Gglts Green Matters 2009 New Green Legislation Presentation

The following presentation is an abbreviated slide presentation that is part of the seminar materials available through the law firm of Gibbs, Giden, Locher, Turner & Senet. For a current list of all upcoming seminars please see our website at http://gglts.com. In house seminars and courses in construction, public contracts and employment law are available through the firms public relations director Lannette Pabon at L.Pabon@gglts.com. 1

According to the U.S. Green Building Council, buildings nationwide account for 70 percent of electricity consumption, 39 percent of energy usage, 12 percent of potable water consumption, 40 percent of raw materials usage, 30 percent of waste output (136 million tons annually), and produce 39 percent of associated greenhouse gases (CO2). 2

Major “Green” Legislation: Green Building Initiative (Executive Order S-20-04) set a goal of reducing energy use in state-owned buildings by 20 percent by 2015 (from a 2003 baseline) and encourages the private commercial sector to set the same goal. The order also directed compliance to the "Green Building Action Plan," which details the measures the state will take to meet these goals. Global Warming Solutions Act (AB 32, now Health & Safety Code 38500 et seq.) The Global Warming Solutions Act requires a cap on greenhouse gas emissions by 2020, mandatory emissions reporting, and the development of a market-based compliance program to achieve the emissions cap in the most cost effective and technologically feasible manner with the least impact on California consumers and business. Among the many public policy initiatives proposed to meet these goals is a requirement that government and private commercial buildings reduce their electricity consumption by 10 percent/square foot by 2010, and 20 percent by 2015. SB 375, a bill aimed to reform land-use planning and decision-making in ways designed to increase the certainty that state housing needs will be met, better integrate transportation planning with development and reduce greenhouse gas (GHG) emissions. Approved by the Legislature and signed into law in late September 2008 , SB 375 (Steinberg) will establish, a future road-map for compliance with AB 32, the state’s new law that sets long-term targets for reducing GHG emissions. 3

On September 27, 2006, Governor Schwarzenegger signed Assembly Bill 32, the Global Warming Solutions Act of 2006, setting the stage for California’s transition to a sustainable, clean energy future. This historic step also helped put climate change on the national agenda, and has spurred action by many other states. The California Air Resources Board (ARB) is the lead agency for implementing AB 32. ARB met the first milestones in 2007: developing a list of discrete early actions to begin reducing greenhouse gas emissions, assembling an inventory of historic emissions, establishing greenhouse gas emission reporting requirements, and setting the 2020 emissions limit. ARB next developed a Scoping Plan outlining the State’s strategy to achieve the 2020 greenhouse gas emissions limit. This Scoping Plan includes a comprehensive set of actions designed to reduce overall greenhouse gas emissions in California, improve our environment, reduce our dependence on oil, diversify our energy sources, save energy, create new jobs, and enhance public health. It was approved by the ARB in December 2008. The measures in the Scoping Plan approved by the Board will be developed over the next two years and be in place by 2012. Key elements of California’s recommendations for reducing its greenhouse gas emissions to 1990 levels by 2020 include: • Expanding and strengthening existing energy efficiency programs as well as building and appliance standards; • Achieving a statewide renewable energy mix of 33 percent; • Developing a California cap-and-trade program that links with other Western Climate Initiative partner programs to create a regional market system; • Establishing targets for transportation-related greenhouse gas emissions for regions throughout California, and pursuing policies and incentives to achieve those targets; • Adopting and implementing measures pursuant to existing State laws and policies, including California’s clean car standards, goods movement measures, and the Low Carbon Fuel Standard; and • Creating targeted fees, including a public goods charge on water use, fees on high global warming potential gases, and a fee to fund the administrative costs of the State’s long term commitment to AB 32 implementation. A full copy of the Scoping Plan is available at: http://www.arb.ca.gov/cc/scopingplan/document/psp.pdf More information on the California Global Warming Solutions Act of 1006: http://www.arb.ca.gov/cc/cc.htm 4

Analysis of the Proposed Scoping Plan indicates that projected economic benefits in 2020 compared to the business-as-usual scenario include: • Increased economic production of $33 billion • Increased overall gross state product of $7 billion • Increased overall personal income by $16 billion • Increased per capita income of $200 • Increased jobs by more than 100,000 5

