Counsel’s Role in Sustainable Solutions: Pay Now or Pay Later
Abstract
What, if any, connection is there between law and sustainability or sustainable development? Law, like sustainability, seeks to conserve our rights and those of others. Logic dictates that these fields must intersect. A full analysis of all statutory, regulatory, and jurisprudential authority that pertains to sustainability principles would be voluminous and daunting, not only to the author but also to the reader. This article aims instead at more modest and efficient goals by providing an overview of the prevalent legal issues associated with sustainable development while also offering potential solutions to these issues.
Attempts to define sustainability have been offered by many trade organizations and textbooks. Perhaps the most cited definition of sustainability was formulated at the 1987 convention of the Brundtland Commission; however, that definition is lacking, as it utilizes a negative in defining sustainable development, instead of encouraging positive and proactive action and thought.
The first sustainable development pioneers did not even realize they were founding a movement. Legislation began to more prevalently influence sustainability during the presidential administrations of the 1960s and 1970s. Although legislative and regulatory authority has expanded over the last thirty to forty years, including the introduction of tax credits and other incentives related to sustainable development, the largest strides have resulted from standards developed by non-profit organizations. As technology evolves, sustainability law must also evolve to keep pace with the technology and principles developed by private organizations.
Many of the legal issues surrounding sustainable development are neither new nor novel; they are issues encountered on most construction and development projects. Some of the more common issues relate to contract formation, breach of the standard of care, breach of contract, breach of warranty, and intellectual property issues. Sustainability principles offer a twist on these issues, however, which may have direconsequences for the unwary. Some suggestions or proposals to mitigate risk and address these issues include self-education and awareness, client education and interaction, and if necessary, engagement of legal counsel during the negotiation and drafting of the contract, employing sustainable objectives.
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References
Michael Durham is a partner at the Baton Rouge office of Crawford Lewis, PLLC. Crawford Lewis also main-
tains an office in New Orleans, Louisiana.
Frequently throughout this work, the terms “sustainability” and “sustainable development” are utilized inter-
changeably due to the frequency of this occurrence in much of the literature on this subject.
Black’s Law Dictionary defines “law” as “[t]hat which is laid down, ordained, or established. A rule or
method according to which phenomena or actions co-exist or follow each other.” Black’s Law Dictionary, 6th
Edition, 1991.
As one of our great innovators, Albert Einstein, imparted many years ago, “The world will not evolve past its
current state of crisis by using the same thinking that created the situation.”
Anderson, Paul Thomas. There Will Be Blood. Daniel Day Lewis (1987).
These proposed solutions, however, are provided for educational and informational purposes only and do
not constitute legal advice. For a full analysis of the issues discussed herein, and how they may apply to
individual circumstances in a specific jurisdiction, counsel should be engaged by the reader.
Not surprisingly, a commonly used offshoot of the term sustainability, “green,” topped the 2009 list published
by Lake Superior State University of words to be banished from our vocabulary due to overuse.
A term—”greenwashing”—has actually been coined for the “fools green” espoused by these charlatans.
Even Wal-Mart has boarded the green train by announcing it plans to implement a sustainability index within
the next five years, which will require all products sold in its stores to have a green rating on the their label.
See, e.g., http://www.nytimes.com/2009/07/16/business/energy-environment/16walmart.html. Last visited
October 14, 2010.
USGBC stands for U.S. Green Building Council; LEED stands for Leadership in Energy and Environmental
Design, which is discussed in great detail herein.
“Cradle to cradle” is a design philosophy that considers the entire lifecycle of a product, including the recy-
cling of the product or material at the end of its useful life. See William McDonough & Michael Braungart,
Cradle to Cradle, New York (2002).
While there is no standardized definition of “green building,” the EPA provides that “green building is the
practice of creating structures and using processes that are environmentally responsible and resource-efficient
throughout a building’s life cycle from siting to design, construction, operation, maintenance, renovation, and
deconstruction. This practice expands and complements the classical building design concerns of economy,
utility, durability, and comfort. Green building is also known as a sustainable or high performance building.”
Environmental Protection Agency, Green Building Basic Information, http://www.epa.gov/greenbuilding/
pubs/about.htm (last visited October 11, 2010).
Arguably, the first sustainability pioneers were Native Americans and other indigenous people who lived in a
manner similar to the definitions provided in the previous section.
See 42 USC §7401, et seq. The Clean Air Act was subsequently amended in 1970 and 1990.
