Best Practices Construction Law : Construction Lawyer & Attorney : Matthew DeVries : Smith Cashion & Orr Law Firm : Green Building & LEED Litigation

The U.S. Environmental Protection Agency yesterday issued a final rule in an effort to reduce water pollution on construction sites. The rule, which is set to take effect in February 2010 over a four-year period, is targeted to improve the quality of water nationwide.  According to a press release by the EPA, the impact is significant: 

Construction activities like clearing, excavating and grading significantly disturb soil and sediment. If that soil is not managed properly it can easily be washed off of the construction site during storms and pollute nearby water bodies.

The final rule requires construction site owners and operators that disturb one or more acres to use best management practices to ensure that soil disturbed during construction activity does not pollute nearby water bodies.

In addition, owners and operators of sites that impact 10 or more acres of land at one time will be required to monitor discharges and ensure they comply with specific limits on discharges to minimize the impact on nearby water bodies. This is the first time that EPA has imposed national monitoring requirements and enforceable numeric limitations on construction site stormwater discharges.

Soil and sediment runoff is one of the leading causes of water quality problems nationwide. Soil runoff from construction has also reduced the depth of small streams, lakes and reservoirs, leading to the need for dredging.

The pre-publication rules (pdf), as well as the EPA's Fact Sheet on the final rule (pdf) are available online.  While it is too early to comment on the draft rule (...primarily because I have not had a chance to digest it all...), it is interesting to note that adoption of the rule came in response to a court order in a lawsuit alleging that the EPA failed to issue certain regulations under the Clean Water Act.  According to the Wall Street Journal, the court requried the EPA to issue the rule no later than December 1, 2009.

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I love seeing a case zig zag through the appellate process ... and I especially enjoy reading one where intermediate appellate court reverses the trial court and the highest court then reverses that intermediate appellate court.  I know, I'm sick.

In a decision released yesterday, Goff v. Elmo Greer & Sons Construction Company, the Supreme Court of Tennessee reversed the Court of Appeals and reinstated the trial court's decision approving an award of punitive damages in a construction case.  The owners of the property filed suit against the general contractor on a highway widening project.  The owners contracted with the general contractor to use their adjacent land as a lay down area in exchange for compensation.  When the contractor failed to pay the full contracted amount, the owners sued.

Following a trial, the jury found in favor of the land owner and awarded: (a) about $5,300 for the unpaid contract balance; (b) about $9,500 for damages resulting from blasting activities; and (c) about $3,300 for burying debris on the property.  The jury also returned a verdict of $2 million in punitive damages, which the trial court reduced to $1 million.

The Court of Appeals affirmed the trial court's judgment as to liability, but reversed the award of punitive damages based upon a finding that the trial court improperly considered Tennessee's environmental laws in approving the award.  The Supreme Court of Tennessee reversed, holding that the trial court properly considered Tennessee's environmental statutes in approving the award.

The Goff decision has a number of construction nuggets to analyze.  One of the more significant aspects of the opinion is the jury's award of punitive damages based upon various environmental laws without any finding of a violation of those laws.   The intermediate appellate court determined that because the jury found that the contractor had not committed an environmental tort, the trial court should not have relied on the environmental statutes and policies in affirming the award of punitive damages.  The Supreme Court disagreed:

The evidence supporting the nuisance claim was the proof regarding buried whole waste tires.  In order to determine the reprehensibility of burying whole waste tires, the trial court considered the State's policy regarding such action. To this end, the trial court correctly noted that the State has enacted legislation against burying whole waste tires, recited the public policy behind that legislation, acknowledged that [the contractor] was aware of the State’s policy against burying waste tires, and
observed that high civil penalties are permissible for burying waste tires. In our  view, the fact that the legislature has determined it necessary to prevent the improper burial of tires “to protect the public health, safety and welfare” is important in the discussion of the reprehensibility of [the contractor's] actions.

Interestingly, the Supreme Court did not decide whether a private right of action existed for a claimed violation of the state's environmental statutes because the jury did not find the existence of any "environmental tort" and neither of the parties raised the issue on appeal.

For the contractors out there, Goff is a good reminder of the total exposure (including significant punitive damages) for violation of state waste disposal and environmental laws.  For the legal practitioner, Goff instructs that a statute may be used to define the public policy for proving punitive damages even when there is no violation of the actual statute.

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Living in the SEC at this time of the year is exciting!  The competition is fierce and everyone has their favorite.  And I am not talking about football . . .

