Transcript Slide 1

Part I
Stanley N. Alpert
Constantine | Cannon LLP
335 Madison Avenue
New York, NY 10017
212-350-2730
[email protected]
http://www.constantinecannon.com/attorneys/salpert.php
Copenhagen





All industrialized nations, save for Turkey, have officially announced plans to reduce
greenhouse gas emissions. The European Union leads the pack with a proposal to
shrink emissions by 20 percent from 1990 levels.
Ambitious targets for financing for developing countries. Developed countries
committed to provide support of up to $30 billion from 2010 to 2012 for developing
countries’ adaptation and mitigation strategies.
Developed countries also committed to a long-term goal of jointly mobilizing $100
billion annually by 2020.
By January 31 however, industrialized countries had to formally submit commitments
for quantifiable economy-wide emissions targets for 2020.
Uncertainty in the United States was pivotal to the U.N. negotiations. The Democratproposed climate bill pending in the United States Senate remains far from securing
the 60 votes it needs.
Result of January 31 Deadline


The deadline came and went, and the vast majority of nations (roughly 130) didn't submit anything.
-- United States: 17 percent below 2005 levels by 2020 (i.e., 4 percent below 1990 levels—but pending legislation)
-- European Union: at least 20 percent below 1990 levels by 2020 (they were promising to go to 30 if other countries did more)
-- Canada: 17 percent below 2005 levels by 2020 (i.e. a 2.5 percent rise from 1990 levels)
-- Japan: 25 percent below 1990 levels by 2020
-- Brazil: 39 percent below 1990 levels by 2020 (mostly by preventing deforestation)
-- China: reduce carbon intensity by at least 40 percent below 2005 levels by 2020
-- India: reduce carbon intensity by at least 20 percent below 2005 levels by 2020
-- New Zealand: at least 10 percent below 1990 levels by 2020
-- Australia: at least 3 percent below 1990 levels and as much as 23 percent below them (depending on what other countries do)
-- Maldives: carbon-neutral by 2020






December 2010 -- Cancun
Kept the process alive
Non-binding target of limiting a rise in average world temperatures to below 2
degrees Celsius (3.6 F) over pre-industrial times. (Existing policies could lead to
close to double that increase.)
Green Climate Fund would give $100 billion a year in aid to poor nations by
2020. Not clear how the money will be raised.
No firm deadlines for a legally binding accord to succeed Kyoto. The next major
global climate talks will be in South Africa at the end of 2011.
Japan, Canada and Russia said they would not extend Kyoto, demanding instead
that all major emitters including the United States, China and India join in a new
global deal.
Developing nations insist that rich Kyoto countries must extend the agreement
beyond 2012 before the poor agree to measures to curb their emissions
Not Enough
 Ecofys, a consulting firm, estimates that if all
those countries actually met their targets, global
temperatures would be on course to rise 3.5°C
(6.3°F) above pre-industrial levels. The agreedupon goal in Copenhagen and Cancun was 2°C.
Looming Federal Carbon Regulation
 Massachusetts v. EPA, 549 U.S. 497 (2007), EPA has a statutory duty to
determine whether GHGs should be regulated under the Clean Air Act.
 Principles affrimed in American Electric Power in 2011
 April 17, 2009: EPA issues a draft regulation proposing to find that
GHGs endanger public health and welfare. “The case for finding that
greenhouse gases in the atmosphere endanger public health and welfare
is compelling and, indeed, overwhelming.”
 EPA’s proposed rule finds that GHG emissions present an endangerment
that is worthy of regulatory attention under the Clean Air Act.
 We will have a federal carbon regulation scheme either from Congress or
the EPA.
Proposed Federal Cap and Trade




On June 26, 2009, the House passed the Waxman-Markey bill by vote of 219212, comprehensive climate legislation.
The bill’s cap-and-trade program would cover an estimated 7,400 power plants,
oil companies, and other large industrial facilities that emit more than 25,000
tons of carbon dioxide per year – collectively responsible for approximately 85%
of our nation’s greenhouse gas emissions.
Under cap-and-trade, the EPA would establish a nationwide cap on GHGs.
Companies covered under the bill would need to have a permit for each ton of
GHGs they release into the atmosphere that exceeds the cap.
The EPA would initially allocate the allowances through a combination of sales to
the highest bidder and free distribution. The recipients would be permitted to
sell, trade with other companies or otherwise use the allowances. By the terms
of the bill, the government would reduce the number of available allowances
issued each year to ensure aggregate GHG emissions reduction to 3 percent
below 2005 levels in 2012, 17 percent below 2005 levels by 2020 and 83 percent
below 2005 levels in 2050.
EPA’s GHG Reporting Rule

In April, EPA published proposed regulations that may mandate GHG reporting for
thousands of facilities and source categories, for suppliers of certain fuels and gases, and
for manufacturers of mobile sources and engines. 74 FR 16488 (April 10, 2009).

The Rule requires reporting from a number of sources, including:
• Electricity generating facilities that are subject to the Acid Rain Program or that
contain generating units that collectively emit 25,000 metric tons or more of GHGs
per year;
• Aluminum production facilities;
• Cement production facilities;
• Electronics manufacturing facilities that exceed certain annual production capacities;
• Petroleum refineries;
• Petrochemical facilities;
• Certain underground coal mines; and
• Certain municipal landfills.
EPA’s GHG Reporting Rule (cont’d)



The Rule also requires reporting by facilities that emit 25,000 metric tons or
more of GHGs per year. Sources with boilers that have an aggregate maximum
rated heat input capacity of 30 million Btus per hour or greater also could be
subject to reporting. In addition, reporting is be required for suppliers of coal,
coal-based liquid fuels, natural gas, and certain other gases, and also for
manufacturers of certain mobile sources and engines.
Covered facilities are required to begin collecting data on January 1, 2010 and
to report the data to the EPA starting March 31, 2011.
Data reported under the Rule will likely be utilized to design and implement
federal GHG regulations.
EPA GHG Tailoring Rule
Applies Clean Air Act to GHGs at Major Facilities
On May 13, 2010, EPA issued the final GHG Tailoring Rule. This rule effectively
raised the thresholds for GHG emissions that define when permits under the PSD
and Title V Operating Permit programs are required for new and existing industrial
facilities. The GHG Tailoring Rule provides time for large industrial facilities and
State governments to implement permitting requirements for GHGs.
Starting in January 2011, large industrial facilities that must already obtain Clean Air
Act permits for non-GHGs must also include GHG requirements in these permits if
they are:
 newly constructed and have the potential to emit 75,000 tons per year of
carbon dioxide equivalent (CO2e) or more or
 if they make changes at the facility that increase GHG emissions by that amount.
EPA GHG Tailoring Rule
(cont’d)
Starting in July 2011, in addition to facilities described above:



all new facilities emitting GHGs in excess of 100,000 tons of per year CO2e and
facilities making changes that would increase GHG emissions by at least 75,000
tpy CO2e, and that also exceed 100/250 tons per year of GHGs on a mass basis,
will be required to obtain permits that address GHG emissions.
Operating permits will be needed by all sources that emit at least 100,000 tons
of GHG per year on a CO2e basis beginning in July 2011.
Sources emitting less than 50,000 tons of GHGs per year on a CO2e basis will
not be required to obtain permits for GHGs before 2016.
EPA GHG Tailoring Rule
(cont’d)
On December 23, 2010, the U.S. Environmental Protection Agency (EPA) issued a
series of rules that put the necessary regulatory framework in place to ensure that
Industrial facilities can get Clean Air Act permits covering their greenhouse gas
(GHG) emissions when needed and 2) facilities emitting GHGs at levels below those
established in the Tailoring Rule do not need to obtain federal Clean Air Act permits.
EPA has been working with state local agencies since that time to make sure that:
o All permitting agencies have the authority to permit GHGs or are on the path to
have such authority, with EPA serving as the permitting authority in the interim,
and
o Only those sources identified in the tailoring rule—the largest emitters of GHGs -are required to obtain permits.
Securities Law Impacts
 A new United Nations report suggests advisors to institutional investors
may end up in court if they ignore environmental and social concerns.