42 USC 4321, et seq.
42 USC §6201, et seq.
See 16 USC § 2601, et seq.
Robert U. Ayres & Ed Ayres, Crossing the Energy Divide, Wharton Publishing (2009).
The Ayres inform how a proposed “win-win” transaction for Cabot Corporation, Columbian Chemicals, Pri-
mary Energy, and one of the local utilities in Louisiana was blocked by the utility service provider because it
would not only lose a portion of its load but would also be unable to build more capital infrastructure, which
costs it could pass on to its ratepayers. See Robert U. Ayres & Ed Ayres, A Bridge to the Renewable Energy
Future, World Watch (2009).
Id.
See 33 USC § 1251, et seq.
Many of these laws or regulations are discussed in greater detail herein.
A copy of the Executive Order is available at http://www.hss.energy.gov/nuclearsafety/env/
rules/74/74fr52117.pdf. Last visited October 14, 2010.
A copy of the guidance is available at http://www.sec.gov/rules/interp/2010/33-9106.pdf. Last visited Octo-
ber 14, 2010.
The Green Guides can be found at http://www.ftc.gov/bcp/grnrule/guides980427.htm. Last visited October
, 2010.
See EPA to Set Modest Pace for Greenhouse Gas Standards / Agency stresses flexibility and public input in
developing cost-effective and protective GHG standards for largest emitters located at http://yosemite.epa.
gov/opa/admpress.nsf/d0cf6618525a9efb85257359003fb69d/d2f038e9daed78de8525780200568bec!OpenDocume
nt. Last visited January 18, 2011.
There is, however, an Office of Federal Environmental Executive, which provides that it protects sustainability
and environmental stewardship through federal government operations. This office was formed by Executive
Order in 1993.
It should be noted that during this same time period, automobiles accounted for approximately 20.5% of
carbon dioxide emissions. See, generally, 2000-2009 statistics on energy usage and consumption published by
the U.S. Energy Information Association located at http://www.eia.doe.gov.
Id.
Zero sum buildings are energy neutral or utilize no more energy than they produce. Energy surplus buildings
produce more energy than they utilize.
Other rating systems or standards not discussed herein include the Energy Star Program developed by the
EPA, the Green Globes developed by Green Building Initiative, ASHRAE Green Building Standard 189.1, and
the BRE Environmental Assessment Method (BREEAM), which is utilized predominantly in Europe.
The rating system subdivision does not apply to single family homes.
GBCI stands for Green Building Certification Institute. Previously, GBCI hired third parties to certify projects,
Strategic Planning for Energy and the Environment
but as of July 2010, it announced it is taking over all aspects of the review and certification process.
One of the criticisms of LEED is the fact that the standards are implemented and certification performed by
non-governmental actors. When mandated by city code or state law, this effectively allows a non-governmen-
tal actor to perform ministerial duties typically performed by a governmental actor, which potentially infringes
on due process rights.
A private citizen has the right to challenge certification under Section 9.3 of the LEED standards. This issue is
addressed in further detail herein with regard to the certification challenge concerning Northland Pines High
School.
Baltimore is actually in the minority of jurisdictions, as its sustainable building ordinances provide that, subse-
quent to July 1, 2009, all new construction and renovation of buildings over 10,000 square feet must achieve a
silver rating under the LEED standards, as certified by USGBC. See generally Baltimore Sustainability Program
powerpoint, prepared by Baltimore Office of Sustainability located at http://www.mdp.state.md.us/PDF/Our-
Work/RoundTable/20080731/BACI_Sustainability_Office_Roundtable_20080731.pdf. Last visited October 12,
While many are aware of rebuilding in New Orleans, few are aware of the disaster sustained by Greensburg,
Kansas and the steps it has undertaken to rebuild through sustainable development principles. More informa-
tion can be found at greensburgks.org.
See selected section of Boston Zoning Code located at http://140.241.251.212/pdf/ZoningCode/Article37.pdf.
Last visited October 11, 2010.
See District of Columbia Code, D.C. Code §6-1451.01, et seq.
Despite this requirement the Mayor of the District of Columbia may grant a waiver if there exists (1) substan-
tial evidence of practical infeasibility or hardship of meeting the green building standard; (2) a determination
that the public interest would not be served by complying with the ordinance’s requirements; or (3) other
compelling circumstances.
Id.