Last week, I highlighted that Tennessee Lt. Governor Ron Ramsey was speaking to a group of contractors in Nashville at the annual convention for the Associated General Contractors of Tennessee.  At the same time Ramsey was commenting that Tennessee should be the "green leader in the South," a four-member panel in Birmingham, Alabama urged business leaders to take advantage of its central location and become "the epicenter of green for the South."

Going Green: Sustainability in Tough Economic Times, which was sponsored by the Birmingham Business Journal, featured a number of green business executives who touted the region's ripeness for growth: "The Southeast is the fastest-growing area for green construction . . . . That is mostly because it is so far behind. However, Birmingham could tap into that growth."  Although many of the "going green" recommendations were about creating energy-efficient environments, one panelist believed that better siting should dictate the activities of business owners.  Chris Miller, co-founder of Piedmont Green Building Solutions, LLC, wondered why business wanted to build beyond the reach of downtown:

Birmingham-area business owners should focus on improving the city’s inner core instead of building in outlying areas, Miller said. It’s puzzling as to why a number of businesses build new facilities outside Birmingham on undeveloped land when there are plenty of opportunities to establish facilities in developed areas inside the city, he said.  “I wonder why people build outside of downtown when you already have this infrastructure in place,” he said. “It’s all about mindset and a culture change.”

The smack-down doesn't end in Birmingham.  Beginning with a reception later this evening ... and continuing all day tomorrow ... the first-ever Tennessee Green Building Summit will focus on green building initiatives in a tight economy.  The following organizations have committed to participation:

• Office of Energy Efficiency & Renewable Energy U.S. Department of Energy (DOE)
• Tennessee Valley Authority (TVA)
• State of Tennessee—Tennessee Department of Economic and Community Development
• Nashville Electric Service (NES)
• Association of Tennessee Valley Governments (ATVG)
• Southeast Energy Efficient Alliance (SEEA)
• National Association of State Energy Offices (NASEO)
• National Energy Services Coalition (ESC)
• National Energy Services Companies (NAESCO)

While I am sure that both Tennessee and Alabama have something to offer to this "greenest leader in the South" competition, it is important to remember the distinction between goal and outcome.  With respect to green buildings, one of the litmus tests is the number of LEED certified buildings.  According to last week's green building study by the Chicago Tribune, the only southern jurisdiction that made the "Top Ten U.S. Cities" was Atlanta. (Go Bulldogs!)  If you are talking about alternative and renewable energy legislation, then perhaps you will find most of the leaders outside the SEC.

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Which is worse: (a) one lawyer in a room of one hundred architects; or (b) one architect in a room of one hundred lawyers? 

Two weeks ago I found myself in the first category (... although I'm sure that I was not the only shark in the room ...) at a local United States Green Building Council (USGBC) meeting that featured the "2009 Top Ten Green Projects" awarded by the American Institute of Architect (AIA) Committee on the Environment (COTE). In case you don't know, every year COTE highlights the top green projects based upon the measures of sustainable design.  According to COTE, "Sustainability envisions the enduring prosperity of all living things ... [and] ... [s]ustainable design seeks to create communities, buildings, and products that contribute to this vision."  The measures of sustainable design include, among others, design and innovation, land use & site ecology, materials & construction, and energy flows & energy future.

The "Top Ten" from 2009 may be old news to many of you.  However, it is worth mentioning here because of the AIA / USGBC comparison that was highlighted in the 2009 presentation:

As you can see, the COTE Top Ten Measures go a few steps beyond the LEED rating system.  According to the speakers a few weeks ago, Henry Siegel and Kim Shinn (both were judges on the 2009 Top Ten panel), the COTE measures include both quantitative and qualitative measures (or "intangibles").  In the presentation above, the measures highlighted in yellow on the left are those areas not fully addressed by USGBC's LEED rating system. 

(... DON'T JUMP THE GUN, USGBC!... I am not done yet...)  This presentation was based upon the LEED v 2.2 criteria ... and not LEED 2009, which now addresses some of those areas included in COTE's Top Ten Measures (i.e., regional credits, future energy performance).  For the green-building newbie, the Top Ten Green Projects is a good starting point for seeing various sustainable measures carried out in actual building projects ... with cool pictures, too!

[NOTE: The full presentation can be found on AIA-COTE's website ... about halfway down on the left.]

