Recent Trend in Green Buildings Laws: Potential Preemption of Green Building and Whether Retrofitting Existing Buildings Will Reduce Greenhouse Gases and Save the Economy

A GREEN BUILDING REGULATION TREND is sweeping the nation. Green building expenditures in 2005 were approximately $10 billion, growing to somewhere between $36 billion and $49 billion in 2008.[ 1] This trend was put in motion in part by state and local green building regulations. Over thirty cities and counties in California alone have enacted green building ordinances that apply to civic, residential or commercial buildings.[ 2] As green building regulations become common place, two questions have emerged: first, whether the economy will help or hinder the green building industry; and second, whether federal laws preempt ambitious, strict local regulations.

I. Green Building Ordinance Background and Trends

Green building regulations are being enacted monthly. These regulations may be voluntary, mandatory or hybrid, and affect civic, residential or commercial development. Although green building regulations differ, all regulations nationwide are requiring third-party certification.

A. Green Building Standards

LEED™ certification is the most prolific of the national green building certification standards. LEED™, which stands for Leadership in Energy and Environmental Design, is a third-party green building rating system developed by the United States Green Building Council (USGBC). Currently, there are six categories of LEED™ certification which are applicable to new construction, core and shell, commercial interiors, existing buildings, schools, retail, healthcare, neighborhood development and homes.[ 3] Buildings are allotted points in five key areas: 1) sustainable site development, 2) water savings, 3) energy efficiency, 4) materials selection, and 5) indoor environmental quality.[ 4] LEED™ allots points for each sustainable building measure a project accomplishes. The accumulation of these points determines whether a project is LEED™ certified at the Silver, Gold or Platinum level.

Although LEED™ is by far the most prevalent ratings system, there are others that are gaining in popularity. In addition to LEED™, for example, the city of Atlanta, Georgia allows certification by Green Globes, a certification process administered in the United States by the Green Building Initiative.[ 5] The National Association of Home Builders (NAHB) Model Green Homebuilding Guidelines were released in 2005 for use by individual home builders interested in green building practices.[ 6] In the spring of 2009 the NAHB published a National Green Building Standard (NGBS) based on their Model Green Home Building Guidelines.[ 7] Oftentimes, local green building ordinances will use local third-party certifications for the requisite certification of residential construction. For example, San Francisco uses the GreenPoint Rating System created by Build It Green, a California non-profit organization.[ 8]

B. Green Building Regulations for New Construction

Civic green building programs are a frequently enacted type of green building regulation. An example is New York City's Local Law 86, which mandates green building for many city-funded construction projects.[ 9] Chicago and Atlanta also require a LEED™ certification for public buildings.[ 10] Washington D.C. and Oakland require that all municipal buildings be retrofitted to LEED™ Silver certification.[ 11] Regulations that require green civil buildings often set a good example for private developments and are easier to enact than mandatory regulations.

Mandatory, voluntary and hybrid ordinances applicable to commercial and residential projects are also gaining in popularity. In 2008, the state of California became the first state in the nation to enact a statewide green building code.[ 12] The code applies to public buildings as well as residential and commercial development and is being implemented in stages such that all mandatory regulations go into effect in 2009, 2010 or 2011.[ 13]

Many cities are finding that mandatory codes are essential to achieving the environmental and economic benefits that green building has to offer. San Francisco has enacted one of the strictest mandatory green building requirements in the state and the nation. San Francisco requires that high rise-residential projects be certified LEED™ Silver by 2010.[ 14] Additionally, these projects must have diverted seventy-five percent of construction debris by January 1, 2009.[ 15] Large commercial building construction projects (buildings with more than 25,000 gross square feet or taller than seventy-five feet) must achieve a LEED™ Silver rating by 2009 and a LEED™ Gold rating by 2012.[ 16]

