One of the more infuriating things about lawyers is that often, if they do their job right, their client wins and no one else benefits from it. This is what happened Monday before Judge Sand in the Southern District of New York in the closely followed green building case, Gifford v U.S.Green Building Council. The judge, in a short Memorandum & Order barely over seven pages (attached below) dismissed Mr. Gifford's case on procedural grounds. So we are left to wonder about the merits.

Mr. Gifford and his co-plaintiffs are building engineering professionals. They assert that the USGBC's LEED standard is false and misleading and has injured them in their business. Specifically, "LEED-certified buildings are no more energy-efficient than non-LEED certified buildings.  USGBC's own study data on the subject indicate that, on average, LEED buildings use 41% more energy than non-LEED buildings.  There is no objective empirical support for the claim that LEED buildings consume less energy.  LEED buildings are less efficient because the criteria that USGBC purportedly uses to certify buildings do not correlate with energy efficiency."  First Amended Complaint ¶ 4 (attached below); also id. ¶ 32 (providing more detail).  As a result of the LEED claims made by USGBC, customers purchase LEED services rather than plaintiffs' design services.

These injuries, according to plaintiffs, entitled plaintiffs to proceed in court for injunctive relief and damages under the federal Lanham Act for commercial misrepresentations and parallel state law claims.

USGBC defended on the ground that the plaintiffs had no standing to assert Lanham Act injury. The court agreed.  Memorandum & Order at 7.

There are two tests for standing in the Second Circuit. Under the first test, the parties must be competitors.  Id. at 4.  Plaintiffs did not certify green buildings or accredit professionals, as USGBC did. Accordingly, they failed the first test. The second test, the reasonable commercial interest test, was more forgiving. There "a plaintiff must demonstrate (1) a reasonable interest to be protected against the alleged false advertising, and (2) a reasonable basis for believing that the interest is likely to be damaged by the alleged false advertising." Id. (citation omitted). Where the parties are not direct competitors a plaintiff must make a "more substantial showing of injury and causation.".  Id. at 5 (citation omitted).

Mr. Gifford and his co-plaintiffs could not satisfy that test either. The court found the allegation that plaintiffs' professional services would be "subsumed" by USGBC was "speculative".  It commented that  "there is no requirement that a builder hire LEED-accredited professionals at any level, let alone every level, to attain LEED certification, ..." Id. at 6.  (While technically correct, my LEED AP colleagues confirmed that as a practical matter they can't imagine a LEED project would proceed without a LEED AP on the project team.  At the very least, having a LEED AP on the team entitles one to points toward certification.)

As to the specific allegation of misrepresentation regarding building efficiencies, there was no allegation that anyone relied on that statement to decline to hire Mr Gifford. So the plaintiffs lacked standing under the second test too.  Id. at 7.

The absence of standing was fatal to the federal claims, which the court dismissed with prejudice.  Id.  As to the state law claims, it declined to assert supplemental jurisdiction and dismissed those claims as well (but without prejudice).  Id. at 8.

The blogosphere reports that Mr Gifford is considering his appeal.   A press release by USGBC states: "This successful outcome is a testament to our process and to our commitment to do what is right." 

What the rest of us want to know, however, is whether there was any substance to any of Mr. Gifford's allegations. This is important and not only for the decision of whether it is sensible to build a LEED-certified building. One has to think about plans that go awry.  Should a green building project fail and investors and lenders lose money (and it is a statistical certainty that this will happen), the injured parties will cast about looking for a place to lay the blame. Mr Gifford might assert that false hopes raised by USGBC's claims are at the root of the problem.   

20110815 Memorandum & Order (of Dismissal) Gifford v. U.S. Green Building Council (72.00 bytes)

Gifford v U.S. Green Building Council - First Amended Complaint February 7, 2011.PDF (94.75 kb)

It appears that the sponsors of the legislation recognized that behavioral change is more likely to occur successfully when positive reinforcement is provided rather than simply mandating compliance with change.  To that end the proposed legislation seeks to create positive financial incentives to spur private development projects that would reduce stormwater runoff through the use of Green or Blue roofs.

A3682:  Would provide low interest loans to private parties to build green or blue roofs

Many jurisdictions provide financial incentives for “Green” or sustainable design and construction.  This bill would amend the law known as the “Regional Greenhouse Gas Initiative” to allow funds from the “Global Warming Solutions Fund” to be used to extend low interest loans to private parties, including homeowners and owners of commercial, industrial, and institutional entities.

Material terms of the loans would require: a) that they be made for no more than 85% of the cost of the Green or Blue roof; b) that the term not exceed 20 years; c) that the interest rate be low, and not to exceed 4%; and d) that loans be secured by a promissory note that requires the loan to be repaid if the property is sold or transferred or that requires the purchaser to assume the loan.