UPDATE (8-1-09): Thanks to Michael at www.buildinggreen.com, who pointed out that Henry Siegel is past chair of AIA COTE and is currently a committee member. He was not a judge on the panel this year.

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Today’s post was written by François Lévy, an architect, author and professor. Lévy maintains a blog, Sustainable Architecture, which he describes as a collection of short and thought-provoking essays on sustainability and architecture. Lévy resides in Austin, Texas with his wife and three children.

As an architect and a concerned citizen, I am frequently required to evaluate the cost of a particular technology or artifact, and then voice my opinion or advise a client as to its value. Cost accounting is typically framed within the context of manufacturing or production. In this model, all contributing costs are determined (by one of several competing methods) only up to the moment a manufactured item is produced. Thus contributing expenditures are the sole determinant of value; cost accounting is hence inherently historical. Furthermore, it is inherently consumerist: in its particular analysis of the cost of production it implicitly treats the artifact as relevant only through the production process; afterwards consideration for the artifact is discarded in effect by neglect. At no time are the costs of the consequences of the artifact considered. In order to shed some light on some of the implicit difficulties in measuring cost, let’s look at a couple of seemingly innocuous commonplace technologies.

When we think about the environmental impact of an automobile, we tend to think of the car alone, as an object. But there are in fact two technologies at play: the technology of the artifact itself (the car qua particular machine), and the technology of the “ecosystem of carhood.” By the latter inelegant term I mean its embodied energy (the extraction, processing, and manufacturing of natural resources) and the consequences of its utility (in the form of hydrocarbon consumption, roads and the complex economic infrastructure, including sprawl, which support this particular form of mechanized personal transportation). The individual may enter a power relationship with the particular artifact, but is de facto helpless against this “ecosystem of carhood,” as that system controls, or at the very least heavily influences, her regardless of whether or not she individually owns a car.

As another common example of the limitations of cost accounting, consider weighing the merits of maintaining existing overhead power lines as opposed to running them underground (the grammatically unpalatable “undergrounding”). Such an analysis would inevitably point to some of the difficulties with calculating true costs, such as accounting for an artifact’s embodied energy and consequences. One can compare overhead and underground electrical distribution system’s relative reliability, but it becomes difficult to calculate relative lost productivity attributed to outages, not to mention lost billing opportunities to the utility company, and emergency repair costs. But where cost accounting fails utterly is in valuating qualitative factors like aesthetics, because these dimensions are social. In some cases individual utility consumers are unwilling to pay reasonable but significant sums for underground service, but in others communities regularly pay on the order of $1M per mile for conversion to such service. Collectively consumers seem willing to pay what individually they reject, even if the cost per distance is the same or similar.

In the end, cost accounting is only about, well, cost, and is not concerned with an artifact’s value. Any method for evaluating cost that relies solely on historical production data, rather than a community consensus of an artifact’s phenomenological context, will tell an incomplete story. An analysis of cost treats artifacts as objects (as in, “objectification”), pigeon-holing them as phenomena disassociated from their use, whereas considerations of value postulate that artifacts are meaningful as experiences in their broader social and environmental context. Cost is therefore not sustainable because it alienates artifacts from the environment; value is sustainable because it contextualizes artifacts as having agency within the larger environment.

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I know that I am a few hours early, but Governor Phil Bredesen is scheduled to sign the Tennessee Clean Energy Future Act of 2009 today at 1:30pm.  He will be joined by key legislators, as well as members of his Energy Task Force.

Among other provisions, the new law will provide for: (1)  a limited statewide residential building code to promote energy efficiency, (2) new energy usage guidelines for state buildings and vehicles, and (3) an extension of Tennessee’s emerging industry tax credit to the clean-energy technology sector. You can find the bill summary on the General Assembly's website, along with the full text of the new law.

Under the new law, the State Building Commission has the authority to implement various cost-saving measures. 

The measures may include, but shall not be limited to, maintenance, repair or replacement of lighting and mechanical equipment and related controls. Energy cost saving measures may be implemented through contracts with energy professionals including, but not limited to, energy service companies, commissioning and retro commissioning firms and agencies and energy auditing consultants.

There are no new state-wide LEED certification requirements, though.  In due time ... in due time.

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What does it take to become a Rockstar of Sustainability in today's environment?  As reported by Wendy Koch of USA Today, it takes the following:

• Being an architect in San Francisco with a desire to build your own eco-friendly home

• Taking 14 months to actually build it

• Designing a more, affordable alternative

• Stalking manufacturers to build the prefab home

• And ... winning an innovation award from the National Association of Home Builders for all the work you did!

