Green Business Law

Albuquerque, New Mexico's Energy Conservation Codes were signed into law back in January, but their implementation was delayed until July 1 after industry groups voiced concerns during the spring that the Codes were, among other things, preempted by federal law. The Codes purported to raise the standards on the installation of HVAC equipment for all new and retrofit commercial and residential projects to a Seasonal Energy Efficiency Ratio ("SEER") of 15 (for air conditioning) and an annual fuel utilization efficiency ("AFUE") of 90 percent (for heating).

Open-source collaboration has fueled the explosion of web-based software applications for years, but what about its potential for developing next-generation green building materials? Several global businesses, including IBM, Sony, Pitney Bowes and Nokia, recently announced their efforts to share patented environmental practices with the public by pledging their environmental-friendly patents to Eco-Patent Commons, a new website hosted by the World Business Council for Sustainable Development ("WBCSD"). The patents, which must either directly or indirectly protect the environment, will be searchable and freely available to all members of the public. WBCSD hopes that the effort will lead to collaborative innovations in energy efficiency, pollution prevention, increased recycling capacity, and the creation of more sustainable materials.

At a press conference last week that was held at Tishman Speyer’s LEED Silver hopeful 555 Mission Street, San Francisco Mayor Gavin Newsom proposed municipal LEED legislation that, if enacted, would be among the most rigorous in the country applying to private construction. Mayor Newsom has vowed to fast-track his signature on the legislation should the San Francisco Board of Supervisors approve it. It's unclear when the Board will debate and vote on the measure.

The legislation would require commercial and residential projects greater than 25,000 square feet, or taller than 75 feet, to earn a LEED Certified rating from USGBC in 2008. In 2009, the requirement for commercial projects would increase to Silver and, in 2010, Gold. Residential projects would require a Silver rating beginning in 2010.

Beginning in 2009, mid-sized commercial buildings would need to meet three LEED credits. This requirement would increase to four credits in 2010, six in 2011, and seven credits in 2012. The text of the proposed legislation does not appear to be available online, and it’s unclear how the ordinance defines small and mid-sized buildings. Nevertheless, all mid-sized buildings would be required to satisfy a checklist based on LEED during 2008.

Small and mid-sized residential buildings would need to receive 25 points under California-based non-profit BuildItGreen’s GreenPointRated rating system beginning in 2009. This requirement would increase to 50 points in 2010 and 75 points in 2012 (2011 for multi-family residential buildings with five units or more).

San Francisco already requires all public projects to earn a LEED Silver rating. The proposal is based on the work of a Task Force featuring a number of local owners and A/E/C stakeholders that Mayor Newsom assembled earlier this year. The Task Force provided the Mayor with a 47-page report (which at one point was available online, but I've been unable to track it down) back in June.

It's no surprise that this week’s edition of Crain’s reports an increasing number of real estate brokers, marketing professionals, and, yes, lawyers, who are sitting for the U.S. Green Building Council’s exam in pursuit of the LEED Accredited Professional ("LEED-AP") designation. (The article is not yet available online). Depending on the industry, though, professionals are divided as to whether LEED-AP is a true value-addition. For example, John Seitz, a principal at architectural firm HOK, told Crain’s that “[t]he LEED system is for people who put the building together,” while Sally Wilson, CB Richard Ellis’ global director of environmental strategy, claims that her LEED accreditation has helped her garner five brokerage accounts that are seeking green office space in Manhattan, including one for Al Gore’s Generation Investment Management (as we previously reported here at gbNYC).

Of particular interest to me is that Crain’s perceives the legal industry as recognizing the risks associated with the LEED rating system. It refers to one attorney who has “been studying for the accreditation test because the environmental standards could lead to new types of litigation. He foresees disputes over whether new buildings actually meet the environmental codes and who is responsible if they do not.” The article notes that an architect, who was designing a green residence, retained this particular attorney to draft a contract to protect the firm in the event that construction “doesn’t measure up” to the plans.

Again, these types of issues are not surprising (we’ve written about them previously) but it’s significant that as mainstream a publication as Crain’s is recognizing them in such stark terms.