Early Action Measures - these measures are to be developed into regulatory proposals, adopted by the Board, and made enforceable by January 1, 2010. Additional early action items include a comprehensive framework of regulatory and non-regulatory elements that will result in significant and effective GHG emission reductions. http://www.arb.ca.gov/cc/ccea/ccea.htm Discrete Early Actions Low Carbon Fuel Standard Landfill Methane Capture Reductions from Mobile AC Semiconductor Reduction SF6 Reductions High GWP Consumer Products Heavy-Duty Measure Tire Pressure Program Shore Power 6

Click on This Link to Access a Copy of the CALGREEN Code The 2008 California Green Building Standards (CALGREEN) Code* The CALGREEN Code is Part 11 of the California Building Standards Code, Title 24. Working with the “Climate Action Team,” the California Air Resources Board and numerous state agencies, the California Building Standards Commission (CBSC) created the CALGREEN Code to meet some of the goals of AB32. To that end, the CBSC created the CALGREEN Code which contains primarily voluntary green building standards for nonresidential occupancies (under the jurisdiction of the CBSC) and hospitals (under the jurisdiction of the Office of Statewide Health Planning and Development) and mandatory standards with delayed effective dates for low-rise residential (under the jurisdiction of the Department of Housing and Community Development). The CALGREEN Code includes provisions for Site Design, Energy Efficiency, Water Conservation, Materials Conservation, and Environmental Quality, with matrix tables to assist the user to determine each agencies adoption. The CALGREEN Code becomes effective on August 1, 2009, at which time local jurisdictions may choose to adopt it or parts of it by ordinance. The Future of the CALGREEN Code Governor Schwarzenegger, in veto messages on a trio of green building bills (AB 888, AB 1058, AB 35) sent to him in late 2007, stated: “It is imperative to expedite the greening of California’s building standards. As such, I am directing the California Building Standards Commission to work with specified state agencies on the adoption of green building standards for residential, commercial, and public building construction for the 2010 code adoption process.” The 2010 version of the CALGREEN Code and the California Building Standards Code is planned to become effective on January 1, 2011. Agency Key - Interpreting the CALGREEN Code CBSC = California Building Standards Commission OSHPD = Office of Statewide Health Planning and Development HCD = Department of Housing and Community Development DSA = Division of the State Architect *Information provided by the California Building Standards Commission website. 7

Implementation of the CALGREEN code will lead to improved energy efficiency and reduced water consumption while reducing the carbon footprint of all new buildings in California including single family homes, health care facilities, schools and commercial buildings. The code will be updated on an annual basis to incorporate new technology and methods of construction. The requirements vary by building type and size, with a delayed implementation of housing mandates and voluntary standards for hospitals and other nonresidential structures. Code concepts: Planning and Design- Preservation and use of available natural resources. Water Management - More stringent management of storm water during construction. Energy efficiency - 15% reduction in building energy use over current standards (will make CA homes 50 percent more efficient than homes built to national energy standards). Water efficiency and conservation - 20% indoor water use reduction primarily through improvement in efficiencies for commercial and residential plumbing fixtures. - 50% landscape water use reduction. Material conservation and resource efficiency - 50% reduction in construction waste by recycling or salvage for reuse of non-hazardous construction and demolition debris. - Requires 10% of construction materials to be produced in California or within 500 miles of the site. Environmental air quality - Low or no-VOC (volatile organic compound) adhesives, paints and coatings. High-efficiency air conditioning filters to better filter out dust and particulates and always-on exhaust fans to ensure better fresh air circulation in homes. 8

National Association of Homebuilders “Of all the embodied emissions produced in building the baseline single family house, Athena’s Impact Estimator estimates that the overwhelming majority are produced during the manufacturing of materials, which accounts for roughly 50 metric tons of CO2 equivalent (MTCO2e). Construction and transportation have relatively little effect, as greenhouse gases generated during construction activity accounts for roughly 2.0 MTCO2e and transportation of building materials to the construction site accounts for only roughly 0.1 MTCO2e. The Impact Estimator also shows relatively little variation in MTCO2e from the transportation and installation of building products as the specification of house changes, unlike manufacturing, which changes total MTCO2e dramatically in some cases. Embodied emissions are often measured in MTCO2e, where the “e” for “equivalent” is used to include the impact of other greenhouse gasses produced during manufacturing. Other gasses besides CO2 have a different (usually much greater) impact on the environment per unit of weight, so in order to compare the overall emissions each greenhouse gas is calculated in terms of the equivalent amount of CO2 it would take to have an equivalent impact on climate change. According to the results produced by Athena’s Impact Estimator, total embodied emissions (cradle to gate) of the baseline house is 51.4 MTCO2e. By comparison, NAHB estimates that a typical new home built in the Los Angeles metro area generates 7.0 MTCO2e per year from energy used inside the home, and the 14.5 MTCO2e per year from vehicles driven by the occupants of the home. In other words, the embodied emissions amount to about seven years of emissions generated by using the home or more than three times the annual transportation emissions.” Greenhouse Gases and Home Building: Manufacturing, Transportation, and Installation of Building Materials Special Studies, September 9, 2008 Http://www.nahb.org/generic.aspx?sectionID=734&genericContentID=101852&channelID=3 11 9

