations accrual, such as Maryland and the District of Columbia locally, will present cases with ever longer, potentially plausible, arguments regarding why the owner "reasonably did not know" of a problem for years after occupancy of the project
• The timing issues presented by extended performance questions mean that contractual agreements on statute of limitations and when they start to run should be focal points of contract negotiations; negotiations regarding extended warranties will be pivotal as well
• The growing use of LEED certification in various local zoning approvals means decertification may carry unintended consequences. If a project is decertified, is there a possibility that its occupancy permit is threatened?
• The potential for decertification, or a failure to participate in recertification if that becomes standard, may place commercial landlords at potential for extended risk of breaches of lease agreements depending on the LEED requirements imposed
• Lease agreements in turn need to be carefully worded so that all parties are on the same page as to exactly what is the yardstick and time frame for complying with LEED related terms

These are just a few of the wrinkles that come the mind when one places an overlay of extended performance obligations into the context of LEED.  We will keep a close watch on these developments moving forward.  We believe that continued movement on the extended performance axis by USGBC will have some serious economic impact on the financial aspects of LEED projects, who "wins" and who "loses" based on these changes, and where bottlenecks may develop on the economic risk side of the equation in reaction to extended performance obligations.

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The recent New York Times piece criticizing LEED (discussed previously) has reignited discussion of the potential for decertification after initial issuance of LEED certification. Some previously pointed to the USGBC addition of extended energy reporting for five years after occupancy as a "Minimum Performance Requirement" and the threat of decertification as an enforcement mechanism.  More recently, commentators have predicted recertification programs.  Rich Cartlidge even called for a wedding between LEED for New Construction and LEED for Existing Buildings.

The USGBC changes must be viewed against the backdrop of the development of international, state and local building codes and even Congressional legislation.  Codified efficiency standards would clearly and immediately raise the minimum energy bar across the board and reduce or eliminate some of the arguments raised by the Times article.  Reducing compliance to clear codes may also reduce in part the increasingly complex interface between local authorities interpreting prescriptive codes and the interpretive voluntary third party organization subject to little if any legal challenge or appeal (commented on previously by Chris Hill).   LEED as a voluntary tool has succeeded in driving the dialogue and advancing knowledge of green building.  LEED as a remotely delegated code interpretative structure with limited avenues of legal challenge is far more complicated.

With regards to code based approaches to energy efficiency, at least one local energy code has been passed and partially tested ... and stopped dead in its tracks (at least temporarily). The City of Albuquerque passed its own building code with energy efficiency standards. In granting a preliminary injunction blocking application of the code, a federal district court judge made the preliminary finding that it was more likely than not the challenger would prevail based on an argument that Congress had spoken on energy efficiency and that the federal statutes preempted state or local action.

The City of Albuquerque case reached the preliminary finding of federal preemption despite the fact that when Congress passed its energy efficiency measures, it included an express limited caveat that excluded building codes from preemption. The case is still pending, so the ultimate result is up in the air. The case does, however, offer a roadmap to those seeking to challenge statewide and local building code efforts to impose energy efficiency standards.

Given these complexities, it may be simpler for proponents of increased efficiency to do so at the federal level. The Waxman-Markley bill (described as the cap and trade bill by some, by others as The Illiad) includes significant increases in required energy efficiency requirements. While these standards have received extensive attention and commentary from green building bloggers, the press and public discussion of these aspects of the bill have been almost strangely silent.

The interplay of these issues raise a number of questions, particularly if proponents are successful at incorporating energy efficiency standards into federal or state statutes:

• If LEED in fact incorporates recertification and/or on-going performance requirements, will it reach the tipping point where owners and end-users push back on fees and process?
• What is LEED's role in the future if green requirements are increasingly codified? Does LEED always impose higher requirements? Does it stick to a holistic approach and avoid "energy myopia" as coined by Shari Shapiro?
• If/when statutory framework for sustainable development emerges in earnest, will the position of pre-eminence of LEED erode? Is the USGBC's ultimate mission of "working to make green building available to everyone within a generation" furthered more by advancing legal codification or increasing the reach and depth of its current market penetration?