In January, the Securities and Exchange Commission encouraged public companies to tell
their investors about the financial and physical risks they face from climate change.

The SEC's interpretative guidance gives specific examples of areas where companies might
have to follow the disclosure rules, including:
 Existing laws and regulations on climate change
 Pending legislation and regulations on climate change
 International accords and treaties on climate change
 Actual or potential indirect consequences of regulations and business trends related to
climate change, such as a decreased demand for goods that result in significant
greenhouse gas emissions
 Actual and potential material impacts of environmental matters on companies
How much risk are we facing?
Groups See Added Risks From Change in Climate
 April 24, 2009 New York Times
“The effects of climate change, especially rising seas, threaten
trillions of dollars’ worth of coastal property, and flood-hazard
maps, zoning laws, building codes and insurance rates in the
United States do not accurately reflect the risk, an unusual
coalition of groups reported Thursday.”
Potential Greater Consequences Not Typically Measured

160 Syrian villages deserted 'due to climate change'

DAMASCUS (AFP) — Some 160 villages in northern Syria were deserted by their residents in
2007 and 2008 because of climate change, according to a study released on Tuesday.
The report drawn up by the International Institute for Sustainable Development (IISD) warns
of potential armed conflict for control of water resources in the Middle East.
"The 2007/8 drought caused significant hardship in rural areas of Syria. In the northeast of
the country, a reported 160 villages have been entirely abandoned and the inhabitants have
had to move to urban areas," it said.
In Syria and also in Jordan, Israel and the occupied Palestinian territories, "climate change
threatens to reduce the availability of scarce water resources, increase food insecurity, hinder
economic growth and lead to large-scale population movements," the report said.
The study, financed by Denmark, predicts a hotter, drier and less predictable climate in the
Middle East, "already considered the world's most water-scarce and where, in many places,
demand for water already outstrips supply."




By Talal El-Atrache
–
June 2, 2009
Corporations See Benefits of Early
Regulation
Negative Impact on the U.S. Economy?




But the opponents of action claim that limiting emissions would have devastating effects on
the U.S. economy. So it’s important to understand that just as denials that climate change
is happening are junk science, predictions of economic disaster if we try to do anything
about climate change are junk economics.
Even with stringent limits, says the M.I.T. group, Americans would consume only 2 percent
less in 2050 than they would have in the absence of emission limits. That would still leave
room for a large rise in the standard of living, shaving only one-twentieth of a percentage
point off the average annual growth rate.
So we can afford a strong climate change policy. And committing ourselves to such a policy
might actually help us in our current economic predicament.
So can we afford to save the planet? Yes, we can. And now would be a very good time to
get started.

Paul Krugman, May 1, 2009 Mr. Krugman received his B.A. from Yale University in 1974 and his Ph.D. from MIT in 1977.
He has taught at Yale, MIT and Stanford. At MIT he became the Ford International Professor of Economics.
The meter is running.
New Orleans Business News
May 3, 2009
Entergy Corp. is pushing emissions cap bill
by Rebecca Mowbray, The Times-Picayune Sunday May 03, 2009
Entergy CEO Wayne Leonard says climate change wakes him up at night

Utilities are sweating about the possibility that Congress may cap carbon-dioxide emissions, and many heavy industries in Louisiana are convinced
that a climate-change bill will spell financial ruin.

But Entergy Corp., the New Orleans-based Fortune 500 electric company, is singularly focused on getting Congress to enact the most
aggressive carbon-dioxide-emissions cap it can.
"Our point of view on this is different from the industry's," Wayne Leonard, Entergy's chairman and chief executive, said last week. "We need to
put a price signal on carbon dioxide."

While electricity prices are forecast to rise dramatically if carbon emissions are capped, Leonard said increases will be modest for Entergy
customers. With 80 percent of its electricity being generated from nuclear and natural gas, Entergy's carbon-dioxide emissions are much lower than
the utility industry as a whole, meaning there will not be as many costs to pass on to ratepayers. By contrast, utilities nationwide generate about
half their power from coal, which is much dirtier.

Right now, proposals in Congress use 2005 emissions as the baseline, which reward companies that have not done anything about climate
change and penalizes companies that acted early, since they already picked the low-hanging fruit and now must take more difficult steps to further
reduce a baseline presumably lower than peers who had not already been working on the issue. But Leonard said 2005 is better than using 2010
or 2012 as the baseline.
Simple But Very Smart
The analysis goes beyond the obvious
operations and carbon concerns will pervade
the market
 For many companies, the most important climate
change risks and opportunities may lie outside of
their owned operations. A 2008 McKinsey
Study noted that between 40 and 60 percent of
manufacturers’ carbon footprints often lie in their
supply chains.
Energy Efficiency: McKinsey Report July 2009


The research shows that the U.S. economy has the potential to reduce
annual non-transportation energy consumption by roughly 23 percent by
2020, eliminating more than $1.2 trillion in waste – well beyond the $520
billion upfront investment (not including program costs) that would be
required. The reduction in energy use would also result in the abatement of
1.1 gigatons of greenhouse gas emissions annually – the equivalent of
taking the entire U.S. fleet of passenger vehicles and light trucks off the
roads.
Such energy savings will be possible only if the United States can overcome
significant sets of barriers. These barriers are widespread and persistent,
and will require an integrated set of solutions to overcome them – including
information and education, incentives and financing, codes and standards,
and deployment resources well beyond current levels.
But the political landscape is constantly shifting
 February 16, 2010: Oil giants BP PLC and ConocoPhillips and
heavy-equipment maker Caterpillar Inc. announced they won't
renew their membership in the three-year-old U.S. Climate
Action Partnership, a broad business-environmental coalition
that had been instrumental in building support in Washington
for capping emissions of greenhouse gases
 More than 20 other large companies, including oil company
Royal Dutch Shell PLC and industrial heavyweights General
Electric Co. and Honeywell International Inc., remain in the
coalition with environmental groups such as the Environmental
Defense Fund and Natural Resources Defense Council. USCAP
expects to add new members in coming months.
Other Legal Schemes
European Union
 Under the Kyoto Protocol, in 2005 the European Union established a 27-country
Emissions Trading System (ETS) for greenhouse gasses.
 The ETS caps the total amount of greenhouse gas emissions from over 11,000
power plants, refineries, manufacturing facilities and other large industrial sources,
Which emit about half of the EU’s carbon.
 Facilities submit one emissions allowance for every ton of greenhouse gasses
emitted. The total number of allowances is capped. If a facility reduces its
emissions below its supply of allowances, it can bank the excess credits or sell
them.
 The trial phase ETS was 2005–07; the next phase tightens coverage and runs
from 2008–12.
RGGI – Regional Greenhouse Gas Initiative
Northeast States





