Green Technology

David E. Schumacher, Esquire

500 Virginia Street East, Suite 600 • P.O. Box 3710 • Charleston, West Virginia 25337

(304) 345-4222

Evolution of Green Building Practices or “From the Flintstones to Jefferson to the Jetsons”

EPA Definition of Green Building

• “The practice of creating structures and using practices that are environmentally responsible and resource efficient throughout a building’s life cycle from siting to design, construction, operation, maintenance, renovation and deconstruction.”

• Without incentives the greening of America’s construction practices was carried out due to necessity

Flintstones

• Natural local products – rock quarry and low energy – home and auto

Jefferson

• Site location – near river and transportation, self sustaining with garden, fish pond, and ice from river with ice house below structure. Tall windows and doors used for ventilation with building products from site, wood, stone, limestone, etc.

• Ventilation blinds on porticos and/or porches to keep out sun and allow breeze.

Why Green Buildings?

• In the U.S. alone buildings use nearly 40% of the energy, approaching 75% of the electricity, produce nearly 40% of the CO2 omissions, and suggest that green construction should be public policy and eventually required. On worldwide basis statistics indicate that construction and building maintenance consumed 40% of the world’s energy, 65% of all electricity and 40% of raw materials.

Is it here to stay?

• So long as money is available or when money runs out and fines are imposed, green will stay.

• The American Recovery and Reinvestment Act of 2009 allocated billions of dollars to green building projects including 4.5 billion dollars to convert federal buildings into high performance green buildings.

• The intention and hope is that by investing now in green construction and environmentally friendly laws we will be able to reduce long term costs including those to the environment and natural resources.

• Historically statistics suggest that the value of green buildings and products and services in 2005 was more than 7 billion dollars. It was estimated that the annual value of green building products and services would increase to 12 billion dollars by 2007 with 2 billion square feet of commercial building space having been registered or certified under the rating system known as LEED, aka Leadership and Energy and Environmental Design. The most recent statistics for 2010 suggest that the value of green building products and services has reached more than 60 billion dollars. Obviously, the market for green construction has been created by both the ideal to better the environment and future of natural resources, the atmosphere, energy resources, etc., as well as the result of financial incentives.

Tax Credits

• Dave Lunsford will provide examples

• Las Vegas and D.C.

Green or Sustainable Construction

• Green or Sustainable Construction has momentum not only because of user demand for environmentally conscious structures and thus provide opportunity for builders, architects, etc., but also because “simplified “ or organized “certification” programs.

• U.S. Green Building Council, among others, helped to launch on a large scale the desire to pursue sustainable and high performance buildings.

Leadership and Energy and Environmental Design (LEED) Program

• Classifications of basic certification, silver, gold, platinum.

• USGBC was created more than 20 years ago and there have been significant developments within the LEED rating system since then, including 4 primary changes, with the 4th change presently on hold with implementation delayed from the winter of 2012/2013 and set for the fall of 2013.

Focus of LEEDs

• The LEED rating system for green construction developed ratings based upon the nature of the construction projects including: – New Construction

– Existing buildings

– Commercial interiors

– Core and shell

– Schools

– Retail

– Health Care

– Homes

• Rating system, other than that for homes, under the LEED criteria is broken down into categories:

– Sustainable sites

– Water efficiency

– Energy and atmosphere

– Materials and resources

– Indoor environmental quality

– Innovation and Design process

• Each category can provide points and credits toward certification at different levels. Examples include, for new construction you may obtain credits for “ground field redevelopment or alternative transportation” (sustainable site)

• Water efficient landscaping or innovative waste water technology

• Water efficiency

• On Site Renewable energy sources or green power (energy and atmosphere)

• Reuse of existing building materials or recycled content (materials and resources)

• Enhanced Ventilation (indoor environmental quality)

• Additionally, there are certain pre-requisites that must be met for the project to be LEED certified.

• For example, new construction rating system requires the project to have construction activity pollution prevention, onsite collection of recyclables and environmental tobacco smoke control among significant threshold requirements.

