Green building consultant Jerry Yudelson delivered two keynote addresses earlier this month at an event sponsored by the Central Texas Green Building Council. According to a press release, during the course of his remarks Yudelson “presented clear evidence that high-level green outcomes add significant value to buildings. ‘What part of a 30 percent increase in value from LEED certification is hard to communicate?’ He challenged architects and engineers to do a better job of advocating for green building with their clients. ‘You are doing your clients a disservice by letting them build projects without LEED certification,’ he said. ‘It almost amounts to dereliction of your duty as professionals.’” As you likely know, this latter remark about the design professional’s responsibilities in the green building space is exactly the opposite of what many construction attorneys have been preaching over the past few years as best practices for architects and engineers. Putting aside for purposes of this article any analysis of Mr. Yudelson’s claims of 30 percent increases in value for LEED-certified buildings, I think his remarks provide a good opportunity to review the risk management implications of the design professional’s representations to his or her clients about the possibilities and potential pitfalls of green building, including the LEED certification process.

First, the design professional who functions as an advocate, extolling the promises of increased energy efficiency, asset values, and rental premiums of LEED-certified buildings is creating a corresponding high expectation in the eyes of his or her client. As we noted over at gbNYC in the aftermath of a BIM/green building panel held here in New York City nearly two years ago, insurance industry professionals will almost always observe that claims start with violated expectations. As architect and attorney Fred Butters points out in his seminal Real Estate Issues article, Greening the Standard of Care: Evolving Legal Standards of Practice for the Architect in a Sustainable World, “[i]f the architect does not clearly and sufficiently indicate the positives and negatives [of green building installations, technologies, or certification programs], the client will be looking to the architect to make him or her whole. Becoming an advocate for many types of sustainable approaches may cause the design professional to overlook the messy reality for the sake of being a good advocate.”

Butters also points out that “[i]f the architect is serving as an educator, the client’s decision to ‘go green’ may be only that- the client’s decision. However, if the architect is ‘encouraging’ or ‘advocating’ for the incorporation of green features, his or her advice is implicated in the design decision. In that instance, the possibility that the architect can avoid the effect of the client’s unmet expectations is low.” Advocating for LEED or other green design features may also implicate standard of care issues, potentially elevating that standard beyond what prevails for architects and engineers in their particular geographic location. As we have noted previously, this amounts to an assumption of liability above what is imposed by law; most professional liability policies will exclude coverage for claims where the design professional has failed to satisfy that heightened standard.

What makes this issuer thornier, though, is that the architect actually does, in fact, have an obligation- both in the 2007 version of the AIA contract documents, and the new AIA Canon of Ethics- to promote sustainable design practices. For example, Canon VI, Obligations to the Environment, requires the architect to “advocate the design, construction, and operation of sustainable buildings and communities.” (Ethical Standard 6.2). In performing design work, the architect “should be environmentally responsible and advocate sustainable building and site design.” (Ethical Standard 6.1). As Mr. Butters also points out, and as we’ve noted here at GRELJ previously, the B201 (2007) Owner – Architect Agreement contains similar requirements:

§ 3.2.3 The Architect shall present its preliminary evaluation to the Owner and shall discuss with the Owner alternative approaches to design and construction of the Project, including the feasibility of incorporating environmentally responsible design approaches.

§ 3.2.5.1 The Architect shall consider environmentally responsible design alternatives, such as material choices and building orientation.

The National Society of Professional Engineers’ Code of Ethics contains a similar obligation under Professional Obligations, III.2.d: “[e]ngineers are encouraged to adhere to the principles of sustainable development in order to protect the environment for future generations.” The design professional is thus placed in a delicate position; professionally, it has an obligation to promote sustainability, but at what potential perils?

Mr. Yudelson’s remarks are also important to note in light of our recent article here at GRELJ about the insurance coverage implications of the Energy Ace LEED certification “guarantee.” Unbridled green building advocacy could also provide an insurance carrier with the argument that the design professional has provided the functional equivalent of a guarantee- either LEED certification, performance, or otherwise- that might give the carrier grounds to deny coverage for negligence claims arising out of the project. For example, and as we noted previously, “the concept of a guarantee is essentially representing perfection; anything less is a breach of contract, claims for which are similarly not covered by a professional liability policy (though the insurer may still defend under the policy but reserve its rights). In short, absent confirmation from the carrier that coverage will remain available, it will continue to be dangerous for parties that maintain professional liability insurance to make the types of representations implicated by the Energy Ace guarantee.”

I think it’s therefore worth repeating that while the analysis of green building legal issues related to standards of care, professional liability insurance, and LEED building performance continue to play out, architects and engineers should be particularly careful when making the types of representations that Mr. Yudelson suggests when participating in the design of green construction projects.

• Green Building Consultant Challenges San Antonio City Groups to Welcome “New Green Era” (PR)
• Green Insurance Law: Thoughts on BIM and LEED Coverage for Design Professionals (gbNYC)

The San Francisco Chronicle has picked up on the recent flurry of commentary generated by Mireya Navarro’s piece in the New York Times about the LEED building performance gap. The article opens up by stating “[r]evelations that many buildings certified as green under a broadly accepted national standard for energy savings are not performing as well as predicted recently prompted changes to the [LEED] program and are forcing San Francisco officials to consider amending city rules that are tied to the older guidelines.” However, a closer look at the substance of the article suggests that city officials may actually be trying to expedite the application of the LEED 2009 system and its corresponding Minimum Program Requirements (“MPRs”) to large, private construction projects. (As you will recall, the new MPRs require that projects which pursue LEED certification to “commit to allow USGBC to access all available actual whole-project energy and water usage data in the future for research purpose” or risk decertification.) I also think the piece is noteworthy because it suggests an inextricable link between increased data reporting and increased building performance.

As you may know, among other provisions, the San Francisco green building ordinance requires commercial and residential projects greater than 25,000 square feet, or taller than 75 feet, to earn a LEED Certified rating from USGBC. The requirement for commercial projects increased this year to Silver and, in 2012, to Gold. Residential projects must earn a Silver rating beginning in 2010. Notwithstanding these phased requirements, in the Chronicle piece, the San Francisco Department of the Environment’s private sector green building coordinator Richard Chien states that “[w]e need to reconvene the task force that recommended the legislation and makes some revisions way before 2012. With the changes coming along [to LEED] we could be out of date and we need to address that.”