The Regional Greenhouse Gas Initiative (RGGI) is a cooperative effort by ten Northeast and MidAtlantic states to limit greenhouse gas emissions. RGGI is the first mandatory, market-based CO2
emissions reduction program in the United States.
States of Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New
York, Rhode Island, and Vermont are signatories.
Carbon dioxide emissions from just one source category (fossil fuel-fired power plants that generate at
least 25 megawatts of electricity) are covered. RGGI caps total emissions at 2009 levels through 2015,
and then gradually tightens the cap for a 10% reduction through 2019.
Establishes a cap and trade carbon emission system.
RGGI is composed of individual CO2 Budget Trading Programs in each of the ten states. These ten
programs are implemented through state regulations, based on a RGGI Model Rule, and are linked
through CO2 allowance reciprocity. Regulated power plants can use a CO2 allowance issued by any of
the ten participating states to demonstrate compliance with the state program governing their facility.
Taken together, the ten individual state programs function as a single regional compliance market for
carbon emissions.
RGGI has been challenged

Indeck Corinth, LP v. Patterson (N.Y. Supreme, Saratoga County). A January 2009 Article 78 Petition
by a natural gas electricity generating company to cease all enforcement of RGGI.
The Summons, Petition and Complaint may be found online at
http://www.arnoldporter.com/resources/documents/IndeckCornith-v-Paterson.pdf

Indeck alleges that RGGI 1) is ultra vires, because it is a DEC regulatory program and interstate
agreement that was not authorized by the New York State legislature; 2) is a tax not authorized by
the legislature; 3) is arbitrary and capricious agency action, because the auction imposes
unnecessary costs; 4) is preempted by federal regulations under the Public Utility Regulatory Policies
Act (PURPA) and promulgated by FERC; 5) violates the interstate Compact Clause of the U.S.
Constitution; 6) violates due process and equal protection rights.
The brief of amici the Chamber of Commerce, American Petroleum Institute and others against RGGI may be found online at
www.uschamber.com. The brief of NRDC, EDF, Conservation Law Foundation and Environmental Advocates of New York in favor of
RGGI may be found at http://www.eany.org/news/RGGIAmicusBrief_05202009.pdf.

Case settled end of 2009 via a Consent Decree whereby Con Ed covered Indeck’s extra generation
costs due to RGGI and NYSERDA compensated Con Ed through energy efficiency funds.
More State Programs
 On the West Coast, 11 states and Canadian provinces are
currently developing another trading program through the
Western Climate Initiative (WCI), which would cover more
economic sectors and greenhouse gasses than RGGI. Program
will start in January 2012.
 Under a state climate law, California is also pursuing its own
cap-and-trade system.
 A coalition of Midwestern states have also been planning a
regional program.
Other Examples – NYS Executive Order No. 24
(there is proposed legislation, too)



It shall be a goal of the State of New York to reduce current greenhouse gas emissions from all sources
within the State eighty percent (80%) below levels emitted in the year nineteen hundred ninety (1990)
by the year two-thousand fifty (2050).
There is hereby created a Climate Action Council (“Council”) consisting of the Commissioners of
Agriculture and Markets, Economic Development, Environmental Conservation, Housing and Community
Renewal, and Transportation; the Chairs of the Public Service Commission, and Metropolitan
Transportation Authority; the Presidents of the New York State Energy Research and Development
Authority, Long Island Power Authority, New York Power Authority and Dormitory Authority of the State
of New York; the Secretary of State; the Director of the Budget; the Director of State Operations; and
the Counsel to the Governor. The Director of State Operations shall serve as the Chair of the Council.
The Council shall prepare a draft Climate Action Plan on or before September 30, 2010. The Council
shall hold regional public comment hearings on the draft Plan, and shall allow at least 60 days for the
submission of public comment. Thereafter, the Council shall prepare a final Climate Action Plan which
shall be reviewed and, if warranted, adjusted annually by the Council.
Executive Order No. 24 (cont’d)
In aspiring to meet the greenhouse gas emission reduction goal, the Council, in preparing the Climate Action
Plan, shall:









inventory greenhouse gas emissions;
identify and assess short-term and long-term actions to reduce greenhouse gas emissions and adapt to
climate change across all economic sectors;
identify the anticipated reductions, and the economic implications from each action;
identify the anticipated life-cycle implications, consequences, benefits and costs of implementing each
action;
identify whether such actions support New York’s goals for clean energy in the new economy;
coordinate its activities with the State energy planning process;
identify existing legal, regulatory and policy constraints to reducing greenhouse gas emissions;
establish estimated timelines for considering and implementing actions; and
undertake such actions, and compile such additional material, as deemed appropriate by the Council in
carrying out its responsibilities under this Order.
Carbon Markets


As a result of Kyoto, State programs and voluntary corporate efforts,
sophisticated carbon emission rights trading markets have emerged.
The international carbon market continued to grow in 2008, reaching a total
value transacted of about US$126 billion, double its 2007 value. Approximately
US$92 billion of this overall value is accounted for by transactions of allowances
and derivatives under the EU Emissions Trading Scheme (EU ETS) for
compliance, risk management, arbitrage, raising cash and profit-taking purposes.
Citation: The World Bank: State and Trends of the Carbon Market 2009,
www.worldbank.org
Carbon Markets (cont’d)


The second largest segment of the carbon market was the secondary market for Certified Emission
Reductions (CERs), which is a financial market with spot, futures and options transactions in excess
of US$26 billion, a five-fold increase over 2007.
Definition: Certified Emission Reductions (CERs): A unit of greenhouse gas emission
reductions issued pursuant to the Clean Development Mechanism of the Kyoto Protocol, and
measured in metric tons of carbon dioxide equivalent. One CER represents a reduction of
greenhouse gas emissions of one tCO2e.

Definition: Clean Development Mechanism (CDM): The mechanism provided by Article 12 of
the Kyoto Protocol, designed to assist developing countries in achieving sustainable development by
permitting industrialized countries to finance projects for reducing greenhouse gas emission in
developing countries and receive credit for doing so.

See attached Appendix A for further carbon trading market definitions.
Carbon Markets (cont’d)
Carbon Markets (cont’d)
 Some Legal Issues: Are the carbon
reductions real? Would the operational
changes have been made anyway? Do the
credits purchased on the open market satisfy
the regional or national regulators?
Will the markets work? Some food for thought.

