First, here’s the language from Mr. Carson’s article which appears to have generated the controversy:

“As reported by the Villas County News-Review, a group of Wisconsin residents filed a 125-page complaint with the USGBC challenging the award of the LEED Gold certification to Northland Pines, which is generally credited as the first certified LEED Gold high school. The challenge was based on a little discussed provision in LEED 2009, which reserves the USGBC’s ability to revoke certification a project that fails to meet the program’s ‘Minimum Program Requirements,’ which include requirements for minimum occupancy rates, site boundaries, and information-sharing about the project’s energy and water usage for five years after certification. It was reported that the USGBC sent independent examiners to Wisconsin to conduct on-site tests at Northland Pines to determine the project’s qualifications for LEED, and that a final determination on the school’s eligibility for LEED would be decided in early 2010.”

Note the bold language (my emphasis) which is not correct; the challenge is not based on any provision in LEED 2009′s Minimum Program Requirements. Rather, the Northland Pines High School was certified under LEED Version 2.1; unlike LEED Version 2.0, the former version required projects for the first time to satisfy every prerequisite of each credit category in order to earn certification. (Previously, under Version 2.0, projects could still earn certification even if they did not satisfy the prerequisite for each individual credit category). The appellants’ specific allegations relate to the project design’s alleged failure to satisfy certain Energy & Atmosphere prerequisites, which, if accurate, would be grounds for USGBC/GBCI to revoke the school’s Gold certification. In early February, a USGBC spokesperson responded to Mr. Carson’s article with some very general clarifications in an insert in Engineering News-Record (which stated, among other items, that Mr. Carson’s piece contained “several inaccuracies, causing unnecessary anxiety in the marketplace”).

In the Multifamily Executive article, which dates from last month, USGBC’s Scot Horst further responded to Mr. Carson’s article as follows:

“‘The idea that there is this new thing call decertification is inaccurate,’ says Scot Horst, USGBC’s senior vice president for LEED. ‘The way LEED works is we have a rating system; you send us information about your project, and we certify to that. But let’s say that there was someone out there who lied about the prerequisite information or unintentionally provided inaccurate information. We have always had a policy to go back and say this wasn’t what it was represented to be. That is nothing new.’”  (emphasis added).

As far as decertification is concerned, USGBC and GBCI have clearly reserved the right to revoke certification from projects that fail to satisfy the Minimum Program Requirements. While that may not be any different from what the organization has been doing all along (hence the question mark in the title to this article), the introduction to the LEED 2009 MPR Supplemental Guidance document (Version 1.0, November 2009) clearly states on page 3 that “[i]f it becomes known that a LEED project is or was in violation of an MPR, certification may be revoked, or the certification process may be halted. These situations will be handled on a case by case basis according to GBCI’s challenge policy.”  However, it appears that the confusion over “decertification” stems from a conflation of a LEED project owner’s failure to report performance data with LEED buildings that actually perform poorly. Consider these remarks from Multifamily Executive:

“The fear of decertification likely stems from one of the Minimum Program Requirements (MPRs) of LEED 2009. The MPRs, which apply only to projects seeking certification under LEED 2009, list the basic characteristics that a project must possess to be eligible for certification under the LEED 2009 rating systems. Requirement No. 6 states that “all certified projects must commit to sharing with USGBC and/or GBCI [Green Building Certification Institute] all available actual whole-project energy and water usage data for a period of at least five years.”

But the information collected under MPR6 is for research purposes only and won’t be used to penalize project teams with buildings that do not perform as well as intended, according to the LEED 2009 Supplemental Guidance document published in November 2009.

‘MPR6 specifically is an exercise to improve the future iterations of LEED rather than to strip the certification from prior program participants and all information remains confidential,’ says USGBC communications manager Ashley Katz. ‘LEED certification is granted based on a building’s design and construction at the time certification is sought. LEED certification does not evaluate the ongoing operation or maintenance of a building—there are too many factors that have to do with how the building is operated.’”  (emphasis added).

I think it’s also worth repeating here that there is absolutely no connection between the Northland Pines proceeding and the Minimum Program Requirements that generated the initial buzz about decertification last summer. (However, it is important to note that the Northland Pines certification challenge appears to be taking place under the GBCI Certification Challenge Policy, which did not exist at the time the high school earned LEED Gold. The general lack of transparency about this process is troubling, but I am willing to give USGBC/GBCI the benefit of the doubt until we get a decision on the challenge before passing final judgment.  For example, will the organizations make certification challenge materials available to the public for third party review? If not, what about down the line in jurisdictions where public money is funding LEED projects whose certifications may be challenged? If for no other reason, the Northland Pines proceeding is critical for practitioners to keep an eye on from a procedural, legal perspective, as it appears USGBC and GBCI have not previously confronted such a serious challenge.)

