A recent article in a Canadian construction industry publication argues that Canada’s green building experience has – to date – avoided legal repercussions arising out of green construction projects.
In light of two recent articles discussing the interplay of LEED 2009’s Minimum Program Requirements, decertification, and the ongoing Northland Pines High School certification challenge proceeding, it’s worth revisiting these topics in greater detail to clarify some misconceptions that have persisted over the past few months, particularly after remarks in response to those articles from USGBC.
Green construction practices may increase the risk for site safety hazards that can lead to personal injury claims. Green building project teams should guide themselves accordingly, particularly in New York and other jurisdictions where controlling statutory law makes liability for those hazards absolute under certain circumstances.
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.
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.
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 new LEED AP program, which 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.
Green roofs have been a part of building for over a thousand years. The current green building movement has, however, had the greatest impact on the growth of the green roofing industry. A green roof is commonly defined as a roof that consists of vegetation and soil, or a growing medium, planted over a waterproofing membrane. There are two basic types of green roofs: (i) an extensive roof, which has a few inches of soil cover; and (ii) an intensive roof that has two feet or more of soil for a variety of grass, trees, bushes and shrubs. Green roofs are used in a multitude of buildings, including industrial facilities, commercial offices, retail properties and residences. The benefits of a green roof include reduced storm-water runoff, absorption of air pollution, reduced heat island effect, protection of underlying roof material from sunlight, reduced noise, and insulation from extreme temperatures. A green roof can thus be a critical design element for a green building. As more properties across the country are attempting to obtain LEED certification, it is worth noting that a green roof can help a property obtain over a dozen LEED credits, including credits for reduced site disturbance, landscape design that reduces urban heat islands, storm water management, water efficient landscaping, innovative wastewater technologies and innovation in design. The increase in green roofs and the green building movement is also resulting in an increase in liability resulting from errors in the design, installation or maintenance of green roofs. As a result, owners, design professionals and contractors should carefully consider ways to mitigate the potential risks involved with building a green roof.
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.
In early March, USGBC released a white paper titled “The Legal Risk in Building Green: New Wine in Old Bottles?” The eight-page paper, which was presented as a panel discussion between four attorneys, concluded that “[p]erhaps surprisingly, in light of the increased attention in seminars and workshops . . . much of the discussion among the attorneys [in the paper] suggests that many of the legal theories advanced in those venues to suggest novel liability associated with building green are, instead, simply new wine in old bottles.” While the paper does not appear on the USGBC’s web site, it was circulated by individual chapters; I accessed a copy through our New York chapter’s weekly email blast and have included a link to download the paper from the USGBC-NY homepage below. I applaud USGBC for taking a critical step towards acknowledging the liability implications of green real estate development and construction, but do think it is important for attorneys practicing in this space to digest the paper’s conclusions. Although the paper does identify and discuss many important legal issues, I think that it ultimately falls short of elevating the analysis of such issues to the level necessary for legislators and stakeholders to make completely informed policy- and project-related decisions. Specifically, by suggesting that “[c]onjecture, anecdote, and even rumor swirl around recent presentations, workshops and discussions circling the question of what legal claims may be based on the design, development, and construction of sustainable buildings,” the paper seems to be an effort to sweep many of the thornier legal issues that may indeed ferment into “new wine” under the rug.
Ed Mazria said that it was “meant to confuse the public and stall meaningful legislation, insuring that America remains dependent on foreign oil, natural gas and dirty conventional coal.” Lloyd Alter of Treehugger called it “one of the dumbest studies that has crossed our screen in a while.” Danielle Sacks at Fast Company wants to “make sure studies like these don’t make it past their press release.” So what, if anything, are we to make of ConSol’s study, prepared for NAIOP, which concluded that the best possible scenario for energy efficiency improvements to a hypothetical 4-story, 95,000-square-foot office building is 23 percent over the ASHRAE 90.1-2004 Energy Standard? While we continue to wait for more meaningful data about the performance of green buildings, I think the study suggests the danger- for both legislators and stakeholders- of relying on energy modeling of any kind as the basis for policymaking or who agree to assist a green building project in achieving certain energy reductions by the terms of their construction contracts.