Interestingly, the San Francisco ordinance (No. 180-08 of September 4, 2008, codified at Chapter 13C of the local building code) states that “[w]herever specific LEED prerequisites or credits are cited, such references are to LEED-NC Version 2.2. More recent LEED . . . versions may be used, provided the credits and points achieved are as or more stringent than LEED-NC Version 2.2.” In other words, because the LEED 2009 MPRs are not referenced specifically, it’s not entirely clear whether they are included within the purview of the ordinance, particularly with respect to mid-sized commercial buildings which are only required to comply with certain LEED credits.

The introduction to the article is therefore inaccurate; San Francisco is not reconsidering whether to restructure its green building ordinance around something besides LEED based on perceived LEED building performance failures. Rather, it is evaluating if, as presently drafted, and based on the recent amendments to LEED in the form of LEED 2009, its ordinance will still (1) obligate covered projects to comply with the new MPRs and share performance data; and (2) whether the ordinance should be revised to expedite that requirement. This is precisely the type of scenario that has been suggested both here at GRELJ and elsewhere with respect to the potential consequences for state and local governments that incorporate LEED into legislation by reference. Notwithstanding its performance-related issues, LEED itself continues to be a moving target and policymakers must guide themselves accordingly when considering the merits of this type of legislative activity.

I also think the Chronicle article is noteworthy because it suggests- once again- an overarching perception that simply collecting an increased volume of building performance metrics will solve the LEED performance gap. For example, consider the following quote from architect Jennifer Devlin of San Francisco-based firm EHDD: “LEED has done an exceptional job of raising awareness. And the U.S Green Building Council recognizes that tracking energy use is vital to the sustainable building movement.” LEED has unquestionably raised public awareness about the environmental impact of the built environment and put building performance on the front page of major media outlets such as the New York Times and the Chronicle. But, as USGBC’s Building Performance Initiative and other efforts ramp up this fall, I think it is critical to keep in mind Larry Spielvogel’s thoughts from our last article here at GRELJ that the question of improving building performance is highly complex and clearly one that cannot be solved by simply compiling a longer spreadsheet.

• Green Building Standard Seen as Flawed (SFC)

Mireya Navarro’s recent piece in the New York Times about the energy performance of LEED buildings does not really shed much new light on a topic that many of us have been paying close attention to for the past two years, particularly in the aftermath of the controversial New Buildings Institute study that claimed LEED buildings performed, on average, 25 percent better than the CBECS database. Nevertheless, Navarro’s piece seems timed to coincide with USGBC’s press release of August 25 that announced a new Building Performance Initiative which will complement the LEED Version 3.0 Minimum Program Requirements’ ongoing performance data reporting obligations in order for projects to maintain their LEED rating and avoid the unsavory potential consequences of decertification. Any commentary on this press release – at least in the blogosphere – appears to have been lost in the August doldrums, but I think it is worthwhile to consider an effort which could ultimately have major repercussions for the underpinnings of the LEED system itself. However, many building scientists will tell you that simply collecting more data does not necessarily translate into improved performance. Consider the following letter that was submitted to the New York Times by ASHRAE Fellow and Distinguished Lecturer Larry Spielvogel, P.E., in response to the USGBC press release announcing the Building Performance Initiative, which Mr. Spielvogel was kind enough to allow us to reprint here at GRELJ:

The USGBC August 25, 2009 press release about their Building Performance Initiative implies that a large-scale collection of energy data from LEED® buildings will improve energy performance. This suggests a response to escalating criticism about the actual energy use of LEED® certified buildings compared with all others. Why do few published stories about these buildings include metered energy and water use data? If these buildings can waste energy efficiently, perhaps one answer is not to include those measures that allow that to happen.

The reality is that neither predicted nor actual measured energy use determines whether a building is energy efficient. Nor does energy use alone determine whether a building meets or exceeds all required or desired criteria, or provide the accountability necessary to achieve those results.

I have been collecting and evaluating detailed metered and measured building energy performance data for 40 years. Collecting the data is one thing, even if done completely and correctly. However, evaluating the data and then making comparisons among buildings is something else. Buildings alone do not use energy. The occupants, operators, and systems do.

In an extreme case, look at apartment buildings where each apartment is identical, and the metered energy use per apartment can easily vary by 2 or 3 to one, or more. Individually metered floors in office buildings occupied by the same company or tenant also can vary by 2 or 3 to one.

The functions in a building can also have a major influence on building energy use. The presence of a laundry in a hotel or hospital can make a 25 to 50% difference in total building energy use per bed, room, or square foot compared with an identical building on the same street.

Buildings with intermittent occupancy present similar dilemmas. How does one estimate, predict, or compare the energy data for two identical churches on the same block built at the same time, when one is only occupied for a few hours each Sunday and on some holidays, and the other is occupied most days of the week?

Comparing metered energy use to modeled energy data is not a valid measurement of anything. If the modeling and estimating methods were sufficiently accurate, utility companies would not require the use of meters.

Some articles I wrote 25 years ago show apartment by apartment or office floor by office floor metered energy use data in the same building. For another good example, look at the range of energy data for any given building type shown in the statistically significant quadrennial CBECS reports, collected at a cost in eight figures.

That reminds me of an energy research project 35 years ago during the 1970’s energy crisis. The US Postal Service spent hundreds of thousand of dollars instrumenting and recording the detailed energy use in a large postal facility. The conclusion was that they could collect lots of data.

The answer in evaluating and comparing energy data is using professional judgment and experience. That involves knowing and understanding not only the energy use and particulars of the subject building, but also the energy use and particulars of comparable buildings in the area. Comparing the energy use of a suburban office building in Boston with suburban office buildings in Providence without knowing the particulars is not likely to be meaningful or conclusive. This is much like the commercial real estate appraisal profession.

I think that there are a few important things to consider here. First, in USGBC’s Building Performance Initiative press release, LEED Senior Vice President Scot Horst notes that “[p]lenty of people are content to simply point to these longstanding issues [relating to LEED building performance] without offering a constructive way to address them. We’re going to take them on and engage practitioners and thought leaders alike in establishing a national roadmap to optimize building performance.”