Friends of the Earth: Carbon off-sets 'add to climate change'
Carbon off-setting will do nothing to prevent climate change and is increasing rather than
reducing carbon emissions, a leading environmental charity warns today.
The Government’s scheme to buy carbon quotas from developing countries in order to reduce
global emissions should be scrapped and developed countries made to cut their own carbon
output, a report by Friends of the Earth says.
“Offsetting is a having a disastrous impact on the prospects for averting catastrophic climate
change,” Andy Atkins, executive director of Friends of the Earth said.
“Because offset cuts are created against a hypothetical business-as-usual baseline, it is
impossible to ensure that offset credits guarantee carbon cuts. Not only can it not
guarantee carbon cuts, in some cases it can increase them,” the report says.
TimesOnLine (UK), June 2, 2009
NEPA and State Analogue EIS Analysis Requirements
Case Examples:


In Center for Biological Diversity v. NHTSA, 508 F.3d 508 (9th Cir.
2007), the Ninth Circuit held that the NHTSA was required to prepare a
full EIS addressing the effects that its fuel economy standards would
have on the global climate.
In Border Power Plant Working Group v. Department of Energy, 260 F.
Supp. 2d 997 (S.D. Cal. 2003), the Southern District of California held
that the Department of Energy must include an analysis of greenhouse
gases emitted from power plant turbines in its NEPA document
prepared for an action to approve transmission lines connected to the
plant.
Conclusion
 These materials were an introduction and will shortly be outdated.
Any business with substantial carbon emissions needs a forwardthinking strategy to deal with the quickly changing legal landscape.
Smart energy use now can save money, prepare a company for cap
and trade, and improve a company’s marketing image.
Green Building: The Future is Now
Part II
Stanley N. Alpert
Constantine | Cannon LLP
335 Madison Avenue
New York, NY 10017
212-350-2730
[email protected]
http://www.constantinecannon.com/attorneys/salpert.php
Environmental Impacts of Buildings:
Conventional versus Green




Built environments are responsible for 40% of primary energy use and 72% of
electricity consumption in the U.S. Green buildings can reduce energy
consumption by 24-50%. U.S. Green Building Council (USGBC).
Built environments are responsible for 39% of greenhouse gas emissions in the
U.S. However, in New York City, buildings account for closer to 80% of
greenhouse gas emissions. Green building can reduce that by 33-39% (U.S.
G.S.A.).
Built environments are responsible for 13.6% of water use in the U.S. Green
building can reduce that by 40%. (Environmental Information Administration).
An estimate 136 million tons of building-related construction and demolition debris
is generated in the U.S. annually. Green buildings can reduce that by 70% (U.S.
E.P.A.).
Environmental Impacts of Buildings:
Conventional versus Green



There is no significant increase in average costs as between green and non-green buildings.
(Davis Langdon). Or, some have estimated small added costs. According to Green Globes,
one environment-friendly building rating system, building a structure to comply with its
criteria normally costs between 1% and 2% more than a standard building; in regions with
extreme temperatures, the additional costs can rise to 8%.
According to the U.S. Green Building Council, about 103 cities, 34 states and 12 federal
departments or agencies have green building policies for government structures; 10 states
have eco-friendly construction standards that apply to a range of non-public structures and
69 cities have green building measures on the books for various types of non-government
construction.
Green buildings currently remain a small share of the total (roughly 25%) (USGBC). Recent
industry surveys have estimated that up to 25 percent of commercial and institutional
construction projects will be for green buildings by 2013.
LEED; A Prominent System for Reducing
Building Impacts






Leadership in Energy and Environmental Design (LEED). Widely accepted.
Whole building approach to sustainability
USGBC’s primary device for transforming the market
Can be used with any building type
Performance across key categories:






Sustainable sites
Water efficiency
Energy and atmosphere
Materials and resources
Indoor environmental quality
Innovation in design



Reduced operating costs
Reduced resource consumption
Reduced water and energy use
Benefits:
LEED Rating Systems









LEED
LEED
LEED
LEED
LEED
LEED
LEED
LEED
LEED
for
for
for
for
for
for
for
for
for
New Construction and Major Renovation
Core & Shell
Commercial Interiors
Schools
Healthcare
Retail
Existing Buildings: Operations and Maintenance
Homes
Neighborhood Development
LEED Rating System Points
 Generally 100 base points plus 6 for Innovation in Design and 4
for Regional Priority. (LEED for homes is on a 125-point scale,
plus 11 Innovation in Design points.)
 LEED Certified = 40-49 points
 LEED Silver = 50-59 points
 LEED Gold = 60-79 points
LEED Greatest Hits
 Sustainable sites (26 points)
 Development Density and Community Connectivity (5)
 Public Transportation Access (6)
 Water efficiency (10 points)
 Use reduction or efficient landscaping (2-4 each)
 Energy and atmosphere (35 points)
 Optimize Energy Performance (1-19)
 On-Site Renewable energy (1-7)
 Materials and resources (14 points)
 Building Reuse (1-3)
 Indoor environmental quality (15 points)
 Low-Emitting Materials (1 each)
 Innovation in design (4 points)

Performance Management
One Example
Continuous Energy Management & Optimization (CEMO) from Davies Energy Systems,
Inc.




Real-Time Energy Monitoring, Dashboards, and Reporting
Data Collection and Analysis for Benchmarking
Automation of EPA Portfolio Reporting
Long-Term Benefits






Better Manage Facility Energy and Water Usage
Make Smarter Energy Choices
Stay on Budget with Real-Time Data
Reduce Costs with Increased Awareness and Accountability
Continuously Updated Database
Web Accessible
Do LEED buildings perform as expected?


USGBC announced that buildings certified under LEED 2009 would be
required share energy- and water-use data. There has been much
debate in recent years about whether LEED-certified buildings actually
perform well. Building Performance Partnership (BPP) will expand the
amount of data available, leading to more reliable analysis in the future
and helping underachieving projects fix performance problems.
The reporting requirement raised fears that a project could lose a LEED
certification due to poor performance, or that unflattering data would
become public. USGBC says “no building will be decertified for
performance or a performance gap,” and USGBC has promised that
public reports of data will be anonymous, while owners will receive
tailored reports.
Gifford v. USGBC, October 2010, Originally Filed
as a Class Action

Suit alleges that USGBC’s claim that it verifies efficient design and construction is “false and intended to
mislead the consumer and monopolize the market for energy-efficient building design.”

Four classes alleged:
1. All persons who paid for LEED certification in reliance on alleged deceptive marketing related to
energy performance in LEED buildings.
2. "All persons who design energy-efficient buildings and whose livelihoods are injured by USGBC's
monopolization of the market through fraudulent and intentionally misleading representations in the
marketing and promotion of the LEED product line. . ."
3. All taxpayers whose city and state tax dollars are spent on the costs of LEED certification in publiclycommissioned buildings.
4. Trades injured by USGBC's alleged deceptive trade practices because the trades lose money and time
in having to comply with LEED certification even though the buildings are allegedly not saving energy.
Gifford v. USGBC, October 2010, as amended




Primarily a false advertising and consumer fraud
act case under Federal and State law.
No longer a class action.
No monopolization claim.
Alleges that USGBC has misrepresented the energy
efficiency of LEED buildings, and that the
LEED certification is not a verification of the actual
energy performance of the building.
Green Globes
 This is a standard that competes with LEED. Green
Globes states that its substantive criteria are similar,
but says that it is less expensive to implement,
making it especially useful for smaller projects.
Passive Buildings; A New,
Developing Methodology


A different concept than LEED. Focuses solely on reducing energy use
to a minimum through building design:
A Passive House is a very well-insulated, virtually air-tight building that
is primarily heated by passive solar gain and by internal gains from
people, electrical equipment, etc. Energy losses are minimized. Any
remaining heat demand is provided by an extremely small source.
Avoidance of heat gain through shading and window orientation also
helps to limit any cooling load, which is similarly minimized. An energy
recovery ventilator provides a constant, balanced fresh air supply. The
result is a system that saves up to 90% of space heating costs, and
provides high indoor air quality.
Passive Buildings; A New, Developing
Methodology


