Q: The current trend is moving toward green building design, as well as toward the U.S. Green Building Council’s Leadership in Energy and Environmental Design (LEED) standards being implemented throughout the country. What is the legal impact of all of these standards?

A: In California alone, more than 120 localities have adopted mandatory green building standards, which form a recent wave of new laws. These laws typically encompass LEED standards—which have become a benchmark in many jurisdictions for green building regulations and associated requirements. Nonetheless, there appears to be a number of competing threads in different building standards, and none of the localities, as well as federal and state agencies, appear to be striving for one set of coherent comprehensive building regulation standards. Instead, they’re simply jumping on the green building band wagon. Regrettably, some of the trend toward adoption of green building standards can be attributed to election year promises to reduce the anticipated future carbon footprint of many municipalities; and many of the new measures seem to come with little concern for the impact of the new regulation on the construction industry or the eventual end users of the buildings. In this case, as with most legal questions, you need to be diligent in learning what green laws govern in your project’s jurisdiction.

Q: What happens if our contract calls for us to meet a certain goal, for example a LEED gold rating, but ultimately the building we designed does not achieve certification due to a number of problems that have nothing to do with our firm’s work?

A: If the standard is missed, a lot is going to depend on the specific contract language that was used in your agreement with respect to the certification requirements. A lot will depend upon how the criteria are characterized in your contract. Were you designing to guidelines or were you stating in contract language certain standards would be met? In the case of specific standards, your firm may have inadvertently created a warranty of the design to meet standards as opposed to design in accordance with guidelines—which are generally recommendations or goals—as opposed to a promise to achieve a certain result. Another issue: Does the contract address how the project will be assessed for purposes of determining proper certification? Is there a tool in the contract for measuring success in terms of the built environment? Many contracts are silent as to the result to be achieved, other than a general reference to a standard. Presently, without adequate contract language, it is going to be difficult to measure performance, let alone estimate or measure compensation for any alleged damages. In fact, many have argued that the damages are speculative, and therefore, uncertain in the event a project does not achieve certification because, after all, what is the monetary loss? All the foregoing is complicated by the lack of a universal standard, unpredictability in the regulatory environment, and the difficulty in quantifying or measuring performance.

Q: Generally speaking, what should our contracts address in terms of green issues?

A: This is a difficult question and will vary from jurisdiction to jurisdiction as the plethora of green standards are codified. But generally speaking, in terms of a design contract, green aspects should be characterized as a goal or guideline that the designer will strive to achieve. The contract should be clear in addressing guidelines versus building or design standards. The contract should also note any limitations, specifications, the commissioning process, or commissioning scope of work, which generally leads to the certification process. The contract should also attempt to identify how success is going to be defined in terms of achieving green requirements. Without a proper definition of success, the owner and the designer will no doubt be wrestling with their idea of success in the event the project turns out to be a disappointment and lawsuits are filed. Green design, like any other element of a contract, must be addressed in terms of risk. Many in the industry recommend developing a green management plan to implement green design. Keep in mind that the owners shift the risk of failing to achieve certification or green goals to designers and contractors. Your contract provisions must be drafted to address certification requirements. Always keep in mind to avoid taking on risks that you can not control, avoid, or properly delegate to the responsible party.