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.
Yesterday, I gave a presentation to a local architecture and interior design firm on current trends in green construction law. I was impressed at how willing the firm’s design professsionals were to listen to my thoughts on the emerging risks associated with green design. In addition to suggesting a number of other legal issues, I selected a handful of claims reported by Maryland-based attorney Frank Musica at the 2007 AIA National Convention in San Antonio to open up a discussion on form contract language – particularly from the AIA documents – and suggested how certain applicable provisions might be amended to reduce the architect’s risk when rendering green design services. The claim that made the biggest splash with my audience yesterday was where Musica reported how an architect failed to perform sufficient due diligence in crafting green building specifications for a particular project and specified what turned out to be a patented solar shading system. After the project was complete, the patent holder approached the owner and demanded a licensing fee for its use of the system. The owner pointed a finger at the architect and sought indemnification under the terms of the parties’ agreement.
I have often used Washington, D.C.’s 2006 Green Building Act as a paradigm for green building legislation that is enacted quickly, fails to define key terms, or fails to address other important legal ramifications that were not contemplated by the drafters. A little over a year ago over at gbNYC, we linked to a letter that Mark McCallum, general counsel for the National Association of Surety Bond Producers, had written to the D.C. City Council expressing his concerns over certain provisions of the Act. I had been wondering where the NASB’s efforts stood because certain provisions of the Act are scheduled to take effect beginning in January. Accordingly, I was interested to recently see an article in the Washington Business Journal noting that the D.C. Department of the Environment has created a working group in cooperation with the Department of Consumer and Regulatory Affairs to address Mr. McCallum’s concerns.
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.
Green roofs may be pretty but they are a plaintiff construction lawyer’s dream come true. Many of them leak or contribute to indoor air quality issues and the growth of mold. Commercial insurers- including Zurich- are taking note, and advising their insureds to make sure that their green roofs are being properly maintained and were installed as required in the first place. Over at gbNYC, we pointed out an article in Property Week magazine that quoted a Zurich consultant noting these concerns. Part of the solution, as always, is to consider a comprehensive risk management program in advance of a green project designed to mitigate non-traditional sources of risk unanticipated by the project team.
A new report from Marsh explores current trends in the insurance markets with respect to available coverages for the risks associated with green building projects.
Some major insurers are becoming increasingly concerned about risks arising out of green roofs drying out and becoming flammable, particularly in connection with scholastic installations.
While it’s true that statistics don’t always tell the whole story, some recent figures from XL and NAHB have important risk management implications for green building industry stakeholders.
Across the country, green building legislation could have significant legal and insurance implications that practitioners are just beginning to explore in earnest.
The standard of care for designers is “changing rapidly,” in large part due to the power of BIM technologies and the proliferation of systems like LEED.