Vol. 79, No. 8, August
Legal and Business Issues of Green Building
"Green building" - the incorporation of construction practices and
standards that maximize human health and economic return and minimize
negative environmental consequences - will have wide-ranging impacts on
by Brian D. Anderson
Disco came and went. Frisbees came and stayed. Though it is difficult
to know whether a trend will vanish or take hold, there are clear signs
that "green building" is a trend that is here to stay.1 Whether representing builders, architects,
engineers, hospitals, nonprofits, manufacturers, banks, or plaintiffs in
product liability suits, every Wisconsin lawyer should anticipate and
understand green building.
With significant and favorable recent coverage in the New York
Times,2 Vanity Fair,3 and the trade publications of builders and design
professionals,4 including the Wisconsin
Builders Association,5 green building has
acquired an undeniable cachet among groups not always aligned. Even
recent plans for the nation's most prominent and controversial building
project, the Freedom Tower meant to replace the Twin Towers, call for
the construction of a "green giant."6
Brian D. Anderson,
Maryland 2000, is an attorney with Axley Brynelson LLP, Madison,
practicing in real estate, construction, and corporate law and is a
member of the firm's Construction and Transportation Practice Group. He
gratefully acknowledges the research assistance of firm librarian
Many Wisconsin companies are at the forefront of green building
construction, construction materials, and consulting,7 and we have seen the construction of many high
profile green buildings. Among them are the JohnsonDiversey Global
Headquarters in Sturtevant,8 the Johnson
Controls Brengel Technology Center in Milwaukee,9 a residence hall at Lawrence University in
Appleton,10 a new Home Savings Bank in
Madison,11 and Harley-Davidson's Product
Development Center expansion in Wauwatosa.12
More and more, it appears that consumers, home builders,
environmentalists, real estate developers, regulators, and architects
are ready to champion the cause of an often amorphous set of principles
and practices loosely termed "green building." After all, that's where
the market appears to be headed.13
According to a recent study conducted by McGraw-Hill and the National
Association of Home Builders, the residential green building marketplace
alone is expected to grow from $7.4 billion (in 2005) to between $19 and
$38 billion by 2010.14
What is Green Building?
In large part, defining what is green building depends on who you
ask. But some of the recurring buzzwords and phrases are "sustainable,"
"healthy," "environmentally responsible," and "high performing."
For a community designer, green building may mean a comprehensive
neighborhood building plan that aims to minimize a broad range of
negative environmental impacts, such as water runoff, sprawl, and
commuting distances, while maximizing energy efficiency and water
For an architect, green building may mean a design and construction
strategy aimed at maximizing the health of building occupants and
minimizing negative environmental impacts.16 Such a plan might include energy generation,
recycling of rain and waste water, use of nontoxic or recycled building
materials, and maximized natural light. For some homebuilders, it may
mean building healthy homes (as opposed to "sick" homes) that can be
advertised as free from mold and toxic building materials.17
The best answer, as discussed in detail below, is that "green
building" refers to practices having the goal of maximizing human health
and economic return while minimizing negative environmental
However it is defined, the green building movement is being propelled
by forces that include the desire to burnish corporate images and by new
"green" building codes, state and federal tax incentives, concern over
global warming, rising energy costs, and a desire among builders and
design professionals to protect the natural environment while selling an
array of sophisticated products and services.
Paul von Paumgarten, director of energy and environmental affairs
with Johnson Controls, has assessed the trend and puts it this way: "Any
business in the automotive and building sectors that is not in the
process of greening its products is on its way out of business."
"Green building is not just a passing trend - it has taken hold and
is here to stay," says Sonya Newenhouse, president of Madison
Environmental Group,18 an award-winning,
Madison-based environmental consulting firm that assists businesses and
individuals with, among other things, green building strategies.
According to Newenhouse, "Any attorney who is not at least somewhat
conversant with the issues and terminology of green building will be
behind the game."
Toward a Definition of Green Building
Green building, according to Connie Lindholm of the Milwaukee-based
Wisconsin Green Building Alliance, is a concept that defies concise
definition. Instead, Lindholm describes green building as a set of
practices falling along a continuum of increasingly sophisticated
building design choices and material selection, all having the common
aim of improved public health and environmental outcomes.
