Nation’s First Green Building Code Sets the Stage for Increased Litigation

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Until recently, green building litigation has been the subject of idle talk outside a handful of environmentally related claims. However, in response to the nation’s first state-level green building code adopted by the California Building Standards Commission earlier this year, developers are increasingly aware of the nature of these regulations as well as their potential legal pitfalls. The California Green Building Code targets all new construction—commercial and residential, public and private—and aims to reduce water consumption and set standards for energy efficiency, waste reduction, and environmentally sensitive construction and design.

“While California may be the first to have adopted formal, green building standards, some local governing bodies across the country have similar requirements and others are rapidly moving in the same direction,” notes Gregory McClintock, Akerman Senterfitt Shareholder and a senior environmental attorney in the firm’s Los Angeles office. “Developers nationwide will be watching to see how this new Code fares.”

Compliance with the standards set by the new Code may be difficult to determine. For instance, the Code sets forth percentage reductions for energy and water use, but does not provide guidance on how achievement of those requirements is to be measured or what type of materials and approaches are to be used to reach the reductions. “The uncertainties created by the new Code will undoubtedly lead to legal disputes over compliance, in particular litigation over the marketing of residential or commercial property that uses the term ‘green’ too loosely,” McClintock adds.

Real estate blogs are also buzzing about the nation’s first green building litigation. The suit involved the construction of a $7.5 million, 23-unit condominium project in Crisfield, Maryland called The Captain’s Galley. The project was designed to comply with Leadership in Energy and Environmental Design (LEED(R)) Silver certification by the United States Green Building Council (USGBC), but did not achieve this certification.

A dispute over claimed losses in green building tax credits between the owner and contractor of The Captain’s Galley demonstrated the degree of risk involved with green building projects. A lack of clarity in the formal construction agreements resulted in a dispute concerning who was responsible for submitting the application to obtain tax credits. The case revealed the danger for contractors, owners, and design professionals who simply rely on “standard form” construction agreements when dealing with green projects.

“The Captain’s Galley case demonstrates that projects involving green building regulations require clear contract language,” says Cecelia Bonifay, Chair of Akerman’s Green and Sustainable Development Practice Group. “Otherwise, there is a real risk of exposure to unanticipated liability for everyone involved.”

The surge of green building interest and concern regarding compliance with new laws and regulations is creating demand for law firms with distinguished, accredited green building practices. Retaining counsel that understands the evolving regulatory landscape surrounding green and sustainable development and that assists stakeholders in managing associated risks, is now particularly important.

“Green building is still an emerging field and developers and building operators are looking for knowledgeable legal assistance. They appreciate that qualified green building attorneys are now just as important to a green project as an experienced architect, engineer or contractor,” Bonifay added.

To support the needs of its clients, Akerman last year launched a firm-wide initiative to build one of the nation’s largest teams of green building attorneys. The firm looked to its nationally recognized construction practice, identifying senior attorneys with extensive experience in construction litigation and dispute resolution. “We knew that our clients would need attorneys with green building knowledge as well as actual experience working on the more complex national and regional construction projects,” noted Bonifay.

Akerman also rolled out study groups, seminars and office-wide conference calls to encourage participation in accreditation programs such as the USGBC’s Leadership in Energy and Environmental Design (LEED) examination program. “Dozens of attorneys instantly joined the effort,” said Bonifay. “We now have a team of more than 35 top-notch attorneys who are helping clients avoid the legal pitfalls associated with these new standards, and if necessary, get clients out of trouble.”

Attorneys in Akerman’s Green and Sustainable Development Practice Group are well equipped to help clients avoid potential pitfalls while also assisting in identifying and attaining green building incentives, where applicable. Akerman offers assistance with virtually every aspect of a green project including: acquisition, environmental and transactional due diligence, design, construction, contracting issues, financing, leasing and even sale of green assets. In fact, Akerman is one of the few law firms with multiple attorneys named LEED® Accredited Professionals (LEED APs) by the USGBC.

“We are very confident in the ability of our attorneys and in-house consultants to bring exceptional green building, construction, environmental, land use and general real estate knowledge to our client engagements,” adds Bonifay. “We are also thrilled by the success of our efforts to grow the number of LEED accredited attorneys in our Green and Sustainable Development Group. Expanding our green building practice is timely and necessary and provides a truly valuable service to our clients.”

Akerman’s Green and Sustainable Development attorneys are currently representing private and public sector clients, both nationally and regionally, on a range of green building matters. Clients include commercial and residential developers, real estate investment funds, and non-profit and governmental organizations.

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