The cities of Los Angeles, Washington D.C, Atlanta, and Dallas have also implemented mandatory green building ordinances. Los Angeles requires nonresidential and mixed-use residential buildings of 50,000 square feet or more to be LEED™ certified.[ 17] Washington D.C. requires nonresidential property with 50,000 square feet or more of floor space to be LEED™ certified by 2010.[ 18] Atlanta is currently undergoing public comment on a draft of its green building ordinance, which requires new high-rise residential and commercial construction over 20,000 square feet to achieve the equivalent of LEED™ certified status.[ 19] Dallas enacted a green building ordinance in April of 2008 that requires all new construction to become LEED™ certified by 2011.[ 20]

II. The Greening of Existing Buildings

In a recession, the question on the minds of many is what type of green building will offer the greatest greenhouse gas emission reduction for the lowest cost. Often, the retrofit of existing buildings is the least expensive approach for the largest efficiency gains. Both San Francisco and Los Angeles provide excellent examples of city codes utilizing existing building regulations.

A. San Francisco's Existing Building Regulations

One of the unique aspects of San Francisco's regulations is that the city has enacted relatively strict and mandatory green building requirements for renovation and retrofit of existing buildings. San Francisco focused on regulating existing buildings because they are a large source of greenhouse gas emissions, whereas new construction only accounts for one percent of the city's built environment in any given year.[ 21] San Francisco's recently implemented existing green building requirements apply only to commercial buildings with areas of over 5,000 gross feet and residential structures.[ 22] In order to complete major alterations (in excess of 25,000 gross square feet) to these buildings — specifically the existing structural, mechanical, electrical or plumbing components of the buildings — developers must submit documentation for a LEED™ Silver rating by 2009 and a LEED™ Gold rating by 2012.[ 23] Both of these are relatively stringent requirements. Additionally, the San Francisco ordinance requires that renovations use low-emitting materials for adhesives, sealants, paints, coatings and carpets.[ 24] Eventually, approximately one-third of the city's existing building renovations will be affected by the city's new green building ordinance.[ 25]

Prior to the enactment of the city's green building ordinance, the San Francisco Planning Department implemented a priority processing system for LEED™ Gold projects. In November, 2008 the planning department raised its priority processing requirement to LEED™ Gold certification plus at least fifteen percent of LEED™-recommended sustainable measures.[ 26] However, with the downturn in the economy, priority processing has been potentially less effective since there are fewer projects in the overall project review pool.[ 27] In order to facilitate the implementation of the existing building requirements, in February, 2009, San Francisco Mayor Gavin Newsom created an Existing Buildings Efficiency Initiative Task Force comprised of building owners, developers, and architectural, financial, engineering, legal, utility and construction stakeholders. The task force is charged with researching and reporting on ways that the city may partner with private entities to improve the energy, water and resource efficiency of existing commercial buildings.[ 28]

B. Los Angeles' Existing Building Regulations

Although Los Angeles' Green Building regulations are less stringent than San Francisco's requirements, Los Angeles is the largest city to impose green building regulations. The newly-enacted Los Angeles building ordinance requires that two types of alterations or rehabilitations achieve LEED™ certification: 1) non-residential building alterations that are 50,000 gross square feet or more of the floor area and exceed a valuation of fifty percent of the replacement cost of the building, and 2) alterations of at least fifty dwelling units in an existing mixed use or residential building if those alterations comprise at least 50,000 gross square feet of floor area and for which construction value is fifty percent or more of the replacement cost of the building.[ 29] Additionally, the Los Angeles City Council passed a Green Building Retrofit Ordinance that will retrofit all city-owned buildings larger than 7,500 square feet or built before 1978 to a LEED™ Silver-level standard.[ 30] Similar to San Francisco, the Los Angeles Planning Department has implemented a priority permitting process that allows for expedited processing for those projects that comply with LEED™ Silver requirements.[ 31]

Other cities have also been instituting existing building regulations. In 2007, Boston enacted a green building law that requires that all rehabilitations over 50,000 square feet achieve LEED™ certification.[ 32] Washington, D.C. also enacted a green building ordinance in 2007 that applies to substantial improvements of private, nonresidential projects of 50,000 square feet of floor space or more.[ 33]

