Be Prepared for Expensive Disputes Unless You Develop a Thoughtful Plan in Advance

Last week I spoke as part of a panel at the annual BuildingsNY trade show in New York City.  Together with three other lawyers, we addressed one of the most important (and potentially valuable) issues facing building owners today:  The benefits and pitfalls of LEED certification and energy efficiency retrofits to reduce energy costs and lower environmental impacts by running greener, more efficient buildings.

My good friend Stan Alpert led off the discussion with a few examples of litigation over LEED certification.  In one lawsuit, an energy efficiency consultant alleged that the U.S. Green Building Council (USGBC), which manages the LEED certification process, is fraudulently misleading consumers and fraudulently misrepresenting energy performance of buildings certified under its LEED rating systems.  The suit also alleged that LEED is actually harming the environment by leading consumers away from using proven energy-saving strategies.

That lawsuit was dismissed, but not on the merits.  The court found that the plaintiff lacked "standing" to bring the suit because he did not compete directly with USGBC and could not establish that he had suffered competitive harm.  So, while the decision was a victory of sorts for the USGBC, it did not settle the questions raised about the legitimacy and effects of LEED certification.

Stan pointed out that LEED certification has traditionally focused on the building as designed, and has not required any ongoing monitoring of building energy performance to establish whether or not the design is actually generating energy and cost savings.

My part of the panel discussion picked up on that point and focused on the nitty-gritty details of actually measuring and quantifying changes in energy consumption and costs as a result of either designing a more efficient building or retrofitting an existing building with new technologies.  The best known methods for accomplishing this task are found in the International Performance Measurement and Verification Protocol (IPMVP).

The single most important aspect of a Measurement & Verification (M&V) plan is establishing an accurate and reliable baseline.  This requires detailed data about not only energy consumption, but also the use, occupancy and operation of the facility, as well as other factors that affect energy consumption.  For example, we all understand intuitively that changing weather conditions will impact energy usage in a building.  Less obvious are some of the operational aspects of buildings.  Changes in electrical loads, repairs to or replacement of equipment, additional usable square footage, higher or lower occupancy levels or hours of operation can all have significant impacts on energy consumption.

If all the variables affecting building energy performance are accounted for in the baseline energy consumption measurements, then M&V becomes an easy process.  Simply measure post-retrofit energy consumption adjusting for all the same variables and you can calculate the difference in energy consumption and costs.  If you do not account for all the variables in the baseline, however, any later disputes can become very expensive.  Without an accurate baseline, you will either not be able to prove whether the savings exist, or you will have to engage in very expensive computer modeling of the building to establish the baseline.  That modeling could cost 10% of the total project cost or more.

Scott Feldman of software (and sustainability) giant SAP followed with an awe-inspiring presentation on a LEED Platinum building designed and built by SAP in Pennsylvania.  Rather than give you mere snippets of this amazing building, I encourage you to view the PowerPoint Slides, which include slides presented by all four speakers.

Gail Wisner concluded our panel discussion with an overview of low-cost ways to reduce energy costs in multi-family housing.  Gail also provided an overview of the many financial incentives available to building owners for energy efficiency projects.  I highly recommend her slides as well.

John Howley
New York, New York