There are plenty of conferences about global warming, climate change, energy policy, the environment, etc. So when a notice for yet another conference like this comes across my desk or shows up in my inbox, it takes a special flair to get my attention. One such event was the International Conference on Climate Change, which was held by the Heartland Institute last year.
I know what you’re thinking: Who wants to be spoon-fed more climate-change information from Al Gore’s crew? However, the description of this conference was different. The debate was not whether global climate change was a reality, but rather whether the change is caused by man’s activity.
The one-day conference was held in Washington, D.C., and attracted an audience of more than 200 scientists, engineers, policymakers, politicians and interested citizens. The speaker panel was an impressive collection of professors from MIT, the University of Virginia, University of Alabama and James Cook University; scientists from NASA and NOAA; geologists; congressmen and senators; and dignitaries from Europe.
The purpose of the event was to discuss science and economics surrounding climate change. It boiled down to some key questions for the day:
In a nutshell, the main themes of the conference could be summed up as:
My interest in attending was based on the assumption increases in anthropogenic (human-induced) greenhouse-gas concentrations is at the center of many of the current activities in regulations and legislation related to how we construct and operate buildings. If we all believe mankind is responsible for and can influence global climate change, then stringent energy codes and standards, green-building initiatives and environmental impact assessments are in order. However, if we believe nature rules the climate, then we would be better served concentrating on how to adapt to the impending changes in our climate.
I took special interest in a discussion about cool roofing. A question was raised about a comment made by U.S. Energy Secretary Steven Chu about the impact of painting all roofs white to mitigate global climate change. Chu had told the London Times the world’s carbon emissions could be significantly lowered by making paved surfaces and roofs lighter in color. When asked if governments should promote white paint as the global-warming solution, he answered, “Yes, absolutely. … White roofs everywhere, yes.”
Dr. Roy Spencer, director of Climate Research at the University of Alabama, Huntsville, stated he had reviewed the original paper, authored by Dr. Hashem Akbari from Lawrence Berkeley National Laboratory, Chu referred to in his comment. Spencer agreed, in general, with the calculations that were made, but he questioned some of the assumptions used for the model.
For example, he wondered whether urban areas of the planet truly cover 1 percent of the Earth’s surface as Akbari assumes, and he questioned the cost/benefit analysis of painting 60 percent of all urban roofs with a reflective paint. Spencer also noted that if a group is even postulating that climate can be changed by something as trivial as painting roof surfaces, it is an admission that the climate is indeed sensitive to changes--many changes.
Regardless of where you stand on the climate-change debate and whether you believe cool roofing can have an impact on the climate, I think saving energy by installing a cool roof is in the best interest of our national security because it can reduce our dependence on oil from unsecured and hostile nations. Saving energy through cool roofs helps building owners save money on utility bills, many of which are rising as caps are being lifted. Cool roofs improve the comfort of the occupants of the building and can work in synergy with insulation to improve the thermal performance of the entire roof system. If we are wrong about cool roofing, why not err on the side of energy independence, cost savings and human comfort?
Scott Kriner is president of Green Metal Consulting, Macungie, Pa. He is a member of Eco-Logic’s advisory board and available to answer your questions in Sage Advice.
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Appellate Division Grants Preliminary Injunction Based on Project’s “Revolutionary” Green Construction Financing
In November 2009, in Destiny USA Holdings LLC v. Citigroup Global Markets Realty Corp., the Appellate Division for the Fourth Department upheld (in a split 3-2 decision) the Onondaga County Supreme Court’s decision that Destiny, the developer of a highly publicized mega-mall project in Syracuse, N.Y., which is currently seeking LEED Platinum certification from USGBC, was entitled to a preliminary injunction requiring its construction lender, Citigroup, to fund certain pending draw requests under Destiny’s construction loan. 889 N.Y.S.2d 793 (App. Div., 4th Dep’t 2009).
The decision is noteworthy from a green-building legal perspective because the court specifically identified the Destiny project’s sustainable design features--and construction financing, which employed federally-backed Green Bonds--as so “unique” and “revolutionary” that money damages alone would not be sufficient to compensate Destiny if the injunction were denied. This allowed the court to find, under New York law, the potential existed for irreparable harm to Destiny if the project did not move forward while Destiny’s suit against Citigroup for breach of contract was pending.