C. Environmental and Economic Benefits of Greening Existing Buildings

Cities enacting existing green building standards are doing so for the local environmental benefits. Buildings are energy-intensive throughout their whole life cycle; therefore, preserving existing structures has the potential to save more energy than tearing down and building over previous buildings, while incurring less cost. Approximately forty percent of the nation's carbon dioxide emissions come from building construction and operation.[ 34] Donovan Rypkema, one of the nation's leading historic preservation experts, explains that the preservation of existing structures not only reduces recurring energy costs as the building operates, but also saves embodied energy, which includes the energy used to manufacture, construct and maintain a building.[ 35] Additionally, older materials — such as bricks, plaster and concrete — are less resource intensive than newer building materials such as vinyl, plastic and steel. San Francisco's Office of Management and Budget has found that the city's mandatory existing building regulations offer significant environmental savings. These savings are summarized in the table below. Cities and counties are hoping that the energy saved by enacting green building regulations will also translate into local job growth. The American Reinvestment and Recovery Act allocated approximately $5.5 billion to the United States General Services Administration for green building projects.[ 37] According to a United States Conference of Mayors study prepared by Global Insight, the retrofitting of residential and commercial buildings has the capacity to spur 36,000 residential and 45,000 commercial green jobs through a thirty-five percent energy savings.[ 38] In particular, the greening of existing buildings creates jobs that require specialty trade contractors, including green building technicians, carpenters, plumbers, laborers, roofers and insulation workers.[ 39]

Los Angeles has recognized the job growth potential of greening existing buildings. In conjunction with its newly enacted green building ordinance, the Los Angeles City Council recently passed a program to facilitate the development of specialized green building jobs for the retrofit of existing buildings.[ 40] The policy includes worker training that will be provided by the local community colleges and the city of Los Angeles. The city partnered with Apollo Alliance, a coalition of labor and environmental organizations that helped draft the ordinance.[ 41] The city hopes to create hundreds of new jobs in order to combat its eleven percent unemployment rate. Through the city's ordinance and program, the city hopes to receive federal stimulus package funding for "shovel ready" projects. The Apollo Alliance hopes to use the Los Angeles ordinance as a national model in which Apollo will invest $500 billion in clean energy solutions in order to create more than five million stable, long-lasting green-collar jobs over the next ten years. For example, Apollo Alliance is partnering with the Center on Wisconsin Strategy and the City of Milwaukee, Wisconsin to assist owners in the voluntary retrofitting of residential and commercial buildings through public money and private capital. Milwaukee plans to employ up to $500 million in private capital that must be paid back in ten years.[ 42]

III. The Costs of Green Building

Economic revitalization and the environmental benefits of green building in general do come at a cost. Studies are finding that the issue turns on initial versus long-term cost recovery and savings.[ 43] Green building may initially be a costly endeavor; however, in the long run the efficiency of the building saves money. Initial costs may exceed 1 % of the project's cost for large buildings and five percent of the project's cost for small buildings.[ 44] A recent study performed by the California Sustainable Building Task Force found that zero to two percent up-front costs yield twenty percent savings over a twenty-year building life.[ 45] The report accounts for energy savings, water and waste reduction, employee productivity, and health improvements. Although emissions, water and energy savings alone exceed the initial cost of green building within twenty years, researchers have found that green building aspects such as natural lighting and air circulation increase human productivity and translate into additional financial savings.

According to the San Francisco Mayor's Office of Economic Analysis (OEA), the short-term effects of San Francisco's Green Building Ordinance will be increased construction costs, a slower rate of gross city product, lower employment and lower per capita income. Within the first twenty years, the city's ordinance will cost 0.5% of the Gross City Product.[ 46] However, the initial construction costs will only increase until 2012, then will begin to decrease.[ 47] The gradual fall in the construction premium, coupled with the steady increase in the resource savings associated with the mandates are the "reason why the economic impact of green building legislation will always be positive, given a long enough time horizon."[ 48]