"Green building can range from someone putting in a water garden in
her lawn, to the `straw bale' home and green roof buildings being
developed by Julilly Kohler, to the new Johnson Controls Brengel
Technology Center in downtown Milwaukee," said Lindholm. Kohler, an
attorney, activist, real estate developer, and granddaughter of the
Kohler Co. founder, is a successful "green" developer in
The Web site GreenBiz.com, designed to promote environmentally
sustainable business ideas and best practices, defines green building
even more broadly.20 According to
GreenBiz.com, green building includes community planning strategies that
decrease traffic, sprawl, demolition and other waste production, and the
use of toxic materials, while increasing indoor air quality, water
conservation, and energy efficiency.
Although definitions of green building vary, the United States Green
Building Council (USGBC)21 nevertheless has
taken the lead in establishing a formalized green building rating
system. The USGBC is a private, nonprofit corporation founded in 1993
and claims to have approximately 8,000 member organizations that include
builders, architects, academics, engineers, and law firms.22
Although other rating systems exist, the USGBC has virtually cornered
the market on the rating of green commercial buildings. The organization
developed the Leadership in Energy and Environmental Design (LEED)
rating system, which, according to the USGBC Web site, is "a voluntary,
consensus-based national standard for developing high-performance,
The USGBC's aim in developing the LEED rating system was to improve
the well-being of building occupants and the environmental performance
and economic return of buildings by employing established and new
practices, standards, and technologies.24
The USGBC has developed or is in the process of developing six LEED
rating systems, each geared to specific projects. They are the LEED-NC
(for new commercial construction and major renovation projects), the
LEED-EB (for existing building operations), the LEED-CI (for commercial
interior projects), the LEED-CS (for core and shell projects), the
LEED-H (for homes), and the LEED-ND (for neighborhood
In addition to developing the standards, the USGBC sells educational
materials and seminars and administers accreditation programs for design
professionals and others (including lawyers) interested in earning a
professional accreditation in the application of LEED standards. The
USGBC also certifies projects as LEED compliant by obtaining written
certifications from project architects stating that design elements meet
prescribed LEED goals. The USGBC does not actively inspect
The LEED system awards points for achieving a number of environmental
and efficiency standards. Projects that obtain the highest number of
points under the applicable LEED standard are designated "LEED
Platinum." Fewer points merit a LEED Gold or Silver ranking, or simply
Many owners of LEED-certified buildings are not shy about proclaiming
their green achievements. A Google search of "LEED Platinum" yields
approximately 180,000 hits, many of which are press releases from proud
building owners and developers touting their USGBC designation.26
On the residential side of green building, the National Association
of Home Builders has emerged as the national leader in green residential
standards and certifications.27 In
Wisconsin, Green Built Home has emerged as a leading residential green
building program that reviews and certifies new homes and remodeling
projects for compliance with its sustainable building and energy
The Attorney's Role
What role do attorneys play in green building? The answer depends on
who is your client. It is best to begin with an example.
Your hospital client asks you to attend a board meeting where an
architect or design-builder will present its LEED-Platinum new building
design for the new hospital wing. The hospital board appears enamored
with the design firm claims that the LEED-certified building will result
in better patient outcomes, better staff retention and productivity,
greater energy efficiency, and a marketing edge over competing
hospitals. The hospital's general counsel asks you to act as the board's
representative in negotiating a contract with the architect or
design-builder, assessing the legal risk involved with seeking the LEED
certification, and to report on whether such a green building
designation would qualify the hospital for any federal or state grants
or tax exemptions.
To effectively advise the board in assessing the risks and benefits
involved with a green building, it is clear that you will have to
understand a range of issues involved in the LEED certification process.
