October 01, 2012

The Law of Green Buildings

JoAnne L. Dunec

J. Cullen Howe and Michael B. Gerrard, eds., The Law of Green Buildings: Regulatory and Legal Issues in Design, Construction, Operations, and Financing, ABA Section of Environment, Energy, and Resources, 2010.

[T]he practice of creating structures and using processes that are environmentally responsible and resource-efficient throughout a building’s life-cycle from siting to design, construction, operation, maintenance, renovation and deconstruction. This practice expands and complements the classical building design concerns of economy, utility, durability, and comfort. Green building is also known as a sustainable or “high performance” building.

—U.S. Environmental Protection Agency (EPA)

Although green building is seemingly the purview of architects, engineers, contractors, and suppliers, as illuminated in The Law of Green Buildings, there are emerging legal issues involving green building. State and local governments are increasingly adopting a variety of types of “green” legislation. Various green building rating systems are being developed and used. “Green” leases are more prevalent. “Green” is increasingly perceived as desirable in the marketplace. The Law of Green Buildings explores each of these subject areas and related legal issues.

Part One provides an overview, followed by a chapter that describes green building rating systems and green leases. According to the authors, “[g]reen building standards seek to establish and implement measurable and attainable benchmarks to evaluate development impacts on the environment.” The most widely used green rating system is the U.S. Green Building Council’s Leadership in Energy and Environmental Design (LEED). Based on the number of points received, a project may be certified as LEED gold, silver, or platinum. Other rating systems, such as the Building Research Establishment’s Environmental Assessment Method, the Energy Star rating system, and the Green Guide for Healthcare, are also described.

With respect to leasing, green leases are categorized as leases of space within green buildings, which generally address “environmentally friendly” products to be used, water and energy conservation, the use of alternative energy such as solar or wind, indoor air quality, and dispute resolution. The chapter authors note,

One of the most common barriers to implementing energy-efficient building practices and technology is the split incentive, where the landlord pays for capital improvements but the tenants, who pay the utility bills, get the benefits of the energy savings. Green leases attempt to address this issue in the lease. For example, one approach the [Building Owner’s and Manager’s Association (BOMA)] Lease Guide recommends to address the conflict between tenants and landlords is to define operating costs carefully so that landlords and tenants agree to share the cost of energy efficiency improvements.

Other green leasing issues are addressed as well.

Governmental initiatives and green building laws are examined in Part Two. Federal legislation and initiatives to promote green building are addressed in Chapter 3. Not surprisingly, state and local initiatives vary. According to the Chapter 4 authors, “[s]tate-level initiatives include mandates, recommendations, financial incentives, temporary programs, or technology-specific laws or regulations.” Washington was one of the first states to enact green building legislation that applied to “major facility projects” of public entities or state-funding projects. California was the first state to adopt a green building code that applied not only to public but also to private buildings. Municipalities have offered an expedited review process and other incentives for green building. According to the authors, there are a number of causes of action for challenging state or local level green building legislation, including constitutional bases, preemption, and antitrust.

Parts Three and Four of The Law of Green Buildings address financing and alternative energy options and practical issues in building green. Chapters 5 through 7 examine green building financing, including federal, state, and local financing options; alternative sources of onsite and offsite electric and thermal energy; and energy reduction through contracts between building owners and utilities.

Chapters 8 through 11 cover site selection and land use planning; green materials and construction; water use and management in buildings, including innovative municipal regulations concerning building water use; and the application of green construction principles to “renovation and reconstruction of older buildings, otherwise known as retrofitting [which] should be considered before more advanced green technologies such as on-site power generation, because generating energy to cover the amount a building is wasting is not cost effective.” Among other things, Chapter 11 examines “conflicts between historic preservation laws and retrofitting requirements.”

The final part, Part Five, addresses emerging legal issues in marketing green buildings (Chapter 12) and in green construction (Chapter 14). Environmental review and climate change adaptation are addressed in Chapter 13. With respect to marketing, there are potential legal consequences in making a false or misleading environmental claim. According to the Chapter 12 authors,

Many real estate developers believe that going green not only is trending but can be good for business. . . . Thus, many developers are seeking to capitalize on this trend by marketing their building as environmentally friendly. Some developers are seeking to certify their buildings as meeting certain environmental standards by organizations such as the U.S. Green Building Council (USGBC) through its [LEED] green building rating system or the [EPA’s] Energy Star program, and, to a lesser extent, the Green Building Initiative and the National Association of Home Builders (NAHB) Model Green Home Program. Other developers are attempting to reduce their buildings’ carbon footprints or are seeking to make their buildings carbon-neutral through the use of one or more carbon dioxide offset mechanisms. Finally, some developers are simply relying on general claims that their building is green or environmentally friendly.

The authors examine the potential legal consequences of certain building-related marketing claims, including claims of general environmental benefit, building certification claims, energy savings claims, and carbon offset and carbon-neutral claims. With respect to legal issues pertaining to construction, the final chapter is broken into three parts,

The first part of the chapter addresses the goals of green building regulations and the types of new regulations that have been enacted. The second part explores the challenges of building green under new green building mandates, including a summary of significant litigation, or “LEEDigation.” The third part explores techniques to identify and manage the legal risks posed by building green.

Among the legal issues examined are the necessity for drafting contracts that “clearly and accurately describe the green building responsibilities assigned to each party” (owner, architect, and contractor), the unforeseen consequences of overly broad financial incentives, and unenforceable enforcement mechanisms.

JoAnne L. Dunec