The initial cost of building may hinder a project's completion. To that end, Washington D.C. is requiring a performance bond as a guarantee that private development projects will achieve LEED™ certification.[ 49] Beginning in 2012, "[d]evelopers must provide 'performance bonds' for up to four percent of the construction cost, up to a maximum of $3 million. If the building fails to achieve LEED™ certification, the bond is paid into a green building fund held by the city."[ 50] However, the National Association of Surety Bond Producers and the Surety and Fidelity Association of America have submitted a complaint to D.C. officials in 2007, stating that the statute's definition of bonds "is not consistent with industry practice."[ 51]

IV. Federal Preemption of Certain Local Green Building Codes

Enacting or updating building codes may not be a straightforward task for local governments. Cities and counties must be aware of federal regulations concerning building and appliance efficiency. Recently, a federal district court in New Mexico issued one of the first court decisions regarding the federal preemption of local green building ordinances. In Air Conditioning, Heating and Refrigeration Institute (AHRI) v. City of Albuquerque, the court found that the city of Albuquerque was preempted from enacting efficiency HVAC regulations by the Energy Policy and Conservation Act of 1975 (EPCA).[ 52] The court found that the EPCA is a "long-standing federal statute governing the energy efficiency of certain HVAC and water heating products and [that it] expressly preempts state regulation of these products…."[ 53] At issue in AHRI v. City of Albuquerque was the city's Energy Conservation Code, which sought to increase energy efficiency requirements for multi-family and commercial buildings by thirty percent by adopting regulations stricter than federal requirements.[ 54] The city failed in its argument that the multiple performance-based options for compliance offered in the code sidestep preemption. The code allowed builders to choose between compliance with the LEED™ Rating System as well as other local standards such as Build Green New Mexico. The judge stated that although a builder would have been able to choose performance standards in order to be certified under the law, the builder would still be required to make other gains in overall efficiency and therefore would have been effectively penalized for using federally acceptable equipment.[ 55] This penalization violates EPCA, which establishes nationwide standards for the performance of HVAC equipment and contains a preemption provision that "prohibits state regulation 'concerning' the energy efficiency, energy use or water use of any covered product with limited exceptions."[ 56] Although building and land use regulation has historically been the authority of local governments, this case may be the first of many to find that federal laws preempt local green building regulations.

V. Conclusion

Funding, programs and legislation related to green building are focused on green building as an essential tool in achieving greenhouse gas emissions reduction and fostering economic growth. As green building regulations become mainstream, local governments and other stakeholders should stay current with green development trends, including whether future courts will follow the New Mexico federal district court's ruling that local ordinances may be federally preempted, and whether the costs of green building will truly be offset by its environmental and economic benefits in the long run, as models predict. Stay tuned as what was once called a fringe trend sweeps the nation.

Weighted Average of the Energy and Water Savings of the San Francisco Green Building Code[36]

Legend for Chart:

A - San Francisco Requirements

B - Average Energy Savings

C - Average Water Savings

A B C

Renovations and LEED™ Gold 6.4% 4.8%

Interior Alterations LEED™ Silver 5.6% 4.8%

LEED™ Certified 4.8% 4%

1. See generally, MCGRAW HILL CONSTRUCTION 2009 GREEN OUTLOOK: TRENDS DRIVING CHANGE REPORT, available at http://www.construction.com/market%5fresearch/reports/GreenOutlook.asp (last visited May 12, 2009).

2. Edmund G. Brown, Jr., California Attorney General Local Government Green Building Ordinances in California, Dec. 18, 2008, http://ag.ca.gov/globalwarming/pdf/green%5fbuilding.pdf (last visited May 12, 2009).

3. U.S. Green Building Council, LEED™ Rating Systems, http://www.usgbc.org/displaypage.aspx?CMsPageID=222 (last visited May 12, 2009).

4. Id.

5. See generally, Green Building Initiative, Green Globes, http://www.thegbi.org/ green-globes-tools/ (last visited May 12, 2009).

6. National Association of Home Builders, National Green Building Program (2005), http://www.nahbgreen.org/Guidelines/nahbguidelines.aspx (last visited May 12, 2009).

