Construction’s Legal Risks in the New Green Paradigm
There is no question that green building is moving into the mainstream of construction in the United States. Both private and public owners are frequently requiring that their new or renovated projects obtain recognition as “green” buildings—a label achieved by meeting certain standards of third-party rating entities such as the U.S. Green Building Council and its Leadership in Energy and Environmental Design program. While many owners decide to build green voluntarily, some governments now require, or at least incentivize, green certification.
Contractors should be aware of the green nuances of public projects. Due in major part to political considerations, public entities are now cognizant of minimizing the impact of the construction process on the environment through site layout and use, energy use, waste management and procurement. Green building means, methods and performance are increasingly becoming contract requirements. Therefore, many contractors are encountering risks that they didn’t have to worry about prior to the “green wave.”
Since some contractors may have adequate experience in the green building process, it is crucial that they educate and contractually protect themselves in order to avoid additional risks. “Old-school” construction practices are now being replaced by a green paradigm.
With respect to risks, the threat of lawsuits stemming from green building is real. So what is the most efficient way for a contractor to approach green building?
Up-front team collaboration, risk analysis and prevention are keys. It would be beneficial for contractors to use experienced attorneys as counselors at the onset of a project.
Contractors should maintain extensive communication among project team members, including counsel, even prior to the design phase of a project. Careful planning and “green contract drafting” is necessary in order to efficiently and effectively allocate risk among the owner, architect and contractor.
The contractor must be aware that the traditional boilerplate provisions typically found in industry form contracts are not crafted to protect them from the nuances of green building. Even the new form contracts with green provisions being advanced by trade groups vary and have not been time-tested. And, considering all the litigation that has evolved even when traditional form contracts are used, simply including such new boilerplate green provisions may be inadequate.
With LEED, because the members of the project team with differing contractual requirements and professional responsibilities, the roles of the players involved must be clearly defined during contract formation.
Contractors must have a clear understanding of their client’s expectations and their contractual obligations. This can be done by defining the LEED credits that are the responsibility of the architect and those that are the responsibility of the contractor.
The contractor should also be careful in agreeing to performance specifications that require it to meet the requirements for green building certification while failing to provide any descriptive or prescriptive specifications detailing how to achieve such requirements.
Finally, while reviewing specifications, contractors must be on the outlook for conflicting green specifications. For instance, the design team may require that certain materials or products meet green requirements and then provide a list of approved materials that may or may not meet green product requirements. A thorough review of prescriptive specifications to ensure that no conflicts exist will help avoid problems later in the construction process.
There are significant financial losses an owner can suffer if the expected level of LEED certification is not met. Among other dangers, tax credits, public funding and incentive program benefits can all be forfeited if a certain rating of accreditation is not met. Ultimately, the most efficient way to avoid such land mines and unforeseen liability found in green construction is for team collaboration and clear and frequent communication before and during contract formation so as to clearly define each player’s obligations during the green construction process.