After last fall’s Greenbuild, I suggested over at gbNYC that, if USGBC was serious about improving the energy performance of LEED buildings, it needed to engage building scientists such as Henry Gifford, Joseph Lstiburek, and Mr. Spielvogel in a meaningful way- certainly through more of an effort than simply collecting more data. As Mr. Spielvogel notes in his letter above, “[b]uildings alone do not use energy. The occupants, operators, and systems do.” This, of course, is what makes the type of predictive energy modeling on which LEED relies so imprecise and why project teams need to remain careful about the types of representations they make to their clients about the performance-related results of potential LEED certification. As Pat Murphy noted in a recent comment here at GRELJ, “[t]here is a crying need for accurate, verifiable and reliable energy rating systems. If LEED doesn’t fill the bill, other options will come forward.” I agree with Mr. Murphy and, in conclusion, would suggest that this is precisely what should give policymakers pause as they consider incorporating LEED- as currently constituted- into state- or local-level green building legislation.

• The Ugly, the Bad, & the Good: Thoughts on Greenbuild 2008 (gbNYC)
• Some Buildings Not Living Up to Green Label (NYT)
• Building Performance Initiative (USGBC Press Release)

As you likely know by now, Atlanta-based Energy Ace, Inc. recently announced that it will offer what the company is calling the green building industry’s first LEED certification guarantee. According to Energy Ace CEO Wayne Robertson, the firm “can offer clients a certainty that their project is going to be certified and remove that anxiety.” The specifics of the guarantee are as follows: clients retain Energy Ace pursuant to a standard service contract under which the firm performs LEED administration, fundamental building commissioning, and energy modeling. It holds a LEED charette and, if everything is satisfactory, the contract will be amended to “guarantee” certification. That guarantee, though, actually reads in substance much more like a limitation on Energy Ace’s liability; if the project fails to earn its target level of certification (i.e. Gold or Silver) or is not certified at all, Energy Ace will refund its LEED administration fee to the owner (which is typically between 30 and 45 percent of its total fee). Although there are a number of additional facts that would be helpful in analyzing the implications of the Energy Ace initiative more comprehensively, I do think it provides us with a timely opportunity to review a number of important general construction contract and insurance coverage considerations, many of which we have considered here at GRELJ during the course of 2009.

First, I think it’s important to note at the outset that in most jurisdictions- including New York- there is no statutory obligation for a party to carry professional liability insurance, though of course most owners will insist upon it where that party is rendering architectural or engineering design services. Accordingly, absent additional information, we don’t know what type of insurance Energy Ace typically procures or the scope of any discussions it had with its carrier in considering the coverage implications of announcing its guarantee. These are critical inquiries because, as you know, most professional liability insurance policies exclude coverage for claims arising out of the breach of warranty or guarantee. However, the notion that a limitation of liability provision in a contract for LEED certification services is novel is misplaced; most LEED consultants will typically limit their liability for such services to the total amount of their fee (and do not carry a corresponding professional liability policy).

Second, I also thought that the following quote from Mr. Robertson, sourced by Andrew Burr in CoStar discussing the Energy Ace guarantee’s genesis at a meeting where local stakeholders reviewed Atlanta’s pending LEED ordinance, was particularly interesting: “[o]ne of the senior architects [who attended the meeting] was saying that these mandates are putting us in a position to offer a guarantee and we can’t do that. And I’m thinking, yes we can.” For design professionals or LEED consultants who do maintain professional liability insurance, providing an explicit guarantee of ultimate certification level or other performance is indeed problematic on that basis. However, the more troubling possibility is that a guarantee in this context might also give a professional liability insurance carrier grounds to deny coverage for any other negligence claim arising out of the project but not specifically tied to the guarantee. Moreover, the concept of a guarantee is essentially representing perfection; anything less is a breach of contract, claims for which are similarly not covered by a professional liability policy (though the insurer may still defend under the policy but reserve its rights). Guarantees also elevate the professional’s standard of care beyond what is imposed by law; again, potentially triggering another another form policy exclusion that could lead the insurer to disclaim coverage. In short, absent confirmation from the carrier that coverage will remain available, it will continue to be dangerous for parties that maintain professional liability insurance to make the types of representations implicated by the Energy Ace guarantee.

Finally, putting aside insurance considerations, the question remains as to the extent a court would uphold a limitation on liability provision for LEED certification services where the economic losses sustained by the plaintiff for the LEED consultant’s negligence were disproportionate to the fee. In New York, at least, courts will review limitation of liability clauses with heightened scrutiny, particularly if they purport to reduce a party’s exposure to damages for its own negligence. If Energy Ace (or any other LEED consultant) breached a guarantee, the project failed to obtain certification, and certain financial incentives were lost or other damages resulted, a court might be inclined to strike the provision. For example, in Shaw Development, the owner’s counterclaims against Southern Builders included two separate counts for breach of contract and negligence for Southern Builders’ “fail[ure] to construct the Project in conformance with a Silver level of certification according to USGBC’s LEED system,” with both claims seeking damages for the project’s failure to qualify for $635,000 in state-level green building tax credits. Although in Shaw Development the receipt of formal LEED certification was not a prerequisite to the owner obtaining the tax credits, the Shaw facts do suggest the kinds of damages that could flow from the breach of a LEED certification guarantee in a jurisdiction where applicable legislation is tied to formal certification. A discussion of green building consequential damages is beyond the scope of this particular article, but it is important to note the possibility that they may arise and be quite significant.

• LEED Certification or Your Money Back (CoStar)

Some interesting legislative developments are taking place right now in Nashville, Tennessee that implicate many of the green building policy issues that we’ve been wrestling with over the past few months here at GRELJ. Since 2007, metropolitan Nashville has required most new and major public projects to larger than 5000 square feet or costing more than $2 million to earn LEED certification. Recently, city councilman Duane Dominy of suburban Antioch introduced legislation that would “allow the Metropolitan Government to pursue an alternative sustainable development design standard to LEED certification based upon pre-determined energy reduction and efficiencies. If Metro chose to pursue an alternative to LEED, the contractor would be required to warrant for a three-year period that the annual energy use for the building will be less than similar buildings” or will earn a minimum score under EPA’s Energy Star program.

The reductions are staggered between 2010 and 2013 and beyond (10 percent through 25 percent, though the benchmark against which those reductions are measured is not set forth in the pending bill); Energy Star ratings would increase from 55 in 2010 to 75 in 2013 and beyond. An independent consultant would determine whether the required energy reduction is met; if not, the contractor (or, interestingly, another entity warranting the energy use) will be responsible for reimbursing the city for the cost of the excess energy use. The amendment is BL2009-503; a vote is slated for later this month. “This would allow an alternative that focuses on the performance of the building, not on the process of how you got to that performance,” Dominy told the Tennessean.