Much like the rest of the green building industry, green leases contain a collection of legal risks that landlords and tenants have not previously had to consider. This article considers a small sample of such problems, specifically in relation to certification requirements, cost issues, insurance provisions and green product issues. Many companies and government agencies require their space to satisfy an applicable LEED for Commercial Interiors certification level. These entities look for a lease to specify that the space will meet such standards. Landlords are not generally in the position to guarantee such certification level. The project architect, general contractor, subcontractor and USGBC all have a much greater impact on whether the space meets the required certification level. The landlord will thus need to make sure it is working with contractors and architects that understand the issues and are able to work towards achieving the necessary certification levels. It will need to protect itself in its applicable project contracts. The landlord and tenant must work together in attempting to craft a lease that adequately protects each of their respective interests and avoids liability outside of either of their control.
Much of the discussion with respect to the liability issues surrounding sustainable building has focused on the commercial sector, so I was interested to see my friend Brian Anderson, a real estate partner in the Madison, Wisconsin office of Whyte Hirschboeck Dudek S.C, quoted in a brief article suggesting risk management best practices for home builders in a recent article posted by Professional Builder. The article suggests that LEED for Homes and NAHB’s National Green Building Program may soon open the doors for insurance claims and litigation arising out of green projects that do not perform as promised. In the article, Mr. Anderson actually describes a matter his office handled where a builder did not obtain the anticipated level of certification for a residential project. “We were struggling to determine the value of the certification when the claim settled,” he told PB. At least in the commercial context, a jumping off point for plaintiffs who assert these types of claims could be the studies- many of which are promulgated by the USGBC and its constituents- that tout the higher leasing and purchasing figures for LEED-certified buildings.
I am consistently amazed at the disparities in how green building projects are promoted. Some projects make it very clear that they are simply “aiming for” or “registered” in pursuit of LEED certification, while others brand themselves as “green” without any real discussion with respect to what (if any) those sustainable design features might be. You can see a good example of how these inconsistencies may wind up exposing green construction project stakeholders to unanticipated liability in this photo that I took over the summer. It shows sidewalk bridging at one of Manhattan’s highest profile green construction projects. The building in question is seeking a LEED Gold rating from USGBC (it is pre-certified under LEED for Core and Shell, but by no means is it “LEED Gold Certified” yet as claimed by the bridging). What happens if the ultimate rating that is conferred by USGBC is not Gold but Silver?
I think it’s interesting to compare the treatment that green building risk management issues received at Greenbuild as compared to West Coast Green. We pointed out over at gbNYC earlier this fall that the latter included a panel discussion titled “Packing a Parachute: Practices that Minimize Risk and Prompt Best Use of Green Features,” while the legal issues associated with building green received very little attention at Greenbuild. As we have noted extensively at gbNYC, the West Coast Green panel similarly stressed that there is no such thing as a form green construction contract or “magic” green provision that can satisfactorily account for the risks associated with green construction. It’s important for stakeholders – or other organizations staging similar conferences – to recognize that attorneys in this space are attempting to assist the industry in mitigating emerging risks up front, in the transactional context, rather than through litigation.
Both Marsh- in its recent report reviewing the current state of the insurance marketplace with respect to green construction issues – and representatives of the Fireman’s Fund at Greenbuild have indicated that we will likely see a new insurance product on the market sometime in 2009 for professionals participating on green building projects. The product would likely be crafted as an endorsement to an existing professional liability policy and cover design professionals or other consultants against the possibility that, by signing credit submittal templates or other documentation in connection with a green rating system, they will trigger the standard exclusion to their professional liability policy that excludes coverage for claims arising out of an express warranty or guarantee. This is a critical issue for professionals and suggests the type of heightened vigilance with which green construction contracts must be vetted.