Also, note that the LEED 2009 MPR Supplemental Guidance document states on page 27 with respect to MPR No. 6 that “this MPR does not intend to penalize project teams with buildings that do not perform as well as intended or create insurmountable technical or legal barriers to registering a LEED project.” (emphasis added).

With respect to this latter point, you will recall that MPR No. 6′s requirements to share whole-building performance data “must carry forward if the building or space changes ownership or lessee.” Page 27 of the Supplemental Guidance document (under “Specific Allowed Exceptions”) notes that

“[t]o own a LEED certified project is to participate in the ongoing evolution of the green building movement. In that spirit, and in keeping with the intent of this MPR, the owner’s commitment to provide whole-building energy and usage data is expected to carry forward to the next owner if all or part of a LEED certified project is sold, re-assigned, or otherwise transferred. However, it is recognized that this may not always be possible, and GBCI will respect the realities of situations in which reasonable efforts to maintain the commitment are not successful. In this situation, the initial building owner will no longer be required to provide the data or access to the data.”

So, although the concept of USGBC/GBCI policing their buildings for MPR enforcement will remain an issue, and practitioners will still need to understand and translate MPR requirements into contract documents and leases, some of the initial concerns about LEED 2009 decertification raised both here at GRELJ and elsewhere may turn out to be unwarranted.

Finally, here’s what Horst had to say in Multifamily Executive about Northland Pines:

So what’s the deal with the LEED Gold-certified Northland Pines High School in Wisconsin referenced in the Business Journal as potentially facing decertification? “We are reviewing the project to make sure that what was represented in the [LEED] documentation was accurate,” Horst says. “That is consistent with what a good certification program would do.” He declined to comment on who brought the project to the USGBC’s attention for review.

As far as the current status of the Northland Pines proceeding goes, I am told that the complaint (which was filed in late 2008, according to USGBC as quoted in ENR) is still being evaluated by USGBC, GBCI, and their technical consultants.

As always, we’ll continue to update you on this critical story.

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)

First, in the MPR preamble, the LEED v3 program expressly provides GBCI with the ability to revoke LEED certification “upon gaining knowledge of non-compliance with any applicable MPRs.” It is thus crucial that project teams consider and comply with each MPR, particularly if the project seeks to take advantage of a state- or local-level LEED-driven incentive program that is keyed to the receipt of formal certification. While we have yet to see LEED-certified project have its certification revoked, an interesting question could arise here if a state or local government that had provided a project with an incentive upon certification sough to recoup those incentives if the project was de-certified by GBCI. Even thornier would be the scenario where a project that was required to earn certification under a legislative mandate loses certification. The corresponding liability-related issues would of course flow downstream and impact each member of the project team. MPR 1 actually obligates every LEED-hopeful project to “be designed to comply with all applicable USA federal, state and local environmental laws and regulations in place where the project is located and at the time of design and construction.” Comprehensive legislative surveys and strong contract language emphasizing regulatory compliance will thus be a priority for project teams under the LEED v3 regime.

From a legal perspective, MPR 7 is perhaps the most important to consider: “all certified projects must commit to allow USGBC to access all available actual whole-project energy and water usage data in the future for research purposes.” Moreover, “[t]his commitment must carry forward if the building changes ownership.” For attorneys, it will be an interesting challenge to draft such a covenant that will bind subsequent purchases of real property (or, in the context of LEED-CS and LEED-CI 2009 MPRs, subsequent tenants). For owners and project teams, it will be imperative to recognize that such language must be translated into purchase agreements or leasing documents such that GBCI cannot revoke a project’s LEED certification. More generally, it will be interesting to see if any private owners balk at granting USGBC access to such data, and whether there are any local legal obstacles (in terms of building codes, utility regulations, etc.) that may make it difficult for owners to provide the data as required by LEED v3.

Applicable MPRs are set forth below as printed in the text of the New Construction and Major Renovations rating system. Note that I have also set forth MPR 6 below, which lays out certain timeframes that project teams should remain aware of. I anticipate that there will be much more analysis of these and other provisions in LEED v3 as more project teams become familiar with the terms and scope of the program; please feel free to suggest any additional legal issues that we may have missed in the comments below.

Minimum Program Requirements (“MPRs”) – LEED 2009 – New Construction and Major Renovations

• LEED Version 3 (USGBC)