The genesis for the amendment is a 16-classroom addition to Antioch’s middle school, which uses an HVAC and building envelope system that does not qualify for credits under LEED (though it’s unclear exactly why this is the case). The contractor which designed and installed the system- Energy Systems, Inc. of Cookeville, Tennessee- is owned by Bob Southerlan, a former aerospace engineer who is “worried about being knocked out of the Metro construction market.”

I think that this is a critical battle to watch as it may suggest that local governments are coming to view LEED as something less than the mark of building performance; Mr. Dominy’s thoughts about process versus performance are particularly noteworthy in this context. It also echoes some of the remarks in the comments to Pat Murphy’s recent article as presented here at GRELJ (i.e., Mr. Murphy himself noted that “[t]here is a crying need for accurate, verificable and reliable energy rating systems. If LEED doesn’t fill the bill, other options will come forward.”) In addition, if it is true that Southerlan’s system is somehow excluded from the purview of LEED, there may be other, more serious problems with Nashville’s legislation from an antitrust perspective, which we’ll get into in a subsequent article.

• Nashville’s Green Building Code Under Review (Tennessean)

“LEEDing from Behind: The Rise and Fall of Green Building” is a survey piece by Community Solutions executive director Pat Murphy that reviews the significant body of critical commentary on the energy performance of LEED buildings that emerged beginning in 2005 with Randy Udall and Auden Schendler’s seminal “LEED Is Broken – Let’s Fix It” article. Mr. Murphy’s stated purpose in writing his piece was to “show the history of the dialogue about LEED energy performance.” Many of the articles cited will be familiar to you, but this is the first time that I have seen all of them organized chronologically with their key points about LEED-related building performance highlighted. I think that reviewing the piece is extremely instructive in terms of framing both green building policy-related issues, as well as corresponding risk management considerations, from a much broader perspective. The article is the first in a three-part series in which Mr. Murphy will subsequently analyze the LEED premium and alternatives to the LEED rating system from a similar angle.

In this first piece, Mr. Murphy concludes that “[t]here has been concern with the LEED rating system relative to energy and CO2 since its inception. . . . LEED has failed to lead in the important areas that are measurable. Initially, [USGBC] adopted a weak status relative to energy consumption. [It] did not recognize and incorporate accountability and verification, unfortunately wasting years that could have providing important feedback relative to energy use. [It] has also not clearly and honestly communicated that LEED is not an exemplary indication of energy performance.” This final thought, of course, is of particular note in the context of many green building legal issues and why Mr. Murphy’s piece will likely serve as a critical backdrop to associated risk management strategies for stakeholders moving forward.

I encourage you to print off this first article, review it, and share your thoughts below in the comments; we’ll be adding the entire series to our Resources section here at GRELJ once it’s available.

• LEEDing From Behind (Community Solutions)

On July 1, new green building legislation applying to private development took effect in Baltimore. Council Bill 07-0602, which was signed in August of 2007, required that the city establish green building standards for new or substantially renovated commercial and multi-family residential buildings larger than 10,000 square feet. City-owned buildings were required to comply with the new legislation beginning January 1, 2008, city-subsidized buildings by January 1, 2009, and all other buildings this past July 1. While the city is developing its own Baltimore-specific green building standards that should be released by the end of 2009, in the interim, in order to obtain a building permit, all buildings applying must be “equivalent” to LEED Silver.

The legislation does not require formal LEED certification, but owners must submit a checklist for the appropriate LEED rating system as part of the plans submittal for a new building permit. Checklists must set forth specific credits the project will pursue, briefly describe how each credit will be achieved, and (interesting to note from a legal perspective) the parties responsible for each credit. The checklist must also be signed by a LEED AP who is not an employee of the building owner at the time of submittal. Again, although certification is not required, in order to obtain a building occupancy permit from the city, at the time of occupancy permit application, project teams must submit a completed checklist indicating which credits the project met successfully, signed by a non-employee LEED AP. As we’ve discussed frequently here at GRELJ, all of these requirements could raise interesting- and novel- liability issues in the event that a project fails to receive a building permit or certificate of occupancy as originally contemplated. However, the city’s development community is calling for Baltimore’s City Council to reconsider the legislation based on perceived additional green building first costs and asking it to propose an incentive-based structure in its place.

According to Don Fry, President and CEO of the Greater Baltimore Committee, the new legislation “inadvertently contradicts the state’s ’smart growth’ policy by making the counties more economically attractive to new growth and development and by impeding the city’s own efforts to grow and expand its tax base.” Specifically, Mr. Fry pointed to legislation in surrounding Baltimore, Howard, and Carroll counties that offer tax incentives for green projects rather than mandates. “This puts the city, which already has the highest property tax rate in the region, at a further competitive disadvantage,” Fry wrote in a recent op/ed piece. You may recall a similar situation unfolding in King County, Washington and Seattle a couple of years ago.

In addition, developers, many of whom have in recent years have been renovating historical structures in Baltimore’s urban core, are worried that the legislation will make such adaptive reuse projects cost-prohibitive. According to Michael Goodwin of Baltimore-based architects Design Collaborative, Inc., “[t]he reality is that right now, there is still an unknown premium to doing something green. . . . The premium, which is 4 or 8 to 12 percent on a green project, you can justify it if it’s a build and hold type of company, and in the boom we’ve been experiencing in the last four or six years, there haven’t been a lot of those.” From an engineering perspective, developers are also worried about the feasibility of simultaneously preserving historic building walls which contain glazing that will need to be upgraded in order to address LEED’s energy and atmosphere credits.

One other thought from Mr. Fry also rings salient in the context of green building policymaking: “[f]or any new policy such as this to succeed, two key things must happen. First the policy must be well-designed to achieve its intended outcome. Second, it must be well communicated to those impacted by it. Neither appears to be the case with Baltimore city’s new ‘green building’ measure.” Here, Mr. Fry is referring to the fact that the Baltimore-specific Green Building Standards that will serve as the “equivalent” to LEED have yet to be fully developed, and will not be released until the end of this year. Moreover, I would also note that, as drafted, Council Bill 07-0602 fails to include language providing for project teams to appeal a decision of the building department not to award a certificate of occupancy or building permit based on the required LEED checklists, nor does it include any sunset provision that allows the city to review the legislation’s impact and effect after a certain period of time.