7. See National Association of Home Builders, http://www.nahb.org/publication%5fdetails.aspx?publicationsID=3887 (last visited May 12, 2009).

8. S.F., CAL., BUILDING CODE § 1304C.1 (2008); Build It Green, http://www.build itgreen.org (last visited May 12, 2009).

9. N.Y.C. CHARTER § 224.1 (2008).

10. THE CITY OF CHICAGO, THE CHICAGO STANDARD, http://egov.cityofchicago.org/webportal/COCWebPortal/ COC_ATTACH/ChicagoStandard.pdf (last visited May 12, 2009); ATLANTA, GA., CODE OF ORDINANCES § 75-1 (2008).

11. D.C. CODE § 6-1451.02 (2008); OAKLAND, CAL., MUNICIPAL CODE § 15.35.010 (2008).

12. CAL. GREEN BUILDING STANDARDS CODE, tit. 24, pt. 11 (2008).

13. Id.

14. S.F., CAL., BUILDING CODE § 1304C.1.3.1 (2008).

15. § 1304C. 1.3.4 (2008).

16. § 1304C.2.2.1 (2008).

17. L.A., CAL., MUNICIPAL CODE § 16.10B, D (2008).

18. D.C. CODE §6-1451.03 (2008).

19. Sustainable Atlanta, Drafts of City Sustainable Building Code, http://sustainableatlanta.org/Default.aspx?pageid=155 (last visited May 12, 2009).

20. DALLAS, TEX., CITY CODE chs. 52, 53 and 57 (2008).

21. See Gavin Newsom, Greening Buildings to Create Jobs, THE HUFFINGTON POST, Mar. 19,2009, http://www.huffingtonpost.com/gavin-newsom/greening-building -to=cre_b_176910.html.

22. S.F., CAL., BUILDING CODE § 1302C (2008).

23. § 1304C3.2.1(2008).

24. § 1304C.3.2.2(2008).

25. SAN FRANCISCO OFFICE OF THE CONTROLLER: OFFICE OF ECONOMIC ANALYSIS, MAYOR'S GREEN BUILDING REQUIREMENTS: ECONOMIC IMPACT REPORT, NO. 080063, 7 (May 21, 2008).

26. Id.

27. Interview with Corey Teague, San Francisco City Neighborhood Planner (April 12, 2009).

28. Press Release, sfenvironment.org, Mayor Launches Task Force to Green Buildings (Feb. 13, 2009, available at http://www.sfenvironment.org/our%5fsfenvironment/press%5f releases.html?topic=details&ni=448. The Task Force recommendations will come out on June 15, 2009.

29. L.A., CAL., MUNICIPAL CODE § 16.10B(4)-(5) (2008).

30. Greener Buildings Staff, Los Angeles Building Retrofit Designed to Boost Green Jobs, April 9, 2009, http://www.greenerbuildings.com/news/2009/04/09/la-building -retrofit-boost-green-jobs.

31. Los ANGELES DEPARTMENT OF CITY PLANNING, STANDARD OF SUSTAINABLE EXCELLENCE, July 2008, http://www.ci.la.ca.us/mayor/stellent/groups/electedoffi cials/@myr_ch_contributor/documents/contributor _web_content/lacity _004868.pdf (last visited May 12, 2009).

32. BOSTON, MASS., ZONING CODE § 80B-2 (2008).

33. D.C. Code §6-1451.03 (2007).

34. ENVIRONMENTAL PROTECTION AGENCY GREEN BUILDING STRATEGY PUBLICATION, http://www.epa.gov/greenbuilding/pubs/greenbuilding%5fstrategy _nov08.pdf (last visited May 12, 2009).

35. DONOVAN RYPKEMA, THE ECONOMICS OF HISTORIC PRESERVATION: A COMMUNITY LEADER'S GUIDE (The National Trust for Historic Preservation 1994).

36. All figures are from the San Francisco Office of the Controller. SAN FRANCISCO OFFICE OF THE CONTROLLER, OFFICE OF ECONOMIC ANALYSIS REPORT: MAYOR'S GREEN BUILDING REQUIREMENTS: ECONOMIC IMPACT REPORT, File No. 080063, 12 (May 21, 2008).