This Rockstar of Sustainability is ... Michelle Kauffman ... and she has tapped into a growing market.  The modular homes range in cost from $100,000 to $1 million.  The USA Today article has an interactive home plan that demonstrates the green features.  As far as savings, Kauffman's own home has a zero-energy bill since the home produces about two times the energy (through solar panels) than the home uses.

Another Rockstar of Sustainability is ... Warren Buffet ... who is being reported as having introduced a line of green prefab homes through a Berkshire Hathaway subsidiary called Clayton Homes.  The green features include: well insulated exterior walls, floor and roof; low-e windows; metal roof designed for rainwater collection; No-VOC paint; high efficiency heat pump; and dual-flush toilets.  Other feature options include: 2-4 kilowatts of solar PV panels; bamboo flooring; tankless hot water heaters; Energy Star appliances.

Riddle me this, Batman Green Lantern, AP?  Which LEED credits should the project seek?

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Look around the internet and you are sure to find one of these:

The design team of a 28,000 sq. ft. public school hope to achieve SS Credit 6.2, Stormwater Design: Quality Control, in the LEED-NC Rating System. Incorporating which of the following green building elements into the design would aid the team in achieving this credit? (Choose three)

A. constructed wetland

B. solar hot water system

C. vegetated roof

D. infiltration basin

E. high-albedo concrete

The correct answers are A, C, and D. (Thanks www.intheleeed.com for the sample.)  Well, if you look around Nashville, you are sure to find a real life LEED AP exam question brewing on some property known as Bells Bend.  It's called the May Town Center ... and the development has both supporters and critics.  If you think I'm kidding about the exam question, watch this clip and listen for words like "sustainable site" "light reduction" and "green-washing":

Following hours of heated open hearings, the Planning Commission voted last week against the proposed land use plan for the development. According to the Nashville Business Journal,

The Metro Nashville City Council has final say on zoning changes and will take up the issue in a public hearing on July 7. However, with a negative recommendation from the planning commission, the zoning measure will need 27 votes from the council, rather than the 21 usually required. . . .The planning staff had recommended approval of a zoning request to allow the development, but that was contingent on the land use plan amendment. The commission then voted down the proposed zoning changes.

There are many of us in Nashville closely watching the May Town Center development and I look forward to reviewing some of the LEED-related issues on the project, as well as reporting back after the July hearings.

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I know it's a gamble to think that my wife or kids would be reading Best Practices ... but in case you do ... my birthday is right around the corner ... and I want one of these:

Gadgets like the Canadian-based ecobee Smart Thermostat are coming to America!  ecobee has partnered with Brady & Associates, as well as opened a new office in Florida, to roll out this digital, energy-saving thermostat.  The ecobee has an integrated programmable smart thermostat with a WiFi-enabled touchscreen that automatically sets your household to conserve energy with a touch of a button. 

The ecobee can now also be purchased online ... but that's not the only thing happening via the Internet.  You can actually monitor and control your home temperate remotely from a personalized web portal.  That means I won't have to get out of bed at night to turn on the air conditioner ... I can use my Blackberry (... or iPhone ... another birthday wish ...)

This post, however, is not entirely about my wants and desires.  Let's talk about this little gadget's effect on the green building industry.  For example, the ecobee Smart Thermostat was installed in the Minto's Inspiration line of echo-homes, which has been touted as "one of Canada's greenest homes."  It has been reported that the ecobee company built its product platform around the LEED rating system.  The company's Smart Thermostat was even selected for use in the "Smart Home: Green + Wired 2009" exhibit in March of this year, presented by Wired Magazine in partnership with Chicago's Museum of Science and Industry.  The promotional material indicates that the device can recoup its $385 price tag within the first 12-18 months of use.

Has anyone out there installed and used an ecobee?  Let me know before July 12 ... that special date right around the corner!

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Within the past couple of months, BNA started a new report called Infrastructure Investment & Policy Report.  Earlier this week, I was contacted by BNA reporter Kate Naseef to share some thoughts about HR 2454, the climate change legislation that was recently approved by the House Energy and Commerce Committee and its affect on the construction industry. 