A guide to the legislation can be found at http://www.documents.dgs.ca.gov/bsc/CALGreen/CALGreen-
GuideFirstEdition8-2010.pdf. Last visited October 14, 2010.
Many surveys on green building note that one of the major impediments to the sustainable development
movement is the belief that up-front costs for green projects are astronomical as compared to conventional
construction. While the up-front may be slightly higher, the life cycle costs are much less. Some governmental
bodies believe that if they can reduce the up-front costs, green construction will soar.
The full IGCC and synopsis may be downloaded from the ICC website at http://www.iccsafe.org/cs/igcc/
pages/default.aspx. Last visited October 11, 2010.
The legal analysis contained herein is a high-level overview and summary of many fundamental legal prin-
ciples. It is offered for educational and informational purposes and should not be relied upon by any party. To
fully address the issues contained herein and how they may apply to your specific circumstances, it is recom-
mended that you consult an attorney.
An overview of LEED related codes can be found at www.usgbc.org/publicpolicy/search/publicpolicies.
aspx?pageid=1776. It should be noted that these codes only apply to LEED and are not always 100% correct.
Although one should not rely on the search engine fully, it is a good starting point.
Interestingly enough, while this article was being written a suit was filed against the USGBC by Henry Gif-
ford and Gifford Fuel Savings, Inc., although on different grounds. See Gifford, et al., v. USGBC, et al., No.
:10 CV-7747, S. Dist. NY 2010. A copy of the case can be found at http://www.greenbuildinglawupdate.com/
uploads/file/Class-Action-Suit-v-USGBC-SDNY-10_12_10.pdf. Last visited January 18, 2011.
AHRI v. City of Albuquerque, 2008 U.S. Dist. LEXIS 42135 (D.N.M. 10/3/2008).
See Green Building Law Blog at http://www.greenbuildinglawblog.com/2010/06/articles/litigation/bia-v-
washington-state-building-council/. Last visited October 10, 2010.
Id.
It should be noted that the Okeson decision was overruled by the Washington State Legislature in 2008 with
the passage of Wash. Rev. Code § 54.16.390.
See Carl J. Circo, Does Sustainability Require a New Theory of Property Rights, 58 Kan L Rev 91, 146 (Oct.
.
The City Council provided that “global warming represents a clear and increasingly imminent danger to the
economic and environmental health of the world, and to specific qualities of life for the Seattle area including
water supply, hydroelectric energy production, air quality, forest health, species protection and recreational
activities.” See Okeson, at 440.
Euclid v. Amber Realty Co., 272 U.S. 365, 395(1926)
Id. See Footnote 31, at page 145.
A full analysis of federal and state energy and renewable energy tax credits is beyond the scope of this article.
Under certain circumstances, appropriate structuring of the transaction and ownership of the equipment may
maximize the benefits to the municipality and developer.
See 26 USC §45. The credit applies to the following types of energy projects: landfill gas, wind, biomass,
hydroelectric, geothermal electric, municipal solid waste, hydrokinetic power (i.e., flowing water), small hydro-
electric, tidal energy, wave energy and ocean thermal.
See Public Law 111-5, American Recovery and Reinvestment Act of 2009.
See Database of State Incentives for Renewable Energy at http://www.dsireusa.org/summarytables/finee.cfm.
Last visited October 12, 2010.
For illustrative purposes, this issue is discussed in much greater detail herein.
Although there currently exists stringent laws and regulations that are enforced by the U.S. Nuclear Regula-
tory Commission, as with any product or service that becomes more widely used, increased regulation is sure
to follow.
See DOE Publication, The Smart Grid: An Introduction, located at http://www.oe.energy.gov/SmartGridIntro-
Winter 2012, Vol. 31, No. 3
duction.htm. Last visited October 8, 2010.
An entire section of this work is devoted to energy efficiency performance contracting, as perhaps no other
offshoot of sustainable development has spawned an industry to rival performance contracting. While LEED
initiatives are found throughout the world, these have previously focused on design standards, while energy
efficient performance contracting focuses on contractual and statutory principles. Additionally, enabling energy
efficiency performance contracting legislation has been introduced in every state, while LEED standards have
never been enacted by a state legislative body.
Historically, energy efficiency performance contracting has emphasized lighting retrofit and HVAC efficiency.
Over the last several years, this industry has expanded to include municipal wastewater and water treatment
facilities, as well as renewable energy projects utilizing wind or solar power.
See, generally, Dr. Shirley Hansen, PHD., Performance Contracting: Expanding Horizons (2nd Ed. 2006).