It’s been a while since we’ve heard industry voice opposition to LEED-driven legislation, and the Baltimore mandate may suggest- particularly as stimulus dollars continue to flow to state and local governments to craft similar pieces of legislation, and economic conditions improve and boost construction starts- similar concerns could be raised once again in other parts of the country as well.

• Baltimore’s Green Building Standards Well-Intentioned But Flawed (GBC)
• Developers Worry About City’s New Law (TDR)
• Council Bill 07-062
• San Francisco Ordinance is “LEED on Acid” (GRELJ)

Recently, there have been a number of articles suggesting that the risks associated with green roofs have been overblown. Over the past few days, I’ve spent some time looking for more concrete examples of green roof-related risks in practice. I started by looking for case law where a plaintiff alleged an attractive nuisance claim against the owner of a building arising out of a green roof or other rooftop landscaping. Westlaw did not return any results entirely on point, but I did find a number of interesting attractive nuisance decisions which I may present in a subsequent post here at GRELJ.

The much more practical research that I turned up was the following except from an article by Kelly Luckett, the self-proclaimed “Green Roof Guy” who writes a column for greenroofs.com. In a column from the very end of 2008, Mr. Luckett describes how uneducated project teams may unwittingly expose themselves to unanticipated risks stemming from the maintenance requirements of green roof installations. His remarks also reflect a number of key points we’ve made consistently both here at GRELJ and over at gbNYC with respect to the additional risk management strategies demanded by new green building technologies and third-party certification programs.

It is also interesting to note that, for the particular project that he describes below, LEED certification requirements resulted in the green roof’s irrigation system being disconnected after the initial green roof establishment period, which resulted in a roof that did not appear as anticipated by the owner. One last important thought- Mr. Luckett hints that this project was located in Toronto, which, as you’ll recall, recently passed a green roof mandate. I think this is a great example of how legislation is fueling the types of liabilities that we grapple with here at GRELJ, and why, as always, contract language will remain paramount for green building project teams.

I would like to turn the focus now to an issue that continues to plague the green roof industry: the maintenance-free green roof myth.  Some in the media continue to espouse this nonexistent characteristic of green roofs resulting in many of our customers being painfully uneducated about realities of critical green roof maintenance!

Pretty strong language, I know, but the problem doesn’t seem to be getting better.  Let me tell you a story about my company’s largest project.  It’s a government owned project in the city that has become the nation’s green roof capitol; you know the place.  I sat in on a meeting where the general contractor, the architect, and the roofing contractor removed all mention of maintenance guidelines and the Plant Health Alert System from my submittal package!

For those of you outside the construction industry, a submittal package is a gathering of documents and drawings the subcontractor submits to the architect and owner to demonstrate compliance with the specifications for products or portions of the construction project.  When I questioned why they were removing critical pages of information from my submittals, I was told that they eliminated the irrigation system for this 96,000 square foot green roof based on a tour a green roof provider took the owner on during the preceding spring.  I asked if they had told them about the drought that killed green roof plants all over the region the summer before, to which I only received blank stares.  I practically had to threaten to hold my breath until I turned blue, or at least threaten to walk away from the project to get them to issue a change order to put the irrigation system back in.

The green roof was planted in June and July, 2007, and required routine irrigation throughout the establishment period, a task that could not be accomplished over 96,000 square feet using a garden hose.  After alleviating concerns over the irrigation system conflicting with LEED certification requirements by agreeing to disconnect the system after the establishment period, the change order was issued.  However, I insisted that the irrigation system remain in place as insurance should drought conditions require its activation to keep the $250,000 worth of plants alive.

Now fast forward two years. The phone rings; it’s the roofing contractor.  The ownership is requesting a walkthrough to discuss the condition of the green roof.  I asked our horticulturist to accompany me to the autumn meeting on the rooftop. We were greeted by the general contractor, the architect, the roofing contractor, and a clearly unhappy owner’s representative.  The condition of the green roof?  Starving sedums due to absence of the fertilizer that was supposed to have been applied the previous spring, per the maintenance guidelines that the ownership never got to see.

Also, since the plants did not receive the food required to grow and cover the surface of the growth media, the weeds moved in.  The good news –  the weeds will die over the winter and an application of fertilizer next spring will allow the plants to thrive.  The bad news – the project lost the opportunity for the plants to grow in one of the wettest growing seasons on record.  As you can imagine, there was a round of discussion about who was supposed to have provided the maintenance, a discussion that may wind up being continued in a court room.

However, the owner’s representative asked why the irrigation system was still there.  When the general contractor started to speak he was stopped by the owner’s representative who said the question was directed to me.  Before I could answer, another question was posed, “Do you tell your customers that they need to provide irrigation for their green roof?”  To which I replied, “Absolutely yes, every single one of them.”

The owner’s representative, clearly not expecting this answer, became even more agitated.  That’s when I began to appreciate how serious this problem has gotten for the green roof industry.  The owner’s representative placed in charge of one the city’s largest green roofs, in arguably the most green roof educated city in the nation, was utterly surprised by the fact that plants need food and water.  The building code issue evoked an urgent call to arms that brought about action by many and opened lines of communication among perceived adversaries, while lack of proper green roof maintenance poses far more serious threat to the green roof concept yet the green roof industry remains largely quiet.

Admittedly, nobody uses discussing maintenance during the green roof sale as their go-to closing strategy, but it’s a lot healthier for a green roof business in the long run to address this issue upfront rather than standing in the middle of a problem on a green roof facing an unhappy and uneducated customer the following season.  I’ll keep working on the code issues on behalf of the industry, but it’s time the industry start working on this much larger problem.

• The Green Roof Guy (greenroofs.com)
• Green Roof Archive (GRELJ)

It may have been lost a bit in the recent discussion over LEED 2009 decertification, but last month Marsh released a new report that solicited feedback from construction industry executives on the risks that they perceive as arising out of green design and construction across ten risk categories: brand and competitive edge or reputation, project consultants and subcontractors, education, finance, building performance, green building regulations, return on investment, standards of care and legal, supply chain and technology. To obtain the feedback, Marsh convened four forums in in Washington D.C., San Francisco, Chicago, and New York City in late 2008 and early 2009, which were attended by a total of 55 industry executives. While the executive summary to the report, which is titled “Green Building: Assessing the Risks, Feedback from the Construction Industry,” acknowledges that its findings “might be characterized as anecdotal,” I do think that the report is important to consider in the context of the types of risks that stakeholders identified as the most salient.