In New York (like most jurisdictions), one of the elements for obtaining a preliminary injunction is whether there will be irreparable injury to the moving party if the court denies provisional relief. However, if the court can calculate the moving party’s damages with precision, there can be no irreparable injury while the action is pending because the moving party would be adequately compensated by money damages if it were to prevail at trial. The Destiny court, however, found two exceptions to the irreparable injury test based explicitly on the project’s green features. It held that
“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 [created under the American Jobs Creation Act of 2004 and authorizing up to $2 billion in tax-exempt, private activity bonds to be issued by state or local governments for qualified green building and/or sustainable design projects] 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. He further commented that the Project ‘is good for economic development and good for the environment.’ Thus, the unprecedented nature and scope of the Project makes it unique, so that it has no established market value and any damages sustained could not be calculated with reasonable precision.”
The court also found a second exception to the general rule because of the project’s highly touted green features, stating that “Destiny Holdings has established the enormous potential for harm to its reputation and the reputation of the entire ‘Destiny USA’ project. Harm to business reputation is harm for which money damages are insufficient and for which injunctive relief may be appropriate.”
I don’t think it’s unreasonable to infer here that the court was connecting the project’s green features to its “reputation” to carve out another exception to the general rule barring injunctive relief in similar contexts. For both of the foregoing reasons, the Appellate Division upheld the trial court’s decision but modified the order granting the preliminary injunction to require Destiny to post a bond to compel Citigroup’s performance under the loan agreement.
Interestingly, two justices joined in filing a dissenting opinion that ignored the project’s green features. The dissent stated that “there is no support in the record for the majority’s conclusion that an ‘enormous potential’ for harm to the reputation of Destiny Holdings exists, other than the bald assertion of a principal of Destiny Holdings that its reputation would be damaged as a result of its failure to complete the project. The core of the majority’s argument is that the nature of the project makes it unique and thus that Destiny Holdings would be entitled to specific performance [of the construction loan agreement]. While the scope of the Project may be unique to the region in both its size and impact, the record clearly establishes that the [construction loan agreement] itself is simply one to loan money in order to finance construction.”
I think there are a few important things to take from this opinion. First, notwithstanding the Destiny project’s massive scope, the Appellate Division has given owners a basis for arguing that green-building projects--regardless of their financing mechanism--are inherently unique. In the event of any type of dispute, owners or other parties, which might be seeking provisional remedies or are engaged in other motion practice (that, like in Destiny, is unrelated to the project’s green design features), can now rely on appellate authority that green-building projects are different and deserve different treatment under applicable law.
Conversely, the opinion suggests why construction and real-estate attorneys need to be well-versed in the green-building space; if you were asked to oppose a similar motion where the movant was arguing that “green buildings are different,” you would likely want to argue in opposition how, to date, many green-building projects have not resulted in such different outcomes from conventional projects (i.e, by identifying the ongoing LEED performance gap and studies analyzing the alleged rental and asset premium for different types of certified green buildings).
The decision is also important to note from a lender’s perspective. If potential borrowers looking to finance a green-construction project have the ability to argue their projects deserve special treatment in connection with any lending dispute, lenders may consider, for example, revisiting the terms of their construction loans or otherwise pricing this type of risk into the loan itself. Are there other green real estate-related legal issues arising out of this opinion that you might anticipate arising in connection with these types of construction lending disputes?
My thanks to Kevin Garrison of Baker Donelson for forwarding a copy of the Appellate Division’s opinion in this matter to my attention. Either of us would be happy to forward you a copy of the opinion upon request.
Stephen Del Percio currently practices real-estate and construction law at Arent Fox LLP, New York. He holds a degree in civil engineering from Columbia and is a graduate of William & Mary Law School. This blog first appeared on Del Percio’s Green Real Estate Law Journal. He can be contacted at firstname.lastname@example.org.
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One of the top renewable-energy legal decisions in 2009 has to be the injunction issued on Dec. 8 by U.S. District Judge Roger Titus in Animal Welfare Institute v. Beech Ridge Energy LLC. The ruling halted the construction of a 122-turbine wind project in West Virginia due to the failure to study adequately the impacts of the turbines on the endangered Indiana bat. The case highlights the importance of heeding the formal advisories of agencies, such as the U.S. Fish and Wildlife Service (USFWS), in the pre-construction evaluation of a project's impacts on local fauna.
Beech Ridge Project
The project obtained its siting certificate in 2006 with the West Virginia Public Service Commission concluding that the evidence before it did not support a conclusion that Indiana bats lived near the project. Following a trial in October 2009, the U.S. District Court in Maryland concluded otherwise and criticized the project's consultant for disregarding the repeated formal advisories of USFWS to conduct multi-year studies using a variety of tools (radar, thermal imaging, acoustical studies, mist-netting and other appropriate sampling techniques) during spring and fall to determine the presence and risks to endangered Indiana bats. The consultants primarily relied on surveys using mist-nets (small-screen fine-mesh nets) conducted during two summer seasons and only incidental, and apparently unintended, collection of acoustical data.