ESCOs develop, design, and finance energy efficiency projects, install and maintain the energy efficient equip-
ment involved, measure, monitor, and verify the project’s energy savings.
The IPMVP provides an “an overview of current best practice techniques available for verifying results of
energy efficiency, water efficiency, and renewable energy projects.” See, generally, International Performance
Measurement and Verification Protocol, 4th edition (2009), available for download at www.evo-world.org.
Id.
A word of caution—although the IPMVP may be the standard by which energy savings and measurement is
defined, if it is not incorporated in the applicable contract or adopted by the jurisdiction in which the services
are provided, savings measurement may be interpreted under a less reliable method, or even a standard
developed by legislative and administrative officials that has no roots in best engineering practices.
It should be noted that performance-based energy efficiency contracts are not a method for bypassing state
bid laws to obtain new equipment, but are services contracts, where the equipment installed is merely a
vehicle to provide the services.
For illustrative purposes, as to the many issues that can occur over a short period of time, concerning not
only energy efficiency performance contracting legislation but also sustainable development legislation, a
detailed analysis of recent issues concerning performance contracting legislation in Louisiana is provided.
Maintenance savings are defined in Louisiana as operating expenses eliminated and future capital replacement
expenditures avoided. See La. R.S. 39:1496.1(D).
In June 2010, a performance contract was executed with a local school board, which was the first performance
contract executed in Louisiana between an ESCO and a local agency since 2006.
See La. Atty. Gen. Op. 07-0002.
Under Louisiana law, the Attorney General can only provide advisory opinions, and the opinions are of no
precedential value. They can be withdrawn, modified, or overruled subject to decisions of a court of law.
Siemens Building Technologies, Inc., v. Iberville Parish School Board, 978 So. 2d 328 (La. 2008).
Many clients ask how a contract can be determined illegal after negotiation and execution in the United States
of America. Generally, the contracts cannot, as financing with third parties and other issues are integrated into
the contracts. If the contract violates the public order, however, it can be declared illegal as a matter of law.
In part as a result of Hurricanes Katrina and Rita, as well as the Deepwater Horizon Oil Spill, Louisiana
has recently become more progressive with regard to sustainable development legislation. It is anticipated
that through the challenge of these tragedies, the state will become more resilient and sustainable, as well as
undertake a leadership role with regard to sustainable development legislation.
See, e.g., Caldwell v. Dept. of Local Govt. Fin., 2007 Ind. Tax LEXIS 15 (Ind. Tax Ct. Mar. 12, 2007) and People
ex rel. Board of Trustees of Chicago State University v. Siemens Building Technologies, 900 N.E. 2d 414 (Ill.
App. 3d 2008). In addition to these cases, there have been several other cases throughout the U.S. that have
been resolved at the trial court level, arbitrated, or settled prior to a decision.
At least one court case disagrees with this point. In Destiny USA Holdings, LLC v. Citigroup Global Markets
Realty Corp., 889 NY S. 2d 793 (NY 4th Dept. 2009), the Court found that green building specifications were
unique and “greenness” makes it difficult to calculate damages. The dissent in this matter disagreed.
Throughout the last two sections, the term “design professional” is utilized as a generic term covering engi-
neers, architects, surveyors, and other designers.
A typical construction defect/breach of contract case that incorporates many of the legal issues discussed in
this section is Gidumal v. Site 16/17 Development, LLC, N.Y. County Index No. 105958/10 (New York County
Supreme Court, May 5, 2010), which generally concerns the failure of a developer to deliver as promised, but
more specifically concerns the failure of a building system to deliver as promised. Further information con-
cerning this suit can be found at http://www.greenrealestatelaw.com/2010/05/unit-owners-file-suit-against-
leed-gold-hopeful-riverhouse-in-battery-park-city/. Last visited January 22, 2011.
Further information on this suit can be found at the blog Construction Law Musings. See http://construction-
lawva.com/builders-association-seeks-cut-down-grassroots-green-building-program-guest-post/. Last visited
January 22, 2011.