The top five risk categories that were identified during the forums were finance, standards of care and legal, building performance, project consultants and subcontractors, and green building regulations; each of these fell either in the “likely” or “moderate” risk profiles (finance, standards of care, and performance were the top three, all of which were in the “likely” profile, which translated into “likely to occur at least once every three years.”). The lowest risk category? Brand and competitive edge or reputation (which is interesting given the new product from AIG that provides coverage (in the form of a lump sum payment and counseling services) for loss of reputation if a green building project fails to achieve third-party certification).

Within each of the top five risk categories, Marsh asked participants in each forum both to identify specific risks and challenges and propose some general solutions. Many of those risks will ring familiar to you, particularly in the standard of care/legal category. However, there were several that I thought were worth repeating, particularly because we have not mentioned them explicitly here at GRELJ previously.

First, the danger that “more aggressive” design may lead to an increased risk of errors or omissions in contract documents. I think that this risk ties in with many designers having little experience with green building technologies, yet specifying certain materials or systems without performing sufficient due diligence; we’ve already heard of claims arising out of this scenario. Next, potential claims for attractive nuisance from low-rise green roofs that are easily accessible- particularly on schools- as well as graywater collection ponds. While we’ve noted insurer attitudes about green roofs generally from the perspective of potential arson, the idea of the green roof or collection pond serving as an attractive nuisance is troubling (though a quick Westlaw search did not identify any reported decisions involving a green roof in this context), and this Marsh report is the first place that we’ve seen the concept identified. Finally, the report mentions that executives were concerned about the possibility that contractors may be assuming liability for professional design services, yet not procuring professional liability insurance coverage for those efforts. This scenario may arise where a contractor performs LEED certification or building commissioning services but is not obligated by contract (or statute) to procure such coverage. Note our recent article here at GRELJ discussing aspects of this important issue.

I thought it was also interesting to note that the top categories as identified by participants in each city varied widely. In New York City, for example, the top two risk categories were performance and standard of care/legal; in Washington, D.C. they were financial and education. With respect to New York City, it was also interesting to note that the panel considered regulatory risks as low-risk; given the Mayor’s Greener Greater Buildings Plan and the pending mandate for energy efficiency benchmarking and retrofits for every building in the city, this will likely change. Moreover, I have written extensively, both here at GRELJ and over at gbNYC, about how critical it is for project teams to survey and understand the regulatory requirements that may apply to a particular project. In that respect, I was a bit disappointed to note that the report’s composite risk map ranked regulatory risks as “unlikely.” As we noted in the context of the Shaw Development litigation, the issue in that particular lawsuit was the parameters of an applicable green building tax incentive program. As the Marsh report points out, most insurance policies will exclude claims based on non-compliance with controlling laws, codes, or regulations. Although claims- at least in negligence- for failure to comply with controlling green building regulations may be asserted as negligence per se, the idea that insurance may not be available for allegations that a designer (or a contractor) failed to comply with those regulations should be considered seriously by green building project stakeholders.

Finally, I think it is also important to quickly point out that insurance risks will change drastically under the LEED 2009 system if the specter of decertification proves as sinister in practice as many have suggested.

The report is a quick read and sums up many of the key issues that the green building legal community has been wrestling with over the past two years rather succinctly. A link to the registration page on the Marsh website from which you can download the report is set forth below.

• Green Building: Assessing the Risks, Feedback from the Construction Industry (Marsh- Register)

This article is published here at GRELJ with the permission of Consilience, the blog of the Institute of Green of Green Professionals.

Green building design, construction and operation practices have gained widespread popularity in the healthcare industry in recent years, even considering the current challenging economic climate. This trend is likely to continue because green building practices result in both decreased overall life cycle costs and healthier building occupants. This article will briefly examine the background of building green in the healthcare sector, discuss the unique needs of healthcare facilities in relation to green building practices, and finally examine the choices and challenges faced by healthcare facilities in determining whether to design, construct and/or operate a green building facility, with a specific emphasis on the legal issues therein.

Introduction

According to the United States Environmental Protection Agency (“EPA”), green building is the practice of creating healthier and more resource-efficient models of construction, renovation, operation, maintenance and demolition. The leading vehicles for green building implementation in the healthcare industry are the Green Guide for Healthcare (“GGHC”), a healthcare industry driven system that was created by the American Society for Healthcare Engineering in 2002 and the Leadership in Energy and Environmental Design (“LEED”) rating system administered by the U.S. Green Building Council (USGBC).

Adapting Green Building to the Unique Needs of Healthcare Facilities

There are a number of unique challenges in accomplishing standard green building practices in healthcare facilities, including, among others:

• The need for hospitals and other healthcare facilities to be open with all systems functioning 24/7;
• The high level of dangerous waste produced by healthcare facilities;
• Patients’ increased sensitivities to chemicals and pollutants (along with related air circulation issues);
• The need for healthcare facilities to meet stringent regulatory standards which are not applicable to typical commercial developments; and
• The fact that healthcare facilities have different transportation expectations than some other places of business (e.g. very few patients can be expected to ride bicycles to the hospital).

As a result of these differences, green building standards for the healthcare industry have taken longer to develop than other uses. Until recently, the healthcare industry generally relied on GGHC in designing, constructing and operating a green building. The GGHC is a voluntary self-certifying program that borrows from, but is not formally connected to the LEED rating system. In a manner similar to the LEED system, GGHC gives a certain number of “credits” for each environmentally-friendly and energy-efficient characteristic incorporated into a building. GGHC includes metrics for both construction and operations, which allows it to be used for existing facilities as well as new construction. Because GGHC is a self-certifying system, healthcare entities who wish to use it must vouch for their own compliance with the program.