In order to gain this understanding, counsel should not rely solely on
the information provided by the architect, but should seek independent
advice from an architecture firm or other LEED-accredited consultant
with substantial experience in making a thorough and critical
examination of the risks and benefits attendant in similar green
Once you understand the risks and benefits as applicable to your
project, you will then have to assess whether the hospital and the
design team are adequately equipped to efficiently and effectively deal
with the LEED certification process and whether LEED certification is
worth the extra expense. Finally, you will need to assess key
contractual and risk management issues such as whether, for example, the
hospital faces potential liability in making representations about the
building's beneficial effects on indoor air quality.
Or, consider that you are representing an asthmatic doctor in a
personal injury suit against a "green" hospital. The doctor left her
former position and joined the new hospital because the new hospital
represented to her that workers and patients in the LEED-Platinum
hospital would suffer a lower incidence of asthma attacks. Your client
claims that her asthma worsened in the new hospital. To effectively
represent the doctor, you need to decode the LEED certification process
and its interaction with HVAC specifications regarding indoor air
quality in order to build a potential case against the hospital, the
design-build firm, or other parties.
Finally, consider that you represent the architecture firm with
respect to the hospital project. Ujjval Vyas,30 a former architecture professor and now an
attorney with Foran, Glennon, Palandech & Ponzi, Chicago, who
focuses on green building issues, says that to effectively advise the
design professional, an attorney must understand the mechanics of the
LEED certification process and develop a "proactive risk
The risk strategy should include creating clearly articulated
performance expectations between the architect and the owner.
Specifically, the architect should review with its counsel and the owner
the contract regarding the scope of services and be sure that any
reference to the anticipated level of LEED certification is not "phrased
in a way that might be interpreted as a performance
In addition, Vyas urges careful review of any certification documents
submitted by the design professional to the USGBC pursuant to a LEED
certification. Some required certification documents have language that
could easily be interpreted as providing warranties or guaranties of
performance. According to Vyas, such a warranty could vitiate coverage
under many professional liability insurance policies, depending on how
the policy defines "professional services."33
An attorney representing a developer or property owner also should be
aware of certain state and federal tax credits associated with green
buildings. Many states, but not Wisconsin, have enacted tax credit
provisions based on achieving standards modeled on LEED.34 Attorneys should exercise caution regarding any
performance verification requirements that might later void a tax
benefit if the building fails to perform as represented to the tax
Whether representing the hospital, the doctor, or the design
professional in the above examples, an attorney versed in the legal
risks, benefits, procedures, and tax consequences involved with
constructing a green building or having it LEED certified can deliver
valuable advice to a client. One way for attorneys to gain LEED
expertise is the USGBC professional accreditation program.35 The USGBC offers a series of classroom and
Internet-based classes that culminate in the professional accreditation
exam. People who pass the exam are awarded the accreditation.
Green Building in Wisconsin
Wisconsin is a leader in the green building movement. The state is
home to many of the nation's key green building visionaries, academics,
product manufacturers, design professionals, and building projects.
Recent action by Gov. Doyle indicates a trend toward green building in
state-financed projects. Wisconsin lawyers have ready access to some of
the most knowledgeable green building professionals in the world and the
opportunity to expand the reach of their practice into a growing and
Johnson Controls, a public company based in Milwaukee and well-known
for its building and automobile interior climate control systems, has
emerged as an international innovator in green building.36 Not only has the company recently completed
construction of its own green facility in Milwaukee, but it recently
completed a green building project in China37 and appears likely to receive a contract to
establish more than 400 additional green structures there. The company
also has created software designed to automate the LEED certification
Johnson Controls' von Paumgarten is a key figure in the green
building movement. He served on the board of the USGBC and helped create
the LEED standards. Michael Arny of Madison's Leonardo Academy also
served on the USGBC board and was instrumental in guiding the
development of the LEED standards. Arny currently chairs the USGBC
LEED-Existing Buildings committee.
Gov. Doyle recently took steps toward requiring Wisconsin state
buildings to comply with a number of LEED-like requirements. On April
11, 2006, Doyle signed Executive Order 145 Relating to Conserve
Wisconsin and the Creation of High Performance Green Building Standards
and Energy Conservation for State Facilities and Operations.39 Although the order does not require LEED
certification for state-owned facilities, it does contain minimum
performance standards based on LEED tools and approaches, as well as
measurement and reporting requirements.