These are the Ghosts of LEED Present.  Next time we will discuss in greater detail the thicket of legal risk and defense issues posed by extended reporting requirements, decertification and recertification, including statutes of limitations and shared/murky issues of risk and responsibility.
 

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The legal blogosphere has been active the last two weeks with discussion of the recent article in the New York Times critical of LEED. The article in essence uses the example project of the Federal Building in Youngstown, Ohio as a sample for LEED projects that fail to be "green". The Times in particular attacks the actual energy performance of a specific project as an example of why the LEED certified project is not in fact green. Reaction has been varied, from Shari Shapiro pointing out these discussions have been in the mix for some time  to an impassioned, relatively emotional, reaction from Rob Watson, a board member of USGBC and significant national player in the green movement.  Chris Cheatham has pointed out for discussion the interplay between green building success on the one hand and risk associated with projects receiving funding under the American Recovery and Reinvestment Act.  Before we move on to the bigger picture, the article deserves the specific focus on the example project, called by the Times the "Federal Building", but more properly known as the Nathaniel R. Jones Federal Building and US Courthouse (Youngstown, OH).  

After first glance, the Times article raises more questions than it purports to answer. The article states, "[T]he building is hardly a model of energy efficiency. According to an environmental assessment last year, it did not score high enough to qualify for the Energy Star Label[.]"  A review of the GSA study on its website reveals a few interesting facts that the Times left out of the article:

• The GSA study was of 14 first wave green GSA buildings ; 8 were LEED certified, 2 were LEED registered, one used Green Building Challenge, and three were designed with an emphasis on energy efficiency
• The Federal Building project did not seek any credits for energy efficiency under EA Credit 1. Similarly, the project did not seek points for additional commissioning, measurement and verification, or green power 
• While the Federal Building project did not receive the 75 score required to qualify for Energy Star, it did in fact reach a 58 despite the fact the building did not even try for the energy efficiency credits. Every other GSA project contained in the study qualified for Energy Star

So how did a project that is alleged by the Times to have a "major gas guzzler" of a cooling system reach LEED certification in 2002? A review of the GSA's webpage describing the project, and further discussion at BuildingGreen.com, reveals that the site is a downtown redevelopment of a previously paved site. The project included restoration and planting with native and adapted vegetation and reduction of impervious area by a whopping 58%. The project reduced ozone depletion by use of HFC refrigerants and the fire suppression system includes no halons. Over 72% of project waste was recycled and the project used structural steel with 90% post-consumer recycled content. Over 62% of the project's building materials were manufactured locally.

The New York Times' focus on the Federal Building project does bring a couple of key themes into focus.  First, "green" is not the same to everyone.  Indeed, Build2Sustain has had a fascinating discussion on-going on its blog and also on its various members blogs and twitter accounts comparing use of "green" and use of "sustainable" terminology. The use of loose labels where everyone does not agree on a shared meaning can create misunderstandings. Green does not necessarily mean energy efficient as there are plenty of areas allowing points under LEED that can in fact inhibit energy efficiency.

Second, the project used as the centerpiece of the article was completed in September 2002. LEED has come a long way since then and trying to extrapolate structures that were designed roughly ten years ago and apply that to current conditions may be suspect.

Finally, the USGBC has in fact already taken steps to address these issues. The new LEED 2009 standards incorporate a shift in greater emphasis towards energy efficiency in particular. Further, USGBC is taking steps to require on-going reporting and has indeed discussed using decertification as a means to require on-going compliance. (Please visit Matt Devries' blog for an excellent recap of the commentary that erupted when the decertification discussion first broke several months ago). 

In summation, it appears like the NYT dug and found an example of an old project to raise objections that the USGBC has already been addressing with LEED ... in short, they are perhaps trying to resurrect the Ghost of LEED Past.  In a few days, we will visit with the Ghosts of LEED Present and Future and try to extrapolate where LEED may be heading and what that means in terms of future risk management, contract exposure, and potential economic pitfalls associated with these trends.

Image (Courthouse): by OZinOH

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