According to AGC and ABC representatives, Naseef writes, the climate change bill is a "mixed bag" because it offers both opportunities for new construction and building modifications, but it could also lead to increased costs and delays given the regulatory hurdles. The article also highlighted comments from Cathy Altman, a good friend and construction attorney in Dallas:

Fewer, Bigger, Green Projects

 

As building shifts to more carbon-friendly facilities, there will be fewer, but bigger projects “because of the higher capital costs of green construction,” Cathy Lilford Altman, an attorney with Carrington, Coleman, Sloman & Blumenthal, L.L.P in Dallas, said.

 

A cap-and-trade program and renewable energy standards are going to further experimentation and use of new technologies and new construction means and methods, “which could open up opportunities, but also create risks,” Altman said. “There's a certain amount of trial-and-error that is going to be inevitable,” she said. Owners are going to want guarantees that designers and contractors might not be able to give until the new technologies and processes are tested.

 

Designers, engineers, and contractors are going to have to get accustomed to working with new materials and new technologies that add cost on the front-end of a project, Matthew DeVries, an attorney with Smith Cashion & Orr, PLC in Nashville and author of www.bestpracticesconstructionlaw.com, a construction law blog, said. Whether or not this results in savings down the road remains to be seen, he said. 

Although there are reports that HR 2454 will be brought to the House floor next week, it will be interesting to see any mark-ups from the Transportation and Infrastructure Committee chaired by Rep. James L. Oberstar.  For those of us outside the Beltway, keep us informed BNA!

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My kids yelled at me last night: "Dad! The plastic container goes in the plastic container box! NOT THE TRASH!"  Nice. Environmental-friendly-kids.  

Even in my day-to-day law practice, I am finding that I am taking small steps to lessen my impact on the environment.  (... Did I just say that?  Out loud? ... )  I am reading correspondence, project documents, and pleadings electronically.  I am selectively sending out correspondence "Via Email Only" to my clients and opposing counsel.  And I just started an monthly e-newsletter.  If you would like to join, please sign up. 

My first newsletter just went out this week and I have received numerous positive responses (... Hi Lauren! Hi Jeff! Hi Kelly! ...)  My e-newsletter host, MyEmma, and their partner, Plant-It 2020, planted 5 trees on behalf of Best Practices Construction Law and 1,645 trees on behalf of other customers who signed up in May. 

Whether law firm, non-profit organization, architect, engineer, owner-developer, contractor or supplier ... what are you doing to lessen your impact on the environment?

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As I was driving to work, a super-hero-like voice interrupted my morning news program on the radio: "Green Power Switch is coming to a neighborhood near you!  Green Power Switch will allow you, the consumer, to choose to purchase “green” energy from the companies that sell the power that TVA generates."

That’s right! The Tennessee Valley Authority and local power companies are banding together to offer their customers various alternatives of renewable energy (i.e., solar, bio fuels and wind).

Self, I ask, what’s the big deal with that? The big deal is that the speeches and PowerPoint presentations we’ve heard on renewable energy legislation and its effects on the construction industry are becoming a reality.  

Just a few weeks ago, the Green Ribbon Committee on Environmental Sustainability issued its recommendations to Nashville Mayor Karl Dean, including the following: 

• "Implement program at NES to switch from petroleum oil to a soybean-based oil for transformers used city wide."
• "Develop a Metro Green Fleet program to expand the use of electric vehicles, hybrids and bio-diesel to help diversify energy supplies, decrease emissions and support regional economic activity."
• Adopt an Advanced Metering Infrastructure (AMI) system for NES residential customers that would enable them to manage their energy consumption and conservation efforts.

From government initiative ... to legislative enactment  ... to industry standard ... to consumer incentive ... renewable energy will have a dramatic effect on the construction industry as a whole. Already, we are seeing green-related ordinances that affect the day-to-day business operations of your hard-hat construction contractors, laborers and suppliers.  Take, for example, the green cement ordinance in Dallas, Texas that requires use of cement from "dry kilns" versus "wet kilns."  That's good news if you operate a dry kiln ... not so good news if you operate a wet kiln.  In other instances, the issue is finding its way into the court system like City of Albuquerque v. AHRI, which blocked enforcement of various state energy conservation codes in New Mexico on preemption grounds. The plaintiffs were a group of HVAC and water heating equipment trade organizations, contractors and distributors.  (Steve Del Percio discusses the City of Albuquerque v. AHRI case on www.greenbuildingsNYC.com.)  

These are just a few examples of the 411 (... information ...) that you can find here at Best Practices Construction Law.  Check back soon for an overview of other green-related legislation affecting the construction industry.

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