This did not sit well with the judge, who said that the mist-nets, which did not capture any Indiana bats, at best could only establish that the bats were not present in large numbers during the summer, but did not establish absence of the bats at other times of the year.
The acoustic data, which apparently a field technician collected on his own, did not get evaluated until trial and arguably indicated that some Indiana bats might be present. The court relied heavily on this disputed acoustic data to confirm "to a virtual certainty" the presence of Indiana bats and to conclude it is "a virtual certainty that Indiana bats would be harmed, wounded or killed" by the wind project in violation of the Endangered Species Act.
The court reluctantly issued an injunction halting the Beech Ridge project and chided the developer for "disregard[ing] not only repeated advice from the [US]FWS but also fail[ing] to take advantage of a specific mechanism, the [incidental take permit] process, established by federal law to allow their project to proceed in harmony with the goal of avoidance of harm to endangered species."
Had the Beech Ridge project followed the USFWS suggestions and combined acoustic data with the mist net surveys the developer might have been in a position to make a case for an incidental take permit under the Endangered Species Act and to have better evidence to oppose a court challenge. The cautionary tale in all this is that the injunction effectively halted the project, which at the time had poured foundations for the initial 67 turbines, taken delivery on turbines and strung transmission lines.
Wind Turbine Guidelines Advisory Committee
In the meantime, the USFWS Wind Turbine Guidelines Advisory Committee is preparing a set of recommended measures to reduce or minimize impacts to wildlife and their habitats related to land-based wind energy facilities. The American Wind Energy Association (AWEA) lists completion of the Advisory Committee work among its wind power trends for 2010, and the Beech Ridge decision suggests that such draft guidelines, if followed, might be helpful to avoid the harsh results of the case.
The sixth draft issued by a workgroup of the Advisory Committee in late October 2009 proposes a five-tiered approach to wildlife assessment and siting decisions that includes pre-construction evaluation of avian and bat impacts.
The draft guidelines specifically recommend against using mist-netting to assess the presence of bats and birds, in part because it is not feasible at the heights of the rotor-swept zone, and captures below that zone may not adequately reflect risk of fatality. If mist-netting is used, the draft guidelines recommend using it in combination with acoustic monitoring.
The Beech Ridge court's critique of the methodologies used in that case lends some credence to the Advisory Committee's draft recommendations. Even, however, as that process works toward final guidelines for approval by Interior Secretary Ken Salazar, they may not prove to be a hallmark event in wind power development for 2010 because of the strong likelihood of a court challenge.
Indeed, the attorney who represented the plaintiffs in the Beech Ridge case wrote a letter earlier in 2009 asking Secretary Salazar to disband the Advisory Committee because its draft recommendations "contain little but vague bromides and generic pronouncements" and "read more as an unabashed endorsement of wind power than a rigorous effort to address the harmful—and ever growing—effects of poorly sited and constructed wind power projects on wildlife." While that letter was written well before the current draft guidelines, it indicates that the final recommendations could well face litigation.
In the absence of implementation of the guidelines, the Beech Ridge case provides a strong signal that it does not pay to ignore or minimize an agency's formal advisories in the pre-construction evaluation of a project.
Michael Nesteroff is a shareholder and chair of the Sustainability & Climate Change team at Lane Powell P.C., Seattle. This blog first appeared on his blog in December 2009. Nesteroff can be reached at email@example.com or through www.lanepowell.com.
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The U.S. Environmental Protection Agency awarded the first ENERGY STAR to a building in 1999. Celebrate a decade of ENERGY STAR buildings with this excerpt of EPA’s historical retrospective of how it all began, where we are today and a glimpse of the exciting future that lies ahead.
Dawn of the EPA Partnership Program
The 1990s marked an important shift in the U.S. toward greater collaboration on pollution prevention. It was a time when business leaders and environmentalists recognized economic progress and environmental protection can, and must, go hand in hand.
EPA’s innovative approach to addressing climate change through greenhouse-gas reductions took shape in 1991under the banner of EPA’s Green Lights program. Through Green Lights, EPA promoted the use of efficient lighting systems in commercial buildings in situations where they maintained or improved lighting quality and were also profitable. The foundation of the program was a voluntary partnership that outlined a method for participants to follow, required annual reporting of energy savings, and offered a package of technical and marketing tools at no cost.
Debut of the Building Benchmark
With the momentum established by Green Lights, EPA moved beyond lighting to capture substantial additional savings by improving the energy efficiency of the whole building. EPA realized the real savings lay not just in technologies but in the interaction of the various building systems. Modeling software had shown buildings could reduce their energy use by 30 percent through efficiency improvements. Results from a study of 20 showcase buildings revealed that despite using the same whole-building approach, some buildings logged 50 percent savings while others only showed 12 percent. But what did that mean?