• The credits and points are added up so that a score card is completed and the number of total credits then push the building toward LEED certification with the lowest level being LEED certified.

• Next level is LEED silver, followed by LEED Gold. The highest form of certification is LEED platinum.

• While not universally accepted, the use of LEED certification is on such a wide spread basis worldwide that the vast majority of governments have adopted it in one form or another or portions of it. The system provides flexibility and is customizable, so as to allow buildings to be certified at different levels and potentially to qualify for credits from local governments or federal government depending upon the project, based on points obtained from prior categories described, and the building may not reach all categories or obtain points or credits from all categories.

LEED basic categories

• 1. Site Consideration

• 2. Water conservation

• 3. Energy Savings

• 4. Material Properties

• 5. Indoor Environment

• 6. Innovative Practices (included as a potential credit or point maker)

• Again, all 5 primary categories contain certain prerequisites that must be met before points can be earned.

• For example, certain minimum standards of energy efficiency must be met before any energy saving credits may be earned.

• Secondly, because some environmental issues have been deemed more important or having greater potential impact than others, the LEED point system is weighted in favor of those with greater impact.

It Ain’t Easy Bein’ Green

Impact of Green Building Initiatives on Construction Defects or “It Isn’t Easy Being Green”

• Increased liability exposure from “green construction” arises from at least 2 issues that exist because of the “cutting edge” status of green construction and products used in green construction.

• There really is, as of this time, no universally accepted standard for what qualifies as a green or sustainable building.

• Secondly, there is an increased risk of heightened expectations on the part of the end user or, in particular, the owner of the building with regard to the results.

• Green = Defect Free?

• Sustainable = Less Maintenance?

• Sustainable = Longer Life than Conventional Construction?

• Expectations regarding – energy savings-subjective comfort-enhanced indoor air quality.

• Aggressive marketing (negligent misrepresentation/intentional misrepresentation/deceit/ fraud in inducement/unfair competition claims) of green buildings due to demand, incentives, and now potentially penalties.

• In essence, each separate characteristic of “green “ construction can lead to claims which might not have been available under standard construction (sustainable building sites/water efficiency/energy conversation/atmospheric impact/effective use of materials and resources/indoor environmental quality/creative design?)

Stricter regulations or changing from the carrot to the stick.

• LEED program as voluntary compliance program or guidelines

for creating a better world.

• Stimulate better world by government related initiative such as tax credits or other non mandatory means of encouraging green construction.

• Local (state/county/city) statutes, regulations and ordinances incorporating portions of green construction including LEED program either in part or wholly by simple reference to the change voluntary to regulatory

Prima Facie Negligence?

• Interpreting LEED when incorporated wholly within local statute or regulation.

• LEED vs. Green Building Initiative vs. International Green Construction Code, etc. – evolving regulations and evolving LEED? – moving targets.

• Increased Exposure to Damages Due to Failure to obtain desired tax credit or for LEED classification with penalties available under local statutes?

Impact of LEED

• USA TODAY video

• Green Building Lead Certification

Measuring a Building’s Impact

• Leadership in Energy and Environmental Design (LEED)Third-party program to verify green building projects

Measuring a Building’s Impact

• Different point systems for different construction types

Measuring a Building’s Impact

• Different point thresholds for various LEED certification levels

– For LEED buildings:

• Certifed = 40-49 points

• Silver = 50-59 points

• Gold = 60-79 points

• Platinum = 80+ points

Measuring a Building’s Impact

• To qualify as a LEED building, it is necessary to meet the point requirements and pay the requisite fee.

Measuring a Building’s Impact

• Buildings can earn credits in a variety of areas:

Measuring a Building’s Impact

• Sustainable site credits encourage strategies that minimize the impact on ecosystems and water resources.

Measuring a Building’s Impact

• Water efficiency credits promote smarter use of water, inside and out, to reduce potable water consumption.

Measuring a Building’s Impact

• Energy and atmosphere credits promote better building energy performance through innovative strategies.

Measuring a Building’s Impact

• Materials and resources credits encourage using sustainable building materials and reducing waste.