The USGBC’s LEED system is the most established green building rating system. It is also a third-party certification system, so in contrast to GGHC, it more rigorously scrutinizes a project’s green building features. Some healthcare facilities have elected to invest the extra time, money, and effort required for LEED certification. For example, the Dell Children’s Medical Center (“DCMC”) in Austin, Texas is one of the most dynamic green building healthcare facilities, as evidenced by recently becoming the world’s first LEED Platinum-certified hospital. DCMC has succeeded in accomplishing some amazing results, including, an onsite natural gas power plant providing 100% of the facility’s electricity; recycling 75% of the waste produced during construction; and ensuring that no location in the building is ever more than 32 feet away from a source of sunlight. Various challenges, such as the hospital’s 24/7 operation schedule, required DCMC to overcompensate in other areas in order to reach Platinum certification. The project’s architect admits that the challenges in obtaining certification under a system not designed for healthcare were “enormous,” but apparently worth the cost for the hospital, which predicts that its energy efficiency investments will pay for themselves within six years. There are currently less than 40 other LEED-certified healthcare facilities of any type across the country (including, for example, the
Boulder Community Hospital in Boulder, Colorado, which was the first-ever hospital to be LEED-certified, and the Jewish Hospital Medical Center South in the Louisville, Kentucky area). However, approximately 350 hospitals that are currently under construction are LEED-registered, indicating a desire to achieve LEED certification upon completion. Luckily, for those looking for something more rigorous than the GGHC, but more tailored to healthcare than general LEED certification, the USGBC will soon issue a new LEED for Healthcarerating system. The new certification system will incorporate feedback from pilot projects that used GGHC and will be open to a public comment period before being officially implemented.

Choices and Challenges

Those who are beginning the planning process for green healthcare facilities have three possible paths to choose from at this point: they can wait until LEED for Healthcare is rolled out, use traditional LEED, or use GGHC. All of these choices have positives and negatives: LEED for Healthcare will likely become the new industry standard, but its exact requirements are not yet clear, so healthcare entities might have to delay their projects or could be taking a risk by committing themselves to a program under which they may not be able to obtain certification. Traditional LEED is rigorous and well-recognized, but could impose unnecessary costs and difficulties when applied to the healthcare sector. GGHC has clear metrics that are already tailored to healthcare construction and operations, but does not carry the same weight as LEED since it is a voluntary, self-certifying system.

There are certain actions, no matter what green building rating system decision makers elect to utilize, that healthcare facility decision makers must take in order to limit unforeseen cost, risk and liability. It is important to make green building goals clear and specific early in the planning process. A team of experienced professionals, including architects, construction managers, contractors, lawyers and others, with quantifiable experience on past GGHC or LEED-certified projects is also highly recommended. These experts will be able to properly guide property owners with the unique issues that arise in connection with green building and thus help mitigate further risk.

There are multiple legal risks that green healthcare facility project teams should consider, some of which may include:

• Whether there any potential governmental incentives or other awards that might help supplement the costs of green construction;
• The proper detailing of liability for failure to achieve certain green standards;
• The evolution of labor laws regarding the classification of the construction tasks for new green building work, such as green roofs;
• Lease drafting that requires all tenants at the property satisfy certain green building operational requirements; and
• Avoidance of greenwashing, or misleading the environmental benefits of the facility or services being provided.

There are innumerable other legal issues associated with green building and leasing. As this is an emerging area, it is important to work with professionals in order to avoid unnecessary liabilities when implementing green design features or pursuing any form of third-party certification.

Conclusion

Green building design, construction and operation practices are likely to continue at an exponential growth pattern in the healthcare industry in the years ahead. It is critical for facility owners, managers and stakeholders to fully understand the unique issues that arise for green building in the healthcare arena and work with a team of professionals that can help advise and minimize the risks associated therewith.

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.

• Building Rating System Requirement Raises Concerns (ENR)

As the Waxman-Markey climate change legislation heads to the Senate, I think it’s important to note that, as currently drafted, the bill includes provisions that could impose the types of energy efficiency mandates which NAIOP argued against in its controversial report that was released earlier this year. Section 201 of the American Clean Energy and Security Act (H.R. 2454) would first set baseline standards for all commercial (ASHRAE 90.1-2004) and residential buildings (the 2006 IECC code) and dates for certain percentage reduction targets in energy consumption over those baselines. The Act would require an immediate 30 percent reduction over those baselines once enacted (likely in 2011 or 2012 if the bill proceeds through the Senate and is implemented as drafted), followed closely by a 50 percent reduction by 2014 for residential buildings and 2015 for commercial buildings. The reduction mandate would increase by 5 percent every 3 years through 2029/2030 for a total reduction of 75 percent over the baselines. However, the Department of Energy would have the ability to increase or decrease the reduction targets based on technological feasibility. Section 201 further obligates state and local governments to adopt the codes, or their own codes that meet or exceed the established targets; the federal government itself will enforce the national codes if state and local governments fail to comply.

If you recall the comments from NAIOP President Thomas Bisacquino in the aftermath of the uproar created by the NAIOP study, Waxman-Markey may ultimately create the precise scenario that NAIOP and its constituents feared: 30 to 50 percent reductions over ASHRAE 90.1-2004 in the short-term. As you may remember, Mr. Bisacquino stated that “to mandate these targets right now, of 30 percent efficiency by 2010, is unrealistic for a lot of properties.” (Note that, even if the bill passes, it will likely not impose the first round of reductions until 2011 or 2012). In the study, NAIOP also argued in favor of increasing available incentives at the local, state, and federal levels to create more palatable payback periods for commercial owners and operators. Accordingly, it will be interesting to see if NAIOP pushes DOE to relax the Section 201 requirements if Waxman-Markey makes it through the Senate, or if this particular section of the bill generates any additional commentary from NAIOP or Mr. Bisacquino. Regardless, it’s clear that building performance- and associated liability concerns- will become increasingly critical issues moving forward if every building in the country is required to meet these new national energy efficient building codes.

• Energy and Climate Bill Would Set National Energy Codes (Worldchanging)
• American Clean Energy and Security Act (Section 201 available at Page 214)

Victor Schinnerer’s most recent quarterly report has some interesting commentary on the increased risk that the new LEED Accredited Professional (“LEED AP”) program may be creating for professionals that participate on LEED projects. Specifically, on page 4, the report notes that the program, which now divides LEED APs into three tiers of increasing expertise, from LEED Green Associate, to LEED AP with specialization, and up to LEED AP Fellow, “has significantly changed the value of the program and the risks to [the] program’s participants.” However, although the report acknowledges that “[m]embers of the upgraded LEED AP [Fellow] program now will face a higher standard of care for their services,” it also states that “[c]urrently this increased exposure is a manageable risk. Current claims information does not indicate a need for additional insurance premiums to cover the exposure created by the higher standard of care.”