Passive homes typically include the following components:
(1) Tightly sealed with superior insulation, double the typical amount on roofs, walls and
ground slabs.
(2) Minimize thermal bridges (areas that are poor insulators) and no gaps in insulation.
(3) Air tightness verified with blower door tests.
(4) Ventilation system with high efficiency heat exchange, integrating heating and cooling.
(5) High performance windows and doors that eliminate air leakage.
Zero-Energy Buildings; Another
Goal-Based System
 “Zero” is really “net zero.” The sums of the flows in and out are equal and
opposite. This does not imply zero flows. Energy can be used but it should
be generated on site, or, in some cases, purchased from outside renewable
sources.
 Savings are measured against the baseline of ANSI/ASHRAE/IESNA
Standard 90.1-2004, Energy Standard for Buildings Except Low-Rise
Residential Buildings.” For example, a 30% energy goal is measured from
Standard 90.1-2004 on the path to zero.
Zero-Energy Buildings; Another
Goal-Based System







Also:
Create a good thermal envelope—especially considering thermal bridges at the
corners and around steel beams.
Implement day lighting with automated controls wherever possible and dim, or
better, turn off the lights.
Consider natural ventilation.
Size the HVAC system to match reduced loads.
Source: ASHRAE Journal, Understanding Zero Energy Buildings, Sept. 2006.
The U.S. Department of Energy is presently funding zero energy building research.
February 14, 2011
New York Times
Soaking Up the Sun to Squeeze Bills to Zero






National Renewable Energy Lab of the federal Department of Energy moved in to a $64 million building in
the Rocky Mountain foothills
Light-bending window louvers cast rays up into the interior office spaces. A giant concrete maze in the
sub-basement holds and stores radiant heat
Through off-the-shelf technology, costs were brought in at only $259 a square foot, nearly $77 below the
average cost of a new super-efficient commercial office building
For zero net electricity over 24 hours, lighting was a main target. That forced designers to lower the
partition walls between work cubicles to only 42 or 54 inches which raised privacy concerns
People print less paper when they share a central printer that requires a walk to the copy room. People
also use less energy, managers say, when they know how much they’re using. A monitor in the lobby
offers real-time feedback on eight different measures.
The feedback comes right down to a worker’s computer screen, where a little icon pops up when the
building’s central computer says conditions are optimal to crank the hand-opened windows.
Plain Old Energy Efficiency
By GreenerBuildings Staff
Created 2010-07-08 03:30
BUFFALO GROVE, IL — Candlebrook Elementary in the Pennsylvania
community King of Prussia has helped its school district save almost
$340,000 in energy costs by developing an efficiency program with an
integrated Siemens building automation system at its core.
In the process, Candlebrook cut its electricity consumption by 53 percent
and its natural gas consumption by 43 percent. That earned the school
an Energy Star rating of 98, one of the higher efficiency scores of the
energy performance ranking system.
The district cut its utility bill by $336,444.28. The district estimates that if
the more than 15,000 districts in the country took similar steps, they
could save as much as $5 billion.
PACE Financing
 PACE (Property Assessed Clean Energy) are local government
initiatives that allow property owners to finance energy
efficiency and renewable energy projects for their homes and
commercial buildings.
 Financing for improvements through an assessment on property
taxes for up to 20 years.
 Energy improvements such as weather sealing, insulation,
energy efficient boilers and cooling systems, new windows, and
solar installations.
 Repayment obligation to transfer automatically to the next
property owner if the property is sold.
 PACE has first lien.
PACE Financing (cont’d): Cognitive Dissonance
 In October 2009, the White House and federal agencies issued a
policy initiative supporting PACE and providing $150 million in
ARRA funding.
 In July 2010, the Federal Finance Housing Agency (FFHA)
issued a directive to Fannie Mae, Freddie Mac, and FHLB banks
which effetively stated that the government would not purchase
mortgages with PACE first lien priorities, creating a severe
setback for local PACE programs.
 NRDC filed suit against the directive in October 2010.
New York State Green Building Laws





State Green Building Construction Act. N.Y. Energy Law Art. 13. (effective
March 2009), attached as Appendix A:
Applies to state agency buildings that are owned by the state
Applies to new construction and substantial reconstruction projects
The State Department of Environmental Conservation, in consultation with the
New York State Energy Research and Development Authority (NYSERDA) , must
publish regulations for green buildings, informed by LEED rating criteria, Office
of Parks, Recreation and Historic Preservation criteria, and the Green Building
Initiative’s Green Globes rating system. N.Y. Energy Law § 13-107(3).
State agencies are also required to prepare annual building performance reports
containing information on energy consumption, waste and water reduction, how
indoor air quality compares with set benchmarks, and changes to major energy
consuming equipment. N.Y. Energy Law § 13-107(2).
New York State Green Building Laws


Green Residential Program Act, N.Y. Pub. Auth. L. § 1872, attached as Appendix
B.
Establishes a state grant program for green buildings. NYSERDA is to create
and administer guidelines and criteria for the design and building techniques
used in the residential sector. These will apply to builders and renovators of
single- and multi-family homes with fewer than 12 dwelling units. Grants will be
paid to owners who fulfill the standards and who produce a certificate of
occupancy for their buildings between January 1, 2010 and October 31,
2013. The grants are subject to a cap, based on a number of considerations,
including the size and type of the residential structure, and whether the owner
is eligible for any other type of financial assistance from any other
source. Depending on the number of units, the caps run from $7,500 to
$15,000. In addition, no owner can receive more than $120,000 in grants in
any year.
New York State Green Building Laws





Tax Credits
There are a variety of green building tax credits in New York that may be found
on NYSERDA’s website. www.nyserda.org.
Executive Orders No. 111 & No. 142, attached as Appendices C & D.
Executive Order No. 111, "Directing State Agencies, State Authorities, and Other
Affected Entities to be More Energy Efficient and Environmentally Aware."
Requires state agencies to implement a variety of energy efficiency measures,
including reductions of energy use in state buildings.. Directed NYSERDA to
issue a set of guidelines within six months from the issuance of the Order.
Established an Advisory Council and several working groups to address issues
and questions associated with the Order.
Executive Order No.142, "Directing State Agencies, and Authorities to Diversify
Fuel and Heating Oil Supplies Through the Use of Biofuels in State Vehicles and
Buildings." Requires state agencies to move toward the use of ethanol and
biofuels.
New York City: Backdrop to the Rules:
Climate Protection Act of 2007

Intro 20-A requires the city to meet two climate reduction goals: to reduce
greenhouse gas emissions from city operations by at least 30 percent by the
year 2017, and to reduce greenhouse gas emissions citywide (including from
homes and businesses) by at least 30 percent by the year 2030.