Measuring a Building’s Impact

• Indoor environmental quality credits promote better indoor air quality and access to daylight and views.

Why Follow LEED Standards?

• Policy considerations

– Reduce environmental footprint

– Conservation

• Tax Considerations

– Governments have supported these policies by providing tax incentives for choosing green construction instead of traditional construction

– Potential penalties at a later point (local regulations)

Sustainability Explained

• http://www.youtube.com/watch?v=B5NiTN0chj0

Green Building Defect and Design Claims Proper Training

• Training (Site Development, Water efficiency, Energy Efficiency, Material Selection, Indoor environmental quality, innovation in Design)

• A lack of Knowledge about the various factors involved in green design can lead to potential legal liability.

• Contractor should hire a BUILDING COMMISSIONING AGENT.

• New technologies and materials enhance potential legal problems.

• Occupant training is also paramount.

Green Building Defect and Design Claims Construction Oversight

• Proper Construction Oversight

• Owner, bid, build

• Owner, selection, teamwork with contractor and primary subcontractors

Green Building Defect and Design Claims

• Guarantee or warranty in place

• “New” Technologies – hemp, bamboo, clay, reeds, cork

• Tax credits – performance; municipal, state, federal

Construction Delays

• Construction Delays: reasonable or unavoidable (Shaw Development v. Southern Builders)

• Mechanics lien

• Time of the essence

New Standard of Care?

• Should a design professional be held to a new standard of care?

• Higher

• Lower

• Comparative Negligence

Measureable Benefits How to measure and document green performance claims for accuracy

• (Site Development, Water efficiency, Energy Efficiency, Material Selection, Indoor environmental quality, innovation in Design)

• Centralized computer reports

• Designer v. Contractors v. Occupants

Potential Problems and Theories of Liability

LEED Certification as a guarantee?

• Voluntary vs. Regulation Imposed

• Terms of Contract

• Warranty/Guarantee/Theories of Liability

– Warranty regarding products used and additional parties exposed to liability (manufacturers, etc.)

– “misrepresentation”

– Aggressive marketing

Structural Problems with green roof

• Products

– Early ‘green’ litigation regarding product

• Chesapeake Bay Foundation, Inc. v. Weyerhaeuser Co.

• One of the very first LEED platinum rated buildings in the country.

• Parallams beams made from wood waste environmentally neutral coatings for sealants-statute of limitation issues

– Roofs variety of functions-shielding building from sun/wind/rain

• Insulation from external temperature fluctuation

• Directing water run off

• Providing working platform for important mechanical equipment

– Due to variety of functions the environmental benefits of roof can be found in nearly every LEED category however LEED emphasizes environmental benefit without an equal concern for durability

– EX: building owner or designer can achieve one LEED point for painting the building roof with reflective coating even though the coating may last less than 5 years. At the same time there may be no credit available for the selection of a high performance but non reflective roofing system that may be designed and warranted for 30 years.

• Design defect

– Architects/Contractors

Learning Curve Issues

• Learning curve issues with new products, technologies and design, particularly roofing materials.

• Historically repair costs support the conclusion that performance of any building envelope system including roofing systems tend to improve as the industry gains experience with that system – incentive by LEED to “favor new technologies” that may not yet offer optimal performance regarding durability.

• Sustainable products based on energy issues under LEEDs criteria may provide minimal durability when compared to currently available high performing roofing systems.

Life Cycle Analysis

• Green product delays

• Not only is there a learning curve with any new product or technology, but often new products and technology are, at least initially, available in limited supply and, due to improved technology or understandings of the limitations of the “new technology” are available during a limited period of time.

• Additionally, new product manufacturers may themselves exist for a limited period of time causing further delays.

• Additional expenses involved in new green materials or green products made from green materials.