The elements to establish a claim for negligence vary from jurisdiction to jurisdiction, and a full legal analysis
is generally beyond the scope of this article. However, generally, to establish a claim for negligence, a plaintiff
must prove (i) a duty; (ii) a breach of the duty; (iii) the breach caused damages; and (iv) actual damages. See
Carr v. City of New Orleans, 626 So.2d 374, 380 (La.App. 4 Cir.1993); writ denied, 94-0062 (La.3/11/94), 634
So.2d 398. Due to variations in law among jurisdictions, the legal issues and analysis addressed herein follow
Louisiana law. This analysis is far from comprehensive and is only provided for educational and informational
purposes; it is not to be relied on by any party. For an analysis of how these issues may pertain to your facts
and circumstances, the engagement of counsel is recommended.
See, generally, Dumas & Associates, Inc. v. Lewis Enterprises, Inc. CA No. 29,900 (La. App. 2 Cir. 12/22/97),
So. 2d 433.
It should be noted that while the owner does not have a contract with the engineer, it may have a claim for
negligent misrepresentation or even breach of the standard of care, depending on the jurisdiction.
Strategic Planning for Energy and the Environment
See, generally, Sams v. Kendall Construction Co., 499 So. 2d 370 (La. App. 4 Cir. 1986).
The Spearin Doctrine is almost 100 years old and arises from United States v. Spearin, 248 U.S. 132 (1918).
See, generally, KiSKA Construction Corp., v. Washington Metro Area Transit Authority, 321 F. 3d 1151 (D.C.
Cir. 2003) and bg., 923 F. 2d 871 (Fed. Cir. 1990). Full opinion at 1990 U.S. App. LEXIS 21618.
Crowley at *5.
Id.
Shaw Development v. Southern Builders, Case No: 19-C-07-011405, Circuit Court for Somerset County, Mary-
land. (2007).
Although inapplicable to professional liability policies, some builder’s risk and general liability coverage
is being provided in the form of green endorsements to cover such things as vegetated or solar roofs and
alternative power systems. This coverage may include the cost of hiring a third party professional to ensure
peak performance of the systems, as well as compliance with applicable certification standards involving
Energy Star rated electrical equipment, roof and insulation materials, energy-efficient lighting systems, and
water-efficient interior plumbing. In all likelihood, both endorsements and riders will soon be available that
will significantly affect professional liability coverage on sustainable development.
As with many other legal theories addressed herein, a full analysis of breach of contract claims is not
provided, due to variations among jurisdictions. This cause of action is only mentioned for educational and
informational purposes and to provide awareness of potential pitfalls in sustainable development contracts.
While some jurisdictions allow recovery for undocumented work on a theory of betterment or equitable ad-
justment, efficiency and good project management mandate that all changes be documented by the contractor.
The B214 may be incorporated into the owner-architect agreement or used as a standalone document.
See Guidebook for ConsensusDOCs 310.
Another similarly cited term in the industry is performance slippage, which means the project does not
perform as planned or anticipated, which is usually only discovered after construction is complete and perfor-
mance commences.
Id.
To reiterate a previous point, a private citizen has the right to challenge certification under Section 9.3 of the
LEED standards.
See FN 47, Id.
A quandary may be created if the developer frequently works with the same lending institution, due to the
specialized knowledge and training possessed by the lending institution. Although the developer may wish to
utilize an experienced and knowledgeable financial institution to ensure that funding is provided and that the
project moves forward, this relationship could create greater risks for the developer.
Again, the information provided herein is purely for educational and informational purposes and is not a full
legal analysis of a claim for fraud or the likelihood that a party would prevail on the prosecution or defense
of said claim, all of which depend on the facts and circumstances as well as the governing jurisdiction.
In reality, a good performance contract should have an adjustment provision that addresses these unintended
and unforeseen consequences, should they substantially differ from the historical information on which the
contract was based.
See 16 CFR §260, et seq.
In addition to being investigated and potentially prosecuted by the FTC, a party may also face a private civil
suit for false or misleading descriptions in commerce pursuant to Section 43(A) of the Lanham Act.
A version of this scenario and multiple other scenarios are discussed in a presentation provided by Frank Mu-
sica in May 2007 entitled “Don’t Let Green Design Cause Red Ink.” A copy of the presentation can be found
at http://www.greenbuildinglawupdate.com/uploads/file/Musica%20AIA%20Slideshow.pdf. Last visited Octo-
ber 12, 2010.
Although arbitration procedures are costly, through a well-drafted arbitration clause, one can ensure having a
knowledgeable and experienced professional resolving a dispute, as opposed to someone who has little to no
construction, much less sustainability, experience. It is also advisable, when possible, to refrain from agreeing
to dispute resolution in the other parties local state or city court, and instead opt for the resolution of disputes
in federal court.
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