The Climate Protection Act will achieve greenhouse gas (carbon dioxide,
methane and nitrous oxide) reductions through a blend of mandatory, marketbased and voluntary approaches. The city is already implementing some
measures, including the planting of carbon dioxide-absorbing trees and new
building codes that will create more energy-efficient buildings.
New York City Green Building
Standards
Local Law No. 86 (2005)
Section 1. Statement of findings and purpose. Probably no urban activity has greater
impact on human health and the environment than building construction and use.
Enormous quantities of resources are used during building construction, renovation and
operation, and the production of these resources has substantial environmental impacts.
It is estimated that 40% of raw materials consumed globally are used for buildings. In
addition, in the United States, commercial and residential buildings are responsible for
approximately 65% of electricity consumption, 30% of greenhouse gas emissions, 12%
of potable water use and 136 million tons of construction and demolition waste annually.
 Also, many indoor building materials release hazardous toxins, impairing indoor air
quality and reducing occupant health and productivity.
SOME GREEN BUILDING FACTS



FACT: In New York City, commercial and residential buildings are estimated to
contribute not 30% of greenhouse gas emissions, but 80%.
FACT: A recent study conducted for the State of California concluded that, on
average, green buildings show a ten times return on the investment in green
building design. This comprehensive analysis of 33 green buildings revealed an
average green cost premium of less than 2%, with only a 0.66% premium for
buildings that achieved the most basic level of LEED certification.
FACT: Numerous municipalities, including Atlanta, Austin, Boston, Boulder,
Chicago, Dallas, Los Angeles, Portland (Oregon), San Diego, San Francisco, San
José, and Seattle, have adopted LEED or have otherwise required that cityowned buildings be built according to green building criteria. Some localities
have created incentive programs for privately-owned green building
construction, including the use of direct subsides, density bonuses and
expedited permitting. Boston will soon require private sector buildings of over
50,000 square feet to be LEED-certifiable.
The Statute and Implementing
Regulations, in Summary



Local Law 86 applies to capital building projects of New York City agencies and to
non-city entities that receive capital funding from the City. Most building
occupancies are covered by the law, with the exception of residential, high hazard,
or industrial occupancies and open-air structures. For covered projects, the law’s
requirements fall into four basic categories.
First, they require that capital building projects with over $2,000,000 in construction
costs achieve a rating according to the LEED green building standard developed by
the USGBC or according to an equivalent, approved standard. A LEED Certified
rating is required for health and educational facilities and a LEED Silver rating is
required for all other types of occupancy.
Second, they require that projects with a green building rating requirement and
construction costs over $12,000,000 also reduce energy costs by 20 to 30%.
Mayoral Exemption
 The mayor may exempt from each provision of the
law capitol projects accounting for up to 20% of the
capital dollars in each fiscal year subject to such
provision if in his or her sole judgment such
exemption is necessary in the public interest. At the
conclusion of each fiscal year the mayor shall report
to the council the exemptions granted pursuant to
this section.
The Statute and Implementing
Regulations, in Summary




Third, for certain projects that involve the replacement or installation of specific
systems including boilers, lighting, and HVAC comfort controls, a 5 to 10%
energy cost reduction is required.
Fourth, a 20 to 30% potable water use reduction is required for some projects
that involve the replacement or installation of plumbing systems. See discussion
of Brac Greywater Systems, infra.
The law also requires the preparation of an annual report for ten years after the
law takes effect, commencing in 2008. This first annual report provides the
information requested in the law and, in some instances, expands upon it.
See Green Building Standards Rules, attached as Appendix E.
A Note on Wind
 The City of New York purchases wind credits that
support the production of approximately 29,000
MWH a year. The City has arranged with the U.S.
Green Buildings Council (USGBC) to utilize this
purchase in order to qualify for green power credits
that contribute to the achievement of a LEED® rating
on city projects.
New York City Green Roof Tax
Abatement



The bill, # A.11226, passed in June 2008. It amended Article 4 of the Real Property Tax
Law ("RPTL") by adding a new Title 4-B, providing for a tax abatement for the construction
of a "green roof" on a class one, two or tour building in the City of New York.
In general, a green roof is an addition to a roof that includes, among other things, a
growth medium and a vegetation layer of drought resistant and hardy plant species. The
amount of the abatement is $4.50 per square foot of green roof: limited to the lesser of
$100,000 or the building's tax liability for the year in which the abatement is taken. The
green roof tax abatement is a pilot program that sunsets March 15, 2013.
The benefits are conditioned on compliance during the year in which the benefit is taken
with applicable provisions of law, maintaining the green roof: permission to inspect the
green roof and related structures, and payment of real estate taxes, water and sewer
charges, payments in lieu of taxes or other municipal charges, and includes a process for
revocation for non-compliance.
New York City Solar Panel Tax
Abatement

The bill, #A11202 , passed in August 2008. It amended Article 4 of the Real
Property Tax Law ("RPTL") by adding a new Title 4-C, providing for a four-year tax
abatement for the construction of a solar electric generating system in connection
with a class one, two or four building in the City of New York. If the solar electric
generating system is placed in service on or after the effective date of the new
Title 4-C and before January 1, 2011, the amount of the tax abatement is 8-3/4%
of eligible solar electric generating system expenditures in each year of the fouryear compliance period. If the solar electric generating system is placed in service
on or after January 1, 2011 and before January 1, 2013, the amount of the tax
abatement is 5% of such expenditures for the four-year period. The benefit in
each tax year is limited to the lesser of the amount of taxes payable or $62,500.
New York City Solar Panel Tax
Abatement


"Eligible solar electric generating system expenditures" include reasonable
expenditures for materials, labor costs properly allocable to on-site preparation,
assembly and original installation, architectural and engineering services, and
designs and plans directly related to the construction or installation of the solar
electric generating system.
The benefits are conditioned on compliance during the four-year compliance
period with applicable provisions of law, maintaining the solar electric generating
system, permission to inspect the solar electric generating system and related
structures and equipment, and payment of real estate taxes, water and sewer
charges, payments in lieu of taxes or other municipal charges, and includes a
process for revocation for noncompliance.
The NYC (Almost) Revolution of
December 2009
 A sweeping package of green building laws announced on Earth Day in
April 2009 by Mayor Michael Bloomberg passed, with modifications, in
December. Four separate bills were presented to the City Council,
requiring building energy benchmarking, and rewriting commercial
lighting standards and parts of the city’s energy code.
 According to New York City, the legislative package will save consumers
$700 million annually in energy costs, create 17,880 jobs, and cut city
CO2 emissions by 4.75%. According to the city, that would be the largest
emissions reduction achieved by a single program in PlaNYC, the city’s
long-term sustainability program.
The NYC (Almost) Revolution of December
2009 (cont’d)



The original legislation included a retrofitting measure requiring buildings subject to the law
to conduct energy audits every 10 years. The original version of the bill required both
retrofitting and retro-commissioning to correct deficiencies found in an audit, if the costs
would pay themselves back through savings in five years.. The approved version requires
private buildings to carry out the retrocommissioning only.
Retrofitting involves capital alterations and installation of new equipment, while retrocommissioning includes noncapital improvements, or “fine tuning” and maintenance of
existing systems. City-owned buildings larger than 10,000 square feet would still have to
retrofit with “all reasonable capital improvements” within a year of filing an audit report, if
the work would generate an energy cost-savings payback within seven years. The audit bill
includes financial hardship exemptions from the upgrade requirements.
Buildings covered are those over 50,000 square feet, accounting for half of the building
square footage in the City.
The NYC (Almost) Revolution of December
2009 (cont’d)
 The other bills require buildings subject to the law to
 benchmark their energy use and water consumption through EPA’s
Portfolio Manager energy leadership program (Intro. No. 476-A);
 require large commercial buildings to carry out lighting upgrades by
2025 (Intro. No. 973-A);
 and create a city energy conservation construction code for building
renovations that would, among other things, remove an exemption
from the State Energy Code for renovations that include less than
50% of a building’s subsystems (Intro. No. 564-A).
Brand New Local Laws – Fall 2010
 Local Law 47 of 2010 (eff. Jan. 2011). For means of egress,
lobbies and hallways, encourages the use of natural light and
occupant sensor of photosensor lighting controls.
 Local Law 48 of 2010 (eff. 12/28/10). For commercial spaces,
lighting shall be by occupant sensor (with turn-off switch but no
override) for classrooms, conference rooms, employee lunch
and break rooms, and offices smaller than 200 square feet.
Brand New Local Laws – Fall 2010 (cont’d)
 Local Law 49 of 2010. States intent of NY Code for plumbing,
mechanical and fuel gas systems to safeguard not just life, limb
and property, but also the environment.
 Local Law 51 of 2010. At construction sites, encourages the use
of natural light, and permits the use of photosensors for lighting
for temporary walkways and footbridges (eff. July 2011).
Brand New Local Laws – Fall 2010 (cont’d)