37. See Memorandum from the Executive Office of the President, Office of Management and Budget, Regarding Updated Implementing Guidance for the American Recovery and Reinvestment Act of 2009, Pub. Law No. 111-5, for the Heads of Departments and Agencies (2009).

38. Press Release, Global Insight, United States Metro Economies, Current and Potential Green Jobs in the U.S. Economy 15 (Oct. 2008) (study by United States Conference of Mayors) (prepared by Global Insight), available at http://www.usmayors.org/pressreleases/uploads/GreenJobReport.pdf.

39. See generally DAVID ROLAND-HOLST, ENERGY EFFICIENCY, INNOVATION, AND JOB CREATION IN CALIFORNIA (Oct. 2008), http://are.berkeley.edu/-dwrh/CERES%5fWeb/Docs/UCB%20Energy%20 Innovation%20and%20Job%20Creation%2010-20-08.pdf.

40. Press Release, Environmental Defense Fund, Environment Defense Fund Applauds City of Los Angeles for Approving First Municipal Program That Links Green Jobs and Green Building, PR NEWSWIRE (Apr. 8, 2009), available at, http://news.prnewswire.com/cgi-bin/stories.pl?ACCT=109%26STORY=/ www/story/04-080-2009/0005003347&EDATE=.

41. Apollo Alliance, Green-Collar jobs in America's Cities: Building Pathways out of Poverty and Careers in the Clean Energy Economy, http://www.americanprogress.org/issues/2008/03/green%5fcollarJobs.html(lastvisited May 12, 2009).

42. Center on Wisconsin Strategy (COWS), Milwaukee Energy Efficiency (Me2), http://www.cows.org/pdf/me2summary.pdf (last visited May 12, 2009).

43. Building Green, General Design Strategies, http://www.buildinggreen.com/ auth/image.cfm?imageName=images/0805/low-cost.gif&fileNarne =080501a.xml (last visited May 12,2009).

44. JERRY YUDELSON, DEVELOPING GREEN: STRATEGIES FOR SUCCESS 69 (2006).

45. GREG KATS, THE COST AND FINANCIAL BENEFITS OF GREEN BUILDING: A REPORT TO THE CALIFORNIA SUSTAINABLE BUILDING TASK FORCE ii (Oct. 2003), avail-able at http://www.ciwmba.ca.gov/Greenbuilding/Design/CostBenefit/Report.pdf.

46. SAN FRANCISCO OFFICE OF THE CONTROLLER, OFFICE OF ECONOMIC ANALYSIS REPORT: MAYOR'S GREEN BUILDING REQUIREMENTS: ECONOMIC IMPACT REPORT, NO. 080063 (May 21,2008), available at http://www.sfgov.org/site/uploadedfiles/controller/ oeal/080063.economic_lmpact_final.pdf.

47. Id. at 11.

48. Id. at 15.

49. D.C. CODE §6-1451.05 (2007).

50. Allyson Wendt, D.C. Green Building Law Hits Enforcement Snag, January 2009, http://www.buildinggreen.eom/auth/article.cfm/ID/411II.

51. Id.

52. 42 U.S.C. § 6201 (2008); AHRI v. City of Albuquerque, No. 08-633 MV/RLP, 2008 U.S. Dist. LEXIS 106706 (D.N.M. 2008).

53. 42 U.S.C. §6201.

54. ALBUQUERQUE ENERGY CONSERVATION CODE VOL. 1 at *14, http://www.cabq.gov/albuquerquegreen/pdf/volumel.pdf (last visited May 12, 2009).

55. See AHRI v. City of Albuquerque, 2008 LEXIS 106706 at *22-25.

56. Id. at *3 (citing 42 U.S.C. § 6297(c)).

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By Erin Burg Hupp, Associate in the Land Use and Climate Change practice groups at Meyers Nave, a California public law firm. J.D. University of North Carolina, 2008; Masters in Regional Planning University of North Carolina Department of City and Regional Planning, 2008