In addition to specifying which agencies would be responsible for the financial aspects, broad powers are being given to the Department of Environmental Protection and the Department of Community Affairs to oversee and review construction to ensure compliance with the standards that are established.

This incentive is no doubt socially desirable.  However, given the fiscal crisis that is faced by New Jersey, and many other states, it is questionable whether financial resources will be available to fund this program at any meaningful level.  There have already been efforts to erode the Global Warming Solutions Fund and such efforts are likely to continue until the economic climate changes significantly.  

A3678:  Requires preferential ranking for projects that seek funding from an environmental infrastructure program

The least sexy of the companion bills, this would require the Department of Environmental Protection to provide a preferential ranking to projects that seek funding from an Environmental Infrastructure Financing Program to those projects that include Green or Blue roofs.  Hardly anything controversial in this bill.  For other states it provides an example of positive incentives that can be offered to developers of construction projects.

As set forth in this series of posts collectively these bills seek to address a serious problem that many are facing with respect to stormwater management.  These efforts have been noticed by environmental groups.  Jeff Tittel, the director of the New Jersey Chapter of the Sierra Club observed: “It actually helps deal with something called combined sewer overflow which is very much a problem in urban older communities where a lot of rainwater comes off of roofs, gets into the sewer systems, and then the sewer systems cannot handle the higher flow.  So what happens is when you get heavy rainstorms, you get partially treated sewage and sometimes raw sewage going out into our rivers”.

Results of a study completed in 2009 by the Penn State Green Roof Center of Pennsylvania State University at University Park, PA indicated that, “green roofs are capable of removing 50% of the annual rainfall volume from a roof through retention and evapotranspiration”.  Accordingly, the effectiveness of Green roofs in combating excessive stormwater runoff cannot be denied.  [Green Roofs for Stormwater Runoff Control, National Risk Management Research Laboratory, Publication EPA/600/R-09/026, February, 2009]

The extent to which these new measures, if the legislation passes, will assist in stormwater management and controlling water quality remains to be seen.  Two things are certain: 1) the stormwater problem and associated flooding is increasing; and 2)  New Jersey and other states are likely to require a change in design and construction in order to confront the problem.  Think about that the next time that flooding harms your neighbors or inconveniences you.  I know that I will.

The U.S. Environmental Protection Agency Friday denied 10 petitions for reconsideration of its Endangerment and Cause or Contribute Findings for Greenhouse Gases under Section 202(a) of the Clean Air Act.

Led by the Chamber of Commerce of the United States of America, the petitions sought to put the brakes on EPA’s regulatory steps that would serve as the trigger for classifying greenhouse gas (GHG) emissions as pollutants under the Clean Air Act.  Although Section 202(a) covers exhaust from new motor vehicles, regulating GHGs in this context has far broader implications because other sections of the Clean Air Act use the same definition of “pollutant” and the regulatory findings, if allowed to stand, will trigger broader consequences for stationary sources like major power plants, industrial boilers and cement kilns.  (EPA’s original findings can be found in the December 15, 2009 Federal Register at 74 FR 66496).

In denying the petitions to reconsider its findings, EPA said that petitioners’ arguments and evidence are inadequate, generally unscientific, and do not show that the underlying science supporting the Endangerment Finding is flawed, misinterpreted by EPA, or inappropriately applied by EPA.  The denial can be found in the August 13^th Federal Register at 75 FR 49556 and a 3-volume, 360-page compendium supporting EPA’s denials can be found at www.epa.gov/climatechange/endangerment.html.

Citing widely-reported e-mails from the United Kingdom-based Climatic Research Unit of the Intergovernmental Panel on Climate Change questioning the climate science, the petitioners argued that recent revelations show that the science supporting the EPA’s findings was flawed or questionable, and that EPA should reconsider the Endangerment Finding.

EPA replied that the petitioners’ claims and supporting information do not change or undermine the scientific understanding of how anthropogenic emissions of GHGs cause climate change and how human-induced climate change generates risks and impacts to public health and welfare.  “This understanding has been decades in the making and has become more clear over time with the accumulation of evidence,” EPA wrote in response.

“The core defect in petitioners’ arguments is that these arguments are not based on consideration of the body of scientific evidence.  Petitioners fail to address the breadth and depth of the scientific evidence and instead rely on an assumption of inaccuracy in the science . . .,” said EPA.

EPA’s response to the petitions shows that EPA remains committed to pursuing regulatory changes that address climate change even as global warming legislation continues to stall in the Congress.