Local governments are essential partners in achieving California’s goals to reduce greenhouse gas emissions. They have broad influence and, in some cases, exclusive authority over activities that contribute to significant direct and indirect greenhouse gas emissions through their planning and permitting processes, local ordinances, outreach and education efforts, and municipal operations. Many of the proposed measures to reduce greenhouse gas emissions rely on local government actions. AB32 Scoping Plan, p. 26 10

1. Regional Target-Setting Process - By September 30, 2010 the California Air Resources Board (CARB) must have consulted with local governments, regional planning agencies and interests groups and then set regional GhG reduction targets for cars and light trucks for 2020 and 2035. 2. Regional Development of Sustainable Community Strategies - Existing regional transportation planning process under state and federal law is modified to require the preparation of regional strategies to meet the GhG targets. 3. Incentives for Land Use Projects That Can Help Reduce Emissions – New California Environmental Quality Act (CEQA) streamlining opportunities for residential and mixed-use projects that are consistent with the regional plan. Favors projects most likely to reduce vehicular use and GhG emissions (e.g. non-sprawl development). Federal and state transportation project funding priority for projects consistent with the approved regional Sustainable Community Strategies. 4. Integration of Regional Planning Update Requirements – coordinated planning between state, regional and local agencies encompassing three public policy objections: regional housing needs allocation including zoning for affordable housing (HUD), transportation infrastructure improvements (CA Transportation Commision and DOT), and GhG reduction (CARB). The process repeats every eight years until 2050. 11

The California Attorney General State office has complied a list of local government “green” building ordinances. This list also includes a summary of green building rating systems, prescriptive measures, performance standards, municipal building standards, enforcement, incentives, and comprehensive ordinances. You can find this detailed resource on the web at : http://ag.ca.gov/globalwarming/pdf/green_building.pdf San Francisco and Los Angeles have enacted strict green building ordinances, based on the national council’s benchmark of Leadership in Energy and Environmental Design, which is also used by the state for public construction. But a large swath of the construction industry considers LEED standards too strict, and managed to head off efforts to incorporate them into the statewide code. 13

The Program was approved by the City Council and signed by the Mayor on Earth Day, April 22, 2008. 14

Exemptions: Projects whose plans were accepted by DBS for plan check or who filed and had deemed complete an entitlement application (except for CEQA review) with DCP prior to the effective date. 16

The LEED® (Leadership in Energy and Environmental Design) green building certification system is a feature-oriented certification program that awards buildings points for satisfying specified green building criteria. The six major environmental categories of review include: Sustainable Sites, Water Efficiency, Energy and Atmosphere, Materials and Resources, Indoor Environmental Quality and Innovation and Design. Certified, Silver, Gold, and Platinum levels of LEED green building certification are awarded based on the total number of points earned within each LEED category. LEED can be applied to all building types including new construction, commercial interiors, core & shell developments, existing buildings, homes, neighborhood developments, schools, retail facilities and Healthcare. Incentives for LEED are available at the state and local level and LEED has also been adopted nationwide by federal agencies, state and local governments, and interested private companies. For more information, visit www.usgbc.org/LEED. 18

US Green Building Council - http://www.usgbc.org/ Certified & Registered Projects List - http://www.usgbc.org/LEED/Project/CertifiedProjectList.aspx 19

Reorganization and enhancement of existing LEED Rating Systems: LEED Prerequisite/Credit Alignment and Harmonization – Structure to consolidate, align and update all existing LEED Rating Systems into their “most effective common denominator” providing a pool of prerequisites/credits for all LEED Rating Systems. A scrub of the existing Credit Interpretation Rulings (CIRs) was conducted and necessary precedent-setting and clarifying language has been incorporated into the prerequisites/credits. Predictable Development Cycle – LEED will move into a predictable development cycle that will help drive continuous improvements in LEED and allow the market to participate more fully in LEED’s growth and development. Transparent Environmental/Human Impact Credit Weighting –LEED has undergone a scientifically grounded re-weighting of credits, which will reflect more accurately a credit point impact on the environment and human health (positive or negative). Regionalism – Incentives will be provided through LEED Innovation & Design style bonus points that will add value to those credits that are considered most important for defined regions. Project teams may select bonus points from a list of eligible credits driven by chapters, regional councils, and the LEED Steering Committee. Information on LEED 2009 available at: http://www.usgbc.org 20