I think that this latter point is critical- as I wrote previously here at GRELJ, most professional liability insurance policies contain an exclusion for assumptions of liability that are not imposed by law (i.e., because the LEED AP Fellow designation implies that the design professional will perform at a higher level than the prevailing common law standard, the design professional may not be covered for any resulting claims of negligent design services arising out of disputed green design services). It seems to me that if the LEED AP fellow designation implies a higher standard of care than is prevalent in the industry, this type of form exclusion would come into play. Accordingly, I am very curious to see if there is any reaction from insurance industry professionals on this crucial issue.

Nevertheless, although the idea that programs like LEED and green design techniques generally are changing the standard of care for design professionals is nothing new, the Schinnerer report is the first time I have seen a major insurer pointing to the new tiered LEED AP program as playing a role in that uptick. The report also emphasizes the importance of a “mutual understanding on designing for sustainability and certification,” and offers two form contract provisions that should serve as a good jumping off point for design professionals concerned about risk management on green building projects.

The same section of the report discussing the new LEED AP program also identifies the “successful marketing of the LEED program” and state and local governments’ tying of certain project-based incentives to private certification as a potential source of “significant financial repercussions if a project is not granted a desired level of LEED certification” (likely a reference to the Shaw Development litigation). The report rather ominously suggests that “[g]overnmental enticements to support the pursuit of these LEED accredited projects and their environmentally conscious goals represent a level of risk that approaches a project-level warranty.” The danger here, of course, is that any claims alleging a breach of such a warranty would likely be excluded by a design professional’s controlling errors and omissions policy, and the notion that legislation may be creating the equivalent of a warranty is certainly interesting to consider.

Finally, on page 5, the report proposes two form contract provisions for design professionals to consider incorporating into green construction contracts. The first reflects the situation where an owner may want certain green building materials or systems incorporated into the design, and the second where the Owner intends to seek third-party certification. These provisions are merely form language and should be treated as such by design professionals; the report does explicitly note the important of assessing risk on project-by-project basis, as well as retaining counsel to draft provisions that reflect the circumstances of a given project. As the Shaw Development litigation teaches, this is the threshold consideration for a green building project team. Each of the provisions is reprinted below for your reference:

When Owner Wants the Design to Meet Specific Sustainability Criteria

Owner has made Design Firm aware that Owner wants a specific level of sustainability incorporated into this Project and that Design Firm shall use the standards published by [specific design guidelines or certification standard] for this Project. Design Firm shall research the applicable sustainability requirements and design the Project with the intentino of having the Project meet the requirements. Owner recognizes that a project designed to meet a specific sustainability standard might not perform as designed because of the construction, operation, and maintenance of the Project and therefore agrees that it shall bring no claim against Design Firm if the project does not perform as intended, unless the negligence of the Design Firm is the sole cause of the performance deficiency.

Owner also recognizes that during the design of the Project, Design Firm shall use professional judgment in the selection of materials, products, and systems for the Project but that Design Firm cannot and does not warrant the performance of any specified material, product or system. Design Firm will identify for Owner any material, product, or system that, in the Design Firm’s judgment from the Design Firm’s examination of available performance information, might provide Owner with a benefit on this Project but does not have adequate information on its performance in actual construction or operation. Owner acknowledges that it shall look solely to the manufacturer, supplier or installer of materials, products, or systems if their performance does not meet expectations.

When Owner Wants Third-Party Certification of Sustainability

Owner has made Design Firm aware that Owner intends to pursue [specific certification standard] for this Project. Design Firm shall research the applicable certification requirements, design the Project with the intention of having the Project meet the requirements, and document the design of the Project for submission by the Owner to the certifying organization. Owner recognizes that certification is not based on design alone but also on the construction, operation and maintenance of the Project and therefore agrees that it shall bring no claim against Design Firm if the Project is not certified as intended unless the negligence of the Design Firm is the sole cause of the Project not being certified.

Owner also recognizes that during the design of the Project, Design Firm shall use professional judgment in the selection of materials, products and systems for the Project with the goal of meeting certification criteria but that Design Firm cannot and does not warrant the performance of any specified material, product, or system. Design Firm will identify for Owner for any material, product or system that, in the Design Firm’s judgment from the Design Firm’s examination of available performance information, might provide Owner with a benefit on this Project but does not have adequate information on its performance in actual construction or operation. Owner acknowledges that it shall look solely to the manufacturer, supplier or installer of materials, products or systems if their performance does not meet expectations.

The full report is available via the link below for your review.

• Victor O. Schinnerer & Company, Inc. – Guidelines for Improving Practice (No. 3, 2009)
• LEED AP = Higher Standard of Care (Real Life LEED)

There have been a couple of interesting articles recently that suggest the pending intersection of labor law and green building. First, you probably read about a complaint that was recently filed with the NLRB by workers who attempted to unionize while installing a green roof on the Target Center in Minneapolis. In addition to alleging a number of safety violations, the workers claimed that the contractor paid them the prevailing wage for landscapers- not for roofers, who earn $20 more per hour. The $5.3 million installation was a city project, and officials, along with OSHA, investigated the workers’ safety concerns earlier in the spring, finding that “the contractors lived up to the specifications of the contract to ensure safety.” From a prevailing wage rate perspective, is the installation of a green roof more akin to landscaping than roofing? This was the contractor’s argument and, I think, a neat example of how green construction practices continue to introduce legal wrinkles into even the most traditional of practice areas.

However, what got me thinking a bit more seriously about the intersection of green building and labor law was an article discussing the California Labor Federation’s two-day conference held earlier this month in San Francisco, where topics across a number of workshops included green real estate development and the creation of green collar jobs. One of the plenary speakers, Greg LeRoy, whose topic was “the emerging green economy,” noted in his remarks that “there are only two reliabile predictors of job quality, unionization and job quality standards. [W]hile some green employers are open to collaboration, others pay poorly and fight unions.” Mr. LeRoy also pointed out that “there are no labor standards in the U.S. Green Building Council’s LEED system.” Is it possible that future versions of LEED might require some type of labor standard for the trades, perhaps by requring that owners who pursue LEED ratings enter into some sort of project labor agreement with local unions or pay prevailing wage rates? Could USGBC itself integrate certain labor requirements into LEED itself? I am not a labor lawyer, but it seems to me that with increasing emphasis, particularly here in New York City, for example, on educating the trades about green construction practices, these types of labor law issues will become increasingly common in the green building context. Any thoughts?

• Green Roof Installers at Target Center Raise Safety, Wage Issues (Star Tribune)
• California Labor Federation’s Rousing Conference (BeyondChron)