Local Law 54 of 2010 (eff. Jan. 2011). Prohibits the use of potable water for
“once-through cooling,” meaning to cool a condenser and then be discharged to
a sewer, with exceptions for ice-making machines that produce less than 500
pounds per day or existing refrigeration installed before January 2011 and
replacements that use the same or less water.
Local Law 56 of 2010 (eff. Jan. 2011). Requires sub-metering for commercial
water to enable the quick detection of leaks and avoid them.
Local Law 57 of 2010 (eff. July 2012). Requires dual-flush toilets using less
water for liquid waste and use of EPA’s Water SENSE program for showers,
faucets and urinals.
Federal Stimulus American Recovery and
Reinvestment Act of 2009(the “Stimulus
Bill”) P.L. 110-343



Tax Deductions for Commercial Buildings:
§ 303 | Extension of Energy-Efficient Buildings Deduction
Current law allows taxpayers to deduct the cost of energy-efficient property
installed in new or existing commercial buildings. The amount deductible is up to
$1.80 per square foot of building floor area for buildings achieving a 50% energy
savings target. The energy savings must be accomplished through energy and
power cost reductions for the building’s heating, cooling, ventilation, hot water, and
interior lighting systems. This bill extends the energy efficient commercial buildings
deduction through December 31, 2013 (5 Years) by amending Section 179D.
American Recovery and Reinvestment Act of
2009(the “Stimulus Bill”) P.L. 110-343
 A tax deduction of up to $1.80 per square foot is available to owners or
designers of new or existing commercial buildings that save at least 50%
of the heating and cooling energy of a building that meets ASHRAE
Standard 90.1-2001. Partial deductions of up to $.60 per square foot can
be taken for measures affecting any one of three building systems: the
building envelope, lighting, or heating and cooling systems. These tax
deductions are available for systems “placed in service” from January 1,
2006 through December 31, 2013.
Federal Energy Efficiency Laws
 The Energy Policy and Conservation Act (“EPCA”), 42 U.S.C. 6201, as
amended by the National Appliance Energy Conservation Act (“NAECA”),
Pub.L. No. 100-102 (1987), and the Energy Policy Act of 1992 (“EPACT”)
42 U.S. C. §§ 6311-17. The EPCA, as amended by the NAECA and the
EPACT, established nationwide standards for the energy efficiency and
energy use of major residential and commercial appliances and
equipment, including heating, ventilating, and air conditioning (“HVAC”)
products and water heaters. Principal responsibility for maintaining, and,
if necessary, amending these standards was given to the U.S.
Department of Energy (“DOE”).
Federal Energy Efficiency Laws

The American Clean Energy and Security Act (the
cap and trade bill) would also require the EPA to
develop procedures for rating building energy
efficiency, in addition to recommending efficiency
standards for lighting and other appliances.
Voluntary Regulatory Programs
Memoranda of Understanding



In the MOU, Cushman & Wakefield recognized the significant impact of the commercial real
estate sector on the environment. The MOU sets out environmental best practices designed
to enhance energy efficiency and reduce carbon footprint, promote water conservation and
minimize waste within Cushman & Wakefield's corporate offices and in properties under
management.
Cushman & Wakefield will leverage its partnerships with EPA and its experience with LEED for
existing buildings. Cushman & Wakefield also will join two new EPA partnership programs:
WasteWise, which promotes waste reduction and resource conservation, and GreenScapes,
which provides environmentally-friendly solutions for landscaping.
The firm will also utilize its own Green Practice Policies as a platform to engage clients in
adopting sustainable approaches to pest management, construction, purchasing, cleaning,
solid waste management, and control of environmental tobacco smoke.
Litigation Issues
Federal Preemption
Three forms of federal preemption:
 express preemption by statute
 occupation of the field, or
 inherent conflict between state laws and a federal regulatory
scheme.
 English v. General Elec. Co., 496 U.S. 72, 78-79 (1990).
Green Buildings Case:
AIR CONDITIONING, HEATING AND
REFRIGERATION INSTITUTE v.
CITY OF ALBUQUERQUE (D.N.M. 2008)





Albuquerque’s Energy Conservation Code changed building regulations
to reduce greenhouse gas emissions and make more effective use of
energy:
For new commercial or multi-family buildings, they must either:
i)
achieve LEED Silver certification, or
ii)
be 30% more efficient than the baseline building set forth in
American Society of Heating, Refrigeration, and Air Conditioning
(“ASHRAE”) Standard 90.1-2004, or
iii) meet specified standards for certain building components such as
HVAC and water heaters.
Green Buildings Case:
AIR CONDITIONING, HEATING AND
REFRIGERATION INSTITUTE v.
CITY OF ALBUQUERQUE (D.N.M. 2008)
 Plaintiffs alleged that the Albuquerque code was preempted by federal
energy efficiency statutes, namely the Energy Policy and Conservation
Act (“EPCA”), 42 U.S.C. § 6201, as amended by the National Appliance
Energy Conservation Act (“NAECA”), Pub.L. No. 100-102 (1987), and
the Energy Policy Act of 1992 (“EPACT”) 42 U.S. C. §§ 6311-17. The
EPCA, as amended by the NAECA and the EPACT, established
nationwide standards for the energy efficiency and energy use of major
residential and commercial appliances and equipment, including heating,
ventilating, and air conditioning (“HVAC”) products and water heaters.
Green Buildings Case:
AIR CONDITIONING, HEATING AND
REFRIGERATION INSTITUTE v.
CITY OF ALBUQUERQUE (D.N.M. 2008)

EPCA, as amended, contains an express preemption provision that prohibits any
state regulation “concerning” the energy efficiency, energy use, or water use of
any covered product with limited exceptions. 42 U.S.C. § 6297(c). A “state
regulation” is defined as any “law, regulation, or other requirement of a State
and its political subdivisions.”42 U.S.C. § 6297(a)(2)(A). EPCA provides a
number of exceptions from federal preemption. Id. at § 6297(f).