Guarantee of Healthy Workplace

• LEEDs rating system has been promoted and contained substantial criteria regarding superior habitability of LEEDs compliant building – essentially claims that if certain criteria are met under LEEDs the building design and construction will be superior to those not followed by LEEDs providing a healthier environment for inhabitants and users much more environmentally sensitive and more importantly energy efficient – note interesting case regarding USGBC itself filed in Oct. 2010. Gifford v. USGBC, et al. – false advertising, consumer protection claim and unfair competition and business practices – showing divergent claims available (turned into standing issues regarding plaintiffs lacking same) Note language from case “The LEED certification process does not assess the actual environmental performance for any structures for which certification is sought or granted, but certifies they were designed in a way that they should result in better performances.”

• Note that purpose of the promotion and advertisement of LEED by USGBC was to encourage the expanded use of this certification system.

• Court adopted the defense set forth by USGBC in its statement that LEED was and is “aimed at improving environmental performance and does not assess actual…performance”

Use of BIM in Green Buildings

• BIM (Building Information Modeling)

• Integrating and Coordinating Architects, contractors, and owners desires in green building requirements though coordination of all aspects of construction.

Damage to Reputation from “Greenwashing” • Greenwashing refers to misleading and inaccurate information

provided by contractor/architects/engineers, etc. in order to create a green image.

• Generally results from overpromising by builders, designers, contractors or suppliers

• Outright misleading of consumers

• Note: recent products offered by carriers including “green reputation coverage”

• Aimed at situation where increased public scrutiny and negative media coverage result from a building failing to meet required industry standards.

Common Defenses in Construction Litigation • Statute of Limitations

• Failure to Mitigate Damages

• Failure to Maintain

• Betterment

• Performance According to Design

• Third Party Liability

Common Defenses in Construction Litigation • Opportunity to Cure Defects within 60/120

Day Window

• Timely Notice to Contractors

• Comparative Negligence (Depends on State)

– Less-Than

– 50-50

– Pure

• Contributory Negligence (Depends on State)

Insurance Law • Insurance Law - coverage / no coverage / endorsements

• Architect

• Contractors

• Owner of Building

• Ex. Target burned down.

Contract Law

• Contract Law - paramount

• Coverage?

• Damages - Are the damages loss of Gold, or cost of bringing that up to the Gold standard?

Tort Law

• higher loss exposure to fire / mold

Warranty Law

• Express/ Implied

• EX. Vegetative roof leak

• Damages – Is the product not working, or did the product damage something? Product claim or did the product cause a diminution of value or cause the owner to evacuate the building.

Negligence and Economic Loss Rule

• Negligence

– Duty of Care

– Breach of Duty

– Causation

– Damages

Negligence and Economic Loss Rule

• Duty of care is a legal obligation imposed on an individual requiring that they adhere to a standard of reasonable care while performing actions that could foreseeably harm others.

• Each person has a duty to do what a reasonably prudent person would do in the same or similar circumstances.

Negligence and Economic Loss Rule

• Breach of Duty occurs when the Probability of loss and the amount of loss outweigh the burden that could have been taken to prevent the loss.

Negligence and Economic Loss Rule

• Causation is a two-part inquiry

– First, a Defendant’s action is a cause in fact if the Plaintiff’s injury would not have occurred but for the Defendant’s action.

– Second, a Defendant’s action is a proximate cause of the Defendant’s injury if it was foreseeable that the Defendant’s breach of his or her duty would cause injury.

Negligence and Economic Loss Rule

• Damages place a monetary value on the harm done. They are compensatory in nature and seek to Plaintiff in the situation he would have been in but for the harm.

Negligence and Economic Loss Rule

• Direct damages are damages that are directly out of the Plaintiff’s pocket.

– Ex: Repair of damaged portion of building

• Consequential damages are damages that are indirectly out of the Plaintiff’s pocket.

– Ex: Lost profits for business closure during renovation.

• Generally, consequential damages are not available unless specifically included in a contract.

Negligence and Economic Loss Rule

• The majority of States allow a party who suffers only economic losses to only pursuant to contract law theories.

• A minority of States allow a party who suffers only economic losses to recover under tort theories.

Negligence and Economic Loss Rule

• Check your local jurisdiction to see if the economic loss rule applies in your State.

Conclusion

• Green Construction is a growing aspect of the construction industry with many potential liabilities to assess during the construction process.