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Initial Legal Thoughts on the LEED 2009 Minimum Program Requirements

As you may know, USGBC’s LEED v3 program launched this past Monday, April 27. Project teams currently pursuing LEED certification under any of the Version 2 programs can opt into LEED v3 for no additional registration fee through the end of the year. The Version 2 programs will be available to project teams for registration until June 26; after that date, all projects must proceed with registration under LEED v3. LEED v3 is comprised of what USGBC calls “LEED 2009″ revisions to the suite of LEED rating systems (other than Homes and Neighborhood Development, which are not changing under v3), a new online interface for project teams, and a shift in the administration of the LEED certification process to the Green Building Certification Institute (“GBCI”). USGBC calls the LEED 2009 credit revisions “a reorganization of the existing commercial and institutional LEED rating systems along with several key advancements.” The revisions contemplate harmonization (i.e., credits and prerequisites are consistent across all LEED 2009 rating systems), credit weighting (i.e., greater emphasis on energy efficiency), and regionalization (up to four bonus credits for projects that address a local environmental issue of import). Although they are important to review for background purposes, the thrust of this article is not to detail the mechanics of the LEED v3 program. Rather, a number of the new minimum program requirements (“MPRs”) present some novel legal issues for project teams- and their attorneys- to consider in connection with drafting construction agreements or leasing documents in connection with LEED v3 projects.

First, in the MPR preamble, the LEED v3 program expressly provides GBCI with the ability to revoke LEED certification “upon gaining knowledge of non-compliance with any applicable MPRs.” It is thus crucial that project teams consider and comply with each MPR, particularly if the project seeks to take advantage of a state- or local-level LEED-driven incentive program that is keyed to the receipt of formal certification. While we have yet to see LEED-certified project have its certification revoked, an interesting question could arise here if a state or local government that had provided a project with an incentive upon certification sough to recoup those incentives if the project was de-certified by GBCI. Even thornier would be the scenario where a project that was required to earn certification under a legislative mandate loses certification. The corresponding liability-related issues would of course flow downstream and impact each member of the project team. MPR 1 actually obligates every LEED-hopeful project to “be designed to comply with all applicable USA federal, state and local environmental laws and regulations in place where the project is located and at the time of design and construction.” Comprehensive legislative surveys and strong contract language emphasizing regulatory compliance will thus be a priority for project teams under the LEED v3 regime.

From a legal perspective, MPR 7 is perhaps the most important to consider: “all certified projects must commit to allow USGBC to access all available actual whole-project energy and water usage data in the future for research purposes.” Moreover, “[t]his commitment must carry forward if the building changes ownership.” For attorneys, it will be an interesting challenge to draft such a covenant that will bind subsequent purchases of real property (or, in the context of LEED-CS and LEED-CI 2009 MPRs, subsequent tenants). For owners and project teams, it will be imperative to recognize that such language must be translated into purchase agreements or leasing documents such that GBCI cannot revoke a project’s LEED certification. More generally, it will be interesting to see if any private owners balk at granting USGBC access to such data, and whether there are any local legal obstacles (in terms of building codes, utility regulations, etc.) that may make it difficult for owners to provide the data as required by LEED v3.

Applicable MPRs are set forth below as printed in the text of the New Construction and Major Renovations rating system. Note that I have also set forth MPR 6 below, which lays out certain timeframes that project teams should remain aware of. I anticipate that there will be much more analysis of these and other provisions in LEED v3 as more project teams become familiar with the terms and scope of the program; please feel free to suggest any additional legal issues that we may have missed in the comments below.

Minimum Program Requirements (“MPRs”) – LEED 2009 – New Construction and Major Renovations

The Green Building Certification Institute (“GBCI”) reserves the right to revoke LEED certification from any LEED 2009 project upon gaining knowledge of non-compliance with any applicable MPRs. If such a circumstance occurs, any registration or certification fees paid by the project team to GBCI will not be refunded.