At the time, there was no way to objectively compare—or benchmark—the performance of one building to another. EPA turned to an existing inventory of commercial-building energy use to develop comparative metrics for evaluating performance. Using these comparative metrics, program officials realized the “very successful” building that cut its energy use in half still had above-average energy use. Even more surprising, the “less successful” building with the modest 12 percent savings was actually performing well above the average building. Moreover, the inventory revealed a wide distribution of energy performance between the best and worst performers, making a comparative metric even more important given such a large spectrum.
The results of the showcase building study represented a major turning point; it was clear organizations needed to measure real energy use to manage it and make sense of those measurements within an objective context.
New Tools of the Trade
After the ENERGY STAR program introduced the first labeled products, the Green Lights program evolved into EPA’s new whole-building program: ENERGY STAR for Buildings. By 1999, EPA emerged with an entirely new method and three new tools to encourage and assist organizations in their efforts to reduce carbon emissions:
With the debut of its three new tools, which still are in effect today, EPA introduced an entirely new way of testing efficiency and defining performance. This new approach allowed organizations to gauge the performance of all their buildings easily and at low cost, prioritize investment opportunities, learn from the best and verify the savings of their actions.
An ENERGY STAR is Born
History was made in January 1999 when EPA awarded the first ENERGY STAR to a 17-year-old, 74,000-square-foot municipal office building in San Diego. During the following decade, thousands of buildings followed suit, resulting in substantial GHG-emission reductions.
Early analyses of ENERGY STAR office buildings proved their financial and environmental value. ENERGY STAR-labeled buildings consistently use, on average, 35 percent less energy than their peers and emit 35 percent less carbon dioxide. Studies documented significant direct financial savings from reduced energy use and persistent savings from improvements in energy performance.
A Decade of Growth
Following EPA’s early success in the office building market, the agency tackled more than a dozen new commercial sectors. EPA also established energy performance indicators for various manufacturing industries and facilities, such as automobile assembly plants. Early champions, such as Hines, Arden Realty, Food Lion, Giant Eagle, JCPenney, Marriott, and the cities of San Diego and Louisville, were instrumental in the program gaining wider acceptance.
The transparent, Web-based method EPA built to deliver the ENERGY STAR energy-performance scale has enabled a new industry of service and product providers to help deliver the program and improve the performance of the market. Utilities retrieve and transfer important commercial building consumption information. State and local governments, energy-efficiency program sponsors and industry groups use it to evolve policies, voluntary programs and frameworks that might never before have been possible.
The value of an ENERGY STAR score has grown with the passage of time and delivery of energy efficiency to the commercial-building sector. An ENERGY STAR score is a quick, objective assessment, easily understood by the marketplace. Today, the energy performance of more than 120,000 buildings representing nearly 14 billion square feet has been measured through ENERGY STAR. More than 5,000 organizations have joined ENERGY STAR as building partners. Nearly 9,000 buildings have earned the ENERGY STAR. And, finally, ENERGY STAR partners in the commercial marketplace have helped prevent GHG emissions equal to the electricity use of 60 million American homes a year.
A Bright Future
Now, 10 years since the introduction of the ENERGY STAR label for buildings and 18 years since the inception of Green Lights, the ENERGY STAR approach to energy efficiency and GHG-emissions reductions remains unchanged. It is still rooted in the power of collaborative partnerships, importance of high-level organizational commitment, value of a good plan, consistent and objective way to measure real-world consumption and savings on a continuous basis, and recognition.
An exciting future lies ahead for the ENERGY STAR program. Improvements to Portfolio Manager will enhance its value as an energy-management tool and important nexus of climate, energy and green-building policies. Growing use of Portfolio Manager will enrich this extensive pool of real-world commercial building data.
ENERGY STAR will continue to expand to new markets, thereby creating greater opportunities for carbon savings. Organizations will continue to use ENERGY STAR as a platform for their energy-efficiency efforts and be better positioned as a result to address future climate policies, reporting requirements and regulations.
Finally, a new emphasis on the role everyone plays in improving the energy efficiency of the places where we work, play and learn will deliver greater consumer awareness, thus driving increased demand for energy efficiency. As the next decade dawns, more buildings across America will proudly bear EPA’s ENERGY STAR label, marking a greater future for us all.
Maura Beard is the strategic communications director for EPA’s ENERGY STAR Commercial and Industrial Buildings program. She has more than 18 years’ experience in public affairs and strategic communications, public policy and public administration.
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