Early last week, the Newark (Delaware) City Council postponed a vote on proposed amendments to Newark’s building codes that would require new construction to earn 25 points under either LEED 2009 for New Construction or LEED 2008 for Homes. In addition to the typical green building regulatory concerns relating to costs and red tape which were raised by local designers, builders, and developers, one architect who participated at the City Council session suggested that – as drafted – the ordinance might violate the copyrights which USGBC holds in its various LEED systems. According to the Newark Post, the city’s staff has contacted USGBC and is investigating the issue, and expects resolution at another council meeting shortly.

The first question I asked myself when I saw this story is whether a state or local government enjoys immunity from suits for copyright infringement, which must be brought in federal court pursuant to 28 U.S.C. § 1498. (Of course, whether USGBC would choose to assert a claim against a government which has allegedly infringed one of its copyrights is a totally different question). Although local governments (towns, cities, counties, etc.) are not immune from suits brought under federal law, the answer is not straightforward with respect to state immunity. (The federal government, on the other hand, has expressly waived its immunity from claims for copyright infringement, though the only available remedy is money damages and not injunctive relief.)

Section 511 of the Copyright Act was adopted by Congress in 1991 in the aftermath of BV Engineering v. University of California at Los Angeles, where UCLA successfully defended a copyright infringement claim on the basis that it enjoyed sovereign immunity under the Eleventh Amendment. 858 F.2d 1394 (9th Cir. 1988). Section 511 states clearly that “[a]ny State . . . shall not be immune, under the Eleventh Amendment of the Constitution of the United States, from suit in Federal court . . . for a violation of any of the exclusive rights of a copyright owner.” 17 U.S.C. § 511. (Just a reminder that the Eleventh Amendment immunizes states from suits for money damages or equitable relief without their consent).

Despite this seemingly clear statutory provision, two Supreme Court cases from the late 1990s suggest that Section 511 might not allow a copyright infringement claim to proceed against a state government. In Florida Prepaid Postsecondary Education Expense Board v. College Savings Bank, 119 S.Ct. 2219 (1999) (patent) and College Savings Bank v. Florida Prepaid Postsecondary Education Expense Board v. College Savings Bank, 119 S.Ct. 2199 (1999) (trademark), the Court rejected patent and trademark infringement claims against the state of Florida that were purportedly authorized by similar provisions in the patent and trademark statutes (35 U.S.C. § 271(h) and 15 U.S.C. § 1125(a)(2), respectively). Justice Stevens suggested in a footnote in the patent decision that Section 511 might nevertheless receive different treatment, but some brief follow up research did not identify any subsequent cases in this line which confronted the Copyright Act. It is also worth noting that the Court’s holding in both cases was grounded in Congress’s inability to enact statutes that effectively circumvent constitutional protections.

Regardless of where the law currently stands on the interplay between sovereign immunity and Section 511 of the Copyright Act, it’s unclear here exactly how Newark’s proposed amendments could violate USGBC’s copyrights because the text of the proposed amendments does not incorporate any language from the rating systems directly. Nevertheless, it’s an interesting and important consideration for state and local governments that do, in fact, pull relevant sections from third-party rating systems directly into proposed legislation, and a good reminder that a broad range of legal issues exist for policymakers to analyze as they consider and ultimately craft legislation.

In terms of the procedures which both the residents and USGBC/GBCI are obligated to follow in addressing the complaint, the GBCI’s Certification Challenge Policy is important to review. It states, in pertinent part, that “GBCI may revoke previously granted LEED certification or take other action regarding LEED certification such as determine to reduce points or category of LEED certification previously granted, if GBCI determines that credits/prerequisites for LEED certification were granted based on erroneous documentation or falsely submitted documentation. Persons concerned with possible inaccurately granted LEED certification are encouraged to contact the GBCI, provided, however, that GBCI reserves the right to institute an investigation and review of such possible errors or inaccuracy or veracity of documentation without third party complaint.” In the full version of its article (which is not available online), the Vilas County News-Review reports a USGBC official as stating that USGBC “gets challenges from time to time on certification designation” but that the Northland Pines challenge is “off the wall.”

Independent from the technical merits of the complaint – which I am curious to review – the article raises many critical legal questions. First, if the allegations are indeed true, will GBCI exercise its ability to decertify the building? If it does, will the party or parties alleged to be responsible face legal action for those failures? Will the complaint – and any written record created pursuant to the requirements of the Certification Challenge Policy – result in precedent that GBCI will follow in any subsequent decertification proceedings? If so, could Northland Pines become the next Shaw Development, cited as the seminal case for LEED decertification and subsequent green building litigation? If other decertification proceedings take place in jurisdictions where legislation is tied to formal LEED certification, how will state and local governments penalize projects that are decertified (if at all)? Finally, to what extent – if any – will USGBC make decertification materials available to the public for peer review? The Northland Pines proceedings may not answer any of these questions, but because it is the first time a decertification proceeding has been reported publicly, we will be keeping a close eye on what transpires in connection with GBCI’s review of the complaint, a copy of which I am attempting to obtain.

• Citizens Challenge Green Certification of Pines School (VCNR)

Back in August, you may recall that Community Solutions executive director Pat Murphy authored the first piece of a three-part survey titled “LEEDing from Behind: The Rise and Fall of Green Building,” which we noted here at GRELJ. Our article pointing you to the piece generated quite a bit of commentary and, now that Mr. Murphy has completed Parts 2 and 3, we thought we’d point you to his new book compiling the survey which is titled “The Green Tragedy: LEED’s Lost Decade.” The book was released while I was away last month and builds on Part 1 by tracing the historical argument promoting minimal green building cost premiums, reviewing the ongoing marketing efforts behind LEED, and concluding that policy makers should demand energy efficiency standards more akin to the German Passive House rather than “cheap quick ‘green’ solutions.”

Interestingly, in the preface, Murphy observes that “[w]e are now faced with a movement to adopt LEED as part of our building codes. An over-marketed standard that is under serious attack for its poor energy performance is now being proposed and accepted by cities as a requirement for our buildings. The idea of accepting as law an inadequate standard that has been developed by the building industry – thereby allowing that industry to usurp the long-established methodology of setting building standards by government policy- is absurd and dangerous.”

In addition to their significant legal implications, these remarks resonate with the conclusions of the recent NIBS report and, in my opinion, portend the types of critiques I believe we will see more forcefully in 2010 if LEED buildings do not perform at a statistically higher level under Version 3.0. Mr. Murphy’s book is available here, and I look forward to continuing the robust discussion that emerged after we noted Part I here at GRELJ in the comments below.

• The Green Tragedy: LEED’s Lost Decade

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)

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)

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)