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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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The Trends in Building Green panel last Thursday morning was a great success.  There were a couple interesting take-aways from the panel's materials and presentations:

• Smart property owners need to be taking energy savings seriously; Tommy Russo, Chief Technology Officer of Akridge, described their highly detailed efforts to analyze and implement projects with a reasonable return of investment horizon;
• Per Tom Mawson, Executive Director of the USGBC National Capital Region Chapter, the "USGBC is all about market transformation"
• Bobby Christian, CEO of Green 20 Now, LLC, and Mike Scelzi, President of Net Metering, Inc. demonstrated just how far we have come with access to energy metering information, and its implications on operations and cost savings
• Chris Pyke, Director of Research for USGBC, provided a wonderful overview of where LEED has been and where it may be going, in particular in the context of on-going performance of buildings and where those measures may not match design.  For Chris and USGBC, the question primary question: "Is there a commitment to demonstrated performance ... which is leadership" with regards to energy efficiency and sustainability.
• I covered some of the press crititiques of LEED, what the actual projects demonstrated, and finally where the performance debate may create significant liability issues in the future

My presentation is here for those who are interested.  Mike Scelzi was also kind to provide his presntation as well.  Please feel free to contact me if you have any questions or are interested in tracking down some of the participants or issues we covered.

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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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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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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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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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