Ruling: The Court granted a preliminary injunction against enforcement of the
new Albuquerque code. It held that the express preemption provision applied,
and that none of the listed exceptions were applicable. 2008 WL 5586316
(D.N.M. 2008).
On the Other Hand
Building Industry Association of Washington (BIAW) v.
Washingon State Building Code Council
 Relying on EPCA’s exceptions to express preemption provision, upholds the
Code.
 Washington Code gives choices or different paths to compliance.
 Washington Code is different than Albuquerque's and Court expressly
distinguishes that decision.
 Higher efficiency appliances are not the only way to comply, so no
preemption.
Green Financing Case:
DESTINY USA HOLDINGS, LLC v. CITIGROUP GLOBAL MARKETS
REALTY CORP, 69 A.D.3d 212, 889 N.Y.S.2d 793 (4th Dept. 2009)

Facts: Destiny had construction financing from Citigroup, requiring periodic
payments during the construction period for a green multi-use project in
Syracuse. Actually, financing came from three sources: Destiny Holdings,
proceeds from bonds issued by the City of Syracuse Industrial Development
Agency (SIDA) and approximately $155 million loaned by Citigroup. Citigroup
stopped the payments, claiming the developer failed to comply with certain
contractual provisions related to spending on tenant improvement costs. Asserting
it would lose the ongoing project in the absence of financing, Destiny moved for a
preliminary injunction requiring Citigroup to make its payments, which the
Supreme Court GRANTED.
Green Financing Case (cont’d):
DESTINY USA HOLDINGS, LLC v. CITIGROUP GLOBAL MARKETS
REALTY CORP, 69 A.D.3d 212, 889 N.Y.S.2d 793 (4th Dept. 2009)

Ruling: The Fourth Department AFFIRMED. In addition to analyzing likelihood of success and balance of
the equities, the Court considered irreparable injury, which prong of course is not met when one can be
compensated adequately later with money damages.

The Court gave two reasons why this was an exceptional case and later money damages were not
adequate. First,
“cases of construction mortgages are an exception” to the general rule (Southampton Wholesale Food
Term. v. Providence Produce Warehouse Co., 129 F.Supp. 663, 664). “Since the law regards land as unique
[,] an agreement to buy land can be specifically enforced even though the defendant's sole obligation is to
pay money ... Although the question is close, it may not be too great a stretch to include advances under a
construction mortgage” (id.) In such circumstances, the “agreement ... is not a simple contract to lend
money. It is an integral part of a contract to sell [or develop] real property.
Green Financing Case (cont’d):
DESTINY USA HOLDINGS, LLC v. CITIGROUP GLOBAL MARKETS
REALTY CORP, 69 A.D.3d 212, 889 N.Y.S.2d 793 (4th Dept. 2009)

The second reason the Court gave tends to elevate financing of green projects to a special status under
the law, which may or may not hold long term given the 3-2 split of the Court, but here it is:
Second, an exception is warranted because the Project's unique character renders it difficult to calculate any
damages sustained by Destiny Holdings. Citigroup stated through its Managing Director at a U.S. Green
Building Council Presentation on November 8, 2007 that the Project is a “visionary project” that has
created a “new financing paradigm for green economic development” that is “revolutionary.” Citigroup
Chairman and Chief Executive Officer Charles Prince called the use of newly-created Federal
Green Bonds in financing the Project “ ‘groundbreaking [and] a step forward in addressing climate change in
the U.S. because [the Project] incorporates sustainable design, energy conservation and renewable
energy sources on a large scale’ ”
Contract or Tort Claims; Generally
 In the green building context, breach of contract claims may include
breach of the implied warranty of fitness or suitability of construction
materials, workmanship and purpose; failure to deliver a promised level
of LEED or other certification; or failure to meet energy efficiency
standards. Owners might sue contractors and subcontractors, as well as
design professionals. Depending on the language in their contracts, a
general contractor may be entitled to assert indemnification claims
against a subcontractor if it was the subcontractor and not the general
contractor who ultimately caused a construction defect.
Contract or Tort Claims;
Generally


Tort claims may include fraud or other misrepresentation claims for allegedly
misleading statements regarding the green attributes of a building. If the
purchasing or lessee business has marketed itself as green and the builder or
lessor fails to deliver, there may be claims for negligence or tortious interference
with contract or prospective economic relations, depending on the facts and how
much was shared with the builder or lessor.
To reduce the likelihood of litigation, contracts should be carefully drafted,
including specifications for certification, tax credits (where applicable), and
sustainability goals or product specifications.
A New Contractual Model

On November 10, 2009 the Virginia-based ConsensusDOCS
organization released its Green Building Addendum. The Addendum
includes a section that specifically addresses the allocation of green
building risk. It is a rating-system neutral and focuses on specific
green performances rather than ratings.

The Addendum creates a new role for design professionals,
contractors, or consultants: the Green Building Facilitator, responsible
under the terms of the Addendum for coordinating and facilitating the
process of obtaining the green building status or certification,
identifying green building measures (both procedural and physical),
potential design and construction alternatives, and other services as
required by the terms of the Addendum.
A New Contractual Model
Article 8.2 provides that the parties are subject to limitations on
liability included in their underlying contracts. Yet the provision
explicitly acknowledges that the owner’s “loss of income or profit or
inability to realize potential reductions in operating, maintenance,
or other related costs, tax, or other similar benefits or credits, marketing
opportunities and other similar opportunities or benefits, resulting from a
failure to attain the [project’s green building goals] shall be deemed
consequential damages subject to any applicable waiver of consequential
damages” in any underlying design or construction contract.
Parties are free to negotiate terms, the Addendum notwithstanding,
including (i) the types of damages which would be included in the
provision; and (ii) any waivers – mutual or otherwise – in the underlying
agreement.
A New Contractual Model
The Addendum also makes it clear that no project participant other
than the Green Building Facilitator will be liable or responsible for
the failure of green measures to achieve the project’s green
building goals,” including the project’s failure to earn any third
-party certification. However, the Addendum also makes clear that
these limitations on the project team’s liability do not relieve them
from any obligation to perform or provide procedural or physical
green measures required by their underlying contracts.
ConsensusDOCS was founded in 2007 and, to date, its suite of
form design and construction agreements has been endorsed by 23
different architectural, engineering and construction organizations.
A Case Study: Shaw Development v. Southern Builders;
Loss of Tax Credit

This 2007 state court case arose from a contract for construction of
Captain’s Galley, a 23-unit condominium project in Crisfield, Maryland.
The scope of work required a “Green Building,” satisfying LEED Silver
certification requirements. In response to Southern Builders’ action to
collect on its mechanics lien, Shaw Development countersued. Among
other claims for damages, Shaw asserted that Southern had failed to
timely deliver a Silver-rated building, causing it to lose out on a
$635,000 tax credit that would have been available if a timely,
compliant building had been delivered. Claims in a case like this may
include breach of contract, fraud, and other business torts.

Consider the result if the new Addendum had been used.
Litigation May be Looming
New York Times, August 31, 2009
Some Buildings Not Living Up To Green Label


Starting this year, the program also is requiring all newly constructed buildings to provide
energy and water bills for the first five years of operation as a condition for certification.
The label could be rescinded if the data is not produced, the officials said.
The council’s own research suggests that a quarter of the new buildings that have been
certified do not save as much energy as their designs predicted and that most do not track
energy consumption once in use. And the program has been under attack from architects,
engineers and energy experts who argue that because building performance is not tracked,
the certification may be falling short in reducing emissions tied to global warming. Some
experts have contended that the seal should be withheld until a building proves itself
energy efficient, which is the cornerstone of what makes a building green, and that energyuse data from every rated building should be made public.
Nuts and Bolts

Old construction and plumbing codes may not be ready to
accommodate green systems such as solar, wind or water use
reduction measures.

Brac systems can be installed in commercial or residential buildings,
and may save roughly 30% of water use. In a home, for example,
shower and sink water is routed to a tank where it receives required
but not expensive treatment, and it is then re-used for toilet water.
Provisions of the NYS Plumbing Code, show that it has evolved to allow
grey water systems, so long as certain requirements are met, such as
indentifying any source of grey water to ensure that it is not used for
drinking.