No. 1: Must Comply with Environmental Laws

The project must be designed to comply with all applicable USA federal, state, and local environmental laws and regulations in place where the project is located and at the time of design and construction. Additionally, all project work must be in compliance during the design and construction phases.

No. 6: Registration and Certification Activity Must Comply with Reasonable Timetables and Rating System Sunset Dates

Subsequent to registration under LEED 2009, a substantial level of application activity (such as updates to general submittals data, LEED-Online activity by project team members, communication with CBs, applying for certification, etc.) must occur within four (4) years. If a LEED 2009 project is inactive for four years, GBCI reserves the right to cancel the registration (proper warnings will be given.)
Certification application sunset dates will occur six (6) years after the close of registration for a rating system version (the close of registration will coincide with the release of a new rating system version). Projects registered under a rating systems version that has been closed due to sunset will be given the opportunity to upgrade to the new rating system version.

Initial application for LEED certification must occur no later than two (2) years after a project reaches completion. This is defined as the date on which the building receives a Certificate of Occupancy or similar official indication that it is ready for use.

No. 7: Must Allow USGBC Access to Whole-Building Energy and Water Usage Data

All certified projects in LEED 2009 must commit to allow USGBC to access all available actual whole-project energy and water usage data in the future for research purposes. This commitment must carry forward if the building changes ownership. Note that building owners will not be required to actively supply USGBC with information, but simply authorize USGBC to access the information. Access must be granted within a year of achieving LEED certification. All projects with whole-project meters in place must comply with this requirement; exemptions are allowed only if no such meters are in place.

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2 Responses to Initial Legal Thoughts on the LEED 2009 Minimum Program Requirements

  1. Will May 4, 2009 at 4:51 pm #

    Steven:
    In LEED-CI, MPR 6 contains this language [insert snark about consistency here], which reads:
    “All certified projects must commit to sharing with USGBC and/or GBCI all available actual whole-project energy
    and water usage data for a period of at least 5 years.”

    Given the expiration of this provision within 5 years of occupancy, do you think it continues to be a problem, or is it easily addressed outside of title?

    Will

  2. Ujjval Vyas May 5, 2009 at 3:29 am #

    Stephen,

    Just wanted to point out one glaring but intersting oddity in the new MPR no. 7. The USGBC has been under a great deal of pressure to begin to provide some real data instead of the often “marketing” data it currently distributes. Thus this new requirement in v.3. This attempt is misguided in a number of ways but I will only discuss two apart from the one you intimate.

    First, the requirement is essentially to allow the USGBC to acquire the data from the approprate utility (or often utilities) for the metered data. Unfortunately, like much of the scanty due diligence at the USGBC, no meaningful examination of the legal or other implications was done. In at least one state (though I am sure this is the case with many others), an owner does not have the right to share utility data in this manner. The public utility commission forbids by statue any sharing of the actual identifiable metered data with any third-parties. The only parties with access to the utility data are current owners of the property or prospective purchasers of the property. There are various reasons given for this, inculding privacy concerns linked to property specific data streams, but the upshot of this is puzzling for those pursuing LEED v.3 in that state. By definition, none of the owners (let alone subsequent purchasers) pursuing LEED certification will be able to provide for this required access to data, let alone for five years subsequent to the completion of the building. To wit, all these owners will fail to get LEED certification.

    The implications of this are staggering. If there are any legislative or regulatory requirements that are, or will be put in place in the jurisdiction of utilities with such statutory prohibitions on sharing metered data, MPR 7 of LEED v.3 will kill the possibiity of proper compliance.

    Second, the claim is that this requirement is for research purposes. I am not currently aware of any plan to make this data publicly and freely available as an open data set. If this is not a fully open data set (which could be a real problem for owners whose buildings are performing poorly since this could lead to asset value loss) then there is a serious question as to who has access to it and how it will be used. The current spate of studies “authored” by the USGBC doesn’t give much confidence in either the transparency/credibility of the data or the relevant methodological care.

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