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Why You Won’t Find “LEEDigation” Under Your Green Building Christmas Tree

Green Building Christmas Tree

Since last month’s Legal Forum at Greenbuild, there have been a number of articles about the increase in “chatter” about the potential for “LEEDigation,” the phrase which my friend and colleague Chris Cheatham coined over at Green Building Law Update some time ago to describe the type of litigation arising out of a project which fails to obtain LEED certification as anticipated. However, as we draw closer to the end of the year, I thought it might be worthwhile to consider why concerns about “LEEDigation” might ultimately be more smoke than fire based on the green building legal experience here in 2010:

  • First, the result of the Northland Pines decertification proceeding suggests to me that USGBC/GBCI will never decertify a building once it has achieved LEED certification. As you will recall, in Northland Pines, although it was clear that the high school had failed to satisfy certain LEED prerequisites – grounds for its LEED rating to be revoked by USGBC under LEED for New Construction Version 2.1 – USGBC nevertheless permitted the project team to retroactively amend its documentation and retain its LEED Gold rating. This is the primary reason – in my opinion – why we have yet to see any reported litigation arising out of a project’s failure to earn LEED certification; USGBC/GBCI will work with project teams through its appeals process to ensure that the desired level of LEED certification is achieved and “LEEDigation” never happens.
  • Second, many of the private owners who are paying for LEED certification are heavily invested in USGBC as members and participate in LEED’s consensus-based development process; initiating “LEEDigation” would be a black eye for them individually, as well as for their reputation within USGBC itself. Far better to work through a project’s LEED issues collaboratively through the appeals process than to commence a costly and likely protracted litigation. I also thought the following comment from one of Mr. Cheatham’s recent posts at Green Building Law Update was fascinating and worth considering here in the context of “LEEDigation” in public contracting:

“LEED requirements are well established in the federal sector and military because they’ve been in writing for many years. The USACE’s standardized D/B RFP contains clear language going in about the LEED requirements. The scenario [described here] seems like a “LEEDigation” scare tactic. Government contracting officers do not randomly require LEED certification after construction has begun. In fact USACE publishes a list of each project they plan to actually certify in a fiscal year BEFORE that fiscal year has begun. Too bad such scare tactics get lots of attention. By the way, the Navy has had a policy of requiring actual LEED Silver certification of all of their MILCON project (not government validation like the Army and Air Force) for the last three fiscal years and no ‘LEEDigation’ has resulted from it. I find this scenario very unrealistic.”

  • Third, and more broadly, I think that the International Green Construction Code, which includes USGBC’s Standard 189P as a compliance path, will become the de facto legislative tool at the state and local levels for green building policymaking. Gone are the halcyon days where municipalities could dole out tax credits and other financial incentives for green buildings; if they choose to address the local-level environmental impacts of buildings, they will do so through amendments to state- and local-level building codes using the IGCC, Standard 189P, or other location-specific initiatives. (We’re seeing this happen already; this fall, Rhode Island became the first state to adopt the IGCC, California has implemented CalGREEN as of January 1, 2010, and New York City’s Green Codes Task Force continues to make recommendations to amend the New York City Building Code.) This is important from a “LEEDigation” perspective because mandates requiring formal LEED certification will soon become an early 21st century legislative novelty.
  • Finally, any private sector “LEEDigation” that does arise will be of a posture similar to Gidumal and the Toronto condominium suit (which we have referenced here at GRELJ but not written about): disgruntled purchasers and lessees of real estate in both residential and commercial contexts will use LEED as a sword if owners and landlords fail to properly represent their projects’ green aspirations in offering plans and leases.

Now, is it important to address and allocate the responsibilities for LEED certification in your design and construction agreements? Absolutely, for a host of reasons, but particularly if one party (i.e., the architect or the LEED consultant) has responsibility for coordinating any subsequent appeals to USGBC in order to capture the required level of certification.  However, it’s been over ten years since the LEED program’s inception and we have yet to see a reported litigation arising out of a project’s failure to earn LEED certification. (Again, note that this was not the allegation in the Shaw Development litigation which, incredibly, continues to be referenced incorrectly for this proposition in various quarters).

My question to you during the upcoming holiday break – which I hope you’ll respond to in the comments – is the following: will 2011 prove me wrong or is “LEEDigation” destined to go down as a green building red herring?

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4 Responses to Why You Won’t Find “LEEDigation” Under Your Green Building Christmas Tree

  1. Chris Cheatham December 21, 2010 at 12:45 pm #

    Stephen,

    Great points, and thanks for initiating an important discussion.

    I disagree with the comment that you quoted. I would recommend all of your readers check out this article first:

    http://www.mysanantonio.com/business/local/article/BAMC-cost-soars-828824.php?showFullArticle=y

    The article describes an Army Corps of Engineer project that added a LEED certification requirement late in the process, ran 25 percent over budget, and then the Corps blamed the LEED certification for part of the cost overruns. I will continue to assert that it is not far fetched to imagine a contracting officer adding LEED certification (just like the project in the article) but refusing to pay for the costs.

    I have talked to numerous LEED consultants and insurers in the field that confirm that lawsuits from LEED certification are becoming more likely. One of the primary reasons is that owners are becoming savvy and requiring LEED certification to a certain level in contracts.

    We won’t see a huge wave of LEEDigation; there is simply not enough projects seeking LEED certification (particularly after the real estate bubble popped). But I do think we will see some of it, particularly as more projects come under LEED 2009, and as the USGBC begins to grapple with de-certification if a project fails to perform properly.

    But we shall see. Allegations that “LEEDigation” is being used as a scare tactic always confuse me. If anything, the commentators that discuss LEEDigation are preventing it from happening by discussing it. That doesn’t seem like a scare tactic to me; that seems like free advice.

    Also, I would be interested to hear more about your perspective on Shaw Development. The project did not receive its LEED certification in a timely fashion, so the developer forfeited its green building tax credits. Right? To me, that is LEEDigation.

    Chris

    • Stephen Del Percio December 23, 2010 at 8:38 am #

      The tax credits at issue in Shaw required the owner to obtain a certificate of occupancy for the project by a certain fixed date established in the tax credit certificate issued by the Maryland authority that controlled the program. Only projects that intended to satisfy LEED Silver could apply for the credits. The project’s failure to obtain formal LEED certification had nothing to do with the expiration of the certificate.

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