Risk Management Challenges and Risk Transfer From a risk management standpoint, a shared risk is often the best means to assure that the project achieves the objectives of the parties. Unreasonable risk allocations, exculpatory contract provisions, or unreasonable limitations on liability are often counter-productive. The contract documents should not only encourage parties to be diligent in meeting the objectives of a project, but to work together with the other members of the project team to meet these objectives. A balanced approach which encourages the project team to cooperate and work together effectively is typically in everyone’s interest. Some key issues and risks to look out for as mentioned in the above slide. 26

Where key certifications or performance criteria are critical to an owner, insurance or bonding should be considered, along with adequate project controls and a carefully considered contractual risk allocation. While bonding is currently available, professional liability is typically the only type of insurance which will cover economic loss such as delay or damages due to improper design. Professional liability insurance is typically expensive and written with relatively low limits. Usually, a contractor’s commercial general liability coverage will only provide coverage for property damage that does not result from improper design. It may be some time before commercial liability insurance coverage for contractors will be available to cover most of the green risks identified above. 28

Attorney Profile - Theodore L. Senet, Partner Page 1 of 2 Theodore L. Senet, Esq. Partner Address: 1880 Century Park East, 12th Floor Los Angeles, California 90067-1621 Phone: (310) 552-3400 Fax: (310) 552-0805 E-mail: tsenet@gglts.com Professional Experience: Theodore L. Senet is a partner of Gibbs, Giden, Locher, Turner & Senet LLP. His practice specializes in the areas of insurance, construction, real property and environmental law. He has been involved in planning, development, risk management, construction and dispute resolution on numerous major projects, including high rise buildings, hospitals, airports, roadways, power and processing plants, refineries, manufacturing facilities and large residential developments. He currently represents public entities, corporate owners and developers, commercial general contractors and major home builders in insurance planning and procurement, insurance claims and insurance coverage litigation, complex construction defect and environmental litigation, class action litigation, construction delay claims and major tort litigation. Mr. Senet is a well-known speaker, educator and author. He is a course instructor on insurance, construction and real property law, and has been a principal speaker for numerous MCLE approved seminars. He has served on many panel programs, including the University of California Continuing Education of the Bar programs "Construction Law and Disputes," "Insurance Law for Real Property, Business and General Counsel" and "Hot Topics in Property and Liability Insurance." Practice Areas: Construction Law Public Contract Law Real Property Law Insurance Law Development of Private and Public Works Education: Loyola Law School (J.D.), Los Angeles, CA, 1978 University of California at Santa Barbara (B.A.), Santa Barbara, CA, 1975 Bar Admissions: California, 1978 U.S. District Court Central District of California, 1979 U.S. Court of Appeals 9th Circuit, 1979

Attorney Profile - Theodore L. Senet, Partner Page 2 of 2 Recent Publications: Architects & Engineers (Co-Author), California Construction contracts, Defects and Litigation, Continuing Education of the Bar, California 2009. New California Law Will Require Major Changes in Construction Contracts (Co-Author), CMAA Southern California Chapter newsletter, Legislative Section, Winter 2009 Nuts & Bolts of Modern Wrap-Up Liabilty Insurance, URS Corporation publication, Claims Resourse, Fall 2008. California Statewide "Green" Building Code New Challenges and Opportunities (Co-Author), CMAA Southern California Chapter newsletter, Legislative Section, Fall 2008. Insurance & Risk Management , Chapter Four and Surety Bonds, Chapter Five, CALIFORNIA CONSTRUCTION LAW (HLK Global Communications, Inc., 2007).

