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Are LEED certification challenges on the horizon?

Bart ReedThe LEED Certification Challenge Policy adopted by the Green Building Certification Institute has emerged to create potentially serious risk and liability exposure to all Leadership in Energy and Environmental Design project team members – including owners, designers and contractors – if great care is not taken in front-end contract drafting. Although the first major LEED Certification Challenge was denied by the U.S. Green Building Council, the case may foreshadow similar challenges against LEED-rated projects in the future.

One such challenge occurred at Northland Pines High School in Eagle River, Wis. The project was completed in late 2006, but did not receive LEED certification until May 10, 2007.

A group of “concerned citizens” living in the area (who were part of the school’s building committee and had experience in building design and construction) filed a 125-page formal challenge pursuant to the LEED Certification Challenge Policy, contesting the project’s LEED gold rating. The residents had raised concerns during the design phase that the heating, ventilation and air conditioning system was inefficient compared with other systems that should have been specified by the design professional.

The USGBC denied the challenge after conducting a long review and engaging independent engineering consultants to review the LEED credits in question. It concluded that the disputed credits had, in fact, been satisfied under the LEED criteria, and the gold rating remained intact.

Although that challenge ended well for the project and the school board, the broad language of the Certification Challenge Policy, which recently was revised by the GBCI, commands attention because it potentially opens the gates for challenges to be initiated and tail-end lawsuits to follow. These concerns may come to light as more LEED projects are completed and occupied in the Pacific Northwest.

Thus it may be helpful to look at the language of the GBCI’s current (Jan. 1, 2012) policy manual, which provides, in pertinent part:

Basis for an initiation of a certification challenge

GBCI reserves the right to institute investigations and review documentation for any reason or for no reason at all. In addition, GBCI encourages third parties who wish to make a complaint, or bring to light information affecting the grant of LEED certification to do so in the following manner. Parties seeking to submit a complaint or report information affecting the grant of LEED certification must have specific personal knowledge of an event or condition that would prevent a project from satisfying a particular credit, prerequisite, or MPR (minimum program requirements). Complainants must indicate the credit, prerequisite or MPR that is affected. Further, such persons must indicate to the fullest extent possible, in the form of a written statement, details of such event or condition including the following:

i) the alleged offending conduct or condition;

ii) the persons involved;

iii) other persons who may have knowledge of the facts and circumstances concerning the allegation, including contact information for such persons; and

iv) the identity of the person presenting the complaint including such person’s full name, address, email, and telephone number.

Complaints must be submitted to GBCI within 18 months of the award of LEED certification for a project. GBCI cannot guarantee anonymity to persons submitting complaints. If GBCI determines that the complaint is frivolous or irrelevant to the credits, prerequisites and MPRs required for LEED certification, no further action will be taken.

Revocation of LEED certification

Based on the final determination of a certification challenge, GBCI retains the right to reduce the level of LEED certification awarded, or to revoke an award of LEED certification.

While the GBCI has taken prompt measures to modify the scope of its certification challenge policy since the Northland Pines High School dispute – limiting the range of LEED project challengers and the time frame in which to challenge – the risks persist for both owners and project design and construction participants on a LEED project to the extent that project goals are not achieved, expectations not realized and a LEED rating, at a particular level, is questioned.

These risks are apparent in that owners and developers depend so heavily on achieving governmental mandates and/or financial incentives or other benefits stemming from a green or LEED rating that they will seek to recover any losses sustained by losing a LEED rating (or a specific level of certification) from those whom they believe contributed to the loss.

To minimize the risks from certification challenges, which may not occur for 18 months after the project achieves a LEED rating (which can take six to 18 months after project completion), parties involved in these construction projects should ensure that the responsibilities of each LEED project participant are well-defined in the contract documents. Unintentionally assumed obligations may lurk in the fine print of the contract documents or go unnoticed in an indemnification or consequential damages provision.

So, before undertaking work on a LEED or green project, carefully review and, if necessary, revise and/or supplement the contract documents so that all parties’ roles relative to the certification process are clearly spelled out and the risks are appropriately allocated.

Bart Reed is an attorney and LEED-accredited professional with the construction and design group of Stoel Rives’ Seattle office. Contact him at 206-386-7568 or bwreed@stoel.com.

About Bart Reed