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Do Third Parties Have Standing to Initiate LEED 2009 Decertification Proceedings?

The possibility that a LEED-certified project could be “decertified” by USGBC or GBCI in the event that any of the new LEED 2009 Minimum Program Requirements (“MPRs”) are not satisfied presents a variety of novel legal issues which we presented earlier this year here at GRELJ when the first iteration of MPRs was announced by USGBC. Today, Engineering-News Record (“ENR”) published an article that highlights a number of those issues, but also raises the question of who, exactly, would have standing to bring a decertification proceeding. If strictly limited to USGBC or GBCI, a recent comment here at GRELJ from Brian Anderson (“lawsuits are bad for marketing”) suggests that decertification would be a remote possibility. However, in the ENR piece, which is titled Building Rating System Requirement Raises Concern and authored by Nadine Post, my colleague Ujjval Vyas notes that “[a]ny third party has the right to initiate a non-compliance action by USGBC. This creates a huge risk and provides standing to any entity whatsoever to injure a building owner or tenant.” If third parties can compel decertification proceedings, the risks associated with failing to comply with the MPRs are far more serious than if that discretion rests exclusively with USGBC or GBCI.

However, I think it’s important to look at the specific language that provides for decertification in LEED 2009, which reads (in part) as follows: “certification may be revoked from any LEED project upon gaining knowledge of non-compliance with any applicable MPR.” (emphasis added). The way I read this language, USGBC/GBCI is not obligated to revoke certification upon learning of non-compliance, but it is not restricted from receiving information regarding non-compliance from any third party. The question then becomes what, if any, obligations USGBC/GBCI may have to use that information and pursue a decertification proceeding, either conferred elsewhere in the LEED rating system itself or otherwise imposed by law. I don’t know the answer to that question, but perhaps Ujjval or others could chime in below in the comments. I think this is an absolutely critical point to dissect.

Also of import in the ENR article with respect to the MPR requiring access to building performance data (which has been the MPR driving much of the risk discussion here at GRELJ and elswhere), Duane Morris construction attorney Ed Gentilcore emphasizes that “[w]hat was once an initial project-performance milestone now has ongoing tail responsibilities that could create extended obligations for the owner itself and possibly, in turn, design and construction teams.” In addition, Scot Horst told ENR in the same article that the organization is “still developing the best and easiest ways to help owners do this. This is a new requirement and there is a lot to work out over time.” He declined to tell ENR when any addenda to the MPRs might be released.

I think it’s clear that the contract challenges and corresponding risks associated with the new LEED 2009 MPRs are just begin to emerge, particularly if USGBC and GBCI release a second addenda to a document that was just released a few months ago.

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8 Responses to Do Third Parties Have Standing to Initiate LEED 2009 Decertification Proceedings?

  1. Jeff Howell, Esq. July 10, 2009 at 4:30 am #

    Stephen:

    The MPR language certainly appears to give the USGBC/GBCI discretion on how to handle a non-compliance situation. It does not seem advantageous from a PR perspective to pursue a hardline approach leading to de-certification, although the organization may have an ethical obligation to at least investigate.

    I sense the formation of an MPR Interpretation unit that will review the issues raised and make a determination regarding de-certification. Who would pay the anticipated fee for this review since any third party may call MPR compliance into question?

    Jeff Howell

  2. Stephen Del Percio July 10, 2009 at 1:08 pm #

    Interesting thoughts on the MPR Interpretation Unit, Jeff. I can’t imagine that the owner will pay for any MPR compliance reviews (though if it does it will likely seek reimbursement from the culpable party or parties).

    I also agree that decertification, from the USGBC’s perspective, is a PR nightmare. I think that’s why the third-party question is so critical- if USGBC/GBCI is compelled to investigate though, the policing mechanism becomes much stronger.

  3. Michael Gibbons, Esq. July 10, 2009 at 1:49 pm #

    This is obviously a controversial issue. I believe the main purpose behind the MPR at issue is the USGBC’s laudable desire to increase the available data on building performance as it relates to energy consumption. LEED is frequently and justifiably criticized as certifying design and not performance (in contrast to Energy Star which certifies performance). USGBC recognizes that ultimately energy modeling must yield to actual building performance data.
    I believe that USGBC will not be making waves with individual non-compliant building owners so long as it is receiving sufficient data around the country to allow meaningful engineering studies of distinct types of buildings. If there is pervasive non-compliance to the point that meaningful data is not available, USGBC will be forced to choose between bad PR and inadequate data to advance the mission.

  4. Ujjval Vyas, Ph.D., J.D. July 10, 2009 at 1:49 pm #

    Stephen,

    You are right to look to the exact language (though this version of the poicy manual does not seem to be final yet since the definitions of the key terms are yet to be produced). I am not suggesting that a third party would have a right to force the GBCI/USGBC to decertify, only that any entity now having some type of knowledge of a failure of performance or compliance with the various requirements may bring to the GBCI/USGBC this information in aniticipation of some type fo review being done to see if the information provided could lead to a de-cerrtification. As you suggest and Ed Genticore also indicates, there are many involved questions here regarding the scope, process and enforcement mechanisms that the GBCI/USGBC may run up against. This is especially the case if the LEED certification is required for compliance with local, state or federal legislative or regulatory edicts. This is a very strange tangled web.

    A very close look at the MPR language as currently established poses serious issues for A/E insurers, sureties, contrators and others on the construction project as well as potential impications for land development. I will be producing a detailed review of the new v.3 and the MPRs in an upcoming issue of Construction Lawyer where I certainly hope to use (and properly cite) the thought that might be developed on this blog.

    The simple question remains for me: when and how will a project get de-certified? If this is another of the black box operations that the USGBC seems to prefer, then it will be problematic both as an aid to “market transformation” and in its legal implications. In fact, I would argue that any time a de-certification occurs, it will be followed by litigation since this would affect everything from building asset value to claims of non-compliance with codes, to signinficant marketing damage to the owner, etc., etc. The de-certification will by dint of that alone provide the basis for an assumption that so-called experts in the green design of the building have found a fault with one or more of the parties. Given this it seems logical for all those negatively affected to seek redress.

    If the USGBC never actually de-certifies, then they become a paper tiger. The first de-certifications will be fraught with difficulty.

  5. Michael English, PE, CCP July 10, 2009 at 2:25 pm #

    I am a huge fan of decertifying a building when appropriate. On multiple occasions, my company is called in after the fact to “fix” a building that has already been LEED certified. The owners of these buildings are trying to do their part by investing in green buildings. The sad part is that some of these buildings don’t function properly due to poor design, coordination, construction and/or commissioning. I’m all for doing whatever it takes to uphold the value of these certifications and making certain they reflect true building performance. This is crucial to maintaining integrity within our industry.

  6. Stephen Del Percio July 10, 2009 at 3:08 pm #

    If buildings that are certified before they start performing are not, in fact, performing, why are we certifying them in the first place? Isn’t this a strong argument in favor of a different way of rating buildings that’s based on actual performance once the building is operational?

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