1 GREEN MATTERS SM NEW GREEN LEGISLATION, REGULATIONS AND OPPORTUNITES Presented by: Theodore L. Senet, Esq. Gibbs, Giden, Locher, Turner & Senet LLP 2 California Green Legislation 3 Landmark Green Legislation • Executive Order S-20-04 Signed in July 2004. • California Global Warming Solutions Act (AB32) signed into law September 2006. • • California “Green Building Standards Code, Part 11 of Title 24, signed into law July 2008. • • SB 375 Transportation Planning, Sustainable Communities & Environmental review amends the Government Code and Public Resources Code, signed into law September 2008. • • 4 California Global Warming Solutions Act (AB32) • Reduce greenhouse gas emissions (GhG) to 1990 emission levels by 2020 (approx. 30% reduction from projected “business-as-usual” levels and a 15% reduction from current levels) • The AB 32 Scoping Plan approved by the Air Resources Board on December 11, 2008 contains the main strategies California will use to reduce the GhG’s that cause climate change. • 5 6 (AB32) What’s next? • During 2009 ARB to draft rule language to implement plan and hold public workshops on each measure. • Jan 1, 2010 “Early Action Measures” to begin reducing GhG emissions to take effect. • Jan 1, 2011 ARB continues rulemaking • Jan 1, 2012 rules adopted by ARB take effect and are legally enforceable. • Dec 21, 2020 Deadline for achieving GhG emissions cap. 7 8 California’s New Green Building Standards Code 9 10 SB375 • Bridges the gap between local government authority over land use and building regulation and the state government goal of reducing greenhouse gas emissions (AB32) • Creates a structure for local, regional and state agency cooperation to reduce GhG emissions from cars and light trucks through improved land use and transportation planning. 11 1

planning. 11 SB375 Main Elements 1. Regional Target-Setting Process 2. Regional Development of Sustainable Community Strategies 3. Incentives for Land Use Projects That Can Help Reduce Emissions 4. Integration of Regional Planning Update Requirements 12 Local Green Building Ordinances in California 13 Local Green Building Ordinances • More than 75 California cities and counties have adopted green building standards • Local ordinances are permitted to be stricter than the new statewide Green Building Standards Code 14 15 City of Los Angeles Green Building Program 16 Standard of Sustainability • Mandatory for non-residential projects >50,000 sq ft, high-rise residential (> 6 stories) or low-rise residential of 50 or more units effective November 1, 2008 • Applies to existing buildings if redevelopment construction costs exceed 50% of the building’s replacement cost • Requires a LEED Accredited Professional on the Project team to certify that the project meets the intent of the LEED Certified level. • The Program will apply to low-rise mixed use or residential effective May 1, 2009. 17 Standard of Sustainable Excellence • Incentive program for projects that register with LEED, contract with an LEED AP, and can demonstrate how the project will achieve LEED certification at Silver or higher level • Incentives include expedited services within the Dept of City Planning, and the Bureau of Engineering, priority plan check processing, and service planning. 18 LEED 19 LEED Statistics • Buildings account for 38% of carbon emissions in the United States. • LEED Accredited Professionals as of December 31, 2008: 77,434 • Projects nationwide seeking certification: > 10,000 • LEED projects registered to local governments: 2319 • CA Projects certified (certified, silver, gold or platinum level): 279 • CA Projects registered to certify: 2003 20 LEED 2009 • Reorganization and enhancement of existing LEED Rating Systems for New Construction, Core and Shell, Commercial Interiors, Existing Buildings, Operations & Maintenance and Schools • Change to certification exam sometime in 2009 with transition complete by September 1, 2009 • Projects registered under current system have option to upgrade to LEED 2009 during transition period 21 Green Building Liability 22 New Design Standards and Guidelines • 3D and 4D CAD Design • BIM (Building Information Modeling) • Web based project controls • Design build systems and components 23 2

21 22 • Design build systems and components • 23 Green Building Standard of Care • What is the standard of care for a green building professional? • Is it the same for an architect, engineer, or construction manager? • Is a design professional with a special certification (e.g. LEED AP) held to a higher standard? 24 25 26 Compliance Issues 27 Potential Green Building Liability: • Failure to meet current and anticipated regulatory requirements for energy use and emission standards • Failure to obtain LEED Certification or other third party certification standards • Failure to meet performance specifications • 28 Added Financial Risk and Potential “Green” Liabilities 29 Legal Take Away(s) • Be ready to take advantage of new building opportunities with revised “green” contracts that reflect new or different “green” liability exposures • • Look for new property insurance products that offer expanded “green” building ordinance coverage • • The trend to be “green” is here to stay and will build a new foundation for future building codes. Get familiar with the basics now to avoid a gap in your knowledge as the industry changes. 30 Attorney Profile 31 3

Gglts Green Matters 2009 New Green Legislation Presentation

by Mike Flynn

Accessibility

Upload Details

Usage Rights

Statistics