The city of Milwaukee is actively engaged in promoting green
building. It has created the Milwaukee Green Team, a group of business
leaders, government officials, and citizens, to promote green building
and other green initiatives. According to the city's Web site,
qualifying green building projects may be entitled to an expedited
Finally, networking with educators, builders, real estate developers,
design professionals, attorneys, and others involved with green building
recently got a lot easier in three Wisconsin cities. Greendrinks.org is
a worldwide organization that brings together people interested in green
building and its practices. The times and venues for each Wisconsin
meeting are listed below:
- Green Bay: The third Thursday of every month at 6 p.m. at the
Kavarna, 112 South Broadway.
- Madison: The first Wednesday of every month at 5 p.m. at the
Flatiron Tavern, 102 King Street.
- Milwaukee: The third Wednesday of every month at 5 p.m. at the Palms
on Broadway, 221 North Broadway.
With its roots in Wisconsin, a growing national profile, and emerging
contractual, insurance, tax, and legislative implications, green
building is a trend that is likely to impact many lawyers' practices.
Lawyers' ability to identify the issues, and to critically assess
attendant risks and benefits, can provide a substantial benefit to
1See, e.g., Christopher
Klein, ed., 2005 AEC Industry Outlook: Strategy and Insight for
Design and Construction Firms, Zweig Market Intelligence Reports
for Design and Construction Firms 22 (2004); and Materials for New York
Building Competition (PDF 48K); and Materials for the National
Building Museum Exhibit on Green Building in Washington, D.C.
2See, e.g., Johnathan D.
Glater, `Greenwash': A Way to Say Hogwash, N.Y. Times, May 17,
Editorial Staff, The Re-Inventors: Green Architects and
Designers, Vanity Fair 190 (May 2006).
Ujjval Vyas, Delivering Green Buildings: Taking Off the Rose Colored
Glasses, 10 Licensed Architect 1, 24 (2006).
5Nikki Brand, The Future of
Green is Rosy, Badger Builder, July/August 2006, at 15.
6See John Gartner, Freedom
Tower Will be Green Giant (Sept. 15, 2004).
7See, e.g., Wisconsin
Green Building Alliance directory.
8See description <www.usgbc.org/docs/LEEDdocs/JohnsonDiversey_Case_study.pdf
9See description <www.johnsoncontrols.com>.
10See description <www.wgba.orgl>.
11See Genie Campbell,
Easy Being Green, but this Bank Accepts the Challenge, Capital
Region Bus. J. Home Savings Bank in Madison "is one of the first banks
in the nation to offer mortgage-rate incentives for buying a certified
Green Built home." Marv Balousek, Rate
Deals for Green Built Homes, Wis. State J.
13See, e.g., Study:
Green Building Market Poised to Take Off.
Survey Says Number of Green Home Builders to Increase by 30% in
2006 (June 6, 2006).
15See, e.g., USGBC LEED
16See, e.g., USGBC LEED
17See, e.g., Dana Dugen,
Building Trend Hits Home, Idaho Mountain Express.
19See Todd Beamon,
Homes With a Purpose, Bus. J., Sept. 16, 2005.
21The United States Green Building
24For a discussion of the LEED
rating system and an analysis of its environmental versus financial
benefits, see Stephen T. Del Percio, The Skyscraper, Green Design,
& the LEED Green Building Rating System: The Creation of Uniform
Sustainable Standards for the 21st Century or the Perpetuation of an
Architectural Fiction?, 28 Environs Envtl. L. & Pol'y J. 117
26For a compendium of LEED
buildings by certification level and location, see, e.g., www.fundinggreenbuildings.com.
28Green Built Home is sponsored
by the Madison Area Builders Association. Green Built Home promotes
green building practices with its new home and remodeling green
30Attorney Vyas' profile.
31Ujjval Vyas, Delivering
Green Buildings: Taking Off the Rose Colored Glasses, Licensed
Architect 1, at 24 (2006).
32Id. at 25.
34A summary of tax incentives available to
green building projects.
36Johnson Controls Web