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Northern Virginia goes green without disputes

LEED rules OK, but noncompliance, construction suits may be coming

Peter Vieth//May 26, 2010

Northern Virginia goes green without disputes

LEED rules OK, but noncompliance, construction suits may be coming

Peter Vieth//May 26, 2010//

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The world of green building standards has been largely free of lawyers and lawsuits, but the formerly peaceful world of sustainable development soon may be getting its first taste of litigation.

Pointing to a failed challenge to the environmental credentials of a Wisconsin high school, a Washington lawyer concludes the field is wide open for efforts to undermine green certification. In Maryland, a project owner claimed a builder’s failure to deliver an “environmentally sound” building cost the owner thousands in tax credits. Moreover, as sustainability standards become part of normal building requirements, lawyers say other green issues are bound to find their way into construction litigation.

For years, local governments in Northern Virginia and other Washington suburbs have deployed innovative green building standards and incentives to encourage sustainable development. Going far beyond national and state initiatives, Arlington County and similar-minded localities “coaxed and cajoled” developers to build environmentally friendly projects.

It’s a green revolution that has triumphed with hardly a shot being fired. Efforts to push the envelope in encouraging construction of sustainable buildings in Northern Virginia have met with almost no resistance, local government officials say.

Despite an avowed effort to go as far as possible under the law to require project planners to “go green,” no one seems to be pushing back. In fact, Northern Virginia remains a national hot spot for green development.

“We have seen no legal issues related to that at all,” said Arlington County environmental planner Joan Kelsch, referring to the county’s innovative zoning requirements and incentives to encourage green development.

“We’re seeing more and more clients require at least some amount of sustainability in their projects,” said Fairfax architect Marlene Shade.

Requiring green certification for new construction, using standards established by LEED or other authorities, actually leads to better overall quality of construction, Shade said. There are so many checks and balances that builders have to do it right the first time. “You get a better end product,” she said.

The threat of green litigation arises, not from those government initiatives, but from more ordinary disputes about whether construction projects meet their promised standards. Sustainability adds a new set of standards to the mix, lawyers say.

Those “green” standards may come with a concealed time bomb, some attorneys are warning. What happens if it turns out a project billed as energy-efficient and earth-friendly is not as green as it was expected to be. If government incentives were accepted on a promise of green standards, what can the government do if the project falls short? What if there were private incentives? How long is the issue up for challenge? Who can make such a challenge?

Washington attorney Christopher Cheatham took a look at the issue after a group of Wisconsin residents filed a challenge to the LEED Gold certification of that state’s Northland Pines High School. The LEED standards, with Silver, Gold and Platinum certification levels, have become the nearly universal yardstick of environmental protection in the building and development industry. The LEED standards, and the rules for filing challenges, are set by the nonprofit U.S. Green Building Council.

Cheatham said the USGBC rules give unlimited opportunity to anyone who wants to claim that a project doesn’t deserve its LEED certification. “Anybody can challenge anything, at anytime,” Cheatham said.

In a series of posts on the Green Building Law Update blog, Cheatham outlined how USGBC rules give standing to anyone to make a challenge to any aspect of LEED certification, without any time limitation. Arlington lawyer Timothy R. Hughes, who lists construction litigation and LEED accreditation on his resume, said the Wisconsin case highlights the difference between the legal process and the process adopted by the USGBC. “It’s a real wild west approach,” Hughes said.

Since both public and private projects involve incentives such as rebates based on LEED certification, the possibility of a successful challenge raises questions about potential remedies for nonperformance. Despite those questions, Cheatham said he was unaware of any contract clause addressing a policy for handling a certification challenge.

Hughes agreed there are a lot of question marks. “If they jerk it after the fact because somebody complains, what happens?” Hughes said. “It’s uncharted territory.”

Steve MacIsaac, Arlington’s County attorney, acknowledged that the issue is just emerging on the local government front. He said noncompliance could be treated as a zoning violation, with the county asking for some sort of compensation, possibly equivalent environmental concessions elsewhere. “Our knowledge of how to deal with these issues is evolving,” he said.

Outside of challenges to a project’s environmental bona fides, the green litigation picture is a bit more mundane. The Maryland litigation, Southern Builders v. Shaw Development, involved a condominium project that was not finished on time. In one of the claims, the owner alleged the builder’s delay caused the loss of LEED certification and, as a result, the loss of valuable tax credits. The case settled, so no legal precedent emerged. “There’s not much guidance,” Hughes said.

Despite the LEED certification angle, the Maryland case looked a lot like any construction dispute. That’s the sort of case most green law observers expect to see as sustainability standards become a part of the ordinary set of construction specifications, said Hughes.

Like most construction lawsuits, he said, the fight over environmental standards comes down to the terms of the contract. “It’s not a real cataclysmic shift from basic construction law principles,” Hughes said.

It may not take long to test the theory. Hughes said the business climate has fostered a lot of underbidding lately, with prospects of performance issues and litigation to follow. “I think we’re going to be seeing a pretty aggressive claims climate in the next couple years,” He said.

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