Avoiding the Gray Area When Going Green*

by David A. Blake, LEED® AP and Leah A. Rochwarg, LEED® AP

*This article appeared in the November 2007 issue of The Construction Specifier (vol. 60, no. 11), the official publication of the Construction Specifications Institute. Visit www.constructionspecifier.com.

One of the more significant issues in sustainable design is the rapidly developing and evolving legislation at federal, state, and local levels that is quickly converting ecologically responsible construction from a voluntary decision to a mandatory requirement. Those who originally went green did so because they felt there were benefits on local or global scales. Now, however, states and counties across the nation are changing their laws and regulations to ensure sustainable building design, construction, and even operation are legal requirements.

Green country

According to the U.S. Green Building Council (USGBC), at the time of this writing there were 25 states and 92 cities, towns, and municipalities across the country that either required green construction or provided incentives to those who followed that path.

Green legislation takes many shapes and forms across the United States. Some laws mandate sustainable construction for certain public facilities, others require it for certain private buildings, and still others do both. This is typically accomplished by requiring projects be certified to a certain level of one of the Leadership in Energy and Environmental Design (LEED) rating programs offered by USGBC. Public facilities are typically held to a slightly higher standard. For example, if a public structure needs to meet the Silver level of USGBC’s building rating program, private structures will typically be required to attain the lower Certified level.

The risks for not meeting the required green standard are significant. Many regions—such as Washington, D.C.—require multi-million dollar performance bonds payable to the local authority having jurisdiction (AHJ) if the project does not achieve the required green standard.

Further, in some jurisdictions (e.g. Arlington County, Virginia), green progress reports must be submitted throughout the course of construction. If the project is not on track, permits are withheld, resulting in work stoppages and potentially costly delays.

Some states and local municipalities use carrots instead of sticks by providing incentives for building green, as opposed to penalties for not doing so. These include:

  • tax abatement (e.g. relief from or reduction of property and/or sales tax on construction materials), as is the case in Nevada, Maryland, Georgia’s Chatham County, and Cincinnati, Ohio;
  • expedited permit reviews; and
  • density bonuses (e.g. floor area ratio [FAR] increase of 15 percent for achieving LEED certification—this increases rentable floor space and, in turn, profits), as is the case in Seattle, Washington; Nashville Tennessee; and Portsmouth, New Hampshire.

Although there is not enough space to address the specific green incentives and requirements of each state and local municipality throughout the country, the map accompanying this article [in its original publication] is a helpful tool for spotting whether a project is located in a jurisdiction with ‘green laws’ on the books.

Once the project team is aware of any applicable incentives or requirements, of course, it is encouraged to consult with a knowledgeable professional who can assist in achieving compliance.

Roles and responsibilities

In addition to green laws and regulations, there is a multitude of other legal issues concerning the field of sustainable construction. One such issue involves mixing performance and design specifications. Performance specifications demand the contractor achieve a specific result, whereas design specifications require the contractor follow the documentation like a roadmap.

Sometimes, an owner provides the contractor with design specifications for the entire project, but also includes a statement in the written holding the contractor responsible for the project being LEED-certified by USGBC. Arguably, this is a limited performance specification.

When this occurs, numerous questions arise. What happens if the contractor precisely follows the owner’s design specifications, but USGBC does not certify the project because of certain design issues? Is the contractor off the hook because the design was followed, or did the contract statement actually require more to be done to ensure certification? Although the courts have not addressed this issue, case law in other contexts suggests the contractor may not be liable in this situation.

For example, the authors know of a contractor who followed the owner’s design specifications for the construction of a roof. However, the contract documents also stated the roof needed to achieve a certain insulation rating. When the roof failed to meet this rating, the owner sued the contractor. The court held the contractor not liable because the owner’s detailed design specifications that described precisely how the roof was to be constructed had been followed.

Another legal issue concerns the many different types of damages an owner may incur if the designers and contractors fail to deliver a green building as promised. Studies demonstrate green buildings have lower utility costs, and foster higher worker productivity. Therefore, if an owner does not receive a sustainably designed facility, it may seek to recover the ‘extra’ utility and labor costs. Further, since green buildings tend to have higher market value than traditional structures, owners may seek to recover this difference. Similarly, certain owners might assert they lost potential tenants or hotel guests because they did not receive the promised green office building or hotel. These are very real losses, despite being difficult to quantify in monetary terms and to prove damages.

The rapid acceleration of sustainable construction may be changing the legal standard of care for architects. Generally, one is liable for negligence if he or she does not exercise the degree of care and skill a reasonably prudent design professional would have employed under the same circumstances. As sustainable design becomes more prevalent, it is likely design professionals will be expected to have increasingly deeper knowledge about the subject. Lack of familiarity with related concepts could amount to negligence.

There are several ways to mitigate the legal risks associated with green construction. The first step should always be determining whether there are green laws in the jurisdiction in which the project is located. The project team must familiarize itself with any such legislation so obligations can be met. While many of these laws apply directly to owners, the requirements often also flow down to the design professionals and general contractors—all members of the project team are affected.

There are many ways contracts can be adjusted to help mitigate and/or manage the risks of a green project. The American Institute of Architects (AIA) B214-2004, Standard Form of Architect’s Services: LEED Certification, can be used as a starting point for professional service contracts to include and define required design and project administration services necessary for a green project. While the document is a good start, it should—like all contracts—be specifically tailored to one’s particular situation. Further, there are a host of green issues applicable to contractors that must be addressed in their respective construction contracts.

Depending on the jurisdiction, the laws and applicable requirements governing green construction can be as complex or straightforward as the building project itself. When potentially millions of dollars are at stake by way of incentives or penalties for not meeting required standards of green construction, savvy parties to the green building movement need qualified counsel to navigate the murky legal waters of this developing field.